ADAMA Ltd. Semi-Annual Report 2020
ADAMA LTD.
SEMI-ANNUAL REPORT 2020
ADAMA Ltd. is a global leader in crop protection, providing solutions to farmers across the
world to combat weeds, insects and disease. ADAMA has one of the widest and most
diverse portfolios of active ingredients in the world, state-of-the art R&D, manufacturing and
formulation facilities, together with a culture that empowers our people in markets around
the world to listen to farmers and ideate from the field. This uniquely positions ADAMA to
offer a vast array of distinctive mixtures, formulations and high-quality differentiated products,
delivering solutions that meet local farmer and customer needs in over 100 countries globally.
Please see important additional information and further details included in the Annex.
August 2020
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ADAMA Ltd. Semi-Annual Report 2020
Section I - Important Notice, Table of Contents and Definitions
The Company’s Board of Directors, Board of Supervisors, directors, supervisors and
senior managers confirm that the content of the Report is true, accurate and complete
and contains no false statement, misleading presentations or material omissions, and
assume joint and several legal liability arising therefrom.
Ignacio Dominguez, the person in charge of the Company (President and Chief
Executive Officer) as well as its legal representative, and Aviram Lahav, the person
leading the accounting function (Chief Financial Officer & Deputy Chief Executive
Officer), hereby assert and confirm the truthfulness, accuracy and completeness of the
Financial Report.
All the Company’s directors attended the board meeting for the review of this Report.
The forward-looking information described in this Report, such as future plans,
development strategy, market trends and their effect etc., does not constitute, in any
manner whatsoever, a substantial commitment of the Company to investors. Investors
and other relevant people are cautioned to be sufficiently mindful of investment risks
as well as the difference between plans, forecasts and commitments.
The Company has described its possible risks in “X - Risks Facing the Company and
Countermeasures” under Section IV herein.
For the Reporting Period, the Company does not plan to distribute cash dividends or
bonus shares or convert capital reserve into share capital.
This Report and its Abstract have been prepared in both Chinese and English. Should
there be any discrepancies between the two versions, the Chinese version shall prevail.
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ADAMA Ltd. Semi-Annual Report 2020
Table of Contents
Section I - Important Notice, Table of Contents and Definitions....................................... 2
Section II - Corporate Profile and Financial Results.......................................................... 5
Section III - Business Profile ............................................................................................... 8
Section IV - Performance Discussion and Analysis ........................................................ 10
Section V - Significant Events........................................................................................... 33
Section VI - Share Changes and Shareholders ................................................................ 50
Section VII - Preferred stock ............................................................................................. 56
Section VIII - Convertible Bonds ....................................................................................... 57
Section IX - Directors, Supervisors and Senior Management ......................................... 58
Section X - Corporate Bonds ............................................................................................ 59
Section XI - Financial Report............................................................................................. 60
Section XII - Documents Available for Reference .......................................................... 176
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ADAMA Ltd. Semi-Annual Report 2020
Definitions
General Terms Definition
Company, the Company ADAMA Ltd.
Adama Agricultural Solutions Ltd., a wholly-owned subsidiary of the Company,
Adama Solutions
incorporated in Israel according to its laws
ADAMA Anpon (Jiangsu) Ltd., a wholly-owned subsidiary of the Company,
Anpon
incorporated in China according to its laws
Board of Directors/Board The Board of Directors of the Company
Board of Supervisors The Board of Supervisors of the Company
Group, the Group, ADAMA The Company, including all its subsidiaries, unless expressly stated otherwise
ChemChina China National Chemical Co., Ltd.
ChemChina-Syngenta
The acquisition of Syngenta AG by ChemChina in 2017
Transaction
China National Agrochemical Co., Ltd., the indirect controlling shareholder of the
CNAC
Company, a wholly-owned subsidiary of ChemChina
CSRC China Securities Regulatory Commission
SZSE Shenzhen Stock Exchange
SASAC State Assets Supervision and Administration Commission of China
Syngenta Group Co., Ltd, the controlling shareholder of the Company as of June
Syngenta Group
15, 2020, a wholly-owned subsidiary of CNAC
Report This 2020 Semi-Annual Report
Reporting Period, this Period January 1, 2020 - June 30, 2020
2019 Annual Report The Company’s 2019 Annual Report published on April 28, 2020
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ADAMA Ltd. Semi-Annual Report 2020
Section II - Corporate Profile and Financial Results
I. Corporate Information
Stock name ADAMA A, ADAMA B Stock code 000553, 200553
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 安道麦股份有限公司
Abbr. 安道麦
Company name in English (if any) ADAMA Ltd.
Abbr. (if any) ADAMA
Legal representative Ignacio Dominguez
II. Contact Information
Board Secretary Securities Affairs Representative Investor Relations Manager
Name Li Zhongxi Liang Jiqin Wang Zhujun
Address 6/F, No.7 Office Building, No.10 Courtyard, Chaoyang Park South Road, Chaoyang District, Beijing
Tel. 010-56718110 010-56718110 010-56718110
Fax 010-59246173 010-59246173 010-59246173
E-mail irchina@adama.com irchina@adama.com irchina@adama.com
III. Other Information
1. Ways to Contact the Company
Indicate by tick mark whether any changes occurred to the registered address, office address and their
postal codes, website address and email address of the Company during the Reporting Period.
□ Applicable √ Not applicable
No changes occurred to the said information during the Reporting Period, which can be found in the 2019
Annual Report.
2. Information Disclosure Media and Place where this Report is Kept
Indicate by tick mark whether any changes occurred to the information disclosure media and the place
where this Report is kept during the Reporting Period.
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by the
CSRC for the publication of this Report and the location where this Report is kept did not change during
the Reporting Period. Said information can be found in the 2019 Annual Report.
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ADAMA Ltd. Semi-Annual Report 2020
3. Other Relevant Documents
Indicate by tick mark whether any changes occurred to the relevant documents during the Reporting
Period.
□ Applicable √ Not applicable
IV. Main Accounting Data and Financial Results
Indicate by tick mark whether the Company needs to retroactively adjust or restate any of its accounting
data.
□ Yes √ No
Same period of last
Reporting Period +/- (%)
year
Operating revenues (RMB’000) 14,121,040 13,616,032 3.71%
Net profit attributable to shareholders of the
Company (RMB’000) 204,649 588,638 -65.23%
Net profit attributable to shareholders of the
Company excluding non-recurring profit and
loss (RMB’000) 219,772 430,270 -48.92%
Net cash flow from operating activities
(RMB’000) 1,234,531 (304,950) -504.83%
Basic EPS (RMB/share) 0.0836 0.2406 -65.25%
Diluted EPS (RMB/share) N/A N/A N/A
Weighted average return on net assets 0.91% 2.59% -1.68%
End of Reporting Period End of last year +/- (%)
Total assets (RMB’000) 49,096,179 45,288,940 8.41%
Net assets attributable to shareholders of
the Company (RMB’000) 22,669,778 22,371,665 1.33%
V. Differences in Accounting Data under Domestic and Foreign Accounting
Standards
1. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under
Chinese and International Accounting Standards
□ Applicable √ Not applicable
None during the Reporting Period.
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ADAMA Ltd. Semi-Annual Report 2020
2. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under
Chinese and Foreign Accounting Standards
□ Applicable √ Not applicable
None during the Reporting Period.
3. Reason for accounting data differences under Chinese and Foreign Accounting Standards
□ Applicable √ Not applicable
VI. Non-Recurring Profit/Loss
√ Applicable □ Not applicable
Unit: RMB’000
Item Reporting Period Note
Gains/losses on the disposal of non-current assets (including the offset
7,694 -
part of asset impairment provisions)
Government grants recognized through profit or loss (excluding
government grants closely related to business of the Company and given
17,834 -
at a fixed quota or amount in accordance with government’s uniform
standards)
Recovery or reversal of provision for bad debts which is assessed
15,508 -
individually during the years
Other non-operating income and expenses other than the above 19,274 -
Employee early
retirement plan
expenses at the
Other profit or loss that meets the definition of non-recurring profit or loss (66,192)
Company’s Israeli
manufacturing
facilities
Less: Income tax effects 9,241
NCI (after tax) -
Total (15,123)
Explanation whether the Company has classified an item as non-recurring profit/loss according to the
definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their
Securities to the Public - Non-Recurring Profit and Loss, and reclassified any non-recurring profit/loss
item given as an example in the said explanatory announcement to recurrent profit/loss
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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ADAMA Ltd. Semi-Annual Report 2020
Section III - Business Profile
I. Main Business of the Company during the Reporting Period
The Company is a corporation incorporated in the People's Republic of China.
The Group engages in the development, manufacturing and commercialization of crop protection
products, that are largely off-patent, and is one of the leading companies in the world in this field. The
Group provides solutions to farmers in approximately 100 countries, through approximately 60 subsidiary
companies throughout the world.
The Group's business model integrates end-customer access, regulatory expertise, global R&D and
production capabilities, thereby providing the Group a significant competitive edge and allowing it to
launch new and differentiated products that address farmers’ needs in key markets.
The Group's primary operations are global, spanning activities in Europe, North America, Latin America,
Asia-Pacific (including China) and India, the Middle-East and Africa. In aggregate, the Group sells its
products in approximately 100 countries across the globe.
The Group is focused on the development, manufacturing and commercialization of largely off-patent
crop protection products, which are generally herbicides, insecticides and fungicides, which protect
agricultural and other crops against weeds, insects and disease, respectively. The Group also utilizes its
expertise to adapt such products also for the development, manufacturing and commercialization of
similar products for non-agricultural purposes (Consumer and Professional Solutions).
In addition, the Group leverages its core capabilities in the agricultural and chemical fields and operates
in several other non-agricultural areas, none of which, individually, is material for the Group. These
activities, collectively reported as Intermediates and Ingredients, include primarily, (a) the manufacturing
and marketing of dietary supplements, food colors, texture and flavor enhancers, and food fortification
ingredients; (b) fragrance products for the perfume, cosmetics, body care and detergents industries; (c)
the manufacturing of industrial products and (d) other non-material activities.
Trends, events and key developments in the Group's macro-economic environment may have a material
impact on its business results and development. The influence of these factors may differ depending on
the geographic region and the different products of the Group. Since the Group maintains a wide product
portfolio and since it is active in many geographic regions, the aggregate effect of these factors in any
given year, and during the course thereof, is not uniform and may sometimes be mitigated by
counterbalancing influences. The activities and results of the Group are further subject to, and affected
by, certain global, localized and other factors, such as: demographic changes; economic growth and
rising standards of living; agricultural commodity prices; significant fluctuations in raw material costs and
global energy prices; development of new crop protection technologies; patent expiries and growth in
volumes of off-patent products; the global agricultural markets and volatile weather conditions; regulatory
changes; government policies; world ports, international monetary policies and the financial markets.
Becoming Part of the Syngenta Group
In June 2020, the Company became a distinctive member of the newly established Syngenta Group. The
new group is a world leader in agricultural inputs, spanning crop protection, seeds, fertilizers, additional
agricultural and digital technologies, as well as an advanced distribution network in China. The Company
joined this newly-formed ag-industry leader through the contribution of most of the stake that ChemChina
indirectly owned in the Company into the group. As such, there is no change in the Company’s ultimate
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ADAMA Ltd. Semi-Annual Report 2020
controlling shareholder. The Company continues to be headquartered in Israel, remains traded on the
Shenzhen Stock Exchange, and maintains its unique brand and positioning.
Please see important additional information and further details included in the Annex.
II. Significant Changes in Main Assets
1. Significant Changes to Main Assets
Main Assets Significant Change
Stock rights/Equity assets No significant change
Fixed assets No significant change
Intangible assets No significant change
Changes are mainly due to investments as part of China relocation and CIP transferred
Construction in progress
to fixed assets
2. Main Overseas Assets
√ Applicable □ Not applicable
Control Proportion
Scale
measures Net Profit of
Specific (Amount) Operation Significant
to of the overseas
contents of the Reason of the Location /Management impairment
guarantee assets assets out
assets assets mode risk?
safety of (RMB’000) of total net
(RMB’000)
the assets assets (%)
Equity Acquired
investment in through Israel and Corporate Corporate
19,875,516 80,586 88% No
Adama Major Assets globally Governance Governance
Solutions Restructuring
Other explanations
III. Core Competitiveness Analysis
No significant changes occurred to the core competitiveness of the Company during the Reporting Period.
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ADAMA Ltd. Semi-Annual Report 2020
Section IV - Performance Discussion and Analysis
I. Overview
During the first half of 2020, the global agrochemical market, amongst many others, was impacted
by the unprecedented COVID-19 pandemic. As a result, farmers’ incomes have been, and continue
to be, negatively impacted in most regions by lower crop prices, reduced demand due to the relative
shutdown of the food sector, and labor shortages owing to mobility restrictions, all leading to
increased costs for farmers. Governments across the world continue to include farmers in extensive
support programs, partially offsetting lost income due to the pandemic.
One of the most widespread economic consequences of the pandemic is the significant weakening
of many global currencies against the US dollar, which started abruptly towards the end of Q1 and
continued throughout the duration of Q2. This has been seen most notably in the Brazilian Real,
Indian Rupee and Turkish Lira, and has contributed to increased volatility in the Euro and Australian
dollar.
Following tight supply in the first quarter due to COVID-19 disruptions, chemical production in China
has largely returned to prior levels and prices of raw materials and intermediates are starting to
reflect such increase in supply. The Company expects to benefit from this trend in the upcoming
quarters.
The ongoing spread of the COVID-19 pandemic is expected to continue to impact the performance
and profitability of the Company in the coming months. The Company continues to actively manage
its response to the pandemic in order to ensure the safety of its employees and limit its impact on
the Company’s business and financial performance.
Despite these challenging conditions largely owing to COVID-19, the Company delivered a resilient
performance in the second quarter driven by significant volume growth, mainly in emerging markets,
supporting continued sales growth over the half-year period in constant exchange terms.
Regarding the explanations on the changes in the financial data, please refer to the following section - “II
Analysis of Main Business” of this chapter.
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ADAMA Ltd. Semi-Annual Report 2020
II. Analysis of Main Business
See details on the relevant contents of the aforementioned “I. Overview” of “Performance Discussion
and Analysis”.
Year-on-year changes of main financial data:
Same period of
Same period of
2020 Apr-June 2020 Apr-June last year
last year +/-% +/-%
(000’RMB) (000’USD) (000’USD)
(000’RMB)
Operating income 7,338,797 6,828,281 7.48% 1,035,873 1,001,729 3.41%
Cost of goods
5,147,057 4,574,006 12.53% 726,512 671,020 8.27%
sales
Selling and
Distribution 1,211,697 1,230,808 -1.55% 171,033 180,568 -5.28%
expenses
General and
administrative 227,957 310,745 -26.64% 32,176 45,582 -29.41%
expenses
R&D expenses 96,177 114,346 -15.89% 13,576 16,777 -19.08%
Financial Expense 431,172 458,815 -6.02% 60,872 67,320 -9.58%
Profit before tax 312,215 314,064 -0.59% 44,051 46,083 -4.41%
Income tax
90,859 92,182 -1.44% 12,823 13,521 -5.16%
expenses
Net income 221,356 221,882 -0.24% 31,228 32,562 -4.10%
EBITDA 1,191,383 1,228,809 -3.05% 168,159 180,267 -6.72%
Net cash flows from 1,619,239 984,534 64.47% 228,566 144,436 58.25%
operating activities
Net cash flows used (442,286) (300,265) 47.30% (62,439) (44,079) 41.65%
in investing activities
Net cash flows used 846,222 (97,912) -964.27% 119,445 (14,435) -927.47%
in financing activities
Net increase in cash 2,018,188 643,136 213.80% 284,548 79,097 259.75%
and cash equivalents
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ADAMA Ltd. Semi-Annual Report 2020
Reporting
Reporting Same period of Same period of
Period
Period last year +/-% last year +/-%
(000’USD)
(000’RMB) (000’RMB) (000’USD)
Operating income 14,121,040 13,616,032 3.71% 2,008,404 2,008,150 0.01%
Cost of goods
9,904,470 9,023,242 9.77% 1,408,693 1,330,711 5.86%
sales
Selling and
Distribution 2,468,568 2,499,774 -1.25% 351,260 368,715 -4.73%
expenses
General and
administrative 553,186 628,259 -11.95% 78,810 92,661 -14.95%
expenses
R&D expenses 188,185 210,699 -10.69% 26,769 31,062 -13.82%
-13.37%
Financial Expense 842,792 938,196 -10.17% 119,894 138,402
Profit before tax 448,847 729,175 -38.44% 63,652 107,630 -40.86%
Income tax 68.23%
244,198 140,537 73.76% 34,811 20,692
expenses
Net income 204,649 588,638 -65.23% 28,841 86,938 -66.82%
EBITDA 2,119,271 2,460,919 -13.88% 301,217 362,956 -17.01%
Net cash flows from
(used in) operating 1,234,531 (304,950) -504.83% 173,400 (46,757) -470.85%
activities
Net cash flows used
(815,385) (1,369,994) -40.48% (115,939) (202,688) -42.80%
in investing activities
Net cash flows
provided by financing 1,475,449 735,633 100.57% 209,672 109,154 92.09%
activities
Net increase
(decrease) in cash 1,936,200 (964,376) -300.77% 264,458 (141,826) -286.47%
and cash equivalents
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ADAMA Ltd. Semi-Annual Report 2020
Analysis of Financial Highlights
(1) Revenues
Revenues in the second quarter were $1,036 million, up by 12% in CER terms, driven by robust
12% volume growth, alongside generally stable prices. This performance was achieved despite the
various impacts of COVID-19, which continued to pose numerous challenges to the way the
Company conducts its business, as well as materially impacting global currencies. In US dollar
terms, sales grew by a more moderate 3% (+8% in RMB terms), reflecting an estimated $85 million
negative impact from the weaker currencies, and reflecting the Company’s strong growth in
emerging markets which were among the most significantly impacted by the global currency
weakness.
Growth in the second quarter was fueled by a strong performance in emerging markets, most
notably in Latin America, with strong business volume overcoming the material depreciation of
regional currencies, as well as in the India, Middle East & Africa region, which benefited from
favorable weather. The second quarter also saw a return to growth in China, with a strong recovery
from the first quarter’s COVID-19 pandemic-related impact on operations at the Company’s
Jingzhou site in Hubei province. The Company also delivered solid growth in Asia-Pacific (outside
China), led by a strong performance in Australia.
Sales were lower in both Europe and North America in the second quarter. Steady growth in
northern and western Europe only partially compensated for a challenging season seen in central
and eastern Europe, where volatile weather posed challenges for growers, reducing planting in
some crops earlier in the season, and preventing application in the latter part. In North America,
challenging weather reduced purchasing from customers in some US crops, while COVID-19
related uncertainty impacted demand from distribution channels.
The return to growth in the second quarter saw the Company generate sales growth of almost 7%
in CER terms over the first half of the year, while in USD terms the Company was able to match
the first-half record high sales of $2,008 million seen in 2019 (+4% in RMB terms). This reflects the
overcoming of an estimated $56 million impact from the COVID-19 pandemic over the first half of
the year, as well as the material impact of widespread global currency weakness against the US
dollar, which constrained sales US dollar terms sales in the period by an estimated $135 million.
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ADAMA Ltd. Semi-Annual Report 2020
Operating revenues
Unit: RMB’000
2020H1 2019H1
Ratio of the Ratio of the
YoY +/-%
Amount operating Amount operating
revenue revenue
Total operating revenue 14,121,040 100.00% 13,616,032 100.00% 3.71%
Classified by industries
Manufacture of chemical raw materials
14,121,040 100.00% 13,616,032 100.00% 3.71%
and chemical products
Classified by products
Herbicides 6,230,425 44.12% 6,184,441 45.42% 0.74%
Fungicides 2,879,888 20.39% 2,410,406 17.70% 19.48%
Insecticides 3,724,051 26.37% 3,707,558 27.23% 0.44%
Ingredients and Intermediates (Formerly
1,286,676 9.11% 1,313,627 9.65% -2.05%
referred to as Non-Agro)
Classified by regions
Europe 4,275,020 30.27% 4,252,479 31.23% 0.53%
North America 2,622,636 18.57% 2,715,528 19.94% -3.42%
Latin America 2,669,490 18.90% 2,411,530 17.71% 10.70%
Asia-Pacific 2,456,818 17.40% 2,426,931 17.82% 1.23%
India, Middle East and Africa 2,097,076 14.85% 1,809,564 13.29% 15.89%
Note: the sales split per product category is provided for convenience purposes only, and is not representative of the way
the Company is managed or in which it makes its operational decisions.
Regional Sales Performance in USD
Q2 2020 Q2 2019 Change H1 2020 H1 2019 Change
$m $m USD $m $m USD
Europe 252 267 -5.6% 609 628 -3.0%
North America 205 220 -7.0% 373 400 -6.9%
Latin America 220 196 12.4% 379 355 6.7%
Asia Pacific 191 173 11.0% 349 358 -2.4%
Of which China 99 86 15.6% 168 180 -6.7%
India, Middle East & Africa 167 146 14.6% 298 267 11.7%
Total 1,036 1,002 3.4% 2,008 2,008 0.0%
Note: the following analysis of regional sales performance is based on USD results.
Europe: Sales were lower by 2.3% in the second quarter but increased slightly in the first half of the year
in CER terms, compared with the corresponding periods last year. The lower sales in the quarter were
caused to some extent by higher inventories in the distribution channels remaining from the poor season
last year, as well as some advanced purchasing of products generally by distributors in the first quarter
of 2020 due to emerging COVID-19 concerns, both of which served to constrain demand and increase
pricing pressure.
Steady growth in northern and western Europe, only partially compensated for a challenging season seen
in central and eastern Europe, where volatile weather posed challenges for growers, with dry weather
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ADAMA Ltd. Semi-Annual Report 2020
reducing planting in some crops earlier in the season, while the sudden wet weather which followed
hampered application in the latter part.
On 1 July, 2020, the Company acquired the remaining 51% stake in Alfa Agricultural Supplies, S.A., a
leading Greek provider of crop protection and other agriculture-related inputs. Through this acquisition,
the Company will further bolster its position and offering in this relevant market by driving the continued
development of its value-added product portfolio, deepening Alfa’s already strong relationships with local
ag-input distributors, retailers and farmers, aiming at meeting the growing needs of farmers in Greece.
In US dollar terms, sales were lower by 5.6% in the quarter and by 3.0% in the half-year period, compared
to the corresponding periods last year, also reflecting the net impact of weaker currencies, largely
attributed to the COVID-19 outbreak.
North America: Sales were lower by 6.5% in the second quarter and by 6.3% in the first half of the year,
in CER terms, compared with the corresponding periods last year. This was largely due to challenging
weather conditions, primarily in southern US, which delayed planting and reduced cotton acreage
alongside a reduction in cotton demand due to lower retail apparel sales as a result of COVID-19. In
addition, COVID-19 related uncertainty saw distributors reducing inventories, putting pressure on prices.
The Company recorded robust growth in Canada, partially offsetting the lower sales in the US, supported
by successful product launches including ORIUS a broad-spectrum herbicide in wheat, barley and oats,
PYTHONTM a broad-spectrum, dual mode of action herbicide in field peas and soybeans, as well as
LEOPARD, a fast-acting, selective graminicide for use against grassy weeds in multiple crops.
In US dollar terms, sales were lower by 7.0% in the quarter and by 6.9% in the first half, compared to the
corresponding period last year, reflecting the weakening of the Canadian Dollar.
Latin America: Sales grew by 39.8% in the second quarter and by 27.6% in the first half of the year, in
CER terms, compared to the corresponding periods last year, driven by significant volume growth in key
countries and continued price increases throughout the region.
The Company delivered strong growth in Brazil, supported by favorable weather conditions and increased
soybean and corn acreage. The Company continues to expand its differentiated product offering in the
country, recently launching PLETHORA, an innovative insecticide mixture with dual mode of action,
addressing a broad spectrum of caterpillar and other pests.
Noteworthy performances were also recorded with continued market share gains in Argentina, supported
by favorable weather conditions that accelerated the pace of summer crop harvesting and winter grain
planting, Peru where the Company’s activities were bolstered by its Q4 2019 acquisition in the country,
as well as a strong performance in Paraguay.
In US dollar terms, sales in the region grew by 12.4% in the quarter and 6.7% in the first half of the year,
compared to the corresponding periods last year, as the robust business growth was heavily impacted by
weaker currencies in the region, in particular the significant decline in the Brazilian Real against the US
dollar.
Asia-Pacific: Sales grew by 16.1% in the quarter and by 2.7% in the first half of the year in CER terms,
compared to the corresponding periods last year, driven by strong volume growth and continued price
increases, recovering from the first quarter COVID-19 impact.
In Asia-Pacific (outside of China), a noteworthy performance was recorded in Australia which has seen a
strong season supported by favorable weather. This compensated for challenging seasonal and COVID-
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ADAMA Ltd. Semi-Annual Report 2020
19 related conditions in many parts of South East Asia. However, good rice cropping conditions in the
region, drove increased sales of the Company’s leading rice insecticide offering.
During the quarter, the Company obtained multiple new product registrations in the region, including
NEGATE, a dual-mode of action herbicide for use in turf in Australia, GOLTIX GOLD, a unique herbicide
formulation with improved efficacy for controlling weeds in beets in New Zealand, and Banjo Forte , a
fungicide for use in black pepper in Vietnam.
In China, the Company saw a strong recovery in business growth in the second quarter, supported by
new product launches including XISHENG LV, a protective fungicide for fruits and vegetables, as well
as FEIDIAN #1, an insecticide for drone application, mainly in rice. This second quarter performance
saw the Company, almost fully overcoming the loss of sales in the first quarter cause largely by the
COVID-19 impact on operations at the Company’s Jingzhou site in Hubei province. The second quarter
saw a recovery in sales of raw materials and intermediates, albeit at lower prices due to increased supply
generally from Chinese producers.
In US dollar terms, sales in the region grew by 11.0% in the second quarter but were lower by 2.4% in
the first half of the year, compared to the corresponding periods last year, reflecting the impact of weaker
currencies, most notably the Australian Dollar and Chinese Renminbi.
India, Middle East & Africa: Sales grew by 23.2% in the quarter and by 18.3% in the first half of the year,
in CER terms, compared to the corresponding periods last year. The Company delivered robust business
growth in the region, led by India, alongside continued price increases.
In India, the timely arrival of the monsoon and its associated rains facilitated the good sowing of summer
crops, encouraging application of crop protection products, following the lifting of the lockdown imposed
by the Indian government. Favorable rainfall in South Africa improved cropping conditions, more than
offsetting a challenging cotton season in Turkey.
In US dollar terms, sales in the region grew by 14.6% in the quarter and by 11.7% in the first half of the
year, compared to the corresponding periods last year, reflecting the impact of softer currencies, most
notably the Turkish Lira, the Indian Rupee and the South African Rand.
(2) Gross Profit:
In the second quarter, the strong volume growth alongside somewhat higher prices and an
improved product mix were more than offset by the material depreciation of global currencies and
slightly higher manufacturing costs. Similarly, over the half-year period, the significant currency
weakness and somewhat higher manufacturing costs outweighed the Company’s strong volume
growth.
The widespread currency depreciation resulting largely from the COVID-19 outbreak constrained
gross profit by an estimated $70 million in the quarter. The pandemic impacted H1 gross profit by
an estimated $16 million, in addition to an estimated $109 million in currency headwinds.
(3) Operating Expenses:
Operating expenses include Sales and Marketing, General and Administration and R&D. Total
operating expenses in the second quarter were $217 million (20.9% of sales) and $457 million
(22.7% of sales) in the half-year, compared to $243 million (24.3% of sales) and $492 million (24.5%
of sales) in the corresponding periods last year, respectively.
The Company continues to exercise tight control of its operating expenses, which were also
naturally constrained by the impact of COVID-19, and was able to achieve significant savings in
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ADAMA Ltd. Semi-Annual Report 2020
the quarter and first half, despite the inclusion of the companies acquired during 2019. Operating
expenses in the 2020 periods also benefited from the global currency weakness against the US
dollar.
In recent years, the Company recorded various one-time or non-cash or non-operational items affecting
its reported numbers, including as a result of mergers and acquisitions, which resulted in the inclusion
within its operating expenses of, mainly, the following items:
Amortization of legacy Purchase Price Allocation (PPA) of 2011 acquisition of Adama Solutions,
a wholly-owned subsidiary of the Company (non-cash): Under PRC GAAP, since the first
combined reporting in Q3 2017 following the combination, the Company has inherited the historical
“legacy” amortization charge that ChemChina previously was incurring in respect of its acquisition of
Adama Solutions in 2011. This amortization is done in a linear manner on a quarterly basis, most of
which will be fully amortized by the end of 2020. Its reported financial impact (affecting the Sales &
Marketing expenses) in the first half of 2020 is RMB 133 million (USD 19 million), net of tax, compared
with RMB 129 million (USD 19 million) in the corresponding period in 2019.
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, the Divestment and Transfer
transactions had no net impact on the underlying economic performance of the Company. Its reported
financial impact (affecting the Sales & Marketing expenses) in the first half of 2020 is RMB 107.4
million (USD 15 million), compared with RMB 134 million (USD 20 million) in the corresponding period
in 2019. Such non-cash charges in 2020 are expected to be approximately RMB 215 million (USD
31 million) (down from RMB 242 million (USD 35 million) in 2019), while in the full year of 2021
they are expected to further reduce to RMB 164 million (USD 23 million).
Employee early retirement plan expenses: a one-time provision for the early retirement plan of
employees at the Company’s Israeli manufacturing facilities, made mainly in the first quarter. Its
reported financial impact (affecting the General & Administrative expenses) in the first half of 2020 is
RMB 66 million (USD 9 million).
(4) Financial Expenses:
“Financial Expenses” alone mainly reflect interest payments on corporate bonds and bank loans
as well as foreign exchange gains/losses on the bonds and other monetary assets and liabilities
before the Company carries out any hedging. The impact of Financial Expenses (before hedging)
is RMB 843 million (USD 120 million) for the first half of 2020 compared with RMB 938 million (USD
138 million) for the corresponding period in 2019.
Given the global nature of its operational activities and the composition of its assets and liabilities,
the Company, in the ordinary course of its business, uses foreign currency derivatives (forwards
and options) to hedge the cash flow risks associated with existing monetary assets and liabilities
that may be affected by exchange rate fluctuations. Net gains/losses from hedging of those
positions, are recorded in “Gains/Losses from Changes in Fair Value”, and are then transferred
to “Investment Income” upon realization. The combined impact of Gains/Losses from Changes
17
ADAMA Ltd. Semi-Annual Report 2020
in Fair Value and Investment Income is a net gain of RMB 303 million (USD 43 million) in the first
half of 2020 compared with RMB 348 million (USD 51 million) in the corresponding period in 2019.
The aggregate of Financial Expenses, Gains/Losses from Changes in Fair Value and
Investment Income (hereinafter as “Total Net Financial Expenses and Investment Income”),
which more comprehensively reflects the financial expenses of the Company in supporting its main
business and protecting its monetary assets/liabilities, amounts to RMB 540 million (USD 77 million)
in the first half of 2020 compared with RMB 590 million (USD 87 million) in the corresponding period
in 2019.
The lower Total Net Financial Expenses and Investment Income in the first half largely reflects a
reduction in financing costs on the NIS-denominated, CPI-linked bonds due to a lower CPI in Israel.
(5) Income Tax expenses:
The higher tax expenses in the first half are largely due to the first-quarter impact of the weakening
of the Brazilian Real against the US dollar, which resulted in non-cash tax expenses due to
differences between the functional currency (US dollar) and tax currency (BRL) with respect to the
value of non-monetary assets.
(6) Net income in the second quarter was $31 million (3.0% of sales) and $29 million (1.4% of
sales) in the first half compared to $33 million (3.3% of sales) and $87 million (4.3% of sales)
in the corresponding periods last year. The net income of 2019 also benefited from a land
expropriation. The Company estimates the net impact of the global currency headwinds on Net
Income to be $55 million in the second quarter and $117 million in the half year period, in
addition the impact from COVID-19 impact of an estimated $12 million over the half year period.
(7) Cash Flow:
Operating cash flow of $229 million was generated in the quarter and $173 million was generated
in the first half, compared to $144 million generated and $47 million consumed in the corresponding
periods last year, respectively. The improved operating cash flow in both the quarter and first half
mainly reflects the improvement in working capital during the periods compared to the parallel
periods last year.
Net cash used in investing activities was $62 million in the second quarter and $116 million in the
first half, compared to $44 million and $203 million in the corresponding periods last year,
respectively. The increase in investments in the second quarter reflect capital investments in
infrastructure, including relocations, as well as portfolio expansion, while the higher spend in the
2019 half-year period reflected the acquisition of Bonide in Q1 2019.
Free cash flow of $127 million was generated in the second quarter and $12 million in the first half
compared to $59 million generated and $297 million consumed in the corresponding periods last
year, respectively, reflecting the improvement in operating cash flow in the second quarter of this
year, contrasted with the higher investment levels and acquisitions over the half-year period in 2019.
Major changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
None during the Reporting Period.
18
ADAMA Ltd. Semi-Annual Report 2020
List of the industries, products or regions which exceed 10% of the operating revenues or
operating profits of the Company as at the Reporting Period
Unit: RMB’000
Gross YoY YoY
Operating Cost of YoY
Margin increase/decrease increase/decrease
revenues goods sold increase/decrease
(%) of the operating of the cost of
of the gross margin
revenues goods sold
Classified by industries
Manufacturing
chemical raw
14,121,040 9,904,470 29.86% 3.71% 9.77% -8.19%
materials and
chemical products
Classified by products
Crop Protection 12,834,364 8,855,628 31.00% 4.32% 10.52% -7.26%
Ingredients and
Intermediates 1,286,676 1,048,842 18.48% -2.04% 3.76% -21.41%
Classified by regions
-- -- -- -- -- --
If the scope of the Company's main business was adjusted during the Reporting Period, the Company's annual financial
data of main business according to the adjusted scope at the end of the year is disclosed as follows:
□ Applicable √ Not applicable
Reasons for any over -30% YoY movement of the data above:
□ Applicable √ Not applicable
III. Analysis of Non-Core Business
√ Applicable □ Not applicable
Unit: RMB’000
Proportion in Whether
Amount Reasons
total profit sustained
Mainly from the realization of
Investment income 52,129 11.61% derivatives. No
See explanation of financial expenses.
Mainly from changes in fair value of
Gain/loss from change of
265,510 59.15% derivatives. No
Fair Value
See explanation of financial expenses.
Asset impairment reversal
(25,376) -5.65% - No
(losses)
Gain or loss from disposal of
7,694 1.71% - No
assets
Non-operating income 39,020 8.69% - No
Non-operating loss 13,441 2.99% No
19
ADAMA Ltd. Semi-Annual Report 2020
IV. Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB’000
End of Reporting Period End of same period of last year Change in Reason for
As a percentage As a percentage percentage significant
Amount Amount
of total assets (%) of total assets (%) (%) change
Cash at bank and on hand 6,293,175 12.82% 5,425,392 11.84% 0.98%
Accounts receivable 8,677,392 17.67% 7,674,381 16.75% 0.92%
Inventories 10,618,794 21.63% 10,337,924 22.57% -0.94%
Investment properties 3,609 0.01% 3,933 0.01% 0.00%
Long term equity investments 134,420 0.27% 135,075 0.29% -0.02%
Fixed assets 6,942,743 14.14% 7,167,032 15.65% -1.51%
Construction in progress 998,060 2.03% 534,351 1.17% 0.86%
Short-term loans 1,893,876 3.86% 2,308,286 5.04% -1.18%
Long-term loans 2,224,678 4.53% 673,796 1.47% 3.06%
Derivative financial assets 1,017,302 2.07% 416,991 0.91% 1.16%
Intangible assets 5,543,526 11.29% 5,802,932 12.67% -1.38%
Goodwill 4,627,331 9.43% 4,298,747 9.38% 0.05%
Deferred tax assets 857,313 1.75% 767,928 1.68% 0.07%
Accounts payables 4,773,708 9.72% 4,178,668 9.12% 0.60%
Employee benefits payable 985,533 2.01% 912,354 1.99% 0.02%
Debentures 8,663,773 17.65% 8,152,990 17.80% -0.15%
Derivative financial liabilities 1,065,034 2.17% 688,267 1.50% 0.67%
Other payables 1,342,465 2.73% 1,970,641 4.30% -1.57%
2. Assets and Liabilities Measured at Fair Value
√ Applicable □ Not applicable
Unit: RMB’000
Impairment
Profit/loss on fair Cumulative fair Purchased in
provided in Sold in the
Opening value changes in value changes the Closing
Item the Reporting Others
balance the Reporting charged to Reporting balance
Reporting Period
Period equity Period
Period
Financial assets
Financial assets held
for trading (excluding
29,510 - - - - (16,901) - 12,609
derivative financial
assets)
Derivative financial
assets (including long 508,705 740,120 (79,999) - 359,509 (507,366) - 1,020,969
term)
Other equity
155,062 - 1,030 - - - 156,092
investments
Total financial assets 693,277 740,120 (78,969) - 359,509 (524,267) - 1,189,670
Other 126,812 (2,152) - - - (46,809) 115 77,966
Total of above 820,089 737,968 (78,969) - 359,509 (571,076) 115 1,267,636
Financial liabilities 717,057 350,972 - - - - - 1,068,029
Significant changes in the measurement attributes of the main assets in the Reporting Period
□ Yes √ No
20
ADAMA Ltd. Semi-Annual Report 2020
3. Limitation on Asset Rights as of End of the Reporting Period
At the end of this Reporting Period, restricted assets included RMB 37 million - restricted cash, most of
which as guarantee for bank acceptance bills; and RMB 109 million - other non-current assets, mainly as
guarantee for asset securitization and lawsuits.
V. Investments Made
1. Overall Condition of the Total Investments Made
√ Applicable □ Not applicable
Investment during the Investment during the Same +/-% YoY
Reporting Period (RMB'000) Period Last Year (RMB'000)
41,529,668 25,350,061 63.82%
2. Significant Equity Investments during the Reporting Period
□ Applicable √ Not applicable
3. Significant Non-Equity Investments executed during the Reporting Period
□ Applicable √ Not applicable
4. Financial assets Measured at Fair value
Profit/loss on fair Cumulative fair Purchased in
Initial Sold in the Accumulated
Asset value changes in value changes the Closing Source of
investment Reporting investment
category the Reporting charged to Reporting balance funds
cost Period income
Period equity Period
Financial Internal
(208,352) 389,148 (79,999) 359,509 (507,366) 37,701 (47,060)
derivatives* finance
Internal
Others 184,572 - 1,030 - (16,901) - 168,701
finance
Total (23,780) 389,148 (78,969) 359,509 (524,267) 37,701 121,641
*Financial derivatives include both relevant financial assets and financial liabilities.
5. Financial Investments
(1) Investments in Securities
□ Applicable √ Not applicable
None during the Reporting Period.
21
ADAMA Ltd. Semi-Annual Report 2020
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable Unit: RMB’000
The Relati Related Type Initial Starting date Expiring date Investment Amount Amount Impai Investment Percentage Gain/loss
party on party investment amount at purchased sold during rment amount at of during
that with transac amount beginning of during the the accru end of the investment the
operate the tion or the period Reporting Reporting ed (if period amount Reporting
s the Comp not? Period Period any) divided by Period
invest any net asset
ment at end of
the period
Banks No No Option 2,078,908 26/04/2020 08/09/2020 2,078,908 3,703,626 -5,123,871 No 658,663 2.91% 116,744
Banks No No Forward 19,122,640 13/02/2020 12/11/2020 19,122,640 37,826,042 -34,924,572 No 22,024,110 97.15% 272,403
Total 21,201,548 -- -- 21,201,548 41,529,668 -40,048,443 22,682,773 100.06% 389,147
Source of fund for the investment Internal.
Litigation-related situations (if
N/A
applicable)
Date of disclosure of Board
December 30, 2017
approval (if any)
Date of disclosure of
N/A
Shareholders’ approval (if any)
The aforesaid refers to short term hedging currency transactions made with banks.
Risk and control analysis for the
The Group’s transactions are not traded in the market. The Transactions are between the applicable company in the Group and the
Reporting Period (including but
applicable bank until the expiration date of the transaction, therefore no market risk is involved.
not limited to market risk,
Regarding credit and liquidity risk, the Group is working with large and substantial banks only and with some of them the Group has ISDA
liquidity risk, credit risk,
agreements.
operational risk, legal risk, etc.)
As to operational risk, the Group is working with relevant software, which is its back office for all transactions.
22
ADAMA Ltd. Semi-Annual Report 2020
No legal risk is involved.
The actions taken in order to further reduce risks are:
The relevant subsidiaries have specific guidelines, under the Group’s policy, which were approved by the subsidiaries' financial
statements committee of the board, which specifies, inter alia, the hedging policy, the persons that have the authorization to deal with
hedging, the tools, ranges etc. The only subsidiary that has hedging positions in the Group in the period was Adama Solutions and its
subsidiaries.
The relevant subsidiaries apply management designed procedures and controls, which among other things, monitor the working
process and the controls of the hedging transactions and are quarterly reviewed and annually audited.
The controllers of the relevant subsidiaries are involved in the process and are monitoring the hedging accounting treatment.
Every 2-3 years the internal audit of the relevant subsidiaries’ department is auditing the entire procedure.
Market price or fair value change
The aforesaid refers to short time hedging currency transactions made by the relevant subsidiary with banks.
of investments during the
Segregation of duties as follows:
Reporting Period.
For the fair value evaluation, the relevant subsidiary is usually using external experts. The relevant subsidiary hedges currencies only;
Specific methodology and
the relevant transactions are simple (Options and forwards) for short terms. For fair value methodology see section XI of the Annual
assumptions should be
Report, note IX. Fair Value. The exchange rates are provided by the accounting department of the relevant subsidiary and all other
disclosed in the analysis of fair
parameters are provided by the experts.
value of the investments
Explanation for any significant
changes in accounting policies
N/A
and principles, compared with
last reporting period
Independent Directors’ opinion The derivative investments carried by the Company are for hedging and narrowing down the risk of market fluctuations. The investments
on the investment in derivative respond to the Company’s routine business demands and are in accordance with the relevant laws and regulations. Additionally, the
financial instruments and related Company has adopted Currency Risk Hedging Policy to strengthen the risk management and control which benefit the Company’s ability
risk controls to protect against market risk. The derivative investments do not harm the interests of the Company and its shareholders.
23
ADAMA Ltd. Semi-Annual Report 2020
VI. Sale of Major Assets and Equity Interests
1. Sale of Significant Assets
□ Applicable √ Not applicable
None during the Reporting Period.
2. Sale of Significant Equities
□ Applicable √ Not applicable
VII. Main Controlled and Joint Stock Companies
√ Applicable □ Not applicable
List of the stock-participating companies influencing over 10% of the net profits on the major
subsidiaries and the Company
Unit: RMB’000
Name Type Registered Total Operating Operating
Main services Net assets Net profit
capital assets revenues profit
Development,
manufacturing and
marketing of
agrochemicals,
Adama intermediate
Subsidiary 720,085 41,587,425 16,910,238 13,266,084 485,150 219,858
Solutions materials for other
industries, food
additives and synthetic
aromatic products,
mainly for export.
Subsidiaries acquired or disposed during the Reporting Period
□ Applicable √ Not applicable
*Subsequent to the Reporting Period, on July 1, 2020, the Company (through its wholly owned subsidiary) acquired the
remaining controlling stake (51%) in Alfa Agricultural Supplies S.A (a provider of crop protection and other agriculture-
related inputs) for a non-material amount, resulting in the Company now holding 100% of such company.
VIII. Structured Entities Controlled by the Company
□ Applicable √Not applicable
IX. Performance Forecast for January-September 2020
Warning of possible loss or considerable YoY change in the accumulative net profit made during the
period-beginning to the end of the next reporting period, as well as the reasons:
□ Applicable √ Not applicable
24
ADAMA Ltd. Semi-Annual Report 2020
X. Risks Facing the Company and Countermeasures
The Group believes that it is exposed to several major risk factors, resulting from its economic
environment, the industry and the Group's unique characteristics, as follows (the order below does not
indicate priority):
Exchange rate fluctuations
Although the Company reports its consolidated financial statements in RMB, the Company’s material
subsidiary, Adama Solutions, reports its consolidated financial statements in US dollars, which is its
functional currency, while its operations, sales and purchases of raw materials are carried out in various
currencies. Therefore, fluctuations in the exchange rate of the selling currency against the purchasing
currency impact the Company’s results. The Group's most significant exposures are to the Euro, the
Israeli Shekel and the Brazilian Real. The Group has lesser exposures to other currencies. The
strengthening of the US dollar against other currencies in which the Company operates reduces the dollar
value of such sales and vice versa.
On an annual perspective, approximately 26% of the Group’s sales are to the European market and
therefore the impact of long-term trends on the Euro may affect the Company's results and profitability.
Concentration of currency exposure from foreign currency exchange rate fluctuations against assets,
including inventory of finished products in countries of sale, liabilities and cash flow denominated in
foreign currencies are done constantly. High volatility of the exchange rates of these currencies could
increase the costs of transactions to hedge against currency exposure, thereby increasing the Company's
financing costs.
The Group uses commonly accepted financial instruments to hedge most of its substantial net balance
sheet exposure to any particular currency. Nonetheless, since as part of these operations the Group
hedges against most of its balance sheet exposure and only against part of its economic exposure,
exchange rate volatility might impact the Group’s results and profitability. As of the date of approval of
the financial statements, the Group has hedged most of its balance sheet exposure for 2020 as it is on
the date of publication of this Report.
In addition, as the Company’s product sales depend directly on the cyclical nature of the agricultural
seasons, therefore the Company’s income and its exposure to the various currencies is not evenly
distributed over the year. Countries in the northern hemisphere have similar agricultural seasons and
therefore, in these countries, the highest sales are usually during the first half of the calendar year. In the
southern hemisphere, the seasons are opposite and most of the local sales are carried out during the
second half of the year. During these months, most of the Company's exposure pertains to the Brazilian
Real. The Company has more sales in markets in the northern hemisphere and therefore, the Company's
sales volume during the first half of the year is higher than the sales volume during the second half of the
year.
Exposure to Interest rate, Israel CPI and NIS exchange rate fluctuations
The debentures issued by Adama Solutions, the material subsidiary of the Company, are Israeli Shekel
based and linked to the Israel Consumer Price Index (CPI) and therefore an increase in the CPI and an
appreciation of the shekel rate against the dollar might lead to a significant increase in its financing
expenses. As of the date of approval of the financial statements, Adama Solutions hedged most of its
exposure to these risks on an ongoing basis, through CPI hedging and USD-ILS exchange rate hedging
transactions.
25
ADAMA Ltd. Semi-Annual Report 2020
The Group is exposed to changes in the US dollar LIBOR interest rate as the Group has dollar
denominated liabilities, which bear variable LIBOR interest. The Group prepares a quarterly summary of
its exposure to changes in the LIBOR interest rate and periodically examines hedging the variable interest
rate by converting it to a fixed rate. As of the date of approval of the financial statements, the Group has
not carried out hedging for such exposure, since US dollar interest rates have been relatively stable.
Business operations in emerging markets
The Group conducts business - mainly product sales and raw material procurement - inter alia, in
emerging markets such as Latin America (particularly in Brazil, the largest market, country wise, in which
the Group operates), Eastern Europe, South East Asia and Africa. The Group's activity in emerging
markets is exposed to risks typical of those markets, including: political and regulatory instability; volatile
exchange rates; economic and fiscal instability and frequent revisions of economic legislation; relatively
high inflation and interest rates; terrorism or war; restrictions on import and trade; differing business
cultures; uncertainty as to the ability to enforce contractual and intellectual property rights; foreign
currency controls; governmental price controls; restrictions on the withdrawal of money from the country;
barter deals and potential entry of international competitors and accelerated consolidations by large-scale
competitors in these markets. Developments in these regions may have a significant effect on the Group's
operations. Distress to the economies of these markets could impair the ability of the Group's customers
to purchase its products or the ability to market them at international market prices, as well as harm the
Group's ability to collect customer debts, in a way that could have a significant adverse effect on the
Group's operating results.
The Group’s operations in multiple regions allows for the diversification of such risks and for the reduction
of its dependency on particular economies. In addition, changes in registration requirements or
customers' preferences in developed western countries, which may limit the use of raw materials
purchased from emerging economies, may require redeployment of the Group's procurement
organization, which might negatively affect its profitability for a certain period.
Operating in a competitive market
The crop protection products industry is highly competitive. Currently, the industry's global market is
shared by seven global companies, five of which are originator companies that continue producing and
marketing their original products after their patent expiry (“Originator Companies”) which control 60%
of the global market with annual sales of over USD six billions in the crop protection field (not including
the seeds activity), these being Corteva, Bayer, BASF Syngenta and FMC, which develop, manufacture
and market both patent-protected as well as off-patent products. The Group competes with the original
products with the aim of maintaining and increasing its market share.
The Originator Companies possess resources enabling them to compete aggressively, in the short-to-
medium term, on price and profit margins, so as to protect their market share. Loss of market share or
inability to acquire additional market share from the Originator Companies can affect the Group's position
in the market and adversely affect its financial results. For details regarding the Group’s competitive
advantages see section III - subsection III. Core competitiveness analysis above.
Similarly, the Group also competes in the more decentralized off-patent market, with other off-patent
companies and smaller-scale Originator Companies, which have significantly grown in number in recent
years and are materially changing the face of the crop protection products industry, the majority of whom
have not yet deployed global distribution networks, and are only active locally. These companies price
their products aggressively and at times have lower profit margins than the Group, which may harm the
26
ADAMA Ltd. Semi-Annual Report 2020
volume of the Group's sales and product prices. The Group's ability to maintain its revenues and
profitability from a specific product in the long term is affected by the number of companies producing
and selling comparable off-patent products and the time of their entrance to the relevant market.
Any delay in developing or obtaining registrations for products and/or delayed penetration into markets
and/or growth of competitors that focus on off-patent active ingredients (whether by the expansion of their
product portfolio, granting registrations to other manufacturers (including manufacturers in China and
India) to operate in additional markets, transforming their distribution network to a global scale or
increasing the competition for distribution access), and/or difficulty in purchasing low cost raw materials,
may harm the Group’s sales volumes in this sector, affect its global position and lead to price erosion.
Decline in scope of agricultural activities; exceptional changes in weather conditions
The scope of agricultural activities may be negatively affected by many exogenous factors, such as
extreme weather conditions, natural disasters, a significant decrease in agricultural commodity prices,
government policies and the economic condition of farmers. A decline in the scope of agricultural activities
necessarily would cause a decline in the demand for the Group’s products, erosion of its prices and
collection difficulties, which may have a significant adverse effect on the Group's results. Extreme weather
conditions as well as damages caused by nature have an impact on the demand for the Group's products.
The Group believes that, should a number of such bad seasons occur in succession, without favorable
seasons in the interim, its results may sustain significant harm.
Environmental, health and safety legislation, standards, regulation and exposure
Many aspects of the Group's operations are strictly regulated, including in relation to production and
trading, and particularly in relation to the storage, treatment, manufacturing, transport, usage and disposal
of its products, their ingredients and byproducts, some of which are considered hazardous. The Group's
activities involve hazardous materials. Defective storage or handling of hazardous materials may cause
harm to human life or to the environment in which the Group operates. The regulatory requirements
regarding the environment, health and safety could, inter alia, include soil and groundwater clean-up
requirements; as well as restrictions on the volume and type of emissions the Group is permitted to
release into the air, water and soil.
The regulatory requirements applicable to the Group vary from product to product and from market to
market, and tend to become stricter with time. In recent years, both government authorities and
environmental protection organizations have been applying growing pressure, including through
investigations and indictments as well as increasingly stricter legislative proposals and class action suits
related to companies and products that may potentially pollute the environment. Compliance with the
foregoing legislative and regulatory requirements and protection against such legal actions requires the
Group to spend considerable financial resources (both in terms of substantial ongoing costs and in terms
of material one-time investments) as well as human resources in order to meet mandatory environmental
standards. In some instances, this may result in delaying the introduction of products into new markets
or in adverse effects on the Group’s profitability. In addition, the toughening, material alteration or
revocation of environmental licenses or permits, or their stipulations, or the inability to obtain such
licenses and permits, may significantly affect the Group's ability to operate its production facilities, which
in turn may have a material adverse effect on the financial and business results of the Group. The Group
may be required to bear significant civil liability (including due to class actions) or criminal liability
(including high penalties and/or high compensation payments and/or costs of environmental monitoring
and rehabilitation), resulting from violation of environmental, health and safety regulations, while some of
the existing legislation may impose obligations on the Group for strict liability, regardless of proof of
27
ADAMA Ltd. Semi-Annual Report 2020
negligence or malice.
While the Group invests material sums in adapting its facilities and in constructing special facilities in
accordance with environmental requirements, it is currently unable to assess with any certainty whether
these investments (current and future) and their outcomes may satisfy or meet future requirements,
should these be significantly increased or adjusted. In addition, the Group is unable to predict with any
certainty the extent of future costs and investments it may incur so as to meet the requirements of the
environmental authorities in the relevant countries in which it operates since, inter alia, the Group is
unable to estimate the extent of potential pollutions, their length, the extent of the measures required to
be taken by the Group in handling them, the division of responsibility among other parties and the
amounts recoverable from third parties.
Furthermore, the Group may be the target of bodily injury claims and property damage claims caused by
exposure to hazardous materials, which are predominantly covered under the Group’s insurance policies.
Legislative, standard and regulatory changes in product registration
The majority of the substances and products marketed by the Group require registration at various stages
of their development, production, import, utilization and marketing, and are also subject to strict regulatory
supervision by the regulatory authorities in each country. Compliance with the registration requirements
that vary from country to country and which are becoming more stringent with time, involves significant
time and costs, and rigorous compliance with individual registration requirements for each product.
Noncompliance with these regulatory requirements might materially adversely affect the scope of the
Group’s expenses, cost structure and profit margins, as well as penetration of its products in the relevant
market, and may even lead to suspension of sales of the relevant product, and recall of those products
already sold, or to legal action. Moreover, to the extent new regulatory requirements are imposed on
existing registered products (requiring additional investment or leading to the existing registration's
revocation) and/or the Group is required to compensate another company for its use of the latter's product
registration data, these might amount to significant sums, considerably increasing the Group's costs and
adversely affecting its results and reputation. In recent years the industry is suffering from revocation of
registration for many products around the world. This trend is particularly evident in European countries
as well as in other countries, including India.
Nevertheless, the Group believes that, in countries where the Group maintains a competitive edge, any
toughening of registration requirements may actually increase this edge, since this will make it difficult for
its competitors to penetrate the same market, whereas in countries in which the Group possesses a small
market share, if any, such toughening may make further penetration of the Group's products into that
market more difficult.
Product liability
Product and producer liability present a risk factor to the Group. Regardless of their prospects or actual
results, product liability lawsuits might involve considerable costs as well as tarnish the Group's reputation,
thus impacting its profits. The Group has a third-party and defective product liability insurance cover.
However, there is no certainty that the scope of insurance cover is sufficient. Any future product liability
lawsuit or series of lawsuits could materially affect the Group’s operations and results, should the Group
lose the lawsuit or should its insurance cover not suffice or apply in a particular instance. In addition,
while currently the Group has not encountered any difficulty renewing such insurance policy, it is possible
that it will encounter future difficulties in renewing an insurance policy for third party liability and defective
products on terms acceptable to the Group.
28
ADAMA Ltd. Semi-Annual Report 2020
Successful market penetration and product diversification
The Group’s growth and profit margins are affected, inter alia, by the extent of its success in developing
differentiated products and obtaining registrations for them, so as to enable it to gain market share at the
expense of its competitors. Usually, being the first to launch a certain off-patent product affords the Group
continuing advantage, even after other competitors penetrate the same market. Thus, the Group's
revenues and profit margins from a certain product could be materially affected by its ability to launch
such product ahead of the launch of a comparable product by its competitors.
Should new products fail to meet registration requirements in the different countries or should it take a
long period of time to obtain such registrations, the Group's ability to successfully introduce a new product
to the market in question in the future would be affected, since entry into the market prior to other
competitors is important for successful market penetration. Furthermore, successful market penetration
involves, inter alia, product diversification in order to suit each market's changing needs. Therefore, if the
Group fails to adapt its product mix by developing new products and obtaining the required regulatory
approvals, its future ability to penetrate that market and to maintain its existing market share could be
affected. Failure to introduce new products to given markets and meet Group objectives (given the
considerable time and resources invested in their development and registration) might affect the sales of
the product in question in the relevant market, the Group’s results and margins.
Intellectual property rights of the Group and of third parties
The Group's ability to develop off-patent products is dependent, inter alia, on its ability to oppose patents
of an Originator Company or other third parties, or to develop products that do not otherwise infringe
intellectual property rights in a manner that may involve significant legal and other costs. Originator
Companies tend to vigorously defend their products and may attempt to delay the launch of competing
off-patent products by registering patents on slightly different versions of products for which the original
patent protection is about to expire or has expired, with the aim of competing against the off-patent
versions of the original product. The Originator Companies may also change the branding and marketing
method of their products. Such actions may increase the Group's costs and the risk it entails, and harm
or even prevent its ability to launch new products.
The Group is also exposed to legal claims that its products or production processes infringe on third-party
intellectual property rights. Such claims may involve time, costs, substantial damages and management
resources, impair the value of the Group's brands and its sales and adversely affect its results. To the
best of the Group’s current knowledge, such lawsuits that were concluded involved non-material amounts.
Furthermore, the Group protects its brands and trade secrets with patents, trademarks and other methods
of intellectual property protection, however these protective means may not be sufficient for safeguarding
its intellectual property. Any unlawful or other unauthorized use of the Group's intellectual property rights
could adversely affect the value of its intellectual property and goodwill. In addition, the Group may be
required to take legal action involving financial costs and resources to safeguard its intellectual property
rights.
Fluctuations in raw material inputs and prices, and in sales costs
Significant percentage of the cost of the Groups’ sales derives from raw material costs. Hence, significant
increases or decreases in raw material cost affect the cost of goods sold, which is generally expressed a
number of months following such cost fluctuation. Most of the Group's raw materials are distant
derivatives of oil prices and therefore, extreme increase or decrease in oil prices may affect the costs of
raw materials, yet only partially.
29
ADAMA Ltd. Semi-Annual Report 2020
To reduce exposure to fluctuations in the prices of raw materials, the Group customarily engages in long-
term purchase contracts for key raw materials, wherever possible. Similarly, the Group acts to adjust its
sales prices, if possible, to reflect the changes in the costs of raw materials.
As of the date of approval of the financial statements, the Group has not engaged in any hedging
transactions against increases in oil and other raw material costs.
Exposure due to recent developments in the genetically modified seeds market
Any further significant development in the market of genetically modified seeds for agricultural crops,
including as a result of regulatory changes in certain countries currently prohibiting the use of genetically
modified seeds, and/or any significant increase in the sales of genetically modified seeds or Glyphosate
and/or to the extent new crop protection products are developed for further crops that would be widely
used (substituting traditional products), will affect demand for crop protection products, requiring the
Group to respond by adapting its product portfolio to the new demand structure. Consequently, to the
extent that the Group fails to adapt its product mix accordingly, this may reduce demand for its products,
erode their sales price and necessarily affect the Group’s results and market share.
Nevertheless, the fact that the Group itself markets Glyphosate acts to mitigate this exposure (albeit only
in terms of marketing margins).
In addition, natural and/or biological substances that attack weeds, pests and diseases are potential
alternatives for the Company’s products, though as of the date of the report, their efficiency is limited and
they are commercialized in a relatively small volumes.
Operational risks
The Group’s operations, including its manufacturing activities, rely, inter alia, on state-of-the-art computer
systems. The Group continually invests in upgrading and protecting these systems. Any unexpected
failure of these systems, as well as the integration of new systems, could involve substantial costs and
adversely affect the Group's operations until completion of the repair or integration. The potential
occurrence of a substantial failure that cannot be repaired within a reasonable time frame may also affect
the Group's operations and its results. Currently, the Group has a property and loss-of-profit insurance
policy.
Data protection and cyber
During its activity, the Group may be exposed to risks and threats, related to the stability of its information
technologies systems, data protection and cyber, which could appear in many different forms (such as
service denial, misleading employees, malfunction, encryption or data erasing and other cyber-attacks
via E-mail or malicious software). An attack on such computerized systems, mainly network based
systems may cause the group material damages and expenses and even partial suspension and
disruption of their proper functioning. In order to minimize the abovementioned risks, the group invests
resources in its technological strength and in proper protection of its systems.
Raw material supply and/or shipping and port services disruptions
Lack of raw materials or other inputs utilized in the manufacture of Group products may prevent the Group
from supplying its products or significantly increase production costs. Moreover, the Group imports raw
materials to its production facilities worldwide, from where it exports the products to its subsidiaries
around the world for formulation and/or commercialization purposes. Disruptions in the supply of raw
materials from regular suppliers may adversely affect operations until an alternative supplier is engaged.
If any of the Group's suppliers are unable to supply raw materials for a prolonged period, including due
to ongoing disruptions and/or prolonged strikes and/or infrastructure defects in the operating of a relevant
30
ADAMA Ltd. Semi-Annual Report 2020
port, and the Group is unable to engage with an alternative supplier at similar terms and in accordance
with product registration requirements, this may adversely affect the Group's results, significantly affect
its ability to obtain raw materials in general, or obtain them at reasonable prices, as well as limit its ability
to supply products and/or meet customer supply deadlines. These might negatively affect the Group, its
finances and operating results. In order to reduce this risk, it is the Group's practice to occasionally adjust
the volume of its product inventories and at times utilize air freight.
Failed mergers and acquisitions; difficulties in integrating acquired operations
The Group's strategy includes growth through mergers, acquisitions, investments and collaborations
designed, in a calculated manner, to expand its product portfolio and deepen its presence in certain
geographical markets.
Growth through mergers and acquisitions requires assimilation of acquired operations and their effective
integration in the Group, including realization of certain forecasts, profitability, market conditions and
competition.
Failure to successfully implement the above and/or non-realization of the said forecasts may result in not
achieving the additional value forecasted, losing customers, exposure to unexpected liabilities, reduced
value of the intangible assets included in the merger or acquisition as well as the loss of professional and
skilled human resources.
Production concentration in limited plants
A large portion of the Group’s production operations is concentrated in a small number of locations.
Natural disasters, hostilities, labor disputes, substantial operational malfunction or any other material
damage might significantly affect Group operations, as a result of the difficulty, the time and investment
required for relocating the production operation or any other activity.
International taxation
Most of the Group’s sales are global, through its consolidated subsidiaries worldwide. These individual
companies are assessed in accordance with the tax laws effective in each respective location. The
Group’s effective tax rate could be significantly affected by different classification or attribution of the
profits arise from the share of value earned of the companies in the Group in the various countries, as
shall be recognized in each tax jurisdiction; changes in the characteristics (including regarding the
location of control and management) of these companies; changes in the breakdown of the Group's
profits into regions where differing tax rates apply; changes in statutory tax rates and other legislative
changes; changes in assessment of the Group's deferred tax assets or deferred tax liabilities; changes
in determining the areas in which the Group is taxed; and potential changes in the Group's organizational
structure.
Changes in tax regulations and the manner of their implementation, including with regard to the
implementation of BEPS, may lead to a substantial increase in the Group's applicable tax rates and have
a material adverse effect on its financial state, results and cash flows.
The Group’s Financial Statements do not include a material provision for exposure for international
taxation, as stated above.
Risks arising from the Group’s debt
The Group finances its business operations by means of its own equity and loans from external sources
(primarily debentures issued by Adama Solutions and bank credit). The Group's main source for servicing
the debt and its operating expenses is by means of the profits from the Group companies’ operations.
Restrictions applying to the Group companies regarding distribution of dividends to the Group, or the tax
31
ADAMA Ltd. Semi-Annual Report 2020
rate applicable on these dividends, may affect the Group's ability to finance its operations and service its
debt.
In addition, the Group's Finance Documents require it to meet certain Financial Covenants. Failure to
meet these covenants due to an exogenous event or non-materialization of Group forecasts, and insofar
as the financing parties refuse to extend or update these Financial Covenants as per the Group’s
capabilities, may lead the financing parties to demand the immediate payment of these liabilities (or part
thereof).
Exposure to customer credit risks
The Group’s sales to customers usually involve customer credit as is customary in each market. A portion
of these credit lines are insured, while the remainder are exposed to risk, particularly during economic
slowdowns in the relevant markets. The Group’s aggregate credit, however, is diversified among many
customers in multiple countries, mitigating this risk. In addition, in certain regions, particularly in South
America, credit days are particularly long (compared to those extended to customers in regions such as
Europe), and on occasion, inter alia, owing to agricultural seasons or economic downturns in those
countries, the Group may encounter difficulty in collection of customer debts, with the collection period
being extended over several years.
Generally, such issues arise more often in developing countries where the Group is less familiar with its
customers, the collaterals might be in double until actual repayment and the insurance cover of these
customers is likely to be limited. Credit default by any of the customers may negatively impact the Group's
cash flow and financial results.
The Group’s working capital and cash flow needs
Similar to other companies operating in the crop protection industry, the Group has substantial cash flow
and working capital requirements in the ordinary course of operations. In view of the Group's growth and
considering its primary growth regions, the Group’s broad product portfolio and the Group’s investments
in manufacturing infrastructures, the Group has significant financing and investment needs. The Group
acts continually to improve the state and management of its working capital. While currently the Group is
in compliance with all its financial covenants, significant deterioration of its operating results may in the
future lead the Group to fail to comply with its financial covenants and fail to meet its financial needs. As
a result, the Group's ability to meet its goals and growth plans, and its ability to meet its financial
obligations, may be harmed.
Contagious disease outbreak
Outbreak of a contagious disease, or other adverse public health developments, in territories where
significant production activity is taking place or from which raw materials are supplied to a significant
extent, might have a material adverse effect on the Company’s activity, such that the Company might
encounter difficulties with procurement of raw materials and intermediates, experience a certain decrease
of activity within its production facilities due to governmental instructions, and to be constrained with
respect to its logistics and supply lines. In addition, the Company sales could be potentially impacted by
temporary demand’s decrease of its products, as well as by temporary disruption of the Company’s ability
to sell and distribute products as mentioned above.
32
ADAMA Ltd. Semi-Annual Report 2020
Section V - Significant Events
I. Annual and Special Meetings of Shareholders Convened during the Reporting
Period
1. Meetings of Shareholders Convened during the Reporting Period
Investor
Index to disclosed
Meeting Type participation Convened date Disclosure date
information
ratio
Announcement of the
Resolutions of the 1st
1st Interim
Interim Shareholders
Shareholders Interim
75.55% March 30, 2020 March 31, 2020 Meeting in 2020
Meeting in 2020
(announcement no. 2020-
17, www.cninfo.com.cn )
Announcement of the
Resolutions of the 2nd
2nd Interim
Interim Shareholders
Shareholders Interim
78.46% April 9, 2020 April 10, 2020 Meeting in 2020
Meeting in 2020
(announcement no. 2020-
20, www.cninfo.com.cn )
Announcement of the
Resolutions of 2019
2019 Annual
Annual General Meeting
General Meeting Annual 76.22% May 20, 2020 May 21, 2020
(announcement no. 2020-
31, www.cninfo.com.cn )
2. Special Meetings of Shareholders Convened at Request of Preference Shareholders with
Resumed Voting Rights
□ Applicable √ Not applicable
II. Basic Information on the Profit Distribution and Converting Capital Reserve into
Share Capital in the Reporting Period
□ Applicable √ Not applicable
For the Reporting Period, the Company does not plan to distribute cash dividends or bonus shares or
convert capital reserve into share capital.
III. Commitments completed by the Company, the shareholders, the actual
controllers, the purchasers, or other related parties during the Reporting Period,
and those which should have been completed failed to be fulfilled during the
Reporting Period
□Applicable √ Not applicable
33
ADAMA Ltd. Semi-Annual Report 2020
Note 1: No commitment that should have been completed during the Reporting Period failed to be timely fulfilled. For
details of the on-going commitments, please refer to the 2019 Annual Report published on the website www.cninfo.com.cn
on April 28, 2020.
Note 2: On May 20, 2020, the 2019 Annual General Meeting reviewed and approved the Proposals relating to the
performance compensation. On July 13, 2020, Syngenta Group timely fulfilled its commitment and completed the
performance compensation. For details, please refer to Announcement on the Completion of Buyback and Cancellation of
the Compensation Shares (announcement no.2020-36) published on the website www.cninfo.com.cn.
Note 3: On August 3, 2020, 1,708,450,759 restricted shares held by Syngenta Group issued as part of the 2017 Major
Assets Restructuring were released for public trading. For details, please refer to Announcement on the Release of
Restricted Shares issued for the Major Assets Restructuring (announcement no.2020-38) published on the website
www.cninfo.com.cn.
IV. Engagement and Disengagement of CPA Firm
Has the semi-annual financial report been audited?
□ Yes √ No
This Semi-Annual Report is unaudited.
V. Explanations Given by the Board of Directors and Board of Supervisors
Regarding “Modified Auditor’s Report” Issued by CPA Firm for the Reporting
Period
□ Applicable √ Not applicable
VI. Explanations Given by Board of Directors Regarding “Modified Auditor’s Report”
Issued for Last Year
□ Applicable √ Not applicable
VII. Bankruptcy and Restructuring
□ Applicable √ Not applicable
None during the Reporting Period.
VIII. Litigation and Arbitration Matters
Material litigations or arbitrations:
□ Applicable √ Not applicable
None during the Reporting Period.
Other litigations or arbitrations:
□ Applicable √ Not applicable
No significant litigation or arbitrations during the Reporting Period.
34
ADAMA Ltd. Semi-Annual Report 2020
IX. Enquiry from Media
□ Applicable √ Not applicable
During the Reporting Period, no matter of the Company was widely enquired by the media.
X. Punishment and Rectification
□Applicable √Not applicable
Status of Rectification
□ Applicable √ Not applicable
XI. Integrity of the Company, its controlling shareholders and actual controller
□ Applicable √ Not applicable
XII. Stock Incentive Plans, ESOP or Other employee Incentives
□ Applicable √ Not applicable
To the date of the report, the Company does not have stock incentive plans, ESOP or other staff incentives.
It shall be noted, that the Company’s subsidiary, Adama Solutions, approved in December 2017 and in
February 2019 long-term incentive plans and granted long-term cash rewards to executive officers and
employees, which are based on the performance of the Company's shares (phantom cash incentives). In
September 2019, the cash rewards granted according to the 2017 long-term incentive plan were replaced
by cash rewards granted according to an approved replacement plan. Adama Solutions has further
adopted an incentive plan linked to the increase in the Syngenta Group EBITDA.
XIII. Material Related-Party Transactions
1. Related-Party Transactions in the ordinary course of business
□Applicable √ Not applicable
(1) The Company was not involved in any material related-party transactions during the Reporting
Period.
(2) Item X of Section XI “Financial Statements” of this Report sets out the related parties and the
related-party transactions of the Company.
2. Related-Party Transactions arising from Asset acquisition or sale
□ Applicable √ Not applicable
The Company was not involved in any related-party transactions arising from asset acquisition or sale
during the Reporting Period.
3. Related-Party Transactions with Joint Investments
□ Applicable √ Not applicable
The Company was not involved in any related-party transaction with joint investments during the
35
ADAMA Ltd. Semi-Annual Report 2020
Reporting Period.
4. Credits and Liabilities with Related Parties
√ Applicable □ Not applicable
Whether non-operating credits and liabilities with related parties exist or not?
□ Yes √ No
The Company was not involved in any non-operating credit and liability with related parties in the
Reporting Period.
5. Other material related-party transactions
√Applicable □ Not applicable
The 2019 Annual Shareholders Meeting approved the expected related-party transactions in the
ordinary business course of the Company in 2020. Please refer to Item X of Section XI “Financial
Statements” of this Report for details of the related-party transactions in the ordinary business course.
The website to disclose the interim announcements on significant related-party transactions:
Disclosure date of the Website to disclose the
Name of the interim announcement
interim announcement interim announcement
Amended Announcement on Expected Related-Party
Transactions in the Ordinary Course of Business in 2020 May 12, 2020 www.cninfo.com.cn
(announcement no. 2019-30)
XIV. Inadequate use of Company’s capital by the controlling shareholder or its
related parties for non-operating purposes
□ Applicable √ Not applicable
No such situation occurred during the Reporting Period.
XV. Particulars regarding material contracts and execution thereof
1. Particulars about trusteeship, Contract and Lease
(1) Trusteeship
□ Applicable √ Not applicable
There was no trusteeship of the Company in the Reporting Period.
(2) Contract operation
□ Applicable √ Not applicable
There was no contract operation of the Company in the Reporting Period.
(3) Lease
□Applicable√ Not applicable
36
ADAMA Ltd. Semi-Annual Report 2020
There is no major lease in the Reporting Period.
2. Significant Guarantees
(1) Details of guarantees
√Applicable □ Not applicable
Unless otherwise specified, the unit hereunder is RMB ‘0000
Guarantees provided by the Company in favor of third parties (excluding subsidiaries)
Guarantee
Disclosure Planned Actual Actual for a
Guaranteed Type of Period of expired
date of the guarantee occurrence guarantee related
party guarantee guarantee or not
announcement amount date amount party or
not
-- -- -- -- -- -- -- -- --
Total guarantee line approved in Total amount of the occurred
favor of third parties (excluding guarantee in favor of third parties
0 0
subsidiaries) during the reporting (excluding subsidiaries) during the
period (A1) reporting period (A2)
Aggregated guarantee line in favor
Total guarantee balance in favor of
of third parties (excluding
third parties (excluding
subsidiaries) that has been 5,000 0
subsidiaries) by the end of the
approved by the end of the
reporting period (A4)
reporting period (A3)
Guarantees provided by the Company in favor of its subsidiaries
Disclosur Guarantee
e date of Planned Actual Actual for a
Type of Period of expired
Guaranteed party the guarantee occurrence guarantee related
guarantee guarantee or not
announce amount date amount party or
ment not
Two years
joint and
ADAMA Anpon May 18, November 13, after the
80,000 5,000 several No No
(Jiangsu) Ltd. 2019 2019 loan
liability
matures
Two years
Joint liability
October 10, after the
4,000 and several No No
2019 loan
liability
ADAMA Anpon August 22, matures
63,000
(Jiangsu) Ltd. 2019 Three years
joint and
November 19, after the
5,000 several No No
2019 loan
liability
matures
37
ADAMA Ltd. Semi-Annual Report 2020
Three years
joint and
December 10, after the
5,000 several No No
2019 loan
liability
matures
Three years
joint and
December 26, after the
5,000 several No No
2019 loan
liability
matures
Two years
Joint liability
December 26, after the
2,000 and several No No
2019 loan
liability
matures
Two years
Joint liability
after the
April 1, 2020 6,400 and several No No
loan
liability
matures
Two years
Joint liability
after the
April 1, 2020 2,000 and several No No
loan
liability
matures
Three years Yes. The
Joint liability
after the loan had
April 2, 2020 5,000 and several No
loan been
liability
matures repaid.
Three years
Joint liability
after the
May 19, 2020 3,000 and several No No
ADAMA Anpon February loan
130,900 liability
(Jiangsu) Ltd. 27, 2020 matures
Three years
Joint liability
after the
May 27, 2020 5,000 and several No No
loan
liability
matures
Two years
Joint liability
after the
June 16, 2020 2,000 and several No No
loan
liability
matures
Three years
Joint liability
after the
June 29, 2020 5,000 and several No No
loan
liability
matures
Total guarantee line approved 130,900 Total amount of the occurred 28,400
38
ADAMA Ltd. Semi-Annual Report 2020
in favor of the subsidiaries guarantee in favor of the
during the reporting period subsidiaries during the reporting
(B1) period (B2)
Aggregated guarantee line
that has been approved in Total guarantee balance in favor
favor of the subsidiaries by 273,900 of the subsidiaries by the end of 49,400
the end of the reporting the reporting period (B4)
period (B3)
Guarantees provided by subsidiaries in favor of subsidiaries (USD ’0000)
Disclosur Guarantee
e date of Planned Actual Actual for a
Type of Period of expired
Guaranteed party the guarantee occurrence guarantee related
guarantee guarantee or not
announce amount date amount party or
ment not
Generally 7
years
joint and
Control Solutions, October October 30, (subject to
1,300 1,300 several
Inc. 31, 2018 2018 the No No
liability
overseas
laws)
The loan
term (5
years) and
any
joint and
Control Solutions, January applicable
4,000 January 9, 2019 4,000 several
Inc. 10, 2019 statute of No No
liability
limitations
period
(generally 7
years).
The guarantee
existed before
the company
joint and
Not was Valid until
ADAMA Brazil 27,399.55 5,329.19 several No No
applicable consolidated cancelled
liability
into the financial
statements of
the Company.
The guarantee
joint and
Not existed before Valid until
9,019.2 1,581 several No No
Adama India Private applicable the company cancelled
liability
Ltd. was
39
ADAMA Ltd. Semi-Annual Report 2020
consolidated
into the financial
statements of
the Company.
The guarantee
existed before
ADAMA (Beijing) the company
joint and
Agricultural Not was Valid until
2,500 0 several No No
Technology applicable consolidated cancellation
liability
Company Limited into the financial
statements of
the Company.
ADAMA Turkey The guarantee
Tarm Sanayi ve existed before
TRY
Ticaret Limited the company
151,320k joint and
irketi Not was Valid until
3,850 (approxima several No No
applicable consolidated cancelled
tely USD liability
into the financial
2,200.19)
statements of
the Company.
Adama Makhteshim Not The guarantee
applicable unlimited existed before
the company
joint and
was Valid until
15,146.7 several No No
consolidated cancelled
liability
into the financial
statements of
the Company.
Adama Agan Not unlimited The guarantee
applicable existed before
the company
joint and
was Valid until
20,077.9 several No No
consolidated cancelled
liability
into the financial
statements of
the Company.
The guarantee
existed before
ADAMA Agricultural the company joint and
Not Valid until
Solutions UK Ltd. 365.64 was 0 several
applicable cancelled No No
consolidated liability
into the financial
statements of
40
ADAMA Ltd. Semi-Annual Report 2020
the Company.
The guarantee
existed before
ADAMA CELSIUS
Not the company
BV, Curacao joint and
was Valid until
branch, & ADAMA applicable 4,500 196.27 several
consolidated cancelled No No
Fahrenheit BV, liability
into the financial
Curacao Branch
statements of
the Company.
Not 2,500 The guarantee
applicable existed before
the company
ADAMA Ukraine joint and
was Valid until
LLC 1,491 several
consolidated cancelled No No
liability
into the financial
statements of
the Company.
Total guarantee line approved Total amount of the guarantee
USD 51,322.25
in favor of the subsidiaries in favor of the subsidiaries
-- (approximately RMB
during the reporting period occurred during the reporting
363,335.87)
(C1) period (C2)
Aggregated guarantee line
Total guarantee balance in
that has been approved in USD USD 51,322.25
favor of the subsidiaries by the
favor of the subsidiaries by 55,434.39(approximately (approximately RMB
end of the reporting period
the end of the reporting RMB 386,721.39) 363,335.87)
(C4)
period (C3)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total guarantee line approved Total actual occurred amount
during the reporting period 130,900 of guarantee during the 391,735.87
(A1+B1+C1) reporting period (A2+B2+C2)
Total guarantee line that has
Total actual guarantee balance
been approved at the end of
665,621.39 at the end of the reporting 412,735.87
the reporting period
period (A4+B4+C4)
(A3+B3+C3)
Proportion of total guarantee amount (A4+B4+C4) to the
18.21%
net assets of the Company
Of which:
The balance of the guarantee provided in favor of the
0
controlling shareholder and related party.
Amount of debt guarantee provided for the guaranteed USD 24,167.08
party whose asset-liability ratio is not less than 70% (approximately RMB 168,589.55)
41
ADAMA Ltd. Semi-Annual Report 2020
directly or indirectly (E)
The amount of the guarantee that exceeds 50% of the
0
net assets
USD 24,167.08
Total amount of the above three guarantees (D+E+F)
(approximately RMB 168,589.55)
As for undue guarantee, liability to guarantee has
happened or joint liquidated liability may be undertaken --
during this Reporting Period (if existing)
Regulated procedures are violated to offer guarantee (if
--
existing)
(2) Illegal guarantee
□ Applicable √ Not applicable
Non during the Reporting Period.
3. Wealth management entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other Significant Contracts
□ Applicable √ Not applicable
Non during the Reporting Period.
42
ADAMA Ltd. Semi-Annual Report 2020
XVI. Social Responsibilities
1. Environmental Situation
Is the Company listed as a “Key Polluting Entity” by the environmental protection agencies?
Yes
Main Number
Layout of Total amount Total
Company pollutants Way of of
emission Concentration Pollution standards applied emitted/ amount Exceeding limit
name and special emission emission
points discharged approved
pollutants points
(1) for the old site: Comprehensive
Standard on Discharge of Waste
Water (GB8978-2002) ，
Centralized
COD<100mg/L;
ADAMA COD Continuous 2 discharge Within limit 12.868 391.3 No
(2) for the new site: Discharge Standards
point
for Pollutants from Urban Sewage
Treatment Plant (GB 18918 – 2002),
COD <50mg/L
(1) for the old site: Comprehensive
Standard on Discharge of Waste
Water (GB8978-2002), ammonia
Centralized
Ammonia nitrogen<15mg/L;
ADAMA Continuous 2 discharge Within limit 0.619 50 No
nitrogen (2) for the new site: Discharge
point
Standards for Pollutants from Urban
Sewage Treatment Plant (GB 18918
– 2002), ammonia nitrogen<8mg/L;
for the old site & new site: Discharge
Total Centralized
Standards for Pollutants from Urban
ADAMA Phosphorou Continuous 2 Discharge Within Limit N/A N/A No
Sewage Treatment Plant (GB 18918 –
s Point
2002), total phosphorous <0.5mg/L
43
ADAMA Ltd. Semi-Annual Report 2020
Main Number
Layout of Total amount Total
Company pollutants Way of of
emission Concentration Pollution standards applied emitted/ amount Exceeding limit
name and special emission emission
points discharged approved
pollutants points
Standard on Air Pollution of Power Plant
ADAMA NOx Continuous 1 Power plant Within limit 7.73 564.7 No
（GB13223-2011）NOx <200mg/m
Standard on Air Pollution of Power Plant
ADAMA SO2 Continuous 1 Power plant Within limit 0.841 380 No
（GB13223-2011）SO2<200mg/m3
Standard on Air Pollution of Power Plant
Fume and
ADAMA Continuous 1 Power plant Within limit （GB13223-2011）Fume and dust 0.192 80 No
dust
<30mg/m3
Centralized Comprehensive Standard on Discharge
Anpon COD Continuous 3 Discharge Within Limit of Waste Water (GB8978-2002)， 196 292.88 None
Point COD<500mg/L
Anpon Water Quality Standard for Sewage
Centralized
Ammonia Discharged into Urban Sewerage（GBT
Continuous 3 Discharge Within Limit 2.26 30.117 None
Nitrogen 31962-2015）, Ammonia Nitrogen
Point
<45mg/L
Anpon For Anpon: Water Quality Standard for
Sewage Discharged into Urban
Total Centralized Sewerage （GBT 31962-2015）, total
Phosphorou Continuous 3 Discharge Within Limit phosphorous <8mg/L; N/A N/A None
s Point For Anpon’s branch Maidao: Agreement
on Waste Water Discharge, total
phosphorous <3mg/L;
Anpon NOx Continuous 1 Power Within Limit Standard on Air Pollution of Power Plant 8.9428 447.366 None
44
ADAMA Ltd. Semi-Annual Report 2020
Main Number
Layout of Total amount Total
Company pollutants Way of of
emission Concentration Pollution standards applied emitted/ amount Exceeding limit
name and special emission emission
points discharged approved
pollutants points
Plant （GB13223-2011）NOx <100mg/m3
Anpon Power Standard on Air Pollution of Power Plant
SO2 Continuous 1 Within Limit 0.977 447.366 None
Plant （GB13223-2011）SO2<50mg/m3
Anpon Standard on Air Pollution of Power Plant
Fume and Power
Continuous 1 Within Limit （GB13223-2011）Fume and 1.689 67.105 None
Dust Plant
Dust<20mg/m3
45
ADAMA Ltd. Semi-Annual Report 2020
(1) Development and Operation of Environmental Facilities
1. Development and Operation of Waste Water Facilities
There are waste water treatment facilities in both the Company and Anpon with the designed
capacity of 37,400 tons/day and 11,000 tons/day, respectively. As all the facilities are
operating well, COD, ammonia nitrogen, and total phosphorous discharged after the
treatment are within the limit.
2. Development and Operation of Waste Gas Facilities
The exhaust treatment facilities in the coal-based power plants of the Company and Anpon
are running well. Therefore, SO2, Nitrogen oxide and fume and dust discharged after the
treatment are within the limit.
3. The Company and Anpon disclose production and pollution information according the Interim
Measures on Environmental Information Disclosure and transfers information of main waste
water and air pollutants to the information platform of the local environmental bureau on a
daily basis.
(2) EIA of construction projects and other environmental administrative permits
No.
(3) Contingency plan of environmental accidents
The Company and its relevant subsidiaries have formulated the Contingency Plan for Environmental
Emergencies according to their production facilities and industry features, and then submitted files
to the local environmental protection authorities as record.
(4) Environment self-monitoring plan
the Company attributes great importance to protecting the environment, out of a sense of
responsibility to society and the environment and strives to meet the relevant regulatory requirements
and to even go beyond mere compliance, engaging in constant dialogue with stakeholders, including
the authorities and the community.
In order to improve the environmental management, track the discharge of various pollutants,
evaluate the impact on the surrounding environment, strengthen the discharge management of
pollutants in the production process, accept the supervision and inspection of environmental
authorities and provide reference for pollution prevention and control, the company and its subsidiary
Anpon have formulated a self-monitoring plan, which conducts regular tests in strict accordance with
the requirements.
The major monitored indicators and frequency of the Company and Anpon are as the following:
1. Monitored Indicators
Waste water: COD, NH3-N, PH, SS, Petroleum, TP.
Air Pollutant: SO2, Nitrogen oxide, Fume and Dust.
Noise: Noise at the Site Border
2. Frequency
Boiler emission and waste water discharged from the centralized point: continuous auto
46
ADAMA Ltd. Semi-Annual Report 2020
monitoring
Manual sampling: SS, Petroleum, TP, once a month.
Noise: once a quarter.
The Company continually examines the implications of the environmental laws, taking actions to prevent
or mitigate the environmental risks and to reduce the environmental effects that may result from its
activities, and invests extensive resources to fulfill those legal provisions that are, and are anticipated to,
affect it. The Company’s plants are subject to atmospheric emissions regulations, whether by virtue of
the stipulations provided in the business licenses or under the applicable law. Hazardous materials are
stored and utilized in the Company's plants, together with infrastructures and facilities containing fuels
and hazardous materials. The Company takes actions to prevent soil and water pollution by these
materials and treats them, if revealed. The Company’s plants conduct various soil surveys, risk surveys
and tests with regard to treatment of the soil or ground water at the plants.
The Company intends to continue investing in environmental protection, to the extent required and
beyond this, whether on its own volition or in compliance with contractual commitments, regulatory or
legal standards relating to environmental protection, so as to realize its best available policy and comply
with any legal requirements.
As part of its policy of ecological process improvement, the Company also invests in remediation,
changes in production processes, establishment of sewage facilities, as well as in byproduct storage and
recycling.
(5) Other environmental information that should be disclosed
No.
(6) Other related information on environmental protection
No.
2. Perform the social responsibility of targeted poverty alleviation
(1) Targeted Poverty Alleviation Planning
The Company actively implements targeted poverty alleviation according to relevant instructions from
Jingzhou Municipal Leading Group and ChemChina on Poverty Alleviation.
(2) Half-year Overview
During the Reporting Period, the trade union of the Company actively responded to the call of Hubei
Provincial Federation of trade unions and Jingzhou Municipal Federation of trade unions, and purchased
RMB 229,950 of poverty relief materials from Xuanen County of Enshi City.
47
ADAMA Ltd. Semi-Annual Report 2020
(3) Results of Targeted Poverty Alleviation
Measurement
Indicator Number/Progress
unit
I. General condition RMB'0,000 22.995
Of which: 1. Capital RMB'0,000 ——
2. Material RMB'0,000 22.995
II. Itemized investment —— ——
1. Out of poverty by industrial development —— ——
Of which: 1.1 type of industrial development out of poverty ——
1.2 number of industrial development out of poverty Unit
1.3 investment amount of industrial development out of
RMB'0,000
poverty
1.4 the number of people out of poverty who were
Number
helped to establish card for archives
2. Out of poverty by transferring employment —— ——
3. Out of poverty by relocating —— ——
4. Out of poverty by education —— ——
5. Out of poverty by improving health —— ——
6. Out of poverty by protecting ecological environment —— ——
7. Subsidy for the poorest —— ——
8. Social poverty alleviation RMB'0,000 22.995
9. Other items —— ——
III. Received awards (contents and rank) —— ——
(4) Follow-up Plan
The Company will continue to perform its obligation of poverty alleviation based on the requirements of
central, local governments and ChemChina.
XVII. Other Significant Events
√ Applicable □ Not applicable
1. In June 2020, after the completion of the Company’s shares transfer from CNAC to Syngenta Group, the Company
became a distinctive member of the newly established Syngenta Group - a world leader in agricultural inputs, spanning
crop protection, seeds, fertilizers, additional agricultural and digital technologies, as well as an advanced distribution
network in China, maintaining its unique brand and positioning.
2. Within the context of the 2017 combination between the Company and Solutions, the Company entered into a
Performance Compensation Agreement with CNAC, then the 100% owner of Solutions and the controlling shareholder of
the Company, according to which, CNAC made a commitment regarding Solutions’ aggregate net profit in the years 2017-
48
ADAMA Ltd. Semi-Annual Report 2020
2019. In case of failure to meet such commitment, CNAC committed to compensate the Company either through shares
or cash according to a predetermined formula. Despite Solutions’ strong performance during the three-year period, due to
exogenous reasons, the calculated net profit of Solutions for this period implies a certain shortfall.
As a result, Syngenta Group (the current direct shareholder of the Company since June 15, 2020), executed such
compensation commitment, which consists of two parts: (1) the buyback and cancellation of 102,432,280 A shares
(executed on July 13,2020), and (2) the return of distributed dividends RMB 17,618,352 (executed on July 14, 2020).
The following are the relevant announcements disclosed on the website www.cninfo.com.cn.
Announcements Disclosure date
Announcement on the Transfer of State-owned Shares of Controlling Shareholders
January 6, 2020
(announcement no. 2020-1)
Announcement-SinoChem Group and ChemChina Planning for Strategic Restructuring
January 23, 2020
(announcement no. 2020-4)
Announcement on the Completion of the Registration of the Transfer of State-owned Shares held
June 17, 2020
by the Controlling Shareholder (announcement no. 2020-33)
Announcement on the Overall Achievement of the Committed Performance Included in the Major
Assets Restructuring and the Planned Compensations to the Company by the Obligors April 28, 2020
(announcement no. 2020-25)
Announcement on the Completion of Shares Buyback and Cancellation of Compensation Shares
July 15, 2020
(announcement no. 2020- 36)
XVIII. Significant Events of Subsidiaries
□ Applicable √ Not applicable
49
ADAMA Ltd. Semi-Annual Report 2020
Section VI - Share Changes and Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
Before the change Increase/decrease (+/-) After the change
Capitalization
Newly issue Bonus
Amount Proportion of public Other Subtotal Amount Proportion
share shares
reserves
I. Restricted shares 1,810,887,539 74.02% -- -- -- -- -- 1,810,887,539 74.02%
a. State-owned legal person’s
1,810,883,039 74.02% -- -- -- -- -- 1,810,883,039 74.02%
shares
b. Shares held by domestic
4,500 0.00% -- -- -- -- -- 4,500 0.00%
investors
i. Shares held by domestic
0 0.00% -- -- -- -- -- 0 0.00%
legal person
ii. Shares held by domestic
4,500 0.00% -- -- -- -- -- 4,500 0.00%
natural person
II. Shares not subject to trading
635,666,043 25.98% -- -- -- -- -- 635,666,043 25.98%
moratorium
a. RMB ordinary shares 468,616,702 19.15% -- -- -- -- -- 468,616,702 19.15%
b. Domestically listed foreign
167,049,341 6.83% 167,049,341 6.83%
shares
III. Total shares 2,446,553,582 100.00% -- -- -- -- -- 2,446,553,582 100.00%
Note: In July 2017 the Company issued CNAC 1,810,883,039 common shares of the Company in consideration for 100% equity of Adama Solutions. According to the
commitment made by CNAC, the said shares were restricted from public trading until August 2, 2020. On June 15, 2020, CNAC transferred the said shares to Syngenta Group
free of charge. In addition, following the completion of the compensation commitments made in the context of the acquisition of Solutions, on July 13, 2020 the total shares of
the Company reduced from 2,446,553,582 to 2,344,121,302, and the restricted shares reduced from 1,810,883,039 to 1,708,450,759. On August 3, 2020, restriction on the
public trading of the above shares was lifted. For details, please refer to Announcement on the Release of Restricted Shares issued for the Major Assets Restructuring
(announcement no.2020-38) published on the website www.cninfo.com.cn.
50
ADAMA Ltd. Semi-Annual Report 2020
Reasons for the change in shares
□ Applicable √ Not applicable
Approval of the change in shares
□ Applicable √ Not applicable
The registered status for the change in shares
□ Applicable √ Not applicable
Status of share buyback
□Applicable √Not applicable
Subsequent to the Reporting Period, on August 19, 2020, the 26th meeting of the 8th session of the Board of Directors approved a Repurchase Plan for up to 26 million Domestically Listed Foreign B-
shares, constituting up to 15.6% of the Company's B-shares and up to 1.1% of its total shares outstanding, at an expected cost in the range of approximately RMB 66.3 million to RMB 132.6 million,
which is subject to the shareholders’ further approval. For details, please refer to the Repurchase Plan for Part of the Company’s Domestically Listed Foreign Shares (B share) published by the
Company on the website www.cninfo.com.cn on August 21, 2020.
Status of share buyback in the way of centralized bidding
□Applicable √Not applicable
Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and other
financial indexes over the last year and last period.
□ Applicable √ Not applicable
Other contents that the Company considered necessary or is required by securities regulatory authorities to disclose
□ Applicable √ Not applicable
51
ADAMA Ltd. Semi-Annual Report 2020
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Shareholders Restricted shares at Shares released in the Restricted shares Restricted shares at Restriction reasons Date of
the opening of the Reporting Period increased in the the end of the release
Reporting Period Reporting Period Reporting Period
Syngenta Group Co., Ltd. 1,810,883,039* Commitment not to August 3,
1,810,883,039 0 0
trade 2020
Jiang Chenggang Six months
Shares held by a
after the
4,500 0 0 4,500 supervisor should be
expiration of
locked up.
the term
1,810,887,539 0 1,810,887,539
Total 0 -- --
* As mentioned above in Section VI “Changes in shares”, on July 13, 2020, the number of restricted shares held by Syngenta Group reduced to 1,708,450,759, and on August
3, 2020, restriction on the public trading of those shares was lifted.
II. Issuance and Listing of Securities
□ Applicable √ Not applicable
52
ADAMA Ltd. Semi-Annual Report 2020
III. Total Number of Shareholders and Their Shareholdings
Unit: share
Total number of Total number of preferred
49,602
shareholders as of the stockholders with vote right
(the number of ordinary A share shareholders is 34,498; 0
end of the Reporting restored (if any) as of the end
the number of B share shareholders is 15,104)
Period of the Reporting Period
Shareholding of shareholders holding more than 5% shares
Number of Pledged or frozen shares
Number of Increase and
Holding shares held Number of shares
Nature of shareholding at the decrease of shares
Name of shareholder percentage subject to held not subject to Status of
shareholder end of the Reporting during Reporting Amount
(%) trading trading moratorium shares
Period Period
moratorium
State-owned
Syngenta Group Co., Ltd. 74.02% 1,810,883,039 1,810,883,039 1,810,883,039 -- -- --
legal person
Jingzhou Sanonda Holding State-owned
4.89% 119,687,202 -- -- 119,687,202 -- --
Co., Ltd. legal person
China Cinda Asset State-owned
1.37% 33,557,046 -- -- 33,557,046 -- --
Management Co., Ltd. legal person
China Structural Reform State-owned
1.37% 33,557,046 -- -- 33,557,046 -- --
Fund Co., Ltd. legal person
Portfolio No.503 of National
Others 0.94% 23,000,052 1,499,955 -- 23,000,052 -- --
Social Security Fund
Overseas
UBS AG 0.68% 16,634,350 16,634,350 -- 16,634,350 -- --
legal person
CCB Principal-ICBC-Avic
Trust, Trust Plan of Pooled
Funds of CCB Principal
Others 0.53% 12,885,906 - - 12,885,906 -- --
Private Placement
Investment, Tianqi (2016)
No. 293 of Avic Trust
Caitong Fund Fuchun
Chuangyi Private
Others 0.19% 4,697,986 -- -- 4,697,986 -- --
Placement No.3 Asset
Management Plan
GUOTAI JUNAN Overseas 0.18% 4,319,872 -79,700 -- 4,319,872 -- --
53
ADAMA Ltd. Semi-Annual Report 2020
SECURITIES(HONGKONG) legal person
LIMITED
Qichun County State-owned
State-owned 0.17% 4,169,266 -- -- 4,169,266 -- --
Assets Administration
Strategic investors or the general legal
person due to the placement of new
Not applicable
shares become the top 10
shareholders (if any)
Syngenta Group Co., Ltd. and Jingzhou Sanonda Holdings Co., Ltd. are related parties, and are acting-in-concert parties as
Explanation on associated relationship prescribed in the Administrative Methods for Acquisition of Listed Companies. Both of them are controlled subsidiaries of CNAC.
or/and persons It is unknown whether the other shareholders are related parties or acting-in-concert parties as prescribed in the Administrative
Methods for Acquisition of Listed Companies.
Details of shares held by top 10 shareholders not subject to trading moratorium
Number of shares held not subject Type of share
Name of shareholder to trading moratorium at the end
Type of share Amount
of the period
Jingzhou Sanonda Holding Co., Ltd. 119,687,202 RMB ordinary share 119,687,202
China Cinda Asset Management Co., Ltd. 33,557,046 RMB ordinary share 33,557,046
China Structural Reform Fund Co., Ltd. 33,557,046 RMB ordinary share 33,557,046
23,000,052 23,000,052
National Social Security Fund Portfolio 503 RMB ordinary share
UBS AG 16,634,350 RMB ordinary share 16,634,350
CCB Principal-ICBC-Avic Trust, Trust Plan of Pooled Funds of CCB Principal 12,885,906 12,885,906
RMB ordinary share
Private Placement Investment, Tianqi (2016) No. 293 of Avic Trust
Caitong Fund Fuchun Chuangyi Private Placement No.3 Asset Management
4,697,986 RMB ordinary share 4,697,986
Plan
Domestically listed foreign
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 4,319,872 4,319,872
share
Qichun County State-owned Assets Administration 4,169,266 RMB ordinary share 4,169,266
Hong Kong Securities Clearing Company Ltd. 4,007,531 RMB ordinary share 4,007,531
Explanation on associated relationship among the top ten shareholders of Qichun County Administration of State-Owned Assets held shares of the Company on behalf
tradable share not subject to trading moratorium, as well as among the top of the government. It is unknown whether the other shareholders are related parties or acting-
ten shareholders of tradable share not subject to trading moratorium and in-concert parties as prescribed in the Administrative Methods for Acquisition of Listed
top ten shareholders, or explanation on acting-in-concert Companies.
Particular about shareholder participate in the securities lending and
--
borrowing business (if any)
54
ADAMA Ltd. Semi-Annual Report 2020
Did any top 10 common shareholders or the top 10 common shareholders not subject to trading
moratorium of the Company carry out a promissory buy-back in the Reporting Period?
□ Yes √ No
The top 10 common shareholders or the top 10 common shareholders not subject to trading
moratorium of the Company had not carried out any agreed buy-back in the Reporting Period.
IV. Change of the Controlling Shareholder or the Actual Controller
Change of the controlling shareholder in the Reporting Period
√ Applicable □ Not applicable
New Direct Controlling Shareholder Syngenta Group Co., Ltd. - a wholly owned
subsidiary of CNAC, the former direct controlling
shareholder of the Company
Date of the Change of Controlling Shareholder June 15, 2020
Disclosure Index Announcement on the Completion of the
Registration of the Transfer of State-owned Shares
held by the Controlling Shareholder (No. 2020-33)
Disclosure Date June 17, 2020
Change of the actual controller in the Reporting Period
□ Applicable √ Not applicable
There was no change of the actual controller of the Company in the Reporting Period.
55
ADAMA Ltd. Semi-Annual Report 2020
Section VII - Preferred stock
□ Applicable √ Not applicable
There was no preferred stock during Reporting Period.
56
ADAMA Ltd. Semi-Annual Report 2020
Section VIII - Convertible Bonds
□ Applicable √ Not applicable
No such cases in the Reporting Period.
57
ADAMA Ltd. Semi-Annual Report 2020
Section IX - Directors, Supervisors and Senior Management
I. Changes in Shareholdings of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
No such cases in the Reporting Period that were not described in the Annual Report. For details, see
Annual Report 2019.
II. Changes in Directors, Supervisors and Senior Management
√Applicable □ Not applicable
As stated in the 2019 Annual Report, changes in directors and senior management during the
Reporting Period, were as follows:
Name Position Type Date Reason
Erik Fyrwald Chairman of the Board Elected April 9, 2020 --
Chen Lichtenstein Director Elected April 9, 2020 --
Ignacio Dominguez President & CEO Appointment March 1, 2020 --
Left the Due to work arrangements by
Yang Xingqiang Chairman of the Board April 9, 2020
position ChemChina.
Nomination as the CFO of
Chen Left the
President & CEO March 1, 2020 Syngenta Group responsible also
Lichtenstein position
for strategy alignment.
58
ADAMA Ltd. Semi-Annual Report 2020
Section X - Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before
the approval date of this Report or were due but could not be redeemed in full?
□ Applicable √ Not applicable
59
ADAMA Ltd. Semi-Annual Report 2020
Section XI - Financial Report
I. Audit report
Was the half-year report audited?
□ Yes √ No
The half-year report was not audited.
II. Financial Statements
Notes to the financial statements are presented in RMB’000.
60
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Balance Sheet
June 30 December 31
Notes 2020 2019
Current assets
Cash at bank and on hand V.1 6,293,175 4,348,588
Financial assets held for trading V.2 12,609 29,510
Derivative financial assets V.3 1,017,302 490,113
Bills receivable V.4 47,433 26,000
Accounts receivable V.5 8,677,392 8,004,157
Receivables financing V.6 35,552 78,948
Prepayments V.7 351,997 377,808
Other receivables V.8 1,235,318 1,195,253
Inventories V.9 10,618,794 9,932,654
Other current assets V.10 611,296 659,195
Total current assets 28,900,868 25,142,226
Non-current assets
Long-term receivables V.11 120,550 170,896
Long-term equity investments V.12 134,420 133,098
Other equity investments V.13 156,092 155,062
Investment properties 3,609 3,771
Fixed assets V.14 6,942,743 6,939,610
Construction in progress V.15 998,060 788,386
Right-of-use assets V.16 515,779 536,034
Intangible assets V.17 5,543,526 5,835,785
Goodwill V.18 4,627,331 4,511,193
Deferred tax assets V.19 857,313 826,696
Other non-current assets V.20 295,888 246,183
Total non-current assets 20,195,311 20,146,714
Total assets 49,096,179 45,288,940
61
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Balance Sheet (continued)
June 30 December 31
Notes 2020 2019
Current liabilities
Short-term loans V.21 1,893,876 2,009,882
Derivative financial liabilities V.22 1,065,034 691,475
Bills payable V.23 255,417 321,674
Accounts payable V.24 4,773,708 4,205,901
Contract liabilities V.25 1,052,333 664,228
Employee benefits payable V.26 985,533 1,211,713
Taxes payable V.27 386,070 369,038
Other payables V.28 1,342,465 1,049,594
Non-current liabilities due within one year V.29 1,336,375 1,066,243
Other current liabilities V.30 381,188 355,243
Total current liabilities 13,471,999 11,944,991
Non-current liabilities
Long-term loans V.31 2,224,678 927,159
Debentures payable V.32 8,663,773 7,965,942
Lease Liabilities V.33 387,635 406,358
Long-term payables 26,860 29,021
Long-term employee benefits payable V.34 676,624 738,854
Provisions V.35 162,545 176,822
Deferred tax liabilities V.19 416,449 323,304
Other non-current liabilities V.36 395,838 404,824
Total non-current liabilities 12,954,402 10,972,284
Total liabilities 26,426,401 22,917,275
Shareholders' equity
Share capital V.37 2,446,554 2,446,554
Capital reserve V.38 12,903,168 12,903,168
Other comprehensive income V.39 1,340,054 1,192,681
Special reserves 17,205 14,927
Surplus reserve V.40 240,162 240,162
Retained earnings V.41 5,722,635 5,574,173
Total shareholders’ equity 22,669,778 22,371,665
Total liabilities and shareholders’ equity 49,096,179 45,288,940
Ignacio Dominguez Aviram Lahav
Legal representative Chief of accounting work & Chief of accounting organ
These financial statements were approved by the Board of Directors of the Company on August 19, 2020.
The notes form part of these financial statements.
62
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Balance Sheet
June 30 December 31
Notes 2020 2019
Current assets
Cash at bank and on hand XV.1 1,445,904 1,423,051
Accounts receivable XV.2 400,029 349,109
Receivables financing XV.3 8,512 11,722
Prepayments 11,641 6,055
Other receivables XV.4 45,492 14,051
Inventories 83,789 97,861
Other current assets 36,105 19,117
Total current assets 2,031,472 1,920,966
Non-current assets
Long-term equity investments XV.5 16,371,411 16,371,411
Other equity investments 85,495 85,495
Investment properties 3,609 3,771
Fixed assets 791,306 777,476
Construction in progress 640,442 504,936
Right-of-use assets 252 486
Intangible assets 167,831 170,053
Deferred tax assets 57,077 84,950
Other non-current assets 83,998 73,668
Total non-current assets 18,201,421 18,072,246
Total assets 20,232,893 19,993,212
Current liabilities
Short-term loans 152,000 150,000
Bills payables 75,360 90,190
Accounts payables 233,960 124,228
Contract liabilities 4,007 6,748
Employee benefits payable 147,645 204,238
Taxes payable 2,779 3,614
Other payables 265,035 237,266
Non-current liabilities due within one year 13,299 454
Total current liabilities 894,085 816,738
Non-current liabilities
Long-term loans 377,750 141,960
Lease Liabilities - 21
Long-term employee benefits payable 96,608 96,826
Provisions 43,907 43,238
Other non-current liabilities 171,770 171,770
Total non-current liabilities 690,035 453,815
Total liabilities 1,584,120 1,270,553
Shareholders’ equity
Share capital V.37 2,446,554 2,446,554
Capital reserve 15,449,878 15,449,878
Other comprehensive income 37,267 41,308
Special reserves 15,251 12,973
Surplus reserve 240,162 240,162
Retained earnings V.41 459,661 531,784
Total shareholders’ equity 18,648,773 18,722,659
Total liabilities and shareholders’ equity 20,232,893 19,993,212
63
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Income Statement
Six months ended June 30
Notes 2020 2019
I. Operating income V.42 14,121,040 13,616,032
Less: Cost of sales V.42 9,904,470 9,023,242
Taxes and surcharges V.43 46,117 46,226
Selling and Distribution expenses V.44 2,468,568 2,499,774
General and administrative expenses V.45 553,186 628,259
Research and Development expenses V.46 188,185 210,699
Financial expenses V.47 842,792 938,196
Including: Interest expense 350,041 325,138
Interest income 29,625 41,534
Add: Investment income, net V.48 52,129 (514,443)
Including: Income from investment
in associates and joint ventures 14,392 21,724
Gain (loss) from changes in fair value V.49 265,510 884,135
Credit impairment reversal (losses) V.50 5,589 3,347
Asset impairment reversal (losses) V.51 (25,376) (23,809)
Gain from disposal of assets V.52 7,694 115,514
II. Operating profit 423,268 734,380
Add: Non-operating income 39,020 10,811
Less: Non-operating expenses 13,441 16,016
III. Total profit 448,847 729,175
Less: Income tax expenses V.53 244,198 140,537
IV. Net profit 204,649 588,638
(1). Classified by nature of operations
(1.1). Continuing operations 204,649 588,638
(2). Classified by ownership
(2.1). Shareholders of the Company 204,649 588,638
V. Other comprehensive income, net of tax V. 39 147,373 (113,471)
Other comprehensive income (net of tax)
attributable to shareholders of the Company 147,373 (113,471)
(1) Items that will not be reclassified to profit or loss: 39,373 (4,417)
(1.1) Re-measurement of defined benefit plan liability 39,373 (13,978)
(1.2) Fair Value changes in other equity investment - 9,561
(2) Items that were or will be reclassified to profit or loss 108,000 (109,054)
(2.1) Effective portion of gains or loss of cash flow hedge (78,285) (151,993)
(2.2) Translation differences of foreign financial statements 186,285 42,939
VI. Total comprehensive income for the period attributable to
Shareholders of the Company 352,022 475,167
VII. Earnings per share XIV.2
(1) Basic earnings per share (Yuan/share) 0.08 0.24
(2) Diluted earnings per share (Yuan/share) N/A N/A
64
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Income Statement
Six months ended June 30
Notes 2020 2019
I. Operating income XV.6 673,646 735,426
Less: Operating costs XV.6 537,314 518,561
Taxes and surcharges 2,821 8,910
Selling and Distribution expenses 17,072 43,054
General and administrative expenses 133,338 190,950
Research and Development expenses 4,559 24,464
Financial expenses (income) (4,826) (1,254)
Including: Interest expense 3,143 2,059
Interest income 8,507 14,333
Add: Credit impairment reversal (losses) (674) (1,633)
Asset Impairment reversal (losses) (2,864) (272)
Gain from disposal of assets 101 -
II. Operating Profit (20,069) (51,164)
Add: Non-operating income 5,597 4,430
Less: Non-operating expenses 420 1,896
III. Total profit (14,892) (48,630)
Less: Income tax expense (income) 27,872 (10,841)
IV. Loss (42,764) (37,789)
Continuing operations (42,764) (37,789)
V. Other comprehensive income, net of tax (4,041) 5,050
(1) Items that will not be reclassified to profit or loss (4,041) 5,050
(1.1) Re-measurement of defined benefit plan liability (4,041) -
(1.2) FV changes in other equity investment - 5,050
VI. Total comprehensive income (loss) for the period (46,805) (32,739)
65
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Cash Flow Statement
Six months ended June 30
Notes 2020 2019
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 13,378,983 12,817,678
Refund of taxes and surcharges 67,336 39,737
Cash received relating to other operating activities V.55(1) 630,515 258,378
Sub-total of cash inflows from operating activities 14,076,834 13,115,793
Cash paid for goods and services 9,247,435 9,779,321
Cash paid to and on behalf of employees 1,967,484 1,801,614
Payments of taxes and surcharges 168,816 465,018
Cash paid relating to other operating activities V.55(2) 1,458,568 1,374,790
Sub-total of cash outflows from operating activities 12,842,303 13,420,743
Net cash flows from (used in) operating activities V.56(1)a 1,234,531 (304,950)
II. Cash flows from investing activities:
Cash received from disposal of investments 16,224 20,173
Cash received from returns of investments 54,304 3,372
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 15,677 30,843
Cash received relating to other investing activities V.55(3) - 9,327
Sub-total of cash inflows from investing activities 86,205 63,715
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 803,315 606,126
Cash paid for acquisition of investments 51,435 -
Net cash paid to acquire subsidiaries or other business units - 826,805
Cash paid relating to other investing activities V.55(4) 46,840 778
Sub-total of cash outflows from investing activities 901,590 1,433,709
Net cash flows used in investing activities (815,385) (1,369,994)
III. Cash flows from financing activities:
Cash received from borrowings 2,822,626 1,987,810
Cash received from other financing activities V.55(5) 4,449 61,701
Sub-total of cash inflows from financing activities 2,827,075 2,049,511
Cash repayments of borrowings 745,547 463,876
Cash payment for dividends, profit distributions and interest 356,793 406,111
Including: Dividends paid to non-controlling interest 26,828 28,936
Cash paid relating to other financing activities V.55(6) 249,286 443,891
Sub-total of cash outflows from financing activities 1,351,626 1,313,878
Net cash from financing activities 1,475,449 735,633
IV. Effects of foreign exchange rate changes on cash and cash
equivalents 41,605 (25,065)
V. Net decrease in cash and cash equivalents V.56(1)b 1,936,200 (964,376)
Add: Cash and cash equivalents at the beginning of the year 4,319,907 6,346,196
I. VI. Cash and cash equivalents at the end of the period V.56(2) 6,256,107 5,381,820
66
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Cash Flow Statement
Six months ended June 30
Notes 2020 2019
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 581,672 1,034,417
Refund of taxes and surcharges 27,022 23,042
Cash received relating to other operating activities XV.7(1) 15,063 18,958
Sub-total of cash inflows from operating activities 623,757 1,076,417
Cash paid for goods and services 467,607 535,991
Cash paid to and on behalf of employees 122,633 94,867
Payments of taxes and surcharges 4,959 73,468
Cash paid relating to other operating activities XV.7(2) 90,807 89,570
Sub-total of cash outflows from operating activities 686,006 793,896
Net cash flows from (used in) operating activities XV.8 (62,249) 282,521
II. Cash flows from investing activities:
Net cash received from disposal of fixed assets, intangible assets and other
long-term assets 114 -
Cash received relating to other investing activities - 1,808
Sub-total of cash inflows from investing activities 114 1,808
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 154,378 92,180
Sub-total of cash outflows from investing activities 154,378 92,180
Net cash flows used in investing activities (154,264) (90,372)
III.Cash flows from financing activities:
Cash received from borrowings 441,500 -
Cash received relating to other financing activities XV.7.(3) 4,449 11,947
Sub-total of cash inflows from financing activities 445,949 11,947
Cash repayments of borrowings 190,500 72,000
Cash payment for dividends, profit distributions or interest 14,606 2,059
Cash paid relating to other financing activities XV.7.(4) 200 200
Sub-total of cash outflows from financing activities 205,306 74,259
Net cash flow provided by (used in) financing activities 240,643 (62,312)
IV. Effects of foreign exchange rate changes on cash and cash equivalents 3,172 (2,976)
V. Net increase in cash and cash equivalents 27,302 126,861
Add: Cash and cash equivalents at the beginning of the year XV.8(2) 1,395,994 2,005,313
VI. Cash and cash equivalents at the end of the period XV.8(2) 1,423,296 2,132,174
67
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2020
Attributable to shareholders of the Company
Other
Share Capital comprehen- Special Surplus Retained
capital reserve sive income reserves reserve earnings Total
I. Balance at December 31, 2019 2,446,554 12,903,168 1,192,681 14,927 240,162 5,574,173 22,371,665
II. Changes in equity for the period - - 147,373 2,278 - 148,462 298,113
1. Total comprehensive income - - 147,373 - - 204,649 352,022
2. Owner’s contributions and reduction - - - - - - -
3. Appropriation of profits - - - - - (56,187) (56,187)
3.1 Distribution to owners - - - - - (29,359) (29,359)
3.2 Distribution to non- - -
controlling interest - - - (26,828) (26,828)
4. Transfers within owners’ equity - - - - - - -
5. Special reserve - - - 2,278 - - 2,278
5.1 Transfer to special reserve - - - 3,756 - - 3,756
5.2 Amount utilized - - - (1,478) - - (1,478)
III. Balance at June 30, 2020 2,446,554 12,903,168 1,340,054 17,205 240,162 5,722,635 22,669,778
For the six months ended June 30, 2019
Attributable to shareholders of the Company
Other
Share Capital comprehen- Special Surplus Retained
capital reserve sive income reserves reserve earnings Total
I. Balance at December 31, 2018 2,446,554 12,975,456 1,090,952 13,536 240,162 5,513,466 22,280,126
Add: Business combination under
common control - 349,035 (125) - - 115,826 464,736
II. Balance at January 1, 2019 2,446,554 13,324,491 1,090,827 13,536 240,162 5,629,292 22,744,862
III. Changes in equity for the period - (421,323) (117,982) 3,262 - 270,585 (265,458)
1. Total comprehensive income - - (113,471) - - 588,638 475,167
2. Owner’s contributions and reduction - (415,000) - - - - (415,000)
2.1 Consideration for Business
combination under common control - (415,000) - - - - (415,000)
3. Appropriation of profits - (6,323) - - - (322,564) (328,887)
3.1 Distribution to owners - - - - - (293,628) (293,628)
3.2 Distribution to non-
controlling interest - - - - - (28,936) (28,936)
3.3 Other - (6,323) - - - - (6,323)
4. Transfers within owners’ equity - - (4,511) - - 4,511 -
4.1 Others - - (4,511) - - 4,511 -
5. Special reserve - - - 3,262 - - 3,262
5.1 Transfer to special reserve - - - 10,646 - - 10,646
5.2 Amount utilized - - - (7,384) - - (7,384)
IV. Balance at June 30, 2019 2,446,554 12,903,168 972,845 16,798 240,162 5,899,877 22,479,404
68
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2020
Attributable to shareholders of the Company
Other
Share Capital comprehensive Special Surplus Retained
capital reserve income reserves reserve earnings Total
I. Balance at December 31, 2019 2,446,554 15,449,878 41,308 12,973 240,162 531,784 18,722,659
II. Changes in equity for the period - - (4,041) 2,278 - (72,123) (73,886)
1. Total comprehensive income - - (4,041) - - (42,764) (46,805)
2. Owner’s contributions and reduction - - - - - - -
3. Appropriation of profits - - - - - (29,359) (29,359)
3.1 Transfer to Distribution to shareholders - - - - - (29,359) (29,359)
4. Special reserve - - - 2,278 - - 2,278
4.1 Transfer to special reserve - - - 3,756 - - 3,756
4.2 Amount utilized - - - (1,478) - - (1,478)
Ⅲ. Balance at June 30, 2020 2,446,554 15,449,878 37,267 15,251 240,162 459,661 18,648,773
For the six months ended June 30, 2019
Attributable to shareholders of the Company
Other
Share Capital comprehensive Special Surplus Retained
capital reserve income reserves reserve earnings Total
I. Balance at December 31, 2018 2,446,554 15,414,429 43,167 11,564 240,162 1,257,073 19,412,949
II. Changes in equity for the period - 48,816 5,050 2,482 - (275,105) (218,757)
1. Total comprehensive income - - 5,050 - - (37,789) (32,739)
2. Owner’s contributions and reduction - 48,816 - - - - 48,816
2.1 Other - 48,816 - - - - 48,816
3. Appropriation of profits - - - - - (237,316) (237,316)
3.1 Transfer to Distribution to shareholders - - - - - (237,316) (237,316)
4. Special reserve - - - 2,482 - - 2,482
4.1 Transfer to special reserve - - - 5,462 - - 5,462
4.2 Amount utilized - - - (2,980) - - (2,980)
Ⅲ. Balance at June 30, 2019 2,446,554 15,463,245 48,217 14,046 240,162 981,968 19,194,192
69
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
I BASIC CORPORATE INFORMATION
ADAMA Ltd. (hereinafter the “Company” or the “Group”) is a company limited by shares established in
China with its head office located in Hubei Jingzhou.
The Company's parent company is Syngenta Group Co., Ltd. (hereinafter “Syngenta Group”), and the
ultimate holding company is China National Chemical Corporation (hereinafter - “ChemChina”).
The principal activities of the Company and its subsidiaries (together referred to as the “Group”) are engaged
in development, manufacturing and marketing of agrochemicals, intermediate materials for other industries,
food additives and synthetic aromatic products, mainly for export. For information about the largest
subsidiaries of the Company, refer to Note VII.
The Company’s consolidated financial statements had been approved by the Board of Directors of the
Company on August 19, 2020.
Details of the scope of consolidated financial statements are set out in Note VII "Interest in other entities",
whereas the changes of the scope of consolidation are set out in Note VI "Changes in consolidation scope".
II BASIS OF PREPARATION
1. Basis of preparation
The Group has adopted the Accounting Standards for Business Enterprises issued by the Ministry of Finance
(the "MoF"). In addition, the Group has disclosed relevant financial information in these financial statements
in accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the
Public No. 15 － General Provisions on Financial Reporting (revised by China Securities Regulatory
Commission (hereinafter "CSRC”) in 2014).
70
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
II BASIS OF PREPARATION - (cont’d)
2. Accrual basis and measurement principle
The Group has adopted the accrual basis of accounting. Except for certain financial instruments which are
measured at fair value, deferred tax assets and liabilities, assets and liabilities relating to employee benefits,
provisions, and investments in associated companies and joint ventures, the Group adopts the historical cost
as the principle of measurement in the financial statements. Where assets are impaired, provisions for asset
impairment are made in accordance with relevant requirements.
In the historical cost measurement, assets obtained shall be measured at the amount of cash or cash
equivalents or fair value of the consideration paid. Liabilities shall be measured at the actual amount of cash
or assets received, or the contractual amount in a present obligation, or the prospective amount of cash or
cash equivalents paid to discharge the liabilities.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,
willing market participants in an arm’s length transaction at the measurement date. Fair value measured and
disclosed in the financial statements are determined on this basis whether it is observable or estimated by
valuation techniques.
The following table provides an analysis, grouped into Levels 1 to 3 based on the degree to which the fair
value input is observable and significant to the fair value measurement as a whole:
Level 1 - based on quoted prices (unadjusted) in active markets;
Level 2 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is observable (other than quoted prices included within Level 1), either directly or
indirectly;
Level 3 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
3. Going concern
The financial statements have been prepared on the going concern basis.
The Group has performed going concern assessment for the following 12 months from June 30, 2020 and
have not identified any significant doubtful matter or event on the going concern, as such the financial
statement have been prepared on the going concern basis.
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
1. Statement of compliance
These financial statements are in compliance with the Accounting Standards for Business Enterprises to truly
and completely reflect the Company's consolidated financial position as at June 30, 2020 and the Company's
consolidated operating results, changes in shareholders' equity and cash flows for the six months then ended.
71
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
2. Accounting period
The Group has adopted the calendar year as its accounting year, i.e. from 1 January to 31 December.
3. Business cycle
The company takes the period from the acquisition of assets for processing to their realisation in cash or cash
equivalents as a normal operating cycle. The operating cycle for the company is 12 months.
4. Reporting currency
The Company and its domestic subsidiaries choose Renminbi (hereinafter "RMB") as their functional
currency. Functional currencies of overseas subsidiaries are determined on the basis of the principal
economic environment in which the overseas subsidiaries operate. The functional currency of the overseas
subsidiaries is mainly the United States Dollar (hereinafter "USD"). The presentation currency of these
financial statements is Renminbi.
5. Business combinations
5.1 Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which all
of the combining enterprises are ultimately controlled by the same party or parties both before and after the
combination, and that control is not transitory. Assets and liabilities obtained shall be measured at their
respective carrying amounts as recorded by the combining entities at the date of the combination. The
difference between the carrying amount of the net assets obtained and the carrying amount of the
consideration paid for the combination is adjusted to the share premium in capital reserve. If the share
premium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
Costs that are directly attributable to the combination are charged to profit or loss in the period in which they
are incurred.
5.2 Business combinations not involving enterprises under common control and goodwill.
A business combination not involving enterprises under common control is a business combination in which
all of the combining enterprises are not ultimately controlled by the same party or parties before and after
the combination.
The costs of business combination are the fair value of the assets paid, liabilities incurred or assumed and
equity instruments issued by the acquirer for the purpose of achieving the control rights over the acquiree.
The intermediary costs such as audit, legal services and assessment consulting costs and other related
management costs that are directly attributable to the combination by the acquirer are charged to profit or
loss in the period in which they are incurred. Direct capital issuance costs incurred in respect of equity
instruments or liabilities issued pursuant to the business combination should be charged to the respect equity
instruments or liabilities upon initial recognition of the underlying equity instruments or liabilities.
72
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
5. Business combinations - (cont’d)
5.2 Business combinations not involving enterprises under common control and goodwill - (cont’d)
The acquiree’s identifiable assets, liabilities and contingent liabilities acquired by the acquirer in a business
combination, that meet the recognition criteria shall be measured at fair value at the acquisition date. Where
the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net
assets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on initial
recognition. Where the cost of combination is less than the acquirer’s interest in the fair value of the
acquiree’s identifiable net assets, the remaining difference is recognized immediately in profit or loss for the
current year.
The goodwill raised because of the business combination should be separately disclosed in the consolidated
financial statement and measured by the initial amount less any accumulative impairment provision.
6. Basis for preparation of consolidated financial statements
The scope of consolidation in consolidated financial statements is determined on the basis of control. Control
is achieved when the Company has power over the investee; is exposed, or has rights, to variable returns
from its involvement with the investee; and has the ability to use its power to affect its returns.
For a subsidiary disposed of by the Group, the operating results and cash flows before the date of disposal
(the date when control is lost) are included in consolidated income statement and consolidated statement of
cash flows.
For a subsidiary acquired through a business combination not involving enterprises under common control,
the operating results and cash flows from the acquisition date (the date when control is obtained) are included
in consolidated income statement and consolidated statement of cash flows.
For a subsidiary acquired through a business combination involving enterprises under common control, it
will be fully consolidated into consolidated financial statements from the date on which the subsidiary was
ultimately under common control by the same party or parties.
The significant accounting policies and accounting years adopted by the subsidiaries are determined based
on the uniform accounting policies and accounting years set out by the Company.
All significant intra-group balances, transactions and unrealized profits are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as non-controlling
interests and presented as "non-controlling interests" in the shareholders’ equity in consolidated balance
sheet. The portion of net profits or losses of subsidiaries for the period attributable to non-controlling
interests is presented as "non-controlling interests" in consolidated income statement below the "net profit"
line item. Total comprehensive income attributable to non-controlling shareholders is presented separately
in the consolidated income statement below the total comprehensive income line item.
73
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
6. Basis for preparation of consolidated financial statements - (cont’d)
When the amount of loss for the period attributable to the non-controlling shareholders of a subsidiary
exceeds the non-controlling shareholders' portion of the opening balance of owners' equity of the subsidiary,
the excess amount is still allocated against non-controlling interests.
Acquisition of non-controlling interests or disposal of equity interest in a subsidiary that does not result in
the loss of control over the subsidiary is accounted for as equity transactions. The carrying amounts of the
Company's interests and non-controlling interests are adjusted to reflect the changes in their relative interests
in the subsidiary. The difference between the amount by which the non-controlling interests are adjusted and
the fair value of the consideration paid or received is adjusted to capital reserve under owners' equity. If the
capital reserve is not sufficient to absorb the difference, the excess is adjusted against retained earnings.
Other comprehensive income attributed to the non-controlling interest is reattributed to the shareholders of
the company.
A put option issued by the Group to holders of non-controlling interests that is settled in cash or other
financial instrument is recognized as a liability at the present value of the exercise price. The Group’s share
of a subsidiary’s profits includes the share of the holders of the non-controlling interests to which the Group
issued a put option.
When the Group loses control over a subsidiary due to disposal of certain equity interest or other reasons,
any retained interest is re-measured at its fair value at the date when control is lost. The difference between
(i) the aggregate of the consideration received on disposal and the fair value of any retained interest and (ii)
the share of the former subsidiary's net assets cumulatively calculated from the acquisition date according to
the original proportion of ownership interest is recognized as investment income in the period in which
control is lost. Other comprehensive income associated with the disposed subsidiary is reclassified to
investment income in the period in which control is lost.
7. Classification and accounting methods of joint arrangement
Joint arrangement involves by two or more parties jointly control. Joint control is the contractually agreed
sharing of control over an economic activity, and exists only when the strategic financial and operating
decisions relating to the activity require the unanimous consent of the parties sharing control (the ventures).
The Group makes the classification of the joint arrangements according to the rights and obligations in the
joint arrangements to either joint operations or joint ventures.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the joint arrangement. Joint ventures are accounted for using the equity method.
8. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are
the Group's short-term, highly liquid investments that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
74
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
9. Translation of transactions and financial statements denominated in foreign currencies
9.1 Transactions denominated in foreign currencies
On initial recognition, foreign currency transactions are translated into functional currency using the spot
exchange rate prevailing at the date of transaction.
At the balance sheet date, foreign currency monetary items are translated into functional currency using the
spot exchange rates at the balance sheet date. Exchange differences arising from the differences between the
spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the previous
balance sheet date are recognized in profit or loss for the period, except that (i) exchange differences related
to a specific-purpose borrowing denominated in foreign currency that qualify for capitalization are
capitalized as part of the cost of the qualifying asset during the capitalization period. (ii) exchange differences
related to hedging instruments for the purpose of hedging against foreign currency risks are accounted for
using hedge accounting.
When preparing financial statements involving foreign operations, if there is any foreign currency monetary
items, which in substance forms part of the net investment in the foreign operations, exchange differences
arising from the changes of foreign currency are recorded as other comprehensive income, and will be
reclassified to profit or loss upon disposal of the foreign operations.
Foreign currency non-monetary items measured at historical cost are translated to the amounts in functional
currency at the spot exchange rates on the dates of the transactions and the amounts in functional currency
remain unchanged.
9.2 Translation of financial statements denominated in foreign currency
For the purpose of preparing consolidated financial statements, financial statements of a foreign operation
are translated from the foreign currency into RMB using the following method: assets and liabilities on the
balance sheet are translated at spot exchange rate prevailing at the balance sheet date; shareholders' equity
items, except for retained earnings, are translated at the spot exchange rates at the dates on which such items
arose; all items in the income statement as well as items reflecting the distribution of profits are translated at
average rate or at spot exchange rates on the dates of the transactions; the retained earnings opening balance
is previous year's translated retained earnings closing balance; the closing balance of retained earnings is
calculated and presented on the basis of each translated income statement and profit distribution item. The
difference between the translated assets and the aggregate of liabilities and shareholders' equity items is
recorded as other comprehensive income. Cash Flows arising from transaction in foreign currency and the
cash flows of a foreign subsidiary are translated at the spot exchange rate on the date of the cash flow, the
effect of exchange rate changes on the cash and cash equivalents is regarded as a reconciling item and present
separately in the statement “effect of foreign exchange rate changes on the cash and cash equivalents".
The opening balances and the comparative figures of prior year are presented at the translated amounts in
the prior year's financial statements.
On disposal of the Group's entire equity interest in a foreign operation, or upon a loss of control over a
foreign operation due to disposal of certain equity interest in it or other reasons, the Group transfers the
accumulated translation differences, which are attributable to the owners' equity of the Company and
presented under other comprehensive income to profit or loss in the period in which the disposal occurs.
75
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
9. Translation of transactions and financial statements denominated in foreign currencies - (cont’d)
9.2 Translation of financial statements denominated in foreign currency - (cont’d)
In case of a disposal or other reason that does not result in the Group losing control over a foreign operation,
the proportionate share of accumulated translation differences are re-attributed to non-controlling interests
and are not recognized in profit and loss. For partial disposals of equity interest in foreign operations, which
are associates or joint ventures, the proportionate share of the accumulated translation differences are
reclassified to profit or loss.
10. Financial instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual
provisions of the instrument. At initial recognition, the Group measures a financial asset or financial liability
at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through
profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset
or financial liability. Initial recognition in trade receivables which do not contain a significant financing
component, shall be made according to their transaction price.
10.1 Classification and measurement of financial assets
After initial recognition, an entity shall measure a financial asset at: (a) amortised cost; (b) fair value through
other comprehensive income (“FVTOCI”); or (c) fair value through profit or loss (“FVTPL”).
10.1.1 Financial assets at amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met: (a) the financial
asset is held within a business model whose objective is to hold financial assets in order to collect contractual
cash flows; and (b) the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding.
Such financial assets are subsequently measured at amortised cost, using effective interest method. Gains or
losses upon impairment and derecognition are recognized in profit or loss.
10.1.1.1 Effective interest method and amortised cost
Effective interest method represents the method for calculating the amortized costs and interest income or
expense of each period in accordance with the effective interest rate of financial assets or financial liabilities
(inclusive of a set of financial assets or financial liabilities). Effective interest rate represents the rate that
discounts the future cash flow over the expected subsisting period or shorter period, if appropriate, of the
financial asset or financial liability to the current carrying value of such financial asset or financial liability.
When calculating the effective interest rate, the Group will consider the anticipated future cash flow (not
considering the future credit loss) on the basis of all contract clauses of financial assets or financial liabilities,
as well as consider all kinds of charges which are an integral part of the effective interest rate, including
transaction fees and discount or premium paid or received between both parties of financial asset or financial
liability contract.
76
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.1 Classification and measurement of financial assets - (cont’d)
10.1.2 Financial assets at FVTOCI
A financial asset is measured at fair value through other comprehensive income if both of the following
conditions are met: (a) the financial asset is held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets and (b) the contractual terms of the
financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding.
A gain or loss on a financial asset measured at fair value through other comprehensive income is recognized
in other comprehensive income, except for impairment gains or losses, foreign exchange gains and losses
and interest calculated using the effective interest method, until the financial asset is derecognized or
reclassified. When the financial asset is derecognized the cumulative gain or loss previously recognized in
other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
10.1.3 Financial assets at FVTPL
Financial assets at FVTPL are either those that are classified as financial assets at FVTPL or designated as
financial assets at FVTPL.
A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVTOCI.
The Group may, at initial recognition, irrevocably designate a financial asset as measured at FVTPL if doing
so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as
an ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing the
gains and losses on them on different bases.
A gain or loss on a financial asset that is measured at FVTPL is recognized in profit or loss unless it is part
of a hedging relationship. Dividends are recognized in profit or loss.
10.1.4 Designated financial assets at FVTOCI
At initial recognition, the Group makes an irrevocable election to designate to FVTOCI an investment in an
equity instrument that is not held for trading.
When a non-trading equity instrument investment is designated as a financial asset that is measured at fair
value through other comprehensive income, the changes in the fair value of the financial asset are recognised
in other comprehensive income. Upon realization the accumulated gains or losses from other comprehensive
income are transferred from other comprehensive income and included in retained earnings. During the
period in which the Group holds these non-trading investment instruments, the right to receive dividends in
the Group has been established, and the economic benefits related to dividends are likely to flow into the
Group, and when the amount of dividends can be reliably measured, the dividend income is recognized in
the current profit and loss.
77
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses on financial assets that are classified to
amortised cost and FVTOCI.
The Group always measures the loss allowance at an amount equal to lifetime expected credit losses for
trade receivables.
For financial assets other than trade receivables, the Group initially measure the loss allowance for that
financial instrument at an amount equal to 12-month expected credit losses. At each balance sheet date, if
the credit risk on that financial instrument has increased significantly since initial recognition, the Group
measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit
losses. The Group recognizes in profit or loss, as an impairment gain or loss, the amount of expected credit
losses (or reversal) that is required to adjust the loss allowance to the amount that is required to be recognized.
10.2.1 Significant increases in credit risk
At each balance sheet date, the Group assesses whether the credit risk on a financial instrument has
increased significantly since initial recognition.
The Group mainly considers the following list of information in assessing changes in credit risk:
(a) significant changes in internal price indicators of credit risk as a result of a change in credit risk since
inception.
(b) significant changes in external market indicators of credit risk for a particular financial instrument
or similar financial instruments with the same expected life.
(c) a significant change in the debtors’ ability to meet its debt obligations.
(d) an actual or expected significant change in the operating results of the debtor.
(e) significant increases in credit risk on other financial instruments of the same debtor.
(f) an actual or expected significant adverse change in the regulatory, economic, or technological
environment of the debtor.
(g) significant changes in the value of the collateral supporting the obligation or in the quality of third-
party guarantees or credit enhancements, which are expected to reduce the debtor’s economic
incentive to make scheduled contractual payments or to otherwise have an effect on the probability
of a default occurring.
(h) significant changes that are expected to reduce the receivable’s economic incentive to make
scheduled contractual payments.
(i) significant changes in the expected performance and behaviour of the debtor.
(j) past due information.
The Group assumes that the credit risk on a financial instrument has not increased significantly since initial
recognition if the financial instrument is determined to have low credit risk at the reporting date.
78
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets - (cont’d)
10.2.2 Credit-impaired financial asset
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated
future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired
include observable data about the following events:
(a) significant financial difficulty of the issuer or the receivable;
(b) a breach of contract, such as a default or past due event;
(c) the lender(s) of the receivable, for economic or contractual reasons relating to the receivable’s
financial difficulty, having granted to the receivable a concession(s) that the lender(s) would not
otherwise consider;
(d) it is becoming probable that the receivable will enter bankruptcy or other financial reorganization;
10.2.3 Recognition of expected credit losses
For the purpose of determining significant increases in credit risk and recognizing a loss allowance on a
collective basis, financial instruments are grouped on the basis of shared credit risk. Examples of shared
credit risk characteristics may include, but are not limited to, the:(a) instrument type; (b) credit risk ratings;
(c) collateral type; (d) industry; (e) geographical location of the debtor; and (f) the value of collateral
relative to the financial asset if it has an impact on the probability of a default occurring.
Expected credit losses of financial instruments are determined as the present value of the difference
between: (a) the contractual cash flows that are due to an entity under the contract; and (b) the cash flows
that the entity expects to receive.
For a financial asset that is credit-impaired at the reporting date, an entity shall measure the expected credit
losses as the difference between the asset’s gross carrying amount and the present value of estimated future
cash flows discounted at the financial asset’s original effective interest rate. Any adjustment is recognized
in profit or loss as an impairment gain or loss.
The Group measures expected credit losses of a financial instrument in a way that reflects:
(a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible
outcomes;
(b) the time value of money; and
(c) reasonable and supportable information that is available without undue cost or effort at the reporting
date about past events, current conditions and forecasts of future economic conditions.
79
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets - (cont’d)
10.2.4 Written-off of financial assets
The Group directly reduces the gross carrying amount of a financial asset when the entity has no reasonable
expectations of recovering a financial asset in its entirety or a portion thereof. A write-off constitutes a
derecognition event.
10.3 Transfer of financial asset
The Group derecognizes a financial asset if one of the following conditions is satisfied: (i) the contractual
rights to the cash flows from the financial asset expire; or (ii) the financial asset has been transferred and
substantially all the risks and rewards of ownership of the financial asset is transferred to the transferee; or
(iii) although the financial asset has been transferred, the Group neither transfers nor retains substantially all
the risks and rewards of ownership of the financial asset but has not retained control of the financial asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial
asset, and it retains control of the financial asset, it recognizes the financial asset to the extent of its continuing
involvement in the transferred financial asset and recognizes an associated liability. The extent of the
Group’s continuing involvement in the transferred asset is the extent to which it is exposed to changes in the
value of the transferred asset.
When the company is derecognizing a financial asset in its entirety, except for equity instrument designated
to FVTOCI, the difference between (i) the carrying amount of the financial asset transferred; and (ii) the sum
of the consideration received from the transfer is recognized in profit or loss.
10.4 Classification and measurement of financial liabilities
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
All financial liabilities are subsequently measured at FVTPL or other financial liabilities.
Financial liabilities are classified as at FVTPL when the financial liability is (i) held for trading or (ii) it is
designated as at FVTPL. The financial liability other than derivative financial liabilities are stated as
liabilities held for trading.
Other financial liabilities are subsequently measured at amortized cost by using effective interest method.
Gain or loss arising from derecognition or amortization is recognized in current profit or loss.
80
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.5 Derecognition of financial liabilities
Financial liabilities are derecognized in full or in part only when the present obligation is discharged in full
or in part. An agreement entered into force between the Group (debtor) and a creditor to replace the original
financial liabilities with new financial liabilities with substantially different terms, derecognize the original
financial liabilities as well as recognize the new financial liabilities. When financial liabilities is
derecognized in full or in part, the difference between the carrying amount of the financial liabilities
derecognized and the consideration paid (including transferred non-cash assets or new financial liability) is
recognized in profit or loss for the current period.
10.6 Derivatives
Derivative financial instruments include forward exchange contracts, currency swaps and foreign exchange
options, etc. Derivatives are initially measured at fair value at the date when the derivative contracts are
entered into and are subsequently re-measured at fair value. The resulting gain or loss is recognized in profit
or loss unless the derivative is designated and highly effective as a hedging instrument, in which case the
timing of the recognition in profit or loss depends on the nature of the hedge relationship (Note III 28.1).
10.7 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be
offset, except for circumstances where the Group has a legal right that is currently enforceable to offset the
recognized financial assets and financial liabilities, and intends either to settle on a net basis, or to realize
the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability
shall be offset and the net amount is presented in the balance sheet.
10.8 Equity instruments
The consideration received from the issuance of equity instruments net of transaction costs is recognized in
shareholders’ equity. Consideration and transaction costs paid by the Company for repurchasing self-issued
equity instruments are deducted from shareholders’ equity.
When the Company repurchases its own shares, those shares are treated as treasury shares. All expenditures
relating to the repurchase are recorded in the cost of the treasury shares, with the transaction entering into
the share capital. Treasury shares are excluded from profit distributions and are stated as a deduction under
shareholders’ equity in the balance sheet.
81
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Receivables
Receivables are assessed for impairment on a collective group and/or on an individual basis as follows:
Expected credit losses in respect of a receivables is measured at an amount equal to lifetime expected credit
losses. The assessment is made collectively for account receivables, where receivables share similar credit
risk characteristics based on geographical location, using the expected credit losses model including inter-
alia aging analysis, historical loss experiences adjusted by the observable factors reflecting current and
expected future economic conditions. The ratio of the collective provision for non-overdue account
receivables is between 0%-1.7%.
When credit risk on a receivable has increased significantly since initial recognition, the group records
specific provision or collective provision, which is determined for groups of similar assets in countries in
which there are large number of customers with immaterial balances.
In assessing whether the credit risk on a receivable has increased significantly since initial recognition, the
Group compares the risk of a default occurring on the receivable at the reporting date with the risk of a
default occurring on the receivable at the date of initial recognition and considers both quantitative and
qualitative information that is reasonable and supportable, including observable data that comes to the
attention of the Group about loss events such as a significant decline in the solvency of an individual debtor
or the portfolio of debtors, and significant changes in the financial condition that have an adverse effect on
the debtor.
12. Inventories
12.1 Categories of inventories and initial measurement
The Group's inventories mainly include raw materials, work in progress, semi-finished goods, finished goods
and reusable materials. Reusable materials include low-value consumables, packaging materials and other
materials, which can be used repeatedly but do not meet the definition of fixed assets.
Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of
conversion and other expenditures incurred in bringing the inventories to their present location and condition
including direct labor costs and an appropriate allocation of production overheads.
12.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
12.3 Basis for determining net realizable value of inventories and provision methods for decline in value of
inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the net
realizable value is below the cost of inventories, a provision for decline in value of inventories is made. Net
realizable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion, the estimated costs necessary to make the sale and relevant taxes.
82
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
12. Inventories - (cont’d)
After the provision for decline in value of inventories is made, if the circumstances that previously caused
inventories to be written down below cost no longer exist so that the net realizable value of inventories is
higher than their carrying amount, the original provision for decline in value is reversed and the reversal is
included in profit or loss for the period.
12.4 The perpetual inventory system is maintained for stock system.
13. Long-term equity investments
Long-term equity investments include investments in subsidiaries, joint ventures and associates.
Subsidiaries are the companies that are controlled by the Company. Associates are the companies over which
the Group has significant influence. Joint ventures are joint arrangements over which the Group has joint
control along with other investors and has rights to the net assets of the joint arrangement.
The Company accounts for the investment in subsidiaries at historical cost in the Company's financial
statements. Investments in associates and joint ventures are accounted for under equity method.
13.1 Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprises under
common control, the investment cost of the long-term equity investment is the share of the carrying amount
of the shareholders' equity of the acquiree attributable to the ultimate controlling party at the date of
combination. For a long-term equity investment acquired through business combination not involving
enterprises under common control, the investment cost of the long-term equity investment is the cost of
acquisition. For a business combination not involving enterprises under common control achieved in stages
that involves multiple exchange transactions, the initial investment cost is carried at the aggregate of the
carrying amount of the acquirer’s previously held equity interest in the acquiree and the new investment cost
incurred on the acquisition date.
Regarding the long-term equity investment acquired otherwise than through a business combination, if the
long-term equity investment is acquired by cash, the historical cost is determined based on the amount of
cash paid and payable; if the long-term equity investment is acquired through the issuance of equity
instruments, the historical cost is determined based on the fair value of the equity instruments issued.
83
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
13. Long-term equity investments - (cont’d)
13.2 Subsequent measurement and recognition of profit or loss
If the long-term equity investment is accounted for at cost, it should be measured at historical cost less
accumulated impairment losses. Dividend declared by the investee should be accounted for as investment
income.
Under the equity method, where the long-term equity investment initial investment cost exceeds the Group’s
share of the fair value of the investee’s identifiable net assets at the time of acquisition, no adjustment is
made to the initial investment cost. Where the initial investment cost is less than the Group’s share of the
fair value of the investee’s identifiable net assets at the time of acquisition, the difference is recognized in
profit or loss for the period, and the cost of the long-term equity investment is adjusted accordingly.
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive
income of the investee for the period as investment income or loss and other comprehensive income for the
period. The Group recognizes its share of the investee’s net profit or loss based on the fair value of the
investee’s individual separately identifiable assets, etc. at the acquisition date after making appropriate
adjustments to be confirmed with the Group's accounting policies and accounting period. The Group
discontinues recognizing its share of net losses of the investee after the carrying amount of the long-term
equity investment together with any long-term interests that in substance form part of its net investment in
the investee is reduced to zero. If the Group has incurred obligations to assume additional losses of the
investee, a provision is recognized according to the expected obligation, and recorded as investment loss for
the period.
13.3 Basis for determining control, joint control and significant influence over investee
Control is achieved when the Company has power over the investee; is exposed, or has rights, to variable
returns from its involvement with the investee; and has the ability to use its power to affect its returns.
Joint control is the contractually agreed sharing of control over an economic activity, and exists only when
the strategic financial and operating policy decisions relating to the activity require the unanimous consent
of the parties sharing control.
Significant influence is the power to participate in the financial and operating policy decisions of the investee
but is not control or joint control over those policies.
When determining whether an investing enterprise is able to exercise control or significant influence over
an investee, the effect of potential voting rights of the investee (for example, warrants and convertible debts)
held by the investing enterprises or other parties that are currently exercisable or convertible shall be
considered.
13.4 Methods of impairment assessment and determining the provision for impairment loss
If the recoverable amounts of the investments to subsidiaries, joint ventures and associates are less than their
carrying amounts, an impairment loss should be recognized to reduce the carrying amounts to the recoverable
amounts (Note III 20).
84
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
13. Long-term equity investments - (cont’d)
13.5 The disposal of long-term equity investment
On disposal of a long term equity investment, the difference between the proceeds actually received and
receivable and the carrying amount is recognized in profit or loss for the period.
14. Investment properties
Investment property refers to real estate held to earn rentals or for capital appreciation, or both, including
leased land use rights, land use rights held and provided for transferring after appreciation and leased
constructions, etc.
Investment property is initially measured at cost. Subsequent expenditures related to an investment property
shall be included in cost of investment property only when the economic benefits associated with the asset
will likely flow to the Group and its cost can be measured reliably. All other subsequent expenditures on
investment property shall be included in profit or loss for the current period when incurred.
The Group adopts cost method for subsequent measurement of investment property, which is depreciated or
amortized using the same policy as that for buildings and land use rights.
When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal of
the property net of the carrying amount and related taxes and surcharges is recognized in profit or loss for
the current period.
15. Fixed assets
15.1 Recognition criteria for fixed assets
Fixed assets include land owned by the Group and buildings, machinery and equipment, transportation
vehicles, office equipment and others.
Fixed assets are tangible assets that are held for use in the production or supply of goods or for administrative
purposes, and have useful lives of more than one accounting year. A fixed asset is recognized only when it
is probable that economic benefits associated with the asset will flow to the Group and the cost of the asset
can be reliably measured. Purchased or constructed fixed assets are initially measured at cost when acquired.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is
probable that economic benefits associated with the asset will flow to the Group and the subsequent
expenditures can be measured reliably. Other subsequent expenditures are recognized in profit or loss in the
period in which they are incurred.
85
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
15. Fixed assets - (cont’d)
15.2 Depreciation of each category of fixed assets
Fixed asset is depreciated based on the cost of fixed asset recognized less expected net residual value over
its useful life using the straight-line method since the month subsequent to the one in which it is ready for
intended use. Depreciation is calculated based on the carrying amount of the fixed asset after impairment
over the estimated remaining useful life of the asset.
The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation
method applied at least once at each financial year-end, and account for any change as a change in an
accounting estimate.
The estimated useful life, estimated net residual value and annual depreciation rate of each category of fixed
assets are as follows:
Residual Annual
Useful life value depreciation rate
Category Depreciation (years) (%) (%)
Buildings the straight-line method 15-50 0-4 1.9-6.7
Machinery and equipment the straight-line method 3-22 0-4 4.4-33.3
Office and other equipment the straight-line method 3-17 0-4 5.6-33.3
Motor vehicles the straight-line method 5-9 0-2 10.9-20.0
Land owned by the Group is not depreciated.
15.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or
disposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, the
amount of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognized
in profit or loss for the period.
The difference between recoverable amounts of the fixed assets under the carrying amount is referred to as
impairment loss (Note III 20).
16. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various construction,
installation costs, borrowing costs capitalized and other expenditures incurred until such time as the relevant
assets are completed and ready for its intended use. When the asset concerned is ready for its intended use,
the cost of the asset is transferred to fixed assets and depreciated starting from the following month.
The difference between recoverable amounts of the construction in progress under the carrying amount is
referred to as impairment loss (Note III 20).
86
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
17. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are
capitalized when expenditures for such asset and borrowing costs are incurred and activities relating to the
acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use
or sale have commenced. Capitalization of borrowing costs ceases when the qualifying asset being acquired,
constructed or produced becomes ready for its intended use or sale. Borrowing costs incurred subsequently
should be charged to profit or loss. Capitalization of borrowing costs is suspended during periods in which
the acquisition, construction or production of a qualifying asset is suspended abnormally and when the
suspension is for a continuous period of more than 3 months. Capitalization is suspended until the acquisition,
construction or production of the asset is resumed.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is
the actual interest expenses incurred on that borrowing for the period less any bank interest earned from
depositing the borrowed funds before being used on the asset or any investment income on the temporary
investment of those funds.
Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interest
to be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excess
of cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The capitalization
rate is the weighted average of the interest rates applicable to the general-purpose borrowings.
During the capitalization period, exchange differences on foreign currency specific-purpose borrowing are
fully capitalized whereas exchange differences on foreign currency general-purpose borrowing, charged to
profit or loss.
18. Intangible assets
18.1 Valuation methods, useful life, impairment test
The Group’s intangible assets include product registration assets, intangible assets upon purchase of products,
marketing rights and rights to use tradenames and trademarks, land use rights, software and customer
relations. Intangible assets are stated at cost less accumulated amortization and impairment losses.
When an intangible asset with a finite useful life is available for use, its original cost less any accumulated
impairment losses is amortized over its estimated useful life using the straight-line method. An intangible
asset with an indefinite useful life is not amortized.
For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method at
the end of the year, and makes adjustments when necessary.
The respective amortization periods for such intangible assets are as follows:
Item Amortization period (years)
Land use rights 49-50 years
Product registration 8 years
Intangible assets on purchase of products 7-11, 20 years
Marketing rights, tradename and trademarks 4-10, 30 years
Software 3-5 years
Customer relations 5-10 years
The difference between recoverable amounts of the intangible assets under the carrying amount is referred
to as impairment loss (see Note III 20 – Impairment of long-term assets).
87
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
18. Intangible assets - (cont’d)
18.2 Research and development expenditure
Internal research and development project expenditures were classified into research expenditures and
development expenditures depending on its nature and the greater uncertainty whether the research activities
becoming to intangible assets.
Expenditure during the research phase is recognized as an expense in the period in which it is incurred.
Expenditure during the development phase that meets all of the following conditions at the same time is
recognized as intangible asset:
- It is technically feasible to complete the intangible asset so that it will be available for use or sale;
- The Group has the intention to complete the intangible asset and use or sell it;
- The Group can demonstrate the ways in which the intangible asset will generate economic benefits;
- The availability of adequate technical, financial and other resources to complete the development and the
ability to use or sell the intangible asset;
- The expenditure attributable to the intangible asset during its development phase can be reliably
measured.
Expenditures that do not meet all of the above conditions at the same time are recognized in profit or loss
when incurred. If the expenditures cannot be distinguished between the research phase and development
phase, the Group recognizes all of them in profit or loss for the period. Expenditures that have previously
been recognized in the profit or loss would not be recognized as an asset in subsequent years. Those
expenditures capitalized during the development stage are recognized as development costs incurred and
will be transferred to intangible asset when the underlying project is ready for an intended use.
19. Goodwill
The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’s interest in the fair
value of the identifiable net assets of the acquiree under a business combination not involving enterprises
under common control.
Goodwill is not amortized and is stated in the balance sheet at cost less accumulated impairment losses (see
Note III 20 – Impairment of long-term assets). On disposal of an asset group or a set of asset groups, any
attributable goodwill is written off and included in the calculation of the profit or loss on disposal.
20. Impairment of long-term assets
The Company assesses at each balance sheet date whether there is any indication that the fixed assets,
construction in progress, right of use assets, intangible assets with finite useful lives, investment properties
measured at historical cost, investments in subsidiaries, joint ventures and associates may be impaired. If
there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets.
The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value of
the future cash flow estimated to be derived from the asset. The Group estimates the recoverable amount on
an individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the Group
determines the recoverable amount of the asset group to which the asset belongs. Identification of an asset
group is based on whether major cash inflows generated by the asset group are largely independent of the
cash inflows from other assets or asset groups.
88
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
20. Impairment of long-term assets - (cont’d)
Goodwill arising from a business combination is tested for impairment at least at each year end, irrespective
of whether there is any indication that the asset may be impaired. For the purpose of impairment testing, the
carrying amount of goodwill acquired in a business combination is allocated from the acquisition date on a
reasonable basis to each of the related asset groups; if it is impossible to allocate to the related asset groups,
it is allocated to each of the related set of asset groups. Each of the related asset groups or set of asset groups
is an asset group or set of asset group that is able to benefit from the synergies of the business combination
and shall not be larger than a reportable segment determined by the Group. If the carrying amount of the
asset group or set of asset groups is higher than its recoverable amount, the amount of the impairment loss
first reduced by the carrying amount of the goodwill allocated to the asset group or set of asset groups, and
then the carrying amount of other assets (other than the goodwill) within the asset group or set of asset groups,
pro rata based on the carrying amount of each asset.
Once the impairment loss of such assets is recognized, it will not be reversed in any subsequent period.
21. Employee benefits
21.1 Short-term employee benefits
Employee wages or salaries, bonuses, social security contributions, measured on a non-discounted basis, and
the expense is recorded when the related service is provided. A provision for short-term employee benefits
in respect of cash bonuses is recognized in the amount expected to be paid where the Group has a current
legal or constructive obligation to pay the said amount for services provided by the employee in the past and
the amount can be estimated reliably.
21.2 Post-employment benefits
Post-employment benefits are classified into defined contribution plans and defined benefit plans.
A defined contribution plan is a post-employment benefit plan under which the Group pays contributions to
a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution plans are recognized as an expense in profit or loss in the periods during
which related services are rendered by employees.
Defined benefit plans of the Group are post-employment benefit plans other than defined contribution plans.
In accordance with the projected unit credit method, the Group measures the obligations under defined
benefit plans using unbiased and mutually compatible actuarial assumptions to estimate related demographic
variables and financial variables, and discount obligations under the defined benefit plans to determine the
present value of the defined benefit liability. The discount rate used is the yield on the reporting date on
highly-rated corporate debentures denominated in the same currency, that have maturity dates approximating
the terms of the Group’s obligation.
The Group attributes benefit obligations under a defined benefit plan to periods of service provided by
respective employees. Service cost and interest expense on the defined benefit liability are charged to profit
or loss and remeasurements of the defined benefit liability are recognized in other comprehensive income.
89
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
21. Employee benefits - (cont’d)
21.3 Termination benefits
When the Group terminates the employment with employees or provides compensation under an offer to
encourage employees to accept voluntary redundancy, a provision is recognized with a corresponding
expense in profit or loss at the earlier of the following dates:
- When the Group cannot unilaterally withdraw the offer of termination benefits because of an employee
termination plan or a curtailment proposal.
- When the Group has a formal detailed restructuring plan involving the payment of termination benefits
and has raised a valid expectation in those affected that it will carry out the restructuring by starting to
implement that plan or announcing its main features to those affected by it.
If the benefits are payable more than 12 months after the end of the reporting period, they are discounted to
their present value. The discount rate used is the yield on the reporting date on highly-rated corporate
debentures denominated in the same currency, that have maturity dates approximating the terms of the
Group’s obligation.
21.4 Other long-term employee benefits
The Group’s net obligation for long-term employee benefits, which are not attributable to post-employment
benefit plans, is for the amount of the future benefit to which employees are entitled for services that were
provided during the current and prior periods.
The amount of these benefits is discounted to its present value and the fair value of the assets related to these
obligations is deducted therefrom. The discount rate used is the yield on the reporting date on highly-rated
corporate debentures denominated in the same currency, that have maturity dates approximating the terms
of the Group’s obligation.
22. Share-based payment
Share-based payment refers to the transaction in order to acquire the service offered by the employees or
other parties that grants equity instruments or liabilities on the basis of the equity instruments. Share-based
payment classified into equity-settled share-based payment and cash-settled share-based payment.
22.1 Cash-settled share-based payment
The cash-settled share-based payment should be measured according to the fair value of the liabilities
recognized based on the shares or other equity instrument undertaken by the Company. For cash-settled
share-based payment made in return for the rendering of employee services that cannot be exercised until
the services are fully provided during the vesting period or specified performance targets are met, on each
balance sheet date within the vesting period, the services acquired in the current period shall, based on the
best estimate of the number of exercisable instruments, be recognized in relevant expenses and the
corresponding liabilities at the fair value of the liability incurred by the Company.
On each balance sheet date and the settlement date before the settlement of the relevant liabilities, the
Company should re-measure the fair value of the liabilities and the changes should be included in the current
period profit and loss.
90
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
23. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency, it is probable
that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation
can be measured reliably.
The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation at the settlement date, taking into account factors pertaining to a contingency such as the risks,
uncertainties and time value of money. Where the effect of the time value of money is material, the amount
of the provision is determined by discounting the related future cash outflows. The increase in the provision
due to passage of time is recognized as interest expense.
If all or part of the provision settlements is reimbursed by third parties, when the realization of income is
virtually certain, then the related asset should be recognized. However, the amount of related asset
recognized should not be exceeding the respective provision amount.
At the balance sheet date, the amount of provision should be re-assessed to reflect the best estimation then.
24. Revenue
Revenue of the Group is mainly from sale of goods.
The Group recognizes revenue when transferring goods to a customer, at the amount of the transaction price.
Goods are considered transferred when the customer obtains control of the goods. Transaction price is the
amount of consideration to which an entity expects to be entitled in exchange for transferring goods to a
customer, excluding amounts collected on behalf of third parties.
Significant financing component
For a contract with a significant financing component, the Group recognize revenue at an amount that reflects
the price that a customer would have paid for the goods if the customer had paid cash for those goods at
receipt. The difference between the amount of consideration and the cash selling price of the goods, is
amortized in the contract period using effective interest rate. The Group does not adjust the amount of
consideration for the effects of a significant financing component if the Group expects, at contract inception,
that the period between when the entity transfers a good to a customer and when the customer pays for that
good will be one year or less.
Sale with a right of return
For sale with a right of return, the Group recognizes revenue at the amount of consideration to which the
Group expects to be entitled (ie excluding the products expected to be returned). For any amounts received
(or receivable) for which an entity does not expect to be entitled, the entity shall not recognize revenue when
it transfers products to customers but shall recognize those amounts received (or receivable) as a refund
liability. An asset recognized for the Group’s right to recover products from a customer on settling a refund
liability shall initially be measured by reference to the former carrying amount of the product less any
expected costs to recover those products.
91
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
25. Government grants
Government grants are transfer of monetary assets and non-monetary assets from the government to the
Group at no consideration, including tax returns, financial subsidies and so on. A government grant is
recognized only when the Group can comply with the conditions attached to the grant and the Group will
receive the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received
or receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If
the fair value cannot be reliably determined, it is measured at a nominal amount.
Government grants are either related to assets or income.
(1) The basis of judgment and accounting method of the government grants related to assets
Government grants obtained for acquiring long-term assets are government grants related to assets. A
government grant related to an asset is offset with the cost of the relevant asset.
(2) The basis of judgment and accounting method of the government grants related to income
For a government grant related to income, if the grant is a compensation for related expenses or losses to be
incurred in subsequent periods, the grant is recognized as deferred income, and recognized in profit or loss
over the periods in which the related costs are recognized. If the grant is a compensation for related expenses
or losses already incurred, the grant is recognized immediately in profit or loss for the period.
Government grants related to the Group’s normal course of business are offset with related costs and
expenses. Government grants related that are irrelevant with the Groups’s normal course of business are
included in non-operating gains.
26. Current and deferred tax
The income tax expenses include current income tax and deferred income tax.
26.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are
measured at the amount expected to be paid (or recovered) according to the requirements of tax laws.
26.2 Deferred tax assets and deferred tax liabilities
Temporary differences are differences between the carrying amounts of certain assets or liabilities and their
tax base.
All taxable temporary differences are recognized as related deferred tax liabilities. Deferred tax assets are
recognized to the extent that it is probable that future taxable profits will be available against which the
deductible losses and tax credits can be utilized.
92
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
26. Current and deferred tax - (cont’d)
26.2 Deferred tax assets and deferred tax liabilities - (cont’d)
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the
extent that it is probable that future taxable profits will be available against which the deductible losses and
tax credits can be utilized. However, for deductible temporary differences associated with the initial
recognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a
business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at
the time of transaction, no deferred tax asset or liability is recognized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to tax
laws, that are expected to apply in the period in which the asset is realized or the liability is settled.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the
timing of the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The Group may be required to pay additional tax in case of distribution of dividends by the Group companies.
This additional tax was not included in the financial statements, since the policy of the Group is not to
distribute in the foreseeable future a dividend which creates a significant additional tax liability.
Except for those current income tax and deferred tax charged to comprehensive income or shareholders’
equity in respect of transactions or events which have been directly recognized in other comprehensive
income or shareholders’ equity, and deferred tax recognized on business combinations, all other current
income tax and deferred tax items are charged to profit or loss in the current period.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer
probable that sufficient taxable profits will be available in the future to allow the benefit of deferred tax
assets to be utilized. Such reduction is reversed when it becomes probable that sufficient taxable profits will
be available.
26.3 Offset of income tax
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and tax assets and
tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity
or different taxable entities which intend to realize the assets and liabilities simultaneously, current tax assets
and liabilities are offset and presented on a net basis.
When the Group has a legal right to settle deferred tax assets and liabilities on a net basis which relates to
income taxes levied by the same taxation authority, on either the same taxable entity or different taxable
entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets and
liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or
liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented
on a net basis.
93
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
27. Leases
Lease is a contract, that conveys the right to use an asset for a period of time in exchange for consideration.
27.1 Determining whether an arrangement contains a lease
On the inception date of the lease, the Group determines whether the arrangement is a lease or contains a
lease, while assessing if it conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. In its assessment of whether an arrangement conveys the right to control the use
of an identified asset, the Group assesses whether it has the following two rights throughout the lease term:
(a) The right to obtain substantially all the economic benefits from use of the identified asset; and
(b) The right to direct the identified asset’s use.
An arrangement does not contain a lease if an asset is leased for a period of less than 12 months, or to lease of
asset with low economic value.
27.2 Initial recognition of leased assets and lease liabilities
Upon initial recognition, the Group recognizes a liability at the present value of future lease payments
(exclude certain variable lease payments, as detailed in note III 27.4), and concurrently the Group recognizes
a right-of-use asset at the same amount, adjusted for any prepaid lease payments paid at the lease date or
before, plus initial direct costs incurred in respect of the lease.
When the interest rate implicit in the lease is not readily determinable, the incremental borrowing rate of the
lessee is used.
The Group presents right-of-use assets separately from other assets in the balance sheet.
27.3 The lease term
The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination
option, if it is reasonably certain that the lessee will exercise or not exercise the option, respectively.
If there is a change in the lease term, or in the assessment of an option to purchase the underlying asset, the
Group remeasures the lease liability, on the basis of the revised lease term and the revised discount rate and
adjust the right-of-use assets accordingly.
27.4 Variable lease payments
Variable lease payments that depend on an index or a rate, are initially measured using the index or rate
existing at the commencement of the lease. When the cash flows of future lease payments change as the
result of a change in an index or a rate, the balance of the liability is adjusted with a correspondence change
in the right-of-use asset.
Other variable lease payments that are not included in the measurement of the lease liability are recognized
in profit or loss in the period in which the condition that triggers payment occurs.
94
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
27. Leases (cont’d)
27.5 Subsequent measurement
After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation
and accumulated impairment losses and is adjusted for re-measurements of the lease liability. The asset is
depreciated on a straight-line basis over the useful life or contractual lease period, whichever earlier.
The Group applies ASBE8 Impairment of Assets, to determine whether the right-of-use asset is impaired
and to account for any impairment loss identified.
A lease liability is measured after the lease commencement date at amortized cost using the effective interest
method.
28. Other significant accounting policies and accounting estimates
28.1 Hedging
The Group uses derivative financial instruments to hedge its risks related to foreign currency and inflation
risks and derivatives that are not used for hedging.
Hedge accounting
The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing
basis, whether the hedge is expected to be effective in offsetting the changes in the fair value of cash flows
that can be attributed to the hedged risk during the period for which the hedge is designated.
An effective hedge exists when all of the below conditions are met:
There is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not dominate the value changes that result from that economic
relationship;
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the
hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity
actually uses to hedge that quantity of hedged item.
On the commencement date of the accounting hedge, the Group formally documents the relationship between
the hedging instrument and hedged item, including the Group’s risk management objectives and strategy in
executing the hedge transaction, together with the methods that will be used by the Group to assess the
effectiveness of the hedging relationship.
With respect to a cash-flow hedge, a forecasted transaction that constitutes a hedged item must be highly
probable and must give rise to exposure to changes in cash flows that could ultimately affect profit or loss.
95
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.1 Hedging (cont’d)
Measurement of derivative financial instruments
Derivative financial instruments are recognized initially at fair value; attributable transaction costs are
recognized in profit or loss as incurred.
Cash-flow hedges
Subsequent to the initial recognition, changes in the fair value of derivatives used to hedge cash flows are
recognized through other comprehensive income directly in a hedging reserve, with respect to the part of the
hedge that is effective. Regarding the portion of the hedge that is not effective, the changes in fair value are
recognized in profit and loss. The amount accumulated in the hedging reserve is reclassified to profit and
loss in the period in which the hedged cash flows impact profit or loss and is presented in the same line item
in the statement of income as the hedged item.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or
exercised, the hedge accounting is discontinued. The cumulative gain or loss previously recognized in a
hedging reserve through other comprehensive income remains in the reserve until the forecasted transaction
occurs or is no longer expected to occur. If the forecasted transaction is no longer expected to occur, the
cumulative gain or loss in respect of the hedging instrument in the hedging reserve is reclassified to profit
or loss.
Economic hedge
Hedge accounting is not applied with respect to derivative instruments used to economically hedge financial
assets and liabilities denominated in foreign currency or CPI linked. Changes in the fair value of such
derivatives are recognized in profit or loss as gain (loss) from changes in fair value or investment income.
Derivatives that are not used for hedging
Changes in the fair value of derivatives that are not used for hedging are recognized in profit or loss as gain
(loss) from changes in fair value or investment income.
28.2 Securitization of assets
Details of the securitization of asset agreements and accounting policy are set out in Note V.5 - Account
receivables.
28.3 Segment reporting
Reportable segments are identified based on operating segments which are determined based on the structure
of the Group’s internal organization, management requirements and internal reporting system.
96
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.3 Segment reporting - (cont’d)
Two or more operating segments may be aggregated into a single operating segment if the segments have
similar economic characteristics and are same or similar in respect of the nature of each product and service,
the nature of production processes, the type or class of customers for the products and services, the methods
used to distribute the products or provide the services, and the nature of the regulatory environment.
Inter-segment revenues are measured on the basis of actual transaction price for such transactions for
segment reporting. Segment accounting policies are consistent with those for the consolidated financial
statements.
28.4 Profit distributions to shareholders
Dividends which are approved after the balance sheet date are not recognized as a liability at the balance
sheet date but are disclosed in the notes separately.
29. Changes in significant accounting policies and accounting estimates
29.1 Changes in significant accounting policies
There are no significant changes in accounting policies in the reporting period.
29.2 Changes in significant accounting estimates
There are no significant changes in accounting estimates in the reporting period.
97
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments
The preparation of the financial statements requires management to make estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates. Estimates as well as underlying assumptions and
uncertainties involved are reviewed on an ongoing basis. Revisions to accounting estimates are recognized
in the period in which the estimate is revised and in any future periods affected.
Notes V.34, Note VIII, Note IX and Note XIII contain information about the assumptions and their risk
factors relating to post-employment benefits – defined benefit plans, fair value of financial instruments and
share-based payments. Other key sources of estimation uncertainty are as follows:
30.1 Expected credit loss of trade receivables
As described in Note III.11, trade receivables are reviewed at each balance sheet date to determine whether
credit risk on a receivable has increased significantly since initial recognition, lifetime expected losses is
accrued for impairment provision. Evidence of impairment includes observable data that comes to the
attention of the Group about loss events such as a significant decline in the solvency of an individual debtor
or the portfolio of debtors, and significant changes in the financial condition that have an adverse effect on
the debtor. If there is objective evidence of a recovery in the value of receivables which can be related
objectively to an event occurring after the impairment was recognized, the previously recognized impairment
loss is reversed.
30.2 Provision for impairment of inventories
As described in Note III.12, the net realisable value of inventories is under management’s regular review,
and as a result, provision for impairment of inventories is recognized for the excess of inventories’ carrying
amounts over their net realisable value. When making estimates of net realisable value, the Group takes into
consideration the use of inventories held on hand and other information available to form the underlying
assumptions, including the inventories’ market prices and the Group’s historical operating costs. The actual
selling price, the costs of completion and the costs necessary to make the sale and relevant taxes may vary
based on the changes in market conditions and product saleability, manufacturing technology and the actual
use of the inventories, resulting in the changes in provision for impairment of inventories. The net profit or
loss may then be affected in the period when the impairment of inventories is adjusted.
98
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments - (cont’d)
30.3 Impairment of assets other than inventories and financial assets
As described in Note III.20, if impairment indication exists, assets other than inventories and financial assets
are assessed at balance sheet date to determine whether the carrying amount exceeds the recoverable amount
of the assets. If any such case exists, an impairment loss is recognized.
The recoverable amount of an asset (or an asset group) is the greater of its fair value less costs to sell and its
present value of expected future cash flows. Since a market price of the asset (or the asset group) cannot be
obtained reliably, the fair value of the asset cannot be estimated reliably, the recoverable amount is calculated
based on the present value of estimated future cash flows. In assessing the present value of estimated future
cash flows, significant judgements are exercised over the asset’s production, selling price, related operating
expenses and discount rate to calculate the present value. All relevant materials which can be obtained are
used for estimation of the recoverable amount, including the estimation of the production, selling price and
related operating expenses based on reasonable and supportable assumptions.
30.4 Depreciation and amortisation of assets such as fixed assets and intangible assets
As described in Note III.15 and III.18, assets such as fixed assets and intangible assets are depreciated and
amortised over their useful lives after taking into account residual value. The estimated useful lives of the
assets are regularly reviewed to determine the depreciation and amortisation costs charged in each reporting
period. The useful lives of the assets are determined based on historical experience of similar assets and the
estimated technical changes. If there have been significant changes in the factors used to determine the
depreciation or amortisation, the rate of depreciation or amortisation is revised prospectively.
30.5 Income taxes and deferred income tax
The Company and Group companies are assessed for income tax purposes in a large number of jurisdictions
and, therefore, Company management is required to use considerable judgment in determining the total
provision for taxes and attribution of income.
When assessing whether there will be sufficient future taxable profits available against which the deductible
temporary differences can be utilised, the Group recognizes deferred tax assets to the extent that it is probable
that future taxable profits will be available against which the deductible temporary differences can be utilised,
using tax rates that would apply in the period when the asset would be utilised. In determining the amount
of deferred tax assets, the Group makes reasonable judgements and estimates about the timing and amount
of taxable profits to be utilised in the following periods, and of the tax rates applicable in the future according
to the existing tax policies and other relevant regulations. If the actual timing and amount of future taxable
profits or the actual applicable tax rates differ from the estimates made by management, the differences affect
the amount of tax expenses.
99
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments - (cont’d)
30.6 Contingent liabilities
When assessing the possible outcomes of legal claims filed against the Company and its investee companies,
the company positions are based on the opinions of their legal advisors. These assessments by the legal
advisors are based on their professional judgment, considering the stage of the proceedings and the legal
experience accumulated regarding the various matters. Since the results of the claims will be determined by
the courts, the outcomes could be different from the assessments.
In addition to the said claims, the Group is exposed to unasserted claims, inter alia, where there is doubt as
to interpretation of the agreement and/or legal provision and/or the manner of their implementation. This
exposure is brought to the Company’s attention in several ways, among others, by means of contacts made
to Company personnel. In assessing the risk deriving from the unasserted claims, the Company relies on
internal assessments by the parties dealing with these matters and by management, who weigh assessment
of the prospects of a claim being filed, and the chances of its success, if filed. The assessment is based on
experience gained with respect to the filing of claims and the analysis of the details of each claim. By their
nature, in view of the preliminary stage of the clarification of the legal claim, the actual outcome could be
different from the assessment made before the claim was filed.
30.7 Employee benefits
The Group’s liabilities for long-term post-employment and other benefits are calculated according to the
estimated future amount of the benefit to which the employee will be entitled in consideration for his services
during the current period and prior periods. The benefit is stated at present value net of the fair value of the
plan’s assets, based on actuarial assumptions. Changes in the actuarial assumptions could lead to material
changes in the book value of the liabilities and in the operating results.
30.8 Derivative financial instruments
The Group enters into transactions in derivative financial instruments for the purpose of hedging risks related
to foreign currency and inflationary risks. The derivatives are recorded at their fair value. The fair value of
derivative financial instruments is based on quotes from financial institutions. The reasonableness of the
quotes is examined by discounting the future cash flows, based on the terms and length of the period to
maturity of each contract, while using market interest rates of a similar instrument as of the measurement
date. Changes in the assumptions and the calculation model could lead to material changes in the fair value
of the assets and liabilities and in the results.
100
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IV. Taxation
1. Main types of taxes and corresponding tax rates
The income tax rate in China is 25% (2019: 25%). The subsidiaries outside of China are assessed based on
the tax laws in the country of their residence.
Set forth below are the tax rates outside China relevant to the subsidiaries with significant sales to third party:
Name of subsidiary Location 2020
ADAMA agriculture solutions Ltd. Israel 23.0%
ADAMA Makhteshim Ltd. Israel 7.5%
ADAMA Agan Ltd. Israel 16.0%
ADAMA Brasil S/A Brazil 34.0%
Makhteshim Agan of North America Inc. U.S. 24.7%
ADAMA India Private Ltd India 25.2%
ADAMA Deutschland GmbH Germany 32.5%
Control Solutions Inc. U.S. 24.0%
Adama Australia Pty Ltd Australia 30.0%
ADAMA France S.A.S France 28.0%
ADAMA Northern Europe B.V. Netherlands 25.0%
ADAMA Italia S.R.L. Italy 27.9%
Alligare Inc. U.S. 27.5%
The VAT rate of the Group's subsidiaries is in the range between 2.5% to 27%.
101
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(1) Benefits from Hi-Tech Certificate
Adama Anpon (Jiangsu) Ltd. (Formally know as Jiangsu Anpon Electrochemical Co. Ltd), a subsidiary of
the Company, was jointly approved as new and high-tech enterprise, by the Jiangsu Provincial Department
of Science and Technology, Department of Finance of Jiangsu Province, Jiangsu Provincial Office of the
State Administration of Taxation. The applicable income tax rate from 2018 to 2020 is 15%.
(2) Benefits under the Law for the Encouragement of Capital Investments
Industrial enterprises of subsidiaries in Israel were granted “Approved Enterprise” or “Beneficiary Enterprise”
status under the Israeli Law for the Encouragement of Capital Investments, 1959. Should a dividend be
distributed from the retained earning produced in which the company was considered as an “Approved
Enterprise” or “Beneficiary Enterprise”, the company may be liable for tax at the time of distribution.
On December 29, 2010 the Knesset approved the Economic Policy Law for 2011-2012, which includes an
amendment to the Law for the Encouragement of Capital Investments - 1959 (hereinafter - “the
Amendment”). The Amendment is effective from January 1, 2011 and its provisions apply to preferred
income derived or accrued in 2011 and thereafter by a preferred company, per the definition of these terms
in the Amendment.
As of the date of the report, all subsidiaries in Israel adopted the amendment and the deferred taxes were
calculated accordingly.
The Amendment provides that only companies in Development Area A will be entitled to the grants track
and that they will be entitled to receive benefits under this track and under the tax benefits track at the same
time. The tax benefit tracks under the law are: a preferred enterprise and a special preferred enterprise, which
mainly provide a uniform and reduced tax rate for all the company’s income entitled to benefits. Tax rates
on preferred income as from the 2017 tax year as follows: 7.5% for Development Area A and 6% for the rest
of the country.
The amendment further determined that no tax shall apply to dividend distributed out of preferred income to
shareholder who is Israel resident company.
102
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(2) Benefits under the Law for the Encouragement of Capital Investments - (cont’d)
On December 21, 2016 the Knesset plenum passed the second and third reading of the Economic Efficiency
Law (Legislative Amendments for Achieving Budget Objectives in the Years 2017 and 2018) – 2016 in
which the Encouragement Law was also amended (hereinafter: “the Amendment”). The Amendment added
new tax benefit tracks for a “preferred technological enterprise” and a “special preferred technological
enterprise” which award reduced tax rates to a technological industrial enterprise for the purpose of
encouraging activity relating to the development of qualifying intangible assets.
The benefits will be awarded to a “preferred company” that has a “preferred technological enterprise” or a
“special preferred technological enterprise” with respect to taxable “preferred technological income” per its
definition in the Encouragement Law.
Preferred technological income that meets the conditions required in the law, will be subject to a reduced
corporate tax rate of 12%, and if the preferred technological enterprise is located in Development Area A to
a tax rate of 7.5%. A company that owns a special preferred technological enterprise will be subject to a
reduced corporate tax rate of 6% regardless of the development area in which the enterprise is located. The
Amendment is effective as from January 1, 2017.
On May 16, 2017 the Knesset Finance Committee approved Encouragement of Capital Investment
Regulations (Preferred Technological Income and Capital Gain of Technological Enterprise) – 2017
(hereinafter: “the Regulations”), which provides rules for applying the “preferred technological enterprise”
and “special preferred technological enterprise” tax benefit tracks including the Nexus formula that provides
the mechanism for allocating the technological income eligible for the benefits.
ADAMA Agan applied to the Tax Authority in order to be included under the applicability of the amended
law.
(3) Benefits under the Law for the Encouragement of Industry (Taxes), 1969
Under the Israeli Law for the Encouragement of Industry (Taxes) 1969, ADAMA Agricultural Solutions Ltd.
(hereinafter: “Solutions”) is an Industrial Holding Company and some of the subsidiaries in Israel are
“Industrial Companies”. The main benefit under this law is the filing of consolidated income tax returns
(Solutions files a consolidated income tax return with Adama Makhteshim and submission of a consolidated
report together with Adama Agan as of 2017) and amortization of know-how over 8 years, higher rates of
depreciation.
103
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements
1. Cash at Bank and On Hand
June 30 December 31
2020 2019
Cash on hand 3,651 6,265
Deposits in banks 6,252,456 4,313,642
Other cash and bank 37,068 28,681
6,293,175 4,348,588
Including cash and bank placed outside China 4,212,790 2,443,065
As at June 30, 2020, restricted cash and bank balances was 37,068 thousand RMB (as at December 31, 2019-
28,681 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Financial assets held for trading
June 30 December 31
2020 2019
Debt instruments - 15,788
Other 12,609 13,722
12,609 29,510
3. Derivative financial assets
June 30 December 31
2020 2019
Economic hedge 949,757 436,201
Accounting hedge derivatives 67,545 53,912
1,017,302 490,113
4. Bills Receivable
June 30 December 31
2020 2019
Post-dated checks receivable 14,478 13,757
Bank acceptance draft 32,955 12,243
47,433 26,000
All bills receivables are due within 1 year.
104
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable
a. By category
June 30, 2020
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 491,187 5 252,313 51 238,874
Account receivables assessed
collectively for impairment 8,523,290 95 84,772 1 8,438,518
9,014,477 100 337,085 4 8,677,392
December 31, 2019
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 534,532 6 299,267 56 235,265
Account receivables assessed
collectively for impairment 7,868,077 94 99,185 1 7,768,892
8,402,609 100 398,452 5 8,004,157
b. Aging analysis
June 30, 2020
Within 1 year (inclusive) 8,564,893
Over 1 year but within 2 years 192,265
Over 2 years but within 3 years 79,439
Over 3 years but within 4 years 38,626
Over 4 years but within 5 years 14,301
Over 5 years 124,953
9,014,477
105
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
Main groups of account receivables assessed collectively for impairment based on geographical
location:
Geographical location A:
Account receivables in geographical location A are grouped based on similar credit risk:
June 30, 2020
Provision for expected Percentage
Book value credit loss (%)
A 1,098,319 3,922 0.03-0.75
B 409,756 5,037 1.23
C 181,019 9,510 5.25
D 53,073 1,654 3.12
1,742,167 20,123 1.16
Geographical location B:
Account receivables in geographical location B are grouped based on aging analysis:
June 30, 2020
Provision for expected Percentage
Book value credit loss (%)
Accounts receivable that are not overdue 349,885 3,145 0.9
Debts overdue less than 60 days 19,725 592 3.0
Debts overdue less than 180 days but 30,484 3,048 10.0
more than 60 days
Debts overdue above 180 days 19,969 7,987 40.0
Legal Debtors 38,214 38,214 100.0
458,277 52,986 11.2
Other geographical locations:
June 30, 2020
Provision for expected Percentage
Book value credit loss (%)
Other account receivables assessed
collectively for impairment 6,322,846 11,663 0-6.84
106
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
c. Addition, written-back and written-off of provision for expected credit losses during the period
Addition of provision for expected credit loss during the period
Lifetime expected credit Lifetime expected
loss (credit losses has credit loss (credit losses
not occurred) has occurred) Total
January 1, 2020 47,908 350,544 398,452
Addition during the period, net - 14,664 14,664
Write back during the period (4,843) (15,601) (20,444)
Write-off during the period - (671) (671)
Exchange rate effect (8,134) (46,782) (54,916)
Balance as of June 30, 2020 34,931 302,154 337,085
d. Five largest accounts receivable at June 30, 2020:
Allowance of expected
Proportion of Accounts credit losses (credit losses
Name Closing balance receivable (%) has occurred)
Party 1 189,320 2 -
Party 2 156,922 2 -
Party 3 128,104 1 -
Party 4 122,603 1 -
Party 5 102,837 1 2,011
Total 699,786 7 2,011
e. Derecognition of accounts receivable due to transfer of financial assets
Certain subsidiaries of the group entered into a securitization transaction with Rabobank International for
sale of trade receivables (hereinafter – “the Securitization Program” and/or “the Securitization Transaction”).
Pursuant to the Securitization Program, the companies will sell their trade receivables debts, in various
different currencies, to a foreign company that was set up for this purpose and that is not owned by the
Adama Ltd. (hereinafter – “the Acquiring Company”). Acquisition of the trade receivables by the Acquiring
Company is financed by a U.S. company, Nieuw Amsterdam Receivables Corporation for the Rabobank
International Group.
The trade receivables included as part of the Securitization Transaction are trade receivables that meet the
criteria provided in the agreement.
Every year the credit facility is re approved in accordance with the Securitization Program. Subsequent to
the report date, the Securitization agreement was extended up to October 31, 2020 and will be renewed then
for an additional year.
107
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The maximum scope of the securitization is adjusted for the seasonal changes in the scope of the Company’s
activities, as follows: during the months March through June the maximum scope of the securitization is
$350 million (as of June 30, 2020 - 2,478 million RMB), during the months July through September the
maximum scope of the securitization is $300 million (as of June 30, 2020 - 2,124 million RMB) and during
the months October through February the maximum scope of the securitization is $250 million (as of June
30, 2020 - 1,770 million RMB). The proceeds received from those customers whose debts were sold are used
for acquisition of new trade receivables.
The price at which the trade receivables debts are sold is the amount of the debt sold less a discount calculated
based on, among other things, the expected length of the period between the date of sale of the trade
receivable and its anticipated repayment date. In the month following acquisition of the debt, the Acquiring
Company pays in cash most of the debt while the remainder is recorded as a subordinated note and as
continuing involvement that is paid after collection of the debt sold. If the customer does not pay its debt on
the anticipated repayment date, the Company bears interest up to the earlier of the date on which the debt is
actually repaid or the date on which debt collection is transferred to the insurance company (the actual costs
are not significant and are not expected to be significant).
The Acquiring Company bears 95% of the credit risk in respect of the customers whose debts were sold and
will not have a right of recourse to the Company in respect of the amounts paid in cash, except regarding
debts with respect to which a commercial dispute arises between the companies and their customers, that is,
a dispute the source of which is a claim of non-fulfillment of an obligation of the seller in the supply
agreement covering the product, such as: a failure to supply the correct product, a defect in the product,
delinquency in the supply date, and the like.
The Acquiring Company appointed a policy manager who will manage for it the credit risk involved with
the trade receivables sold, including an undertaking with an insurance company.
Pursuant to the Receivables Servicing Agreement, the Group subsidiaries handle collection of the trade
receivables as part of the Securitization Transaction for the benefit of the Acquiring Company.
As part of the agreement, Solutions is committed to comply with certain financial covenants, mainly the ratio
of the liabilities to equity and profit ratios. As of June 30, 2020, Solutions was in compliance with the
financial covenants.
The accounting treatment of sale of the trade receivables included as part of the Securitization Program is:
The Company is not controlling the Acquiring Company, therefore the Acquiring Company is not
consolidated in the financial statements.
The Company continues to recognize the trade receivables included in the Securitization Program based on
the extent of its continuing involvement therein.
In respect of the part of the trade receivables included in the securitization Program with respect to which
cash proceeds were not yet received, however regarding which the Company has transferred the credit risk,
a subordinated note is recorded.
The continuing involvement and subordinated note recorded in the balance sheet as part of the “other
receivables” line item.
108
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The loss from sale of the trade receivables is recorded at the time of sale in the statement of income in the
“financing expenses” line item.
In the third quarter of 2019, a subsidiary in Brazil (hereinafter - “the subsidiary”) renewed a 3 years
securitization agreement with Rabobank Brazil for sale of trade receivables. Under the agreement, the
subsidiary will sell its trade receivables to a securitization structure (hereinafter - “the entity”) that was
formed for this purpose where the subsidiary has subordinate rights of 5% of the entity's capital.
During June 2020 the maximum securitization scope increased up to BRL 560 million (as of June 30, 2020
- 724 million RMB).
On the date of the sale of the trade receivables, the entity pays the full amount which is the debt amount sold
net of discount calculated, among others, over the expected length of the period between the date of sale of
the customer receivable and its anticipated repayment date.
The entity bears 95% of the credit risk in respect of the customers whose debts were sold such that the entity
has the right of recourse of 5% of the unpaid amount. The subsidiary should make a pledged deposit equal
to the amount the entity’s right of recourse.
The subsidiary handles the collection of receivables included in the securitization for the entity.
The subsidiary does not control the entity and therefore the entity is not consolidated in the group's financial
statements.
The subsidiary continues to recognize the trade receivables sold to the entity based on the extent of its
continuing involvement therein (5% right of recourse) and also recognizes an associated liability in the same
amount.
The loss from the sale of the trade receivables is recorded at the time of sale in the statement of income in
the “financing expenses” category.
June 30 December 31
2020 2019
Accounts receivables derecognized 3,299,603 2,994,917
Continuing involvement 140,995 134,243
Subordinated note in respect of trade receivables 777,145 808,807
Liability in respect of trade receivables 286,642 26,370
Six months ended June 30
2020 2019
Loss in respect of sale of trade receivables 36,790 33,129
109
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
6. Receivables financing
June 30 December 31
2020 2019
Bank acceptance draft 35,552 78,948
35,552 78,948
As at June 30, 2020, bank acceptance endorsed but not yet due amounts to 424,044 thousands RMB.
7. Prepayments
(1) The aging analysis of prepayments is as follows:
June 30 December 31
2020 2019
Amount Percentage (%) Amount Percentage (%)
Within 1 year (inclusive) 341,413 97 370,607 98
Over 1 year but within 2 years (inclusive) 7,418 2 3,691 1
Over 2 years but within 3 years (inclusive) 665 - 621 -
Over 3 years 2,501 1 2,889 1
351,997 100 377,808 100
(2) Total of five largest prepayments by debtor at the end of the period:
Amount Percentage of prepayments (%)
June 30, 2020 87,497 25
110
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables
(1) Other receivables by nature
June 30 December 31
2020 2019
Dividends receivable 10,768 -
Others 1,224,550 1,195,253
1,235,318 1,195,253
a. Others breakdown by categories
June 30 December 31
2020 2019
Trade receivables as part of securitization transactions
not yet eliminated 140,995 134,243
Subordinated note in respect of trade receivables 777,145 808,807
Financial institutions 31,150 5,107
Receivables in respect of disposal of fixed assets 23,951 28,762
Other 266,404 233,238
Sub total 1,239,645 1,210,157
Provision for expected credit losses - other receivables (15,095) (14,904)
1,224,550 1,195,253
b. Other receivables by aging
June 30
2020
Within 1 year (inclusive) 1,195,783
Over 1 year but within 2 years 15,494
Over 2 years but within 3 years 3,124
Over 3 years but within 4 years 2,307
Over 4 years but within 5 years 11,090
Over 5 years 11,847
1,239,645
111
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables - (cont'd)
(2) Additions, recovery or reversal and written-off of provision for expected credit losses during the
period:
Six months
ended
June 30, 2020
Balance as of January 1 2020, 14,904
Addition during the period 191
Written back during the period -
Write-off during the period -
Balance as of June 30, 2020 15,095
(3) Five largest other receivables at June 30, 2020:
Allowance of
Proportion of other expected credit
Name Closing balance receivables (%) losses
Party 1 777,145 63 -
Party 2 31,150 3 -
Party 3 18,329 1 -
Party 4 13,324 1 -
Party 5 10,627 1 -
Total 850,575 69 -
9. Inventories
(1) Inventories by category:
June 30, 2020
Provision for
Book value impairment Carrying amount
Raw materials 3,956,321 31,492 3,924,829
Work in progress 495,996 4,167 491,829
Finished goods 6,058,038 167,373 5,890,665
Others 321,216 9,745 311,471
10,831,571 212,777 10,618,794
December 31, 2019
Provision for
Book value impairment Carrying amount
Raw materials 3,100,027 22,344 3,077,683
Work in progress 633,731 5,351 628,380
Finished goods 6,131,386 184,900 5,946,486
Others 288,794 8,689 280,105
10,153,938 221,284 9,932,654
112
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
9. Inventories - (cont'd)
(2) Provision for impairment of inventories:
For the six months ended June 30, 2020
Reversal or
January 1, 2020 Provision write-off Other June 30, 2020
Raw material 22,344 12,704 (3,869) 313 31,492
Work in progress 5,351 - (1,193) 9 4,167
Finished goods 184,900 53,233 (72,580) 1,820 167,373
Others 8,689 1,091 (159) 124 9,745
221,284 67,028 (77,801) 2,266 212,777
10. Other Current Assets
June 30 December 31
2020 2019
Deductible VAT 441,875 459,209
Current tax assets 140,713 170,505
Others 28,708 29,481
611,296 659,195
11. Long-Term Receivables
June 30 December 31
2020 2019
Long term account receivables from sale of goods 120,550 170,896
120,550 170,896
113
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
12. Long-Term Equity Investments
(1) Long-term equity investments by category:
June 30 December 31
2020 2019
Investments in joint ventures 93,419 92,695
Investments in associates 41,001 40,403
134,420 133,098
(2) Movements of long-term equity investments for the period are as follows:
Other Declared Balance at
January 1, Investment Comprehensive distribution of Capital the end of the
2020 income (loss) income cash dividend investment Other period
Joint ventures
Company A 75,924 11,118 1,070 (62,600) 51,435 2,404 79,351
Company B 5,441 57 83 (2,480) - - 3,101
Company C 1,046 - (119) - - - 927
Company D 10,284 3,217 (3,461) - - - 10,040
Sub-total 92,695 14,392 (2,427) (65,080) 51,435 2,404 93,419
Associates
Company E 40,403 - 598 - - - 41,001
Sub-total 40,403 - 598 - - - 41,001
133,098 14,392 (1,829) (65,080) 51,435 2,404 134,420
13. Other equity investments
June 30 December 31
2020 2019
Company A 85,495 85,495
Company B 68,784 67,781
Company C 1,813 1,786
156,092 155,062
Other equity investments are non-core businesses that are intended to be held in the foreseeable future. For the
six months period ended at June 30, 2020 the company did not recognize dividend income from other equity
investments.
114
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
14. Fixed assets
Land & Machinery & Office & other
Buildings equipment Motor vehicles equipment Total
Cost
Balance as at January 1, 2020 3,377,533 14,383,742 119,900 365,798 18,246,973
Purchases 46,231 110,441 7,981 16,006 180,659
Transfer from construction in progress 37,001 134,640 1,546 337 173,524
Disposals (2,432) (48,359) (7,841) (2,608) (61,240)
Currency translation adjustment 3,892 133,054 (1,264) 155 135,837
Balance as at June 30, 2020 3,462,225 14,713,518 120,322 379,688 18,675,753
Accumulated depreciation
Balance as at January 1, 2020 (1,667,208) (8,690,076) (60,679) (276,110) (10,694,073)
Charge for the period (55,955) (307,076) (8,719) (19,198) (390,948)
Disposals 1,329 39,193 6,535 2,411 49,468
Currency translation adjustment (6,241) (80,105) 992 (25) (85,379)
Balance as at June 30, 2020 (1,728,075) (9,038,064) (61,871) (292,922) (11,120,932)
Provision for impairment
Balance as at January 1, 2020 (196,295) (416,011) (733) (251) (613,290)
Charge for the period - - - - -
Disposals - 2,452 82 - 2,534
Currency translation adjustment (139) (1,179) - (4) (1,322)
Balance as at June 30, 2020 (196,434) (414,738) (651) (255) (612,078)
Carrying amounts
As at June 30, 2020 1,537,716 5,260,716 57,800 86,511 6,942,743
As at January 1, 2020 1,514,030 5,277,655 58,488 89,437 6,939,610
The lands reported as fixed assets are owned by the group subsidiaries and are located outside of China.
115
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
15. Construction in Progress
(1) Construction in progress
June 30 December 31
2020 2019
Provision for Provision for
Book value impairment Carrying amount Book value impairment Carrying amount
1,023,800 (25,740) 998,060 814,126 (25,740) 788,386
(2) Details and Movements of major construction projects in progress during the six months ended
June 30, 2020
Provision Actual
Currency Transfer for cost to Project
December translation to fixed impairment June 30, budget progress Source
Budget 31, 2019 Additions differences assets * 2020 (%) (%) of funds
Bank
Project A 1,509,420 376,996 166,700 - (86,956) - 456,740 38 38 loan
Bank
Project B 505,643 13,064 8,139 - - - 21,203 4 4 loan
Internal
Project C 172,055 18,434 10,120 - (1,783) - 26,771 16 16 finance
Internal
Project D 80,924 45,073 2,990 689 - - 48,752 60 60 finance
Internal
Project E 70,035 14,344 8,782 - - - 23,126 33 33 finance
Bank
Project F 32,000 31,912 1,176 - - - 33,088 100 100 loan
Internal
Project G 146,900 5,246 22,542 812 - - 28,600 19 19 finance
Internal
Project H 29,153 18,867 4,007 29 - - 22,903 79 79 finance
116
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
16. Right-of-use assets
Land & Machinery & Office & other
Buildings equipment Motor vehicles equipment Total
Cost
Balance as at January 1, 2020 456,983 46,714 178,402 3,187 685,286
Additions 29,392 27 33,651 - 63,070
Disposals (3,423) (998) (14,862) (7) (19,290)
Currency translation adjustment (630) 415 865 41 691
Balance as at June 30, 2020 482,322 46,158 198,056 3,221 729,757
Accumulated depreciation
Balance as at January 1, 2020 (77,196) (7,820) (63,238) (998) (149,252)
Charge for the period (40,534) (893) (36,557) (584) (78,568)
Disposals 963 984 12,914 14 14,875
Currency translation adjustment (631) (9) (438) 45 (1,033)
Balance as at June 30, 2020 (117,398) (7,738) (87,319) (1,523) (213,978)
Provision for impairment
Balance as at January 1, 2020 - - - - -
Balance as at June 30, 2020 - - - - -
Carrying amounts
As at June 30, 2020 364,924 38,420 110,737 1,698 515,779
As at January 1, 2020 379,787 38,894 115,164 2,189 536,034
117
ADAMA LTD.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
17. Intangible Assets
Marketing
Intangible assets rights,
Product on Purchase of tradename and Customers
registration Products Software trademarks relations Land use rights (1) Others(2) Total
Costs
Balance as at January 1, 2020 10,769,146 4,189,417 761,236 743,734 399,193 344,917 326,115 17,533,758
Purchases 223,712 - 79,789 162 - 1,513 6,769 311,945
Currency translation adjustment 146,007 62,035 10,066 9,859 4,220 10 4,550 236,747
Disposal )50,463( - - (169) - (441) (8,660) (59,733)
Balance as at June 30, 2020 11,088,402 4,251,452 851,091 753,586 403,413 345,999 328,774 18,022,717
Accumulated amortization
Balance as at January 1, 2020 )7,873,186( )2,278,371( )513,028( )441,587( )196,458( )65,271( )164,844( )11,532,745(
Charge for the period (408,542) (176,314) (31,746) (13,384) (18,654) (4,180) (20,285) (673,105)
Currency translation adjustment (114,605) (34,999) (6,607) (5,580) (1,351) (3) (1,826) (164,971)
Disposal 29,361 - (7) - - - 3,939 33,293
Balance as at June 30, 2020 (8,366,972) (2,489,684) (551,388) (460,551) (216,463) (69,454) (183,016) (12,337,528)
Provision for impairment
Balance as at January 1, 2020 )108,075( )52,182( - - - - )4,971( )165,228(
Charge for the period )21( - - - - - )387( )408(
Currency translation adjustment )1,450( )773( - - - - - )2,223(
Disposal 21,088 - - - - - 5,108 26,196
Balance as at June 30, 2020 )88,458( )52,955( - - - - )250( )141,663(
Carrying amount
As at June 30, 2020 2,632,972 1,708,813 299,703 293,035 186,950 276,545 145,508 5,543,526
As at January 1, 2020 2,787,885 1,858,864 248,208 302,147 202,735 279,646 156,300 5,835,785
(1) Include land parcel in Israel that has not yet been registered in the name of the Group subsidiaries at the Land Registry Office, mostly due to registration procedures or technical problems.
(2) Mainly non-compete.
118
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
18. Goodwill
Changes in goodwill
The Group identified two cash generating units ("CGU"), Crop Protection (Agro) and Intermediates and
ingredients (formerly known as “Other”) units. Operations are allocated into either one of the two cash generating
units according to their business.
At the end of the year, or more frequently whether indicators for impairment exists, the Group estimates the
recoverable amount of Crop Protection and Intermediates and ingredients units, which are the cash generating
units of the Group that contain goodwill.
For the purpose of evaluating the groups Goodwill, the Group used a comparable trading multiple as well as the
DCF model analysis in order to benchmark each of its CGU’s valuation against that of the markets peer companies.
As of December 31, 2019 the fair value of the cash generating units to which the goodwill relates exceeds its
carrying amount.
As at the reporting period, there were no indicators for impairment.
Currency
January 1, translation Balance at
2020 Additions adjustment June 30, 2020
Book value 4,511,193 49,338 66,800 4,627,331
Impairment provision - - - -
Carrying amount 4,511,193 49,338 66,800 4,627,331
19. Deferred Tax Assets and Deferred Tax Liabilities
(1) Deferred tax assets without taking into consideration of the offsetting of balances within the same
tax jurisdiction
June 30 December 31
2020 2019
Deductible Deductible
temporary Deferred tax temporary Deferred tax
differences assets differences assets
Deferred tax assets
Deferred tax assets in respect of carry
forward losses 860,435 211,514 611,496 136,594
Deferred tax assets in respect of
inventories 1,544,685 409,030 1,552,766 413,713
Deferred tax assets in respect of
employee benefits 860,296 110,922 973,434 135,422
Other deferred tax asset 1,554,284 345,401 1,606,933 387,109
4,819,700 1,076,867 4,744,629 1,072,838
119
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont’d)
(2) Deferred tax liabilities without taking into consideration of the offsetting of balances within the
same tax jurisdiction
June 30 December 31
2020 2019
Taxable Taxable
temporary Deferred tax temporary Deferred tax
differences liabilities differences liabilities
Deferred tax liabilities
Deferred tax liabilities in respect of
fixed assets and intangible assets 3,730,231 636,003 3,551,402 569,446
3,730,231 636,003 3,551,402 569,446
(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting
June 30 December 31
2020 2019
The offset The offset
amount of Deferred tax amount of Deferred tax
deferred tax assets or deferred tax assets or
assets and liabilities assets and liabilities after
liabilities after offset liabilities offset
Presented as:
Deferred tax assets 219,554 857,313 246,142 826,696
Deferred tax liabilities 219,554 416,449 246,142 323,304
(4) Details of unrecognized deferred tax assets
June 30 December 31
2020 2019
Deductible temporary differences 595,321 515,589
Deductible losses carry forward 176,911 142,042
772,232 657,631
(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets
June 30 December 31
2020 2019
2020 16,410 16,171
2021 13,069 13,031
2022 1,423 1,402
2023 27,793 27,767
After 2023 118,216 83,671
176,911 142,042
120
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont'd)
(6) Unrecognized deferred tax liabilities
When calculating the deferred taxes, taxes that would have applied in the event of realizing investments
in subsidiaries were not taken into account since it is the Company’s intention to hold these investments
and not realize them.
20. Other Non-Current Assets
June 30 December 31
2020 2019
Assets related to securitization 43,836 38,648
Advances in respect of non-current assets 75,311 58,689
Judicial deposits 91,134 56,347
Call option in respect of business combination - 9,216
Others 85,607 83,283
295,888 246,183
21. Short-Term Loans
Short-term loans by category:
June 30 December 31
2020 2019
Guaranteed loans 528,000 414,000
Unsecured loans 1,365,876 1,595,882
1,893,876 2,009,882
Details of the guarantees are set out in note X.5(2) Related parties and related party transactions.
22. Derivative financial liabilities
June 30 December 31
2020 2019
Economic hedge 867,381 603,009
Accounting hedge derivatives 197,653 88,466
1,065,034 691,475
121
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
23. Bills Payables
June 30 December 31
2020 2019
Post-dated checks payables 136,089 224,878
Note payables draft 119,328 96,796
255,417 321,674
As at June 30, 2020, none of the bills payable are overdue.
24. Accounts payable
June 30 December 31
2020 2019
Within 1 year (including 1 year) 4,729,959 4,172,996
1-2 years (including 2 years) 17,041 10,458
2-3 years (including 3 years) 6,776 2,881
Over 3 years 19,932 19,566
4,773,708 4,205,901
There are no significant accounts payables aging over one year.
25. Contract liabilities
June 30 December 31
2020 2019
Discount for customers 857,186 522,614
Advances from customers 195,147 141,614
1,052,333 664,228
26. Employee Benefits Payable
June 30 December 31
2020 2019
Short-term employee benefits 406,604 656,272
Post-employment benefits* 180,318 224,035
Share based payment (See note XIII) 54,158 -
Other benefits within one year 305,390 304,366
946,470 1,184,673
Current maturities 39,063 27,040
985,533 1,211,713
* For further information regarding the termination benefits to employees during the periods see note XI.2 –
Commitments and contingent liabilities.
122
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
27. Taxes Payable
June 30 December 31
2020 2019
Corporate income tax 201,764 157,548
VAT 164,029 180,818
Others 20,277 30,672
386,070 369,038
28. Other Payables
June 30 December 31
2020 2019
Dividends payables 23,916 750
Other payables 1,318,549 1,048,844
1,342,465 1,049,594
(1) Other payables
June 30 December 31
2020 2019
Accrued expenses 596,202 613,183
Liability in respect of securitization transactions 286,642 26,370
Payables in respect of intangible assets 132,606 130,329
Financial institutions 61,847 1,137
Other payables 241,252 277,825
1,318,549 1,048,844
As at June 30, 2020, the Group did not have any significant overdue other payables.
29. Non-Current Liabilities Due Within One Year
Non-current liabilities due within one year by category are as follows:
June 30 December 31
2020 2019
Long-term loans due within one year 651,027 420,086
Lease liabilities due within one year 144,736 148,287
Debentures payable due within one year 540,612 497,870
1,336,375 1,066,243
123
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
30. Other Current Liabilities
June 30 December 31
2020 2019
Put options to holders of non-controlling interests 148,974 148,886
Provision in respect of returns 217,411 191,065
Provision in respect of claims 14,407 14,901
Others 396 391
381,188 355,243
31. Long-Term Loans
Long-term loans by category
June 30 December 31
2020 Interest range 2019 Interest range
Long term loans
Loan secured by tangible assets
other than monetary assets - - 2,860 2.4%-2.7%
Unsecured loans 2,875,705 1.6%-4.8% 1,344,385 1.5%-6.2%
Total Long term loans 2,875,705 1,347,245
Less: Long term loans due within 1 year (651,027) (420,086)
Long term loans, net 2,224,678 927,159
For the maturity analysis, see note VIII.C - Liquidity risk.
There are no long-term loans mortgaged by fixed assets as at June 30, 2020 (31.12.19: 900 thousand RMB).
Details of the guarantees are set out in note X(5) Related parties and related party transactions.
32. Debentures Payable
June 30 December 31
2020 2019
Debentures Series B 9,204,385 8,463,812
Current maturities (540,612) (497,870)
8,663,773 7,965,942
June 30
2020
First year (current maturities) 540,612
Second year 540,612
Third year 540,612
Fourth year 540,612
Fifth year and thereafter 7,041,937
9,204,385
124
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
32. Debentures Payable - (cont'd)
Movements of debentures payable:
For the six months ended June 30, 2020
Issuance
Balance at during Amortization CPI and Repayment Currency Balance at
Maturity Face value Face value Issuance Maturity Issuance January 1, the of discounts exchange during the translation June 30,
period in RMB NIS date period amount 2020 period or premium rate effect period adjustment 2020
Debentures November
Series B 2,673,640 1,650,000 4.12.2006 2020-2036 3,043,742 3,839,289 - 124 (35,993) - 54,569 3,857,989
Debentures November
Series B 843,846 513,527 16.1.2012 2020-2036 842,579 1,137,246 - 5,481 (10,724) - 16,271 1,148,274
Debentures November
Series B 995,516 600,000 7.1.2013 2020-2036 1,120,339 1,417,383 - 2,404 (13,301) - 20,210 1,426,696
Debentures November
Series B 832,778 533,330 1.2.2015 2020-2036 1,047,439 1,335,461 - (1,507) (12,535) - 18,957 1,340,376
Debentures November
Series B 418,172 266,665 1-6.2015 2020-2036 556,941 734,433 - (4,140) (6,894) - 10,363 733,762
Debentures November
Series B 497,989 246,499 5.5.2020 2020-2036 692,893 - 692,896 (1,445) 4,549 - 1,288 697,288
8,463,812 692,896 917 (74,898) - 121,658 9,204,385
On May 5, 2020, Solutions issued debentures through an expansion of Series B totaling NIS 246.5 million par value of debentures, in consideration for 115.6% of their par
value. The total net proceeds amounted to $98 million. The issuance costs were $341 thousand.
Series B constitutes CPI-linked debentures, bearing basic annual interest of 5.15%. The principal will be repaid in 17 equal payments in the years 2020 to 2036.
- 125 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
33. Lease liabilities
June 30 December 31
2020 Interest range 2019 Interest range
Lease liabilities 532,371 1.3% - 6.1% 554,645 1.9% - 6.1%
Less: Lease liabilities due within one year (144,736) (148,287)
Long term lease liabilities, net 387,635 406,358
34. Long-Term Employee Benefits Payable
Post-employment benefit plans – defined benefit plan and early retirement
June 30 December 31
2020 2019
Total present value of obligation 580,853 651,803
Less: fair value of plan's assets )92,565( (104,448)
Net liability related to Post-employment benefits 488,288 547,355
Termination benefits 114,543 70,128
Total recognized liability for defined benefit plan, net (1) 602,831 617,483
Share based payment (See note XIII) 59,549 94,104
Other long-term employee benefits 53,308 54,307
Total long-term employee benefits, net 715,688 765,894
Including: Long-term employee benefits payable due within one year 39,064 27,040
676,624 738,854
(1) Movement in the net liability and assets in respect of defined benefit plans, early retirement and
their components
Defined benefit obligation Fair value of
and early retirement plan's assets Total
2020 2019 2020 2019 2020 2019
Balance as at January 1, 721,931 638,355 104,448 87,492 617,483 550,863
Expense/income recognized
in profit and loss:
Current service cost 65,096 11,429 - - 65,096 11,429
Interest costs 9,532 10,931 1,399 1,749 8,133 9,182
Changes in exchange rates )2,209( 22,709 )260( 4,265 )1,949( 18,444
Actuarial gain (losses) due to early retirement )1,822( 707 - - )1,822( 707
Included in other comprehensive income:
Actuarial gain (losses) as a result of changes in
actuarial assumptions )55,882( 17,515 )8,449( 1,953 )47,433( 15,562
Foreign currency translation differences in respect of
foreign operations 8,906 1,359 1,218 350 7,688 1,009
Additional movements:
Benefits paid )50,156( (33,628) )8,153( (5,404) )42,003( (28,224)
Contributions paid by the Group - - 2,362 3,180 )2,362( (3,180)
Balance as at June 30, 695,396 669,377 92,565 93,585 602,831 575,792
126
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
34. Long-Term Employee Benefits Payable - (cont'd)
Post-employment benefit plans – defined benefit plan and early retirement - (cont'd)
(2) Actuarial assumptions and sensitivity analysis
The principal actuarial assumptions at the reporting date for defined benefit plan
June 30 December 31
2020 2019
Discount rate (%)* 1.2%-3.3% 0.4%-3.3%
*According to the demographic and the benefit components.
The assumptions regarding the future mortality rate are based on published statistical data and acceptable
mortality rates.
Possible reasonable changes as of the date of the report in the discount rate, assuming the other assumptions
remain unchanged, would have affected the defined benefit obligation as follows:
As of June 30, 2020
Increase of 1% Decrease of 1%
Discount rate )47,302( 58,230
35. Provisions
June 30 December 31
2020 2019
Liabilities in respect of contingencies* 79,479 90,051
Provision in respect of site restoration 80,475 84,211
Other 2,591 2,560
162,545 176,822
* Liabilities in respect of contingencies includes obligations of pending litigations, where an outflow of
resources had been reliably estimated.
127
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
36. Other Non-Current Liabilities
June 30 December 31
2020 2019
Put options to holders of non- controlling interests 221,072 207,472
Long term transactions in derivatives 2,996 25,582
Long term loans - others 171,770 171,770
395,838 404,824
37. Share Capital
Balance at Issuance of new Cancellations of Balance at
January 1, 2020 shares shares June 30, 2020
Share capital 2,446,554 - - 2,446,554
38. Capital Reserve
Balance at
Balance at Additions during Reductions during December 31,
January 1, 2020 the period the period 2019
Share premiums 12,550,177 - - 12,550,177
Other capital reserve 352,991 - - 352,991
12,903,168 - - 12,903,168
39. Other Comprehensive Income, net of tax
Attributable to shareholders of the company
Less: Less: Less:
Balance at Before transfer to Income Net-of- transfer to Balance at
January 1, tax profit or tax tax retained June 30,
2020 amount loss expenses amount earnings 2020
Items that will not be
reclassified to profit or
loss 13,824 47,433 - 8,060 39,373 - 53,197
Re-measurement of changes
in liabilities under defined
benefit plans (34,876) 47,433 - 8,060 39,373 - 4,497
Changes in fair value of
other equity investment 48,700 - - - - - 48,700
Items that may be
reclassified to profit or -
loss 1,178,857 187,982 83,672 (3,690) 108,000 1,286,857
Effective portion of gain or
loss of cash flow hedge (45,532) 1,697 83,672 (3,690) (78,285) - (123,817)
Translation difference of
foreign financial statements 1,224,389 186,285 - - 186,285 - 1,410,674
1,192,681 235,415 83,672 4,370 147,373 - 1,340,054
128
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
40. Surplus reserve
Additions Reductions
Balance at during the during the Balance at
January 1, 2020 period period June 30, 2020
Statutory surplus reserve 236,348 - - 236,348
Discretional surplus reserve 3,814 - - 3,814
240,162 - - 240,162
41. Retained Earnings
2020 2019
Retained earnings as at December 31 of preceding year 5,574,173 5,513,466
Adjustment for business combination under common control (Note 1) - 115,826
Retained earnings as at January 1 5,574,173 5,629,292
Net profits for the period attributable to shareholders of the Company 204,649 588,638
Dividends to non-controlling Interest (26,828) (28,936)
Dividend to the shareholders of the company (Note 2) (29,359) (293,628)
Transfer from other comprehensive income - 4,511
Retained earnings as at June 30 5,722,635 5,899,877
Note 1:
During the first quarter of 2019 the acquisition of Adama Anpon (Jiangsu) Ltd., a wholly-owned subsidiary of
CNAC, was successfully completed. Anpon became a wholly owned subsidiary of the Company. The
combination was considered as a business combination under common control.
Note 2:
On April 27, 2020, following approval of the 25th meeting of the Company's 8th session of the Board of Directors,
the Company declared RMB 0.12 (before tax) per 10 shares as cash dividend to all shareholders, resulting in a
total cash dividend of 29,359 thousands RMB (before tax). No shares were distributed as share dividend and no
reserve was transferred to equity capital. The proposal was approved by the 2019 Annual General Meeting of the
Company held on May 20, 2020. As of the date of the approval of this report, the dividend was fully paid.
129
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
42. Operating Income and Cost of Sales
Six months ended June 30 Six months ended June 30
2020 2019
Income Cost of sales Income Cost of sales
Principal activities 14,100,337 9,894,415 13,579,047 8,999,083
Other businesses 20,703 10,055 36,985 24,159
14,121,040 9,904,470 13,616,032 9,023,242
43. Taxes and Surcharges
Six months ended June 30
2020 2019
Tax on turnover 11,087 8,285
Others 35,030 37,941
46,117 46,226
44. Selling and Distribution Expenses
Six months ended June 30
2020 2019
Salaries and related expense 804,371 811,280
Depreciation and amortization 712,432 703,980
Transportation and Commissions 384,906 372,574
Advertising and sales promotion 161,027 178,645
Travel expenses 42,169 68,795
Warehouse expenses 77,121 75,558
Registration 81,676 74,483
Professional services 45,113 38,998
Insurance 36,863 41,668
Others 122,890 133,793
2,468,568 2,499,774
130
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
45. General and Administrative Expenses
Six months ended June 30
2020 2019
Salaries and related expenses 263,523 248,290
Idleness expenses 87,755 155,214
Professional services 56,030 64,171
Depreciation and amortization 44,550 45,283
IT systems 46,259 41,929
Office rent, maintenance and expenses 17,759 25,925
Other 37,310 47,447
553,186 628,259
46. Research and development expenses
Six months ended June 30
2020 2019
Salaries and related expenses 91,566 90,220
Field trial 17,652 33,143
Professional services 31,068 27,519
Depreciation and amortization 13,942 18,826
Materials 3,251 14,860
Office rent, maintenance and expenses 3,631 4,316
Other 27,075 21,815
188,185 210,699
47. Financial expenses, net
Six months ended June 30
2020 2019
Interest expenses on debentures and loans 352,342 349,941
CPI expense (income) in respect of debentures (63,213) 96,329
Loss in respect of sale of trade receivables 36,790 33,129
Interest expense in respect of post-employment benefits and early
retirement, net 8,133 9,182
Revaluation of put option, net 8,566 (14,954)
Interest income from customers, banks and others (29,625) (41,104)
Exchange rate differences, net 507,673 481,676
Interest expense on lease liabilities 11,955 12,894
Other expenses 10,171 11,103
842,792 938,196
131
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
48. Investment income, net
Six months ended June 30
2020 2019
Investment income (expenses) from disposal of derivatives 37,737 (536,167)
Income from long-term equity investments accounted for using
the equity method 14,392 21,724
52,129 (514,443)
49. Gain (loss) from Changes in Fair Value
Six months ended June 30
2020 2019
Gain from changes in fair value of derivative financial instruments 267,775 881,007
Others (2,265) 3,128
265,510 884,135
50. Credit impairment reversal (losses)
Six months ended June 30
2020 2019
Bills receivable and accounts receivable 5,780 3,356
Other receivables (191) (9)
5,589 3,347
51. Asset impairment reversal (losses)
Six months ended June 30
2020 2019
Inventories (24,724) (19,371)
Intangible asset (21) -
Other (631) (4,438)
(25,376) (23,809)
52. Gain from Disposal of Assets
Six months ended June 30 Included in
non-recurring
2020 2019 items
Gain from disposal of fixed assets 720 115,730 720
Gain (loss) from disposal of intangible assets 6,974 (216) 6,974
7,694 115,514 7,694
132
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
53. Income Tax Expenses
Six months ended June 30
2020 2019
Current year 211,779 192,289
Deferred tax expenses (income) 17,036 (54,959)
Adjustments for previous years, net 15,383 3,207
244,198 140,537
(1) Reconciliation between income tax expense and accounting profit is as follows:
Six months ended June 30
2020 2019
Profit before taxes 448,847 729,175
Statutory tax in china 25% 25%
Tax calculated according to statutory tax in china 112,212 182,294
Tax benefits from Approved Enterprises )30,179( (29,962)
Difference between measurement basis of income for financial
statement and for tax purposes 138,291 870
Taxable income and temporary differences at other tax rate )41,814( (6,378)
Taxes in respect of prior years 15,383 3,207
Utilization of tax losses prior years for which deferred taxes were
not created )771( -
Temporary differences and losses in the report year for which
deferred taxes were not created 33,094 897
Non-deductible expenses and other differences 12,994 (5,907)
Neutralization of tax calculated in respect of the Company’s share
in results of equity accounted investees )3,889( (6,304)
Effect of change in tax rate in respect of deferred taxes 15,435 442
Creation and reversal of deferred taxes for tax losses and temporary
differences from previous years )6,558( 1,378
Income tax expenses 244,198 140,537
54. Other comprehensive income
Details of the Other comprehensive income are set out in Note V.39
133
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
55. Notes to items in the cash flow statements
(1) Cash received relating to other operating activities
Six months ended June 30
2020 2019
Derivatives transactions 404,824 44,546
Financial institutions 126,770 -
Interest income 26,314 29,257
Government subsidies 6,236 363
Others 66,371 184,212
630,515 258,378
(2) Cash paid relating to other operating activities
Six months ended June 30
2020 2019
Transportation, Commissions and Warehouse 389,972 386,468
Advertising and sales promotion 145,267 159,574
Professional services 134,480 141,127
Financial institutions 136,897 39,402
IT and Communication 94,321 77,596
Registration and Field trials 81,576 92,911
Derivatives transactions 90,297 54,030
Travel 51,360 69,405
Insurance 36,663 29,015
Others 297,735 325,262
Net cash flow from operating activities 1,458,568 1,374,790
(3) Cash received relating to other investing activities
Six months ended June 30
2020 2019
Proceeds from loan to affiliate company - 7,491
Investment grant - 1,808
Other - 28
- 9,327
(4) Cash paid relating to other investing activities
Six months ended June 30
2020 2019
Increase in securitization facility 31,483 -
Other 15,357 778
46,840 778
134
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
55. Notes to items in the cash flow statements - (cont'd)
(5) Cash received from other financing activities
Six months ended June 30
2020 2019
Cash received in respect of hedging transactions on debentures - 41,144
Deposit for issuing bills payables 4,449 20,557
4,449 61,701
(6) Cash paid relating to other financing activities
Six months ended June 30
2020 2019
Payment in respect of hedging transactions on debentures 154,335 325,474
Repayment of lease liability 81,915 74,182
Realization of call option - 35,625
Deposit for issuing bills payable 13,036 8,610
249,286 443,891
56. Supplementary Information on Cash Flow Statement
(1) Supplementary information on Cash Flow Statement
a. Reconciliation of net profit to cash flows from operating activities:
Six months ended June 30
2020 2019
Net profit 204,649 588,638
Add: Impairment provisions for assets 25,376 23,809
Credit impairment loss (5,589) (3,347)
Depreciation of fixed assets and investment property 391,110 413,802
Depreciation of right-of-use asset 78,568 75,529
Amortization of intangible asset 673,105 670,019
Gains on disposal of fixed assets, intangible assets, and other
long-term assets, net (7,694) (115,514)
Gains from changes in fair value (265,510) (884,135)
Financial expenses 245,591 806,091
Investment loss (income), net (245,248) 900,426
Decrease (increase) in deferred tax assets (43,845) (50,833)
Increase (decrease) in deferred tax liabilities 60,881 (4,126)
Decrease (increase) in inventories, net (717,127) (777,827)
Increase in operating receivables (701,359) (1,263,516)
Increase (decrease) in operating payables 1,525,228 (751,460)
Others 16,395 67,494
Net cash flow from operating activities 1,234,531 (304,950)
135
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
56. Supplementary Information on Cash Flow Statement - (cont'd)
b. Net increase (decrease) in cash and cash equivalents
Six months ended June 30
2020 2019
Closing balance of cash 6,256,107 5,381,820
Less: Opening balance of cash 4,319,907 6,346,196
Net increase (decrease) in cash and cash equivalents 1,936,200 (964,376)
(2) Details of cash and cash equivalents
June 30 January 1
2020 2020
Cash on hand 3,651 6,265
Bank deposits available on demand without restrictions 6,252,456 4,313,642
6,256,107 4,319,907
57. Assets with Restricted Ownership or Right of Use
June 30
2020 Reason
Cash 37,068 Pledged
Other non-current assets 109,312 Guarantees
146,380
136
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items
(1) Foreign currencies denominated items
As at June 30, 2020
Foreign currency at
the end of the RMB at the end of
period Exchange rate the period
Cash and bank balances
EUR 69,566 7.9366 552,116
ILS 247,542 2.0440 505,986
BRL 239,855 1.2938 310,316
USD 39,157 7.0846 277,417
PLN 125,210 1.7798 222,849
ZAR 184,159 0.4109 75,673
Other 395,822
Total 2,340,179
Bills and Accounts receivable
BRL 791,834 1.2938 1,024,446
EUR 119,802 7.9366 950,821
CAD 74,365 5.1731 384,693
RON 233,146 1.6387 382,059
TRY 247,993 1.0354 256,781
HUF 7,416,257 0.0223 165,313
RUB 1,347,746 0.1013 136,500
ZAR 236,432 0.4109 97,152
USD 37,490 7.0846 265,604
ILS 33,980 2.0440 69,457
Other 305,004
Total 4,037,830
Other receivables
EUR 52,928 7.9366 420,068
AUD 59,549 4.8491 288,759
ILS 120,764 2.0440 246,846
GBP 15,050 8.6956 130,872
BRL 16,909 1.2938 21,876
Other 77,684
Total 1,186,105
Other current assets
ILS 59,308 2.0440 121,229
BRL 42,578 1.2938 55,086
EUR 6,372 7.9366 50,569
ARS 291,633 0.1005 29,323
UAH 89,541 0.2654 23,766
Other 72,522
Total 352,495
137
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at June 30, 2020
Foreign currency at
the end of the RMB at the end of
period Exchange rate the period
Long-term receivables
BRL 93,178 1.2938 120,550
Total 120,550
Other non-current assets
BRL 71,580 1.2938 92,607
Other 8,453
Total 101,060
Short-term loans
EUR 45,454 7.9366 360,750
TRY 153,940 1.0354 159,395
UAH 397,692 0.2654 105,555
Total 625,700
Bills and Accounts payable
ILS 311,163 2.0440 636,029
EUR 51,014 7.9366 404,877
USD 18,843 7.0846 133,497
BRL 61,883 1.2938 80,062
COP 30,537,740 0.0019 57,556
RON 19,324 1.6387 31,667
Other 57,684
Total 1,401,372
Other payables
ILS 139,454 2.0440 285,050
AUD 24,913 4.8491 120,805
BRL 37,248 1.2938 48,190
OTHER 19,049
TOTAL 473,094
Contract liabilities
EUR 40,015 7.9366 317,586
CAD 16,209 5.1731 83,850
BRL 49,057 1.2938 63,468
TRY 37,912 1.0354 39,256
USD 2,125 7.0846 15,058
Other 58,675
Total 577,893
138
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at June 30, 2020
Foreign currency at RMB at the end of
the end of the period Exchange rate the period
Non-current liabilities due within one year
ILS CPI 282,703 2.0440 577,857
EUR 23,891 7.9366 189,610
USD 1,303 7.0846 9,232
Other 36,565
Total 813,264
Other current liabilities
EUR 4,638 7.9366 36,813
Other 2,768
Total 39,581
Long-term loan
EUR 55,302 7.9366 438,908
Total 438,908
Debentures payable
ILS CPI 4,238,551 2.0440 8,663,772
Total 8,663,772
Provision and Long-term payables
BRL 45,566 1.2938 58,951
EUR 372 7.9366 2,952
Total 61,903
Other non-current liabilities
EUR 7,852 7.9366 62,321
USD 5,577 7.0846 39,511
ILS CPI 18,647 2.0440 38,116
GBP 1,038 8.6956 9,026
Other 49,387
Total 198,361
139
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items - (cont'd)
(2) Major foreign operations
Registration &
Principal place of Functional
Name of the Subsidiary business Business nature currency
ADAMA France S.A.S France Distribution USD
ADAMA Brasil S/A Brazil Manufacturing; Distribution; USD
Registration
ADAMA Deutschland GmbH Germany Distribution; Registration USD
ADAMA India Private Ltd. India Manufacturing INR
Distribution; Registration
Makhteshim Agan of North United States Manufacturing; Distribution; USD
America Inc. Registration
Control Solutions Inc. United States Manufacturing; Distribution; USD
Registration
ADAMA Agan Ltd. Israel Manufacturing; Distribution; USD
Registration
ADAMA Makhteshim Ltd. Israel Manufacturing; Distribution; USD
Registration
ADAMA Australia Pty Australia Distribution AUD
Limited
ADAMA Italia SRL Italy Distribution USD
ADAMA Northern Netherlands Distribution USD
Europe B.V.
Alligare LLC United States Manufacturing; Distribution; USD
Registration
The functional currency of the subsidiaries above is the main currency that represent the principal
economic environment.
VI. Change in consolidation Scope
There were no changes in consolidation scope during the reporting period.
140
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VII. Interest in Other Entities
1. Interests in subsidiaries
Composition of the largest subsidiaries of the Group in respect of assets and operating income
Registration & Method of
Principal place of obtaining the
Name of the Subsidiary business Business nature Direct Indirect subsidiary
ADAMA France S.A.S FRANCE Distribution 100% Established
ADAMA Brasil S/A BRAZIL Manufacturing; Distribution; 100% Purchased
Registration
ADAMA Deutschland GmbH GERMANY Distribution; Registration; 100% Established
ADAMA India Private Ltd. INDIA Manufacturing; 100% Established
Distribution; Registration
Makhteshim Agan of North America UNITED STATES Manufacturing; Distribution; 100% Established
Inc. Registration
Control Solutions Inc. UNITED STATES Manufacturing; Distribution; 67% Purchased
Registration
ADAMA Agan Ltd. ISRAEL Manufacturing; Distribution; 100% Restructure
Registration
ADAMA Makhteshim Ltd. ISRAEL Manufacturing; Distribution; 100% Restructure
Registration
ADAMA Australia Pty Limited AUSTRALIA Distribution 100% Purchased
ADAM Italia SRL ITALY Distribution 100% Established
ADAMA Northern Europe B.V. NETHERLANDS Distribution 55% Purchased
Manufacturing; Distribution;
Alligare LLC UNITED STATES 100% Purchased
Registration
Adama Anpon (Jiangsu) Ltd. CHINA Manufacturing; Distribution 100% Purchased
2. Interests in joint ventures or associates
June 30 December 31
2020 2019
Joint ventures 93,419 92,695
Associates 41,001 40,403
134,420 133,098
3. Summarized financial information of joint ventures and associates
June 30, 2020 and six June 30, 2019 and six
months then ended months then ended
Joint ventures:
Total carrying amount 93,419 95,258
The Group's share of the following items:
Net profit 14,392 21,740
Other comprehensive income (2,427) 158
Total comprehensive income 11,965 21,898
Associates:
Total carrying amount 41,001 39,817
The Group's share of the following items:
Net profit - (16)
Other comprehensive income 598 67
Total comprehensive income 598 51
141
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments
A. General
The Group has extensive international operations, and, therefore, it is exposed to credit risks, liquidity risks
and market risks (including currency risk, interest risk and other price risk). In order to reduce the exposure to
these risks, the Group uses financial derivatives instruments, including forward transactions and options
(hereinafter - “derivatives”).
Transactions in derivatives are undertaken with major financial institutions, and therefore, in the opinion of
Group Management the credit risk in respect thereof is low.
This note provides information on the Group’s exposure to each of the above risks, the Group’s objectives,
policies and processes regarding the measurement and management of the risk. Additional quantitative
disclosure is included throughout the consolidated financial statements.
The Board of Directors has overall responsibility for establishing and monitoring the framework of the Group's
risk management policy. The Finance Committee is responsible for establishing and monitoring the Group's
actual risk management policy. The Chief Financial Officer reports to the Finance Committee on a regular
basis regarding these risks.
The Group’s risk management policy, established to identify and analyze the risks facing the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. The policy and methods for
managing the risks are reviewed regularly, in order to reflect changes in market conditions and the Group's
activities. The Group, through training, and management standards and procedures, aims to develop a
disciplined and constructive control environment in which all the employees understand their roles and
obligations.
B. Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations, and derives mainly from trade receivables and other receivables as well as
from cash and deposits in financial institutions.
Accounts and other receivables
The Group’s revenues are derived from a large number of widely dispersed customers in many countries.
Customers include multi-national companies and manufacturing companies, as well as distributors,
agriculturists, agents and agrochemical manufacturers who purchase the products either as finished goods or
as intermediate products for their own requirements.
The Company entered into an agreement for the sale of trade receivables in a securitization transaction, for
details see note V.5.e.
In April 2019, a two-years agreement with an international insurance company was renewed. The amount of
the insurance coverage was fixed at $150 million cumulative per year. The indemnification is limited to about
90% of the debt.
The Group’s exposure to credit risk is influenced mainly by the personal characterization of each customer,
and by the demographic characterization of the customer’s base, including the risk of insolvency of the
industry and geographic region in which the customer operates. No single customer accounted for greater than
5% of total accounts receivable.
142
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
B. Credit risk - (cont’d)
The Company management has prescribed a credit policy, whereby the Company performs current ongoing
credit evaluations of existing and new customers, and every new customer is examined thoroughly regarding
the quality of his credit, before offering him the Group’s customary shipping and payment terms. The
examination made by the Group includes an outside credit rating, if any, and in many cases, receipt of
documents from an insurance company. A credit limit is prescribed for each customer, outstanding amount of
the accounts receivable balance. These limits are examined annually. Customers that do not meet the Group’s
criteria for credit quality may do business with the Group on the basis of a prepayment or against furnishing
of appropriate collateral.
Most of the Group’s customers have been doing business with it for many years. In monitoring customer credit
risk, the customers were grouped according to a characterization of their credit, based on geographical location,
industry, aging of receivables, maturity, and existence of past financial difficulties. Customers defined as “high
risk” are classified to the restricted customer list and are supervised by management. In certain countries,
mainly, Brazil, customers are required to provide property collaterals (such as agricultural lands and equipment)
against execution of the sales, the value of which is examined on a current ongoing basis by the Company. In
these countries, in a case of expected credit risk, the Company records a provision for the amount of the debt
less the value of the collaterals provided and acts to realize the collaterals.
The Group closely monitors the economic situation in Eastern Europe and South America on an ongoing basis.
As a result of the Covid-19 pandemic, the Group also closely monitors the economic situation worldwide.
Where necessary, the Group operates to limit its exposure to customers.
The Group recognizes an impairment provision, which reflects its assessment regarding the credit risk of
account receivables, Other receivables and investments on a lifetime expected credit loss basis. See also notes
Ⅲ.10 – Financial instruments and Ⅲ.11 – Receivables.
Cash and deposits in banks
The Company holds cash and deposits in banks with a high credit rating. These banks are also required to
comply with capital adequacy or maintain a level of security based on different situations.
Guarantees
The Company’s policy is to provide financial guarantees only to investee companies.
Aging of receivables and expected credit risk
Presented below is the aging of the past due trade receivables:
June 30, 2020
Past due by less than 90 days 490,268
Past due by more than 90 days 591,410
1,081,678
143
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
B. Credit risk - (cont’d)
The company measure the provision for credit losses on a collective group basis, where receivables share
similar credit risk characteristics based on geographical locations. The examination for expected credit losses
is performed using model including aging analysis and historical loss experiences, and adjusted by the
observable factors reflecting current and expected future economic conditions.
When credit risk on a receivable has increased significantly since initial recognition, the group records specific
provision or general provision which is determined for groups of similar assets in countries in which there are
large number of customers with immaterial balances.
The Group has credit risk exposures for accounts receivables amounted to RMB 8,414,898 thousand relate to
category of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 599,579
thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has credit
risk exposures for other receivables amounted to RMB 15,095 thousand related to category of "Lifetime
expected credit losses (credit losses occurred)". The credit risk exposures for all remaining balance of financial
assets at amortised cost and financial assets at FVTOCI are related to "12-month expected credit losses".
C. Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligation when they
come due. The Group's approach to managing its liquidity risk is to assure, to the extent possible, an adequate
degree of liquidity for meeting its obligations timely, under ordinary conditions and under pressure conditions,
without sustaining unwanted losses or hurting its reputation.
The cash-flow forecast is determined both at the level of the various entities as well as of the consolidated
level. The Company examines the current forecasts of its liquidity requirements in order to ascertain that there
is sufficient cash for the operating needs, including the amounts required in order to comply with the financial
liabilities, while taking strict care that at all times there will be unused credit frameworks so that the Company
will not exceed the credit frameworks granted to it and the financial covenants with which it is required to
comply with. These forecasts take into consideration matters such as the Company’s plans to use debt for
financing its activities, compliance with required financial covenants, compliance with certain liquidity ratios
and compliance with external requirements such as laws or regulation.
The surplus cash held by the Group subsidiaries, which is not required for financing the current ongoing
operations, is invested in short-term interest-bearing investment channels.
144
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
C. Liquidity risk - (cont’d)
(1) Presented below are the contractual maturities of the financial liabilities at undiscounted amounts,
including estimated interest payments:
As at June 30, 2020
Third- Fifth year Contractual Carrying
First year Second year Fourth year and above Cash flow amount
Non-derivative financial
liabilities
Short-term loans 1,918,865 - - - 1,918,865 1,893,876
Bills payables 255,417 - - - 255,417 255,417
Accounts payables 4,773,708 - - - 4,773,708 4,773,708
Other payables 1,342,465 - - - 1,342,465 1,342,465
Other current liabilities 148,974 - - - 148,974 148,974
Debentures payable 959,646 970,651 1,857,907 9,366,047 13,154,251 9,204,385
Long-term loans 719,769 680,316 1,401,467 314,685 3,116,237 2,875,705
Long-term payables 64 64 128 26,612 26,868 26,860
Lease Liabilities 162,885 126,886 133,534 236,625 659,930 532,371
Other non-current liabilities 2,061 30,690 281,420 87,946 402,117 392,842
Derivative financial liabilities
Foreign currency derivatives 1,044,945 2,996 - - 1,047,941 1,047,941
CPI/shekel forward transactions 20,089 - - - 20,089 20,089
11,348,888 1,811,603 3,674,456 10,031,915 26,866,862 22,514,633
D. Market risks
Market risk is the risk that changes in market prices, such as foreign exchange rates, CPI, interest rates and
prices of capital instruments, will affect the Group’s revenues or the value of its holdings in its financial
instruments. The objective of market risk management is to manage and monitor the exposure to market risks
within acceptable parameters, while optimizing the return.
During the ordinary course of business, the Group purchases and sells derivatives and assumes financial
liabilities for the purpose of managing market risks.
(1) CPI and foreign currency risks
Currency risk
The Group is exposed to currency risk from its sales, purchases, expenses and loans denominated in currencies
that differ from the Group’s functional currency. The main exposure is in Euro, Brazilian real, USD and in
NIS. In addition, there are smaller exposures to various currencies such as the British pound, Polish zloty,
Australian dollar, Indian rupee, Argentine peso, Canadian dollar, South African Rand, Ukraine Hryunia, the
Turkish lira and Chinese Yuan Renminbi.
The Group uses foreign currency derivatives – forward transactions and currency options – in order to hedge
the cash flows risk, which derive from existing monetary assets and liabilities and anticipated sales and
purchases, which may be affected by exchange rate fluctuations.
145
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
The Group hedged a part of the estimated currency exposure to anticipate sales and purchases for the
subsequent year. Likewise, the Group hedges most of its monetary assets and liabilities denominated in a
non- U.S. dollar currency. The Group uses foreign currency derivatives to hedge its currency risk, mostly with
maturity dates of less than one year from the reporting date.
Solutions debentures are linked to the NIS-CPI and, therefore, an increase in the NIS-CPI, as well as changes
in the NIS exchange rate, could cause significant exposure with respect to the subsidiary functional currency
– the U.S. dollar. As of the approval date of the financial statements, the subsidiary had hedged most of its
exposure deriving from issuance of the debentures, in options and forward contracts.
(A) The Group’s exposure to NIS-CPI and foreign currency risk, except in respect of derivative financial
instruments is as follows:
June 30, 2020
Total assets Total liabilities
In US Dollar 1,483,757 1,355,563
In Euro 2,074,195 1,763,078
In Brazilian real 1,634,318 193,476
CPI-linked NIS - 9,316,928
In New Israeli Shekel 943,518 929,318
Denominated in or linked to other foreign currency 4,326,664 990,532
10,462,452 14,548,895
(B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows:
June 30, 2020
Currency/ Currency/ Average USD RMB
linkage linkage expiration thousands thousands
receivable payable date Par value Par value Fair value
Forward foreign currency USD EUR 2020/08/30 202,693 1,434,967 (208,857)
Contracts and call options USD PLN 2020/09/14 71,275 504,593 (15,478)
USD BRL 2020/09/19 377,868 2,675,116 194,775
USD GBP 2020/08/12 31,482 222,880 1,090
USD ZAR 2020/07/30 22,749 161,050 (12,747)
ILS USD 2021/01/31 1,395,087 9,876,519 152,787
USD OTHER 523,287 3,704,608 (135,455)
CPI forward contracts CPI ILS 2020/11/06 577,034 4,085,113 (23,172)
146
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
(C) Sensitivity analysis
The appreciation or depreciation of the Dollar against the following currencies as of June 30, 2020 and
the increase or decrease in the CPI would increase (decrease) the equity and profit or loss by the amounts
presented below. This analysis assumes that all the remaining variables, among others interest rates,
remains constant.
June 30, 2020
Decrease of 5% Increase of 5%
Equity Profit (loss) Equity Profit (loss)
New Israeli shekel 67,527 55,863 (14,957) (4,407)
British pound (1,369) 698 1,369 (698)
Euro (101,708) 792 103,565 2,335
Brazilian real (55,508) 22,957 43,005 (29,116)
Polish zloty (18,054) (6,391) 15,441 4,890
South African Rand (1,080) (427) 218 (372)
Chinese Yuan Renminbi (11,098) (11,098) 11,098 11,098
CPI-linked NIS 255,959 255,959 (255,959) (255,959)
(2) Interest rate risks
The Group has exposure to changes in the variable interest rate. The Group has different assets and
liabilities in different countries which bear interest according to the economic environment in each country.
Most of the loans, other than the debentures, bear Dollar and Euro Libor interest. As a result, most of the
variable interest exposure of those loans is to the Libor interest. Due to market conditions, the variable
interest rates on cash are relatively low.
The Company prepares a quarterly summary of exposure to a change in the Libor interest rate. As at the
approval date of the financial statements, the Company had not hedged this exposure.
147
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(2) Interest rate risks - (cont’d)
(A) Type of interest
The interest rate profile of the Group’s interest-bearing financial instruments was as follows:
June 30, 2020
Fixed-rate instruments – unlinked to the CPI
Financial assets
Cash at banks -
Other non-current assets 44,346
Financial liabilities
Long-term loans 1,439,374
Long-term payables 21,345
Other non-current liabilities 171,770
(1,588,143)
Fixed-rate instruments – linked to the CPI
Financial liabilities
Debentures payable 9,204,385
Variable-rate instruments
Financial assets
Cash at banks 1,239,860
Financial assets at fair value through profit or loss 12,609
Other non-current assets 24,502
Financial liabilities
Short-term loans and credit from banks 1,893,876
Long-term loans(1) 1,436,331
(2,053,236)
(1) Including long-term loans current maturities.
(B) Sensitivity analysis of cash flows regarding variable-interest instruments
A change of 5% in the interest rates on the reporting date would increase or reduce equity and profit or loss
by the amounts presented below. This analysis assumes that all the remaining variables, among others
exchange rates, remained fixed.
Profit or loss Equity
Increase in Decrease in Increase in Decrease in
interest interest interest interest
As at June 30, 2020 1,467 (1,425) 1,467 (1,425)
148
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IX. Fair Value
The fair value of forward contracts on foreign currency is based on their listed market price, if available. In the
absence of market prices, the fair value is estimated based on the discounted difference between the stated
forward price in the contract and the current forward price for the residual period until redemption, using an
appropriate interest rate.
The fair value of foreign currency options is based on bank quotes. The reasonableness of the quotes is evaluated
through discounting future cash flow estimates, based on the conditions and duration to maturity of each contract,
using the market interest rates of a similar instrument at the measurement date and in accordance with the Black
& Scholes model.
1. Financial instruments measured at fair value for disclosure purposes only
The carrying amount of certain financial assets and liabilities, including cash at bank and on hand, bills and
accounts receivable, receivables financing, other receivables, derivatives financial assets, short-term loans, bills
and accounts payable and other payable, are the same or proximate to their fair value.
The following table details the carrying amount in the books and the fair value of groups of non-current financial
instruments presented in the financial statements not in accordance with their fair values:
June 30, 2020
Carrying amount Fair value
Financial assets
Other non-current assets (a – Level 2) 65,783 61,900
Financial liabilities
Long-term loans and others (b – Level 2) 3,609,306 3,628,893
Debentures (c – Level 1) 9,204,384 11,227,319
a) The fair value of the other non-current assets is based on a discounted future cash flows, using the acceptable
interest rate for similar investment having similar characteristics (Level 2).
b) The fair value of the long-term loans and others is based on a discounted future cash flows, using the acceptable
interest rate for similar loans having similar characteristics (Level 2).
c) The fair value of the debentures is based on stock exchange quotes (Level 1).
2. The interest rates used in determining fair value
The interest rates used to discount the estimate of anticipated cash flows are:
June 30, 2020
%
U.S. dollar interest 0.15 – 0.88
Euro (0.51) – 0.21
149
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IX. Fair Value - (cont’d)
3. Fair value hierarchy of financial instruments measured at fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The table below presents an analysis of financial
instruments measured at fair value. The various levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active market for identical instrument.
Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.
Level 3: inputs that are not based on observable market data (unobservable inputs).
The Company’s forward contracts and options are carried at fair value and are evaluated by observable inputs
and therefore are concurrent with the definition of level 2.
June 30
2020
Forward contracts and options used for hedging the cash flow (Level 2) (132,245)
Forward contracts and options used for economic hedging (Level 2) 85,188
Other equity investment (Level 2) 156,092
Other non-current asset (Level 2) 35,235
Receivables financing (Level 2) 35,552
Call option in respect of business combination (Level 2) 7,179
Other (Level 2) 12,609
Financial Instrument Fair value
Fair value measured on the basis of discounting the difference between the
stated forward price in the contract and the current forward price for the
Forward contracts
residual period until redemption using an appropriate interest rates.
Foreign currency options The fair value is measured based on the Black&Scholes model.
No transfer between any levels of the fair value hierarchy in the reporting period.
No change in the valuation techniques in the reporting period.
150
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions
1. Information on parent Company
Company Registered Registered capital Shareholding Percentage
name place Business nature (Thousand RMB) percentage of voting rights
Production and sales
of agrochemicals,
Syngenta Shanghai, fertilizers and GM
Group China seeds 10,000,000 74.02% 74.02%
In June 2020, ADAMA became a distinctive member of the newly established Syngenta Group through the
contribution of 74.02% of the shares that CNAC owned in ADAMA into the group. As such, there is no change
in the Company’s ultimate controlling shareholder China National Chemical Co., Ltd.
2. Information on the largest subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
3. Information on largest joint ventures and associates of the Company
For information about the joint ventures and associates of the Company, refer to Note V.12.
Other joint ventures and associates that have related party transactions with the Group during this period or the
previous periods are as follows:
Name of entity Relationship with the Company
Alfa Agricultural Supplies S. Joint venture of the Group
Innovaroma SA Joint venture of the Group
Agribul Ltd. Joint venture of the Group
151
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties
Name of other related parties Related party relationship
Jingzhou Sanonda holdings Co., Ltd. Common control
CNAC International Co., Ltd. (SPV Company) Common control
ChemChina Asset Management Co., Ltd. Common control
ChemChina Information Center Co., Ltd. Common control
Syngenta (China) Investment Co.Ltd Common control
Syngenta Crop Protection AG Common control
Syngenta Crop Protection S.A. Common control
Syngenta Supply AG Common control
Syngenta Crop Protection LLC. Common control
Syngenta Romania SRL Common control
Syngenta France SAS Common control
Syngenta Australia Pty Ltd Common control
Syngenta Agro Sociedad Anonima Common control
Syngenta Protecao De Cultivos LTDA Common control
Syngenta Canada Inc. Common control
Syngenta Korea Ltd. Common control
Syngenta Vietnam Ltd. Common control
Syngenta Czech s.r.o. Common control
Syngenta Espana S.A. Common control
Syngenta India Limited Common control
Syngenta South Africa (Pty) Ltd. Common control
PT Syngenta Indonesia Common control
Syngenta Agro AG Common control
Syngenta Agro S.A. Common control
Syngenta Agro S.r.l. Common control
Syngenta Polska Sp. z o.o. Common control
Syngenta Agro, S.A. DE C.V. Common control
Syngenta Italia S.p.A. Common control
Syngenta Crop Protection Lda. Common control
Syngenta Crop Protection B.V. Common control
Syngenta Crop Protection NV Common control
Syngenta Nordics A.S. Common control
Syngenta Tarim Sanayi ve Ticaret A.S. Common control
Syngenta Agro GmbH Common control
Syngenta Kazakhstan Limited Liability Partnership Common control
Syngenta Slovakia S.R.O. Common control
Syngenta Hungary Kft. Common control
Syngenta UK Ltd Common control
Syngenta Ireland Ltd Common control
Syngenta Comercial Agricola Ltda Common control
Syngenta S.A. (Colombia) Common control
Bluestar Engineering Co.,Ltd. Common control
China National Bluestar Co., Ltd. Common control
China Bluestar Chengrand Common control
Bluestar (Beijing) Chemical Machinery Co., Ltd. Common control
Hangzhou (Torch) Xidoumen Membrane Industry Co., Ltd Common control
Shandong Dacheng International Trading Common control
Shandong Dacheng agricultural chemical co. LTD. Common control
Southwest Chemical Research and Design Institute Co., Ltd. Common control
Beijing Guangyuan Yinong Chemical Co., Ltd. Common control
152
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties - (cont’d)
Name of other related parties Related party relationship
Anhui Research Institute of Chemical Industry Common control
Bluestar Engineering Co.,Ltd. Common control
Elkem Silicones Brasil Ltda. Common control
Shanghai branch of China blue lianhai design and research institute. Common control
Jiangsu Huaihe Chemical Co.,Ltd. Common control
Sinochem Fertilizer Co., Ltd Jiangsu Branch Common control
Sinochem Fertilizer Co., Ltd Fujian Branch Common control
Sinochem Fertilizer Co., Ltd Guangxi Branch Common control
Sinochem Agriculture Biotechnology Co. LTD Xinjiang Branch Common control
Sinochem Fertilizer Co., Ltd Southwest Branch Common control
Sinochem Modern Agriculture Xinjiang Co. LTD Common control
Sinochem Modern Agriculture Co. LTD. Anhui Branch Common control
Zhonglan Lianhai Design & Research Institute Co.,Ltd. Common control
Zhonglan International Chemical Co., Ltd Common control
Jiangsu Youshi Chemical Co., Ltd. Associate of the Group
Jiangsu Ruixiang Chemical Co., Ltd. Associate of the Group
Jiangsu Yangnong Chemical Co., Ltd. Associate of the Group
Jiangsu Yangnong Chemical Group Co., Ltd. Associate of the Group
5. Transactions and balances with related parties
(1) Transactions with related parties
Six months ended June 30
Type of purchase Related Party Relationship 2020 2019
Summary of purchase of goods/services:
Purchase of goods/services received Common control under
ChemChina 618,225 734,273
Joint venture 1,891 3,332
Purchase of fixed assets and other assets Common control under
ChemChina 163,931 13,098
Summary of Sales of goods:
Sale of goods/ Service rendered Common control under
ChemChina 408,470 408,089
Joint venture 96,378 108,664
153
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties
(2) Guarantee
The Group as the guarantee receiver
Amount of Inception date Maturity date Guaranty
Guarantee provider guaranteed loan of guaranty of guaranty completed (Y / N)
Parent company 300,000 20/11/2017 20/11/2022 N
30,000 01/08/2019 30/07/2020 N
2,000 11/02/2020 11/08/2020 N
20,000 28/06/2019 18/06/2020 Y
20,000 01/03/2019 20/02/2020 Y
50,000 01/06/2019 29/05/2020 Y
50,000 28/06/2019 27/06/2020 Y
64,000 19/02/2019 18/02/2020 Y
80,000 02/02/2019 30/01/2020 Y
(3) Remuneration of key management personnel and directors
Periods ended June 30
2020 2019
Remuneration of key management personnel and directors 22,043 32,756
(4) Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
2020 2019
Expected Expected
Book credit Book credit
Items Related Party Relationship Balance losses Balance losses
Trade receivables Common control under 156,809 - 153,197 -
ChemChina
Joint venture 43,645 - 24,026 -
Associates 5,694 - - -
Other receivables Common control under 416 - 25,346 -
ChemChina
Prepayments Common control under 41,032 - 69,610 -
ChemChina
Associates 669 - - -
Dividends receivable Joint venture 10,768 - - -
Other assets Joint venture - - 314 -
154
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties - (cont'd)
(4) Receivables from and payables to related parties (including loans) - (cont'd)
Payable Items
June 30 December 31
Items Related Party Relationship 2020 2019
Trade payables Common control under ChemChina 282,447 239,360
Joint venture 637 258
Associates 28,042 -
Other payables Common control under ChemChina 29,118 23,195
Joint venture 538 -
Other non-current
liabilities * Common control under ChemChina 171,770 171,770
* The liability is a loan from a related party, the interest expense for the six months ended June 30, 2020 is
1,048 thousand RMB (six months ended June 30, 2019: 1,042 thousand RMB).
(5) Acquisition of a subsidiary
June 30 December 31
Related Party Related Party Relationship 2020 2019
Parent Acquisition of a subsidiary - 415,000
(6) Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 273,383 thousand RMB
(31.12.19: 396,355 thousand RMB) Interest income of bank deposit for the current period was 670 thousand
RMB (amount for six months ended June 30, 2019 is 2,106 thousand RMB).
The closing balance of a loan received from ChemChina Finance corporation was 4,000 thousand RMB
(31.12.19: 100,000 thousand RMB). Interest expenses in the current period was 370 thousand RMB (amount
for six months ended June 30, 2019 is 0 thousand RMB).
155
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies
1. Significant commitments
June 30 December 31
2020 2019
Investment in Fixed assets 710,474 588,243
2. Commitments and Contingent Liabilities
On December 10, 2018 the 9th meeting of the 8th session of the Board of Directors of the Company approved
the extension of the engagement in annual liability insurance policies for directors, supervisors and senior
officers of the Company (“D&O Liability Insurance) as originally approved by the 22nd meeting of the 7th
session of Board of Directors and the 4th Interim Shareholders Meeting, and authorized the management to
annually deal with all matters relating to renewal/extension of the customary D&O Liability Insurance policies,
with up to 20% flexibility in the relevant terms of the original policy. On December 26, 2018 the 3rd Interim
Shareholders Meeting approved the above resolution.
Environmental protection
The manufacturing processes of the Company, and the products it produces and markets, entail environmental
risks that impact the environment. The Company invests substantial resources in order to comply with the
applicable environmental laws and attempts to prevent or minimize the environmental risks that could occur as
a result of its activities. To the best of the Company’s knowledge, at the balance sheet date, none of its applicable
permits and licenses regarding environmental issues have been revoked.
Other
Two of the Company’s production sites, Jingzhou old site in Jingzhou, Hubei Province and Anpon old site in
Huai’An, Jiangsu Province (hereinafter the “Sites”) are in the process of relocating to new sites. As part of the
relocation process, the number of employees in the Company and its subsidiary Anpon is to be reduced.
The Company and its subsidiary Anpon began to execute the employees’ reduction plan during the fourth quarter
of 2019 and through the first half of 2020. The fourth quarter of 2019 includes expenses of RMB 243 million
with regard to termination benefits to employees.
156
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies - (cont’d)
2. Commitments and Contingent Liabilities - (cont’d)
Claims against subsidiaries
In the ordinary course of business, legal claims are filed against subsidiaries, including lawsuits, regarding
claims for patent infringement. Inter alia, from time to time, the Company, similar to other companies operating
in the plant protection industry, is exposed to class actions for large amounts, which it must defend against while
incurring considerable costs, even if these claims, from the start, have no basis. In the estimation of the
Company’s management, based, inter alia, on opinions of its legal counsel regarding the prospects of the
proceedings, the financial statements include appropriate provisions where necessary to cover the exposure
resulting from the claims.
Various immaterial claims have been filed against Group companies in courts throughout the world, in
immaterial amounts, for causes of action involving mainly employee-employer relations and various civil claims,
for which the Company did not record a provision in the financial statements. Furthermore, claims were filed
for product liability damages, for which the Company has appropriate insurance coverage, such that the
Company’s exposure in respect thereof is limited to the amount its deductible requirement or the amount thereof
does not exceed the deductible amount.
Performance Compensation Agreement
Within the context of the 2017 combination between the Company and Solutions, the Company entered into a
Performance Compensation Agreement with CNAC, then the 100% owner of Solutions and the controlling
shareholder of the Company, according to which, CNAC made a commitment regarding Solutions’ aggregate
net profit in the years 2017-2019 (the “Compensation Period”). In case of failure to meet such commitment,
CNAC committed to compensate the Company either through shares or cash according to a predetermined
formula.
The calculated net profit of Solutions for the Compensation Period was lower than committed. As a result,
Syngenta Group (the current direct shareholder of the Company since June 15, 2020), executed such
compensation commitment, which consists of two parts: (1) the buyback and cancellation of 102,432,280 A
shares for a consideration of RMB 1, executed on July 13, 2020, and (2) the return of the cumulative dividend
declared during the Compensation Period from the Compensation Shares amounting to RMB 17.6 million free
of charge, executed on July 14, 2020.
As a result, the Company's total share and registered capital was reduced from 2,446,553,582 to 2,344,121,302,
and CNAC’s effective ownership in the Company was reduced from 78.9% to 78.0%.
157
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies - (cont’d)
2. Commitments and Contingent Liabilities - (cont’d)
COVID-19 pandemic
During the first half of 2020, the global agrochemical market, amongst many others, was impacted by the
unprecedented COVID-19 pandemic. As a result, farmers’ incomes have been, and continue to be, negatively
impacted in most regions by lower crop prices, reduced demand due to the relative shutdown of the food sector,
and labor shortages owing to mobility restrictions, all leading to increased costs for farmers. Governments across
the world continue to include farmers in extensive support programs, partially offsetting lost income due to the
pandemic.
One of the most widespread economic consequences of the pandemic is the significant weakening of many
global currencies against the US dollar, which started abruptly towards the end of the first quarter and throughout
the duration of the second quarter. This has been seen most notably in the Brazilian Real, Indian Rupee and
Turkish Lira, and has contributed to increased volatility in the Euro and Australian dollar.
Following tight supply in the first quarter due to COVID-19 disruptions, chemical production in China has
largely returned to prior levels and prices of raw materials and intermediates are starting to reflect such increase
in supply.
The ongoing spread of the COVID-19 pandemic is expected to continue to negatively impact the performance
and profitability of the Company in the coming months. The Company continues to actively manage its response
to the pandemic in order to ensure the safety of its employees and limit its impact on the Company’s business
and its financial performance.
XII. Events subsequent to the balance sheet date
Subsequent to the report date, the Company’s Board of Directors has approved a limited B-share repurchase
program. In terms of this program, the Company intends to repurchase up to 26 million of its B-shares
(constituting up to 15.6% of the Company's B-shares and up to 1.1% of its total shares outstanding), at an
expected cost in the range of approximately RMB 66.3 million to RMB 132.6 million. This proposal will be
submitted to the Shareholders’ Meeting for confirmation in the coming weeks. If confirmed, the program will
be completed within three months. The actual timing, number and value of B-shares to be repurchased under
the share repurchase program will be determined by the Company’s management at its discretion and will
depend on a variety of factors.
158
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments
1. In February 2019, the remuneration committee and the Company's Board of Directors (and the General
Meeting with respect to the CEO and Vice President who also serves as a director) approved the allocation of
77,864,910 phantom warrants to officers and employees in accordance with the long-term phantom
compensation plan (hereinafter - "the 2019 Plan"). The allocation date is February 21, 2019.
The warrants will vest in four equal portions, where the first and second quarters are exercisable after two
years, the third quarter after three years and the fourth quarter after four years from January 1, 2019. The
warrants will be exercisable, in whole or in part, in accordance with the terms of the 2019 plan, and subject to
achieving financial targets as determined in the plan. The warrants will be exercisable until the end of 2025.
Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the difference
between the base price as determined at the time of the grant and the closing price of one share the company
on the Shenzhen Stock Exchange, as it will be on the exercise date up to the ceiling that was determined under
the plan.
The fair value of the granted warrants as aforesaid was estimated using the binomial pricing model.
The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at the
grant date, amounted to a total of approximately 186 million RMB. The liability at the end of the reporting
period was recorded according to the vesting period as determined in the plan, taking into account the extent
of the service that the employees provided until that date.
Statement of share based payments in the period Phantom warrants
Total number of Phantom warrants at the beginning of the period 67,226,416
Total number of Phantom warrants granted in current period 1,613,348
Total number of Phantom warrants exercised in current period -
Total number of Phantom warrants forfeited in current period (4,963,172)
Total number of Phantom warrants at the end of the period 63,876,592
The exercise prices and the remainder of the contractual period for Phantom RMB 9.92 – 10.85
warrants outstanding at the end of period 5.5 years
The parameters used in implementing the model are as follows:
Stock price (RMB) 10.85
Exercise increment (RMB) 10.03/10.85
Expected volatility 43.97%
Risk-free interest rate 3.06%
Economic value as of February 21, 2019 (in thousands RMB) 186,206
The methods for the determination of the fair value of liabilities arising from
cash-settled share-based payments The binomial pricing model
Accumulated amount of liabilities arising from cash-settled share-based
payments (in thousands RMB) 82,667
Expenses arising from cash-settled share-based payments in current period
(in thousands RMB) 15,358
159
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments - (cont’d)
2. In September 2019, the remuneration committee and the Company's Board of Directors (and the General
Meeting with respect to the CEO and Vice President who also serves as a director) approved the cancellation
of 2017 Plan against the allocation of 28,258,248 warrants in accordance with the long-term phantom
compensation plan (hereinafter - "The Alternative Warrants" and "The Alternative Plan"). The cancellation
and allocation date is September 26, 2019.
The alternative warrants will vest in four equal portions, where the first quarter is exercisable after one year,
the second quarter after two years, the third quarter after three years and the fourth quarter after four years
from October 1, 2019. The warrants will be exercisable, in whole or in part, in accordance with the terms of
the Alternative Plan, and subject to achieving financial targets as determined in the plan. The warrants will be
exercisable until October 1, 2026.
Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the difference
between the base price as determined at the time of the grant and the closing price of one share of the parent
company on the Shenzhen Stock Exchange, as it will be on the exercise date up to the ceiling that was
determined under the plan.
The fair value of the total granted alternative Warrants at the allocated date is equal to the fair value of the
total warrants canceled from the 2017 plan.
The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at the
cancellation and allocation date, amounted to a total of approximately 69 million RMB. The liability in the
financial statements at the end of the reporting period was recorded at the fair value estimated using the
binomial option pricing model and by the vesting period from the original grant date of the 2017 plan to the
end of the service period determined by the alternative plan, taking into account the extent of the service that
the employees provided until that date and the stock price at the reporting date.
Statement of share based payments in the period
Phantom warrants
Changes in the number of 2017 Plan:
Total number of Phantom warrants at the beginning of the period 24,266,876
Total number of Phantom warrants granted in current period -
Total number of Phantom warrants exercised in current period -
Total number of Phantom warrants forfeited in current period (1,842,443)
Total number of Phantom warrants at the end of the period 22,424,433
The range of the exercise prices and the remainder of the contractual period RMB 9.42
for Phantom warrants outstanding at the end of period 6.25 years
160
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments - (cont’d)
The parameters used in implementing the model are as follows:
Stock price (RMB) 9.23
Exercise increment (RMB) 9.43
Expected volatility 40.29%
Risk-free interest rate 3.14%
Economic value as of September 26, 2019 (in thousands RMB) 68,836
The methods for the determination of the fair value of liabilities arising from
cash-settled share-based payments related to the alternative plan The binomial pricing model
Accumulated amount of liabilities arising from cash-settled share-based
payments related to the alternative plan (in thousands RMB) 31,041
Expenses arising from cash-settled share-based payments in current period
related to the alternative plan (in thousands RMB) 1,036
XIV. Other significant items
1. Segment reporting
The Company presents its segment reporting based on a format that is based on a breakdown by business
segments:
Crop Protection (Agro)
This is the main area of the Company’s operations and includes the manufacture and marketing of
conventional agrochemical products.
Intermediates and ingredients (formerly known as “Other”)
This field of activity includes a large number of sub-fields, including: Lycopan (an oxidization retardant),
aromatic products, and other chemicals. It combines all the Company’s activities not included in the Crop
Protection products segment.
Segment results reported to the chief operating decision maker include items directly attributable to a segment
as well as items that can be allocated on a reasonable basis. Unallocated items comprise mainly financing
expenses, net, gains from changes in fair value, investment income and tax expenses.
All assets and liabilities that can be attributed to a specific segment were allocated accordingly. Attributed
assets include: accounts and bills receivables, receivables financing, inventory, fixed assets, right-of-use assets,
construction in progress, intangible assets, goodwill, non-current trade receivables and long-term equity
investments. Attributed liabilities include account payables, bill payablesand lease liabilities. All other assets
and liabilities which are not attributable to a specific segment are presented as unallocated assets and liabilities.
161
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Information regarding the results and assets and liabilities of each reportable segment is included below:
Crop Protection Intermediates and ingredients Elimination among segments Total
Six months ended Six months ended Six months ended Six months ended
June 30 June 30 June 30 June 30
2020 2019 2020 2019 2020 2019 2020 2019
Operating income from external
customers 12,834,364 12,302,544 1,286,676 1,313,488 - - 14,121,040 13,616,032
Inter-segment operating income - - 665 692 (665) (692) - -
Interest in the profit or loss of
associates and joint ventures 11,118 11,462 3,274 10,262 - - 14,392 21,724
Segment's results 927,549 1,244,460 60,843 74,943 - - 988,392 1,319,403
Financial expenses, net 842,792 938,196
Gain (loss) from changes in fair
value 265,510 884,135
Investment income 37,737 (536,167)
Profit before tax 448,847 729,175
Income tax expense (244,198) 140,537
Net profit 204,649 588,638
Crop Protection Intermediates and ingredients Unallocated assets and liabilities Total
June 30 December 31 June 30 December 31 June 30 December 31 June 30 December 31
2020 2019 2020 2019 2020 2019 2020 2019
Total assets 36,682,597 35,506,894 2,497,137 2,392,909 9,916,445 7,389,137 49,096,179 45,288,940
Total liabilities 5,105,591 4,682,416 311,169 286,109 21,009,641 17,948,750 26,426,401 22,917,275
162
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Geographic information
The following tables sets out information about the geographical segments of the Group’s operating income
based on the location of customers (sales target) and the Group's non-current assets (including fixed assets,
right-of-use assets, construction in progress, investment properties intangible assets and goodwill). In the case
of investment property, fixed assets, right of used assets and construction in progress, the geographical location
of the assets is based on its physical location. In case of intangible assets and goodwill, the geographical
location of the company which owns the assets.
Operating income from external
customers
Six months ended June 30
2020 2019
Europe 4,275,020 4,252,479
North America 2,622,636 2,715,528
Latin America 2,669,490 2,411,530
Asia Pacific 2,456,818 2,426,931
Africa, Middle East (including Israel) and India 2,097,076 1,809,564
14,121,040 13,616,032
Specified non-current assets
June 30 December 31
2020 2019
Europe 1,055,760 1,047,505
Latin America 2,259,179 2,298,654
North America 1,272,965 1,282,267
Asia Pacific 2,825,394 2,709,786
Africa, Middle East (including Israel) and India 11,468,388 11,512,105
18,881,686 18,850,317
The dependency on major customers
No single customer's proportion of the total amount of sales is over 10%.
163
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
2. Calculation of Earnings per share and Diluted earnings per share
Amount for Amount for
the current the prior
period period
Net profit from continuing operations attributable to ordinary shareholders 204,649 588,638
Amount for Amount for
the current the prior
Thousands shares period period
Number of ordinary shares outstanding at the beginning of the year 2,446,554 2,446,554
Add: weighted average number of ordinary shares issued during the year - -
Less: weighted average number of ordinary shares repurchased during the
year - -
Weighted average number of ordinary shares outstanding at the end of the
year 2,446,554 2,446,554
Amount for Amount for
the current the prior
period period
Calculated based on net profit attributable to ordinary shareholders
Basic earnings per share 0.08 0.24
Diluted earnings per share N/A N/A
Calculated based on net profit from continuing operations
attributable to ordinary shareholders:
Basic earnings per share 0.08 0.24
Diluted earnings per share N/A N/A
Calculated based on net profit from discontinued operations
attributable to ordinary shareholders:
Basic earnings per share N/A N/A
Diluted earnings per share N/A N/A
164
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements
1. Cash at bank and on hand
June 30 December 31
2020 2019
Deposits in banks 1,423,296 1,395,994
Other cash and bank 22,608 27,057
1,445,904 1,423,051
As at June 30, 2020, restricted cash and bank balances was 22,608 thousand RMB (as at December 31, 2019-
27,057 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Accounts receivable
a. By category
June 30, 2020
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed 131,888 25 131,888 100 -
individually for impairment
Account receivables assessed 400,047 75 18 - 400,029
collectively for impairment
531,935 100 131,906 27 400,029
December 31, 2019
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 131,375 27 131,375 100 -
Account receivables assessed
collectively for impairment 349,157 73 48 - 349,109
480,532 100 131,423 27 349,109
b. Aging analysis
June 30, 2020
Within 1 year (inclusive) 402,496
Over 1 year but within 2 years 74,629
Over 2 years but within 3 years 40,933
Over 3 years but within 4 years 1,700
Over 4 years but within 5 years 2,634
Over 5 years 9,543
531,935
165
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
2. Accounts receivable - (cont'd)
c. Addition, written-back and written-off of provision for expected credit losses during the period
Six months ended June 30, 2020
Balance as of January 1, 131,423
Addition during the year, net 518
Write back during the year (35)
Write-off during the year -
Exchange rate effect -
Balance as of June 30 131,906
d. Five largest accounts receivable at June 30, 2020:
Proportion of Allowance of
Accounts expected
Name Closing balance receivable (%) credit losses
Party 1 270,467 51 -
Party 2 118,009 22 118,009
Party 3 95,472 18 -
Party 4 8,788 2 5
Party 5 7,650 1 4
500,386 94 118,018
3. Receivable financing
June 30 December 31
2020 2019
Bank acceptance draft 8,512 11,722
8,512 11,722
As at June 30, 2020, bank acceptance endorsed but not yet due amounts to 138,699 thousands RMB.
166
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables
June 30 December 31
2020 2019
Interest receivable - 64
Other receivables 45,492 13,987
45,492 14,051
(1) Other receivables
a. Other receivables by categories
June 30 December 31
2020 2019
Other 51,350 19,655
Provision for expected credit losses (5,858) (5,668)
45,492 13,987
b. Other receivables by aging
June 30, 2020
Within 1 year (inclusive) 32,606
Over 1 year but within 2 years 13,679
Over 2 years but within 3 years -
Over 3 years but within 4 years -
Over 4 years but within 5 years 10
Over 5 years 5,055
51,350
167
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables - (cont'd)
(2) Other receivables - (cont'd)
c. Additions, recovery or reversal and written-off of provision for expected credit losses during the
period:
Six months ended
June 30, 2020
Balance as of January 1, 2020 5,668
Addition during the period 262
Written back during the period (72)
Write-off during the period -
Balance as of June 30, 2020 5,858
d. Five largest other receivables at June 30 2020:
Proportion of other
Name Closing balance receivables (%) Credit loss provision
Party 1 16,985 33 -
Party 2 13,322 26 -
Party 3 12,716 25 -
Party 4 3,125 6 3,125
Party 5 1,053 2 -
47,201 92 3,125
168
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
5. Long-term equity investments
June 30, 2020 December 31, 2019
Impairment Impairment
Amount balance loss Book value Amount balance loss Book value
Invest in
subsidiaries. 16,390,275 18,864 16,371,411 16,390,275 18,864 16,371,411
16,390,275 18,864 16,371,411 16,390,275 18,864 16,371,411
Investments in subsidiaries
Current Balance
provision provision
Opening Closing Impairment Impairment
Invested unit balance Increase Decrease balance loss loss
Jingzhou Hongxiang Chemical Co.
Ltd. 18,756 - - 18,756 - 18,864
Hubei Sanonda Foreign Trade Co. Ltd. 11,993 - - 11,993 - -
Adama Anpon (Jiangsu) Ltd. 450,449 - - 450,449 - -
ADAMA Agricultural Solutions Ltd. 15,890,213 - - 15,890,213 - -
16,371,411 - - 16,371,411 - 18,864
6. Operating Income and operating costs
Six months ended June 30, 2020 Six months ended June 30, 2019
Operating Operating
Revenue costs Revenue costs
Main operations 653,055 526,904 704,594 493,979
Other operations 20,591 10,410 30,832 24,582
673,646 537,314 735,426 518,561
169
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
7. Notes to items in the cash flow statements
(1) Other cash received relevant to operating activities
Six months ended Six months ended
June 30, 2020 June 30, 2019
Interest income 8,507 14,333
Government subsidies 4,992 4,414
Other 1,564 211
15,063 18,958
(2) Other cash paid relevant to operating activities
Six months ended Six months ended
June 30, 2020 June 30, 2019
Professional services 56,487 44,848
Transportation and Commissions 13,067 28,438
Other 21,253 16,284
90,807 89,570
(3) Other cash received relevant to financing activities
Six months ended Six months ended
June 30, 2020 June 30, 2019
Deposit for issuing bills payables 4,449 11,947
(4) Other cash paid relevant to financing activities:
Six months ended Six months ended
June 30, 2020 June 30, 2019
Other 200 200
200 200
170
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
8. Supplementary information to cash flow statement
(1) Reconciliation of net profit to net cash flows generated from operating activities:
Six months ended June 30
2020 2019
Net profit (42,764) (37,789)
Add: Assets impairment loss 2,864 272
Credit impairment loss 674 1,633
Depreciation of fixed assets 76,057 99,602
Depreciation of-right-of use assets 233 209
Amortization of intangible assets 2,222 2,347
Loss on disposal of fixed assets, intangible assets and other
long-term assets (101) 293
Financial expenses 3,518 12,588
Decrease (increase) in deferred income tax assets 27,873 (11,220)
Decrease (increase) in inventory 11,596 39,895
Increase in accounts receivable from operating activities (102,463) 411,591
Increase in payables from operating activities (41,958) (236,900)
Net cash flows generated from operating activities (62,249) 282,521
(2) Net increase in cash and cash equivalents
Closing balance of cash 1,423,296 2,132,174
Less: Opening balance of cash 1,395,994 2,005,313
Net increase in cash and cash equivalents 27,302 126,861
171
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Related parties and related parties transactions
(1) Information on parent Company
Registered
capital
Company Registered (Thousand Shareholding Percentage
name place Business nature RMB) percentage of voting rights
Production and sales
of agrochemicals,
Syngenta Shanghai, fertilizers and GM
Group China seeds 10,000,000 74.02% 74.02%
The ultimate controller of the company is China National Chemical Corporation.
(2) Information on the subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
(3) Transactions with related parties
a. Transactions of goods and services
Six months ended June 30
2020 2019
Summary of Purchase of goods/services Related Party Relationship
received:
Purchase of goods/services received Common control
under ChemChina 2,063 7,571
Subsidiary 45,630 48,064
Purchase of fixed assets and other assets Common control
under ChemChina 155,616 12,766
Subsidiary 136 -
Summary of Sales of goods:
Sale of goods Subsidiary 450,283 260,266
Sale of raw materials Subsidiary - 331
172
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
b. Guarantees
The Company as the guarantor
Amount of Inception Maturity Guaranty
guaranteed date of date of completed
loan guaranty guaranty (Y/ N)
Subsidiary 20,000 26/12/2019 25/12/2020 N
40,000 10/10/2019 09/10/2020 N
50,000 30/12/2019 25/12/2020 N
50,000 12/12/2019 09/12/2020 N
50,000 21/11/2019 18/11/2020 N
50,000 19/11/2019 18/11/2020 N
64,000 26/02/2020 25/02/2021 N
20,000 27/02/2020 18/02/2021 N
20,000 16/06/2020 11/06/2021 N
30,000 19/05/2020 18/05/2021 N
50,000 27/05/2020 05/02/2021 N
50,000 29/06/2020 27/06/2021 N
The Company as the guarantee receiver
Amount of Inception Maturity Guaranty
guaranteed date of date of completed
Guarantee provider loan guaranty guaranty (Y/ N)
Parent 300,000 20/11/2017 20/11/2022 N
173
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
c. Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
2020 2019
Expected Expected
Related Party Book credit Book credit
Items Relationship Balance losses Balance losses
Trade receivables Subsidiary 483,948 118,009 424,182 117,491
Associates of ChemChina 3,401 2 - -
Other receivables Subsidiary 29,701 - - -
Payable Items
June 30 December 31
Items Related Party Relationship 2020 2019
Trade payables Common control under ChemChina 115,589 9,195
Other payables Subsidiary 163,510 163,877
Common control under ChemChina 97 97
Other non-current
liabilities* Common control under ChemChina 171,770 171,770
* loans from related party, the interest expense for the 6 months ended June 30, 2020 and 2019 was
1,048 thousand RMB for each of the periods.
d. Acquisition of a subsidiary
Six months ended June 30
Related Party Related Party Relationship 2020 2019
Parent Acquisition of a subsidiary - 415,000
e. Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 166,383 thousand RMB
(31.12.19: 163,630 thousand RMB). Interest income of bank deposit for the current period was 219
thousand RMB (amount for six months ended June 30, 2019 is 1,654 thousand RMB ).
The closing balance of a loan received from ChemChina Finance corporation was 2,000 thousand
RMB (31.12.19: 100,000 thousand RMB). Interest expenses in the current period was 370 thousand
RMB (amount for six months ended June 30, 2019 is 0 thousand RMB).
174
ADAMA Ltd. Semi-Annual Report 2020
Supplementary information
(Expressed in RMB '000)
1. Extraordinary Gain and Loss
Six months ended
June 30, 2020
Disposal of non-current assets 7,694
Government grants recognized through profit or loss 17,834
Recovery or reversal of expected credit losses which is assessed individually during the
years 15,508
Other non-operating income or expenses other than the above 19,274
Other profit or loss that meets the definition of non-recurring profit or loss (66,192)
Tax effect (9,241)
(15,123)
Note 1: Extraordinary gain and loss items listed above are presented in the amount before taxation
2. Return on net assets and earnings per share (“EPS”)
The information of Return on net assets and EPS is in accordance with the Preparation Rules for
Information Disclosure by Companies Offering Securities to the Public No. 9 – Calculation and
Disclosure of Return on net assets and Earnings per share (2010 Amendment) issued by China Securities
Regulatory Commission
Weighted average
rate of return on net Basic EPS Diluted EPS
Profit during the reporting period assets (RMB/share) (RMB/share)
Net profit attributable to ordinary
shareholders of the Company 0.91% 0.08 N/A
Net profit after deduction of extraordinary
gains/losses attributable to ordinary
shareholders of the Company 0.98% 0.09 N/A
175
ADAMA Ltd. Semi-Annual Report 2020
Section XII - Documents Available for Reference
(I) Financial Statements carried with signatures and seals of Legal Representative and Accounting Principal as well as
Head of the Accounting Organ;
(II) In the Reporting Period, originals of all documents of the Company ever disclosed publicly in media designated by
China Securities Regulatory Commission as well as the originals of all the public notices were deposited in the office of
the Company.
ADAMA Ltd.
Legal Representative:
Ignacio Dominguez
August 19, 2020
176
