ADAMA Ltd. Semi-Annual Report 2021
ADAMA LTD.
SEMI-ANNUAL REPORT 2021
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 2021
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ADAMA Ltd. Semi-Annual Report 2021
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 III herein. The major risks of the Company include,
among others, exchange rate fluctuations; exposure to interest rate, Israel CPI and
NIS exchange rate fluctuations; fluctuations in raw material inputs and prices, and in
sales. Investors and other relevant people are cautioned to be sufficiently mindful of
investment risks. For the complete “Risks Facing the Company and Countermeasures”
of the Company, please see the relevant section below.
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 2021
Table of Contents
Section I - Important Notice, Table of Contents and Definitions....................................... 2
Section II - Corporate Profile and Financial Results.......................................................... 6
Section III - Performance Discussion and Analysis........................................................... 9
Section IV – Corporate Governance ................................................................................. 34
Section V – Environmental and Social Responsibilities ................................................. 36
Section VI - Significant Events.......................................................................................... 44
Section VII - Share Changes and Shareholders ............................................................... 57
Section VIII - Preferred stock ............................................................................................ 65
Section IX - Bonds ............................................................................................................. 66
Section X - Financial Report.............................................................................................. 67
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ADAMA Ltd. Semi-Annual Report 2021
Documents Available for Reference
(I) Duly signed Financial Statements by the Legal Representative and Accounting Principal as well as Head of the
Accounting Organ;
(II) Originals of all Company’s documents previously disclosed in media designated by the CSRC as well as the originals
of all the public notices, were deposited in the Company’s office.
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ADAMA Ltd. Semi-Annual Report 2021
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, ADAMA 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
ADAMA Huifeng (Jiangsu) Ltd., a 51% owned subsidiary of the Company,
ADAMA Huifeng
incorporated in China according to its laws
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 2021 Semi-Annual Report
Reporting Period, this Period January 1, 2021 - June 30, 2021
2020 Annual Report The Company’s 2020 Annual Report published on March 31, 2021
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ADAMA Ltd. Semi-Annual Report 2021
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
Securities Affairs Representative &
Board Secretary
Investor Relations Manager
Name Guo Zhi Wang Zhujun
Address 6/F, No.7 Office Building, No.10 Courtyard, Chaoyang Park South Road, Chaoyang District, Beijing
Tel. 010-56718110 010-56718110
Fax 010-59246173 010-59246173
E-mail 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 2020
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
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ADAMA Ltd. Semi-Annual Report 2021
the Reporting Period. Said information can be found in the 2020 Annual Report.
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) 15,063,780 14,121,040 6.68%
Net profit attributable to shareholders of the
Company (RMB’000) 367,036 204,649 79.35%
Net profit attributable to shareholders of the
Company excluding non-recurring profit and
loss (RMB’000) 322,123 219,772 46.57%
Net cash flow from operating activities
(RMB’000) 1,491,293 1,234,531 20.80%
Basic EPS (RMB/share) 0.1575 0.0836 88.40%
Diluted EPS (RMB/share) N/A N/A N/A
Weighted average return on net assets 1.71% 0.91% 0.80%
End of Reporting Period End of last year +/- (%)
Total assets (RMB’000) 49,450,006 46,801,034 5.66%
Net assets attributable to shareholders of
the Company (RMB’000) 21,432,352 21,353,752 0.37%
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
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ADAMA Ltd. Semi-Annual Report 2021
None during the Reporting Period.
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
14,864
part of asset impairment provisions)
Government grants recognized through profit or loss (excluding
government grants closely related to business of the Company and given
20,630
at a fixed quota or amount in accordance with government’s uniform
standards)
Recovery or reversal of provision for bad debts which is assessed
12,474
individually during the years
Other non-operating income and expenses other than the above 6,792
Other profit or loss that meets the definition of non-recurring profit or loss -44
Less: Income tax effects 9,803
NCI (after tax) -
Total 44,913
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 2021
Section III - Performance Discussion and Analysis
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 is a global leader in crop protection, engaging in the development, manufacturing and
commercialization of a wide range of crop protection products, that are largely off-patent. The Group
provides solutions to farmers to combat weeds, insects and disease, and sells its products in
approximately 100 countries, through approximately 60 subsidiaries worldwide.
The Group's business model integrates end-customer access, regulatory expertise, state-of-the art global
R&D, production and formulation facilities, thereby providing the Group a significant competitive edge
and allowing it to launch new and differentiated products that meet local farmers and customer 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.
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.
ADAMA Group is a distinctive member of 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.
The general crop protection market environment
During the first half of 2021, crop prices of most of the major commodity crops remained elevated, driving
an increase in planted areas and strong crop protection demand in most regions. Demand was also
supported by positive weather conditions in various regions, although drought conditions in the Americas,
most notably in Brazil and the western United States, posed challenges for farmers in those regions.
During the first half, prices of intermediates and active ingredients sourced from China were higher than
in the same period last year, driven by elevated raw material prices, and the stronger global demand. Oil
prices have been rising considerably, following the alleviation of pandemic control measures in a number
of countries.
Global freight and logistics costs rose significantly during the first half of 2021, as COVID-19 continues
to disrupt port activity, resulting in container shortages, while demand for container shipping remains high.
Similarly, in-land logistics remain challenged as pandemic-related restrictions continue to create frictions
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ADAMA Ltd. Semi-Annual Report 2021
in domestic supply lines. Taken together, these constraints have impacted both availability of shipping
and transportation resources, as well as significantly increased their costs, a dynamic widely observed
across all international trade-related industries.
The Company continues to actively manage its procurement and supply chain activities in order to
mitigate these higher procurement and logistics costs. It also endeavors to adjust its pricing wherever
possible to compensate for these increased costs, but intense competition in certain key markets has
restrained the Company's ability to do so in an effective and timely manner.
Jingzhou Production Resumption Update
Following the completion of the Relocation & Upgrade program for Sanonda, production has recently
resumed at the Company's new, state-of-the-art Jingzhou site. While production is initially starting at
relatively low levels, the Company expects output levels to gradually ramp up over the remainder of the
year. This return to production at Sanonda will progressively reduce the need for incurring additional
procurement costs which the Company has endured while the plant has been suspended, and is expected
to reduce idleness charges as production and utilization levels rise over the coming months.
Crop Protection Products
As described within the Company’s 2020 annual report, 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. Since the publication of the 2020 annual report, no major changes occurred
with that respect. For details, please refer to 2020 annual report.
Please see important additional information and further details included in the Annex.
II. Core Competitiveness Analysis
No significant changes occurred to the core competitiveness of the Company during the Reporting Period.
III. Analysis of Main Business
General Description
Whether it is the same as main business of the Company during the Reporting Period disclosed or not?
√ Yes □ No
Please refer to the relevant information in section “I. Main Business of the Company during the
Reporting Period” above.
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ADAMA Ltd. Semi-Annual Report 2021
Year-on-year changes of main financial data:
Same period of
Same period of
2021 Apr-June 2021 Apr-June last year
last year +/-% +/-%
(000’RMB) (000’USD) (000’USD)
(000’RMB)
Operating revenues 7,876,616 7,338,797 7.33% 1,219,619 1,035,873 17.74%
Cost of goods sold 5,579,320 5,147,057 8.40% 863,906 726,512 18.91%
Selling and
Distribution 1,265,126 1,211,697 4.41% 196,170 171,033 14.70%
expenses
General and
administrative 305,094 227,957 33.84% 46,972 32,176 45.98%
expenses
R&D expenses 116,458 96,177 21.09% 18,033 13,576 32.83%
Financial Expense 263,858 431,172 -38.80% 40,837 60,872 -32.91%
Profit before tax 233,415 312,215 -25.24% 36,151 44,051 -17.93%
Income tax
15,026 90,859 -83.46% 2,328 12,823 -81.85%
expenses
Net income 218,252 221,356 -1.40% 33,803 31,228 8.25%
EBITDA 1,060,189 1,191,383 -11.01% 164,151 168,159 -2.38%
Net cash flows from 1,619,239 228,566
2,329,066 43.84% 360,650 57.79%
operating activities
Net cash flows used (442,286) (62,439)
(1,187,564) 168.51% (183,765) 194.31%
in investing activities
Net cash flows used 846,222 119,445
(371,928) -143.95% (57,706) -148.31%
in financing activities
Net increase in cash 2,018,188 284,548
722,759 -64.19% 122,074 -57.10%
and cash equivalents
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ADAMA Ltd. Semi-Annual Report 2021
Reporting
Reporting Same period of Same period of
Period
Period last year +/-% last year +/-%
(000’USD)
(000’RMB) (000’RMB) (000’USD)
Operating revenues 15,063,780 14,121,040 6.68% 2,328,523 2,008,404 15.94%
Cost of goods sold 10,706,710 9,904,470 8.10% 1,655,008 1,408,693 17.49%
Selling and
Distribution 2,506,436 2,468,568 1.53% 387,417 351,260 10.29%
expenses
General and
administrative 571,807 553,186 3.37% 88,391 78,810 12.16%
expenses
R&D expenses 226,940 188,185 20.59% 35,080 26,769 31.05%
Financial Expense 448,790 842,792 -46.75% 69,388 119,894 -42.13%
Profit before tax 420,314 448,847 -6.36% 64,976 63,652 2.08%
Income tax
51,081 244,198 -79.08% 7,890 34,811 -77.33%
expenses
Net income 367,036 204,649 79.35% 56,748 28,841 96.76%
EBITDA 1,952,421 2,119,271 -7.87% 301,820 301,217 0.20%
Net cash flows from
(used in) operating 1,491,293 1,234,531 20.80% 231,391 173,400 33.44%
activities
Net cash flows used
(1,892,047) (815,385) 132.04% (292,460) (115,939) 152.25%
in investing activities
Net cash flows
provided by financing 1,208,791 1,475,449 -18.07% 186,183 209,672 -11.20%
activities
Net increase
(decrease) in cash 780,137 1,936,200 -59.71% 126,656 264,458 -52.11%
and cash equivalents
Major changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
None during the Reporting Period.
Analysis of Financial Highlights
(1) Operating Revenues
Revenues in the second quarter grew by 18% (+7% in RMB terms) to $1,220 million, driven by continued
robust 15% volume growth.
In the quarter, the Company delivered significant growth in Asia Pacific, led by a strong performance in
China and the Pacific region. In North America, the Company recorded continued growth from its
Consumer and Professional business, alongside a solid performance in the crop protection arm,
recovering from first-quarter headwinds seen there. Pleasing growth was seen in Latin America despite
ongoing drought conditions across the region, as well as strong growth in the India, Middle-East & Africa
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ADAMA Ltd. Semi-Annual Report 2021
region, which enjoyed favorable weather including the start of the monsoon season in India. In Europe
sales grew, aided by a recent heatwave in the region, which caused higher disease and insect pressure
in most countries.
The accelerated growth in the quarter brought half-year sales to a record-high of $2,329 million, an
increase of 16% (+7% in RMB terms).
Unit: RMB’000
2021H1 2020H1
Ratio of the Ratio of the
YoY +/-%
Amount operating Amount operating
revenue revenue
Total operating revenue 15,063,780 100.00% 14,121,040 100.00% 6.7%
Classified by industries
Manufacture of chemical raw materials
15,063,780 100.00% 14,121,040 100.00% 6.7%
and chemical products
Classified by products
Herbicides 6,141,269 40.77% 6,230,425 44.12% -1.4%
Fungicides 2,943,265 19.54% 2,879,888 20.39% 2.2%
Insecticides 4,569,132 30.33% 3,724,051 26.37% 22.7%
Ingredients and Intermediates (Formerly
1,410,114 9.36% 1,286,676 9.11% 9.6%
referred to as Non-Agro)
Classified by regions
Europe 3,915,671 25.99% 4,275,020 30.27% -8.4%
North America 2,880,327 19.12% 2,622,636 18.57% 9.8%
Latin America 2,895,965 19.22% 2,669,490 18.90% 8.5%
Asia-Pacific 3,124,576 20.75% 2,456,818 17.40% 27.2%
India, Middle East and Africa 2,247,241 14.92% 2,097,076 14.85% 7.2%
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 2021 Q2 2020 Change H1 2021 H1 2020 Change
$m $m USD $m $m USD
Europe 261 252 3.4% 605 609 -0.6%
North America 256 205 25.2% 445 373 19.4%
Latin America 271 220 22.9% 448 379 18.1%
Asia Pacific 242 191 26.4% 483 349 38.3%
Of which China 135 99 36.0% 259 168 54.6%
India, Middle East & Africa 190 167 13.5% 347 298 16.6%
Total 1,220 1,036 17.7% 2,329 2,008 15.9%
Note: the following analysis of regional sales performance is based on USD results.
Europe: Sales in the second quarter were in line with those of the same quarter last year, in Constant
Exchange Rates (“CER”) terms, but were lower by 2.3% in the first half of the year compared with the
corresponding period last year.
In the quarter, sales were aided by a recent region-wide heatwave, causing higher disease and insect
pressure in most countries, following a prolonged cold spell. Noteworthy performances were seen across
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ADAMA Ltd. Semi-Annual Report 2021
eastern Europe, supported by favorable conditions in key crops, as well as in Italy and in Greece,
bolstered by the Company’s recent acquisition in the latter country. These more than compensated for
softer performances in certain countries in the western part of the continent, but were largely offset by a
generally softer pricing environment across the region.
In US dollar terms, sales were higher by 3.4% in the quarter but were lower by 0.6% in the half-year
period, compared to the corresponding periods last year, reflecting the net impact of the strengthening of
regional currencies compared to their weakening in the 2020 periods at the outbreak of COVID-19 then.
North America: Sales were up by 24.0% in the second quarter and by 18.5% in the first half of the year,
in CER terms, compared with the corresponding periods last year.
In the quarter, ADAMA recorded continued robust growth and market share gain in key segments of its
Consumer and Professional business, alongside a solid performance in the crop protection arm,
recovering from first-quarter headwinds seen there.
In US dollar terms, sales were higher by 25.2% in the quarter and by 19.4% in the first half, compared to
the corresponding period last year, reflecting the strengthening of the Canadian Dollar.
Latin America: Sales grew by 21.5% in the second quarter and by 21.7% in the first half of the year, in
CER terms, compared to the corresponding periods last year.
The Company delivered pleasing growth in the quarter, driven by business growth in Brazil supported by
the strong crop prices, and despite ongoing drought conditions which affected the corn planting season
in the country, as well as growth seen in other countries across the region.
In US dollar terms, sales in the region grew by 22.9% in the quarter, reflecting a strengthening in regional
currencies during the quarter compared to the parallel quarter in 2020. In the half year, sales in the region
grew by 18.1% in US dollar terms, compared to the corresponding period last year, reflecting the
somewhat weaker average currency levels that prevailed during the first quarter of 2021 compared to the
parallel quarter in 2020, which saw currency weakness against the USD only late in the quarter at the
outbreak of COVID-19.
Asia-Pacific: Sales grew by 14.4% in the quarter and by 25.7% in the first half of the year, in CER terms,
compared to the corresponding periods last year.
In the second quarter, the Company delivered robust growth in the region, led by a strong performance
in China and the Pacific. In China, ADAMA is seeing strong growth, both from sales of its branded,
formulated portfolio, further aided by the acquisition of Huifeng’s domestic commercial arm at the end of
2020, as well as from sales of its raw materials and intermediates which saw strong demand and higher
prices. The Company also started to benefit from its recent acquisition of Huifeng's manufacturing assets
at the end of May 2021. In the Pacific region, the Company grew strongly in the quarter, driven by
continued favorable seasonal conditions.
In the rest of APAC, the Company recorded continued growth in the quarter, with noteworthy
performances delivered in Indonesia, Korea and Australia, more than offsetting the challenging seasonal
conditions in other parts of South-East Asia, and the lingering effects of COVID-19 which continues to
challenge local farmers throughout the region.
In US dollar terms, sales in the region grew by 26.4% in the second quarter and by 38.3% in the first half
of the year, compared to the corresponding periods last year, reflecting the impact of the strengthening
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ADAMA Ltd. Semi-Annual Report 2021
of regional currencies, most notably the Australian Dollar and Chinese Renminbi.
India, Middle East & Africa: Sales grew by 9.7% in the quarter and by 15.5% in the first half of the year,
in CER terms, compared to the corresponding periods last year.
In the quarter, the strong growth was led by India, which enjoyed favorable weather with a strong start to
the monsoon season, enabling good cropping conditions.
In US dollar terms, sales in the region grew by 13.5% in the quarter and by 16.6% in the first half of the
year, compared to the corresponding periods last year, reflecting the impact of the strengthening of
regional currencies compared to the USD, most notably the Israeli Shekel.
(2) Cost of Goods Sold:
Cost of Goods Sold in the second quarter were $864 million (70.8 % of sales), compared to $727
million (70.1% of sales) reported in the corresponding quarter last year. In the half year, Cost of
Goods sold were $1,655 million (71.1 % of sales), compared to $1,409 million (70.1% of sales)
reported in the corresponding period last year.
The Company recorded certain extraordinary charges within its reported cost of goods sold, totaling
approximately $16 million in the second quarter (Q2 2020: $9 million) and $25 million in the half-
year period (H1 2020: $18 million). These charges were largely related to its continuing Relocation
& Upgrade program, and include mainly (i) excess procurement costs, both in quantity and cost
terms, incurred as the Company continued to fulfill demand for its products in order to protect its
market position through replacement sourcing at significantly higher costs from third-party suppliers.
Excluding the impact of the abovementioned extraordinary charges in the quarter, the higher Cost
of Goods sold, both in the quarter and in the half-year periods, were driven by the impacts of higher
procurement and logistics costs as well as the strengthening of local currencies against the US
dollar.
Despite the exceptionally strong sales growth, the Company continues to see pressure on gross
margins, reflecting the higher logistics and procurement costs, as well as the impact on production
costs of the strengthening of the Chinese Renminbi and the Israeli Shekel.
(3) Operating Expenses:
Operating expenses include Sales and Marketing, General and Administration and R&D.
Operating expenses in the second quarter were $261 million (RMB 1,687 million) (21.4 % of sales)
and $511 million (RMB 3,305 million) (21.9 % of sales) in the half-year period, compared to $217
million (RMB 1,536 million) (20.9% of sales) and $457 million (RMB 3,210 million) (22.7 % of sales)
in the half-year period reported in the corresponding periods last year.
The Company recorded certain non-operational, mostly non-cash, charges within its reported
operating expenses, mainly as follows:
(i) $7 million (RMB 43 million) in Q2 2021 (Q2 2020: $8 million (RMB 53 million)) and $15 million
(RMB 94 million) in H1 2021 (H1 2020: $15 million (RMB 107 million)) in non-cash
amortization charges in respect of Transfer assets received and written-up related to the
2017 ChemChina-Syngenta acquisition. The proceeds from the Divestment of crop
protection products in connection with the approval by the EU Commission of the acquisition
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ADAMA Ltd. Semi-Annual Report 2021
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. These additional
amortization charges will continue until 2032 but at a reducing rate, yet will still be at a
meaningful level until 2028;
(ii) $4 million (RMB 24 million) in Q2 2021 (Q2 2020: $3 million (RMB 18 million)) and $8 million
(RMB 49 million) in H1 2021 (H1 2020: $5 million (RMB 38 million)) in charges related mainly
to the non-cash amortization of intangible assets created as part of the Purchase Price
Allocation (PPA) on acquisitions, with no impact on the ongoing performance of the
companies acquired, as well as other M&A-related costs.
(iii) $9 million (RMB 55 million) in Q2 2021(Q2 2020: $2 million (RMB 15 million)) and $15 million
(RMB 97 million) in H1 2021(H1 2020: $13 million (RMB 88 million)) in idleness charges
largely related to suspensions at the facilities being relocated as well as to the temporary
suspension of the Jingzhou site in Q1 2020 at the outbreak of COVID-19 in Hubei Province.
The higher aggregate amount of non-operational charges in Q2 and H1 2020 then also included
$11 million (RMB 81 million) and $23 million (RMB 160 million), respectively, in non-cash
amortization charges related to the legacy PPA of the 2011 acquisition of Adama Agricultural
Solutions, which have now largely finished, and $1 million (RMB 6 million) and $9 million (RMB 66
million), respectively, in early retirement expenses. For further details on these non-operational
charges, please see the appendix to this release.
Excluding the impact of the abovementioned non-operational charges, the higher operating
expenses in the quarter and half-year period reflect primarily an increase in sales and marketing
teams in growing geographies to drive and support the strong sales growth, higher transportation
and logistics costs driven by both an increase in freight costs and the increased volumes being
transported, as well as the inclusion of recent acquisitions.
In addition to these factors, operating expenses in the quarter were impacted by the strengthening
of local currencies against the US dollar.
(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 449 million ($69 million) for the first half of 2021 compared with RMB 843 million ($120
million) for the corresponding period in 2020.
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
16
ADAMA Ltd. Semi-Annual Report 2021
to “Investment Income” upon realization. The combined impact of Gains/Losses from Changes
in Fair Value and Investment Income is a net loss of RMB 140 million ($22 million) in the first half
of 2021 compared with a net gain RMB 303 million ($43 million) in the corresponding period in
2020.
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 589 million ($91 million) in
the first half of 2020 compared with RMB 540 million ($77 million) in the corresponding period in
2020.
The higher financial expenses in the quarter and half-year period were mainly driven by the net
effect of an increase in the Israeli CPI on the ILS-denominated, CPI-linked bonds. The increase in
the CPI was most marked in the second quarter of 2021, compared to its decline in the parallel
quarter last year, and appears to be similar to the increase in inflation rates that has been observed
in many countries across the world this year as the global economy continues to reopen following
pandemic-related shutdowns.
(5) Income Tax expenses:
The lower tax expenses recorded in the second quarter and first half of 2021 were mainly due to
non-cash tax income from the impact of the stronger Brazilian Real on the value of non-monetary
tax assets, caused due to differences between the functional (US dollar) and tax (local) currencies'
value of non-monetary assets. The higher tax expenses recorded in 2020 were largely due to the
opposite impact, which was then caused by the significant weakening of the BRL in those periods
in 2020.
(6) Net income attributable to the shareholders of the company
The improvement in net income in the half-year period was driven by the higher operating income
and lower taxes, which were partially offset by the higher financial expenses.
(7) Cash Flow:
Net cash flows from (used in) operating activities: Operating cash flow of $361 million (RMB
2,329 million) was generated in the quarter and $231 million (RMB 1,491 million) in the half-year
period, compared to $229 million (RMB 1,619 million) and $173 million (RMB 1,235 million)
generated in the corresponding periods last year, respectively. The stronger operating cash flow
generated in the second quarter and half-year period reflects the stronger operating income
generated this year, alongside improved collections during the periods.
Net cash used in investing activities was $184 million (RMB 1,188 million) in the quarter and
$292 million (RMB 1,892 million) in the half-year period, compared to $62 million (RMB 442 million)
and $116 million (RMB 815 million) in the corresponding periods last year, respectively. The higher
levels of cash used in investing activities in the periods largely reflect an increase in investments
in fixed assets, mainly driven by the relocation of manufacturing facilities in China and upgrading
of facilities in Israel, as well as the acquisitions of majority stakes in Jiangsu Huifeng’s domestic
commercial crop protection business and its manufacturing assets.
Free cash flow of $132 million (RMB 854 million) was generated in the second quarter and $116
million (RMB 752 million) consumed in the half-year period compared to $127 million (RMB 900
million) and $12 million (RMB 95 million) generated in the corresponding periods last year,
17
ADAMA Ltd. Semi-Annual Report 2021
respectively, reflecting the aforementioned operating and investing cash flow dynamics.
Cash Flow from Financing Activities was $58 million (RMB 372 million) consumed in the quarter
and $186 million (RMB 1,209 million) generated in the half-year period, compared to $119 million
(RMB 846 million) and $210 million (RMB 1,475 million) generated in the corresponding periods
last year, respectively. The lower level of financing cash flow in both the second quarter and half-
year period is due to the fact that in Q2 2020, as a result of the COVID-19 pandemic, the Company
utilized its credit lines and expanded its Israeli bond series, in order to strengthen its liquidity, while
in 2021, due to the strong collections of receivables, the Company has been able to pay down a
portion of its short term loans. By contrast, the Company has seen an inflow of funds in 2021 due
to the realization of profit on hedging positions in respect of the Company's Israeli ILS-denominated
bonds, as a result of the strengthening of the Shekel against the US dollar.
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
materials and
chemical products 15,063,780 10,706,710 28.9% 6.7% 8.1% 3.3%
Classified by products
Crop Protection 13,653,666 9,635,518 29.4% 6.4% 8.8% 1.0%
Ingredients and
Intermediates 1,410,114 1,071,192 24.0% 9.6% 2.1% 42.5%
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
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ADAMA Ltd. Semi-Annual Report 2021
IV. Analysis of Non-Core Business
√ Applicable □ Not applicable
Unit: RMB’000
Proportion in Whether
Amount Reasons
total profit sustained
527,756 Mainly from the realization of
Investment income 125.56% No
derivatives
Mainly from changes in fair value of No
Gain/loss from change of (664,582)
-158.12% derivatives. See explanation of financial
Fair Value
expenses
Asset impairment reversal 29,403 No
7.00%
(losses)
Gain or loss from disposal of No
14,799 3.52%
assets
33,032 No
Non-operating income 7.86%
15,429 No
Non-operating loss 3.67%
V. Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB’000
End of Reporting Period End 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 4,633,440 9.37% 3,863,886 8.26% 1.11%
Accounts receivable 9,295,611 18.80% 8,766,869 18.73% 0.07%
Inventories 11,280,638 22.81% 10,338,273 22.09% 0.72%
Investment properties 3,186 0.01% 4,364 0.01% 0.00%
Long term equity investments 15,847 0.03% 14,081 0.03% 0.00%
Fixed assets 7,695,471 15.56% 6,576,116 14.05% 1.51%
Construction in progress 1,812,323 3.66% 1,405,328 3.00% 0.66%
right-of-use asset 505,895 1.02% 483,618 1.03% -0.01%
Short-term loans 1,209,421 2.45% 1,205,498 2.58% -0.13%
Contract liabilities 1,260,942 2.55% 1,092,253 2.33% 0.22%
Long-term loans 3,271,544 6.62% 2,387,628 5.10% 1.52%
Lease liabilities 394,531 0.80% 379,190 0.81% -0.01%
Derivative financial assets 376,746 0.76% 1,560,788 3.33% -2.57%
Intangible assets 5,150,421 10.42% 5,226,455 11.17% -0.75%
Goodwill 4,600,258 9.30% 4,584,226 9.80% -0.50%
Deferred tax assets 939,867 1.90% 773,673 1.65% 0.25%
Accounts payables 5,184,480 10.48% 4,557,006 9.74% 0.74%
Employee benefits payable 916,236 1.85% 1,208,834 2.58% -0.73%
Debentures 7,995,724 16.17% 8,078,113 17.26% -1.09%
Derivative financial liabilities 799,715 1.62% 1,463,614 3.13% -1.51%
Other payables 1,562,623 3.16% 1,075,721 2.30% 0.86%
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ADAMA Ltd. Semi-Annual Report 2021
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 18,686,809 Israel and Corporate Corporate
277,588 87% No
Adama Major Assets globally Governance Governance
Solutions Restructuring
Other explanations
3. Assets and Liabilities Measured at Fair Value
√ Applicable □ Not applicable
Unit: RMB’000
Profit/loss on Impairment
Cumulative fair Purchased in
fair value provided in Sold in the
Opening value changes the Closing
Item changes in the the Reporting Others
balance charged to Reporting balance
Reporting Reporting Period
equity Period
Period Period
Financial assets
Financial assets held
for trading (excluding
1,253 - - - 1,241 - - 2,494
derivative financial
assets)
Derivative financial
assets (including long 1,560,781 (980,250) 144,076 - 168,475 (516,342) - 376,740
term)
Other equity
152,200 - (663) - - - - 151,537
investments
Total financial assets 1,714,234 (980,250) 143,413 - 169,716 (516,342) - 530,771
Other 174,236 (18,733) - - 6,462 (24,713) - 137,252
Total of above 1,888,470 (998,983) 143,413 - 176,178 (541,055) - 668,023
Financial liabilities 1,463,612 (663,897) - - - - - 799,715
Significant changes in the measurement attributes of the main assets in the Reporting Period
□ Yes √ No
4. Limitation on Asset Rights as of End of the Reporting Period
At the end of this Reporting Period, restricted assets included RMB 18 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.
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ADAMA Ltd. Semi-Annual Report 2021
VI. 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)
49,924,938 41,529,668 20.22%
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 Investments
(1) Investments in Securities
□ Applicable √ Not applicable
None during the Reporting Period.
21
ADAMA Ltd. Semi-Annual Report 2021
(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 1,994,238 29/3/2021 14/10/2021 1,994,238 9,096,960 -7,051,283 No 4,039,915 18.85% -94,906
Banks No No Forward 20,796,924 20/3/2021 31/07/2021 20,796,924 40,827,978 -41,186,892 No 20,438,010 95.36% -221,447
Total 22,791,162 -- -- 22,791,162 49,924,938 -48,238,175 24,477,925 114.21% -316,353
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 2021
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 X of the this Report,
assumptions should be
note IX. Fair Value. The exchange rates are provided by the accounting department of the relevant subsidiary and all other parameters
disclosed in the analysis of fair
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 2021
VII. 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
VIII. 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 40,099,174 16,099,726 13,853,045 304,287 280,273
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
Way of Acquirement of Impact on the Business Operation and
Company Name
Disposal Performance of the Company
Upon and immediately after completion of
the Transaction on May 28, 2021, the
Company currently owns and holds 51%
equity interests in ADAMA Huifeng and
ADAMA Huifeng has become a controlled
subsidiary of the Company. Based on the
Accounting Standards for Business
ADAMA Huifeng
Purchase 51% of Share Equity Enterprises, ADAMA Huifeng has been
(Jiangsu) Co., Ltd.
included in the Company’s consolidated
financial statements.
For details, please refer to the
Announcement on the Closing of the
Acquisition of 51% Equity Interests in
ADAMA Huifeng (Jiangsu) Co., Ltd.
(Announcement No. 2021-25)
24
ADAMA Ltd. Semi-Annual Report 2021
Explanations on the main controlled and joint stock companies
□ Applicable √Not applicable
IX. Structured Entities Controlled by the Company
□ Applicable √Not applicable
X. Risks Facing the Company and Countermeasures
The Group 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 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 25% 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 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. During
this period, the Company is most exposed to the Euro. 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
25
ADAMA Ltd. Semi-Annual Report 2021
The debentures issued by 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, Solutions hedged most of its exposure
to these risks on an ongoing basis, through CPI hedging and USD-ILS exchange rate hedging
transactions.
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 part of the global reform in interest rate benchmarks, the phasing
out of LIBOR (the so-called LIBOR fallback) is scheduled for the end of 2021. Three global interest rate
benchmarks are expected to transition to alternative risk-free rates and to replace the existing benchmark
London Interbank Offered Rates (LIBOR): SOFR (USD), ESTR (EUR) and SONIA (GBP). 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, seven multinational companies,
including the Company, lead the global industry. Five of these, Bayer, Syngenta, Corteva, BASF and
FMC, are Originator Companies, 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
26
ADAMA Ltd. Semi-Annual Report 2021
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 II. Core competitiveness analysis above.
Similarly, the Group also competes in the more decentralized off-patent segment of the market, against
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 industry, the majority
of whom have not yet deployed global distribution networks, and are only active locally. These companies
often price their products aggressively and at times have lower profit margins than the Group, which may
adversely impact 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 timing 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, affect its global position and lead to price erosion.
Decline in scope of agricultural activities; exceptional changes in weather conditions
The scope of general agricultural activities worldwide may be negatively affected by many exogenous
factors, such as extreme weather conditions, natural disasters, a decrease in agricultural commodity
prices, government policies and the economic condition of farmers. A material decline in the scope of
agricultural activities would by necessary implication 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 other damages caused by nature may 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 increasing 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 these
legislative and regulatory requirements and protection against such legal actions requires the Group to
commit considerable human and financial resources (both in terms of substantial ongoing costs and in
27
ADAMA Ltd. Semi-Annual Report 2021
terms of material one-time investments) 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 liabilities (including due to class actions) or criminal liabilities (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 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 current or future requirements,
should these be significantly increased or changed. In addition, the Group is unable to predict with any
certainty the extent of future costs and investments it may incur in order 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 duration, 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 largely 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 regulatory 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 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 has been suffering from revocation of
registration for many products around the world. This trend is particularly evident in European countries
as well as in many other countries worldwide.
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.
28
ADAMA Ltd. Semi-Annual Report 2021
Product liability
Product and producer liability are a risk for 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
potentially 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 the Group has not currently 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.
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. As such, the Group's
revenues and profit margins from a certain new off-patent 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 relevant market in the future may 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
or patent application of Originator Companies 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 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. Such
lawsuits that were concluded involved non-material amounts.
Furthermore, although the Group protects its brands and trade secrets with patents, trademarks and other
methods of intellectual property protection, these protective means may not be sufficient for fully
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ADAMA Ltd. Semi-Annual Report 2021
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 actions 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 Groups’ cost of sales derives from raw material costs. Hence, significant
increases or decreases in raw material costs affect the cost of goods sold, and are, due to the length of
the Company’s inventory cycle, generally reflected in the Company’s financials. Most of the Group's raw
materials are distant derivatives of oil prices and therefore, extreme changes or decrease in oil prices
may affect the costs of raw materials, although only partially.
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, wherever 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 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 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 by
implication affect the Group’s results and market share.
Nevertheless, the fact that the Group itself markets some of the products for which herbicide tolerance
traits have been developed, 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 relatively
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 from malfunctions and
attack. 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 security
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 security, 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
30
ADAMA Ltd. Semi-Annual Report 2021
disruption of their proper functioning. In order to minimize the abovementioned risks, the group invests
resources in its technological resilience and in proper protection of its systems.
Raw material supply and/or shipping and port service disruptions
Lack of raw materials or other inputs utilized in the manufacture of the Group’s 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 then exports the technical or formulated
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 port, and if the Group is unable to engage with an alternative supplier
at similar terms and in accordance with the relevant 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 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 relevant forecasts may result in
not achieving the incremental value forecasted, loss of 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 relatively 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 arising from the proportional value of the components of each of the companies in the Group in
the various countries, as is 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.
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ADAMA Ltd. Semi-Annual Report 2021
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 position, 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 traded debentures issued by 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
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, as contained in the bank credit agreements, require meeting
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 worldwide usually involve customer credit as is customary in each market.
A portion of these credit lines is 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 dozens of 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 timely 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 may be 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, as well as its ability to meet its financial
obligations, may be harmed.
Contagious disease outbreak
Outbreak of a contagious disease and pandemics, or other adverse public health developments, in
territories where significant production activity is taking place or from which raw materials are supplied to
32
ADAMA Ltd. Semi-Annual Report 2021
a significant extent, may have a material adverse effect on the Company’s activity, such that the Company
may encounter difficulties with procurement of raw materials and intermediates, experience a certain
decrease of activity within its production facilities due to governmental instructions, and be constrained
with respect to its logistics and supply lines. In addition, the Company sales could be potentially impacted
by a temporary decrease in demand for its products, as well as by temporary disruption of the Company’s
ability to sell and distribute products as mentioned above.
33
ADAMA Ltd. Semi-Annual Report 2021
Section IV – Corporate Governance
I. Annual and Special Meetings of Shareholders Convened during the Reporting
Period
1. Meetings of Shareholders Convened during the Reporting Period
Investor
Meeting Type participation Convened date Disclosure date Resolutions of the meeting
ratio
Announcement on the
Resolutions of 2020
2020 Annual Annual Annual General Meeting
Shareholders Shareholders 75.2124% May 21, 2021 May 22, 2021 (Announcement No. 2021-
Meeting Meeting 22). Disclosed at the
website CNINFO
www.cninfo.com.cn
2. Special Meetings of Shareholders Convened at Request of Preference Shareholders with
Resumed Voting Rights
□ Applicable √ Not applicable
II. Changes in Directors, Supervisors and Senior Management
√Applicable □ Not applicable
Changes in directors, supervisors and senior management during the Reporting Period, were as
follows:
Name Position Type Date Reason
Elected by
Jianhua Liu Supervisor the May 21, 2021 --
Shareholders
Supervisor Elected by May 21, 2021
Yuan Yuan the --
Shareholders
Supervisor Term of office May 21, 2021
Dejun Li --
expired
Supervisor Term of office May 21, 2021
Clement Tung --
expired
III. 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
34
ADAMA Ltd. Semi-Annual Report 2021
convert capital reserve into share capital.
IV. 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, currently has several long-term
incentive plans according to which it has granted long-term cash rewards to executive officers and
employees. These long-term incentive plans are based either on the performance of the Company's
shares (phantom cash incentives) and/or the Company's performance. Adama Solutions has further
adopted an incentive plan linked to the increase in the Syngenta Group EBITDA.
35
ADAMA Ltd. Semi-Annual Report 2021
Section V - Environmental and Social Responsibilities
I. Major Environmental Situation
Is the Company listed as a “Key Polluting Entity” by the environmental protection agencies?
Yes
Main Number Total amount Total
Layout of
Company pollutants Way of of emitted/ amount
emission Concentration Pollution standards applied Exceeding limit
name and special emission emission Discharged Approved
points
pollutants points (ton) (ton)
(1) for the old site: Comprehensive
Standard on Discharge of Waste
The old site: Water (GB8978-2002) ，
Centralized
24.53mg/L. COD<100mg/L;
ADAMA COD Continuous 2 discharge 4.59507 391.3 None
The new site: (2) for the new site: Discharge Standards
point
17.30mg/L. for Pollutants from Urban Sewage
Treatment Plant (GB 18918 – 2002),
COD <50mg/L
(1) for the old site: Comprehensive
Standard on Discharge of Waste
The old site: Water (GB8978-2002), ammonia
Centralized
Ammonia 0.97mg/L. nitrogen<15mg/L;
ADAMA Continuous 2 discharge 0.14592 50 None
nitrogen The new site: (2) for the new site: Discharge
point
2.04mg/L. Standards for Pollutants from Urban
Sewage Treatment Plant (GB 18918
– 2002), ammonia nitrogen<8mg/L;
Total Centralized The old site: for the old site & new site: Discharge
ADAMA Continuous 2 N/A N/A None
Phosphorou Discharge 0.27mg/L. Standards for Pollutants from Urban
36
ADAMA Ltd. Semi-Annual Report 2021
Main Number Total amount Total
Layout of
Company pollutants Way of of emitted/ amount
emission Concentration Pollution standards applied Exceeding limit
name and special emission emission Discharged Approved
points
pollutants points (ton) (ton)
s Point The new site: Sewage Treatment Plant (GB 18918 –
0.26mg/L. 2002), total phosphorous <0.5mg/L
Standard on Air Pollution of Power Plant
ADAMA NOx Continuous 1 Power plant 27.43mg/m 16.560 212.22 None
（GB13223-2011）NOx <200mg/m
Standard on Air Pollution of Power Plant
ADAMA SO2 Continuous 1 Power plant 2.89mg/m 1.886 126.09 None
（GB13223-2011）SO2<200mg/m
Standard on Air Pollution of Power Plant
Fume and
ADAMA Continuous 1 Power plant 0.322mg/m （GB13223-2011）Fume and dust 0.203 47.28 None
dust
<30mg/m
Centralized Comprehensive Standard on Discharge
Anpon COD Continuous 3 Discharge 125 of Waste Water (GB8978-2002)， 122.72 356.7124 None
Point COD<500mg/L
Anpon Water Quality Standard for Sewage
Centralized
Ammonia Discharged into Urban Sewerage（GBT
Continuous 3 Discharge 0.8 0.91 34.886 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 2.2 1.3925 20.611 None
phosphorous <8mg/L;
s Point
For Anpon’s branch Maidao: Agreement
on Waste Water Discharge, total
37
ADAMA Ltd. Semi-Annual Report 2021
Main Number Total amount Total
Layout of
Company pollutants Way of of emitted/ amount
emission Concentration Pollution standards applied Exceeding limit
name and special emission emission Discharged Approved
points
pollutants points (ton) (ton)
phosphorous <3mg/L;
Anpon None
Power Standard on Air Pollution of Power Plant
NOx Continuous 1 / / 447.366 The power plant has
Plant （GB13223-2011）NOx <100mg/m3
been deactivated.
Anpon None
Power Standard on Air Pollution of Power Plant
SO2 Continuous 1 / / 447.366 The power plant has
Plant （GB13223-2011）SO2<50mg/m3
been deactivated.
Anpon Standard on Air Pollution of Power Plant None
Fume and Power
Continuous 1 / （GB13223-2011）Fume and / 67.105 The power plant has
Dust Plant
3
Dust<20mg/m been deactivated.
ADAMA Centralized
Huifeng COD Continuous 1 Discharge 196.63mg/L Industrial park standard 74.735 249.784 None
Point
ADAMA Centralized
Ammonia
Huifeng Continuous 1 Discharge 2.609mg/L Industrial park standard 2.6096 19.467 None
Nitrogen
Point
ADAMA Total Centralized
Huifeng Phosphorou Continuous 1 Discharge 0.8123 mg/ L Industrial park standard 0.3087 0.9383 None
s Point
ADAMA Centralized
total
Huifeng Continuous 1 Discharge 10.0627 mg/ L Industrial park standard 10.0629 46.964 None
nitrogen
Point
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ADAMA Ltd. Semi-Annual Report 2021
Main Number Total amount Total
Layout of
Company pollutants Way of of emitted/ amount
emission Concentration Pollution standards applied Exceeding limit
name and special emission emission Discharged Approved
points
pollutants points (ton) (ton)
ADAMA RTO
Huifeng furnace, Discharge Standards for Air Pollutants
NOx Continuous 6 workshop 14.357mg/m from Pesticide Manufacturing Industry 7.906 147.7072 None
discharge (GB39727 – 2020)
point
ADAMA RTO
Huifeng furnace, Discharge Standards for Air Pollutants
SO2 Continuous 6 workshop 5.235mg/m from Pesticide Manufacturing Industry 3.123 47.1958 None
discharge (GB39727 – 2020)
point
ADAMA RTO
Huifeng furnace, Discharge Standards for Air Pollutants
Fume and
Continuous 6 workshop 13.824mg/m from Pesticide Manufacturing Industry 4.675 22.7146 None
Dust
discharge (GB39727 – 2020)
point
ADAMA RTO
Huifeng non- furnace, Discharge Standard of Volatile Organic
methane Continuous 6 workshop 11.1mg/m Compounds in Chemical Industry (DB 6.5 59.60094 None
hydrocarbon discharge 32/3151-2016)
point
39
ADAMA Ltd. Semi-Annual Report 2021
(1) Development and Operation of Environmental Facilities
1. Development and Operation of Waste Water Facilities
The Company has a 20,000-ton/day sewage treatment station. As of the date of this Report,
the sewage treatment facilities are operating normally. COD, ammonia nitrogen and total
phosphorus discharged after the treatment are within the limit;
There are waste water treatment facilities in both the Company and Anpon with the designed
capacity of 11,000 tons/day. As all the facilities are operating well, COD, ammonia nitrogen,
and total phosphorous discharged after the treatment are within the limit.
ADAMA Huifeng, a subsidiary of the Company, has a 5,000-ton/day sewage treatment station.
As of the date of this Report, the sewage treatment facilities are operating normally. After the
treatment, COD, ammonia nitrogen, total nitrogen and total phosphorus are all discharged
within the limit.
2. Development and Operation of Waste Gas Facilities
The Company's self-owned coal-fired thermal power plant has undergone ultra-low emission
transformation. After the transformation, the environmental protection facilities of the self-
owned coal-fired thermal power plant operate normally. SO2, NOx and fume and dust
discharged all meet the ultra-low emission standards.
Anpon, a subsidiary of the Company, adopted the distribution network in the second half of
2020 and shut down its own coal-fired power plant by itself. In addition, its chemical
production unit has implemented upgrading and transformation of VOC treatment facilities
for tail gas, and is currently undergoing trial operation.
ADAMA Huifeng, a subsidiary of the Company, has RTO furnace, alkali washing waste gas
treatment facilities and acid washing waste gas treatment facilities, which are used to treat
process waste gas containing volatile organic compounds, acid washing waste gas and alkali
washing waste gas respectively. The main emission indexes of waste gas, such as SO2,
NOx, fume and dust and non-methane hydrocarbon, have been within the limit.
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, Anpon and ADAMA Huifeng 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
In the first half of 2021, the Company and its subsidiary - Anpon, have no environmental
administrative permit for new projects, and all the pollutant discharge permits are within the
validity period.
The Company’s subsidiary - ADAMA Huifeng has obtained the following environmental
administrative permits in the first half of 2021:
The technical transformation project of flutriafol approved by Yancheng Ecological
Environment Bureau on January 26, 2021 with the approval number: Yanhuanshen [2021]
40
ADAMA Ltd. Semi-Annual Report 2021
No.2;
The technical transformation project of epoxiconazole approved by Yancheng Ecological
Environment Bureau on January 26, 2021 with the approval number: Yanhuanshen [2021]
No.3;
The technical transformation project of glufosinate-ammonium approved by Yancheng
Ecological Environment Bureau on January 26, 2021 with the approval number:
Yanhuanshen [2021] No.4);
The technical transformation project of 2,4-D isooctyl ester approved by Yancheng Ecological
Environment Bureau on May 31, 2021 with the approval number: Yanhuanshen [2021] No.9;
The independent acceptance of wastewater, waste gas, noise and solid waste for the
octanoyl bromoxynil project and trinexapac-ethyl project was completed on February 8, 2021;
The independent acceptance of solid waste was completed on May 30, 2021 for the project
of fluthrin and the project of 2,3-dimercapto-maleic cyanide disodium salt solution.
On May 17, 2021, a new pollutant discharge permit was obtained.
(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
subsidiaries - Anpon and ADAMA Huifeng 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, Anpon and ADAMA Huifeng are as the
following:
1. Monitored Indicators
Waste water: COD, NH3-N, PH, SS, Petroleum, TP.
Air Pollutant: SO2, Nitrogen oxide, Fume and Dust, Non-methane Hydrocarbon.
Noise: Noise at the Site Border
2. Frequency
Boiler emission, Non-methane Hydrocarbon in the waste gas, SO2 in RTO furnace, NOx, Fume
and Dust, and waste water discharged from the centralized point: continuous auto monitoring
(COD, Ammonia nitrogen, Total Phosphorous).
Manual sampling: PM in some waste gas discharge outlets, SS in wastewater discharge outlet,
41
ADAMA Ltd. Semi-Annual Report 2021
Petroleum, 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) Administrative punishment due to environmental problems in the Reporting Period
No
(6) Other environmental information that should be disclosed
No.
(7) Other related information on environmental protection
No.
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ADAMA Ltd. Semi-Annual Report 2021
II. Social Responsibilities
ADAMA Group is being engaged in a 10 years journey of ongoing commitment to
accountability and transparency regarding its operations. During 2020, ADAMA Group
launched for the first time a dedicated website reflecting its activities during the years 2018-
2019 and all the improvements that are the outcome of a 10 years investments. The website
provides meaningful insights into the challenges and opportunities it faces in becoming not
only a global supplier of crop protection products, solutions, and services, but one that aims
to bolster food security in a world where populations are rising, resources are dwindling, and
energy demands are increasing. The website is also an opportunity to engage with, and enter
into, a dialogue with its employees and stakeholders. ADAMA Group is committed in its efforts
to further increase transparency and broaden its disclosures and will continue working closely
with all relevant stakeholders the years to come planning on reporting ESG during 2021. With
the aid of a designated website, ADAMA Group shares how it integrates sustainability into its
business and operations to create long-term value for all the Group’s stakeholders: customers,
people, communities, shareholders, and society at large. In this respect, the Group’s practice
is to publish an updated Sustainability Report annually, which shall constitute ESG reporting
as of the year 2021. The Sustainability Report was issued in accordance with the Global
Reporting Initiative (GRI) SRS framework at the “Core” level. In addition, the Company
adheres to by the principles of corporate governance to ensure checks and balances in the
conduct of its affairs, and among others adopted a code of conduct which applies to its people
and stakeholders, and has adopted internal enforcement programs in relevant fields of activity.
Regarding the targeted poverty allegation and in order to thoroughly implement the central,
provincial and municipal decision-making arrangements for poverty alleviation, and vigorously
implement accurate poverty alleviation and " transparency in poverty alleviation", the
Company’s subsidiary Anpon, has set up a leading group for poverty alleviation headed by
the Party Secretary, which is led by the chairman of the labor union, and the vice-chairman
of the labor union specifically participates in the support team of the municipal party
committee in counties and districts. According to the work arrangement of the Municipal Party
Committee and Municipal Government, Anpon helped Shidang Village, Boli Town, Huai 'an
District, an economically weak village in the province, and actively explored ways and means
of poverty alleviation to ensure that poverty alleviation work is in place. According to the
characteristics of the company's production, Anpon actively organized the activities of
sending pesticides to the countryside, and organized a batch of pesticides to be used by local
farmers according to the agreement between Anpon and designated help villages and the
situation of local crops. Anpon provided RMB 160,000 yuan of special poverty alleviation
funds for the designated villages, which were used to build village service centers and party
member activity centers. Anpon actively participated in the project examination, publicity,
allocation and use of funds, etc., ensuring the smooth implementation of the project and
providing guarantee for the improvement of the spiritual and cultural life of local people. At
the same time, Anpon also took an active part in activities of assisting Gulang in Gansu
Province and Pingshan in Hebei Province organized by the group.
43
ADAMA Ltd. Semi-Annual Report 2021
Section VI - Significant Events
I. 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
Note: 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 2020 Annual Report published on
the website www.cninfo.com.cn
on March 31, 2021.
II. 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.
III. Illegal guarantee
□ Applicable √ Not applicable
Non during the Reporting Period.
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
44
ADAMA Ltd. Semi-Annual Report 2021
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.
IX. Punishment and Rectification
□Applicable √Not applicable
None during the Reporting Period.
X. Integrity of the Company, its controlling shareholders and actual controller
□ Applicable √ Not applicable
XI. 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 X “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
Reporting Period.
45
ADAMA Ltd. Semi-Annual Report 2021
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. Transactions with financial company which is a related-party of the Company or controlled
by the Company
√ Applicable □ Not applicable
Deposit Business
Opening Closing
Maximum Daily Deposit Occurred
Associated Balance Balance
Related Party Deposit Limit Interest Rate Amount
Relationship （RMB’0000 （RMB’0000
（RMB’0000） Range （RMB’0000）
） ）
Legal person
ChemChina
controlled by
Finance 40,000.0 0.05%-1.3% 37,014.1 2,776.9 39,791.0
controlling
Corporation
shareholder
Loan Transaction
Opening Occurred Closing
Associated Loan Limit Loan Interest
Related Party Balance Amount Balance
Relationship （RMB’0000） Rate Range
（RMB’0000） （RMB’0000） （RMB’0000）
Legal person
ChemChina
controlled by 3.6% -
Finance 40,000.0 - 10,000.0 10,000.0
controlling 3.85%
Corporation
shareholder
Credit or other financial business
Associated Total Amount Actual Occurred
Related Party Business Type
Relationship （RMB’0000） Amount（RMB’0000）
Legal person controlled
ChemChina Finance
by controlling Facilities 40,000.0 10,000.0
Corporation
shareholder
46
ADAMA Ltd. Semi-Annual Report 2021
6. Other material related-party transactions
√Applicable □ Not applicable
The 2020 Annual Shareholders Meeting approved the Proposal on the Expected Related-Party
Transactions in the Ordinary Course of Business in 2021. Please refer to Item X of Section X “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
Announcement on Expected Related-Party Transactions in the
Ordinary Course of Business in 2021 (Announcement No. 2021- March 31, 2021 www.cninfo.com.cn
6)
XII. 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
There is no major lease in the Reporting Period.
2. Significant Guarantees
(1) Details of guarantees
√Applicable □ Not applicable
47
ADAMA Ltd. Semi-Annual Report 2021
Unless otherwise specified, the unit hereunder is RMB ‘0000
Guarantees provided by the Company in favor of third parties (excluding subsidiaries)
Collater Counter Guarant
Disclosure Actual
Planned Actual Type of al（if Guarant Period of expire ee for a
Guarante date of the guarant
guarante occurrence guarant any） ee（if guarante d or related
ed party announceme ee
e amount date ee any） e not party or
nt amount
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 Total guarantee balance in favor of
favor of third parties (excluding third parties (excluding subsidiaries)
subsidiaries) that has been 5,000 by the end of the reporting period 0
approved by the end of the (A4)
reporting period (A3)
Guarantees provided by the Company in favor of its subsidiaries
Collater Counter Guarant
Disclosure Actual
Planned Actual Type of al（if Guarant Period of expire ee for a
Guarante date of the guarant
guarante occurrence guarant any） ee（if guarante d or related
ed party announceme ee
e amount date ee any） e not party or
nt amount
not
Three
Joint and years
May 19,
3,000 several / / after the Yes No
2020
liability loan
matures
Three
Joint and years
June 29,
ADAMA February 27, 5,000 several / / after the Yes No
2020
Anpon 2020, liability loan
147,000
(Jiangsu) August 21, matures
Ltd. 2020 Two years
Joint and
September after the
3,000 several / / Yes No
1, 2020 loan
liability
matures
Three
Joint and
July 20, years
5,000 several / / No No
2020 after the
liability
loan
48
ADAMA Ltd. Semi-Annual Report 2021
matures
Three
Joint and years
December
5,000 several / / after the No No
14, 2020
liability loan
matures
Three
Joint and years
December
5,000 several / / after the No No
16, 2020
liability loan
matures
Two years
Joint and
December after the
2,000 several / / No No
22, 2020 loan
liability
matures
4,050 Joint and Two years
January 15, several after the
/ / No No
2021 liability loan
matures
Two years
Joint and
January 20, after the
3,000 several / / No No
2021 loan
liability
matures
7,000 Joint and Two years
January 27, several after the
/ / No No
2021 liability loan
matures
ADAMA
December Joint and Three
Anpon
22, 2020 125,400 several years
(Jiangsu) February 1,
April 29, 2021 4,000 liability / / after the No No
Ltd. 2021
loan
matures
Joint and Three
several years
February 26,
3,000 liability / / after the No No
2021
loan
matures
2,776 Joint and Three
several years
February 8,
liability / / after the Yes No
2021
loan
matures
49
ADAMA Ltd. Semi-Annual Report 2021
Joint and Three
several years
March 18,
4,000 liability / / after the No No
2021
loan
matures
5,950 Joint and Two years
April 27, several after the
/ / No No
2021 liability loan
matures
Joint and Two years
May 21, several after the
6,000 / / No No
2021 liability loan
matures
Joint and Three
several years
June 25,
3,000 liability / / after the No No
2021
loan
matures
Two years
Joint and
October 28, after the
Hubei 3,444 several / / Yes No
2020 loan
Sanonda liability
August 21, matures
Foreign 20,000
2020 Two years
Trade Co. Joint and
January 29, after the
Ltd. 1,453 several / / No No
2021 loan
liability
matures
Three
ADAMA
Joint and years
Huifeng June 29, July 27,
33,000 10,000 several / / after the No No
(Jiangsu) 2021 2021
liability loan
Co., Ltd.
matures
Total guarantee line Total amount of the occurred guarantee in
approved in favor of favor of the subsidiaries during the reporting
the subsidiaries during 33,200 period (B2) 44,229
the reporting period
(B1)
Aggregated guarantee Total guarantee balance in favor of the
line that has been subsidiaries by the end of the reporting period
approved in favor of (B4)
325,400 75,673
the subsidiaries by the
end of the reporting
period (B3)
50
ADAMA Ltd. Semi-Annual Report 2021
Guarantees provided by subsidiaries in favor of subsidiaries (USD ’0000)
Collater Counter Guarant
Planned Actual
Disclosure Actual Type of al（if Guarant Period of expire ee for a
Guarante guarante guarant
date of the occurrenc guarant any） ee（if guarante d or related
ed party e ee
announcement e date ee any） e not party or
amount amount
not
Generally
7 years
Control joint and
October 31, October (subject
Solutions, 1,300 1,300 several / /
2018 30, 2018 to the No No
Inc. liability
overseas
laws)
The loan
term (5
years)
and any
Control joint and
January 10, January 9, applicable
Solutions, 4,000 4,000 several / /
2019 2019 statute of No No
Inc. liability
limitations
period
(generally
7 years).
The
guarantee
existed
before the
company
joint and
ADAMA 27,399.5 was Valid until
Not applicable 779.90 several / / No No
Brazil 5 consolidat cancelled
liability
ed into the
financial
statements
of the
Company.
The
guarantee
existed
before the joint and
Valid until
Not applicable 9,019.2 company 3,974.67 several / / No No
cancelled
Adama was liability
India consolidat
Private ed into the
Ltd. financial
51
ADAMA Ltd. Semi-Annual Report 2021
statements
of the
Company.
The
guarantee
ADAMA existed
(Beijing) before the
Agricultura company
joint and Valid until
l was
Not applicable 2,500 0 several / / cancellati Yes No
Technolog consolidat
liability on
y ed into the
Company financial
Limited statements
of the
Company.
ADAMA The
Turkey guarantee
Tarm existed
Sanayi ve before the
Ticaret company
joint and
Limited was Valid until
Not applicable 3,850 2,185.63 several / / No No
irketi consolidat cancelled
liability
ed into the
financial
statements
of the
Company.
Adama Not applicable The
Makhteshi unlimited guarantee
m existed
before the
company
joint and
was Valid until
21,726.9 several / / No No
consolidat cancelled
liability
ed into the
financial
statements
of the
Company.
Adama Not applicable unlimited The
joint and
Agan guarantee Valid until
21,339 several / / No No
existed cancelled
liability
before the
52
ADAMA Ltd. Semi-Annual Report 2021
company
was
consolidat
ed into the
financial
statements
of the
Company.
The
guarantee
existed
before the
ADAMA
company
Agricultura joint and
was Valid until
l Solutions Not applicable 365.64 0 several / /
consolidat cancelled No No
UK Ltd. liability
ed into the
financial
statements
of the
Company.
The
ADAMA guarantee
CELSIUS Not applicable existed
BV, before the
Curacao company
joint and
branch, & was Valid until
4,500 1,954.68 several / /
ADAMA consolidat cancelled No No
liability
Fahrenheit ed into the
BV, financial
Curacao statements
Branch of the
Company.
Not applicable 2,500 The
guarantee
existed
before the
ADAMA
company joint and
Ukraine Valid until
was 1,438.75 several / /
LLC cancelled No No
consolidat liability
ed into the
financial
statements
of the
53
ADAMA Ltd. Semi-Annual Report 2021
Company.
Total guarantee line Total amount of the guarantee in
USD 58,699.53
approved in favor of the favor of the subsidiaries occurred
-- (approximately RMB
subsidiaries during the during the reporting period (C2)
379,204.83)
reporting period (C1)
USD 55,434.39(the Total guarantee balance in favor of
Aggregated guarantee
guarantee amount for the subsidiaries by the end of the
line that has been USD 58,699.53
Adama Makhteshim reporting period (C4)
approved in favor of the (approximately RMB
and Adama Agan is
subsidiaries by the end of 379,204.83)
unlimited)(approximat
the reporting period (C3)
ely RMB 358,111.7)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total guarantee line Total actual occurred amount of
approved during the guarantee during the reporting
33,200 423,433.83
reporting period period (A2+B2+C2)
(A1+B1+C1)
Total guarantee line Total actual guarantee balance at the
that has been approved end of the reporting period
at the end of the 688,511.7 (A4+B4+C4) 454,877.83
reporting period
(A3+B3+C3)
Proportion of total guarantee amount 21.22%
(A4+B4+C4) to the net assets of the Company
Of which:
The balance of the guarantee provided in favor 0
of the controlling shareholder and related
party.
Amount of debt guarantee provided for the USD 26,131.18
guaranteed party whose asset-liability ratio is (approximately RMB 168,810.04)
not less than 70% directly or indirectly (E)
The amount of the guarantee that exceeds 50% 0
of the net assets
Total amount of the above three guarantees USD 26,131.18
(D+E+F) (approximately RMB 168,810.04)
As for undue guarantee, liability to guarantee --
has happened or there is evidence that joint
liquidated liability may be undertaken during
this Reporting Period (if existing)
Regulated procedures are violated to offer --
guarantee (if existing)
54
ADAMA Ltd. Semi-Annual Report 2021
3. Wealth management entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Significant contracts in the routine course of the business
□ Applicable √ Not applicable
5. Other Significant Contracts
□ Applicable √ Not applicable
Non during the Reporting Period.
XIII. Other Significant Events
√ Applicable □ Not applicable
On March 31, 2021, the Company received a notification letter from ChemChina, stating that ChemChina
had received a Notice Regarding Restructuring of ChemChina and Sinochem Group Co., Ltd. (“Sinochem
Group” and the “Restructuring Notice”, respectively) from SASAC. Pursuant to the Restructuring Notice,
the State Council approved the joint restructuring of Sinochem Group and ChemChina, whereby a new
holding company will be set up by SASAC who will perform the duties of the investor on behalf of the
State Council, and Sinochem Group and ChemChina will be consolidated into the new holding company.
Upon completion of the joint restructuring, the controlling shareholder and the de facto controller of the
Company will remain as is.
On August 9, 2021, the Company received a notice from its shareholder Jingzhou Sanonda Holdings Co.,
Ltd. (hereinafter referred to as "Sanonda Holdings"), stating that Sanonda Holdings and Syngenta Group
signed the "Share Transfer Agreement" on August 9, 2021. Sanonda Holdings intends to transfer 5.14%
of the Company's shares it holds to Syngenta Group via free transfer (hereinafter referred to as the
"Transfer"). The implementation of the Transfer will not lead to changes in the Company's controlling
shareholder and actual controller, and the total number of Company shares indirectly held by the actual
controller remains unchanged.
The following are the relevant announcements disclosed on the website www.cninfo.com.cn.
55
ADAMA Ltd. Semi-Annual Report 2021
Announcements Disclosure date
Announcement on Obtaining the Approval of the Joint Restructuring of Sinochem Group and
March 31, 2021
ChemChina (Announcement No. 2021-10)
Announcement on the Transfer of State-owned Shares of Controlling Shareholders
August 11, 2021
(Announcement No. 2021-32)
Simplified Report on Changes in Equity of ADAMA Ltd. August 11, 2021
Detailed Report on Changes in Equity of ADAMA Ltd. August 11, 2021
Legal Opinions of Haiwen & Partners on Exemption of Syngenta Group Co., Ltd. from Making an August 11, 2021
Tender Offer for the Transfer
XIV. Significant Events of Subsidiaries
□ Applicable √ Not applicable
56
ADAMA Ltd. Semi-Annual Report 2021
Section VII - Share Changes and Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
Before the change Increase/decrease (+/-) After the change
Newly Capitalization
Bonus
Amount Proportion issue of public Other Subtotal Amount Proportion
shares
share reserves
I. Restricted shares 4,500 0.0002% -- -- -- -- -- 4,500 0.0002%
a. State-owned legal person’s
0 0.0000% -- -- -- -- -- 0 0.0000%
shares
b. Shares held by domestic
4,500 0.0002% -- -- -- -- -- 4,500 0.0002%
investors
i. Shares held by domestic legal
0 0.0000% -- -- -- -- -- 0 0.0000%
person
ii. Shares held by domestic
4,500 0.0002% -- -- -- -- -- 4,500 0.0002%
natural person
II. Shares not subject to trading
2,344,116,802 99.9998% -- -- -- -14,309,536 -14,309,536 2,329,807,266 99.9998%
moratorium
a. RMB ordinary shares 2,177,067,461 92.8735% -- -- -- -- -- 2,177,067,461 93.4439%
b. Domestically listed foreign
167,049,341 7.1263% -14,309,536 -14,309,536 152,739,805 6.5559%
shares
III. Total shares 2,344,121,302 100.0000% -- -- -- -14,309,536 -14,309,536 2,329,811,766 100.0000%
57
ADAMA Ltd. Semi-Annual Report 2021
Reasons for the change in shares
√Applicable □Not applicable
As of September 16, 2020, the first day on which the Company has initiated the B-Shares repurchase,
until December 6, 2020 - the expiry period of the repurchase plan, the Company repurchased a total
number of 14,309,536 B-Shares by means of a centralized price bidding transaction, and on June 17,
2021 completed the cancellation of the above repurchased shares at the China Securities Depository
and Clearing Corporation Limited Shenzhen Branch. Upon the completion of said B shares’ cancellation,
the total number of B-Shares decreased from 167,049,341 to 152,739,805, and the total share capital of
the Company decreased from 2,344,121,302 shares to 2,329,811,766 shares.
Approval of the change in shares
√Applicable □Not applicable
The 26th Meeting of the 8th Session of the Board of Directors held on August 19, 2020 and the 3rd Interim
Shareholders Meeting held on September 7, 2020 approved the Repurchase Plan for Part of the
Company’s Domestically Listed Foreign Shares (B share), and agreed to repurchase and cancel a portion
of the Company’s domestically listed foreign shares (B-Shares).
Upon the completion of said repurchase plan, the Company approved the Proposal on the Cancellation
of the Repurchased Shares and the Subsequent Decrease of the Registered Capital of the Company and
the Proposal on Revisions to the Articles of Association of the Company at the 31st Meeting of the 8th
Session of the Board of Directors held on March 29, 2021 and the 2020 Annual General Meeting held on
May 21, 2021, and agreed to cancel the repurchased shares, reduce the registered capital of the
Company and amend the Articles of Association accordingly.
The registered status for the change in shares
√Applicable □Not applicable
As of September 16, 2020, the first day on which the Company has initiated the B-Shares repurchase,
until December 6, 2020, the expiry period of the repurchase plan, the Company, the Company
repurchased a total number of 14,309,536 B-Shares, and completed the cancellation of the above
repurchased shares at the China Securities Depository and Clearing Corporation Limited Shenzhen
Branch on June 17, 2021.
Status of share buyback
√Applicable □Not applicable
The 26th Meeting of the 8th Session of the Board of Directors held on August 19, 2020 and the 3rd Interim
Shareholders Meeting held on September 7, 2020 approved the Repurchase Plan for Part of the
Company’s Domestically Listed Foreign Shares (B share), and agreed to repurchase and cancel a portion
of the Company’s domestically listed foreign shares (B-Shares). The Company subsequently disclosed
the repurchase report and repurchase progress announcements according to relevant regulations.
As of December 6, 2020, the repurchase period has expired. From September 16, 2020, the first day the
Company started B-Shares repurchase, to December 6, 2020, the Company repurchased 14,309,536
58
ADAMA Ltd. Semi-Annual Report 2021
shares of B-Shares by means of a centralized price bidding transaction through a special securities
repurchase account for B-Shares, which accounts for 0.61% of the Company’s total share capital. The
highest transaction price is 5.22 HKD/share, the lowest transaction price is 4.27 HKD/share, and the total
payment amount is HKD 69,747,209 (including transaction fees). For details, please refer to the
Announcement on the Expiry of the Repurchase Period and the Results of the B-Shares Repurchase
(Announcement No. 2020-71).
After the share repurchase was completed, the Company approved the Proposal on the Cancellation of
the Repurchased Shares and the Subsequent Decrease of the Registered Capital of the Company and
the Proposal on Revisions to the Articles of Association of the Company at the 31st Meeting of the 8th
Session of the Board of Directors held on March 29, 2021 and the 2020 Annual General Meeting held on
May 21, 2021, and agreed to cancel the repurchased shares, reduce the registered capital of the
Company and amend the Articles of Association accordingly.
The Company completed cancellation of the above repurchased shares at the China Securities
Depository and Clearing Corporation Limited Shenzhen Branch on June 17, 2021. For details, please
refer to Announcement on the Completion of Cancelling Repurchased Shares and Share Capital Change
(Announcement No. 2021-26)
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
The above change in shares has no significant impact 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.
Other contents that the Company considered necessary or is required by securities regulatory authorities
to disclose
□ Applicable √ Not applicable
59
ADAMA Ltd. Semi-Annual Report 2021
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
Shareholders Restricted Shares Restricted Restricted Restriction Date of
shares at the released in the shares shares at the reasons release
opening of Reporting increased end of the
the Reporting Period in the Reporting
Period Reporting Period
Period
Jiang Chenggang Six
Shares held
months
by a
after the
4,500 0 0 4,500 supervisor
expiratio
should be
n of the
locked up.
term
4,500 0 4,500
Total 0 -- --
II. Issuance and Listing of Securities
□ Applicable √ Not applicable
60
ADAMA Ltd. Semi-Annual Report 2021
III. Total Number of Shareholders and Their Shareholdings
Unit: share
Total number Total number of
of 46,347 preferred
shareholders (the number of ordinary A share shareholders stockholders with
as of the end is 32,321; vote right restored 0
of the the number of B share shareholders is (if any) as of the
Reporting 14,026) end of the
Period Reporting Period
Shareholding of common shareholders holding more than 5% shares
Increase Pledged, marked or
Number of Number of
Number of and frozen shares
common common
Holding shareholding decrease
Name of Nature of shares held shares held
percentage at the end of of shares Status
shareholder shareholder subject to not subject
(%) the Reporting during of Amount
trading to trading
Period Reporting shares
moratorium moratorium
Period
Syngenta
State-owned
Group Co., 73.33% 1,708,450,759 -- -- 1,708,450,759 -- --
legal person
Ltd.
Jingzhou
Sanonda State-owned
5.14% 119,687,202 -- -- 119,687,202 -- --
Holding Co., legal person
Ltd.
China Cinda
Asset State-owned
1.34% 31,115,916 -- -- 31,115,916 -- --
Management legal person
Co., Ltd.
Portfolio
No.503 of
-
National Others 0.88% 20,500,000 -- 20,500,000 -- --
2,500,052
Social Security
Fund
Huarong
Ruitong Equity
State-owned
Investment 0.55% 12,885,906 -- -- 12,885,906 -- --
legal person
Management
Co., Ltd.
Hong Kong
Securities
Overseas
Clearing 0.42% 9,877,317 3,928,997 -- 9,877,317 -- --
legal person
Company
Ltd.(HKSCC)
Shanghai
Greenwoods
Asset
Management
Co., Ltd.- Others 0.32% 7,473,785 7,473,785 -- 7,473,785 -- --
Greenwoods
Fengshou
No.3 Private
Equity Fund
Bosera Funds-
China Others 0.28% 6,500,000 6,500,000 -- 6,500,000 -- --
Merchants
61
ADAMA Ltd. Semi-Annual Report 2021
Bank- Bosera
Funds
Xincheng No.2
Collective
Asset
Management
Plan
Bosera Funds-
Postal Savings
Bank- Bosera
Funds
Xincheng No.3 Others 0.26% 6,000,000 6,000,000 -- 6,000,000 -- --
Collective
Asset
Management
Plan
China
Universal
Fund-
Industrial
Bank-China
Universal-
Strategic Others 0.19% 4,400,000 4,400,000 -- 4,400,000 -- --
Enhancement
No.3
Collective
Asset
Management
Plan
Strategic investors or the
general legal person due
to the placement of new
Not applicable
shares become the top 10
common shareholders (if
any)
Syngenta Group Co., Ltd. and Jingzhou Sanonda Holdings Co., Ltd. are related parties, and
Explanation on associated are acting-in-concert parties as prescribed in the Administrative Methods for Acquisition of
relationship or/and Listed Companies. Both of them are controlled subsidiaries of CNAC. It is unknown whether
persons the other shareholders are related parties or acting-in-concert parties as prescribed in the
Administrative Methods for Acquisition of Listed Companies.
Explanation on situations
of entrusted voting rights
or waiver of voting rights Not applicable
involved by the above
shareholders
Explanation on the
existence of special
repurchase accounts Not applicable
among the top 10
shareholders (if any)
Details of shares held by top 10 common shareholders not subject to trading moratorium
Number of common Type of share
shares held not
Name of shareholder subject to trading
Type of share Amount
moratorium at the
end of the period
Syngenta Group Co., Ltd. 1,708,450,759 RMB ordinary share 1,708,450,759
62
ADAMA Ltd. Semi-Annual Report 2021
Jingzhou Sanonda Holding Co., Ltd. 119,687,202 RMB ordinary share 119,687,202
China Cinda Asset Management Co., Ltd. 31,115,916 RMB ordinary share 31,115,916
Portfolio No.503 of National Social Security Fund 20,500,000 RMB ordinary share 20,500,000
Huarong Ruitong Equity Investment Management Co.,
12,885,906 RMB ordinary share 12,885,906
Ltd.
Hong Kong Securities Clearing Company Ltd. (HKSCC) 9,877,317 RMB ordinary share 9,877,317
Shanghai Greenwoods Asset Management Co., Ltd.-
7,473,785 RMB ordinary share 7,473,785
Greenwoods Fengshou No.3 Private Equity Fund
Bosera Funds-China Merchants Bank- Bosera Funds
6,500,000 RMB ordinary share 6,500,000
Xincheng No.2 Collective Asset Management Plan
Bosera Funds-Postal Savings Bank- Bosera Funds
6,000,000 RMB ordinary share 6,000,000
Xincheng No.3 Collective Asset Management Plan
China Universal Fund-Industrial Bank-China Universal-
Strategic Enhancement No.3 Collective Asset 4,400,000 RMB ordinary share 4,400,000
Management Plan
Syngenta Group Co., Ltd. and Jingzhou Sanonda Holdings
Explanation on associated relationship among the top Co., Ltd. are related parties, and are acting-in-concert parties
ten common shareholders of tradable share not as prescribed in the Administrative Methods for Acquisition of
subject to trading moratorium, as well as among the Listed Companies. Both of them are controlled subsidiaries
top ten common shareholders of tradable share not of CNAC. It is unknown whether the other shareholders are
subject to trading moratorium and top ten related parties or acting-in-concert parties as prescribed in
shareholders, or explanation on acting-in-concert the Administrative Methods for Acquisition of Listed
Companies.
Particular about the top ten common shareholder
participating in the securities lending and borrowing --
business (if any)
63
ADAMA Ltd. Semi-Annual Report 2021
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. 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 2020.
V. Change of the Controlling Shareholder or the Actual Controller
Change of the controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
There was no change of the controlling shareholder of the Company in the Reporting Period.
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.
64
ADAMA Ltd. Semi-Annual Report 2021
Section VIII - Preferred stock
□ Applicable √ Not applicable
There was no preferred stock during Reporting Period.
65
ADAMA Ltd. Semi-Annual Report 2021
Section IX - Bonds
□ Applicable √ Not applicable
66
ADAMA Ltd. Semi-Annual Report 2021
Section X - 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.
67
ADAMA Ltd. Semi-Annual Report 2021
(Expressed in RMB '000)
Consolidated Balance Sheet
June 30 December 31
Notes 2021 2020
Current assets
Cash at bank and on hand V.1 4,633,440 3,863,886
Financial assets held for trading V.2 2,494 1,253
Derivative financial assets V.3 376,746 1,560,788
Bills receivable V.4 108,078 102,082
Accounts receivable V.5 9,295,611 8,766,869
Receivables financing V.6 99,066 109,483
Prepayments V.7 363,364 406,008
Other receivables V.8 1,045,685 1,310,029
Inventories V.9 11,280,638 10,338,273
Other current assets V.10 940,835 769,641
Total current assets 28,145,957 27,228,312
Non-current assets
Long-term receivables V.11 98,400 95,329
Long-term equity investments V.12 15,847 14,081
Other equity investments V.13 151,537 152,200
Investment properties 3,186 4,364
Fixed assets V.14 7,695,471 6,576,116
Construction in progress V.15 1,812,323 1,405,328
Right-of-use assets V.16 505,895 483,618
Intangible assets V.17 5,150,421 5,226,455
Goodwill V.18 4,600,258 4,584,226
Deferred tax assets V.19 939,867 773,673
Other non-current assets V.20 330,844 257,332
Total non-current assets 21,304,049 19,572,722
Total assets 49,450,006 46,801,034
68
ADAMA Ltd. Semi-Annual Report 2021
(Expressed in RMB '000)
Consolidated Balance Sheet (continued)
June 30 December 31
Notes 2021 2020
Current liabilities
Short-term loans V.21 1,209,421 1,205,498
Derivative financial liabilities V.22 799,715 1,463,614
Bills payable V.23 198,428 369,791
Accounts payable V.24 5,184,480 4,557,006
Contract liabilities V.25 1,260,942 1,092,253
Employee benefits payable V.26 916,236 1,208,834
Taxes payable V.27 426,631 358,988
Other payables V.28 1,562,623 1,075,721
Non-current liabilities due within one year V.29 1,744,770 1,272,581
Other current liabilities V.30 347,366 315,597
Total current liabilities 13,650,612 12,919,883
Non-current liabilities
Long-term loans V.31 3,271,544 2,387,628
Debentures payable V.32 7,995,724 8,078,113
Lease liabilities V.33 394,531 379,190
Long-term payables 99,815 27,327
Long-term employee benefits payable V.34 748,266 645,755
Provisions V.35 178,699 163,251
Deferred tax liabilities V.19 362,973 331,942
Other non-current liabilities V.36 1,315,490 434,030
Total non-current liabilities 14,367,042 12,447,236
Total liabilities 28,017,654 25,367,119
Shareholders' equity
Share capital V.37 2,329,812 2,344,121
Capital reserve V.38 12,882,324 13,023,219
Less: Treasury shares - 60,357
Other comprehensive income V.39 (194,961) (72,055)
Special reserves 18,458 15,960
Surplus reserve V.40 240,162 240,162
Retained earnings V.41 6,156,557 5,862,702
Total equity attributed to the shareholders
of the company 21,432,352 21,353,752
Non-controlling interests - 80,163
Total Equity 21,432,352 21,433,915
Total liabilities and equity 49,450,006 46,801,034
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 24, 2021.
The notes form part of these financial statements.
69
ADAMA Ltd. Semi-Annual Report 2021
(Expressed in RMB '000)
Balance Sheet
June 30 December 31
Notes 2021 2020
Current assets
Cash at bank and on hand XV.1 443,269 1,034,812
Accounts receivable XV.2 121,301 387,117
Receivables financing XV.3 22,031 25,060
Prepayments 49,582 5,973
Other receivables XV.4 26,995 27,138
Inventories 51,746 141,235
Other current assets 39,956 42,243
Total current assets 754,880 1,663,578
Non-current assets
Long-term equity investments XV.5 17,511,352 16,663,212
Other equity investments 85,495 85,495
Investment properties 3,186 4,364
Fixed assets 731,493 784,218
Construction in progress 1,163,591 992,863
Right-of-use assets 9 37
Intangible assets 261,282 220,963
Deferred tax assets 66,264 66,036
Other non-current assets 588,302 238,750
Total non-current assets 20,410,974 19,055,938
Total assets 21,165,854 20,719,516
Current liabilities
Short-term loans - 100,000
Bills payables 970 19,600
Accounts payables 182,619 324,047
Contract liabilities 3,701 17,480
Employee benefits payable 40,929 99,808
Taxes payable 2,029 3,143
Other payables 573,086 240,939
Non-current liabilities due within one year 564,000 39,302
Total current liabilities 1,367,334 844,319
Non-current liabilities
Long-term loans 810,200 941,430
Long-term employee benefits payable 84,178 89,658
Provisions 51,900 44,743
Other non-current liabilities 260,000 143,770
Total non-current liabilities 1,206,278 1,219,601
Total liabilities 2,573,612 2,063,920
Shareholders’ equity
Share capital V.37 2,329,812 2,344,121
Capital reserve 15,523,881 15,569,929
Less: Treasury shares - 60,357
Other comprehensive income 47,020 47,390
Special reserves 19,149 16,651
Surplus reserve 240,162 240,162
Retained earnings V.41 432,218 497,700
Total shareholders’ equity 18,592,242 18,655,596
Total liabilities and shareholders’ equity 21,165,854 20,719,516
70
ADAMA Ltd. Semi-Annual Report 2021
(Expressed in RMB '000)
Consolidated Income Statement
Six months ended June 30
Notes 2021 2020
I. Operating income V.42 15,063,780 14,121,040
Less: Cost of sales V.42 10,706,710 9,904,470
Taxes and surcharges V.43 59,007 46,117
Selling and Distribution expenses V.44 2,506,436 2,468,568
General and administrative expenses V.45 571,807 553,186
Research and Development expenses V.46 226,940 188,185
Financial expenses V.47 448,790 842,792
Including: Interest expense 322,765 350,041
Interest income 31,363 29,625
Add: Investment income (loss), net V.48 527,756 52,129
Including: Income from investment
in associates and joint ventures 3,243 14,392
Gain (loss) from changes in fair value V.49 (664,582) 265,510
Credit impairment reversal (losses) V.50 10,051 5,589
Asset impairment reversal (losses) V.51 (29,403) (25,376)
Gain from disposal of assets V.52 14,799 7,694
II. Operating profit 402,711 423,268
Add: Non-operating income 33,032 39,020
Less: Non-operating expenses 15,429 13,441
III. Total profit 420,314 448,847
Less: Income tax expenses V.53 51,081 244,198
IV. Net profit 369,233 204,649
(1). Classified by nature of operations
(1.1). Continuing operations 369,233 204,649
(2). Classified by ownership
(2.1). Shareholders of the Company 367,036 204,649
(2.2). Non-controlling interests 2,197 -
V. Other comprehensive income, net of tax V. 39 (122,906) 147,373
Other comprehensive income (net of tax)
attributable to shareholders of the Company (122,906) 147,373
(1) Items that will not be reclassified to profit or loss: (6,971) 39,373
(1.1) Re-measurement of defined benefit plan liability (6,971) 39,373
(2) Items that were or will be reclassified to profit or loss (115,935) 108,000
(2.1) Effective portion of gains or loss of cash flow hedge 144,297 (78,285)
(2.2) Translation differences of foreign financial statements (260,232) 186,285
VI. Total comprehensive income for the period attributable to
Shareholders of the Company 246,327 352,022
Total comprehensive income for the period
attributable to shareholders of the Company 244,130 352,022
Total comprehensive income for the period
attributable to Non-controlling interests 2,197 -
VII. Earnings per share XIV.2
(1) Basic earnings per share (Yuan/share) 0.16 0.08
(2) Diluted earnings per share (Yuan/share) N/A N/A
- 71 -
ADAMA Ltd. Semi-Annual Report 2021
(Expressed in RMB '000)
Income Statement
Six months ended June 30
Notes 2021 2020
I. Operating income XV.6 617,097 673,646
Less: Operating costs XV.6 482,937 537,314
Taxes and surcharges 3,982 2,821
Selling and Distribution expenses 19,304 17,072
General and administrative expenses 140,326 133,338
Research and Development expenses 19,709 4,559
Financial expenses (income) 3,523 (4,826)
Including: Interest expense 10,176 3,143
Interest income 9,971 8,507
Add: Credit impairment reversal (losses) 107 (674)
Asset Impairment reversal (losses) (1,068) (2,864)
Gain from disposal of assets 16,081 101
II. Operating Profit (37,564) (20,069)
Add: Non-operating income 10,143 5,597
Less: Non-operating expenses 1,012 420
III. Total profit (28,433) (14,892)
Less: Income tax expense (income) (228) 27,872
IV. Net profit (loss) (28,205) (42,764)
V. Other comprehensive income, net of tax (370) (4,041)
(1) Items that will not be reclassified to profit or loss (370) (4,041)
(1.1) Re-measurement of defined benefit plan liability (370) (4,041)
VI. Total comprehensive income (loss) for the period (28,575) (46,805)
- 72 -
ADAMA Ltd. Semi-Annual Report 2021
(Expressed in RMB '000)
Consolidated Cash Flow Statement
Six months ended June 30
Notes 2021 2020
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 14,644,075 13,378,983
Refund of taxes and surcharges 82,190 67,336
Cash received relating to other operating activities V.55(1) 363,408 630,515
Sub-total of cash inflows from operating activities 15,089,673 14,076,834
Cash paid for goods and services 9,737,778 9,247,435
Cash paid to and on behalf of employees 1,988,051 1,967,484
Payments of taxes and surcharges 208,458 168,816
Cash paid relating to other operating activities V.55(2) 1,664,093 1,458,568
Sub-total of cash outflows from operating activities 13,598,380 12,842,303
Net cash flows from (used in) operating activities V.56(1)a 1,491,293 1,234,531
II. Cash flows from investing activities:
Cash received from disposal of investments 856 16,224
Cash received from returns of investments - 54,304
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 19,507 15,677
Cash received relating to other investing activities V.55(3) 6,754 -
Sub-total of cash inflows from investing activities 27,117 86,205
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 1,179,017 803,315
Cash paid for acquisition of investments - 51,435
Net cash paid to acquire subsidiaries or other business units 655,039 -
Cash paid relating to other investing activities V.55(4) 85,108 46,840
Sub-total of cash outflows from investing activities 1,919,164 901,590
Net cash flows used in investing activities (1,892,047) (815,385)
III. Cash flows from financing activities:
Cash received from borrowings 3,776,407 2,822,626
Cash received from other financing activities V.55(5) 412,308 4,449
Sub-total of cash inflows from financing activities 4,188,715 2,827,075
Cash repayments of borrowings 2,328,962 745,547
Cash payment for dividends, profit distributions and interest 387,611 356,793
Including: Dividends paid to non-controlling interest 35,904 26,828
Cash paid relating to other financing activities V.55(6) 263,351 249,286
Sub-total of cash outflows from financing activities 2,979,924 1,351,626
Net cash from financing activities 1,208,791 1,475,449
IV. Effects of foreign exchange rate changes on cash and cash
equivalents (27,900) 41,605
V. Net increase in cash and cash equivalents V.56(1)b 780,137 1,936,200
Add: Cash and cash equivalents at the beginning of the year 3,835,071 4,319,907
VI. Cash and cash equivalents at the end of the period V.56(2) 4,615,208 6,256,107
- 73 -
ADAMA Ltd. Semi-Annual Report 2021
(Expressed in RMB '000)
Cash Flow Statement
Six months ended June 30
Notes 2021 2020
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 838,428 581,672
Refund of taxes and surcharges 22,166 27,022
Cash received relating to other operating activities XV.7(1) 21,203 15,063
Sub-total of cash inflows from operating activities 881,797 623,757
Cash paid for goods and services 440,234 467,607
Cash paid to and on behalf of employees 122,202 122,633
Payments of taxes and surcharges 6,834 4,959
Cash paid relating to other operating activities XV.7(2) 67,311 90,807
Sub-total of cash outflows from operating activities 636,581 686,006
Net cash flows from (used in) operating activities XV.8 245,216 (62,249)
II. Cash flows from investing activities:
Net cash received from disposal of fixed assets, intangible assets and
other long-term assets 17,630 114
Sub-total of cash inflows from investing activities 17,630 114
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 280,865 154,378
Cash paid for acquisition of investments 697,909 -
Sub-total of cash outflows from investing activities 978,774 154,378
Net cash flows used in investing activities (961,144) (154,264)
III. Cash flows from financing activities:
Cash received from borrowings 615,200 441,500
Cash received relating to other financing activities XV.7.(3) 5,880 4,449
Sub-total of cash inflows from financing activities 621,080 445,949
Cash repayments of borrowings 293,732 190,500
Cash payment for dividends, profit distributions or interest 24,027 14,606
Cash paid relating to other financing activities XV.7.(4) 172,061 200
Sub-total of cash outflows from financing activities 489,820 205,306
Net cash flow provided by (used in) financing activities 131,260 240,643
IV. Effects of foreign exchange rate changes on cash and cash equivalents (1,286) 3,172
V. Net decrease in cash and cash equivalents (585,954) 27,302
Add: Cash and cash equivalents at the beginning of the year XV.8(2) 1,022,758 1,395,994
VI. Cash and cash equivalents at the end of the period XV.8(2) 436,804 1,423,296
- 74 -
ADAMA Ltd. Semi-Annual Report 2021
(Expressed in RMB '000)
Consolidated Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2021
Attributable to shareholders of the Company
Other
Share Capital Less: Treasury comprehensive Special Surplus Retained Non-controlling
capital * reserve * shares * income reserves reserve earnings Total interests Total equity
I. Balance at December 31, 2020 2,344,121 13,023,219 60,357 (72,055) 15,960 240,162 5,862,702 21,353,752 80,163 21,433,915
II. Changes in equity for the period (14,309) (140,895) (60,357) (122,906) 2,498 - 293,855 78,600 (80,163) (1,563)
1. Total comprehensive income - - - (122,906) - - 367,036 244,130 2,197 246,327
2. Owner’s contributions and reduction (14,309) (140,895) (60,357) - - - - (94,847) (82,360) (177,207)
2.1 Repurchase of shares (14,309) (46,048) (60,357) - - - - - - -
2.2 Non-controlling interests in
respect of business combination - (94,847) - - - - - (94,847) (82,360) (177,207)
3. Appropriation of profits - - - - - - (73,181) (73,181) - (73,181)
3.1 Distribution to owners - - - - - - (37,277) (37,277) - (37,277)
3.2 Distribution to non-controlling - - - - - - -
interest (35,904) (35,904) (35,904)
4. Special reserve - - - - 2,498 - - 2,498 - 2,498
4.1 Transfer to special reserve - - - - 3,866 - - 3,866 - 3,866
4.2 Amount utilized - - - - (1,368) - - (1,368) - (1,368)
III. Balance at June 30, 2021 2,329,812 12,882,324 - (194,961) 18,458 240,162 6,156,557 21,432,352 - 21,432,352
* For further information of the changes during the period see Note XI.2 – Commitments and Contingent Liabilities
- 75 -
ADAMA Ltd. Semi-Annual Report 2021
(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 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
- 76 -
ADAMA Ltd. Semi-Annual Report 2021
(Expressed in RMB '000)
Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2021
Attributable to shareholders of the Company
Less: Other
Share Capital treasury comprehensive Special Surplus Retained
capital reserve share income reserves reserve earnings Total
I. Balance at December 31, 2020 2,344,121 15,569,929 60,357 47,390 16,651 240,162 497,700 18,655,596
II. Changes in equity for the period (14,309) (46,048) (60,357) (370) 2,498 - (65,482) (63,354)
1. Total comprehensive income - - - (370) - - (28,205) (28,575)
2. Owner’s contributions and reduction (14,309) (46,048) (60,357) - - - - -
2.1 Repurchase of shares (14,309) (46,048) (60,357) - - - - -
2.2 Other - - - - - - - -
3. Appropriation of profits - - - - - - (37,277) (37,277)
3.1 Transfer to Distribution to shareholders - - - - - - (37,277) (37,277)
4. Special reserve - - - - 2,498 - - 2,498
4.1 Transfer to special reserve - - - - 3,866 - - 3,866
4.2 Amount utilized - - - - (1,368) - - (1,368)
Ⅲ. Balance at June 30, 2021 2,329,812 15,523,881 - 47,020 19,149 240,162 432,218 18,592,242
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
- 77 -
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.
In June 2020, the controlling shareholder of the Company changed from China National Agrochemical Co,.
Ltd. (hereinafter – “CNAC") to Syngenta Group Co., Ltd. (hereinafter “Syngenta Group”). The ultimate
controlling shareholder remains 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 24, 2021.
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).
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.
- 78 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
II BASIS OF PREPARATION - (cont’d)
2. Accrual basis and measurement principle - (cont’d)
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, 2021 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, 2021 and the Company's
consolidated operating results, changes in shareholders' equity and cash flows for the six months then ended.
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.
- 79 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
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.
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.
In a business combination achieved in stages, the Group remeasure its previously held equity interest in the
acquiree at its acquisition-date fair value and recognise the resulting gain or loss, if any, in profit or loss.
- 80 -
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
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.
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.
- 81 -
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)
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 (according to the
"anticipated acquisition method"). 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.
In cases which the Group has a Call option in addition to the Put option above, due to the anticipated
acquisition method implementation no value is given to the Call option in the consolidated financial
statements.
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.
- 82 -
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.
- 83 -
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.
- 84 -
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.
- 85 -
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.
- 86 -
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.
- 87 -
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.
- 88 -
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.
- 89 -
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.
- 90 -
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. The difference between initial investment cost and cash paid, non-cash assets transferred and
book value of liabilities assumed, is adjusted in capital reserve. If the balance of capital reserve is not
sufficient to absorb the difference, any excess is adjusted to retained earnings.
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.
- 91 -
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).
- 92 -
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.
- 93 -
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).
- 94 -
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).
- 95 -
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.
- 96 -
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.
- 97 -
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.
- 98 -
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.
- 99 -
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.
- 100 -
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.
- 101 -
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.
- 102 -
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.
- 103 -
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.
- 104 -
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.
- 105 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
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.
- 106 -
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.
- 107 -
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.
- 108 -
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% (2020: 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 2021
ADAMA agriculture solutions Ltd. Israel 23.0%
ADAMA Makhteshim Ltd. Israel 7.5%
ADAMA Agan Ltd. Israel 7.5%
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%.
- 109 -
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 High-Tech Certificate
The Company, was jointly approved as new and high-tech enterprise, by the Hubei Provincial Department
of Science and Technology, Department of Finance of Hubei Province, Hubei Provincial Office of the State
Administration of Taxation and Hubei Local Taxation Bureau. The applicable income tax rate from 2020 to
2022 is 15%.
Adama Anpon (Jiangsu) Ltd. (Formally know as Jiangsu Anpon Electrochemical Co. Ltd, hereinafter -
“Anpon"), 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.
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 constitute 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 2017 tax year are as follows: 7.5% for Development Area A and 16% for
the rest of the country.
The amendment further determined that no tax shall apply to dividend distributed out of preferred income to
Israel resident company shareholder.
As of the date of the report, all subsidiaries in Israel adopted the amendment and the deferred taxes were
calculated accordingly.
- 110 -
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 is
effective as from January 1, 2017 and 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%. 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.
In addition, as part of the amendment, a temporary provision was enacted, valid until June 30, 2021, which
settles tax benefits continuation on income that is eligible to the Preferred Enterprise tax benefits as at June
30, 2016. ADAMA Agricultural Solutions Ltd. (hereinafter: “Solutions”) implement and act in accordance
with the temporary provision.
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.
Solutions, through a subsidiary, filed an application to the Israeli Tax Authority for settling its eligibility to
the tax benefits in accordance with the amendment to the Encouragement Law.
(3) Benefits under the Law for the Encouragement of Industry (Taxes), 1969
Under the Israeli Law for the Encouragement of Industry (Taxes) 1969, 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), amortization
of know-how over 8 years and higher rates of depreciation.
- 111 -
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
2021 2020
Cash on hand 3,504 4,590
Deposits in banks 4,611,704 3,830,481
Other cash and bank 18,232 28,815
4,633,440 3,863,886
Including cash and bank placed outside China 3,379,563 2,064,876
As at June 30, 2021 restricted cash and bank balances was 18,232 thousand RMB (as at December 31, 2020
28,815 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Financial assets held for trading
June 30 December 31
2021 2020
Debt instruments - -
Other 2,494 1,253
2,494 1,253
3. Derivative financial assets
June 30 December 31
2021 2020
Economic hedge 359,401 1,545,481
Accounting hedge derivatives 17,345 15,307
376,746 1,560,788
4. Bills Receivable
June 30 December 31
2021 2020
Post-dated checks receivable 87,302 91,975
Bank acceptance draft 20,776 10,107
108,078 102,082
All bills receivables are due within 1 year.
- 112 -
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, 2021
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 422,926 4 253,510 60 169,416
Account receivables assessed
collectively for impairment 9,211,527 96 85,332 1 9,126,195
9,634,453 100 338,842 4 9,295,611
December 31, 2020
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 467,325 5 262,933 56 204,392
Account receivables assessed
collectively for impairment 8,661,818 95 99,341 1 8,562,477
9,129,143 100 362,274 4 8,766,869
b. Aging analysis
June 30, 2021
Within 1 year (inclusive) 9,150,914
Over 1 year but within 2 years 167,433
Over 2 years but within 3 years 78,705
Over 3 years but within 4 years 74,239
Over 4 years but within 5 years 35,808
Over 5 years 127,354
9,634,453
- 113 -
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, 2021
Provision for expected
Book value credit loss Percentage (%)
Credit group A 1,250,702 4,270 0.07-0.62
Credit group B 746,847 6,463 0.87
Credit group C 226,381 9,876 4.36
Credit group D 43,419 906 2.09
2,267,349 21,515 0.95
Geographical location B:
Account receivables in geographical location B are grouped based on aging analysis:
June 30, 2021
Provision for expected
Book value credit loss Percentage (%)
Accounts receivable that are not overdue 463,544 4,118 0.9
Debts overdue less than 60 days 29,029 871 3.0
Debts overdue less than 180 days but
more than 60 days 29,812 2,981 10.0
Debts overdue above 180 days 19,002 7,601 40.0
Legal Debtors 35,648 35,648 100.0
577,035 51,219 8.9
Other geographical locations:
June 30, 2021
Provision for expected
Book value credit loss Percentage (%)
Other account receivables assessed
collectively for impairment 6,367,143 12,598 0.0-2.03%
- 114 -
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, 2021 51,895 310,379 362,274
First time consolidation - 246 246
Addition during the period, net (12,761) 18,294 5,533
Write back during the period - (15,470) (15,470)
Write-off during the period - (14,343) (14,343)
Exchange rate effect (903) 1,505 602
Balance as of June 30, 2021 38,231 300,611 338,842
d. Five largest accounts receivable at June 30, 2021:
Allowance of expected
Proportion of Accounts credit losses (credit losses
Name Closing balance receivable (%) has occurred)
Customer 1 151,580 2 -
Customer 2 140,391 2 -
Customer 3 126,838 1 -
Customer 4 108,497 1 -
Customer 5 95,325 1 13,095
Total 622,631 7 13,095
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 Cooperative Rabobank U.A..
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. As at the report
date, the Securitization agreement was approved up to October 31, 2021.
- 115 -
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, 2021 – 2,261 million RMB), during the months July through September the
maximum scope of the securitization is $300 million (as of June 30, 2021 – 1,938 million RMB) and during
the months October through February the maximum scope of the securitization is $250 million (as of June
30, 2021 - 1,615 million RMB). In addition the company has uncommitted facility of $50 million (as of June
30, 2021 - 326 million RMB) which will be applicable each period. 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, 2021, 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.
- 116 -
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”.
The Company’s subsidiary in Brazil (hereinafter - “the subsidiary”) entered into a 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.
As at the report date, the subsidiary agreement was approved up to September 1, 2022. The maximum
securitization scope as of June 30, 2021 is BRL 364 million (470 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 to profit and loss under financing
expenses.
June 30 December 31
2021 2020
Accounts receivables derecognized 2,899,468 2,850,745
Continuing involvement 127,981 125,578
Subordinated note in respect of trade receivables 512,938 762,598
Liability in respect of trade receivables 303,121 22,002
Six months ended June 30
2021 2020
Loss in respect of sale of trade receivables 15,403 36,790
- 117 -
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
2021 2020
Bank acceptance draft 99,066 109,483
99,066 109,483
As at June 30, 2021, bank acceptance endorsed but not yet due amounts to 531,091 thousands RMB.
7. Prepayments
(1) The aging analysis of prepayments is as follows:
June 30 December 31
2021 2020
Amount Percentage (%) Amount Percentage (%)
Within 1 year (inclusive) 354,921 98 400,549 99
Over 1 year but within 2 years (inclusive) 5,595 1 3,037 1
Over 2 years but within 3 years (inclusive) 687 - 640 -
Over 3 years 2,161 1 1,782 -
363,364 100 406,008 100
(2) Total of five largest prepayments by debtor at the end of the period:
Amount Percentage of prepayments (%)
June 30, 2021 115,867 32
- 118 -
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
2021 2020
Dividends receivable 903 -
Others 1,044,782 1,310,029
1,045,685 1,310,029
a. Others breakdown by categories
June 30 December 31
2021 2020
Trade receivables as part of securitization transactions
not yet eliminated 127,981 125,578
Subordinated note in respect of trade receivables 512,938 762,598
Financial institutions 175,747 231,183
Receivables in respect of disposal of fixed assets 23,949 23,949
Other 220,188 182,867
Sub total 1,060,803 1,326,175
Provision for expected credit losses - other receivables (16,021) (16,146)
1,044,782 1,310,029
b. Other receivables by aging
June 30
2021
Within 1 year (inclusive) 1,001,463
Over 1 year but within 2 years 17,151
Over 2 years but within 3 years 13,730
Over 3 years but within 4 years 2,218
Over 4 years but within 5 years 2,843
Over 5 years 23,398
1,060,803
- 119 -
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, 2021
Balance as of January 1 2021, 16,146
Addition during the period -
Written back during the period (114)
Write-off during the period -
Exchange rate effect (11)
Balance as of June 30, 2021 16,021
(3) Five largest other receivables at June 30, 2021:
Allowance of
Proportion of other expected credit
Name Closing balance receivables (%) losses
Party 1 512,938 49 -
Party 2 175,747 17 -
Party 3 13,321 1 -
Party 4 12,921 1 -
Party 5 10,627 1 -
Total 725,554 69 -
9. Inventories
(1) Inventories by category:
June 30, 2021
Provision for
Book value impairment Carrying amount
Raw materials 3,780,831 31,450 3,749,381
Work in progress 632,631 1,236 631,395
Finished goods 6,692,176 157,118 6,535,058
Others 372,730 7,926 364,804
11,478,368 197,730 11,280,638
December 31, 2020
Provision for
Book value impairment Carrying amount
Raw materials 3,060,965 42,945 3,018,020
Work in progress 704,391 - 704,391
Finished goods 6,488,658 153,577 6,335,081
Others 288,218 7,437 280,781
10,542,232 203,959 10,338,273
- 120 -
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, 2021
January 1, First time Reversal or
2021 consolidation Provision write-off Other June 30, 2021
Raw material 42,945 956 7,356 (19,325) (482) 31,450
Work in progress - 1,134 50 (55) 107 1,236
Finished goods 153,577 3,355 42,380 (40,449) (1,745) 157,118
Others 7,437 - 879 (265) (125) 7,926
203,959 5,445 50,665 (60,094) (2,245) 197,730
10. Other Current Assets
June 30 December 31
2021 2020
Deductible VAT 564,790 499,136
Current tax assets 262,515 232,051
Short term investments 80,267 -
Others 33,263 38,454
940,835 769,641
11. Long-Term Receivables
June 30 December 31
2021 2020
Long term account receivables from sale of goods 98,400 95,329
98,400 95,329
- 121 -
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
2021 2020
Investments in joint ventures 15,847 14,081
15,847 14,081
(2) Movements of long-term equity investments for the period are as follows:
Balance
Other Declared Change in at the end
January Investment Comprehensive distribution of Capital consolidation of the
1, 2021 income income cash dividend investment scope Impairment period
Joint
ventures
Investee A 2,884 566 (26) - - - - 3,424
Investee B 933 - (84) - - (849) - -
Investee C 10,264 2,678 349 (868) - - - 12,423
Sub-total 14,081 3,244 239 (868) - (849) - 15,847
13. Other equity investments
June 30 December 31
2021 2020
Investment A 85,495 85,495
Investment B 64,388 65,034
Investment C 1,654 1,671
151,537 152,200
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, 2021 the company did not recognize dividend income from other equity
investments.
- 122 -
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, 2021 3,299,569 13,982,376 122,215 371,573 17,775,733
First time consolidation 327,898 909,326 1,830 7,490 1,246,544
Purchases 22,474 132,069 7,031 10,848 172,422
Transfer from construction in progress 12,714 180,102 1,210 1,229 195,255
Disposals (13,613) (28,950) (5,745) (14,493) (62,801)
Currency translation adjustment (28,689) (113,265) (2,449) (5,170) (149,573)
Balance as at June 30, 2021 3,620,353 15,061,658 124,092 371,477 19,177,580
Accumulated depreciation
Balance as at January 1, 2021 (1,673,044) (8,647,241) (62,224) (293,523) (10,676,032)
First time consolidation (11,075) (49,997) (256) (1,406) (62,734)
Charge for the period (46,557) (292,582) (8,245) (17,877) (365,261)
Disposals 13,344 27,498 4,432 15,236 60,510
Currency translation adjustment 11,311 72,720 1,293 4,514 89,838
Balance as at June 30, 2021 (1,706,021) (8,889,602) (65,000) (293,056) (10,953,679)
Provision for impairment
Balance as at January 1, 2021 (159,691) (363,008) (651) (235) (523,585)
First time consolidation - (5,915) (8) - (5,923)
Charge for the period - - - - -
Disposals - 245 7 - 252
Currency translation adjustment 100 725 (1) 2 826
Balance as at June 30, 2021 (159,591) (367,953) (653) (233) (528,430)
Carrying amounts
As at June 30, 2021 1,754,741 5,804,103 58,439 78,188 7,695,471
As at January 1, 2021 1,466,834 4,972,127 59,340 77,815 6,576,116
The lands reported as fixed assets are owned by the group subsidiaries and are located outside of China.
- 123 -
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
2021 2020
Provision for Provision for
Book value impairment Carrying amount Book value impairment Carrying amount
1,838,063 (25,740) 1,812,323 1,431,068 (25,740) 1,405,328
(2) Details and Movements of major construction projects in progress during year ended June 30,
2021
Actual
Currency Transfer cost to Project
January 1, translation to fixed June 30, budget progress
Budget 2021 Additions differences assets 2021 (%) (%) Source of funds
Project A 1,509,420 632,656 87,045 - - 719,701 55% 55% Bank loan
Project B 722,302 25,441 13,820 - - 39,261 5% 5% Bank loan
Project C 333,373 15,803 22,955 (191) - 38,567 12% 12% Internal finance
Project D 279,367 56,460 84,942 (688) - 140,714 50% 50% Internal finance
Project E * 172,055 51,402 10,855 - (14,920) 47,337 50% 50% Internal finance
Project F 138,000 39,786 33,627 - - 73,413 53% 53% Internal finance
Project G 140,649 53,922 71,956 (455) (125,423) - 100% 100% Internal finance
Project H 135,662 59,699 17,611 (620) - 76,690 57% 57% Internal finance
Project I 70,101 32,300 33,177 - - 65,477 93% 93% Internal finance
Project J 70,035 54,618 6,171 - - 60,789 87% 87% Internal finance
* As of June 30, 2021 Project E include impairment of RMB 26 million.
- 124 -
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, 2021 468,521 45,329 223,914 3,445 741,209
Additions 62,899 757 53,038 1,837 118,531
Disposals (12,105) (408) (30,110) (970) (43,593)
Currency translation adjustment (10,077) (451) (2,747) (67) (13,342)
Balance as at June 30, 2021 509,238 45,227 244,095 4,245 802,805
Accumulated depreciation
Balance as at January 1, 2021 (145,226) (12,553) (98,233) (1,579) (257,591)
Charge for the period (40,323) (705) (38,249) (408) (79,685)
Disposals 10,630 401 25,167 660 36,858
Currency translation adjustment 2,081 137 1,268 22 3,508
Balance as at June 30, 2021 (172,838) (12,720) (110,047) (1,305) (296,910)
Provision for impairment
Balance as at January 1, 2021 - - - - -
Balance as at June 30, 2021 - - - - -
Carrying amounts
As at June 30, 2021 336,400 32,507 134,048 2,940 505,895
As at January 1, 2021 323,295 32,776 125,681 1,866 483,618
- 125 -
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, 2021 10,693,031 3,918,407 856,741 744,060 451,008 392,876 320,747 17,376,870
First time consolidation (3) 63,642 - 2,833 - - 65,397 2,809 134,681
Purchases 218,551 757 71,146 757 - - 7,647 298,858
Currency translation adjustment (107,518) (38,924) (9,747) (7,582) (4,822) (361) (3,226) (172,180)
Transfer from construction in progress - - 45,418 - - - - 45,418
Disposal (212,688) - (1,048) (841) - - - (214,577)
Balance as at June 30, 2021 10,655,018 3,880,240 965,343 736,394 446,186 457,912 327,977 17,469,070
Accumulated amortization
Balance as at January 1, 2021 (8,106,183) (2,456,612) (538,255) (443,625) (220,302) (71,468) (183,235) (12,019,680)
First time consolidation (3) (1,879) - (141) - - (886) (609) (3,515)
Charge for the period (271,853) (143,888) (36,558) (15,075) (16,026) (4,455) (14,890) (502,745)
Currency translation adjustment 83,275 24,613 5,825 4,542 2,555 (3) 2,136 122,943
Disposal 212,688 - 848 252 - - - 213,788
Balance as at June 30, 2021 (8,083,952) (2,575,887) (568,281) (453,906) (233,773) (76,812) (196,598) (12,189,209)
Provision for impairment
Balance as at January 1, 2021 (81,679) (48,806) - - - - (250) (130,735)
Charge for the period - - - - - - - -
Disposal - - - - - - - -
Currency translation adjustment 811 484 - - - - - 1,295
Balance as at June 30, 2021 (80,868) (48,322) - - - - (250) (129,440)
Carrying amount
As at June 30, 2021 2,490,198 1,256,031 397,062 282,488 212,413 381,100 131,129 5,150,421
As at January 1, 2021 2,505,169 1,412,989 318,486 300,435 230,706 321,408 137,262 5,226,455
(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.
(3) Product registration includes provisional purchase price allocation related to Adama Huifeng (shanghai) Agricultural Technology Co. Ltd acquired in December 31, 2020.
- 126 -
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 allocates goodwill to two cash generating units ("CGU"), Crop Protection (Agro) and a non-core
activity included in the Intermediates and ingredients segment. At the end of the year, or more frequently whether
indicators for impairment exists, the Group estimates the recoverable amount of each CGU for which goodwill
has been allocated to using th DCF model.
The carrying amount of goodwill is mainly allocated to Agro units, which includes RMB 261 million from the
acquisitions of Adama Huifeng (shanghai) Agricultural Technology Co., Ltd and Adama Huifeng (Jiangsu) Co.
Ltd.. The goodwill allocated to non-core CGU is not significant.
As of December 31, 2020 the fair value of the cash generating units to which goodwill has been allocated to
exceeds its carrying amount.
Currency
January 1, translation Balance at
2021 Additions adjustment June 30, 2021
Book value 4,584,226 59,305 (43,273) 4,600,258
Impairment provision - - - -
Carrying amount 4,584,226 59,305 (43,273) 4,600,258
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
2021 2020
Deductible Deductible
temporary Deferred tax temporary Deferred tax
differences assets differences assets
Deferred tax assets
Deferred tax assets in respect of carry
forward losses 978,130 173,245 785,259 142,312
Deferred tax assets in respect of
inventories 1,688,325 472,415 1,555,528 422,995
Deferred tax assets in respect of
employee benefits 900,207 130,032 910,081 128,676
Other deferred tax asset 1,586,051 391,185 1,569,188 366,652
5,152,713 1,166,877 4,820,056 1,060,635
- 127 -
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
2021 2020
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 3,321,928 589,983 3,512,629 618,904
3,321,928 589,983 3,512,629 618,904
(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting
June 30 December 31
2021 2020
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 227,010 939,867 286,962 773,673
Deferred tax liabilities 227,010 362,973 286,962 331,942
(4) Details of unrecognized deferred tax assets
June 30 December 31
2021 2020
Deductible temporary differences 450,995 523,951
Deductible losses carry forward 211,553 103,402
662,548 627,353
(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets
June 30 December 31
2021 2020
2021 2,364 2,388
2022 1,612 1,626
2023 2,089 2,105
2024 1,764 1,785
2025 5,827 5,885
After 2025 197,897 89,613
211,553 103,402
- 128 -
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
2021 2020
Judicial deposits 99,854 93,182
Assets related to securitization 28,566 31,979
Advances in respect of non-current assets 122,431 40,857
Call option in respect of business combination - 18,733
Others 79,993 72,581
330,844 257,332
21. Short-Term Loans
Short-term loans by category:
June 30 December 31
2021 2020
Unsecured loans 1,209,421 1,205,498
1,209,421 1,205,498
22. Derivative financial liabilities
June 30 December 31
2021 2020
Economic hedge 675,597 1,197,274
Accounting hedge derivatives 124,118 266,340
799,715 1,463,614
- 129 -
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
2021 2020
Post-dated checks payables 179,610 264,402
Note payables draft 18,818 105,389
198,428 369,791
As at June 30, 2021, none of the bills payable are overdue.
24. Accounts payable
June 30 December 31
2021 2020
Within 1 year (including 1 year) 5,143,044 4,523,845
1-2 years (including 2 years) 14,492 7,454
2-3 years (including 3 years) 3,659 4,349
Over 3 years 23,285 21,358
5,184,480 4,557,006
There are no significant accounts payables aging over one year.
25. Contract liabilities
June 30 December 31
2021 2020
Discount for customers 1,015,799 633,882
Advances from customers 245,143 458,371
1,260,942 1,092,253
26. Employee Benefits Payable
June 30 December 31
2021 2020
Short-term employee benefits 488,340 660,144
Post-employment benefits* 63,467 122,216
Share based payment (See note XIII) 116,348 85,900
Other benefits within one year 219,150 306,506
887,305 1,174,766
Current maturities 28,931 34,068
916,236 1,208,834
* For further information regarding the termination benefits to employees during the periods see note XI.2 –
Commitments and contingent liabilities.
- 130 -
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
2021 2020
Corporate income tax 206,365 168,033
VAT 195,635 166,073
Others 24,631 24,882
426,631 358,988
28. Other Payables
June 30 December 31
2021 2020
Dividends payables 38,027 3,780
Other payables 1,524,596 1,071,941
1,562,623 1,075,721
(1) Other payables
June 30 December 31
2021 2020
Accrued expenses 613,152 541,250
Payables in respect of intangible assets 109,447 135,176
Financial institutions 13,870 111,863
Liability in respect of securitization transactions 303,121 22,002
Others 485,006 261,650
1,524,596 1,071,941
As at June 30, 2021, the Group did not have any significant other payables overdue.
29. Non-Current Liabilities Due Within One Year
Non-current liabilities due within one year by category are as follows:
June 30 December 31
2021 2020
Long-term loans due within one year 1,064,974 587,864
Lease liabilities due within one year 146,747 146,178
Debentures payable due within one year 533,049 538,539
1,744,770 1,272,581
- 131 -
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
2021 2020
Put options to holders of non-controlling interests 85,700 87,388
Provision in respect of returns 195,373 194,775
Provision in respect of claims 65,912 33,036
Others 381 398
347,366 315,597
31. Long-Term Loans
Long-term loans by category
June 30 December 31
2021 Interest range 2020 Interest range
Long term loans
Guaranteed loans 373,200 3.9%-4.1% - -
Unsecured loans 3,963,318 1.4%-4.1% 2,947,492 1.4%-4.7%
Total Long term loans 4,336,518 2,947,492
Less: Long term loans from banks due within 1
year (1,064,974) (559,864)
Long term loans, net 3,271,544 2,387,628
For the maturity analysis, see note VIII.C - Liquidity risk.
32. Debentures Payable
June 30 December 31
2021 2020
Debentures Series B 8,528,773 8,616,652
Current maturities (533,049) (538,539)
7,995,724 8,078,113
June 30
2021
First year (current maturities) 533,049
Second year 533,049
Third year 533,049
Fourth year 533,049
Fifth year and thereafter 6,396,577
8,528,773
- 132 -
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, 2021:
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 2021 period or premium rate effect period adjustment 2021
Debentures November
Series B 2,673,640 1,650,000 4.12.2006 2020-2036 3,043,742 3,611,389 - 104 (6) - (35,828) 3,575,659
Debentures November
Series B 843,846 513,527 16.1.2012 2020-2036 842,579 1,074,338 - 5,318 - - (10,677) 1,068,979
Debentures November
Series B 995,516 600,000 7.1.2013 2020-2036 1,120,339 1,335,327 - 2,329 19 - (13,264) 1,324,411
Debentures November
Series B 832,778 533,330 1.2.2015 2020-2036 1,047,439 1,255,064 - (1,456) 19 - (12,467) 1,241,160
Debentures November
Series B 418,172 266,665 1-6.2015 2020-2036 556,941 687,307 - (3,979) 6 - (6,813) 676,521
Debentures November
Series B 497,989 246,499 5.5.2020 2020-2036 692,896 653,227 - (4,710) 6 - (6,480) 642,043
8,616,652 - (2,394) 44 - (85,529) 8,528,773
Series B debentures amounts to NIS 3,810 million par value (3,510 million par value, net of self-purchased) linked to the CPI, bearing basic annual interest of 5.15%. The
principal is repaid in 17 equal payments in the years 2020 to 2036.
On November 30, 2020 the Company made the first principal repayment of its Series B debentures, for a total of NIS 219.4 million par value (approximately RMB 525
million).
- 133 -
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
2021 Interest range 2020 Interest range
Lease liabilities 541,278 1.1%-6.3% 525,368 1.3%-6.1%
Less: Lease liabilities due within one year (146,747) (146,178)
Long term lease liabilities, net 394,531 379,190
34. Long-Term Employee Benefits Payable
Post-employment benefit plans – defined benefit plan and early retirement
June 30 December 31
2021 2020
Total present value of obligation 672,093 594,165
Less: fair value of plan's assets (88,161) (92,634)
Net liability related to Post-employment benefits 583,932 501,531
Termination benefits 83,325 99,466
Total recognized liability for defined benefit plan, net (1) 667,257 600,997
Share based payment (See note XIII) 33,589 21,088
Other long-term employee benefits 76,351 57,738
Total long-term employee benefits, net 777,197 679,823
Including: Long-term employee benefits payable due within one year 28,931 34,068
748,266 645,755
(1) Movement in the net liability and assets in respect of defined benefit plans, early retirement and
their components
Defined benefit
obligation and early Fair value of plan's
retirement assets Total
2021 2020 2021 2020 2021 2020
Balance as at January 1, 2020 693,631 721,931 92,634 104,448 600,997 617,483
Expense/income recognized
in profit and loss:
Current service cost 7,595 7,975 - - 7,595 7,975
Interest costs 9,495 9,532 1,113 1,399 8,382 8,133
Losses (gains) on curtailments and settlements 9,369 57,120 - - 9,369 57,120
Changes in exchange rates (9,436) (2,209) (1,204) (260) (8,232) (1,949)
Actuarial gain (losses) due to early retirement (10,298) (1,822) - - (10,298) (1,822)
Included in other comprehensive income:
Actuarial gain (losses) as a result of changes in
actuarial assumptions 9,121 (55,882) 1,540 (8,449) 7,581 (47,433)
Foreign currency translation differences in respect of
foreign operations (6,859) 8,906 (967) 1,218 (5,892) 7,688
Additional movements:
Benefits paid (47,174) (50,156) (6,825) (8,153) (40,349) (42,003)
Contributions paid by the Group - - 1,870 2,362 (1,870) (2,362)
Cllasification 99,974 - - - 99,974 -
Balance as at June 30, 2021 755,418 695,395 88,161 92,565 667,257 602,830
- 134 -
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
2021 2020
Discount rate (%)* 0.4%-3.3% 0.6%-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, 2021
Increase of 1% Decrease of 1%
Change in defined benefit obligation (55,314) 68,136
35. Provisions
June 30 December 31
2021 2020
Liabilities in respect of contingencies* 85,122 77,138
Provision in respect of site restoration 73,733 79,706
Long-term liability in respect of business combinations 17,434 3,954
Other 2,410 2,453
178,699 163,251
* Liabilities in respect of contingencies includes obligations of pending litigations, where an outflow of
resources had been reliably estimated.
- 135 -
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
2021 2020
Put options to holders of non- controlling interests (1) 1,315,490 290,260
Long term loans – others - 171,770
1,315,490 462,030
Current maturities - (28,000)
1,315,490 434,030
(1) For further information see note VI.1 – Change in consolidation Scope.
37. Share Capital
Balance at Issuance of new Balance at
January 1, 2021 shares Buyback of shares June 30, 2021
Share capital 2,344,121 - (14,309) 2,329,812
* For further information of the changes see note XI.2 – Commitments and contingent liabilities.
38. Capital Reserve
Balance at Additions during Reductions during Balance at
January 1, 2021 the period the period June 30, 2021
Share premiums 12,652,610 - (46,048) 12,606,562
Other capital reserve 370,609 - (94,847) 275,762
13,023,219 - (140,895) 12,882,324
* For further information of the changes see note XI.2 – Commitments and contingent liabilities.
39. Other Comprehensive Income, net of tax
Attributable to shareholders of the company
Less: Less: Less:
Balance at transfer Income transfer to Balance at
January 1, Before tax to profit tax Net-of-tax retained June 30,
2021 amount or loss expenses amount earnings 2021
Items that will not be
reclassified to profit or loss 49,933 (7,581) - (610) (6,971) - 42,962
Re-measurement of changes
in liabilities under defined
benefit plans (5,258) (7,581) - (610) (6,971) - (12,229)
Changes in fair value of
other equity investment 55,191 - - - - - 55,191
Items that may be
reclassified to profit or loss (121,988) (296,048) (179,892) (221) (115,935) - (237,923)
Effective portion of gain or
loss of cash flow hedge (220,719) (35,816) (179,892) (221) 144,297 - (76,422)
Translation difference of
foreign financial statements 98,731 (260,232) - - (260,232) - (161,501)
(72,055) (303,629) (179,892) (831) (122,906) - (194,961)
- 136 -
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, 2021 period period June 30, 2021
Statutory surplus reserve 236,348 - - 236,348
Discretional surplus reserve 3,814 - - 3,814
240,162 - - 240,162
41. Retained Earnings
2021 2020
Retained earnings as at January 1 5,862,702 5,574,173
Net profits for the period attributable to shareholders of the Company 367,036 204,649
Dividends to non-controlling Interest (35,904) (26,828)
Dividend to the shareholders of the company (Note 1 & 2) (37,277) (29,359)
Retained earnings as at June 30 6,156,557 5,722,635
Note 1:
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 and was fully paid during the third quarter of 2020.
Note 2:
On March 29, 2021, after obtaining the approval of the 31st meeting of the Company's 8th Board of Directors,
the Company declared RMB 0.16 (before tax) per 10 shares as cash dividend to all shareholders, resulting in a
total cash dividend of 37,277 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 2020 Annual General Meeting of the
Company held on May 21, 2021 and was fully paid during the third quarter of 2021.
- 137 -
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
2021 2020
Income Cost of sales Income Cost of sales
Principal activities 15,037,841 10,694,295 14,100,337 9,894,415
Other businesses 25,939 12,415 20,703 10,055
15,063,780 10,706,710 14,121,040 9,904,470
43. Taxes and Surcharges
Six months ended June 30
2021 2020
Tax on turnover 12,693 11,087
Others 46,314 35,030
59,007 46,117
44. Selling and Distribution Expenses
Six months ended June 30
2021 2020
Salaries and related expense 885,153 804,371
Depreciation and amortization 536,516 712,432
Transportation and Commissions 481,263 384,906
Advertising and sales promotion 154,157 161,027
Travel expenses 38,180 42,169
Warehouse expenses 83,456 77,121
Registration 62,030 81,676
Professional services 51,735 45,113
Insurance 48,945 36,863
Others 165,001 122,890
2,506,436 2,468,568
- 138 -
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
2021 2020
Salaries and related expenses 265,783 263,523
Idleness expenses 96,638 87,755
Professional services 47,805 56,030
Depreciation and amortization 41,558 44,550
IT systems 49,294 46,259
Office rent, maintenance and expenses 19,315 17,759
Other 51,414 37,310
571,807 553,186
46. Research and development expenses
Six months ended June 30
2021 2020
Salaries and related expenses 109,731 91,566
Field trial 18,063 17,652
Professional services 22,169 31,068
Depreciation and amortization 22,194 13,942
Materials 27,714 3,251
Office rent, maintenance and expenses 4,946 3,631
Other 22,123 27,075
226,940 188,185
47. Financial expenses, net
Six months ended June 30
2021 2020
Interest expenses on debentures and loans 333,733 352,342
CPI expense (income) in respect of debentures 118,106 (63,213)
Loss in respect of sale of trade receivables 15,403 36,790
Interest expense in respect of post-employment benefits and early
retirement, net 12,967 8,133
Revaluation of put option, net 24,449 8,566
Interest income from customers, banks and others (31,363) (29,625)
Exchange rate differences, net (45,084) 507,673
Interest expense on lease liabilities 12,364 11,955
Other expenses 8,215 10,171
448,790 842,792
- 139 -
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
2021 2020
Investment income (expenses) from disposal of derivatives 524,513 37,737
Income from long-term equity investments accounted for using
the equity method 3,243 14,392
527,756 52,129
49. Gain (loss) from Changes in Fair Value
Six months ended June 30
2021 2020
Gain (loss) from changes in fair value of derivative financial (660,975) 267,775
instruments
Others (3,607) (2,265)
(664,582) 265,510
50. Credit impairment reversal (losses)
Six months ended June 30
2021 2020
Bills receivable and accounts receivable 9,937 5,780
Other receivables 114 (191)
10,051 5,589
51. Asset impairment reversal (losses)
Six months ended June 30
2021 2020
Inventories (29,403) (24,724)
Intangible asset - (21)
Other - (631)
(29,403) (25,376)
52. Gain from Disposal of Assets
Six months ended June 30 Included in
non-recurring
2021 2020 items
Gain from disposal of fixed assets 15,654 720 15,654
Gain (loss) from disposal of intangible assets (855) 6,974 (855)
14,799 7,694 14,799
- 140 -
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
2021 2020
Current year 204,125 211,779
Deferred tax expenses (income) (120,113) 17,036
Adjustments for previous years, net (32,931) 15,383
51,081 244,198
(1) Reconciliation between income tax expense and accounting profit is as follows:
Six months ended June 30
2021 2020
Profit before taxes 420,314 448,847
Statutory tax in china 25% 25%
Tax calculated according to statutory tax in china 105,079 112,212
Tax benefits from Approved Enterprises (48,293) (30,179)
Difference between measurement basis of income for financial
statement and for tax purposes (5,629) 138,291
Taxable income and temporary differences at other tax rate (32,963) (41,814)
Taxes in respect of prior years (32,931) 15,383
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 9,293 33,094
Non-deductible expenses and other differences 22,144 12,994
Neutralization of tax calculated in respect of the Company’s share
in results of equity accounted investees (1,051) (3,889)
Effect of change in tax rate in respect of deferred taxes 15,399 15,435
Creation and reversal of deferred taxes for tax losses and temporary
differences from previous years 20,033 (6,558)
Income tax expenses 51,081 244,198
54. Other comprehensive income
Details of the Other comprehensive income are set out in Note V.39
- 141 -
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
2021 2020
Derivatives transactions 19,943 404,824
Financial institutions 265,280 126,770
Interest income 24,203 26,314
Government subsidies 10,922 6,236
Others 43,060 66,371
363,408 630,515
(2) Cash paid relating to other operating activities
Six months ended June 30
2021 2020
Transportation, Commissions and Warehouse 507,772 389,972
Advertising and sales promotion 146,744 145,267
Professional services 117,566 134,480
Financial institutions 211,211 136,897
IT and Communication 87,785 94,321
Registration and Field trials 79,988 81,576
Derivatives transactions 168,475 90,297
Travel 35,094 51,360
Insurance 41,736 36,663
Others 267,722 297,735
Net cash flow from operating activities 1,664,093 1,458,568
(3) Cash received relating to other investing activities
Six months ended June 30
2021 2020
Investment grant 6,754 -
6,754 -
(4) Cash paid relating to other investing activities
Six months ended June 30
2021 2020
Increase in securitization facility - 31,483
Incraese in short and long term investments 85,108 15,357
85,108 46,840
- 142 -
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
2021 2020
Cash received in respect of hedging transactions on debentures 396,096 -
Deposit for issuing bills payables 16,212 4,449
412,308 4,449
(6) Cash paid relating to other financing activities
Six months ended June 30
2021 2020
Repayment of lease liability 85,595 81,915
Payment in respect of hedging transactions on debentures - 154,335
Repayment of loan from others 171,770 -
Deposit for issuing bills payable 5,986 13,036
263,351 249,286
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
2021 2020
Net profit 369,233 204,649
Add: Impairment provisions for assets 29,403 25,376
Credit impairment gain (10,051) (5,589)
Depreciation of fixed assets and investment property 365,261 391,110
Depreciation of right-of-use asset 79,685 78,568
Amortization of intangible asset 502,745 673,105
Gains on disposal of fixed assets, intangible assets, and other long-
term assets, net (14,799) (7,694)
Losses (gains) from changes in fair value 664,582 (265,510)
Financial expenses 340,716 245,591
Investment income, net (34,729) (245,248)
Increase in deferred tax assets (159,673) (43,845)
Increase in deferred tax liabilities 39,560 60,881
Increase in inventories, net (748,037) (717,127)
Increase in operating receivables (1,049,194) (701,359)
Increase in operating payables 1,069,229 1,525,228
Others 47,362 16,395
Net cash flow from operating activities 1,491,293 1,234,531
- 143 -
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
2021 2020
Closing balance of cash 4,615,208 6,256,107
Less: Opening balance of cash 3,835,071 4,319,907
Increase in cash and cash equivalents 780,137 1,936,200
(2) Information on acquisition or disposal of subsidiaries and other business units
Six months
ended June 30
2021
Cash paid for business combination not under common control 697,909
Less: cash and cash equivalents of the acquirees at the date of acquisition (42,870)
Net cash paid to acquire subsidiaries 655,039
(3) Details of cash and cash equivalents
June 30 January 1
2021 2021
Cash on hand 1,598 4,590
Bank deposits available on demand without restrictions 4,613,610 3,830,481
4,615,208 3,835,071
57. Assets with Restricted Ownership or Right of Use
June 30
2021 Reason
Cash 18,232 Pledged
Other non-current assets 108,660 Guarantees
126,892
- 144 -
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, 2021
Foreign currency at
the end of the RMB at the end of
period Exchange rate the period
Cash and bank balances
BRL 350,009 1.2915 452,020
USD 46,718 6.4601 301,801
EUR 28,881 7.6784 221,762
PLN 128,520 1.6985 218,287
ILS 80,724 1.9816 159,965
ZAR 133,888 0.4503 60,286
GBP 6,548 8.9524 58,619
ARS 371,489 0.0675 25,072
Other 254,007
Total 1,751,819
Bills and Accounts receivable
BRL 1,253,654 1.2915 1,619,034
EUR 125,571 7.6784 964,183
RON 220,340 1.5595 343,613
TRY 386,911 0.7421 287,126
USD 44,018 6.4601 284,361
HUF 8,064,722 0.0218 175,986
CAD 22,167 5.2101 115,494
ILS 75,368 1.9816 149,351
RUB 1,278,240 0.0893 114,098
ZAR 193,615 0.4503 87,179
GBP 7,576 8.9524 67,825
Other 436,021
Total 4,644,271
Other receivables
EUR 46,041 7.6784 353,525
ILS 98,628 1.9816 195,444
GBP 11,406 8.9524 102,108
Other 125,983
Total 777,060
Other current assets
ILS 96,153 1.9816 190,541
BRL 85,017 1.2915 109,796
ARS 404,991 0.0675 27,333
EUR 3,174 7.6784 24,374
USD 2,963 6.4601 19,141
Other 70,452
Total 441,637
- 145 -
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, 2021
Foreign currency at
the end of the RMB at the end of
period Exchange rate the period
Long-term receivables
BRL 76,193 1.2915 98,400
Total 98,400
Other non-current assets
BRL 67,795 1.2915 87,554
Other 3,728
Total 91,282
Short-term loans
TRY 203,536 0.7421 151,044
UAH 391,013 0.2377 92,948
EUR 653 7.6784 5,013
Other 17,842
Total 266,847
Bills and Accounts payable
ILS 322,602 1.9816 639,279
EUR 23,718 7.6784 182,120
BRL 114,950 1.2915 148,453
USD 9,668 6.4601 62,457
Other 138,100
Total 1,170,409
Other payables
ILS 102,637 1.9816 203,390
BRL 42,153 1.2915 54,439
PLN 24,152 1.6985 41,022
ILS CPI 18,149 1.9816 35,965
OTHER 42,354
TOTAL 377,170
Contract liabilities
EUR 49,527 7.6784 380,287
CAD 20,448 5.2101 106,534
BRL 60,142 1.2915 77,670
TRY 50,891 0.7421 37,766
Other 82,850
Total 685,107
- 146 -
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, 2021
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 288,883 1.9816 572,461
EUR 24,429 7.6784 187,575
Other 21,313
Total 781,349
Other current liabilities
EUR 3,198 7.6784 24,555
ILS 4,169 1.9816 8,262
Other 730
Total 33,547
Long-term loan
EUR 33,659 7.6784 258,449
Total 258,449
Debentures payable
ILS CPI 4,034,911 1.9816 7,995,724
Total 7,995,724
Provision and Long-term payables
BRL 50,017 1.2915 64,595
EUR 374 7.6784 2,874
Total 67,469
Other non-current liabilities
USD 11,784 6.4601 76,126
EUR 7,599 7.6784 58,349
ILS CPI 18,840 1.9816 37,334
GBP 1,055 8.9524 9,445
Other 38,178
Total 219,432
- 147 -
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.
- 148 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VI. Change in consolidation Scope
1. Business combinations involving enterprises not under common control
(1) Business combinations involving enterprises not under common control during current period
Cost of equity From acquisition date
Name of investment– Proportion Basis of till period end
the Acquisition cash of equity Acquisition acquisition date Net
Revenue
Company date consideration investment method determination profit
Adama 1.6.2021 664,000 51% Stock Obtained control 108,691 364
Huifeng purchase
(Jiangsu)
Co. Ltd.
(2) Acquisition cost and goodwill
Adama Huifeng
(Jiangsu) Co.
Acquisition costs Ltd.
Total acquisition cost in cash 664,000
Contingent consideration 13,140
Put option 826,730
Other 254,000
Less: share of the fair value of the identifiable
net assets acquired 1,723,861
Goodwill 34,009
In June 2021, the Company acquired a 51% stake in ADAMA Huifeng (Jiangsu) Co., Ltd (hereinafter –
"ADAMA Huifeng"), a wholly owned subsidiary of Jiangsu Huifeng Bio Agriculture Co., Ltd (hereinafter
– "Jiangsu Huifeng"). ADAMA Huifeng was established to incorporate Jiangsu Huifeng's key crop
protection synthesis and formulation facilities. This acquisition follows the acquisition of a 51% stake in
Adama Huifeng (Shanghai) Agricultural Technology Co. Ltd, a wholly owned subsidiary of Jiangsu
Huifeng focused on the sale and distribution of key formulated crop protection products in China, which
took place on December 31st, 2020.
ADAMA Huifeng was purchased for a total cash consideration of approximately RMB 918 million RMB
(including RMB 254 million RMB held back to secure the post-Cacquisition closing obligations of Jiangsu
Huifeng). As of June 1st, 2021 (hereinafter: “date of the business combination”), cControl has been
achieved acquired over ADAMA Huifeng as of June 1st, 2021 (hereinafter: “date of the business
combination”), and from this date forward, the Group consolidates ADAMA Huifeng's results in its
consolidated financial statements.
The initial accounting treatment for the acquisition of the operations, as presented in these financial
statements, is accounted for using "provisional amounts" (as this term is defined in ASBE 20 Business
combination). Until the date of approval of the financial statements, the Group has not yet completed the
initial treatment of Huifeng and Adama Huifeng (Shanghai) Agricultural Technology Co. Ltd business
combination, including the estimation of the fair value of the acquired assets and the goodwill. Therefore,
the fair value data is still provisional, based on the information available to the company's management at
the time of the acquisition, and may be subject to changes affecting the data as included in these financial
statements.
- 149 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VI. Change in consolidation Scope - (cont'd)
1. Business combinations involving enterprises not under common control - (cont'd)
(3) Identifiable assets and liabilities of the acquiree, at acquisition date
Adama Huifeng (Jiangsu) Co. Ltd.
Fair value at Book value at
acquisition date acquisition date
Assets:
Cash and bank balances 42,870 42,870
Bills and Accounts receivable 102,679 102,679
Prepayments 10,221 10,221
Inventories 332,473 332,473
Fixed assets 1,177,886 1,177,886
Intangible assets 131,192 131,192
Deferred tax assets 18,929 18,929
Other assets 101,229 101,229
Liabilities:
Bills and Accounts payable 179,461 179,461
Employee benefits payable 11,198 11,198
Deferred tax liabilities - -
Other Liabilities 2,959 2,959
Net assets 1,723,861 1,723,861
Less: Non-controlling interests - -
Net assets acquired 1,723,861 1,723,861
- 150 -
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
2021 2020
Joint ventures 15,847 14,081
Associates - -
15,847 14,081
3. Summarized financial information of joint ventures and associates
June 30, 2021 and six June 30, 2020 and six
months then ended months then ended
Joint ventures:
Total carrying amount 15,847 93,419
The Group's share of the following items:
Net profit 3,244 14,392
Other comprehensive income 239 (2,427)
Total comprehensive income 3,483 11,965
Associates:
Total carrying amount - 41,001
The Group's share of the following items:
Net profit - -
Other comprehensive income - 598
Total comprehensive income
- 598
- 151 -
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 2021, 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.
- 152 -
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, 2021
Past due by less than 90 days 527,612
Past due by more than 90 days 672,583
1,200,195
- 153 -
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 9,098,035 thousand relate to
category of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 536,418
thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has credit
risk exposures for other receivables amounted to RMB 16,021 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.
- 154 -
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, 2021
Third- Fifth year Contractual Carrying
First year Second year Fourth year and above Cash flow amount
Non-derivative financial
liabilities
Short-term loans 1,228,852 - - - 1,228,852 1,209,421
Bills payables 198,428 - - - 198,428 198,428
Accounts payables 5,184,480 - - - 5,184,480 5,184,480
Other payables 1,562,623 - - - 1,562,623 1,562,623
Other current liabilities 85,700 - - - 85,700 85,700
Debentures payable 919,886 928,471 1,774,822 8,349,492 11,972,671 8,528,773
Long-term loans 1,182,370 825,806 1,533,310 1,181,959 4,723,445 4,336,518
Long-term payables 3,170 8,616 16,967 86,383 115,136 99,815
Lease Liabilities 161,457 112,354 127,245 235,865 636,921 541,278
Long-term liability in respect of
business combinations - 969 2,471 34,133 37,573 17,434
Other non-current liabilities - 47,368 283,865 1,749,835 2,081,068 1,315,490
Derivative financial liabilities
Foreign currency derivatives 798,931 - - - 798,931 798,931
CPI/shekel forward transactions 784 - - - 784 784
11,326,681 1,923,584 3,738,680 11,637,667 28,626,612 23,879,675
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.
- 155 -
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, 2021
Total assets Total liabilities
In US Dollar 1,207,365 886,469
In Euro 1,717,704 1,092,291
In Brazilian real 2,386,733 281,027
CPI-linked NIS 1,195 8,632,213
In New Israeli Shekel 695,301 871,687
Denominated in or linked to other foreign currency 4,497,907 967,887
10,506,205 12,731,574
(B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows:
June 30, 2021
Currency/ Currency/ Average USD RMB
linkage linkage expiration thousands thousands
receivable payable date Par value Par value Fair value
Forward foreign currency USD EUR 20/11/2021 229,814 1,484,622 (185,762)
Contracts and call options USD PLN 01/08/2021 17,950 115,960 (2,632)
USD BRL 17/09/2021 440,092 2,843,037 (304,481)
USD GBP 31/07/2021 39,154 252,936 197
USD ZAR 17/08/2021 30,422 196,528 (7,830)
ILS USD 19/07/2021 1,595,647 10,308,039 (21,344)
USD OTHER 1,495,697 9,662,350 40,621
CPI forward contracts CPI ILS 07/01/2022 774,540 5,003,605 58,256
- 156 -
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 December 31, 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, 2021
Decrease of 5% Increase of 5%
Equity Profit (loss) Equity Profit (loss)
New Israeli shekel 96,283 69,176 (41,178) (16,956)
British pound (1,059) 1,729 1,112 (1,464)
Euro (29,229) 16,828 32,953 (15,950)
Brazilian real (54,973) 3,880 39,582 (13,504)
Polish zloty (1,557) 199 1,530 (60)
South African Rand (3,785) (553) 2,786 (141)
Chinese Yuan Renminbi 19,859 (814) (10,975) 2,426
CPI-linked NIS 316,824 316,824 (316,824) (316,824)
(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.
- 157 -
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, 2021
Fixed-rate instruments – unlinked to the CPI
Financial assets
Cash at banks 891
Other non-current assets 45,738
Financial liabilities
Long-term loans 2,651,614
Long-term payables 21,997
(2,626,982)
Fixed-rate instruments – linked to the CPI
Financial liabilities
Debentures payable (1) 8,528,773
Variable-rate instruments
Financial assets
Cash at banks 1,033,900
Financial assets at fair value through profit or loss 2,494
Other current assets 80,267
Other non-current assets 24,006
Financial liabilities
Short-term loans and credit from banks 1,209,421
Long-term loans (1) 1,684,904
Long-term payables 72,579
(1,826,237)
(1) Including 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, 2021 1,915 (1,931) 1,915 (1,931)
158
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, 2021
Carrying amount Fair value
Financial assets
Other non-current assets (a – Level 2) 66,642 63,341
Financial liabilities
Long-term loans and others (b – Level 2) 4,980,021 5,058,332
Debentures (c – Level 1) 8,528,773 11,395,230
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, 2021
%
U.S. dollar interest (1.16) – 1.82
Chinese Yuan Renminbi 2.06 – 3.07
Euro (0.65) – (0.07)
159
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
2021
Forward contracts and options used for hedging the cash flow (Level 2) (106,779)
Forward contracts and options used for economic hedging (Level 2) (316,196)
Other equity investment (Level 2) 151,537
Receivables financing (Level 2) 99,066
Other non-current assets (Level 2) 38,186
Other (Level 2) 2,494
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.
- 160 -
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 11,144,545 73.33% 73.33%
The Company’s ultimate controlling shareholder is ChemChina.
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
Innovaroma SA Joint venture of the Group
- 161 -
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
Bluestar Engineering co.,Ltd . Common control
Bluestar (Beijing) Chemical Machinery Co.,Ltd Common control
Changsha Huaxing Construction Supervision Co., Ltd. Common control
ChemChina Asset Management co.,Ltd .(Headquarter) Common control
ChemChina Information Center co.,Ltd . Common control
China Bluestar Chengrand Research Institute Chemical Industry Common control
Elkem Silicones Brasil Ltda Common control
Hangzhou (Torch) Xidoumen Membrane Industry co.,Ltd Common control
Jiangsu Ruixiang Chemical co., Ltd . Common control
Jiangsu Youjia Plant Protection Co., Ltd. Common control
Jiangsu Youshi Chemical co., Ltd . Common control
Jiangsu Huaihe Chemical co.,Ltd .(H&H) Common control
Jingzhou Sanonda Holdings Co.,Ltd. Common control
Jiangsu Yangnong Chemical Co.,Ltd. Common control
OOO Syngenta Common control
PT Syngenta Indonesia Common control
PT Syngenta Seed Indonesia Common control
Shandong Dacheng Biochemical Co., Ltd. Common control
Sinochem (Hainan) Crop Technology Co. Ltd Common control
Sinochem Agricultural Ecological Technology (Hubei) Co. Ltd Common control
Sinochem Agriculture (Xinjiang) Biotechnology Co. Ltd Common control
Sinochem Agro Co.,Ltd. Common control
Sinochem Chongqing Fuling Chemical Co. Ltd Common control
Sinochem Fertilizer Co., Ltd Common control
Sinochem Fertilizer Co., Ltd Fujian Branch Common control
Sinochem Fertilizer Co., Ltd Guangxi Branch Common control
Sinochem Fertilizer Co., Ltd Hebei Branch Common control
Sinochem Fertilizer Co., Ltd Jiangsu Branch Common control
Sinochem Fertilizer Co., Ltd Jilin Branch Common control
Sinochem Fertilizer Co., Ltd Nothwest Branch Common control
Sinochem Fertilizer Co., Ltd Shandong Branch Common control
Sinochem Fertilizer Co., Ltd Southwest Branch Common control
Sinochem International Crop Care (Overseas) Pte. Ltd. Common control
Sinochem Modern Agriculture Anhui Co. Ltd Common control
Sinochem Modern Agriculture Sichuan Co. Ltd Common control
- 162 -
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
Sinochem Modern Agriculture Xinjiang Co. Ltd Common control
Sinochem Modern Agriculture(Jiangsu) Co. Ltd Common control
Sinochem Modern Agriculture(Shandong) Co. Ltd Common control
Sinochem Modern Agriculture(Shanxi) Co. Ltd Common control
Syngenta AG Common control
Syngenta Agro AG Common control
Syngenta Agro GmbH Common control
Syngenta Agro S.A. Common control
Syngenta Agro SRL Common control
Syngenta Agro,S.A.deC.V. Common control
Syngenta AustraliaPty Limited Common control
Syngenta Canada Inc. Common control
Syngenta Coml Agr Ltda Common control
Syngenta Crop Protection AG Common control
Syngenta Crop Protection B.V. Common control
Syngenta Crop Protection Limited Common control
Syngenta Crop Protection S.A. Common control
Syngenta Crop Protection, LLC Common control
Syngenta Czech s.r.o. Common control
Syngenta France S.A.S. Common control
Syngenta Hellas AEBE Common control
Syngenta Hungary Kft. Common control
Syngenta India Limited Common control
Syngenta Italia S.p.A Common control
Syngenta Korea Ltd. Common control
Syngenta Limited Liability Company Common control
Syngenta Polska Sp.z.o.o. Common control
Syngenta Protecao Cultivos Ltda Common control
Syngenta S.A.(Colombia) Common control
Syngenta Slovakia s.r.o Common control
Syngenta South Africa (Pty) Ltd. Common control
Syngenta (China) Investment Co.Ltd Common control
Syngenta Espana S.A Common control
Syngenta Tarim Sanayive Ticaret A.S. Common control
Zhonglan International Chemical co.,Ltd Common control
Zhonglan Lianhai Design Institute co.,Ltd. Common control
Zhonglan Lianhai (Shanghai) Chemical Engineering Technology Co.,Ltd. Common control
Zhonglan Chenguang Chemical Co., Ltd Common control
- 163 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
5. Transactions and balances with related parties
(1) Transactions with related parties
Six months ended June 30
Type of purchase Related Party Relationship 2021 2020
Summary of purchase of goods/services:
Purchase of goods/services received Common control under
ChemChina 875,206 618,225
Joint venture - 1,891
Purchase of fixed assets and other assets Common control under 42,917 163,931
ChemChina
Summary of Sales of goods:
Sale of goods/ Service rendered Common control under
ChemChina 550,260 408,470
Joint venture 45,515 96,378
(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 21/04/2021 20/04/2028 N
73,200 01/06/2021 31/05/2028 N
(3) Remuneration of key management personnel and directors
Periods ended June 30
2021 2020
Remuneration of key management personnel and directors 34,203 22,043
(4) Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
2021 2020
Expected Expected
Book credit Book credit
Items Related Party Relationship Balance losses Balance losses
Trade receivables Common control under 144,395 - 155,050 -
ChemChina
Joint venture 29,484 - 21,630 -
Associates - - 327 -
Other receivables Common control under 501 - 681 -
ChemChina
Prepayments Common control under 17,879 - 17,065 -
ChemChina
Associates - - 350 -
- 164 -
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 2021 2020
Trade payables Common control under 490,713 357,148
ChemChina
Associates - 15,907
Other payables Common control under 36,520 19,354
ChemChina
Contract liability Common control under - 2,355
ChemChina
Associates - 340
Other non-current Common control under
liabilities due within ChemChina - 28,000
one year
Other non-current Common control under - 143,770
liabilities* ChemChina
* The liability is a loan from a related party, the interest expense for the six months ended June 30, 2021 is
2,865 thousand RMB (six months ended June 30, 2020: 1,048 thousand RMB).
(5) Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 397,910 thousand RMB
(31.12.20: 370,141 thousand RMB) Interest income of bank deposit for the current period was 810 thousand
RMB (amount for six months ended June 30, 2020 is 670 thousand RMB).
The closing balance of a loan received from ChemChina Finance corporation was 100,000 thousand RMB
(31.12.20: 0 thousand RMB). Interest expenses in the current period was 1,471 thousand RMB (amount for
six months ended June 30, 2021 is 370 thousand RMB).
- 165 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies
1. Significant commitments
June 30 December 31
2021 2020
Investment in Fixed assets 590,714 571,367
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 in 2017, 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. The current D&O Liability Insurance was
renewed for an additional one-year term commencing November 15, 2020.
Environmental protection
The manufacturing processes of the Company and the products it produces and market, 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, there are no material
environmental issues relating to the Company, there are no material administrative penalties or investigations
related to environment, health and safety imposed or initiated by regulatory authorities, and none of the material
permits and licenses regarding environmental issues required for the Company’s day to day operations 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 Company and its subsidiary, Anpon, began to execute a reduction plan to reduce the
number of employees.
Claims against subsidiaries
In the ordinary course of business, legal claims are filed against subsidiaries, including claims for patent
infringement. The Company, inter alia like other companies operating in the crop protection market, is exposed
to class actions for large amounts, which it must defend against while incurring considerable costs, even if these
claims have no basis. In the opinion of the Company’s management, which is based, inter alia, on opinions of
its legal advisors regarding the prospects of the proceedings, the financial statements include adequate
provisions where necessary to cover the exposure resulting from the claims.
- 166 -
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 (cont’d)
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
against the Company for product liability damages, for which the Company has adequate insurance coverage,
such that the Company’s exposure in respect thereof is limited to the deductible amount or the amount thereof
does not exceed the deductible amount.
In June 2021, a lawsuit was filed against a subsidiary of the Company, alleging a patent owned by a large
competitor of the Company, has been infringed by such subsidiary. Among the claims, the plaintiff seeks a
preliminary and permanent injunction to prevent the subsidiary from manufacturing, using or commercializing
any product that infringed the plaintiff’s patent, and seeks actual damages and profits loss. The preliminary
injunction motion as well as an ex-parte appeal, were rejected by the court at this time. Prior to such claims, the
subsidiary filed lawsuits against the said plaintiff and the local Patent and Trademark Office seeking to declare
the said patent is invalid and the subsidiary does not infringe it. All these lawsuits are pending as of the
Company’s financial results. At this preliminary stage, the claim filed by the plaintiff is not expected to have a
material effect on the Company.
Repurchase of the Company’s B-shares
The 3rd Interim Shareholders Meeting held on September 7, 2020 approved a repurchase plan for part of the
Company’s domestically listed foreign shares (B share) (the “Repurchase Plan”).
According to the Repurchase Plan, during the period beginning at September 16, 2020 (the date on which the
Company commenced repurchasing of the B-shares) and ending on December 6, 2020 (the end date of the
Repurchase Plan), the Company repurchased 14,309,536 B-Shares, which account for 0.61% of the Company’s
total share capital. The amount paid for the repurchased shares amounted to RMB 60,399,296 (HKD
69,747,209), including transaction fees.
Within three years following the disclosure of the announcement on the results of the B-shares repurchase, the
B-Shares that have been repurchased will be cancelled and the registered capital will be reduced accordingly
following approval of the shareholders.
During the 2020 Annual General Meeting of the Company, held on May 21 2021, the cancellation of the
repurchased shares and subsequent the decrease of the Company's registered capital was approved and on June
17, 2021, the Company completed the cancellation at the Shenzhen Branch of China Securities Depository and
Clearing Co., Ltd,.
- 167 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments
1. In February 2019, the remuneration committee and Solutions Board of Directors (as well as the General
Meeting with respect to theformer 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"), out of which 75,814,897 phantom warrants were
granted at the grant date of February 21, 2019. During 2019, 1,206,081 additional Phantom warrants were
granted.
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 of 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 and the Company’s share price at the end of the
reporting period.
Statement of share based payments in the period Phantom warrants
Total number of Phantom warrants at the beginning of the period 60,047,067
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 (785,438)
Total number of Phantom warrants at the end of the period 59,261,629
The exercise prices and the remainder of the contractual period for Phantom RMB 9.91 – 10.85
warrants outstanding at the end of period 4.5 years
The parameters used in implementing the model at the grant date 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) 111,396
Expenses arising from cash-settled share-based payments in current period
(in thousands RMB) 32,418
XIII. Share-based Payments - (cont’d)
- 168 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
2. In September 2019, the remuneration committee and Solutions 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. During 2019, an additional 90,130 Alternative Phantom Warrants were granted.
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 20,739,142
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 (398,150)
Total number of Phantom warrants at the end of the period 20,340,992
The range of the exercise prices and the remainder of the contractual period RMB 9.40 – 9.43
for Phantom warrants outstanding at the end of period 5.25 years
- 169 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments - (cont’d)
The parameters used in implementing the model at the grant date 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) 38,541
Expenses (income) arising from cash-settled share-based payments in
current period related to the alternative plan (in thousands RMB) 11,713
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
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.
- 170 -
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
2021 2020 2021 2020 2021 2020 2021 2020
Operating income from external
customers 13,653,666 12,834,364 1,410,114 1,286,676 - - 15,063,780 14,121,040
Inter-segment operating income - - 977 665 (977) (665) - -
Interest in the profit or loss of
associates and joint ventures - 11,118 3,243 3,274 - - 3,243 14,392
Segment's results 840,793 927,549 168,380 60,843 - - 1,009,173 988,392
Financial expenses, net 448,790 842,792
Gain (loss) from changes in fair
value (664,582) 265,510
Investment income 524,513 37,737
Profit before tax 420,314 448,847
Income tax expense (51,081) (244,198)
Net profit 369,233 204,649
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
2021 2020 2021 2020 2021 2020 2021 2020
Total assets 39,158,700 36,454,726 2,144,227 2,135,310 8,147,079 8,210,998 49,450,006 46,801,034
Total liabilities 5,537,583 5,037,016 239,856 268,972 22,240,215 20,061,131 28,017,654 25,367,119
- 171 -
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
2021 2020
Europe 3,915,671 4,275,020
North America 2,880,327 2,622,636
Latin America 2,895,965 2,669,490
Asia Pacific 3,124,576 2,456,818
Africa, Middle East and India 2,247,241 2,097,076
15,063,780 14,121,040
Specified non-current assets
June 30 December 31
2021 2020
Europe 992,265 1,039,248
Latin America 2,165,484 2,122,291
North America 1,148,709 1,169,812
Asia Pacific 5,117,155 3,550,785
Africa, Middle East and India 10,523,975 10,489,849
19,947,588 18,371,985
The dependency on major customers
No single customer's proportion of the total amount of sales is over 10%.
- 172 -
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 the Amount for the
current period prior period
Net profit from continuing operations attributable to ordinary
shareholders 367,036 204,649
Amount for the Amount for the
Shares current period prior period
Number of ordinary shares outstanding at the beginning of the
year 2,329,811,766 2,446,553,582
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 2,329,811,766 2,446,553,582
Amount for Amount for
the current the prior
period period
Calculated based on net profit attributable to ordinary shareholders
Basic earnings per share 0.16 0.08
Diluted earnings per share N/A N/A
Calculated based on net profit from continuing operations
attributable to ordinary shareholders:
Basic earnings per share 0.16 0.08
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
- 173 -
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
2021 2020
Deposits in banks 436,804 1,022,758
Other cash and bank 6,465 12,054
443,269 1,034,812
As at June 30, 2021, restricted cash and bank balances was 6,465 thousand RMB (as at December 31, 2020:
12,054 thousand RMB).
2. Accounts receivable
a. By category
June 30, 2021
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 13,879 10 13,879 100 -
Account receivables assessed
collectively for impairment 121,324 90 23 - 121,301
135,203 100 13,902 10 121,301
December 31, 2020
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 13,879 3 13,879 100 -
Account receivables assessed
collectively for impairment 387,132 97 15 - 387,117
401,011 100 13,894 3 387,117
b. Aging analysis
June 30, 2021
Within 1 year (inclusive) 121,310
Over 1 year but within 2 years 15
Over 2 years but within 3 years 1
Over 3 years but within 4 years 1
Over 4 years but within 5 years 1,699
Over 5 years 12,177
135,203
XV. Notes to major items in the Company's financial statements - (cont'd)
- 174 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
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, 2021
Balance as of January 1 13,894
Addition during the year, net 23
Write back during the year (15)
Write-off during the year -
Exchange rate effect -
Balance as of June 30 13,902
d. Five largest accounts receivable at June 30, 2021:
Proportion of Allowance of
Accounts expected
Name Closing balance receivable (%) credit losses
Party 1 (1) 56,971 42 -
Party 2 (1) 25,048 18 -
Party 3 7,764 6 2
Party 4 6,868 5 -
Party 5 5,098 4 1
101,749 75 3
(1) The amounts are intergroup balances with Solutions' subsidiaries.
3. Receivable financing
June 30 December 31
2021 2020
Bank acceptance draft 22,031 25,060
22,031 25,060
As at June 30, 2021, bank acceptance endorsed but not yet due amounts to 153,514 thousand RMB.
- 175 -
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
2021 2020
Other receivables 26,995 27,138
26,995 27,138
(1) Other receivables
a. Other receivables by categories
June 30 December 31
2021 2020
Other 32,561 32,819
Provision for expected credit losses (5,566) (5,681)
26,995 27,138
b. Other receivables by aging
June 30, 2021
Within 1 year (inclusive) 720
Over 1 year but within 2 years 13,283
Over 2 years but within 3 years 13,329
Over 3 years but within 4 years 265
Over 4 years but within 5 years -
Over 5 years 4,964
32,561
- 176 -
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:
Year ended June 30, 2021
Balance as of January 1, 2021 5,681
Addition during the period -
Written back during the period (115)
Write-off during the period -
Balance as of June 30, 2021 5,566
d. Five largest other receivables at June 30 2021:
Proportion of other
Name Closing balance receivables (%) Credit loss provision
Party 1 13,322 41 -
Party 2 * 11,611 36 -
Party 3 3,125 9 3,125
Party 4 1,753 5 -
Party 5 548 2 548
30,359 93 3,673
* The amount are intergroup balances with Anpon.
- 177 -
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, 2021 December 31, 2020
Impairment Impairment
Amount balance loss Book value Amount balance loss Book value
Invest in
subsidiaries 17,511,352 - 17,511,352 16,663,212 - 16,663,212
17,511,352 - 17,511,352 16,663,212 - 16,663,212
Investments in subsidiaries
Current Balance
provision provision
Opening Closing Impairment Impairment
Invested unit balance Increase Decrease balance loss loss
ADAMA Agricultural Solutions Ltd. 15,890,213 - - 15,890,213 - -
Adama Anpon (Jiangsu) Ltd. 450,449 - - 450,449 - -
ADAMA Hiufeng (Jiangsu) Co. Ltd. - 848,140 - 848,140 - -
Hubei Sanonda Foreign Trade Co. -
Ltd. 11,993 - 11,993 - -
Adama Huifeng (shanghai)
Agricultural Technology Co., Ltd 310,557 - - 310,557 - -
16,663,212 848,140 - 17,511,352 - -
6. Operating Income and operating costs
Six months ended June 30, 2021 Six months ended June 30, 2020
Operating Operating
Revenue costs Revenue costs
Main operations 591,292 467,717 653,055 526,904
Other operations 25,805 15,220 20,591 10,410
617,097 482,937 673,646 537,314
- 178 -
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, 2021 June 30, 2020
Interest income 9,971 8,507
Government subsidies 9,976 4,992
Other 1,256 1,564
21,203 15,063
(2) Other cash paid relevant to operating activities
Six months ended Six months ended
June 30, 2021 June 30, 2020
Professional services 48,027 56,487
Transportation and Commissions 11,122 13,067
Other 8,162 21,253
67,311 90,807
(3) Other cash received relevant to financing activities
Six months ended Six months ended
June 30, 2021 June 30, 2020
Deposit for issuing bills payables 5,880 4,449
(4) Other cash paid relevant to financing activities:
Six months ended Six months ended
June 30, 2021 June 30, 2020
Other 291 200
291 200
- 179 -
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
2021 2020
Net profit (28,205) (42,764)
Add: Assets impairment loss 1,068 2,864
Credit impairment loss (107) 674
Depreciation of fixed assets 53,021 76,057
Depreciation of-right-of use assets 28 233
Amortization of intangible assets 5,099 2,222
Loss (gain) on disposal of fixed assets, intangible assets and
other long-term assets (15,239) (101)
Financial expenses 13,438 3,518
Decrease (increase) in deferred income tax assets (228) 27,873
Decrease (increase) in inventory 88,421 11,596
Increase in accounts receivable from operating activities 227,772 (102,463)
Increase in payables from operating activities (99,852) (41,958)
Net cash flows generated from operating activities 245,216 (62,249)
(2) Net increase in cash and cash equivalents
Six months ended June 30
2021 2020
Closing balance of cash 436,804 1,423,296
Less: Opening balance of cash 1,022,758 1,395,994
Net increase in cash and cash equivalents (585,954) 27,302
- 180 -
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 11,144,545 73.33% 73.33%
The ultimate controlling shareholder is ChemChina.
(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
2021 2020
Summary of Purchase of goods/services Related Party Relationship
received:
Purchase of goods/services received Common control
under ChemChina 40 2,063
Subsidiary 58,038 45,630
Purchase of fixed assets and other assets Common control
under ChemChina 39,580 155,616
Subsidiary - 136
Summary of Sales of goods:
Sale of goods Associated enterprises
under ChemChina 1,082 -
Subsidiary 328,762 450,283
Sale of raw materials Subsidiary 3,396 -
- 181 -
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 30,000 21/07/2020 21/01/2021 Y
18,000 19/08/2020 19/02/2021 Y
30,000 01/09/2020 17/08/2021 Y
50,000 20/07/2020 14/07/2021 N
30,000 19/05/2020 18/05/2021 Y
20,000 22/12/2020 16/12/2021 N
50,000 16/12/2020 15/12/2021 N
50,000 14/12/2020 13/12/2021 N
50,000 29/06/2020 27/06/2021 Y
20,438 30/10/2020 30/04/2021 Y
14,004 17/12/2020 17/06/2021 Y
40,500 15/01/2021 14/01/2022 N
59,500 27/04/2021 26/04/2022 N
40,000 01/02/2021 03/01/2022 N
30,000 26/02/2021 24/02/2022 N
30,000 25/06/2021 24/06/2022 N
60,000 21/05/2021 18/05/2022 N
40,000 18/03/2021 17/03/2022 N
30,000 20/01/2021 20/01/2022 N
70,000 27/01/2021 27/01/2022 N
14,534 29/01/2021 29/07/2021 N
The Company 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 21/04/2021 20/04/2028 N
73,200 01/06/2021 31/05/2028 N
- 182 -
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
2021 2020
Expected Expected
Related Party Book credit Book credit
Items Relationship Balance losses Balance losses
Trade receivables Subsidiary 85,769 344,436 -
Other non-current
assets Subsidiary 212,716 212,771 -
Other receivables Subsidiary 11,611 11,744 -
Payable Items
June 30 December 31
Items Related Party Relationship 2021 2020
Trade payables Common control under ChemChina 50,409 127,082
Other payables Subsidiary 219,931 143,840
Common control under ChemChina 108 108
Associated enterprises under
Contract liability ChemChina 340
Other non-current
liabilities due within one
year * Common control under ChemChina - 28,000
Other non-current
liabilities* Common control under ChemChina - 143,770
* loans from related party, the interest expense for the 6 months ended June 30, 2021 was 2,865
thousand RMB (1,048 thoussand RMB in 2020).
d. Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 200,467 thousand RMB
(31.12.20: 170,210 thousand RMB). Interest income of bank deposit for the current period was 598
thousand RMB (amount for six months ended June, 2020 is 219 thousand RMB).
The closing balance of a loan received from ChemChina Finance corporation was 0 thousand RMB
(31.12.20: 0 thousand RMB). Interest expense in the current period was 0 thousand RMB (amount
for six months ended June 30, 2020 is 370 thousand RMB).
- 183 -
ADAMA Ltd. Semi-Annual Report 2021
Supplementary information
(Expressed in RMB '000)
1. Extraordinary Gain and Loss
Six months ended
June 30, 2021
Disposal of non-current assets 14,864
Government grants recognized through profit or loss 20,630
Recovery or reversal of expected credit losses which is assessed individually during
the years 12,474
Other non-operating income or expenses other than the above 6,792
Other profit or loss that meets the definition of non-recurring profit or loss (44)
Tax effect (9,803)
44,913
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 1.71 0.16 N/A
Net profit after deduction of extraordinary
gains/losses attributable to ordinary
shareholders of the Company 1.50 0.14 N/A
ADAMA Ltd.
Legal Representative：Ignacio Dominguez
August 24, 2021
184
