ADAMA Ltd.
ENGLISH TRANSLATION OF FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
ADAMA Ltd.
(Expressed in RMB '000)
AUDITOR'S REPORT AND FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
CONTENTS PAGES
THE CONSOLIDATED AND COMPANY'S BALANCE SHEETS 1-3
THE CONSOLIDATED AND COMPANY'S INCOME STATEMENTS 4-5
THE CONSOLIDATED AND COMPANY'S CASH FLOW STATEMENTS 6-7
THE CONSOLIDATED AND COMPANY'S STATEMENTS
OF CHANGES IN SHAREHOLDERS' EQUITY 8 - 10
NOTES TO THE FINANCIAL STATEMENTS 11 - 120
ADAMA Ltd. Semmi-Annual Report 2022
(Expressed in RMB '000)
Consolidated Balance Sheet
June 30 December 31
Notes 2022 2021
Current assets
Cash at bank and on hand V.1 3,296,536 5,818,835
Financial assets held for trading V.2 1,604 1,479
Derivative financial assets V.3 544,831 243,316
Bills receivable V.4 96,792 81,992
Accounts receivable V.5 10,091,376 8,362,493
Receivables financing V.6 78,634 120,157
Prepayments V.7 389,142 379,788
Other receivables V.8 852,408 691,939
Inventories V.9 15,568,631 11,750,162
Other current assets V.10 1,082,958 938,453
Total current assets 32,002,912 28,388,614
Non-current assets
Long-term receivables V.11 58,309 56,234
Long-term equity investments V.12 20,508 15,335
Other equity investments V.13 155,666 152,118
Investment properties 3,442 3,716
Fixed assets V.14 8,583,316 8,048,389
Construction in progress V.15 2,650,735 2,143,400
Right-of-use assets V.16 485,629 463,915
Intangible assets V.17 5,348,490 5,326,288
Goodwill V.18 4,635,081 4,409,599
Deferred tax assets V.19 1,073,097 723,075
Other non-current assets V.20 492,470 504,625
Total non-current assets 23,506,743 21,846,694
Total assets 55,509,655 50,235,308
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ADAMA Ltd. Semmi-Annual Report 2022
(Expressed in RMB '000)
Consolidated Balance Sheet (continued)
June 30 December 31
Notes 2022 2021
Current liabilities
Short-term loans V.21 1,635,446 874,755
Derivative financial liabilities V.22 635,643 176,206
Bills payable V.23 701,764 493,376
Accounts payable V.24 7,826,483 6,294,163
Contract liabilities V.25 1,442,598 1,381,311
Employee benefits payable V.26 1,041,153 1,247,979
Taxes payable V.27 458,955 368,682
Other payables V.28 1,758,231 1,342,188
Non-current liabilities due within one year V.29 1,637,673 1,795,754
Other current liabilities V.30 402,423 412,909
Total current liabilities 17,540,369 14,387,323
Non-current liabilities
Long-term loans V.31 4,292,178 3,498,912
Debentures payable V.32 7,517,272 7,797,131
Lease liabilities V.33 367,573 362,086
Long-term payables 97,737 95,699
Long-term employee benefits payable V.34 769,276 792,358
Provisions V.35 202,069 186,430
Deferred tax liabilities V.19 392,445 380,138
Other non-current liabilities V.36 1,794,066 1,660,148
Total non-current liabilities 15,432,616 14,772,902
Total liabilities 32,972,985 29,160,225
Shareholders' equity
Share capital V.37 2,329,812 2,329,812
Capital reserve V.38 12,977,171 12,977,171
Less: Treasury shares - -
Other comprehensive income V.39 355,851 (432,384)
Special reserves 18,823 19,857
Surplus reserve V.40 240,162 240,162
Retained earnings V.41 6,614,851 5,940,465
Total equity attributed to the shareholders
of the company 22,536,670 21,075,083
Non-controlling interests - -
Total Equity 22,536,670 21,075,083
Total liabilities and equity 55,509,655 50,235,308
Ignacio Dominguez Shahar Florentz
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 29 2022.
The notes form part of these financial statements.
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ADAMA Ltd. Semmi-Annual Report 2022
(Expressed in RMB '000)
Balance Sheet
June 30 December 31
Notes 2022 2021
Current assets
Cash at bank and on hand XV.1 295,242 265,558
Accounts receivable XV.2 478,073 208,109
Receivables financing XV.3 72,745 11,752
Prepayments 28,980 29,364
Other receivables XV.4 20,923 21,496
Inventories 330,819 220,329
Other current assets 1,383 44,221
Total current assets 1,228,165 800,829
Non-current assets
Long-term equity investments XV.5 17,511,352 17,511,352
Other equity investments 84,720 84,720
Investment properties 3,442 3,716
Fixed assets 1,885,011 1,264,210
Construction in progress 56,212 728,742
Right-of-use assets 4,019 5,453
Intangible assets 264,908 265,510
Deferred tax assets 60,668 60,668
Other non-current assets 662,973 560,982
Total non-current assets 20,533,305 20,485,353
Total assets 21,761,470 21,286,182
Current liabilities
Short-term loans 50,000 -
Bills payables 62,470 20,415
Accounts payables 208,992 205,985
Contract liabilities 11,200 10,145
Employee benefits payable 18,777 28,880
Taxes payable 1,921 2,662
Other payables 681,933 560,098
Non-current liabilities due within one year 427,400 612,666
Total current liabilities 1,462,693 1,440,851
Non-current liabilities
Long-term loans 1,137,108 905,840
Lease liabilities 1,919 2,925
Long-term employee benefits payable 98,150 99,495
Provisions 42,784 44,385
Other non-current liabilities 312,130 312,130
Total non-current liabilities 1,592,091 1,364,775
Total liabilities 3,054.784 2,805,626
Shareholders’ equity
Share capital V.37 2,329,812 2,329,812
Capital reserve 15,523,881 15,523,881
Other comprehensive income 30,668 30,668
Special reserves 19,514 20,548
Surplus reserve 240,162 240,162
Retained earnings V.41 562,649 335,485
Total shareholders’ equity 18,706,686 18,480,556
Total liabilities and shareholders’ equity 21,761,470 21,286,182
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ADAMA Ltd. Semmi-Annual Report 2022
(Expressed in RMB '000)
Consolidated Income Statement
Six months ended June 30
Notes 2022 2021
I. Operating income V.42 18,795,828 15,063,780
Less: Cost of sales V.42 13,822,755 10,706,710
Taxes and surcharges V.43 55,837 59,007
Selling and Distribution expenses V.44 2,159,089 2,506,436
General and administrative expenses V.45 642,313 571,807
Research and Development expenses V.46 274,738 226,940
Financial expenses (incomes) V.47 (438,224) 448,790
Including: Interest expense 326,788 322,765
Interest income 53,960 31,363
Add: Investment income (loss), net V.48 4,706 3,243
Including: Income from investment
in associates and joint ventures 4,706 3,243
Gain (loss) from changes in fair value V.49 (1,341,717) (140,069)
Credit impairment reversal (losses) V.50 (97,125) 10,051
Asset impairment reversal (losses) V.51 (85,346) (29,403)
Gain from disposal of assets V.52 60,298 14,799
II. Operating profit 820,136 402,711
Add: Non-operating income 29,797 33,032
Less: Non-operating expenses 16,559 15,429
III. Total profit 833,374 420,314
Less: Income tax expenses V.53 101,276 51,081
IV. Net profit 732,098 369,233
(1). Classified by nature of operations
(1.1). Continuing operations 732,098 369,233
(2). Classified by ownership
(2.1). Shareholders of the Company 732,098 367,036
(2.2). Non-controlling interests - 2,197
V. Other comprehensive income, net of tax V. 39 788,235 (122,906)
Other comprehensive income (net of tax)
attributable to shareholders of the Company 788,235 (122,906)
(1) Items that will not be reclassified to profit or loss: 61,296 (6,971)
(1.1) Re-measurement of defined benefit plan liability 61,296 (6,971)
(2) Items that were or will be reclassified to profit or loss 726,939 (115,935)
(2.1) Effective portion of gains or loss of cash flow hedge (60,863) 144,297
(2.2) Translation differences of foreign financial 787,802 (260,232)
statements
VI. Total comprehensive income for the period attributable to
Shareholders of the Company 1,520,333 246,327
Total comprehensive income for the period
attributable to shareholders of the Company 1,520,333 244,130
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) 0.31 0.16
(2) Diluted earnings per share (Yuan/share) N/A N/A
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ADAMA Ltd. Semmi-Annual Report 2022
(Expressed in RMB '000)
Income Statement
Six months ended June 30
Notes 2022 2021
I. Operating income XV.6 1,185,094 617,097
Less: Operating costs XV.6 881,418 482,937
Taxes and surcharges 3,003 3,982
Selling and Distribution expenses 2,178 19,304
General and administrative expenses 65,151 140,326
Research and Development expenses 38,042 19,709
Financial expenses (income) 25,075 3,523
Including: Interest expense 25,382 10,176
Interest income 3,340 9,971
Add: Investment income (loss), net - -
Gain from changes in fair value (“-” means loss) - -
Credit impairment reversal (losses) (141) 107
Asset Impairment reversal (losses) 3,142 (1,068)
Gain from disposal of assets 59,654 16,081
II. Operating Profit 232,882 (37,564)
Add: Non-operating income 13,082 10,143
Less: Non-operating expenses 162 1,012
III. Total profit 245,802 (28,433)
Less: Income tax expense (income) - (228)
IV. Net profit (loss) 245,802 (28,205)
V. Other comprehensive income, net of tax - (370)
(1) Items that will not be reclassified to profit or loss - (370)
(1.1) Re-measurement of defined benefit plan liability - (370)
(1.2) FV changes in other equity investment -
VI. Total comprehensive income (loss) for the period 245,802 (28,575)
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ADAMA Ltd. Semmi-Annual Report 2022
(Expressed in RMB '000)
Consolidated Cash Flow Statement
Six months ended June 31
Notes 2022 2021
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 16,427,981 14,644,075
Refund of taxes and surcharges 164,802 82,190
Cash received relating to other operating activities V.56(1) 304,088 363,408
Sub-total of cash inflows from operating activities 16,896,871 15,089,673
Cash paid for goods and services 13,683,974 9,737,778
Cash paid to and on behalf of employees 2,329,629 1,988,051
Payments of taxes and surcharges 494,626 208,458
Cash paid relating to other operating activities V.56(2) 1,734,503 1,664,093
Sub-total of cash outflows from operating activities 18,242,732 13,598,380
Net cash flows from operating activities V.57(1)a (1,345,861) 1,491,293
II. Cash flows from investing activities:
Cash received from disposal of investments 5,887 856
Cash received from returns of investments 1,588 -
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 70,264 19,507
Cash received relating to other investing activities V.56(3) - 6,754
Sub-total of cash inflows from investing activities 77,739 27,117
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 1,291,889 1,179,017
Net cash paid to acquire subsidiaries or other business units - 655,039
Cash paid relating to other investing activities V.56(4) 64,719 85,108
Sub-total of cash outflows from investing activities 1,356,608 1,919,164
Net cash flows used in investing activities (1,278,869) (1,892,047)
III. Cash flows from financing activities:
Cash received from borrowings 2,435,083 3,776,407
Cash received from other financing activities V.56(5) 11,012 412,308
Sub-total of cash inflows from financing activities 2,446,095 4,188,715
Cash repayments of borrowings 1,163,615 2,328,962
Cash payment for dividends, profit distributions and interest 431,993 387,611
Including: Dividends paid to non-controlling interest 39,074 35,904
Cash paid relating to other financing activities V.56(6) 944,580 263,351
Sub-total of cash outflows from financing activities 2,540,188 2,979,924
Net cash flows from financing activities (94,093) 1,208,791
IV. Effects of foreign exchange rate changes on cash and cash
equivalents 150,085 (27,900)
V. Net (decrease) increase in cash and cash equivalents V.57(1)b (2,568,738) 780,137
Add: Cash and cash equivalents at the beginning of the year 5,759,480 3,835,071
I. VI. Cash and cash equivalents at the end of the period V.57(2) 3,190,742 4,615,208
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ADAMA Ltd. Semmi-Annual Report 2022
(Expressed in RMB '000)
Cash Flow Statement
Six months ended June 30
Notes 2022 2021
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 786,908 838,428
Refund of taxes and surcharges 51,548 22,166
Cash received relating to other operating activities XV.7(1) 23,102 21,203
Sub-total of cash inflows from operating activities 861,558 881,797
Cash paid for goods and services 653,912 440,234
Cash paid to and on behalf of employees 70,273 122,202
Payments of taxes and surcharges 3,899 6,834
Cash paid relating to other operating activities XV.7(2) 70,927 67,311
Sub-total of cash outflows from operating activities 799,011 636,581
Net cash flows from operating activities XV.8 62,547 245,216
II. Cash flows from investing activities:
Net cash received from disposal of fixed assets, intangible assets and other
long-term assets 66,420 17,630
Cash received relating to other investing activities XV.7.(3) 150,000 -
Sub-total of cash inflows from investing activities 216,420 17,630
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 50,383 280,865
Cash paid for acquisition of investments - 697,909
Cash paid for other investing activities XV.7.(4) 250,000 -
Sub-total of cash outflows from investing activities 300,383 978,774
Net cash flows used in investing activities (83,963) (961,144)
III. Cash flows from financing activities:
Cash received from borrowings 650,000 615,200
Cash received relating to other financing activities XV.7.(5) 6,124 5,880
Sub-total of cash inflows from financing activities 656,124 621,080
Cash repayments of borrowings 553,732 293,732
Cash payment for dividends, profit distributions or interest 45,228 24,027
Cash paid relating to other financing activities XV.7.(6) 18,741 172,061
Sub-total of cash outflows from financing activities 617,701 489,820
Net cash flows from financing activities 38,423 131,260
IV. Effects of foreign exchange rate changes on cash and cash equivalents 60 (1,286)
V. Net increase (decrease) in cash and cash equivalents 17,067 (585,954)
Add: Cash and cash equivalents at the beginning of the year XV.8(2) 259,434 1,022,758
VI. Cash and cash equivalents at the end of the period XV.8(2) 276,501 436,804
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ADAMA Ltd. Semmi-Annual Report 2022
(Expressed in RMB '000)
Consolidated Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2022
Other
Share Capital comprehensive Special Surplus Retained Non-controlling
capital reserve income reserves reserve earnings Total interests Total equity
I. Balance at December 31, 2021 2,329,812 12,977,171 (432,384) 19,857 240,162 5,940,465 21,075,083 - 21,075,083
II. Changes in equity for the period - - 788,235 (1,034) - 674,386 1,461,587 - 1,461,587
1. Total comprehensive income - - 788,235 - - 732,098 1,520,333 - 1,520,333
2. Owner’s contributions and reduction - - - - - - - - -
2.1 Cancellation of shares - - - - - - - - -
2.2 Non-controlling interests in - - - - - - - - -
respect of business combination
3. Appropriation of profits - - - - - (57,712) (57,712) - (57,712)
3.1 Distribution to owners - - - - - (18,638) (18,638) - (18,638)
3.2 Distribution to non-controlling - - - - - (39,074) (39,074) - (39,074)
interest
4. Special reserve - - - (1,034) - - (1,034) - (1,034)
4.1 Transfer to special reserve - - - 3,507 - - 3,507 - 3,507
4.2 Amount utilized - - - (4,541) - - (4,541) - (4,541)
III. Balance at June 30, 2022 2,329,812 12,977,171 355,851 18,823 240,162 6,614,851 22,536,670 - 22,536,670
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ADAMA Ltd. Semmi-Annual Report 2022
(Expressed in RMB '000)
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
* Following the approval and execution of the repurchase plan for part of the Company’s domestically listed foreign shares (B share) on 2020 and the repurchase of 14,309,536 B-
Shares, the Company cancelled said amount of B-Shares at the Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. on June 17, 2021.
.
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ADAMA Ltd. Semmi-Annual Report 2022
(Expressed in RMB '000)
Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2022
Other
Share Capital comprehensive Special Surplus Retained
capital reserve income reserves reserve earnings Total
I. Balance at December 31, 2021 2,329,812 15,523,881 30,668 20,548 240,162 335,485 18,480,556
II. Changes in equity for the period - - - (1,034) - 227,164 226,130
1. Total comprehensive income - - - - - 245,802 245,802
2. Appropriation of profits - - - - - (18,638) (18,638)
2.1 Transfer to Distribution to shareholders - - - - - (18,638) (18,638)
3. Special reserve - - - (1,034) - - (1,034)
3.1 Transfer to special reserve - - - 3,507 - - 3,507
3.2 Amount utilized - - - (4,541) - - (4,541)
Ⅲ. Balance at June 30, 2022 2,329,812 15,523,881 30,668 19,514 240,162 562,649 18,706,686
For the six months ended June 30, 2021
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) - - - - -
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
- 10 -
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”). As of August
2021, following the combination between China National Chemical Co., Ltd. (hereinafter - “ChemChina”)
and Sinochem Holdings Corporation Ltd. (hereinafter - “Sinochem Holdings”), Syngenta Group, and
subsequently the Company, are ultimately controlled by Sinochem Holdings - parent of both ChemChina
and Sinochem Group Co., Ltd. (hereinafter “Sinochem Holdings”), subordinated to SASAC.
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 29, 2022.
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.
- 11 -
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, 2022 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 December 31, 2021 and the
Company's consolidated operating results, changes in shareholders' equity and cash flows for the twelve
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.
- 12 -
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.
- 13 -
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-controllin g
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-controllin g
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.
- 14 -
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.
- 15 -
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.
- 16 -
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 (which is not measured 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 liabilit ies
(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 liabilit ies,
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.
- 17 -
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.
- 18 -
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 technologica l
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.
- 19 -
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.
- 20 -
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 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.
- 21 -
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 liabilit ies
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.
- 22 -
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 account receivables collective provision for expected
credit losses in which credit losses has not occurred is between 0%-4.36%.
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.
- 23 -
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.
- 24 -
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).
- 25 -
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, motor 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.
- 26 -
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
Overseas 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).
- 27 -
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 capitalizat ion
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, 11 years
Intangible assets on purchase of products 7-11, 20 years
Marketing rights, tradename and trademarks 4-10, 30 years
Exclusivity agreement 21 years
Software 3-5 years
Customer relations 5-10, 13 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).
- 28 -
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.
- 29 -
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 demograp hic
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 approximatin g
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.
- 30 -
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 liabilit ies
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.
- 31 -
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.
- 32 -
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.
- 33 -
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.
- 34 -
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.
- 35 -
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.
- 36 -
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)
28.2 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.
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.
28.3 Securitization of assets
Details of the securitization of asset agreements and accounting policy are set out in Note V.5 - Account
receivables.
28.4 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.
- 37 -
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.
- 38 -
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.
- 39 -
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.
- 40 -
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.
- 41 -
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% (2021: 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 2022
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 27.5%
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%.
- 42 -
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 and Hubei Provincial Office of the
State Administration of Taxation. 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 and Jiangsu
Provincial Office of the State Administration of Taxation. The applicable income tax rate from 2021 to 2023
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.
- 43 -
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. The Israelis subsidiaries implemented and acted 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.
On November 15, 2021 the Economic Efficiency Law (Legislative Amendments for the 2021 and 2022
Budget Years) – 2021 was published as well as a Temporary Order to the Law for the Encouragement of
Capital Investments – 1959 (hereinafter: “the temporary order”), which offers a reduced tax rate arrangement
to companies that received an exemption from corporate tax under the aforesaid law. The temporary order
provided that companies that choose to apply the temporary order, which is effective until November 14,
2022, will be entitled to a reduced tax rate on the “release” of exempt profits (hereinafter: “the beneficiary
corporate tax rate”). The release of exempt profits makes it possible to distribute them at a reduced rate of
corporate tax at the company level based on the rate of the profits being distributed pursuant to the
conditions set forth in the Amendment.
- 44 -
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)
The reduced corporate tax rate will be determined according to the rate of exempt profits the company
chooses to release from its entire exempt profits, and will be between 40% and 70% of the corporate tax rate
that would have applied to the revenue in the year it was produced if it had not been exempt, but in any event
no less than 6%. Furthermore, a company that chooses to release its exempt profits and pay a beneficiary
corporate tax rate will be required to invest in its enterprise, within a period of 5 years beginning from the
tax year it elected, an amount calculated according to a formula provided in the temporary order (30% of the
exempt income multiplied by the corporate tax rate and multiplied by the release rate). The investment will
be made in productive assets (with the exclusion of buildings), research and development in Israel and
salaries to new employees of the enterprise. Failure to comply with this condition will require the company
to pay additional corporate tax.
In addition, an amendment was made to Section 74 of the Law for the Encouragement of Capital Investments
– 1959 with respect to identifying the sources of dividend distributions as from August 15, 2021.
The amendment requires companies to allocate the sources of dividends between exempt profits and other
profits, pro-rata, as well as the imposition of corporate tax and withholding tax on dividends accordingly. It
is noted that the amendment to the section may contradict section 72a of the Law, which provides for stability
in the benefits awarded to companies that chose this track.
As of this date, Solutions is examining the effect of the amendment on its financial position and financial
results. Solutions has not yet decided whether and how much accumulated profits will be “released”. Thus,
in these financial statements the aforementioned amendment had no effect on Solutions current and deferred
tax balances.
(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.
- 45 -
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
2022 2021
Cash on hand 1,138 1,196
Deposits in banks 3,189,604 5,758,284
Other cash and bank 105,794 59,355
3,296,536 5,818,835
Including cash and bank placed outside China 2,288,205 4,935,072
As at June 30, 2022 restricted cash and bank balances was 105,794 thousand RMB (as at December 31, 2021
59,355 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Financial assets held for trading
June 30 December 31
2022 2021
Bank deposits 1,604 1,479
1,604 1,479
3. Derivative financial assets
June 30 December 31
2022 2021
Economic hedge 470,858 198,775
Accounting hedge derivatives 73,973 44,541
544,831 243,316
4. Bills Receivable
June 30 December 31
2022 2021
Post-dated checks receivable 95,020 79,996
Bank acceptance draft 1,772 1,996
96,792 81,992
All bills receivables are due within 1 year.
- 46 -
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, 2022
Provision for expected
Book value credit losses
Percentage Carrying
Amount (%) Amount Percentage (%) amount
Account receivables assessed 690,591 7 224,141 32 466,450
individually for impairment
Account receivables assessed
collectively for impairment 9,714,771 93 89,845 1 9,624,926
10,405,362 100 313,986 3 10,091,376
December 31, 2021
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 290,224 3 143,827 50 146,397
Account receivables assessed
collectively for impairment 8,300,941 97 84,845 1 8,216,096
8,591,165 100 228,672 3 8,362,493
b. Aging analysis
June 30, 2022
Within 1 year (inclusive) 9,955,745
Over 1 year but within 2 years 207,872
Over 2 years but within 3 years 46,289
Over 3 years but within 4 years 55,859
Over 4 years but within 5 years 40,356
Over 5 years 99,241
10,405,362
- 47 -
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, 2022
Provision for expected
Book value credit loss Percentage (%)
Credit group A 1,445,412 4,862 0.34
Credit group B 725,931 6,282 0.9
Credit group C 162,058 7,070 4.4
Credit group D 33,034 689 2.1
2,366,435 18,903 0.8
Geographical location B:
Account receivables in geographical location B are grouped based on aging analysis:
June 30, 2022
Provision for expected
Book value credit loss Percentage (%)
Accounts receivable that are not overdue 612,084 5,438 0.89
Debts overdue less than 60 days 24,013 720 3
Debts overdue less than 180 days but
more than 60 days 30,378 3,105 10
Debts overdue above 180 days 15,656 6,262 40
Legal Debtors 39,190 39,190 100
721,321 54,715 7.6
Other geographical locations:
June 30, 2022
Provision for expected
Book value credit loss Percentage (%)
Other account receivables assessed
collectively for impairment 6,627,015 16,227 0.24
- 48 -
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
Lifetime expected
credit loss (credit Lifetime expected
losses has not credit loss (credit
occurred) losses has occurred) Total
January 1, 2022 36,094 192,578 228,672
Addition (write back) during the period, net 2,266 62,437 64,703
Write-off during the period (17) 6,025 6,008
Exchange rate effect 2,231 12,372 14,603
Balance as of June 30, 2022 40,574 273,412 313,986
d. Five largest accounts receivable at June 30, 2022:
Allowance of expected
Proportion of Accounts credit losses (credit losses
Name Closing balance receivable (%) has occurred)
Customer 1 272,724 3 -
Customer 2 131,906 1 -
Customer 3 127,490 1 -
Customer 4 84,926 1 14,000
Customer 5 70,785 1 -
Total 687,831 7 14,000
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, 2022.
- 49 -
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, 2022 – 2,349 million RMB), during the months July through September the
maximum scope of the securitization is $300 million (as of June 30, 2022 – 2,013 million RMB) and during
the months October through February the maximum scope of the securitization is $250 million (as of as of
June 30, 2022 – 1,678 million RMB). In addition the company has uncommitted facility of $50 million (as
of as of June 30, 2022 - 336 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, 2022, 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.
- 50 -
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 24, 2022. The maximum
securitization scope as of June 30, 2022 is BRL 500 million (RMB 641 million).
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 has a pledged deposit with regards to
the entity's right of recourse.
The subsidiary continues to recognize the trade receivables sold to the entitiy based on the extent of its
continuing involvement therein (5% right of recourse) and also recognizes an associated liability in the same
amount.
During the fourth quarter of 2021, the subsidiary has entered into an additional securitization agreement with
Itau Bank and Farm investments, for sale of trade receivables to a securitization structure that was formed
for this purpose where the subsidiary has mezzanine quotes of 10.5% of the entity's capital.
As at the report date, the subsidiary agreement was approved up to November 10, 2025. The agreement has
a maximum scope of BRL 306 million (RMB 392 million).
The entity bears 100% of the credit risk in respect of the customers whose debts were sold (non-recourse),
therefore the subsidiary has no continuing involvement in the those account receivables sold.
In both agreements, the subsidiary handles the collection of receivables included in the securitization for the
entities.
The subsidiary does not control the entities and therefore the entities are not consolidated in the group's
financial statements.
The loss from the sale of the trade receivables is recorded at the time of sale to profit and loss under financing
expenses.
- 51 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
6. Accounts Receivable – (cont'd)
f. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
June 30 December 31
2022 2021
Accounts receivables derecognized 2,899,622 2,962,111
Continuing involvement 115,637 117,995
Subordinated note in respect of trade receivables 397,147 388,631
Liability in respect of trade receivables 191,302 98,836
Six months ended June 30
2022 2021
Loss in respect of sale of trade receivables 70,123 15,403
7. Receivables financing
June 30 December 31
2022 2021
Bank acceptance draft 78,634 120,157
78,634 120,157
As at June 30, 2022, bank acceptance endorsed but not yet due amounts to 769,413 thousands RMB.
8. Prepayments
(1) The aging analysis of prepayments is as follows:
June 30 December 31
2022 2021
Amount Percentage (%) Amount Percentage (%)
Within 1 year (inclusive) 375,453 97 368,565 97
Over 1 year but within 2 years (inclusive) 12,005 3 8,850 2
Over 2 years but within 3 years (inclusive) 609 - 429 -
Over 3 years 1,075 - 1,944 1
389,142 100 379,788 100
(2) Total of five largest prepayments by debtor at the end of the period:
Percentage of prepayments
Amount (%)
June 30, 2022 104,220 27
- 52 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
9. Other Receivables
(1) Other receivables by nature
June 30 December 31
2022 2021
Dividends receivable 1,578 1,599
Others 850,830 690,340
852,408 691,939
a. Others breakdown by categories
June 30 December 31
2022 2021
Trade receivables as part of securitization transactions
not yet eliminated 115,637 117,995
Subordinated note in respect of trade receivables 397,147 388,631
Financial institutions 32,805 -
Receivables in respect of disposal of fixed assets 9,313 19,940
Other 340,974 174,624
Sub total 895,876 701,190
Provision for expected credit losses - other receivables (45,046) (10,850)
850,830 690,340
b. Other receivables by aging
June 30
2022
Within 1 year (inclusive) 855,008
Over 1 year but within 2 years 1,763
Over 2 years but within 3 years 18,201
Over 3 years but within 4 years 2,040
Over 4 years but within 5 years 268
Over 5 years 18,596
895,876
- 53 -
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, 2022
Balance as of January 1 2022, 10,850
Addition during the period 32,817
Written back during the period (395)
Write-off during the period (3)
Exchange rate effect 1,777
Balance as of June 30, 2022 45,046
(3) Five largest other receivables at June 30, 2022:
Allowance of
Proportion of other expected credit
Name Closing balance receivables (%) losses
Party 1 397,147 44.3 -
Party 2 91,671 10.2 -
Party 3 32,805 3.7 -
Party 4 16,658 1.9 -
Party 5 13,581 1.5 -
Total 551,862 61.6 -
9. Inventories
(1) Inventories by category:
June 30, 2022
Provision for
Book value impairment Carrying amount
Raw materials 6,042,396 26,401 6,015,995
Work in progress 677,248 3,812 673,436
Finished goods 8,593,829 191,818 8,402,011
Others 486,561 9,372 477,189
15,800,034 231,403 15,568,631
December 31, 2021
Provision for
Book value impairment Carrying amount
Raw materials 4,217,049 26,514 4,190,535
Work in progress 766,650 16,647 750,003
Finished goods 6,545,536 139,307 6,406,229
Others 415,047 11,652 403,395
11,944,282 194,120 11,750,162
- 54 -
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, 2022
January 1, Reversal or
2022 Provision write-off Other June 30, 2022
Raw material 26,514 18,474 (19,864) 1,277 26,401
Work in progress 16,647 743 (13,615) 37 3,812
Finished goods 139,307 90,662 (48,889) 10,738 191,818
Others 11,652 687 (3,377) 410 9,372
194,120 110,566 (85,745) 12,462 231,403
10. Other Current Assets
June 30 December 31
2022 2021
Deductible VAT 642,921 615,406
Current tax assets 202,723 158,440
Short term investments 179,349 121,629
Others 57,965 42,978
1,082,958 938,453
11. Long-Term Receivables
June 30 December 31
2022 2021
Long term account receivables from sale of goods 58,309 56,234
58,309 56,234
- 55 -
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
2022 2021
Investments in Joint ventures 20,508 15,335
20,508 15,335
(2) Movements of long-term equity investments for the period are as follows:
Other Declared Change in
January 1, Investment Comprehensive distribution of consolidation Balance at the
2022 income income cash dividend scope end of the period
Joint
ventures
Investee A 2,227 234 123 - - 2,584
Investee B 13,108 4,472 1,754 (1,410) - 17,924
Sub-total 15,335 4,706 1,877 (1,410) - 20,508
13. Other equity investments
December 31, Dividend received
June 30, 2022 2021 during 2022
Investment A 84,720 84,720 -
Investment B 69,228 65,765 -
Investment C 1,718 1,633 -
155,666 152,118 -
Other equity investments are non-core businesses that are intended to be held in the foreseeable future.
- 56 -
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, 2022 3,825,676 15,410,751 120,698 375,442 19,732,567
Purchases 32,716 100,947 20,216 25,982 179,861
Transfer from construction in progress 170,267 674,646 - 1,801 846,714
Reclassification to construction in progress - (252,941) - - (252,941)
Disposals (182,047) (737,979) (6,924) (5,788) (932,738)
Currency translation adjustment 82,534 532,908 10,928 14,518 640,888
Balance as at June 30, 2022 3,929,146 15,728,332 144,918 411,955 20,214,351
Accumulated depreciation
Balance as at January 1, 2022 (1,734,850) (9,079,083) (66,602) (299,595) (11,180,130)
Charge for the period (66,004) (406,740) (9,596) (17,135) (499,475)
Disposals 141,128 584,657 6,105 5,431 737,321
Reclassification to construction in progress - 21,992 - - 21,992
Currency translation adjustment (43,770) (331,341) (4,675) (11,576) (391,362)
Balance as at June 30, 2022 (1,703,496) (9,210,515) (74,768) (322,875) (11,311,654)
Provision for impairment
Balance as at January 1, 2022 (155,563) (347,068) (646) (770) (504,047)
Charge for the period - (1,435) (9) (178) (1,622)
Disposals 40,887 153,343 - 14 194,244
Transfer from construction in progress - (3,808) - - (3,808)
Currency translation adjustment (338) (3,798) - (12) (4,148)
Balance as at June 30, 2022 (115,014) (202,766) (655) (946) (319,381)
Carrying amounts
As at June 30, 2022 2,110,636 6,315,051 69,495 88,134 8,583,316
As at January 1, 2022 1,935,263 5,984,599 53,450 75,077 8,048,389
The lands reported as fixed assets are owned by the group subsidiaries and are located outside of China.
- 57 -
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
2022 2021
Provision for Provision for
Book value impairment Carrying amount Book value impairment Carrying amount
2,681,642 (30,907) 2,650,735 2,164,394 (20,994) 2,143,400
(1) Details and Movements of major construction projects in progress during period ended June 30, 2022
Actual
Including: Currency Transfer cost to Project
January Interest translation to fixed June 30, budget progress
Budget 1, 2022 Additions capitalized differences assets 2022 (% ) (% ) Source of funds
Project A 1,509,420 332,722 17,738 1,195 - (341,764) 8,696 86% 86% Bank loan
Project B 765,314 215,571 137,657 1,995 - - 353,228 46% 46% Bank loan
Project C 512,550 174,554 87,383 - 12,298 - 274,235 54% 54% Internal finance
Project D 477,805 243,367 133,042 14,200 17,543 - 393,952 82% 82% Internal finance
Project E 297,852 105,346 155,621 8,289 11,080 - 272,047 91% 91% Internal finance
Project F 194,604 124,659 65,750 - - (21,394) 169,015 87% 87% Internal finance
Project G 155,033 21,920 57,603 2,268 3,202 - 82,725 96% 96% Internal finance
Project H 140,939 100,256 29,881 - 6,341 - 136,478 97% 97% Internal finance
Project I 138,000 99,615 4,505 - - (104,120) - 100% 100% Internal finance
Project J 96,401 73,244 - - - (73,244) - 100% 100% Internal finance
Project K 82,247 81,131 2,723 - - (83,854) - 100% 100% Internal finance
Under re- -
Project L evalution 22,016 251,132 - - - 273,148 - - Internal finance
* As of June 30, 2022 Project B and Project F are include impairment of RMB 14 million and 17 million , respectively.
- 58 -
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, 2022 493,032 44,259 258,111 4,188 799,590
Additions 59,029 13 38,095 - 97,137
Disposals (28,166) (298) (49,016) (298) (77,778)
Currency translation adjustment 16,553 2,281 10,959 184 29,977
Balance as at June 30, 2022 540,448 46,255 258,149 4,074 848,926
Accumulated depreciation
Balance as at January 1, 2022 (201,150) (17,393) (115,455) (1,677) (335,675)
Charge for the period (40,757) (551) (39,035) (557) (80,900)
Disposals 21,284 298 44,835 298 66,715
Currency translation adjustment (7,603) (898) (4,859) (77) (13,437)
Balance as at June 30, 2022 (228,226) (18,544) (114,514) (2,013) (363,297)
Provision for impairment
Balance as at January 1, 2022 - - - - -
Balance as at June 30, 2022 - - - - -
Carrying amounts
As at June 30, 2022 312,222 27,711 143,635 2,061 485,629
As at January 1, 2022 291,882 26,866 142,656 2,511 463,915
- 59 -
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, 2022 10,793,847 3,828,805 998,213 726,947 538,239 498,177 536,691 17,920,919
Purchases 183,431 - 59,561 568 - 7,135 9,643 260,338
Currency translation adjustment 557,774 201,599 49,229 37,901 22,444 1,862 17,577 888,386
Transfer from construction in progress - - - - - - - -
Disposal (2,819) - - - - (950) - (3,769)
Balance as at June 30, 2022 11,532,233 4,030,404 1,107,003 765,416 560,683 506,224 563,911 19,065,874
Accumulated amortization
Balance as at January 1, 2022 (8,214,576) (2,649,128) (596,197) (457,479) (249,305) (82,720) (215,008) (12,464,413)
Charge for the period (253,627) (108,562) (39,489) (11,835) (19,046) (5,151) (15,677) (453,387)
Currency translation adjustment (438,424) (143,344) (30,515) (24,192) (12,737) (1,474) (10,503) (661,189)
Disposal 2,670 - - - - 340 - 3,010
Balance as at June 30, 2022 (8,903,957) (2,901,034) (666,201) (493,506) (281,088) (89,005) (241,188) (13,575,979)
Provision for impairment
Balance as at January 1, 2022 (82,278) (47,690) - - - - (250) (130,218)
Charge for the period - (4,193) - - - - - (4,193)
Currency translation adjustment (4,333) (2,661) - - - - - (6,994)
Balance as at June 30, 2022 (86,611) (54,544) - - - - (250) (141,405)
Carrying amount
As at June 30, 2022 2,541,665 1,074,826 440,802 271,910 279,595 417,219 322,473 5,348,490
As at January 1, 2022 2,496,993 2,496,993 402,016 269,468 288,934 415,457 321,433 5,326,288
(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 and exclusivity agreements.
- 60 -
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 the DCF model based on the Group business plan. The discount rate used in the DCF
model is determined based on the company's cost of equity and cost of debt, taking into account the comprehensive
risk factors.
As of December 31, 2021 the fair value of the cash generating units to which goodwill has been allocated to
exceeds its carrying amount.
Change Currency
January 1, during the translation Balance at
2022 year (*) adjustment June 30, 2022
Book value 4,409,599 - 225,482 4,635,081
Impairment provision - - - -
Carrying amount 4,409,599 - 225,482 4,635,081
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
2022 2021
Deductible Deductible
temporary Deferred tax temporary Deferred tax
differences assets differences assets
Deferred tax assets
Deferred tax assets in respect of carry
forward losses 1,236,551 180,164 1,378,984 197,354
Deferred tax assets in respect of
inventories 1,930,617 547,559 1,117,094 294,043
Deferred tax assets in respect of
employee benefits 857,197 136,406 1,009,387 150,742
Other deferred tax asset 1,738,906 442,036 1,375,455 331,258
5,763,271 1,306,165 4,880,920 973,397
- 61 -
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
2022 2021
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 3,388,980 625,513 3,392,987 630,460
3,388,980 625,513 3,392,987 630,460
(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting
June 30 December 31
2022 2021
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 233,068 1,073,097 250,322 723,075
Deferred tax liabilities 233,068 392,445 250,322 380,138
(4) Details of unrecognized deferred tax assets
June 30 December 31
2022 2021
Deductible temporary differences 446,259 496,972
Deductible losses carry forward 352,466 308,812
798,725 805,784
(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets
June 30 December 31
2022 2021
2022 1,663 1,596
2023 2,151 2,068
2024 20,067 19,063
2025 9,255 5,751
2026 6,141 5,834
After 2027 313,189 274,500
352,466 308,812
- 62 -
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
2022 2021
Judicial deposits 142,349 115,649
Assets related to securitization 75,792 74,169
Advances in respect of non-current assets 80,928 165,555
Others 193,401 149,252
492,470 504,625
21. Short-Term Loans
Short-term loans by category:
June 30 December 31
2022 2021
Unsecured loans 1,635,446 874,755
1,635,446 874,755
22. Derivative financial liabilities
June 30 December 31
2022 2021
Economic hedge 524,502 167,987
Accounting hedge derivatives 111,141 8,219
635,643 176,206
- 63 -
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
2022 2021
Post-dated checks payables 537,013 371,467
Note payables draft 164,751 121,909
701,764 493,376
As at June 30, 2022, none of the bills payable are overdue.
24. Accounts payable
June 30 December 31
2022 2021
Within 1 year (including 1 year) 7,709,098 6,238,230
1-2 years (including 2 years) 91,456 30,707
2-3 years (including 3 years) 7,212 3,181
Over 3 years 18,717 22,045
7,826,483 6,294,163
There are no significant accounts payables aging over one year.
25. Contract liabilities
June 30 December 31
2022 2021
Discount for customers 1,139,256 763,964
Advances from customers 303,342 617,347
1,442,598 1,381,311
26. Employee Benefits Payable
June 30 December 31
2022 2021
Short-term employee benefits 619,193 852,806
Post-employment benefits 36,558 44,260
Share based payment (See note XIII) 148,402 112,176
Other benefits within one year 209,811 205,562
1,013,964 1,214,804
Current maturities 27,189 33,175
1,041,153 1,247,979
- 64 -
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
2022 2021
Corporate income tax 211,763 174,705
VAT 219,790 153,336
Others 27,402 40,641
458,955 368,682
28. Other Payables
June 30 December 31
2022 2021
Dividends payables 750 750
Other payables 1,757,481 1,341,438
1,758,231 1,342,188
(1) Other payables
June 30 December 31
2022 2021
Accrued expenses 747,705 621,024
Payables in respect of intangible assets 118,792 115,987
Financial institutions 111,933 6,127
Liability in respect of securitization transactions 191,302 98,836
Hold-back payment due to acquistions 254,000 254,000
Others 333,749 245,464
1,757,481 1,341,438
As at June 30, 2022, 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
2022 2021
Long-term loans due within one year 965,629 1,099,643
Lease liabilities due within one year 135,085 139,162
Debentures payable due within one year 536,959 556,949
1,637,673 1,795,754
- 65 -
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
2022 2021
Put options to holders of non-controlling interests 176,637 170,422
Provision in respect of returns 187,530 196,831
Provision in respect of claims 37,907 45,293
Others 349 363
402,423 412,909
31. Long-Term Loans
Long-term loans by category
June 30 December 31
2022 Interest range 2021 Interest range
Long term loans
Guaranteed loans 410,154 1.1%-4.89% 415,887 3.95% - 4.1%
Unsecured loans 4,847,653 3.75%-4.05% 4,182,668 1.36% - 4.05%
Total Long term loans 5,257,807 4,598,555
Less:
Long term loans from banks due within 1 year (965,629) (1,099,643)
Long term loans, net 4,292,178 3,498,912
* For more detailes regarding the guaranteed loans – see note X. related parties and related parties
transactions.
For the maturity analysis, see note VIII.C - Liquidity risk.
32. Debentures Payable
June 30 December 31
2022 2021
Debentures Series B 8,054,231 8,354,080
Current maturities (536,959) (556,949)
7,517,272 7,797,131
June 30
2022
First year (current maturities) 536,959
Second year 536,959
Third year 536,959
Fourth year 536,959
Fifth year and thereafter 5,906,395
8,054,231
- 66 -
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 year ended June 30, 2022:
Balance at Amortization CPI and Repayment Currency Balance at
Maturity Face value Face value Issuance Maturity Issuance January 1, of discounts exchange during the translation June 30,
period in RMB NIS date period amount 2022 or premium rate effect period adjustment 2022
Debentures November
Series B 2,673,640 1,650,000 4.12.2006 2020-2036 3,043,742 3,502,632 117 (303,233) - 178,486 3,378,002
Debentures November
Series B 843,846 513,527 16.1.2012 2020-2036 842,579 1,046,335 4,980 (90,871) - 53,501 1,013,945
Debentures November
Series B 995,516 600,000 7.1.2013 2020-2036 1,120,339 1,296,951 2,173 (112,211) - 66,173 1,253,086
Debentures November
Series B 832,778 533,330 1.2.2015 2020-2036 1,047,439 1,215,910 (1,345) (105,214) - 61,909 1,171,260
Debentures November
Series B 418,172 266,665 1-6.2015 2020-2036 556,941 662,990 (3,674) (57,346) - 33,647 635,617
Debentures November
Series B 497,989 246,499 5.5.2020 2020-2036 692,896 629,262 (4,340) (54,503) - 31,902 602,321
8,354,080 (2,089) (723,378) - 425,618 8,054,231
Series B debentures, in amount of NIS 3,810 million par value (3,730 million par value, net of self-purchased), linked to the CPI and bear interest at the base annual rate of
5.15%. The debenture principal shall be repaid in 17 equal payments in the years 2020 through 2036.
- 67 -
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
2022 Interest range 2021 Interest range
Lease liabilities 502,658 1.3%-7.4% 501,248 1.3%-6.1%
Less: Lease liabilities due within one year (135,085) (139,162)
Long term lease liabilities, net 367,573 362,086
34. Long-Term Employee Benefits Payable
Post-employment benefit plans – defined benefit plan and early retirement
June 30 December 31
2022 2021
Total present value of obligation 581,961 687,759
Less: fair value of plan's assets (72,826) (86,282)
Net liability related to Post-employment benefits 509,135 601,477
Termination benefits 78,126 91,912
Total recognized liability for defined benefit plan, net (1) 587,261 693,389
Share based payment (See XIII) 12,067 5,674
Other long-term employee benefits 197,137 123,826
Total long-term employee benefits, net 796,465 822,889
Including: Long-term employee benefits payable due within one year 27,189 30,531
769,276 792,358
(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
2022 2021 2022 2021 2022 2021
Balance as at January 1, 2022 779,671 693,631 86,282 92,634 693,389 600,997
Expense/income recognized
in profit and loss:
Current service cost 12,707 7,595 - - 12,707 7,595
Interest costs 6,682 9,495 648 1,113 6,034 8,382
Losses (gains) on curtailments and settlements 5,478 9,369 - - 5,478 9,369
Changes in exchange rates (68,417) (9,436) (9,611) (1,204) (58,806) (8,232)
Actuarial gain (losses) due to early retirement (77) (10,298) - - (77) (10,298)
Included in other comprehensive income:
Actuarial gain (losses) as a result of changes in
actuarial assumptions (72,633) 9,121 (3,474) 1,540 (69,159) 7,581
Foreign currency translation differences in respect of
foreign operations 31,967 (6,859) 3,743 (967) 28,224 (5,892)
Additional movements:
Benefits paid (35,291) (47,174) (6,104) (6,825) (29,187) (40,349)
Classification from short term - 99,974 - - - 99,974
Contributions paid by the Group - - 1,342 1,870 (1,342) (1,870)
Balance as at June 30, 2022 660,087 755,418 72,826 88,161 587,261 667,257
- 68 -
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
2022 2021
Discount rate (%)* 0.4%-3% (0.8%)-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, 2022
Increase of 1% Decrease of 1%
Change in defined benefit obligation (48,248) 57,855
35. Provisions
June 30 December 31
2022 2021
Liabilities in respect of contingencies* 121,204 104,220
Provision in respect of site restoration 60,557 62,370
Long-term liability in respect of business combinations 17,872 17,411
Other 2,436 2,429
202,069 186,430
* Liabilities in respect of contingencies includes obligations of pending litigations, where an outflow of
resources had been reliably estimated.
- 69 -
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
2022 2021
Put options to holders of non- controlling interests 1,458,496 1,341,362
Long term loans – others 335,570 318,786
1,794,066 1,660,148
Current maturities - -
1,794,066 1,660,148
37. Share Capital
Balance at Issuance of new Balance at
January 1, 2022 shares Buyback of shares June 30, 2022
Share capital 2,329,812 - - 2,329,812
38. Capital Reserve
Balance at Additions during Reductions during Balance at
January 1, 2022 the period the period June 30, 2022
Share premiums 12,606,562 - - 12,606,562
Other capital reserve 370,609 - - 370,609
12,977,171 - - 12,977,171
- 70 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
39. Other Comprehensive Income, net of tax
Attributable to shareholders of the company
Less:
Balance at transfer Less:
January 1, Before tax to profit Income tax Net-of-tax Balance at June
2022 amount or loss expenses amount 30, 2022
Items that will not be
reclassified to profit or loss 18,671 69,160 - 7,864 61,296 79,967
Re-measurement of changes
in liabilities under defined
benefit plans (35,861) 69,160 - 7,864 61,296 25,435
Changes in fair value of
other equity investment 54,532 - - - - 54,532
Items that may be
reclassified to profit or loss (451,055) 721,617 5,246 (10,568) 726,939 275,884
Effective portion of gain or
loss of cash flow hedge 31,955 (66,185) 5,246 (10,568) (60,863) (28,908)
Translation difference of
foreign financial statements (483,010) 788,802 - - 787,802 304,792
(432,384) 790,777 5,246 (2,704) 788,235 355,851
40. Surplus reserve
Additions Reductions
Balance at during the during the Balance at
January 1, 2022 period period June 30, 2022
Statutory surplus reserve 236,348 - - 236,348
Discretional surplus reserve 3,814 - - 3,814
240,162 - - 240,162
- 71 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
41. Retained Earnings
2022 2021
Retained earnings as at January 1 5,940,465 5,862,702
Net profits for the period attributable to shareholders of the Company 732,098 367,036
Dividends to non-controlling Interest (39,074) (35,904)
Dividend to the shareholders of the company (Note 1 & 2) (18,638) (37,277)
Retained earnings as at June 30 6,614,851 6,156,557
Note 1:
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.
Note 2:
On March 29, 2022, after obtaining the approval of the 9th meeting of the Company's 9th Board of Directors,
the Company declared RMB 0.08 (before tax) per 10 shares as cash dividend to all shareholders, resulting in a
total cash dividend of 18,638 thousand RMB (before tax). No shares were distributed as share dividend and no
reserve was transferred to equity capital.
- 72 -
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
2022 2021
Income Cost of sales * Income Cost of sales
Principal activities 18,761,356 13,802,108 15,037,841 10,694,295
Other businesses 34,472 20,647 25,939 12,415
18,795,828 13,822,755 15,063,780 10,706,710
* According to the Q&A issued by the Ministry of Finance during the year, the transportation expenses
incurred before the transfer of control over goods to customers in order to fulfil the contract does not
constitute a separate performance obligation and shall be regarded as the cost to fulfil the contract.
Therefore, starting from 2021, the transportation expenses are recorded as cost of sales.
43. Taxes and Surcharges
Six months ended June 30
2022 2021
Tax on turnover 17,666 12,693
Others 38,171 46,314
55,837 59,007
44. Selling and Distribution Expenses
Six months ended June 30
2022 2021
Salaries and related expense 1,015,829 885,153
Depreciation and amortization 481,460 536,516
Transportation and Commissions * 19,056 481,263
Advertising and sales promotion 173,457 154,157
Travel expenses 62,794 38,180
Warehouse expenses 75,378 83,456
Registration 64,983 62,030
Professional services 53,811 51,735
Insurance 56,054 48,945
Others 156,267 165,001
2,159,089 2,506,436
* See note 42 above.
- 73 -
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
2022 2021
Salaries and related expenses 375,272 265,783
Idleness expenses - 96,638
Professional services 56,828 47,805
Depreciation and amortization 48,168 41,558
IT systems 58,466 49,294
Office rent, maintenance and expenses 24,348 19,315
Other 79,231 51,414
642,313 571,807
46. Research and development expenses
Six months ended June 30
2022 2021
Salaries and related expenses 127,574 109,731
Field trial 16,475 18,063
Professional services 17,350 22,169
Depreciation and amortization 42,400 22,194
Materials 38,803 27,714
Office rent, maintenance and expenses 6,077 4,946
Other 26,059 22,123
274,738 226,940
47. Financial expenses (incomes), net
Six months ended June 30
2022 2021
Interest expenses on debentures and loans 341,633 333,733
CPI expense (income) in respect of debentures 236,815 118,106
Loss in respect of sale of trade receivables 51,063 15,403
Interest expense in respect of post-employment benefits and early
retirement, net 7,000 12,967
Revaluation of put option, net 101,901 24,449
Interest income from customers, banks and others (53,960) (31,363)
Exchange rate differences, net (1,153,323) (45,084)
Interest expense on lease liabilities 11,962 12,364
Others 18,685 8,215
(438,224) 448,790
- 74 -
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
2022 2021
Income from long-term equity investments accounted for using
the equity method 4,706 3,243
4,706 3,243
See note 49 below
49. Gain (loss) from Changes in Fair Value
Six months ended June 30
2022 2021
Gain (loss) from changes in fair value of derivative financial
Instruments * (1,330,194) (136,462)
Others (11,523) (3,607)
(1,341,717) (140,069)
* According to ASBE 22 - Financial Instruments Recognition and Measurement, starting from 2022 the
Group recorded the gain or loss from the disposal of derivative instruments in the “Gain(loss) from Changes
in Fair Value”. Before 2022, the Group recorded the abovementioned gain of loss in the “Investment income,
net”. The Company reclassified the “Gain(loss) from Changes in Fair Value” and the “Investment income,
net” in the corresponding period in 2021. Such change did not impact the operating results or net assets of
the reporting period.
50. Credit impairment reversal (losses)
Six months ended June 30
2022 2021
Bills receivable and accounts receivable (64,703) 9,937
Other receivables (32,422) 114
(97,125) 10,051
51. Asset impairment reversal (losses)
Six months ended June 30
2022 2021
Inventories (79,445) (29,403)
Fixed assets (1,623) -
Other (4,278) -
(85,346) (29,403)
- 75 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
52. Gain from Disposal of Assets
Six months ended June 30 Included in
non-recurring
2022 2021 items
Gain from disposal of fixed assets 60,572 15,654 60,572
Loss from disposal of intangible assets (274) (855) (274)
60,298 14,799 60,298
53. Income Tax Expenses
Six months ended June 30
2022 2021
Current year 431,750 204,125
Deferred tax expenses (income) (306,884) (120,113)
Adjustments for previous years, net (23,590) (32,931)
101,276 51,081
(1) Reconciliation between income tax expense and accounting profit is as follows:
Six months ended June 30
2022 2021
Profit before taxes 833,374 420,314
Statutory tax in china 25% 25%
Tax calculated according to statutory tax in china 208,344 105,079
Tax benefits from Approved Enterprises (98,005) (48,293)
Difference between measurement basis of income for financial
statement and for tax purposes 3,085 (5,629)
Taxable income and temporary differences at other tax rate (58,494) (32,963)
Taxes in respect of prior years (23,590) (32,931)
Utilization of tax losses prior years for which deferred taxes were
not created (31,440) -
Temporary differences and losses in the report year for which
deferred taxes were not created 34,798 9,293
Non-deductible expenses and other differences 21,569 22,144
Neutralization of tax calculated in respect of the Company’s share
in results of equity accounted investees (1,599) (1,051)
Effect of change in tax rate in respect of deferred taxes 13,979 15,399
Creation and reversal of deferred taxes for tax losses and temporary
differences from previous years 32,629 20,033
Income tax expenses 101,276 51,081
54. Other comprehensive income
Details of the Other comprehensive income are set out in Note V.39
- 76 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
55. Government grants
Amount recognized in the profit
and loss statements during the six
months ended June 30
Category Presentation accounts 2022 2021
Government grants related to income Non-Operating income 15,623 10,899
Government grants related to assets Fixed assets, Intangible assets 9,211 9,731
56. Notes to items in the cash flow statements
(1) Cash received relating to other operating activities
Six months ended June 30
2022 2021
Derivatives transactions - 19,943
Financial institutions 231,142 265,280
Interest income 30,761 24,203
Government subsidies 15,623 10,922
Others 26,562 43,060
304,088 363,408
(2) Cash paid relating to other operating activities
Six months ended June 30
2022 2021
Transportation, Commissions and Warehouse 75,076 507,772
Advertising and sales promotion 181,788 146,744
Professional services 122,886 117,566
Financial institutions 116,107 211,211
IT and Communication 125,187 87,785
Registration and Field trials 86,410 79,988
Derivatives transactions 471,332 168,475
Travel 64,767 35,094
Insurance 37,655 41,736
Others 453,295 267,722
1,734,503 1,664,093
(3) Cash received relating to other investing activities
Six months ended June 30
2022 2021
Investment grant - 6,754
- 6,754
- 77 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
56. Notes to items in the cash flow statements - (cont'd)
(4) Cash paid relating to other investing activities
Six months ended June 30
2022 2021
Increase in short and long term investments 64,719 85,108
64,719 85,108
(5) Cash received from other financing activities
Six months ended June 30
2022 2021
Cash received in respect of hedging transactions on debentures - 396,096
Deposit for issuing bills payables 11,012 16,212
11,012 412,308
(6) Cash paid relating to other financing activities
Six months ended June 30
2022 2021
Repayment of lease liability 84,743 85,595
Payment in respect of hedging transactions on debentures 802,237 -
Repayment of loan from others 153 171,770
Deposit for issuing bills payable 57,447 5,986
944,580 263,351
- 78 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
57. 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
2022 2021
Net profit 732,098 369,233
Add: Impairment provisions for assets 85,346 29,403
Credit impairment losses (gain) 97,125 (10,051)
Depreciation of fixed assets and investment property 499,714 365,261
Depreciation of right-of-use asset 80,900 79,685
Amortization of intangible asset 453,387 502,745
Gains on disposal of fixed assets, intangible assets, and other long-
term assets, net (60,298) (14,799)
Losses (gains) from changes in fair value 1,341,717 140,069
Financial expenses (342,658) 340,716
Investment income, net (4,706) (3,243)
Increase in deferred tax assets, net (318,979) (159,673)
Increase in deferred tax liabilities, net 12,095 39,560
Increase in inventories, net (3,360,343) (748,037)
Increase in operating receivables, net (2,842,961) (556,167)
Increase in operating payables, net 2,248,418 1,069,229
Others 33,284 47,362
Net cash flow from operating activities (1,345,861) 1,491,293
b. Net increase (decrease) in cash and cash equivalents
Six months ended June 30
2022 2021
Closing balance of cash 3,190,742 4,615,208
Less: Opening balance of cash 5,759,480 3,835,071
Increase in cash and cash equivalents (2,568,738) 780,137
- 79 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
57. Supplementary Information on Cash Flow Statement - (cont'd)
(2) Details of cash and cash equivalents
June 30 December 31
2022 2021
Cash on hand 1,138 1,196
Bank deposits available on demand without restrictions 3,189,604 5,758,284
3,190,742 5,759,480
58. Assets with Restricted Ownership or Right of Use
June 30
2022 Reason
Cash 105,794 Pledged
Other non-current assets 142,349 Guarantees
248,143
- 80 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items
(1) Foreign currencies denominated items
As at June 30, 2022
Foreign currency at
the end of the RMB at the end of
period Exchange rate the period
Cash and bank balances
EUR 35,705 6.977 249,114
BRL 188,176 1.281 241,053
ILS 97,315 1.918 186,651
USD 15,855 6.711 106,401
PLN 97,977 1.497 146,671
AUD 7,644 4.613 35,262
ZAR 166,385 0.417 69,382
ARS 1,916,478 0.054 103,490
RUB 164,096 0.131 21,497
GBP 5,740 8.125 46,638
TRY 37,204 0.403 14,993
CAD 4,325 5.191 22,450
UAH 171,859 0.229 39,356
Other 221,227
Total 1,504,185
Bills and Accounts receivable
EUR 156,523 6.977 1,092,061
BRL 1,385,571 1.281 1,774,917
ILS 68,922 1.918 132,193
USD 40,676 6.711 272,977
COP 50,439,527 0.002 100,879
CAD 23,051 5.191 119,658
RUB 1,120,804 0.131 146,825
TRY 689,725 0.403 277,959
ZAR 170,618 0.417 71,148
THB 377,675 0.190 71,758
HUF 8,186,417 0.018 147,355
RON 214,973 1.415 304,187
Other 190,577
Total 4,702,494
Other receivables
EUR 57,447 6.977 400,805
ILS 41,010 1.918 78,658
BRL 10,473 1.281 13,416
Other 260,885
Total 753,764
Other current assets
ILS 118,423 1.918 227,135
BRL 109,006 1.281 139,637
EUR 9,381 6.977 65,452
Other 85,191
Total 517,415
- 81 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at June 30, 2022
Foreign currency at RMB at the end of
the end of the period Exchange rate the period
Long-term receivables
BRL 45,518 1.281 58,309
Total 58,309
Other non-current assets
BRL 130,607 1.281 167,308
Other 18,784
Total 186,092
Short-term loans
EUR 71,672 6.977 500,053
INR 2,549,937 0.085 216,745
Other 43,700
Total 760,498
Bills and Accounts payable
ILS 778,356 1.918 1,492,886
EUR 78,598 6.977 548,378
BRL 159,135 1.281 203,852
USD 17,909 6.711 120,184
Other 155,538
Total 2,520,838
Other payables
ILS 65,403 1.918 125,442
BRL 73,427 1.281 94,060
EUR 178 6.977 1,242
ILS CPI 17,717 1.918 33,982
Other 89,049
TOTAL 343,775
Contract liabilities
EUR 54,148 6.977 377,791
BRL 72,269 1.281 92,577
CAD 37,185 5.191 193,027
UAH 174,379 0.229 39,933
Other 93,530
Total 796,858
- 82 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at June 30, 2022
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 291,865 1.918 559,798
EUR 29,938 6.977 208,879
Other 44,088
Total 812,765
Other current liabilities
EUR 6,048 6.977 42,195
ILS 1,410 1.918 2,705
Other 1,280
Total 46,180
Long-term loan
EUR 95,154 6.977 663,892
Total 663,892
Debentures payable
ILS CPI 3,919,328 1.918 7,517,271
Total 7,517,271
Provision and Long-term payables
BRL 78,787 1.281 100,926
EUR 372 6.977 2,597
Other 822,972
Total 926,495
Other non-current liabilities
USD 3,414 6.711 22,913
EUR 6,101 6.977 42,564
ILS CPI 15,298 1.918 29,342
ILS 6,113 1.918 11,725
Other 101,920
Total 208,464
- 83 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(2) Major foreign operations
Registration &
Principal place of Functional
Name of the Subsidiary business Business nature currency
ADAMA France S.A.S France Distribution USD
ADAMA Brasil S/A Brazil Manufacturing; Distribution; USD
Registration
ADAMA Deutschland GmbH Germany Distribution; Registration USD
ADAMA India Private Ltd. India Manufacturing INR
Distribution; Registration
Makhteshim Agan of North United States Manufacturing; Distribution; USD
America Inc. Registration
Control Solutions Inc. United States Manufacturing; Distribution; USD
Registration
ADAMA Agan Ltd. Israel Manufacturing; Distribution; USD
Registration
ADAMA Makhteshim Ltd. Israel Manufacturing; Distribution; USD
Registration
ADAMA Australia Pty Australia Distribution AUD
Limited
ADAMA Italia SRL Italy Distribution USD
ADAMA Northern Netherlands Distribution USD
Europe B.V.
Alligare LLC United States Manufacturing; Distribution; USD
Registration
The functional currency of the subsidiaries above is the main currency that represent the principal economic
environment.
VI. Change in consolidation Scope
There is no change of consolidation scope during the period.
- 84 -
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 Australis Distribution 100% Purchased
ADAM Italia SRL Italy Distribution 100% Established
ADAMA Northern Europe B.V. Netherlands Distribution 55% Purchased
Manufacturing; Distribution; Purchased
Alligare LLC United States 100%
Registration
Adama Anpon (Jiangsu) Ltd. China Manufacturing; Distribution 100% Purchased
Adama Huifeng (Jiangsu) Co. Ltd. China Manufacturing; Distribution 51% Purchased
2. Interests in joint ventures or associates
June 30 December 31
2022 2021
Joint ventures 20,508 15,335
Associates - -
20,508 15,335
3. Summarized financial information of joint ventures and associates
June 30, 2022 and six June 30, 2021 and six
months then ended months then ended
Joint ventures:
Total carrying amount 20,508 15,847
The Group's share of the following items:
Net profit 4,706 3,244
Other comprehensive income 1,877 239
Total comprehensive income 6,583 3,483
Associates:
Total carrying amount - -
The Group's share of the following items:
Net profit - -
Other comprehensive income - -
Total comprehensive income
- -
- 85 -
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.
- 86 -
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.
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, 2022
Past due by less than 90 days 557,888
Past due by more than 90 days 524,732
1,082,620
- 87 -
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 9,605,534 thousand relate to
category of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 799,828
thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has credit
risk exposures for other receivables amounted to RMB 45,046 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.
- 88 -
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, 2022
Third- Fifth year Contractual Carrying
First year Second year Fourth year and above Cash flow amount
Non-derivative financial
liabilities
Short-term loans 1,646,897 - - - 1,646,897 1,635,446
Bills payables 701,764 - - - 701,764 701,764
Accounts payables 7,826,483 - - - 7,826,483 7,826,483
Other payables 1,758,231 - - - 1,758,231 1,758,231
Other current liabilities 176,637 - - - 176,637 176,637
Debentures payable 710,395 924,126 1,765,300 7,731,862 11,131,683 8,054,231
Long-term loans 1,099,779 1,831,179 1,517,491 1,236,226 5,684,675 5,257,807
Long-term payables 1,079 6,720 13,126 78,919 99,844 97,737
Lease Liabilities 157,127 118,879 128,651 251,443 656,100 502,658
Long-term liability in respect of
business combinations - 1,007 34,229 2,567 37,803 17,872
Other non-current liabilities - 321,860 1,687,677 71,632 2,081,169 1,794,066
Derivative financial liabilities
Foreign currency derivatives 635,643 - - - 635,643 635,643
14,714,035 3,203,771 5,146,474 9,372,649 32,436,929 28,458,575
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.
- 89 -
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 is as follows:
June 30, 2022
Total assets Total liabilities
In US Dollar 2,055,380 2,148,120
In Euro 1,992,295 2,418,712
In Brazilian real 2,394,640 390,489
CPI-linked NIS - 8,129,816
In New Israeli Shekel 624,634 1,643,335
Denominated in or linked to other foreign currency 4,428,621 1,028,883
11,495,570 15,759,335
(B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows:
June 30, 2022
Currency/ Currency/ Average USD RMB
linkage linkage expiration thousands thousands
receivable payable date Par value Par value Fair value
Forward foreign currency USD EUR 17/09/2022 332,326 2,118,809 (26,882)
Contracts and call options USD PLN 26/07/2022 38,608 246,152 438
USD BRL 05/09/2022 477,937 3,047,180 71,102
USD GBP 20/07/2022 20,956 133,612 9,862
USD ZAR 31/07/2022 22,436 143,047 17,698
ILS USD 09/08/2022 1,555,247 9,915,791 (325,001)
USD OTHER 2,724,057 17,367,770 102,402
CPI forward contracts CPI ILS 09/04/2022 700,000 4,462,990 61,672
- 90 -
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, 2021
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, 2022
Decrease of 5% Increase of 5%
Equity Profit (loss) Equity Profit (loss)
New Israeli shekel 57,166 21,876 (8,062) 23,842
British pound 7,810 7,810 (7,810) (7,810)
Euro (51,173) (55,280) 51,173 55,280
Brazilian real (41,833) 5,361 23,301 (14,269)
Polish zloty 1,641 1,641 (1,649) (1,649)
South African Rand (482) (482) (196) (196)
Chinese Yuan Renminbi 3,933 (12,310) (30,333) 15,188
CPI-linked NIS 505,895 505,895 (505,895) (505,895)
(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.
- 91 -
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, 2022
Fixed-rate instruments – unlinked to the CPI
Financial assets
Other non-current assets 51,611
Financial liabilities
Long-term loans (1) 3,902,399
Long-term payables 24,799
Other non-current liabilities 335,570
(4,211,157)
Fixed-rate instruments – linked to the CPI
Financial liabilities
Debentures payable (1) 8,054,230
Variable-rate instruments
Financial assets
Cash at banks 446,207
Financial assets at fair value through profit or loss 1,604
Other current assets 179,349
Other non-current assets 14,322
Financial liabilities
Short-term loans and credit from banks 1,635,447
Long-term loans (1) 1,355,408
Long-term payables 68,295
(2,417,668)
(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, 2022 1,802 (1,825) 1,802 (1,825)
92
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, 2022
Carrying amount Fair value
Financial assets
Other non-current assets (a – Level 2) 87,758 122,434
Financial liabilities
Long-term loans and others (b – Level 2) 6,196,217 5,973,567
Debentures (c – Level 1) 8,054,230 9,930,540
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, 2022
%
U.S. dollar interest 2.36% - 4.02%
Chinese Yuan Renminbi 0.99% - 2.22%
Euro (0.51%) - 2.16%
93
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
2022
Forward contracts and options used for hedging the cash flow (Level 2) (37,168)
Forward contracts and options used for economic hedging (Level 2) (53,644)
Other equity investment (Level 2) 155,666
Receivables financing (Level 2) 78,634
Other non-current assets (Level 2) 89,148
Other (Level 2) 1,604
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.
- 94 -
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 78.47% 78.47%
The Company’s ultimate controlling shareholder is Sinochem Holdings .
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
- 95 -
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
Beijing Jiamao Real Estate Co. Ltd. Common control
Bluestar (Beijing )ChemicalMachinery co.,LTD ( consolidated) Common control
Bluestar Engineering co.,LTD . Common control
Changsha Huaxing Construction Supervision Co., Ltd. Common control
Chem China Asset Management co.,LTD .(Headquarter) Common control
Chem China Information Center Co.,Ltd. Common control
China Bluestar Chengrand Research Institute Chemical Industry Common control
China National Bluestar (Group) Co. Ltd. Common control
China National Chemical Agrochemical Corporation Common control
China National Chemical Information Center Co. LTD Common control
Elkem Silicones Brasil LTDA Common control
Hangzhou (Torch)XidoumenMembraneIndustry co.,LTD Common control
Jiangsu Huaihe Chemical Co. Ltd. Common control
Jiangsu Ruixiang Chemical co., LTD . Common control
Jiangsu Yangnong Chemical co., LTD . Common control
Jiangsu Yangnong Chemical Group Co. Ltd. Common control
Jiangsu Youjia Plant Protection Co., Ltd. Common control
Jiangsu Youshi Chemical Co., Ltd. Common control
Jiangsu Yushi Chemical Co., LTD Common control
Jingzhou Sanonda Holdings Co.,Ltd. Common control
(MAP) Sinochem Modern Agriculture Co.LTD Xinjiang Branch Common control
OOO Syngenta Common control
PT Syngenta Indonesia Common control
PT Syngenta Seed Indonesia Common control
Shandong Dacheng Agrochemical Company Limited Common control
Shandong Dacheng Biochemical Co., Ltd. Common control
Shenyang Chemical Research Institute Co. LTD Common control
Shenyang Shenhua Institute Testing Technology Co. Ltd. Common control
Shenyang Chemical Institute Testing Technology Co. Ltd Common control
Sinochem (Hainan) Agroecology Co., LTD Common control
Sinochem Agricultural Ecological Technology (Hubei) Co., Ltd. Common control
Sinochem Agriculture (Xinjiang) Biotechnology Co., Ltd. Common control
Manas Branch
Sinochem Agriculture Co., Ltd Common control
Sinochem Agro Co. Ltd Common control
Sinochem Crop Protection Products Co. LTD Common control
Sinochem Fertilizer Company Limited Common control
Sinochem Fertilizer Company Limited Fujian Branch Common control
Sinochem Fertilizer Company Limited Guangxi Branch Common control
Sinochem Fertilizer Company Limited Hebei Branch Common control
Sinochem Fertilizer Company Limited Hubei Branch Common control
Sinochem Fertilizer Company Limited Jiangsu Branch Common control
Sinochem Fertilizer Company Limited Jilin Branch Common control
Sinochem Fertilizer Company Limited Northwest Branch Common control
- 96 -
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 Fertilizer Company Limited Shandong Branch Common control
Sinochem Information Technology Co. LTD Common control
Sinochem Innovation (Beijing) Technology Research Institute Co., Ltd. Common control
Sinochem International Crop Care (Overseas) Pte. Ltd. Common control
Sinochem Lantian Fluorine Materials Co. Ltd. Common control
Sinochem Modern Agriculture (Guangxi) Co. LTD Common control
Sinochem Modern Agriculture (Hunan) Co. LTD Common control
Sinochem Modern Agriculture (Hunan) Co. LTD Common control
Sinochem Modern Agriculture (Jiangsu) Co. LTD Common control
Sinochem Modern Agriculture (Shandong) Co. LTD Common control
Sinochem Modern Agriculture (Xinjiang) Co. LTD Common control
Sinochem Modern Agriculture (Xinjiang) Co. LTD Common control
Sinochem Modern Agriculture Anhui Co. LTD Common control
Sinochem Modern Agriculture Sichuan Co. LTD Common control
Sinochem Modern Agriculture Sichuan Co. LTD Common control
Sinochem Shandong Fertilizer Co. Ltd. Common control
Syngenta (China) Investment Company Ltd Common control
Syngenta Agro AG Common control
Syngenta Agro GmbH Common control
Syngenta Agro S.A. Common control
Syngenta Agro SRL Common control
Syngenta Australia Pty 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 LLC Common control
Syngenta Crop Protection Ltd Common control
Syngenta Crop Protection S.A. Common control
Syngenta Crop Protection, LLC Common control
Syngenta Czech s.r.o. Common control
Syngenta Espana S.A Common control
Syngenta France S.A.S. Common control
Syngenta Group Company Limited Common control
Syngenta Group(NL) B.V. Common control
Syngenta Hellas AEBE Common control
Syngenta India Limited Common control
Syngenta Italia S.p.A Common control
Syngenta Korea Ltd. Common control
Syngenta Nantong Crop Protection Company Limited Common control
Syngenta Polska Sp.z.o.o. Common control
Syngenta protecao cultivos ltda Common control
Syngenta S.A(Chile) Common control
- 97 -
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
Syngenta S.A. (Panama) Common control
SYNGENTA SEEDS LTDA Common control
Syngenta Slovakia s.r.o Common control
Syngenta South Africa (Pty) Ltd. Common control
SyngentaTarimSanayiveTicaretA.S. Common control
Zhonglan International Chemical Co. Ltd Common control
Zhonglan LianhaiDesignInstitute co.,LTD .( consolidated) Common control
Jiangsu Huifeng Agrochemical Co. Ltd. Minority shareholder and its subsidiary
Jiangsu Huifeng Biological Agriculture Co., Ltd Minority shareholder and its subsidiary
Nongyi Net (Yangling) e-commerce Co., Ltd. Minority shareholder and its subsidiary
Shanghai focus supply chain Co., Ltd Minority shareholder and its subsidiary
Shanghai nengjianyuan Biological Agriculture Co., Ltd Minority shareholder and its subsidiary
- 98 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
5. (1) Transactions and balances with related parties
Six months ended June 30
Type of purchase Related Party Relationship 2022 2021
Summary of purchase of goods/services:
Purchase of goods/services received Common control under
Sinochem Holdings 1,567,313 875,206
Minority shareholder and 3,232 -
its subsidiary
Purchase of fixed assets and other assets Common control under 8,474 42,917
Sinochem Holdings
Lease expenses Common control under 117 -
Sinochem Holdings
Minority shareholder and 410 -
its subsidiary
Summary of Sales of goods:
Sale of goods/ Service rendered Common control under
Sinochem Holdings 987,560 550,260
Joint venture 51,757 45,515
Minority shareholder and
its subsidiary 44,658 -
(2) Guarantees
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 338,000 21/04/2021 20/04/2028 N
72,154 01/06/2021 31/05/2028 N
* During the reporting period, the Company paid a guarantee fee amounting to 227 thousand RMB
(2021 1-6: nil) to the parent company.
(1) Remuneration of key management personnel and directors
Periods ended June 30
2022 2021
Remuneration of key management personnel and directors 52,977 34,203
- 99 -
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)
(2) Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
2022 2021
Expected Expected
Related Party Book credit Book credit
Items Relationship Balance losses Balance losses
Trade receivables Common control under 338,272 - 200,954 -
Sinochem Holdings
Joint venture 25,074 - 23,150 -
Minority shareholder and 40,618 - 32,953 -
its subsidiary
Other receivables Common control under 1,007 - 83 -
Sinochem Holdings
Other Non-Current assets Common control under 84 - 84 -
Sinochem Holdings
Prepayments Common control under 10,813 - 33,069 -
Sinochem Holdings
Payable Items
June 30 December 31
Items Related Party Relationship 2022 2021
Trade payables Common control under Sinochem 619,837 489,859
Holdings
Minority shareholder and its subsidiary 3,096 355
Other payables Common control under Sinochem 21,636 30,006
Holdings
Minority shareholder and its subsidiary 207 -
Other non-current Common control under Sinochem 335,570 -
liabilities due within Holdings
one year *
Other non-current Common control under Sinochem 335,570 318,786
liabilities * Holdings
* The liabilities are loans from a related party, the interest expenses for the six months ended June 30, 2022
is 3,033 thousand RMB (six months ended June 30, 2021: 2,865 thousand RMB).
Following the approvals from Solutions Board of Directors and the Audit Committee dated October 25,
2021, on October 27, 2021, Solutions, through one of its subsidiaries, entered into a committed credit
facilities agreements in the aggregate amount of USD 100 million on market terms with Syngenta Group, or
any of its subsidiaries. As of 30 June 2022, the total amount of USD 100 million has been fully utilized
(RMB 671 million).
- 100 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
6. Transactions and balances with related parties - (cont'd)
(3) Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was nil thousand RMB (31.12.21:
358,881 thousand RMB) Interest income of bank deposit for the current period was 90 thousand RMB
(amount for six months ended June 30, 2021 was 810 thousand RMB).
The closing balance of a loan received from ChemChina Finance corporation was nil (31.12. 20: nil). Interest
expenses in the current period was nil (six months ended June 30, 2021 was 1,471 thousand RMB).
The closing balance of bank deposit in Sinochem Finance Corporation was 179,469 thousand RMB
(31.12.21: nil) Interest income of bank deposit for the current period was 976 thousand RMB (amount for
six months ended June 30, 2021 was nil).
- 101 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies
1. Significant commitments
June 30 December 31
2022 2021
Investment in Fixed assets 549,096 623,156
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, 2021.
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
For two of the Company’s production sites in China that have been in the process of relocation, Jingzhou site
in Jingzhou, Hubei Province completed its relocation and upgrade program and is now at high level of opertion
and Anpon old site in Huai’An, Jiangsu Province is in the process of relocating to the new site. As part of the
relocation process, the Company executed in previous years a reduction plan to reduce the number of employees
during the relocation period.
Claims against subsidiaries
In the ordinary course of business, legal claims were 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 first place. In the opinion of the Company’s management, which is based, inter alia,
on the 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.
- 102 -
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)
On October 20, 2020, a claim and a motion for its approval as a class action (the “Motion”) was filed against
Monsanto Company and Bayer AG (the “Manufacturers”) as well as against ADAMA Agan Ltd., a wholly -
owned subsidiary of the Company, with respect to an herbicide bearing the brand name Roundup, which is
produced by the Manufacturers and distributed in Israel in small quantities by the subsidiary. The applicants
argue that the product allegedly poses a risk to users or those who have been exposed to it. The Company and
the subsidiary reject the allegations against the subsidiary in the Motion and in the statement of claim. As the
Company is an authorized distributor of the Manufactures, which undertook to fully indemnify, defend and hold
harmless ADAMA Agan Ltd., for any monetary compensation or any other remedy it will have to make in
connection with the Motion, the Motion and claim are not expected to have any non-negligible effect on the
Company’s financial results.
In June 2021, a lawsuit was filed against a subsidiary of the Company, alleging two patents owned by a large
competitor of the Company, have been infringed by such subsidiary. Among the claims, the plaintiff seeks
preliminary and permanent injunctions to prevent the subsidiary from manufacturing, using or commercializ in g
any product that infringes the plaintiff’s patents, and seeks actual damages and profits loss. The said preliminary
injunctions were granted by the court in favor of the plaintiff. The subsidiary has filed appeals against such
preliminary injunctions, which one was rejected and the second is still pending. Prior to such claims, and on-
going, the subsidiary filed several lawsuits against the said plaintiff seeking to declare the said patents are invalid
and the subsidiary does not infringe them. All these lawsuits are pending as of the approval date of the financial
statements. At this stage, the claims filed by the plaintiff are not expected to have a material effect on the
Company.
Various immaterial claims have been filed against Group companies in courts throughout the world, in
immaterial amounts, for causes of action primarily involving employee-employer relations and various civil
claims, for which the Company did not record a provision in the financial statements. The claims that in the
estimation of Company’s management, based on its legal advisors’ opinion, have lower chances of succeeding
than being rejected, amount to a negligible amount. 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.
XII. Events subsequent to the balance sheet date
With respect to the current events in Ukraine, at this stage, the Company cannot definitively estimate the
potential impact of these events on the financial performance of the Company. The Company is continuously
reviewing the situation on the ground and assessing the potential risks involved, and will provide a further
update in due course.
- 103 -
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 55,720,575
Total number of Phantom warrants granted in current period -
Total number of Phantom warrants exercised in current period (19,391,502)
Total number of Phantom warrants forfeited in current period (3,189,393)
Total number of Phantom warrants at the end of the period 33,139,680
The exercise prices and the remainder of the contractual period for Phantom RMB 9.90 – 10.85
warrants outstanding at the end of period 3.5 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) 114,172
Expenses arising from cash-settled share-based payments in current period
(in thousands RMB) 51,627
- 104 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments - (cont’d)
2. In September 2019, the remuneration committee and 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 18,710,787
Total number of Phantom warrants granted in current period -
Total number of Phantom warrants exercised in current period (4,893,994)
Total number of Phantom warrants forfeited in current period (493,963)
Total number of Phantom warrants at the end of the period 13,322,830
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 4.25 years
- 105 -
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) 46,306
Expenses (income) arising from cash-settled share-based payments in
current period related to the alternative plan (in thousands RMB) 25,993
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 liabilit ies.
- 106 -
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
2022 2021 2022 2021 2022 2021 2022 2021
Operating income from external
customers 16,842,617 13,653,666 1,953,211 1,410,114 - - 18,795,828 15,063,780
Inter-segment operating income - - 870 977 (870) (977) - -
Interest in the profit or loss of
associates and joint ventures - - 4,706 3,243 - - 4,706 3,243
Segment's results 1,385,155 840,793 351,710 168,380 - - 1,736,865 1,009,173
Financial expenses (incomes) (438,224) 448,790
Gain (loss) from changes in fair
value (1,341,717) (140,069)
Profit before tax 833,374 420,314
Income tax expense (101,276) (51,081)
Net profit 732,098 369,233
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
2022 2021 2022 2021 2022 2021 2022 2021
Total assets 45,611,876 39,213,516 2,518,410 2,071,074 7,379,370 8,950,718 55,509,655 50,235,308
Total liabilities 8,532,547 6,867,619 363,273 282,006 24,077,165 22,010,600 32,972,985 29,160,225
- 107 -
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 geographica l
location of the company which owns the assets.
Operating income from external
customers
Six months ended June 30
2022 2021
Europe 4,202,841 3,915,671
North America 3,639,600 2,880,327
Latin America 3,993,953 2,895,965
Asia Pacific 4,658,470 3,124,576
Africa, Middle East and India 2,300,964 2,247,241
18,795,828 15,063,780
Specified non-current assets
June 30 December 31
2022 2021
Europe 999,698 962,601
Latin America 2,391,232 2,227,234
North America 1,159,861 1,116,510
Asia Pacific 5,556,399 5,609,749
Africa, Middle East and India 11,774,777 10,713,739
21,881,967 20,629,833
2. The dependency on major customers
No single customer's proportion of the total amount of sales is over 10%.
- 108 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
3. 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 732,098 367,036
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 2,329,811,766
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 2,329,811,766
Amount for Amount for
the current the prior
period period
Calculated based on net profit attributable to ordinary shareholders
Basic earnings per share 0.31 0.16
Diluted earnings per share N/A N/A
Calculated based on net profit from continuing operations
attributable to ordinary shareholders:
Basic earnings per share 0.31 0.16
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
- 109 -
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
2022 2021
Deposits in banks 276,501 259,434
Other cash and bank 18,741 6,124
295,242 265,558
As at June 30, 2022, restricted cash and bank balances was 18,741 thousand RMB (as at December 31, 2021:
6,124 thousand RMB).
2. Accounts receivable
a. By category
June 30, 2022
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 13,893 3 13,893 100 -
Account receivables assessed
collectively for impairment 478,104 97 31 - 478,073
491,997 100 13,924 3 478,073
December 31, 2021
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 13,879 6 13,879 100 -
Account receivables assessed
collectively for impairment 208,125 94 16 - 208,109
222,004 100 13,895 6 208,109
b. Aging analysis
June 30, 2022
Within 1 year (inclusive) 478,104
Over 1 year but within 2 years -
Over 2 years but within 3 years 15
Over 3 years but within 4 years 1
Over 4 years but within 5 years 1
Over 5 years 13,876
491,997
- 110 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
2. Accounts receivable - (cont'd)
c. Addition, written-back and written-off of provision for expected credit losses during the period
Six months ended June 30, 2022
Balance as of January 1 13,895
Addition during the year, net 31
Write back during the year (2)
Write-off during the year -
Exchange rate effect -
Balance as of June 30 13,924
d. Five largest accounts receivable at June 30, 2022:
Proportion of Allowance of
Accounts expected
Name Closing balance receivable (%) credit losses
Party 1 317,841 65 -
Party 2 70,812 14 -
Party 3 37,139 8 -
Party 4 17,216 3 -
Party 5 9,886 2 -
452,894 92 -
3. Receivable financing
June 30 December 31
2022 2021
Bank acceptance draft 72,745 11,752
72,745 11,752
As at June 30, 2022, bank acceptance endorsed but not yet due amounts to 239,571 thousand RMB.
- 111 -
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
2022 2021
Other receivables 20,923 21,496
20,923 21,496
(1) Other receivables
a. Other receivables by categories
June 30 December 31
2022 2021
Other 27,016 27,477
Provision for expected credit losses (6,093) (5,981)
20,923 21,496
b. Other receivables by aging
June 30, 2022
Within 1 year (inclusive) 204
Over 1 year but within 2 years * 563
Over 2 years but within 3 years 11,830
Over 3 years but within 4 years 9,456
Over 4 years but within 5 years -
Over 5 years 4,963
27,016
* Include intergroup balance with Anpon.
- 112 -
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:
Period ended June 30, 2022
Balance as of January 1, 2022 5,981
Addition during the period 512
Written back during the period (400)
Write-off during the period -
Balance as of June 30, 2022 6,093
d. Five largest other receivables at June 30 2022:
Proportion of other
Name Closing balance receivables (%) Credit loss provision
Party 1 11,611 43 -
Party 2 9,313 34 -
Party 3 3,125 12 3,125
Party 4 548 2 548
Party 5 543 2 543
25,140 93 4,216
- 113 -
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, 2022 December 31, 2021
Impairment Impairment
Amount balance loss Book value Amount balance loss Book value
Invest in
subsidiaries 17,511,352 - 17,511,352 17,511,352 - 17,511,352
17,511,352 - 17,511,352 17,511,352 - 17,511,352
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 - -
17,511,352 - - 17,511,352 - -
6. Operating Income and operating costs
Six months ended June 30, 2022 Six months ended June 30, 2021
Operating Operating
Revenue costs Revenue costs
Main operations 1,162,352 870,245 591,292 467,717
Other operations 22,742 11,173 25,805 15,220
1,185,094 881,418 617,097 482,937
- 114 -
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, 2022 June 30, 2021
Interest income 3,340 9,971
Government subsidies 13,377 9,976
Other 6,385 1,256
23,102 21,203
(2) Other cash paid relevant to operating activities
Six months ended Six months ended
June 30, 2022 June 30, 2021
Professional services 37,608 48,027
Transportation and Commissions 26,622 11,122
Other 6,697 8,162
70,927 67,311
(3) Other cash received relevant to investing activities
Six months ended Six months ended
June 30, 2022 June 30, 2021
Loans 150,000 -
(4) Other cash paid relevant to investing activities
Six months ended Six months ended
June 30, 2022 June 30, 2021
Loans 250,000 -
(5) Other cash received relevant to financing activities
Six months ended Six months ended
June 30, 2022 June 30, 2021
Deposit for issuing bills payables 6,124 5,880
- 115 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
(6) Other cash paid relevant to financing activities:
Six months ended Six months ended
June 30, 2022 June 30, 2021
Repayment of loan from others 18,741 171,770
Other - 291
18,741 172,061
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
2022 2021
Net profit 245,802 )28,205(
Add: Assets impairment loss )3,142( 1,068
Credit impairment loss 141 )107(
Depreciation of fixed assets 100,485 53,021
Depreciation of-right-of use assets 1,434 28
Amortization of intangible assets 5,727 5,099
Loss (gain) on disposal of fixed assets, intangible assets and
other long-term assets )59,538( )15,239(
Financial expenses 28,333 13,438
Increase in deferred income tax assets - )228(
Decrease (increase) in inventory )107,348( 88,421
Decrease (increase) in accounts receivable from operating
activities )287,302( 227,772
Increase (decrease) in payables from operating activities 137,955 )99,852(
Net cash flows generated from operating activities 62,547 245,216
(2) Net increase in cash and cash equivalents
Six months ended June 30
2022 2021
Closing balance of cash 276,501 436,804
Less: Opening balance of cash 259,434 1,022,758
Net increase in cash and cash equivalents 17,067 )585,954(
- 116 -
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 78.47% 78.47%
The ultimate controlling shareholder is Sinochem Holdings .
(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
2022 2021
Summary of Purchase of goods/services Related Party Relationship
received:
Purchase of goods/services received Common control
under ChemChina 67,101 40
Subsidiary 47,970 58,038
Purchase of fixed assets and other assets Common control
under ChemChina 2,569 39,580
Summary of Sales of goods:
Sale of goods Common control under
ChemChina 20,068 -
Associated enterprises
under ChemChina - 1,082
Subsidiary 497,938 328,762
Sale of raw materials Subsidiary 1,003 3,396
- 117 -
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 59,500 27/04/2021 26/04/2022 Y
30,000 26/02/2021 24/02/2022 Y
30,000 25/06/2021 24/06/2022 Y
45,000 21/05/2021 18/05/2022 Y
40,000 18/03/2021 17/03/2022 Y
100,000 19/07/2021 10/07/2022 Y
33,000 05/11/2021 03/05/2022 Y
20,000 05/11/2021 04/05/2022 Y
141,000 01/12/2021 28/10/2027 N
33,000 16/12/2021 15/12/2022 N
40,000 26/04/2022 27/04/2023 N
30,000 26/02/2022 24/02/2023 N
50,000 18/01/2022 17/01/2023 N
7,900 25/01/2022 28/09/2026 N
30,000 30/03/2022 29/03/2023 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 338,000 21/04/2021 20/04/2028 N
72,154 01/06/2021 31/05/2028 N
During the reporting period, the Company paid a guarantee fee amounting to 227 thousand RMB
(2021.1-6: nil) to the parent company.
- 118 -
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
2022 2021
Expected Expected
Related Party Book credit Book credit
Items Relationship Balance losses Balance losses
Trade receivables Subsidiary 338,683 - 160,190 -
Other non-current
assets Subsidiary 250,000 - 150,000 -
Other receivables Subsidiary 11,611 - 11,611 -
Trade rceivables Holding Common
control under Sinochem 3,767 - - -
Holding Common
control under
Prepayments Sinochem Holding 10.812 - 10,000 -
Other non-current Common control under
assets Sinochem Holding 84 - 84 -
Payable Items
December
June 30 31
Items Related Party Relationship 2022 2021
Trade payables Subsidiary 1,432 71
Common control under Sinochem
Trade payables Holdings 45,562 52,075
Other payables Subsidiary 346,739 241,049
Common control under Sinochem
Holdings 475 249
Associated enterprises under Sinochem
Contract liability Holdings 611 -
- 119 -
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)
d. Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was nil (31.12. 21 :
189,978 thousand RMB) Interest income of bank deposit for the current period was 67
thousand RMB (amount for six months ended June 30, 2021 was 598 thousand RMB).
The closing balance of bank deposit in SinoChem Finance Corporation was 15,368 thousand
RMB (31.12. 21: nil) Interest income of bank deposit for the current period was 493 thousand
RMB (amount for six months ended June 30, 2021 was nil).
- 120 -
Supplementary information
(Expressed in RMB '000)
1. Extraordinary Gain and Loss
Six months ended
June 30, 2022
Disposal of non-current assets 67,970
Government grants recognized through profit or loss 24,834
Recovery or reversal of expected credit losses which is assessed individually during
the years 17,200
Other non-operating income or expenses other than the above (10,240)
Other profit or loss that meets the definition of non-recurring profit or loss (5,845)
Tax effect (16,844)
77,075
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 3.35 0.31 N/A
Net profit after deduction of extraordinary
gains/losses attributable to ordinary
shareholders of the Company 3.01 0.28 N/A
