ADAMA reports strong growth, driving record sales in both the Q3 and
year-to-date
Overcoming significant headwinds throughout the year
Q3 record-high sales of $953 million, growing +9% in US dollar terms, +11% in local
currencies
Strong business growth in almost all geographies, led by robust recovery in North America,
strong performance in Latin America and Europe
Continued average price increases of more than 2% across all regions
Q3 sales constrained by $55 million due to Jingzhou old site disruption impacting supply of
high-demand products; incremental ramp-up of production at site continuing
9M record-high sales of $2,962 million, exceeding last year’s in both US dollar terms and
local currencies, overcoming the significant market and supply headwinds encountered
throughout the year, as well as the impact of softer currencies
Jingzhou old site disruption constraining 9M sales by $162 million
Sales of formulated, branded products in China, other than those from the Jingzhou old site,
grew by more than 25% in both the quarter and the nine-month period
Q3 Gross Profit up 6% to $295 million
Gross margin of 31.0% vs. 32.0% last year
9M gross profit of $968 million, with gross margin of 32.7% vs. 33.3% last year
Increased prices offset by higher procurement costs and softer currencies
Jingzhou old site disruption constraining Q3 gross profit by $24 million and 9M gross profit by
$64 million
Q3 EBITDA up 8% to $144 million
EBITDA margin of 15.1%, in-line with last year
9M EBITDA of $509 million, in-line with last year; EBITDA margin of 17.2%, in-line with last
year
Strong containment of operating expenses despite recording idleness cost at Jingzhou old
site
Jingzhou old site disruption, including idleness cost, constraining Q3 EBITDA by $31 million
and 9M EBITDA by $89 million
Q3 Net Income of $42 million, 5% above last year
Net income margin of 4.4% vs. 4.6% last year
9M net income of $173 million, with net income margin of 5.9% vs. 6.8% last year
Jingzhou old site disruption, constraining Q3 Net Income by $25 million and 9M Net Income
by $71 million
1
BEIJING, CHINA and TEL AVIV, ISRAEL, October 30, 2019 – ADAMA Ltd. (the “Company”)
(SZSE 000553) today reported its financial results for the third quarter and nine-month period ended
September 30, 2019.
Table 1. Financial Performance Summary
% %
% 9M 9M %
Adjusted, US$m Q3 2019 Q3 2018 Change Change
Change 2019 2018 Change
CER CER
Revenues 953 872 +9% +11% 2,962 2,918 +2% +3%
Gross profit 295 279 +6% 968 972 -0.4%
Gross margin 31.0% 32.0% 32.7% 33.3%
Operating income (EBIT) 83 81 +3% 325 353 -8%
EBIT margin 8.7% 9.3% 11.0% 12.1%
Net income 42 40 +5% 173 197 -12%
Net income margin 4.4% 4.6% 5.9% 6.8%
EBITDA 144 134 +8% 509 512 -0.6%
EBITDA margin 15.1% 15.3% 17.2% 17.6%
Earnings per share - USD 0.0173 0.0164 0.0708 0.0806
- RMB 0.1210 0.1117 0.4836 0.5200
All income statement items contained in this release are presented on an adjusted basis. A detailed description and
analysis of differences b etween the adjusted income statement and that reported in the financial statements is contained in
the “Analysis of Gaps b etween Adjusted Income Statement and Income Statement in Financial Statements” in the
appendix to this release. EPS are the same for b asic and diluted. Q3 and 9 M 2019 include the results of b oth Bonide and
Anpon following their acquisition in Q1 2019.
Commenting on the results, Yang Xingqiang, Chairman of ADAM A’s Board of Directors, said,
“Our strong performance in the quarter aided in overcoming the challenges that we faced during the
first-half of the year, bringing the Company to growth also over the nine-month period. With the
continued development and rolling out of our pipeline of differentiated products in markets across
the globe, we remain focused on executing our growth strategy and look ahead to concluding the
year with positive momentum.”
Chen Lichtenstein, President and CEO of ADAM A, added, “We delivered record-high sales in
both the quarter and nine-months, led by double-digit growth in North America as well as our
differentiated, formulated and branded products in China. Latin America is performing strongly as it
goes into its peak season, and we saw a pleasing contribution from Europe in its late season. The
business growth was further bolstered by continued price increases. This performance drove growth
in all profit-metrics in the quarter, despite the significant residual impact from the Jingzhou site
disruption which is continuing to progress in its ramp-up of operations.”
Performance in Context of Market Environment
The third quarter saw drought conditions across Europe, Latin-America and parts of Asia-Pacific. In
Europe, the dry weather delayed herbicide application in key crops and reduced oilseed rape
planting areas. North America saw a partial recovery late in the season following the severe flooding
seen in the first half of the year. Following a delayed start to the Indian monsoon season, conditions
have improved.
Prices in key crops including wheat, corn and soybean softened somewhat during the quarter, which
continues to challenge farmer income in most regions.
2
While product supply remains generally constrained due to the increased environmental focus in
China causing industry-wide shortages in certain raw materials and intermediates, some capacity is
returning to the market, yet procurement costs are still elevated compared to last year. The
Company continues to raise its prices in all regions and contain its manufacturing and other
operating costs to mitigate this impact.
Financial Highlights
Revenues in the third quarter grew strongly to $953 million, up 9% compared to $872 million in the
same period last year in US dollar terms, and 11% up in constant currency terms. Nine-month sales
reached $2,962 million, up 2% in US dollar terms compared to $2,918 million in the parallel period
last year, and up 3% in constant currency terms, overcoming the significant headwinds encountered
throughout the year. This strong growth was achieved despite the impact of the disruption at the
Jingzhou old site, which constrains the supply of high-demand products in many geographies as it
continues its gradual ramp-up of operations. The disruption at the site constrained third quarter
sales by $55 million and nine-month sales by $162 million.
The third quarter saw a partial recovery in North America late in the season following the severe
weather challenges seen in the first half of the year, with noteworthy performances in both the US
and Canada. The Company also grew strongly in Europe in the third quarter, following a challenging
first half of the year, despite the drought in the region, as well as in Brazil and the rest of Latin
America, where its portfolio of differentiated products is driving increasing market penetration. In
China, ADAMA continues to grow sales of its differentiated, formulated and branded products at
significant double-digit rates.
Supportive demand facilitated further price increases in the quarter of an average 2% across all
regions.
Gross profit grew 6% in the third quarter to $295 million (gross margin of 31.0%) compared to $279
million (gross margin of 32.0%) in Q3 2018, while gross profit in the nine-month period was $968
million (gross margin of 32.7%), in line with the $972 million (gross margin of 33.3%) recorded in the
corresponding period last year. The somewhat lower gross margins reflect the impact of the
Jingzhou old site disruption which constrained sales of backward-integrated products in high
demand, as well as higher procurement costs and softer currencies, partially offset by higher pricing
aimed at passing on the impact of the higher procurement costs, as well as an improvement in
product mix in the quarter. The Jingzhou site disruption reduced third quarter gross profit by $24
million and nine-month gross profit by $64 million.
Operating expenses. Total operating expenses in the third quarter were $212 million (22.3% of
sales) compared to $198 million (22.7% of sales) in Q3 last year, and $643 million (21.7% of sales)
in the nine-month period compared to $618 million (21.2% of sales) in the corresponding period last
year. The tight expense-to-sales ratios in both the quarter and in the nine-month period reflects the
ongoing strong containment of expenses, and was achieved despite the inclusion of joiners and the
recording of Jingzhou old-site related idleness costs of $8 million in the quarter and $29 million in the
nine-month period. Operating expenses also benefited from the stronger US dollar as well as, in the
first half of the year, income from expropriation of land.
Sales and Marketing expenses in the third quarter were $148 million (15.5% of sales), and $472
million (15.9% of sales) in the first nine months, compared to $146 million (16.8% of sales) and $465
million (15.9% of sales) in the corresponding periods last year, respectively. The improvement in the
expense-to-sales ratio in the quarter, and its stability in the nine-month period, largely reflects the
containment of expenses, and was achieved despite the inclusion of joiners.
General and Administrative expenses in the third quarter were $32 million (3.4% of sales), and $101
million (3.4% of sales) in the first nine months, compared to $30 million (3.4% of sales) and $103
3
million (3.5% of sales) in the corresponding periods last year, respectively, achieved despite the
inclusion of joiners, and reflects the strong containment of expenses.
R&D expenses in the third quarter were $15 million (1.6% of sales), and $46 million (1.6% of sales)
in the first nine months, compared to $16 million (1.8% of sales) and $40 million (1.4% of sales) in
the corresponding periods last year.
Operating income in the third quarter was $83 million (8.7% of sales) and $325 million (11.0% of
sales) in the first nine months, compared to $81 million (9.3% of sales) and $353 million (12.1% of
sales) in the corresponding periods last year, respectively. The Jingzhou old site disruption,
including idleness costs, constrained operating income by $31 million in the third quarter and by $89
million in the nine-month period.
EBITDA in the third quarter was $144 million (15.1% of sales), up 8% compared to the $134 million
(15.3% of sales) recorded in Q3 2018. In the nine-month period, EBITDA was $509 million (17.2% of
sales), in line with the $512 million (17.6% of sales) recorded in the corresponding period last year.
The Jingzhou old site disruption, including idleness costs, constrained EBITDA by $31 million in the
third quarter and by $89 million in the nine-month period.
Financial expenses and investment income. Total net financial expenses and investment income
were $35 million in the third quarter and $122 million in the first nine months, compared to $30
million and $97 million in the corresponding periods last year, respectively. The higher level reflects
mainly higher hedging costs due to global currency volatility, as well as higher interest payments,
offset in the third quarter by the reduction in financing costs on the ILS-denominated, CPI-linked
bonds due to a lower CPI. The lower expenses in the corresponding periods last year reflect the
benefit of foreign exchange income related to balance sheet positions.
Tax expenses. Net tax expenses were $6 million in the third quarter and $30 million in the first nine
months, compared to $11 million and $60 million in the corresponding periods last year, respectively.
The lower net tax expenses in the quarter reflect the impact of the Jingzhou old site disruption,
which reduced taxable income, partially offset by a non-cash impact due to the devaluation of the
Brazilian Real over the quarter, which reduced the value of local currency-denominated non-
monetary assets. The lower tax expenses over the nine-month period were largely due to the lower
taxable income, mainly resulting from the impact from the Jingzhou old site disruption, as well as
changes in exchange rates against the US dollar that affected the value of local-currency
denominated balance sheet items.
Net income in the third quarter was $42 million (4.4% of sales) up 5% compared to the $40 million
(4.6% of sales) recorded in Q3 2018. In the nine-month period, net income was $173 million (5.9%
of sales), compared to $197 million (6.8% of sales) in the corresponding period last year. The
Jingzhou old site disruption constrained net income in the quarter by $25 million and in the nine-
month period by $71 million.
Working capital at September 30, 2019 was $2,143 million, compared to $1,751 million at the same
point last year. The higher level reflects increased trade receivables resulting from the Company’s
robust performance in Brazil in the first nine months, alongside somewhat lower payable days. In
addition, inventory levels were higher due to the higher procurement costs, changes in the sales mix
due to the volatile weather in many regions, proactively constrained sales due to credit restraint in
Eastern Europe, as well as the first-time inclusion of joiners.
Cash Flow. Operating cash flow of $57 million was generated in the quarter and $10 million in the
first nine months, compared to $99 million and $221 million generated in the corresponding periods
last year, respectively, mainly reflecting the build-up of working capital earlier in the year and the
impact of the disruption from the Jingzhou old site, which is now gradually ramping-up its operations.
4
Net cash used in investing activities was $42 million in the quarter and $245 million in the first nine-
months compared to $44 million and $85 million in the corresponding periods last year, respectively.
Investing activities in the quarter include increased investments in the relocation and upgrading of
environmental facilities in Jingzhou, as well as proceeds from expropriation of land. The higher nine-
month investment level also reflects acquisitions made during the year. In the first quarter of 2018,
the Company recorded the one-time proceeds from the divestiture of several products in connection
with the approval by the EU Commission of the acquisition of Syngenta by ChemChina, and outflow
of a lesser net amount for the transfer of a similar portfolio of products.
Free cash flow of $7 million was generated in the third quarter, while $290 million was consumed in
the nine-month period. This compares to the $52 million and $93 million that the Company
generated in the corresponding periods last year, respectively, noting the impact of net proceeds
from divestitures in 2018, and acquisitions in 2019.
Leverage: Balance sheet net debt at the end of the quarter was $960 million, compared to $435
million as of September 30, 2018, largely reflecting the acquisitions and the assumption of their debt,
capital investments and dividends paid.
Corporate development
ADAMA today also announced the acquisition of AgroKlinge, a leading Peruvian crop protection
company. This acquisition will allow ADAMA to further improve and expand its business in Peru,
broadening its portfolio, creating a leading commercial platform throughout the country and
enhancing its access to large scale industrial farmers.
Increasing collaboration activities
The Company continues to advance collaboration opportunities with other ChemChina group entities,
as well as other entities of the Sinochem group, to make the most of its positioning.
Jingzhou Old Site
Following resumption of operations at the Jingzhou old site in late March, the Company continues to
advance the gradual ramp-up of production at the site. The site was visited during the third quarter
by the Ecological Protection Supervision Team of the central government, as part of its inspections
of the ChemChina group and in the context of strengthening ongoing nationwide environmental
focus. As part of its China sites’ three-year relocation and upgrade process, due to conclude by the
end of next year, the Company continues to work with all relevant authorities to bring the site to
best-in-class safety and environmental standards.
In a significant milestone in this upgrade and relocation process, ADAMA obtained a new, expanded
EIA (Environmental Impact Assessment) permit for the new Jingzhou site, allowing increased
production of Acephate, DMPAT and other backward-integrated products. This will ensure the
Company’s ability to strengthen the ACEMAIN franchise in key markets, including India, Brazil, US
and China, leveraging its strong cost position and site stability.
By end of 2020, ADAMA is aiming to complete most of its relocations at both Jingzhou and Huai’An,
vacate the old sites, and be operational with improved cost and efficiencies at its new sites. The
transformed new sites are designed to be more profitable, and ready to accommodate additional
new molecules emerging from the Company’s strong development pipeline.
5
Table 2. Regional Sales Performance
Q3 2019 Q3 2018 Change Change 9M 2019 9M 2018 Change Change
$m $m CER USD $m $m CER USD
Europe 188 168 +15.0% +12.1% 816 870 -8.1% -6.2%
North America 160 124 +28.8% +28.8% 560 530 +5.7% +5.5%
Latin America 302 277 +10.1% +9.1% 657 587 +16.7% +11.9%
Asia Pacific 138 131 +8.6% +5.3% 496 487 +6.1% +1.9%
Of which China 76 69 +13.0% +9.8% 255 241 +9.3% +5.6%
India, Middle East & Africa 166 173 -3.4% -4.0% 432 443 +2.3% -2.4%
Total 953 872 +10.8% +9.3% 2,962 2,918 +3.4% +1.5%
CER: Constant Exchange Rates
Europe: Sales in Europe grew by 15.0% in the quarter and were lower by 8.1% in the first nine-
months, in constant currency terms, compared to the corresponding periods last year. The strong
performance in the quarter was driven by business growth, although only partially recovering from
the supply-related challenges in the first half of the year, and despite a severe drought in the region
which delayed herbicide application in cereals, reduced disease pressure in grapes and citrus,
lowering consumption, and reduced oilseed rape planting areas.
In Northern Europe, sales grew strongly in the quarter driven by Germany and the Baltic countries.
The Company restrains sales in Ukraine where liquidity remains challenging for distributors.
The Company saw robust growth in South Europe in the quarter with continued market share gains.
Noteworthy performances were recorded in France, which experienced its second strongest
harvest on record, as well as Italy and Iberia. Strong demand for insecticides compensated for the
weak disease pressure in grapes and citrus.
The Company obtained a number of new registrations for differentiated products, including
FOLPAN, ADAMA’s proprietary fungicide treating key resistant diseases in cereals in Germany,
PITCHER, a differentiated mixture fungicide for flower-bulbs in the Netherlands and ZAKEO
EXTRA, a dual-action, wide spectrum fungicide in Greece.
In US dollar terms, sales in Europe grew by 12.1% in the quarter and were lower by 6.2% in the
first nine months, compared to the corresponding periods last year, reflecting the impact of softer
currencies over the periods.
North America: Sales grew by 28.8% in the quarter and by 5.7% in the nine-month period, in
constant currency terms, compared with the corresponding periods last year. The significant
increase in the quarter was achieved through a combination of robust organic business growth,
increased prices and joiners.
The Company recorded strong growth in the quarter in both the US and Canada, partially
recovering from the first-half floodings while benefiting from price increases in key backward-
integrated products.
In US dollar terms, sales in North America grew by 28.8% in the quarter and 5.5% in the first nine
months, compared to the corresponding periods last year.
Latin America: Sales grew by 10.1% in the quarter and by 16.7% in the first nine months, in
constant currency terms, compared to the corresponding periods last year. Strong business growth
in key countries in the face of a severe drought across the region, alongside continued price
increases, more than offset the impact of constrained supply.
The Company continues to grow strongly in Brazil despite a delayed planting season in soybean
and corn crops, driven by its differentiated product portfolio and key recently launched products.
6
These include flagship product CRONNOS, the triple-action fungicide for soybean rust which is
performing strongly in its first year since launch, GALIL, a differentiated combination insecticide
and TRIVOR, a dual-action insecticide for rapid and extended control of sucking pests.
Noteworthy performances were recorded in the quarter in Colombia, Bolivia, Mexico and Peru,
while over the nine-month period, the leading contributors to growth were Peru and Colombia.
During the quarter, ADAMA launched several new products, including BREVIS, a differentiated
solution to optimize fruit load and size in apples in Argentina and TRIVOR, in Colombia. The
Company obtained a number of new registrations for differentiated products, including
EXPERTGROW , a range of biostimulants promoting the growth and development of multiple fruit,
vegetables and flower crops in Peru, Paraguay and Bolivia.
In US dollar terms, sales in Latin America increased by 9.1% in the quarter and 11.9% in the first
nine months, compared to the corresponding periods last year, reflecting the impact of generally
softer currencies, and in particular the devaluation of the Argentinian Peso.
Asia-Pacific: Sales in the region grew by 8.6% in the third quarter and by 6.1% in the first nine
months, in constant currency terms, compared to the corresponding periods last year, driven by
business growth alongside continued price increases, while being affected by constrained supply
of products of the Jingzhou old site.
In China, ADAMA continues to see strong demand for its differentiated, formulated and branded
products, with sales growth of more than 25% in both the quarter and the first nine months,
excluding those from the Jingzhou old site. In the first nine months of this year, ADAMA has
launched 12 new products in China, driving this strong growth. Two new registrations of the
NIMITZ suite of products were obtained in the quarter. Anpon delivered a solid performance.
The third quarter saw robust growth in Japan and a resilient performance in Australia, despite the
continued severe drought in the country which is significantly reducing summer crops. These
compensated for the weather-related challenges seen throughout South-East Asia.
During the quarter, the Company obtained new registrations in Australia, including SOPRANO, a
cereal fungicide, and SOMBRERO , an insecticide seed dressing for a wide range of crops.
In US dollar terms, sales in Asia-Pacific grew by 5.3% in the third quarter and by 1.9% in the first
nine months, compared to the corresponding periods last year, reflecting the impact of softer
currencies.
India, Middle East & Africa: Sales in the third quarter were lower by 3.4%, yet still grew by 2.3%
in the first nine months, in constant currency terms, compared to the corresponding periods last
year.
In India, the Company benefited from the start of the monsoon rains, but was impacted by
shortages of key products produced at the Jingzhou old site. ADAMA saw noteworthy sales in the
country of SHAMIR, the novel dual-action combination fungicide for protection of multiple fruit and
vegetable crops.
Over the nine-month period, India and Turkey delivered noteworthy performance.
In US dollar terms, sales were lower by 4.0% in the third quarter and by 2.4% in the first nine
months, compared to the corresponding periods last year, reflecting the impact of softer currencies.
7
Table 3. Revenues by operating segment
Third quarter sales
Q3 2019 Q3 2018
% %
USD(m) USD(m)
Crop Protection 855 89.6% 812 93.0%
Intermediates and Ingredients 99 10.4% 61 7.0%
Total 953 100.0% 872 100.0%
Nine months sales
9M 2019 9M 2018
% %
USD(m) USD(m)
Crop Protection 2,669 90.1% 2,717 93.1%
Intermediates and Ingredients 293 9.9% 202 6.9%
Total 2,962 100.0% 2,918 100.0%
Further Information
All filings of the Company, together with a presentation of the key financial highlights of the period,
can be accessed through the Company website at www.adama.com.
##
About ADAMA
ADAMA Ltd. is one of the world's leading crop protection companies. We strive to Create Simplicity
in Agriculture – offering farmers effective products and services that simplify their lives and help
them grow. With one of the most comprehensive and diversified portfolios of differentiated, quality
products, our more than 7,000-strong team reaches farmers in over 100 countries, providing them
with solutions to control weeds, insects and disease, and improve their yields. For more information,
visit us at www.ADAMA.com and follow us on Twitter at @ADAMAAgri.
Contact
Ben Cohen Zhujun Wang
Global Investor Relations China Investor Relations
Email: ir@adama.com Email: irchina@adama.com
8
Abridged Consolidated Financial Statements
The following abridged consolidated financial statements and notes have been prepared as
described in Note 1. While prepared based on the principles of PRC GAAP, they do not contain all
of the information which either PRC GAAP or IFRS would require for a complete set of financial
statements and should be read in conjunction with the consolidated financial statements of both
ADAMA Ltd. and Adama Agricultural Solutions Ltd. as filed with the Shenzhen and Tel Aviv Stock
Exchanges, respectively.
Table 4. Abridged Consolidated Income Statement for the Third Quarter
Q3 2019 Q3 2018 Q3 2019 Q3 2018
Adjusted1 USD(m) USD(m) RMB(m) RMB(m)
Revenues 953 872 6,666 5,929
Cost of Sales 656 592 4,583 4,021
Business taxes and surcharges 3 2 18 12
Gross profit 295 279 2,064 1,896
% of revenue 31.0% 32.0% 31.0% 32.0%
Selling and distribution expenses 841 841 1,035 994
General and administrative expenses 32 30 225 202
Research and development expenses 81 81 108 107
Other operating expenses / (income) 17 6 115 43
Total Operating expenses 212 198 1,483 1,346
Operating income (EBIT) 83 81 581 550
% of revenue 8.7% 9.3% 8.7% 9.3%
Financial expenses and investment income 35 30 244 203
Income before taxes 48 51 337 347
Taxes on Income 6 11 41 73
Net income 42 40 296 273
% of revenue 4.4% 4.6% 4.4% 4.6%
EBITDA 144 134 1,010 909
% of revenue 15.1% 15.3% 15.1% 15.3%
Earnings per Share – Basic 0.0173 0.0164 0.1210 0.1117
– Diluted 0.0173 0.0164 0.1210 0.1117
Earnings per share are the same for b asic and diluted. The numb er of shares used to calculate earnings per share is
2,446.6 million shares.
1
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the
financial statements, see below “Analy sis of Gaps between Adjusted Income Statement and Income Statement in Financial Stateme nts”.
9
Table 5. Abridged Consolidated Income Statement for the Nine Months
9M 2019 9M 2018 9M 2019 9M 2018
Adjusted2
USD(m) USD(m) RMB(m) RMB(m)
Revenues 2,962 2,918 20,282 18,955
Cost of Sales 1,984 1,938 13,593 12,592
Business taxes and surcharges 9 8.4 65 54
Gross profit 968 972 6,624 6,308
% of revenue 32.7% 33.3% 32.7% 33.3%
Selling and distribution expenses 472 465 3,230 3,024
General and administrative expenses 101 103 690 671
Research and development expenses 46 40 318 263
Other operating expenses / (income) 24 10 164 65
Total Operating expenses 643 618 4,402 4,023
Operating income (EBIT) 325 353 2,222 2,285
% of revenue 11.0% 12.1% 11.0% 12.1%
Financial expenses and investment income 122 97 833 630
Income before taxes 204 257 1,389 1,656
Taxes on Income 30 59 206 384
Net income 173 197 1,183 1,272
% of revenue 5.9% 6.8% 5.9% 6.8%
EBITDA 509 512 3,481 3,321
% of revenue 17.2% 17.6% 17.2% 17.6%
Earnings per Share – Basic 0.0708 0.0806 0.4836 0.5200
– Diluted 0.0708 0.0806 0.4836 0.5200
Earnings per share are the same for b asic and diluted. The numb er of shares used to calculate earnings per share is
2,446.6 million shares.
2
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the
financial statements, see below “Analy sis of Gaps between Adjusted Income Statement and Income Statement in Financial St atements”.
10
Table 6. Abridged Consolidated Balance Sheet
September 30 September 30 September 30 September 30
2019 2018 2019 2018
USD (m) USD (m) RMB (m) RMB (m)
Assets
Current assets:
Cash at bank and on hand 647 933 4,579 6,416
Bills and accounts receivable 1,214 1,045 8,585 7,189
Inventories 1,485 1,296 10,509 8,918
Other current assets, receivables and
307 243 2,171 1,674
prepaid expenses
Total current assets 3,653 3,517 25,844 24,197
Non-current assets:
Fixed assets, net 1,112 1,052 7,866 7,237
Rights of use assets 78 - 550 -
Intangible assets, net 1,447 1,453 10,235 9,996
Deferred tax assets 111 98 782 673
Other non-current assets 109 76 771 525
Total non-current assets 2,857 2,679 20,203 18,431
Total assets 6,510 6,197 46,047 42,628
Liabilities
Current liabilities:
Loans and credit from banks and
298 136 2,106 936
others
Bills and accounts payable 581 610 4,109 4,195
Other current liabilities 707 791 5,002 5,443
Total current liabilities 1,586 1,537 11,218 10,574
Long-term liabilities:
Long-term loans 141 44 998 305
Debentures 1,206 1,151 8,533 7,915
Deferred tax liabilities 52 63 368 431
Employee benefits 102 93 719 637
Other long-term liabilities 140 50 989 343
Total long-term liabilities 1,641 1,400 11,607 9,631
Total liabilities 3,227 2,937 22,825 20,205
Equity
Total equity 3,283 3,260 23,222 22,423
Total equity 3,283 3,260 23,222 22,423
Total liabilities and equity 6,510 6,197 46,047 42,628
11
Table 7. Abridged Consolidated Cash Flow Statement for the Third Quarter
Q3 2019 Q3 2018 Q3 2019 Q3 2018
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 57 99 399 675
Cash flow from operating activities 57 99 399 675
Investing activities:
Acquisitions of fixed and intangible assets -69 -42 -484 -288
Proceeds from sale of long term assets 26 - 182 -
Other investing activities 1 -2 10 -10
Cash flow used for investing activities -42 -44 -292 -298
Financing activities:
Receipt of loans from banks and other lenders 97 12 680 85
Repayment of loans from banks and other lenders -146 -10 -1,020 -68
Other financing activities -97 -33 -681 -218
Cash flow from (used for) financing activities -146 -30 -1,020 -201
Effects of exchange rate movement on cash and cash -8 -9 87 174
equivalents
Net change in cash and cash equiva lents -139 16 -827 350
Cash and cash equivalents at the beginning of the period 783 910 5,382 6,021
Cash and cash equivalents at the end of the period 644 926 4,555 6,371
Free Cash Flow 7 52 44 352
12
Table 8. Abridged Consolidated Cash Flow Statement for the Nine Month
9M 2019 9M 2018 9M 2019 9M 2018
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 10 221 94 1,455
Cash flow from operating activities 10 221 94 1,455
Investing activities:
Acquisitions of fixed and intangible assets -158 -463 -1,090 -2,966
Proceeds received from disposal of investments 3 - 20 -
Proceeds from sale of long term assets 33 380 235 2,413
Acquisitions of a subsidiary -123 - -827 -
Other investing activities - -1 - -10
Cash flow used for investing activities -245 -85 -1,662 -563
Financing activities:
Receipt of loans from banks and other lenders 391 12 2,668 85
Repayment of loans from banks and other lenders -214 -332 -1,484 -2,116
Other financing activities -214 -81 -1,469 -526
Cash flow from (used for) financing activities -37 -401 -285 -2,557
Effects of exchange rate movement on cash and cash -9 -13 62 -172
equivalents
Net change in cash and cash equiva lents -281 -277 -1,791 -1,493
Cash and cash equivalents at the beginning of the period 925 1,204 6,346 7,864
Cash and cash equivalents at the end of the period 644 926 4,555 6,371
Free Cash Flow -290 93 -1,952 616
13
Notes to Abridged Consolidated Financial Statements
Note 1: Basi s of preparation
Basi s of pre sentation and accounting policies: The abridged consolidated financial statements for the
quarters ended September 30, 2019 and 2018 incorporat e the financial statements of ADAMA Ltd. and of all
of its subsidiaries (the “Company”), including Adama Agricultural Solutions Ltd. (“Solutions”) and its
subsidiaries.
The Company has adopted the Accounting Standards for Business Enterprises issued by the Ministry of
Finance (the "MoF") and the implementation guidance, interpretations and other relevant provisions issued or
revis ed subsequently by the MoF (collectively referred to as "CASBE").
The abridged consolidat ed financial statements contained in this release are present ed in both Chinese
Renminbi (RMB ), as the Company’s shares are traded on the Shenzhen Stock Exchange, as well as in United
States dollars ($) as this is the major currency in which the Company’s business is conducted. For the
purposes of this releas e, a customary convenience translation has been used for the translation from RMB to
US dollars, with Income Statement and Cash Flow items being translated using the quarterly average
exchange rat e, and Balance Sheet items being translated using the exchange rate at the end of the period.
The preparation of financial statements requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and l iabilities at the date of
the financial statements, and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimated.
The 2018 figures are as previously reported, and not restated to include the business combination under
common cont rol in respect of Anpon.
In estimating the impact from t he Jingzhou old site disruption, the lost sales and gross profit are calculated as
the differenc e in sales and gross profit earned on the affected products between the relevant periods in 2019
and their comparative periods in 2018. Related operating expenses include idleness costs, as well as an
assumed saving of 2.5% of affected sales in respect of inc remental Sales & Marketing expenses. Financing
costs were assumed not to be impacted. An effective tax rat e of 20% was assumed in calculating the after -tax
impact.
Note 2: Abridged Financial Statements
For ease of use, the Financial Statements shown in this release have been abridged as follows:
Abridged Consolidat ed Income Statement:
“Other operating expenses/(income)” includes asset and credit impairment losses; gain (loss) from
disposal of assets and non-operating income and expenses and idleness
“Financial expenses and investment income” includes net financing expenses; gains from changes in
fair value; and investment income (including share of income of equity accounted investees)
Abridged Consolidat ed Balance Sheet:
“Other current assets, receivables and prepaid expenses” includes financial assets held for trading,
derivatives financial assets, receivables financing, prepayments, other receivables; and other current
assets
“Fixed assets, net” includes fixed assets, construction in progress and rights-of-use assets
“Intangible assets, net” includes intangible assets and goodwill
“Other non-current assets” includes other equity investments; long-term equity investments; long-term
receivables; investment property; and other non-current assets
“Loans and credit from banks and others” includes short-term loans and non-current liabilities due
within one year
“Other current liabilities” includes derivatives financial liabilities, payables for employee benefits,
contract liabilities, taxes payable, other payables and other current liabilities
“Other long-term liabilities” includes long-term payables, lease liability, provisions and other non-
current liabilities
14
Table 9. Analysis of Gaps between Adjusted Income Statement and
Reported Income Statement in Financial Statements
Q3 Adjusted Adjustments Reported
USD(m) Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018
Revenues 953 872 - - 953 872
Gross profit 295 279 0 -0 295 279
Operating expenses 212 198 -15 -16 227 214
Operating income (EBIT) 83 81 15 16 68 65
Income before taxes 48 51 15 16 33 35
Net income 42 40 13 14 29 26
EBITDA 144 134 -8 -6 152 140
Earnings per share 0.0173 0.0164 0.1200 0.0108
Q3 Adjusted Adjustments Reported
RMB(m) Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018
Revenues 6,666 5,929 - - 6,666 5,929
Gross profit 2,064 1,896 1 -2 2,063 1,897
Operating expenses 1,483 1,346 -103 -109 1,586 1,454
Operating income (EBIT) 581 550 104 107 477 443
Income before taxes 337 347 104 107 233 240
Net income 296 273 90 94 206 180
EBITDA 1,010 909 -54 -40 1,064 949
Earnings per share 0.1210 0.1117 0.0842 0.0734
9M Adjusted Adjustments Reported
USD(m) 9M 2019 9M 2018 9M 2019 9M 2018 9M 2019 9M 2018
Revenues 2,962 2,918 - - 2,962 2,918
Gross profit 968 972 2 1 966 970
Operating expenses 643 618 -64 266 706 353
Operating income (EBIT) 325 353 66 -264 260 618
Income before taxes 204 257 63 -264 141 521
Net income 173 197 57 -201 116 398
EBITDA 509 512 -6 -317 515 829
Earnings per share 0.0708 0.0806 0.0476 0.1626
9M Adjusted Adjustments Reported
RMB(m) 9M 2019 9M 2018 9M 2019 9M 2018 9M 2019 9M 2018
Revenues 20,282 18,955 - - 20,282 18,955
Gross profit 6,624 6,308 14 8 6,610 6,300
Operating expenses 4,402 4,023 -433 1,682 4,835 2,341
Operating income (EBIT) 2,222 2,285 448 -1,674 1,775 3,959
Income before taxes 1,389 1,656 427 -1,674 962 3,330
Net income 1,183 1,272 388 -1,270 795 2,542
EBITDA 3,481 3,321 -43 -2,015 3,524 5,336
Earnings per share 0.4836 0.5200 0.3248 1.0392
15
Table 10. Income Statement Adjustments
In addition to the reported financial results that the Company prepares in accordance with PRC GAAP, the
Company’s management prepares non-GAAP, Adjusted financial res ults to present what the Company
believes is a more useful view of the true economic performance of the business on an ongoing basis. The se
Adjusted results exclude items that are of a one-time or non-cash/non-operational nature that do not im pact
the ongoing performance of the business and reflects the way the Company’s management and Board of
Directors view the performance of the Company. The Company believes that excluding the effects of these
items from its operating results allows an effective assessment and comparis on of the underlying financial
performance of its business from period to period and within the market.
Q3 2019 Q3 2018 Q3 2019 Q3 2018
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 29.5 26.4 206. 1 179. 7
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non- 11.5 11.5 80.1 77.8
cash)
2. One-time capital gain from Divestment of registrations due to 2017 - - - -
ChemChina-Syngenta transaction
3. Amortization of Transfer assets received and written-up due to 2017 7.7 10.2 53.5 69.2
ChemChina-Syngenta transaction (non-cash)
4. Reinstatement of amortization expenses due to Divestment (non- - - - -
cash)
5. Accelerated depreciation due to relocation (non-cash) 1.6 - 11.2 -
6. Non-core assets closure (non-cash) - - - -
7. Long-term incentive (non-cash) -7.8 -5.9 -54.3 -40.1
8. Amortization of acquisition PPA (non-cash) 1.9 - 13.4 -
9. Sanonda-ADAMA Combination transaction one-time stamp tax - - - -
Total Adjustments to Operating Income (EBIT) 14.9 15.7 103. 9 106. 9
Total Adjustments to EBITDA -7.7 -5.9 -53.7 -40.1
Adjustments to Financing Expenses:
10. Revaluation of non-cash adjustment related to non-controlling - - - -
interest
Total Adjustments to Income before Taxes 14.9 15.7 103. 9 106. 9
Adjustments to Taxes
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions 1.9 1.9 13.6 13.2
2. Tax expense due to capital gain from registrations Divestment - - - -
8. Deferred tax due to PPA 0.1 - 0.5 -
Total adjustments to Net Income 12.8 13.8 89.8 93.7
Net Income (Adjusted) 42.3 40.2 296. 0 273. 4
16
9M 2019 9M 2018 9M 2019 9M 2018
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 116. 4 397. 9 794. 7 2,542.4
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non- 34.4 34.4 235. 4 223. 7
cash)
2. One-time capital gain from Divestment of registrations due to 2017 - -314.3 - -1,998.5
ChemChina-Syngenta transaction
3. Amortization of Transfer assets received and written-up due to 2017 27.5 20.3 187. 7 134. 0
ChemChina-Syngenta transaction (non-cash)
4. Reinstatement of amortization expenses due to Divestment (non- - -2.6 - -16.5
cash)
5. Accelerated depreciation due to relocation (non-cash) 6.1 - 41.9 -
6. Non-core assets closure (non-cash) - 2.3 - 14.8
7. Long-term incentive (non-cash) -6.4 -6.0 -45.0 -41.0
8. Amortization of acquisition PPA (non-cash) 4.0 - 27.5 -
9. Sanonda-ADAMA Combination transaction one-time stamp tax - 1.5 - 9.4
Total Adjustments to Operating Income (EBIT) 65.6 -264.5 447. 5 -1,674.0
Total Adjustments to EBITDA -6.1 -316.8 -43.4 -2,016.8
Adjustments to Financing Expenses:
10. Revaluation of non-cash adjustment related to non-controlling -3.0 - -20.5 -
interest
Total Adjustments to Income before Taxes 62.5 -264.5 427. 0 -1,674.0
Adjustments to Taxes
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions 5.8 5.8 40.0 38.0
2. Tax expense due to capital gain from registrations Divestment - -69.5 - -441.8
8. Deferred tax due to PPA -0.2 - -1.4 -
Total adjustments to Net Income 56.9 -200.8 388. 3 -1,270.2
Net Income (Adjusted) 173. 3 197. 1 1,183.1 1,272.2
Notes:
1. Amortization of Legacy PPA of 2011 acqui sition of Solutions (non-cash): Under PRC GAAP, the Company has inherited the historical
“legacy” amortization charge from the first combined reporting for Q3 2017 that ChemChina previously was incurring in respect of its acquisition
of Solutions in 2011. This amortization is done in a linear manner on a quarterly basis, most of which will be completed and removed in the
second half of 2020.
2. One-time capital gain from Divestment of registrations due to 2017 ChemChina-Syngenta transaction: In the first quarter of 2018, the
Company earned a one-time profit on the Divestment of crop protection products in connection with the approval by the EU Commission of the
acquisition of Syngenta by ChemChina. This one-time profit is excluded from the Adjusted financial results due to its one-time nature, while the
related tax expense is also adjusted for.
3. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash): The proceeds from
the Divestment of crop protection products in connection with the approval by the EU Commission of the acquisition of Syngenta by
ChemChina, net of taxes and transaction expenses, were paid to Syngenta in return for the transfer of a portfolio of products in Europe of
similar nature and economic value. Since the products acquired from Syngenta are of the same nature and with the same net economic value
as those divested, and since the Company excludes the one-time gain that it made on the divested products, the additional amortization charge
incurred due to the written-up of the acquired assets is also excluded to present a consistent view of Divestment and Transfer transactions,
which had no net impact on the underlying economic performance of the Company. See note 2.
4. Reinstatem ent of amortization expenses, related to the Divestment (non-cash): Reinstatement of amortization expenses due to
classification of to-be-divested European registrations as “Held-for-Sale”, related to 2017 ChemChina acquisition of Syngenta.
5. Accelerated depreciation due to relocation (non-cash): Production assets located in the old production sites in Jingzhou and Huai’An will
be relocated to the new sites in the coming years. Since some of the older production assets may not be able to be relocated, some of these
assets which are no longer operational are being written off (or impaired), while for others, their economic life has been shortened and
therefore will be depreciated over a shorter period. Since these are older assets that were built many years ago and will be replaced by newer
production facilities at the new sites, and since the ongoing operations of the business will not be impacted there by, the Company adjusts for
the impact of the accelerated depreciation of these assets.
6. Non-core assets closure (non-cash): One-time charge due to closure of peripheral, non-material assets.
7. Long-term Incentive (non-cash): The Company granted its employees, who are mainly non-Chinese residents, a long term incentive (LTI) in
17
the form of 'phantom' options, due to the complexity of granting Chinese-listed, equity-settled options to non-Chinese employees. As such, the
Company records an expense, or recognizes income, depending on the fluctuation in the Company’s share price, even though the Company
will not incur any cash impact prior to exercise of the phantom options. To neutralize the impact of such share price movements on the
measurement of the Company’s performance and expected employee compensation and to reflect the existing phantom options, in the
Company’s adjusted financial performance, the LTI is presented on an equity -settled basis in accordance with the value of the existing plan at
the grant date.
8. Amortization of acquisition PPA (non-cash): Related to the amortization of non-cash intangible assets created as part of acquisitions; has
no impact on the ongoing performance of the companies acquired.
9. Sanonda-ADAMA Combination transaction one-time stamp tax: One-time stamp tax expense incurred related to the Combination.
10. Revaluation of non-cash adjustment related to non-controlling interest: Relates to put options issued to non-controlling interests as part
of historical business combinations which took place before January 1, 2010. The put options are presented as a liability at the present value of
the future exercise price. The revaluation of these put options in Solutions is recognized under IFRS to Goodwill, but due to the acquisition of
Solutions by the Company in 2017, which is treated from an accounting perspective as a “Business Combination Under Common Control”,
such revaluation is recorded as a profit or loss item in the financial reports of the Company. The revaluations of such put options have no
bearing on the ongoing performance of the Company and are therefore adjusted for.
18
Table 11. Exchange Rate Data for the Company's Principal
Functional Currencies
September 30 Q3 Average 9M Average
2019 2018 Change 2019 2018 Change 2019 2018 Change
EUR/USD 1.093 1.162 (6.0%) 1.112 1.163 (4.4%) 1.124 1.194 (5.9%)
USD/BRL 4.164 4.004 (4.0%) 3.974 3.958 (0.4%) 3.888 3.603 (7.9%)
USD/PLN 4.000 3.675 (8.8%) 3.885 3.704 (4.9%) 3.829 3.559 (7.6%)
USD/ZAR 15.083 14.182 (6.4%) 14.677 14.105 (4.1%) 14.367 12.891 (11.5%)
AUD/USD 0.676 0.721 (6.3%) 0.686 0.731 (6.3%) 0.699 0.758 (7.7%)
GBP/USD 1.229 1.306 (5.9%) 1.232 1.303 (5.4%) 1.273 1.351 (5.8%)
USD/ILS 3.482 3.627 4.0% 3.527 3.631 2.9% 3.589 3.553 (1.0%)
USD LIBOR 3M 2.09% 2.40% (13.1%) 2.20% 3.24% (6.0%) 2.46% 3.89% 12.4%
September 30 Q3 Average 9M Average
2019 2018 Change 2019 2018 Change 2019 2018 Change
USD/RMB 7.073 6.879 2.8% 6.992 6.797 2.9% 6.851 6.511 5.2%
EUR/RMB 7.729 7.996 (3.3%) 7.774 7.903 (1.6%) 7.699 7.776 (1.0%)
RMB/BRL 0.589 0.582 (1.2%) 0.568 0.582 2.4% 0.567 0.553 (2.6%)
RMB/PLN 0.566 0.534 (5.9%) 0.556 0.545 (2.0%) 0.559 0.547 (2.2%)
RMB/ZAR 2.133 2.062 (3.4%) 2.099 2.075 (1.2%) 2.097 1.980 (5.9%)
AUD/RMB 4.783 4.963 (3.6%) 4.793 4.971 (3.6%) 4.791 4.933 (2.9%)
GBP/RMB 8.694 8.987 (3.3%) 8.615 8.857 (2.7%) 8.718 8.795 (0.9%)
RMB/ILS 0.492 0.527 6.6% 0.504 0.534 5.6% 0.524 0.546 4.0%
RMB SHIBOR 3M 2.73% 2.85% (4.2%) 2.67% 3.11% (14.2%) 2.80% 3.98% (29.6%)
19
