ADAMA Ltd. Full Content of the First Quarter Report 2020
ADAMA LTD.
FIRST QUARTER REPORT 2020
ADAMA Ltd. (hereinafter referred to as “the Company”) is a global leader in crop protection,
providing solutions to farmers across the world to combat weeds, insects and disease.
ADAMA has one of the widest and most diverse portfolios of active ingredients in the world,
state-of-the art R&D, manufacturing and formulation facilities, together with a culture that
empowers our people in markets around the world to listen to farmers and ideate from the
field. This uniquely positions ADAMA to offer a vast array of distinctive mixtures, formulations
and high-quality differentiated products, delivering solutions that meet local farmer and
customer needs in over 100 countries globally.
Please see important additional information and further details included in the Annex.
April 2020
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ADAMA Ltd. Full Content of the First Quarter Report 2020
Section I - Important Notice
The Company’s Board of Directors, Board of Supervisors, directors, supervisors and
senior managers confirm that the content of the Report is true, accurate and complete
and contains no false statements, misleading presentations or material omissions,
and assume joint and several legal liability arising therefrom.
Ignacio Dominguez, the person leading the Company (President and Chief Executive
Officer) as well as its legal representative, and Aviram Lahav, the person leading the
accounting function (Chief Financial Officer & Deputy Chief Executive Officer), hereby
assert and confirm the truthfulness, accuracy and completeness of the Financial
Report.
All of the Company’s directors attended the board meeting for the review of this
Report.
This Report and its abstract have been prepared in both Chinese and English. Should
there be any discrepancy between the two versions, the Chinese version shall prevail.
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ADAMA Ltd. Full Content of the First Quarter Report 2020
Section II - Financial Highlights & Shareholder Changes
1. Main accounting and financial results
Whether the Company performs any retroactive adjustments to, or restatements of, its accounting data of last year due to
change in accounting policies or correction of accounting errors
□ Yes√ No
January - March 2020 January - March 2019 YoY +/- (%)
Operating revenues (RMB’000) 6,782,243 6,787,751 -0.08%
Net profit attributable to shareholders of the Company
(16,707) 366,756 -104.56%
(RMB’000)
Net profit attributable to shareholders of the Company
16,813 285,087 -94.10%
excluding non-recurring profit and loss (RMB’000)
Net cash flow from operating activities (RMB’000) (384,708) (1,289,484) -70.17%
Basic EPS (RMB/share) (0.007) 0.150 -104. 67%
Diluted EPS (RMB/share) NA NA NA
Weighted average return on net assets -0.07% 1.61% -1.68%
End of Reporting
End of last year +/- (%)
Period
Total assets (RMB’000) 47,780,240 45,288, 940 5.50%
Net assets attributable to shareholders (RMB’000) 22,500,143 22,371,665 0.57%
Please see key additional information and further details included in the Annex.
Non-Recurring profit/loss
√ Applicable □ Not applicable
Unit: RMB’000
Item January-March 2020 Notes
Gains/losses on the disposal of non-current assets (including the write-off of
7,692
asset impairment provisions accrued during the period)
Government grants recognized in profit or loss (other than grants which are
closely related to the Company's business and are either in fixed amounts or
10,794
determined under quantitative methods in accordance with the national
standard)
Reversal of provision for receivables and contract assets, that are subject to
9,871
specific provision
Other non-operating income and expenses other than the above 2,176
Employee
early
Other profit or loss that meets the definition of non-recurring profit or loss (59,752)
retirement
plan expenses
Less: Income tax effects 4,301
Total (33,520)
Explanation of why the Company classified an item as non-recurring profit/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public - Non-recurring Profit
and Loss, and reclassified any non-recurring profit/loss item given as an example in the said explanatory announcement
to recurrent profit/loss
□ Applicable √ Not applicable
No such cases during the Reporting Period.
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ADAMA Ltd. Full Content of the First Quarter Report 2020
I. Total number of shareholders and shareholdings of top 10 shareholders at the
period-end
1. Total number of ordinary shareholders and preference shareholders who had resumed their voting
right and shareholdings of top 10 shareholders at the period-end
Unit: share
51,151
Total number of preference
(the number of ordinary A
Total number of ordinary shareholders at the shareholders who had resumed
share shareholders is 35,706; 0
end of the Reporting Period their voting right at the end of
the number of B share
the Reporting Period (if any)
shareholders is 15,445)
Shareholdings of top 10 shareholders
Number of Pledged or frozen
Nature of Shareholding Number of shares
Name of shareholder restricted shares
shareholder percentage shares held
held Status Number
China National Agrochemical State-owned
74.02% 1,810,883,039 1,810,883,039 -- --
Co., Ltd. legal person
Jingzhou Sanonda Holding State-owned
4.89% 119,687,202 -- -- --
Co., Ltd. legal person
China Cinda Asset State-owned
1.37% 33,557,046 -- -- --
Management Co., Ltd. legal person
China Structural Reform State-owned
1.37% 33,557,046 -- -- --
Fund Co., Ltd. legal person
Portfolio No.503 of National
Others 0.92% 22,500,052 -- -- --
Social Security Fund
Overseas
UBS AG 0.58% 14,264,374 -- -- --
legal person
CCB Principal-ICBC-Avic
Trust, Trust Plan of Pooled
Funds of CCB Principal
Others 0.53% 12,885,906 -- -- --
Private Placement
Investment, Tianqi (2016) No.
293 of Avic Trust
Caitong Fund Fuchun
Chuangyi Private Placement Others 0.19% 4,697,986 -- -- --
No.3 Asset Management Plan
GUOTAI JUNAN
Overseas
SECURITIES(HONGKONG) 0.18% 4,309,872 -- -- --
legal person
LIMITED
State-owned Assets
Administration Bureau of State 0.17% 4,169,266 -- -- --
Qichun County
Shareholdings of top 10 non-restricted shareholders
Number of non-restricted Type of shares
Name of shareholder
shares held at the period-end Type Number
Jingzhou Sanonda Holding Co., RMB ordinary share
119,687,202 119,687,202
Ltd.
China Cinda Asset Management RMB ordinary share
33,557,046 33,557,046
Co., Ltd.
China Structural Reform Fund Co., RMB ordinary share
33,557,046 33,557,046
Ltd.
Portfolio No.503 of National Social RMB ordinary share
22,500,052 22,500,052
Security Fund
UBS AG 14,264,374 RMB ordinary share 14,264,374
CCB Principal-ICBC-Avic Trust,
Trust Plan of Pooled Funds of CCB
Principal Private Placement 12,885,906 RMB ordinary share 12,885,906
Investment, Tianqi (2016) No. 293
of Avic Trust
Caitong Fund Fuchun Chuangyi RMB ordinary share
4,697,986 4,697,986
Private Placement No.3 Asset
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ADAMA Ltd. Full Content of the First Quarter Report 2020
Management Plan
GUOTAI JUNAN
SECURITIES(HONGKONG) 4,309,872 Domestically listed foreign share 4,309,872
LIMITED
State-owned Assets Administration RMB ordinary share
4,169,266 4,169,266
Bureau of Qichun County
China Agricultural Bank-CSI 500
Trading Open Index Investment
4,030,584 RMB ordinary share 4,030,584
Funds
Jingzhou Sanonda Holdings Co., Ltd. and CNAC are related parties, and are acting-
in-concert parties as prescribed in the Administrative Methods for Acquisition of
Related or act-in-concert parties Listed Companies. Sanonda Holding is a wholly-controlled subsidiary of CNAC. It is
among the shareholders above unknown to the Company whether the other shareholders are related parties or
acting-in-concert parties as prescribed in the Administrative Methods for Acquisition
of Listed Companies.
Top 10 ordinary shareholders
conducting securities margin
No suc h issue.
trading (if any)
Note: China National Agrochemical Co., Ltd. (“CNAC”) and Syngenta Group Co., Ltd. (formerly: “China (Shanghai)
Agricultural Technology Co., Ltd.”, and hereinafter: the “Syngenta Group”) have signed a Share Transfer Agreement on
January 5, 2020 for the transfer of the State-owned 74.02% shares of the Company directly held by CNAC to Syngenta
Group.
Did any of the top 10 ordinary shareholders or the top 10 non-restricted ordinary shareholders of the Company conduct
any promissory buy-back transaction during the Reporting Period?
□ Yes √ No
No such cases in the Reporting Period.
2. Total number of preference shareholders and shareholdings of the top 10 of them
□ Applicable √ Not applicable
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ADAMA Ltd. Full Content of the First Quarter Report 2020
Section III - Significant Events
I. Changes in main accounting statement items and financial indicators in the Reporting
Period, as well as reasons for the changes
√ Applicable □ Not applicable
During the first quarter of 2020, the global agrochemical market, amongst many others, was impacted by the
unprecedented Coronavirus pandemic, COVID-19 ("COVID-19"). The pandemic, which started early in the quarter and
now continues to rage throughout the rest of the world, has had a number of adverse effects on the Company’s performance
in the first quarter, compared to the corresponding period last year, the most significant of which were:
In China, while operations at the Company’s Huai’An, Jiangsu site have continued without material interruption,
operations at the Jingzhou site in Hubei province were temporarily suspended from late January until the end of
February due to the COVID-19 in the province. Although operations at the site recommenced at the beginning of March,
restrictions on logistics remained, impacting the free transport of goods to and from the sites and to the ports;
Renewed tightening in supply of raw materials and intermediates sourced from third parties in China and around the
world;
Restrictions on international trading and sales through the Company’s global channels, as well as increased costs of
global shipping, airfreight and other logistics;
Lower demand in the Company’s US Consumer & Professional (non-crop) businesses, as retailers slowed their
restocking of products;
Significant impacts on global currency markets, which have seen the rapid depreciation of many currencies against the
US dollar, most notably the Brazilian Real, Australian dollar, Turkish Lira and Indian Rupee, as well as increased
volatility in the Euro. These movements have negatively impacted the Company’s performance in the first quarter
compared to the corresponding period last year.
The ongoing spread of the pandemic is expected to continue to negatively impact the performance of the Company in the
second quarter, and potentially beyond.
The Company is actively managing its response to the outbreak in order to ensure the safety of its employees and limit the
impact on the Company’s performance. Actions being taken include extending and strengthening distribution channels,
use of expedited transport options where possible, working collaboratively with supply chain partners, and raising prices
wherever possible to accommodate the weaker currencies and increased logistics costs.
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ADAMA Ltd. Full Content of the First Quarter Report 2020
Q1 2020 Q1 2019 Q1 2020 Q1 2019
+/-% +/-%
(000’RMB) (000’RMB) (000’USD) (000’USD)
Operating income
6,782,243 6,787,751 -0.08% 972,531 1,006,421 -3.37%
(Revenues)
Cost of goods sold 4,757,413 4,449,236 6.93% 682,181 659,691 3.41%
Gross Profits 2,024,830 2,338,515 -13.41% 290,350 346,730 -16.26%
% of Sales 29.85% 34.45% - 29.85% 34.45% -
*Total Operating
1,647,108 1,682,833 -2.12% 240,055 249,511 -3.79%
Expenses
Financial Expenses 411,620 479,381 -14.14% 59,022 71,082 -16.97%
Gain (loss) from Changes
323,813 794,180 -59.23% 46,433 117,753 -60.57%
in Fair Value
Investment Income (loss) -129,323 -550,462 -76.51% -18,544 -81,617 -77.28%
Total Net Financial
Expenses and Investment 217,130 235,663 -7,86% 31,133 34,946 -10.91%
Income
Total profits 136,632 415,111 -67.09% 19,601 61,547 -68.15%
% of Sales 2.02% 6.12% - 2.02% 6.12% -
Income tax expenses 153,339 48,355 217.11% 21,988 7,171 206.62%
Net income (16,707) 366,756 -104.56% -2,387 54,376 -104.39%
% of Sales -0.25% 5.4% - -0.25% 5.4% -
EBITDA 927,888 1,232,110 -24.69% 133,058 182,689 -27.17%
% of Sales 13.68% 18.15% - 13.68% 18.15% -
* Total operating expenses includes Sales and Marketing, General and Administrative and Research and Development
expenses
Note: As the Company’s functional currency is USD, following explanations and analysis are based on USD-denominated
numbers as listed above.
Analysis of Financial Highlights
(1) Revenues
Revenues in the first quarter were $973 million, up 2% at constant exchange rates, with continued business growth in the
face of the COVID-19 pandemic. Constant currency sales were constrained by an estimated $47 million due to COVID-19.
In addition, sales were heavily impacted by the depreciation of global currencies, resulting in sales in US dollar terms being
3% below those of the same period last year.
The Company delivered solid business growth in Europe, driven by a strong performance in Eastern European countries,
as well as throughout the India, Middle East & Africa region supported by favorable weather conditions in key areas. In
Latin America, the Company was strengthened by its recent acquisition in Peru, but sales were impacted by the
depreciation of regional currencies, most notably the Brazilian Real. Sales in North America were lower largely due to the
impact of the COVID-19 on demand for the Company’s Consumer & Professional products. In Asia-Pacific (excluding
China), a strong performance in Australia, which has begun to see a recovery from the extreme drought conditions of the
past few years, largely compensated for a COVID-19-driven slowdown in East-Asian markets and the depreciation of local
currencies.
In China, despite seeing continued growth in the sales of the Company’s branded, formulated products, overall sales in
the country were impacted by lower sales of intermediates and unformulated products, mainly those produced at the
Jingzhou site which was temporarily suspended during the quarter.
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ADAMA Ltd. Full Content of the First Quarter Report 2020
Regional Sales Performance
Q1 2020 Q1 2019 Change
$m $m USD
Europe 357 360 -1.0%
North America 168 180 -6.7%
Latin America 159 159 -0.3%
Asia Pacific 158 186 -14.9%
Of which China 68 94 -27.1%
India, Middle East & Africa 131 121 +8.3%
Total 973 1,006 -3.4%
Europe: Sales increased by 2.7% in the first quarter at constant exchange rates, compared with the corresponding period
last year, driven by continued business growth, partially offset by lower prices resulting from high inventory levels in the
industry’s distribution channels.
In Northern Europe, the Company saw pleasing business growth in the quarter, partially recovering from supply
constraints seen in 2019 that affected key products. The Company delivered robust growth in most Eastern European
countries supported by favorable weather conditions, with noteworthy performances recorded in Russia and Ukraine,
where the Company is seeing continued market share gains, as well as Hungary and Romania, which benefited from an
early start to the 2020 season. In addition, the Company grew in the key western European markets of France and Italy.
In US dollar terms, sales in Europe were lower by 1.0% in the quarter, compared to the corresponding period last year,
reflecting the net impact of weaker currencies, largely due to the COVID-19.
North America: Sales in the quarter were lower by 6.0%, at constant exchange rates, compared to the corresponding
period last year, largely due to the impact of the COVID-19, which reduced demand for the Company’s Consumer &
Professional (non-crop) products.
The Company recorded strong business growth in Canada with solid demand for crop protection products, as well as
favorable weather conditions. In the US, the Company obtained two new rice herbicide registrations in the quarter,
enhancing its portfolio of solutions for conventional rice and complementing the Company’s Preface and Postscript
herbicides for the FullPage Rice Cropping Solution, furthering the Company’s offering to rice farmers.
In US dollar terms, sales in North America were lower by 6.7% in the quarter, compared to the corresponding period last
year, reflecting the COVID-19-related weakening of the Canadian Dollar.
Latin America: Sales grew by 12.5% in the first quarter, at constant exchange rates, compared to the corresponding
period last year. The robust performance was driven by strong business growth, bolstered by the Company’s recent
acquisition in Peru, alongside continued price increases.
The Company saw continued constant-currency business growth in Brazil in the quarter, despite drought conditions which
delayed the planting season in key crops including soybean and reduced application of fungicides. Noteworthy
performances were also recorded in the quarter in Mexico, benefiting from good weather conditions particularly in the
Pacific region, as well as Colombia and Ecuador, driven by a good harvest season in key crops.
The Company continues to expand its differentiated product offering in the region with the launch during the quarter of
EMINENT, a dual mode broad-spectrum insecticide, in Argentina. The Company also obtained the registration of
UBERTOP, an insecticide used mainly for the control of a wide range of pests in tomato and cabbage, in Mexico.
In US dollar terms, sales in Latin America were lower by 0.3% in the quarter, compared to the corresponding period last
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ADAMA Ltd. Full Content of the First Quarter Report 2020
year, reflecting the significant depreciation of regional currencies, most notably the Brazilian Real, as a result of the
COVID-19outbreak.
Asia Pacific: Sales were lower by 9.8% in the quarter, at constant exchange rates, compared to the corresponding
period last year, due largely to the outbreak of the COVID-19, which started early in the quarter.
In Asia-Pacific (excluding China), a strong performance in Australia, which has begun to see a recovery from the extreme
drought conditions of the past few years, largely compensated for a COVID-19-driven slowdown in East-Asian markets.
In China, despite seeing continued growth in the sales of the Company’s branded, formulated products, overall sales in
the country were impacted by the COVID-19 which resulted in logistics and supply challenges, and reduced sales of
intermediates and unformulated products from the temporarily suspended Jingzhou site.
During the quarter, the Company launched new products including QUALIPRO ENCLAVE, a quadruple-mode of action
fungicide mixture for use in turf in Australia, and obtained multiple new product registrations in the region, including
BALORIC and SOLITO, an early post-emergence rice herbicide, in Thailand and Indonesia.
In US dollar terms, sales in Asia-Pacific were lower by 14.9% in the quarter, compared to the corresponding period last
year, reflecting the impact of weaker currencies following the COVID-19.
India, Middle East and Africa: Sales in the first quarter grew by 12.5%, at constant exchange rates, compared to the
corresponding period last year. The Company recorded robust business growth in all major markets throughout the region,
alongside increased prices, despite the impact of the missing sales of Jingzhou old site products resulting from the
temporary suspension of operations there due to the COVID-19.
The Company delivered solid business growth in India combined with higher pricing, in spite of a countrywide lockdown
enforced by the Indian government that commenced towards the end of the quarter. The Company also grew strongly in
South Africa and Israel, benefiting from favorable weather conditions, and delivered pleasing results in Turkey from where
the Company is also expanding its presence into surrounding countries in the region.
In US dollar terms, sales in the region grew by 8.3% in the quarter, compared to the corresponding period last year,
reflecting the impact of softer currencies, which were adversely affected by the COVID-19, most notably the Turkish Lira
and the Indian Rupee.
(2) Gross Profit:
Gross margin was lower mainly a result of the material depreciation of global currencies, alongside some pricing pressure,
mainly in Europe and China, and sustained high procurement costs, all of which were only partially offset by the business
growth achieved in the quarter.
(3) Operating Expenses:
Operating expenses include Sales and Marketing, General and Administration and R&D - The Company continues to
exercise tight control of its operating expenses, assisted by the beneficial impact of the strengthening of the US dollar
against global currencies, achieving significant savings even while including companies acquired during 2019. The first
quarter this year also saw the recording of Jingzhou-related idleness costs resulting from the temporary suspension of
operations there due to the COVID-19 in an amount similar to those recorded also during Q1 2019 when the sites were
similarly suspended.
In recent years, the Company recorded various one-time or non-cash or non-operational items affecting its reported
numbers, including as a result of mergers and acquisitions, which resulted in the inclusion within its operating expenses
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ADAMA Ltd. Full Content of the First Quarter Report 2020
of, mainly, the following items:
Amortization of legacy Purchase Price Allocation (PPA) of 2011 acquisition of Adama Agricultural Solutions
Ltd., a wholly-owned subsidiary of the Company (hereinafter: “Solutions”) (non-cash): Under PRC GAAP, since
the first combined reporting in Q3 2017 following the combination, the Company has inherited the historical “legacy”
amortization charge that ChemChina previously was incurring in respect of its acquisition of Solutions in 2011. This
amortization is done in a linear manner on a quarterly basis, most of which will be fully amortized by the end of 2020.
Its reported financial impact (affecting the Sales & Marketing expenses) in the first quarter of 2020 is RMB 66.3 million
(USD 9.6 million), net of tax, compared with RMB 64.1 million (USD 9.6 million) in the corresponding period in 2019.
Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-
cash): The proceeds from the Divestment of crop protection products in connection with the approval by the EU
Commission of the acquisition of Syngenta by ChemChina, net of taxes and transaction expenses, were paid to
Syngenta in return for the transfer of a portfolio of products in Europe of similar nature and economic value. Since the
products acquired from Syngenta are of the same nature, and with the same net economic value as those divested,
the Divestment and Transfer transactions had no net impact on the underlying economic performance of the Company.
Its reported financial impact (affecting the Sales & Marketing expenses) in the first quarter of 2020 is RMB 54.9 million
(USD 7.9 million), net of tax, compared with RMB 71.7 million (USD 10.6 million) in the corresponding period in 2019.
Employee early retirement plan expenses: a one-time provision for the early retirement plan of employees at the
Company’s Israeli manufacturing facilities. Its reported financial impact (affecting the General & Administrative
expenses) in the first quarter of 2020 is RMB 59.8 million (USD 8.6 million), net of tax.
(4) Financial Expenses
“Financial Expenses” alone mainly reflect interest payments on corporate bonds and bank loans as well as foreign
exchange gains/losses on the bonds and other monetary assets and liabilities before the Company carries out any hedging.
The impact of Financial Expenses (before hedging) is RMB 412 million (USD 59 million) for the first three months of 2020
compared with RMB 479 million (USD 71 million) for the corresponding period in 2019.
Given the global nature of its operational activities and the composition of its assets and liabilities, the Company, in the
ordinary course of its business, uses foreign currency derivatives (forwards and options) to hedge the cash flow risks
associated with existing monetary assets and liabilities that may be affected by exchange rate fluctuations. Net gains/losses
from hedging of those positions, are recorded in “Gains/Losses from Changes in Fair Value”, and are then transferred
to “Investment Income” upon realization. The combined impact of Gains/Losses from Changes in Fair Value and
Investment Income is a net gain of RMB 194 million (USD 28 million) in the first three months of 2020 compared with
RMB 244 million (USD 36 million) in the corresponding period in 2019.
The aggregate of Financial Expenses, Gains/Losses from Changes in Fair Value and Investment Income (hereinafter
as “Total Net Financial Expenses and Investment Income”), which more comprehensively reflects the financial
expenses of the Company in supporting its main business and protecting its monetary assets/liabilities, amounts to RMB
217 million (USD 31 million) in the first three months of 2020 compared with RMB 236 million (USD 35 million) in the
corresponding period in 2019.
The lower level in the first quarter compared with the same period last year reflects mainly financial income earned due to
the effect of the appreciation of the US dollar against the RMB on the value of US dollar-denominated monetary assets in
China, while the higher expenses in the prior year resulted from the opposite. This financial income in the quarter more
than offset the slightly increased interest costs on higher net debt levels.
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ADAMA Ltd. Full Content of the First Quarter Report 2020
(5) Income Tax Expenses
The net tax expense in the quarter was higher largely due to the impact of weakening of currencies, against the US dollar,
most notably that of the Brazilian Real, driving higher non-cash tax expenses due to differences between the functional
(US dollar) and tax (local) currencies regarding the value of non-monetary assets.
Changes in main assets and liabilities
Unit: RMB’000
Assets and liabilities March 31, 2020 December 31, 2019 % change Explanation for any major
change
Derivative financial Realization and revaluation of
1,829,988 490,113 273.38%
assets* derivatives
Due to the Company's strong
growth in regions with
Accounts receivable 8,577,783 8,004,157 7.17% generally longer credit terms,
especially Brazil and Latin
America
Derivative financial Realization and revaluation of
1,687,360 691,475 144.02%
liabilities derivatives.
Seasonality increase mainly
Taxes payable 515,575 369,038 39.71%
due to VAT
Seasonality increase mainly
Contractual liability 888,232 664,228 33.72%
due to rebates
Increase mainly due to tax
Deferred tax liability 447,499 323,304 38.41% basis revaluation of non-
monetary assets in Brazil
*Both derivative financial assets and liabilities are hedging instruments, the sum-up of which reflects the net position.
II. Progress on significant events, as well as the impact and solutions
√ Applicable □ Not applicable
1. In January 2020 the Company announced that it is becoming a distinctive member of the Syngenta Group, a newly-
formed ag-industry leader being created through the bringing together of the agricultural businesses of ChemChina and
Sinochem. The Syngenta Group, comprising the Company, Syngenta AG and Sinochem’s agriculture-related activities, is
expected to become one of the world’s leading agriculture inputs companies, spanning crop protection, seeds, fertilizers,
additional agricultural and digital technologies, as well as an advanced distribution network in China, reaching farmers
nationwide.
As mentioned above, CNAC and Syngenta Group have signed a Share Transfer Agreement on January 5, 2020 for the
transfer of the State-owned 74.02% shares of the Company directly held by CNAC to Syngenta Group, which is also owned
by ChemChina. The Company will maintain its unique brand and positioning.
2. In this context, Mr. Chen Lichtenstein ceased to serve as the President and CEO of the Company (while continuing to
serve as a director) effective as of March 1, 2020, following his nomination as CFO of Syngenta Group, with responsibility
also for strategy and Integration; Mr. Ignacio Dominguez was appointed on February 26, 2020 as the President and CEO
of the Company also acting as its legal representative, effective from March 1, 2020, after serving as the CCO of the
Company’s subsidiary - Adama Agricultural Solutions Ltd. (hereinafter: “Solutions”) for the last 6 years, and in other
executive positions prior to that. Due to the impact of the coronavirus pandemic, the Company will register Ignacio
Dominguez as the legal representative in Hubei Administration for Market Regulation Bureau when circumstance permits;
Mr. Aviram Lahav, the CFO of the Company was also appointed as Deputy CEO, concurrently with his appointment as
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ADAMA Ltd. Full Content of the First Quarter Report 2020
Solutions’ CEO (on top of his role as Solution’s CFO).
Additionally, on April 9, 2020, the shareholders meeting approved the nomination of Mr. Erik Fyrwald, the CEO of Syngenta
Group and CEO and Executive Director of Syngenta AG, as director and Chairman of the Board of Directors of the
Company, replacing Mr. Yang Xingqiang, and the continuous nomination of Mr. Chen Lichtenstein, CFO of the Syngenta
Group and Syngenta AG, as a director of the Board of Directors of the Company. Concurrently, Mr. Ignacio Dominguez
was nominated as the Chairman of the board of directors of Solutions, replacing Mr. Yang Xingqiang.
3. Within the context of the 2017 combination between the Company and Solutions, the Company entered into a
Performance Compensation Agreement with CNAC, then the 100% owner of Solutions and the controlling shareholder of
the Company, according to which, CNAC made a commitment regarding Solutions’ aggregate net profit in the years 2017,
2018 and 2019. In case of failure to meet such commitment, CNAC committed to compensate the Company either through
shares or cash according to a predetermined formula. Despite Solutions’ strong performance during the three-year period,
due to exogenous reasons, the calculated net profit of Solutions for this period implies a certain shortfall. This shortfall was
caused entirely by the impact of the Divestment & Transfer of several products that Solutions implemented to facilitate the
approval by the EU Commission of the acquisition of Syngenta by ChemChina, which caused an incremental non-cash
amortization charges related to the written-up value of the assets received from Syngenta. Absent these non-cash
amortization charges, Solutions would have exceeded the profit commitment.
As a result, CNAC shall return to the Company a certain number of shares of the Company it received in exchange for the
transfer of 100% of Solutions to the Company, and return an additional amount in dividends it received in respect of such
shares. Following their receipt, these shares will be canceled by the Company. As a result, the total number of shares in
issue will be reduced, and CNAC’s ownership (directly and indirectly) in the Company will go from 78.9% to 78.0%.
Additionally, according to the Impairment Test Report of Solutions due to the Expiration of the Compensation Period of
Major Assets Restructuring Project issued by Deloitte, there was no impairment of Solutions on December 31, 2019.
In view of CNAC transferring the shares directly held by it in the Company to the Syngenta Group, CNAC and Syngenta
Group will compensate the Company. For details, please refer to the Announcement on the Overall Achievement of the
Committed Performance in the Major Assets Restructuring and the Planned Compensations to the Company by the
Obligors disclosed by the Company on April 28, 2020 on the website www.cninfo.com.cn.
For details on the aforesaid compensation, please refer to Item II of Section V of the 2019 Annual Report.
Significant Events Date of Index of the Disclosed Announcements
Disclosure
CNAC is January 6, Announcement on the Transfer of State-owned Shares of
transferring its 2020 Controlling Shareholders (Announcement No. 2020-1)
direct ownership in January 23, Announcement-SinoChem Group and ChemChina Planning for Strategic
the Company to 2020 Restructuring (Announcement No. 2020-4)
Syngenta Group March 14, Announcement on Approval from China Securities Regulatory Commission
2020 for the Application of Offeror and its Person Acting in Concert for Waiving of
the Obligation of a Mandatory Tender Offer for the Transfer (Announcement
No. 2020-12)
Replacement of February 27, Announcement on the Resolutions of the 21st meeting of the 8th Session of
directors and senior 2020 the Board (Announcement No. 2020-7)
executives March 26, Announcement on the Resolutions of the 23rd meeting of the 8th Session of
2020 the Board (Announcement No. 2020-15)
April 10,2020 Announcement on the Resolutions of the 2nd Interim Shareholders Meeting
in 2020 (Announcement No. 2020-20)
Please see key additional information and further details included in the Annex.
Status of share buyback
□Applicable √Not applicable
Status of share buyback in the way of centralized bidding
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ADAMA Ltd. Full Content of the First Quarter Report 2020
□Applicable √Not applicable
III. None completion of Commitments that should have been completed in the reporting
period by the Company, actual controller, shareholders, related parties, acquirer, and
other committed parties
□ Applicable √ Not applicable
IV. Securities investment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
V. Wealth management entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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ADAMA Ltd. Full Content of the First Quarter Report 2020
VI. Investment in derivative financial instruments
√ Applicable □ Not applicable
Unit: RMB’000
The party that Related party Initial Investment amount at Amount purchased Percentage of investment Gain/loss during
Relation with Expiring Amount sold during Impairment Investment amount
operates the transaction or Type investment Starting date beginning of the during the reporting amount divided by net asset at the reporting
the Company date the reporting period accrued (if any) at end of the period
investment not? amount period period end of the period period
Banks No No Option 2,078,908 2020/02/17 26/05/2020 2,078,908 3,703,626 -3,671,174 No 2,111,360 9.38% 73,918
Banks No No Forward 19,122,640 29/11/2019 04/08/2020 19,122,640 37,826,042 -37,527,533 No 19,421,149 86.32% 172,474
Total 21,201,548 -- -- 21,201,548 41,529,668 -41,198,707 21,532,509 95.70% 246,392
Source of fund for the investment Internal
litigation-related situations (if applicable) N/A
Date of disclosure of Board approval (if any) December 30, 2017
Date of disclosure of Shareholders’ approval (if any) N/A
The aforesaid refers to short term hedging currency transactions made with banks.
The Group’s transactions are not traded in the market. The Transactions are between the applicable company in the Group and the applicable bank until the expiration date of the transaction, therefore no
market risk is involved.
Regarding credit and liquidity risk, the Group is working with large and substantial banks only and with some of them the Group has ISDA agreements.
As to operational risk, the Group is working with relevant software, which is its back office for all transactions.
Risk and control analysis for the reporting period (including but No legal risk is involved.
not limited to market risk, liquidity risk, credit risk, operational The actions taken in order to further reduce risks are:
risk, legal risk, etc.) The relevant subsidiaries have specific guidelines, under the Group’s policy, which were approved by the subsidiaries' financial statements committee of the board, which specifies, inter alia, the hedging
policy, the persons that have the authorization to deal with hedging, the tools, ranges etc. The only subsidiary that has hedging positions in the Group in the period was Solutions and its subsidiaries.
The relevant subsidiaries apply management designed procedures and controls, which among other things, monitor the working process and the controls of the hedging transactions and are quarterly
reviewed and annually audited.
The controllers of the relevant subsidiaries are involved in the process and are monitoring the hedging accounting treatment.
Every 2-3 years the internal audit of the relevant subsidiaries’ department is auditing the entire procedure.
The aforesaid refers to short time hedging currency transactions made by the relevant subsidiary with banks.
Market price or fair value change of investments during the
Segregation of duties as follows:
reporting period.
For the fair value evaluation, the relevant subsidiary is usually using external experts. The relevant subsidiary hedges currencies only; the relevant transactions are simple (Options and forwards) for short
Specific methodology and assumptions should be disclosed in
terms. For fair value methodology see section XI of the annual report, note IX. Fair Value. The exchange rates are provided by the accounting department of the relevant subsidiary and all other parameters
the analysis of fair value of the investments
are provided by the experts.
Explanation for any significant changes in accounting policies
N/A
and principles, compared with last reporting period
The derivative investments carried by the Company are for hedging and narrowing down the risk of market fluctuations. The investments respond to the Company’s routine business demands and are in
Independent Directors’ opinion on the investment in derivative
accordance with the relevant laws and regulations. Additionally, the Company has adopted Currency Risk Hedging Policy to strengthen the risk management and control which benefit the Company’s ability
financial instruments and related risk controls
to protect against market risk. The derivative investments do not harm the interests of the Company and its shareholders.
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ADAMA Ltd. Full Content of the First Quarter Report 2020
VII. Information regarding communication with investors
√ Applicable □ Not applicable
Date of visit Way of visit Type of visitor About
March 30th, 2020 Tele-conference Institutional Debriefing of 2019 Annual Financial Preview
VIII. Illegal provision of guarantees for external parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IX. Inadequate use of Company’s capital by the controlling shareholder or by its related
parties for non-operating purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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ADAMA Ltd. Full Content of the First Quarter Report 2020
Section IV Financial Statements
II. Financial statements
1. Consolidated balance sheet
Prepared by ADAMA Ltd.
31 March 2020
Unit: RMB’000
March 31, December 31, March 31, December 31,
Item Item
2020 2019 2020 20109
Current assets: Current liabilities:
Cash at bank and on hand 4,264,450 4,348,588 Short-term loans 2,515,622 2,009,882
Financial assets held for 26,831 29,510 1,687,360 691,475
Derivative financial liabilities
trading
Derivative financial assets 1,829,988 490,113 Bills payable 379,381 321,674
Bills receivable 31,203 26,000 Accounts payable 4,434,631 4,205,901
Accounts receivable 8,577,783 8,004,157 Contract liabilities 888,232 664,228
Receivables financing 35,624 78,948 Employee benefits payable 1,127,486 1,211,713
Prepayments 388,841 377,808 Taxes payable 515,575 369,038
Other receivables 1,752,959 1,195,253 Other payables 1,237,407 1,049,594
10,091,315 9,932,654 Non-current liabilities due 1,079,671 1,066,243
Inventories
within one year
Other current assets 639,603 659,195 Other current liabilities 303,740 355,243
Total current assets 27,638,597 25,142,226 Total current liabilities 14,169,105 11,944,991
Non-current assets: Non-current liabilities:
Long-term receivables 135,332 170,896 Long-term loans 1,181,250 927,159
Long-term equity investments 141,184 133,098 Debentures payable 7,804,486 7,965,942
Other equity investments 156,148 155,062 Lease liabilities 406,109 406,358
Investment properties 3,690 3,771 Long-term accounts payable 26,570 29,021
6,926,084 6,939,610 Long-term employee benefits 686,505 738,854
Fixed assets
payables
Construction in progress 859,769 788,386 Provisions 164,473 176,822
Right-of-use assets 533,749 536,034 Deferred tax liabilities 447,499 323,304
Intangible assets 5,698,552 5,835,785 Other non-current liabilities 394,100 404,824
Goodwill 4,609,054 4,511,193 Total non-current liabilities 11,110,992 10,972,284
Deferred tax assets 833,511 826,696 Total liabilities 25,280,097 22,917,275
Other non-current assets 244,570 246,183 Shareholders’ equity:
Total non-current assets 20,141,643 20,146,714 Share capital 2,446,554 2,446,554
Total assets 47,780,240 45,288,940 Capital reserves 12,903,168 12,903,168
Other comprehensive 1,336,915 1,192,681
income
Special reserves 15,888 14,927
Surplus reserves 240,162 240,162
Retained earnings 5,557,456 5,574,173
Total shareholders’ equity 22,500,143 22,371,665
Total liabilities and 47,780,240 45,288,940
shareholders’ equity
Ignacio Dominguez Aviram Lahav Aviram Lahav
Legal representative Chief of the accounting work Chief of the accounting organ
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ADAMA Ltd. Full Content of the First Quarter Report 2020
2. Balance sheet of the Company
Unit: RMB’000
March 31, December 31, March 31, December 31,
Item Item
2020 2019 2020 20109
Current assets: Current liabilities:
Cash at bank and on hand 1,464,248 1,423,051 Short-term loans 122,000 150,000
Accounts receivable 192,541 349,109 Bills payable 83,020 90,190
Receivables financing 11,091 11,722 Accounts payable 125,030 124,228
Prepayments 38,418 6,055 Contract liabilities 7,230 6,748
Other receivables 28,964 14,051 Employee benefits payable 176,567 204,238
Inventories 89,956 97,861 Taxes payable 2,710 3,614
Other current assets 7,164 19,117 Other payables 239,224 237,266
1,832,382 1,920,966 Non-current liabilities due 11,339 454
Total current assets
within one year
Non-current assets: Total current liabilities 767,120 816,738
Long-term equity investments 16,371,411 16,371,411 Non-current liabilities:
Other equity investments 85,495 85,495 Long-term loans 173,210 141,960
Investment properties 3,690 3,771 Lease liabilities - 21
738,208 777,476 Long-term employee benefits 95,961 96,826
Fixed assets
payables
Construction in progress 532,564 504,936 Provisions 43,379 43,238
Right-of-use assets 369 486 Other non-current liabilities 171,770 171,770
Intangible assets 168,942 170,053 Total non-current liabilities 484,320 453,815
Deferred tax assets 86,353 84,950 Total liabilities 1,251,440 1,270,553
Other non-current assets 77,247 73,668 Shareholders’ equity:
Total non-current assets 18,064,279 18,072,246 Share capital 2,446,554 2,446,554
Total assets 19,896,661 19,993,212 Capital reserves 15,449,878 15,449,878
Other comprehensive 41,308 41,308
income
Special reserves 13,933 12,973
Surplus reserves 240,162 240,162
Retained earnings 453,386 531,784
Total shareholders’ equity 18,645,221 18,722,659
Total liabilities and 19,896,661 19,993,212
shareholders’ equity
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ADAMA Ltd. Full Content of the First Quarter Report 2020
3. Consolidated income statement
Unit: RMB’000
Item January-March, 2020 January-March, 2019
1. Total operating Income 6,782,243 6,787,751
Less: Cost of sales 4,757,413 4,449,236
Taxes and surcharges 18,943 24,541
Selling and Distribution expenses 1,256,871 1,268,966
General and Administrative expenses 325,229 317,514
Research and Development expenses 92,008 96,353
Financial expenses 411,620 479,381
Including: Interest expense 165,243 163,299
Interest income 10,530 20,227
Add: Investment income, net (129,323) (550,462)
Including: Income from investment in associates 9,128 5,773
and joint ventures
Gain (loss) from changes in fair value 323,813 794,180
Credit impairment loss 13,886 (8,580)
Asset impairment loss (1,923) (8,777)
Gain (loss) from disposal of assets 7,692 40,479
2. Operating profit 134,304 418,600
Add: Non-operating income 17,390 5,707
Less: Non-operating expense 15,062 9,196
3. Total profit 136,632 415,111
Less: income tax expense 153,339 48,355
4. Net profit (16,707) 366,756
5.1 Classified by nature of operations
5.1.1 Continuing operations (16,707) 366,756
5.2 Classified by ownership
5.2.1 Shareholders of the Company (16,707) 366,756
5. Other comprehensive income net of tax
Other comprehensive income net of tax attributable to shareholders 144,207 (390,043)
of the Company
5.1 Items that will not be reclassified into profit/loss 34,218 (4,152)
5.1.1 Re-measurement of defined benefit plan liability 34,218 (9,202)
5.1.2 FV changes in other equity investment - 5,050
5.2 Items that were or will be reclassified to profit or loss 109,989 (385,891)
5.2.1 Effective portion of gains or loss of cash flow hedge 45,885 (40,304)
5.2.2 Translation differences of foreign financial statements 64,104 (345,587)
6. Total comprehensive income for the period 127,500 (23,287)
7. Earnings per share
7.1 Basic earnings per share (RMB/ share) (0.007) 0.150
7.2 Diluted earnings per share (RMB/ share) N/A N/A
Ignacio Dominguez Aviram Lahav Aviram Lahav
Legal representative Chief of the accounting work Chief of the accounting organ
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ADAMA Ltd. Full Content of the First Quarter Report 2020
4. Income statement of the Company
Unit: RMB’000
Item January-March, 2020 January-March, 2019
1. Operating income 170,951 416,354
Less: Cost of sales 149,890 292,548
Taxes and surcharges 1,695 6,241
Selling and Distribution expenses 2,938 19,482
General and Administrative expenses 98,878 96,492
Research and Development expenses 1,961 1,470
Financial expenses (income) (3,725) 8,886
Including: Interest expense 1,415 1,077
Interest income 4,033 6,901
Add: Credit impairment loss (1,266) (577)
Asset Impairment loss (1,587) (69)
2. Operating profit (83,539) (9,411)
Add: Non-operating income 4,100 710
Less: Non-operating expense 363 1,857
3. Total profit (79,802) (10,558)
Less: Income tax expense (1,404) (2,828)
4. Net profit (78,398) (7,730)
4.1 Continuing operations (78,398) (7,730)
5. Other comprehensive income net of tax - 5,050
5.1 Items that will not be reclassified into profit/loss - 5,050
5.1.1 FV changes in other equity investment - 5,050
6. Total comprehensive income for the period (78,398) (2,680)
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ADAMA Ltd. Full Content of the First Quarter Report 2020
5. Consolidated cash flow statement
Unit: RMB’000
Item January-March, 2020 January-March, 2019
1. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 5,144,846 5,006,120
Refund of taxes and surcharges 26,579 30,497
Cash received relating to other operating activities 167,605 109,616
Sub-total of cash inflows from operating activities 5,339,030 5,146,233
Cash paid for goods and services 4,028,009 4,604,831
Cash paid to and on behalf of employees 905,294 829,857
Payments of taxes and surcharges 75,043 264,648
Cash paid relating to other operating activities 715,392 736,381
Sub-total of cash outflows from operating activities 5,723,738 6,435,717
Net cash flows from operating activities (384,708) (1,289,484)
2. Cash flows from investing activities:
Cash received from disposal of investments 2,218 8,148
Cash received from returns of investments - 3,372
Net cash received from disposal of fixed assets, intangible assets 9,429 30,843
and other long-term assets
Sub-total of cash inflows from investing activities 11,647 42,363
Cash paid to acquire fixed assets, intangible assets and other 357,353 287,509
long-term assets
Net cash paid to acquire subsidiaries or other - 824,583
business units
Cash paid for other investing activities 27,393 -
Sub-total of cash outflows from investing activities 384,746 1,112,092
Net cash flows from investing activities (373,099) (1,069,729)
3. Cash flows from financing activities:
Cash received from borrowings 1,194,240 1,537,197
Sub-total of cash inflows from financing activities 1,194,240 1,537,197
Cash repayment of borrowings 428,544 258,676
Cash payment for dividends, profit distributions or interest 46,210 64,551
Including: dividends paid to non-controlling interest - 23,830
Cash paid relating to other financing activities 90,259 380,425
Sub-total of cash outflows from financing activities 565,013 703,652
Net cash flows from financing activities 629,227 833,545
4. Effect of foreign exchange rate changes on cash and cash 46,592 (81,844)
equivalents
5. Net increase (decrease) in cash and cash equivalents (81,988) (1,607,512)
Add: Cash and cash equivalents at the beginning of the period 4,319,907 6,346,196
6. Cash and cash equivalents at the end of the period 4,237,919 4,738,684
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ADAMA Ltd. Full Content of the First Quarter Report 2020
6. Cash flow statement of the Company
Unit: RMB’000
Item January-March, 2020 January-March, 2019
1. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 309,170 633,069
Refund of taxes and surcharges 17,306 15,759
Cash received relating to other operating activities 8,199 7,737
Sub-total of cash inflows from operating activities 334,675 656,565
Cash paid for goods and services 169,917 290,452
Cash paid to and on behalf of employees 59,625 55,606
Payments of taxes and surcharges 2,723 20,779
Cash paid relating to other operating activities 43,067 51,452
Sub-total of cash outflows from operating activities 275,332 418,289
Net cash flows from operating activities 59,343 238,276
2. Cash flows from investing activities:
Cash received relating to other investing activities - 1,808
Sub-total of cash inflows from investing activities - 1,808
Cash paid to acquire fixed assets, intangible assets and other 32,861 25,850
long-term assets
Sub-total of cash outflows from investing activities 32,861 25,850
Net cash flows from investing activities (32,861) (24,042)
3. Cash flows from financing activities:
Cash received from borrowings 114,500 -
Cash received relating to other financing activities 2,151 -
Sub-total of cash inflows from financing activities 116,651 -
Cash repayment of borrowings 100,000 -
Cash payment for dividends, profit distributions or interest 3,381 1,077
Cash paid relating to other financing activities - 8,610
Sub-total of cash outflows from financing activities 103,381 9,687
Net cash flows from financing activities 13,270 (9,687)
4. Effect of foreign exchange rate changes on cash and cash 3,596 (4,777)
equivalents
5. Net increase (decrease) in cash and cash equivalents 43,348 199,770
Add: cash and cash equivalents at the beginning of the period 1,395,994 2,005,313
6. Cash and cash equivalents at the end of the period 1,439,342 2,205,083
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ADAMA Ltd. Full Content of the First Quarter Report 2020
III. Adjustments of the financial statements
1. Opening balance adjustments due to adoption of new accounting standards for financial instruments,
revenue and leases
□ Applicable√ Not applicable
2. Retrospective adjustments due to adoption of new accounting standards for financial instruments and
leases
□ Applicable √ Not applicable
IV. Auditor’s report
Is this Report audited?
□ Yes √ No
This Report is unaudited.
ADAMA Ltd.
April 27, 2020
22
