ADAMA Ltd.
ENGLISH TRANSLATION OF FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
ADAMA Ltd.
(Expressed in RMB '000)
AUDITOR'S REPORT AND FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
CONTENTS PAGES
THE CONSOLIDATED AND COMPANY'S BALANCE SHEETS 1-3
THE CONSOLIDATED AND COMPANY'S INCOME STATEMENTS 4-5
THE CONSOLIDATED AND COMPANY'S CASH FLOW STATEMENTS 6-7
THE CONSOLIDATED AND COMPANY'S STATEMENTS
OF CHANGES IN SHAREHOLDERS' EQUITY 8-9
NOTES TO THE FINANCIAL STATEMENTS 10 - 114
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Balance Sheet
June 30 December 31
Notes 2020 2019
Current assets
Cash at bank and on hand V.1 6,293,175 4,348,588
Financial assets held for trading V.2 12,609 29,510
Derivative financial assets V.3 1,017,302 490,113
Bills receivable V.4 47,433 26,000
Accounts receivable V.5 8,677,392 8,004,157
Receivables financing V.6 35,552 78,948
Prepayments V.7 351,997 377,808
Other receivables V.8 1,235,318 1,195,253
Inventories V.9 10,618,794 9,932,654
Other current assets V.10 611,296 659,195
Total current assets 28,900,868 25,142,226
Non-current assets
Long-term receivables V.11 120,550 170,896
Long-term equity investments V.12 134,420 133,098
Other equity investments V.13 156,092 155,062
Investment properties 3,609 3,771
Fixed assets V.14 6,942,743 6,939,601
Construction in progress V.15 998,060 788,386
Right-of-use assets V.16 515,779 536,034
Intangible assets V.17 5,543,526 5,835,785
Goodwill V.18 4,627,331 4,511,091
Deferred tax assets V.19 857,313 826,696
Other non-current assets V.20 295,888 246,183
Total non-current assets 20,195,311 20,146,714
Total assets 49,096,199 45,288,940
-1-
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Balance Sheet (continued)
June 30 December 31
Notes 2020 2019
Current liabilities
Short-term loans V.21 1,893,876 2,009,882
Derivative financial liabilities V.22 1,065,034 691,475
Bills payable V.23 255,417 321,674
Accounts payable V.24 4,773,708 4,205,901
Contract liabilities V.25 1,052,333 664,228
Employee benefits payable V.26 985,533 1,211,713
Taxes payable V.27 386,070 369,038
Other payables V.28 1,342,465 1,049,594
Non-current liabilities due within one year V.29 1,336,375 1,066,243
Other current liabilities V.30 381,188 355,243
Total current liabilities 13,471,999 11,944,991
Non-current liabilities
Long-term loans V.31 2,224,678 927,159
Debentures payable V.32 8,663,773 7,965,942
Lease Liabilities V.33 387,635 406,358
Long-term payables 26,860 29,021
Long-term employee benefits payable V.34 676,624 738,854
Provisions V.35 162,545 176,822
Deferred tax liabilities V.19 416,449 323,304
Other non-current liabilities V.36 395,838 404,824
Total non-current liabilities 12,954,402 10,972,284
Total liabilities 26,426,401 22,917,275
Shareholders' equity
Share capital V.37 2,446,554 2,446,554
Capital reserve V.38 12,903,168 12,903,168
Other comprehensive income V.39 1,340,054 1,192,681
Special reserves 17,205 14,927
Surplus reserve V.40 240,162 240,162
Retained earnings V.41 5,722,635 5,574,173
Total shareholders’ equity 22,669,778 22,371,665
Total liabilities and shareholders’ equity 49,096,179 45,288,940
Ignacio Dominguez Aviram Lahav
Legal representative Chief of accounting work & Chief of accounting organ
These financial statements were approved by the Board of Directors of the Company on August 19, 2020.
The notes form part of these financial statements.
-2-
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Balance Sheet
June 30 December 31
Notes 2020 9102
Current assets
Cash at bank and on hand XV.1 1,445,904 1,423,051
Accounts receivable XV.2 400,029 349,109
Receivables financing XV.3 8,512 11,722
Prepayments 11,641 6,055
Other receivables XV.4 45,492 14,051
Inventories 83,789 97,861
Other current assets 36,105 19,117
Total current assets 2,031,472 1,920,966
Non-current assets
Long-term equity investments XV.5 16,371,411 16,371,411
Other equity investments 85,495 85,495
Investment properties 3,609 3,771
Fixed assets 791,306 777,476
Construction in progress 640,442 504,936
Right-of-use assets 252 486
Intangible assets 167,831 170,053
Deferred tax assets 57,077 84,950
Other non-current assets 83,998 73,668
Total non-current assets 18,201,421 18,072,246
Total assets 20,232,893 19,993,212
Current liabilities
Short-term loans 152,000 150,000
Bills payables 75,360 90,190
Accounts payables 233,960 124,228
Contract liabilities 4,007 6,748
Employee benefits payable 147,645 204,238
Taxes payable 2,779 3,614
Other payables 265,035 237,266
Non-current liabilities due within one year 13,299 454
Total current liabilities 894,085 816,738
Non-current liabilities
Long-term loans 377,750 141,960
Lease Liabilities - 21
Long-term employee benefits payable 96,608 96,826
Provisions 43,907 43,238
Other non-current liabilities 171,770 171,770
Total non-current liabilities 690,035 453,815
Total liabilities 1,584,120 1,270,553
Shareholders’ equity
Share capital V.37 2,446,554 2,446,554
Capital reserve 15,449,878 15,449,898
Other comprehensive income 37,267 41,308
Special reserves 15,251 12,973
Surplus reserve 240,162 240,162
Retained earnings V.41 459,661 531,784
Total shareholders’ equity 18,648,773 18,977,659
Total liabilities and shareholders’ equity 20,232,893 19,993,212
-3-
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Income Statement
Six months ended June 30
Notes 2020 2019
I. Operating income V.42 14,121,040 13,616,032
Less: Cost of sales V.42 9,904,470 9,023,242
Taxes and surcharges V.43 46,117 46,226
Selling and Distribution expenses V.44 2,468,568 2,499,774
General and administrative expenses V.45 553,186 628,259
Research and Development expenses V.46 188,185 210,699
Financial expenses V.47 842,797 938,196
Including: Interest expense 350,041 175,018
Interest income 29,625 40,514
Add: Investment income, net V.48 52,129 (514,443)
Including: Income from investment
in associates and joint ventures 14,392 21,724
Gain (loss) from changes in fair value V.49 265,510 884,135
Credit impairment reversal (losses) V.50 5,589 3,347
Asset impairment reversal (losses) V.51 (25,376) (23,809)
Gain from disposal of assets V.52 7,694 115,514
II. Operating profit 423,268 734,380
Add: Non-operating income 39,020 10,811
Less: Non-operating expenses 13,441 16,016
III. Total profit 448,847 729,175
Less: Income tax expenses V.53 244,198 140,537
IV. Net profit 204,649 588,638
(1). Classified by nature of operations
(1.1). Continuing operations 204,649 588,638
(2). Classified by ownership
(2.1). Shareholders of the Company 204,649 588,638
V. Other comprehensive income, net of tax V. 39 147,373 (113,471)
Other comprehensive income (net of tax)
attributable to shareholders of the Company 147,373 (113,471)
(1) Items that will not be reclassified to profit or loss: 39,373 (4,417)
(1.1) Re-measurement of defined benefit plan liability 39,373 (13,978)
(1.2) Fair Value changes in other equity investment - 9,561
(2) Items that were or will be reclassified to profit or loss 108,000 (109,054)
(2.1) Effective portion of gains or loss of cash flow hedge (78,285) (151,993)
(2.2) Translation differences of foreign financial statements 186,285 42,939
VI. Total comprehensive income for the period attributable to
Shareholders of the Company 352,022 475,167
VII. Earnings per share XIV.2
(1) Basic earnings per share (Yuan/share) 0.08 0.24
(2) Diluted earnings per share (Yuan/share) N/A N/A
-4-
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Income Statement
Six months ended June 30
Notes 2091 2019
I. Operating income XV.6 673,646 735,426
Less: Operating costs XV.6 537,314 518,561
Taxes and surcharges 2,821 8,910
Selling and Distribution expenses 17,072 43,054
General and administrative expenses 133,338 190,950
Research and Development expenses 4,559 24,464
Financial expenses (income) (4,826) (1,254)
Including: Interest expense 3,143 2,059
Interest income 8,507 14,333
Add: Credit impairment reversal (losses) (674) (1,633)
Asset Impairment reversal (losses) (2,864) (272)
Gain from disposal of assets 101 -
II. Operating Profit (20,069) (51,164)
Add: Non-operating income 5,597 4,430
Less: Non-operating expenses 420 1,896
III. Total profit (14,892) (48,630)
Less: Income tax expense (income) 27,872 (10,841)
IV. Loss (42,764) (37,789)
Continuing operations (42,764) (37,789)
V. Other comprehensive income, net of tax (4,041) 5,050
(1) Items that will not be reclassified to profit or loss (4,041) 5,050
(1.1) Re-measurement of defined benefit plan liability (4,041) -
(1.2) FV changes in other equity investment - 5,050
VI. Total comprehensive income (loss) for the period (46,805) (32,739)
-5-
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Cash Flow Statement
Six months ended June 30
Notes 2020 2019
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 13,378,983 12,817,678
Refund of taxes and surcharges 67,336 39,737
Cash received relating to other operating activities V.55(1) 630,515 258,378
Sub-total of cash inflows from operating activities 14,076,834 13,115,793
Cash paid for goods and services 9,247,435 9,779,321
Cash paid to and on behalf of employees 1,967,484 1,801,614
Payments of taxes and surcharges 168,816 465,018
Cash paid relating to other operating activities V.55(2) 1,458,568 1,374,790
Sub-total of cash outflows from operating activities 12,842,303 13,420,743
Net cash flows from (used in) operating activities V.56(1)a 1,234,531 (304,950)
II. Cash flows from investing activities:
Cash received from disposal of investments 16,224 20,173
Cash received from returns of investments 54,304 3,372
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 15,677 30,843
Cash received relating to other investing activities V.55(3) - 9,327
Sub-total of cash inflows from investing activities 86,205 63,715
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 803,315 606,126
Cash paid for acquisition of investments 51,435 -
Net cash paid to acquire subsidiaries or other business units - 826,805
Cash paid relating to other investing activities V.55(4) 46,840 778
Sub-total of cash outflows from investing activities 901,590 1,433,709
Net cash flows used in investing activities (815,385) (1,369,994)
III. Cash flows from financing activities:
Cash received from borrowings 2,822,626 1,987,810
Cash received from other financing activities V.55(5) 4,449 61,701
Sub-total of cash inflows from financing activities 2,827,075 2,049,511
Cash repayments of borrowings 745,547 463,876
Cash payment for dividends, profit distributions and interest 356,793 406,111
Including: Dividends paid to non-controlling interest 26,828 28,936
Cash paid relating to other financing activities V.55(6) 249,286 443,891
Sub-total of cash outflows from financing activities 1,351,626 1,313,878
Net cash from financing activities 1,475,449 735,633
IV. Effects of foreign exchange rate changes on cash and cash
equivalents 41,605 (25,065)
V. Net decrease in cash and cash equivalents V.56(1)b 1,936,200 (964,376)
Add: Cash and cash equivalents at the beginning of the year 719,313,4 6,346,196
I. VI. Cash and cash equivalents at the end of the period V.56(2) 611,61,,4 5,381,820
-6-
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Cash Flow Statement
Six months ended June 30
Notes 2020 2019
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 581,672 1,034,417
Refund of taxes and surcharges 27,022 23,042
Cash received relating to other operating activities XV.7(1) 15,063 18,958
Sub-total of cash inflows from operating activities 623,757 1,076,417
Cash paid for goods and services 467,607 535,991
Cash paid to and on behalf of employees 122,633 94,867
Payments of taxes and surcharges 4,959 73,468
Cash paid relating to other operating activities XV.7(2) 90,807 89,570
Sub-total of cash outflows from operating activities 686,006 793,896
Net cash flows from (used in) operating activities XV.8 (62,249) 282,521
II. Cash flows from investing activities:
Net cash received from disposal of fixed assets, intangible assets and other
long-term assets 114 -
Cash received relating to other investing activities - 1,808
Sub-total of cash inflows from investing activities 114 1,808
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 154,378 92,180
Sub-total of cash outflows from investing activities 154,378 92,180
Net cash flows used in investing activities (154,264) (90,372)
III.Cash flows from financing activities:
Cash received from borrowings 441,500 -
Cash received relating to other financing activities XV.7.(3) 4,449 11,947
Sub-total of cash inflows from financing activities 445,949 11,947
Cash repayments of borrowings 190,500 72,000
Cash payment for dividends, profit distributions or interest 14,606 2,059
Cash paid relating to other financing activities XV.7.(4) 200 200
Sub-total of cash outflows from financing activities 205,306 74,259
Net cash flow provided by (used in) financing activities 240,643 (62,312)
IV. Effects of foreign exchange rate changes on cash and cash equivalents 3,172 (2,996)
V. Net increase in cash and cash equivalents 27,302 126,861
Add: Cash and cash equivalents at the beginning of the year XV.8(2) 1,395,994 2,005,313
VI. Cash and cash equivalents at the end of the period XV.8(2) 1,423,296 2,132,174
-7-
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Consolidated Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2020
Attributable to shareholders of the Company
Other
Share Capital comprehen-si Special Surplus Retained
capital reserve ve income reserves reserve earnings Total
I. Balance at December 31, 2019 2,446,554 12,903,168 1,192,681 14,927 240,162 5,574,173 22,371,665
II. Changes in equity for the period - - 147,373 2,278 - 148,462 298,113
1. Total comprehensive income - - 147,373 - - 204,649 352,022
2. Owner’s contributions and reduction - - - - - - -
3. Appropriation of profits - - - - - (56,187) (56,187)
3.1 Distribution to owners - - - - - (29,359) (29,359)
3.2 Distribution to - -
non-controlling interest - - - (26,828) (26,828)
4. Transfers within owners’ equity - - - - - - -
5. Special reserve - - - 2,278 - - 2,278
5.1 Transfer to special reserve - - - 3,756 - - 3,756
5.2 Amount utilized - - - (1,478) - - (1,478)
III. Balance at June 30, 2020 2,446,554 12,903,168 1,340,054 17,205 240,162 5,722,635 22,669,778
For the six months ended June 30, 2019
Attributable to shareholders of the Company
Other
Share Capital comprehen-si Special Surplus Retained
capital reserve ve income reserves reserve earnings Total
I. Balance at December 31, 2018 2,446,554 12,975,456 1,090,952 13,536 240,162 5,513,466 22,280,126
Add: Business combination under
common control - 349,035 (125) - - 115,826 464,736
II. Balance at January 1, 2019 2,446,554 13,324,491 1,090,827 13,536 240,162 5,629,292 22,744,862
III. Changes in equity for the period - (421,323) (117,982) 3,262 - 270,585 (265,458)
1. Total comprehensive income - - (113,471) - - 588,638 475,167
2. Owner’s contributions and reduction - (415,000) - - - - (415,000)
2.1 Consideration for Business
combination under common control - (415,000) - - - - (415,000)
3. Appropriation of profits - (6,323) - - - (322,564) (328,887)
3.1 Distribution to owners - - - - - (293,628) (293,628)
3.2 Distribution to
non-controlling interest - - - - - (28,936) (28,936)
3.3 Other - (6,323) - - - - (6,323)
4. Transfers within owners’ equity - - (4,511) - - 4,511 -
4.1 Others - - (4,511) - - 4,511 -
5. Special reserve - - - 3,262 - - 3,262
5.1 Transfer to special reserve - - - 10,646 - - 10,646
5.2 Amount utilized - - - (7,384) - - (7,384)
IV. Balance at June 30, 2019 2,446,554 12,903,168 972,845 16,798 240,162 5,899,877 22,479,404
-8-
ADAMA Ltd. Semi-Annual Report 2020
ADAMA Ltd.
(Expressed in RMB '000)
Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2020
Attributable to shareholders of the Company
Other
Share Capital comprehensive Special Surplus Retained
capital reserve income reserves reserve earnings Total
I. Balance at December 31, 2019 2,446,554 15,449,878 41,308 12,973 240,162 531,784 18,722,659
II. Changes in equity for the period - - (4,041) 2,278 - (72,123) (73,886)
1. Total comprehensive income - - (4,041) - - (42,764) (46,805)
2. Owner’s contributions and reduction - - - - - - -
3. Appropriation of profits - - - - - (29,359) (29,359)
3.1 Transfer to Distribution to shareholders - - - - - (29,359) (29,359)
4. Special reserve - - - 2,278 - - 2,278
4.1 Transfer to special reserve - - - 3,756 - - 3,756
4.2 Amount utilized - - - (1,478) - - (1,478)
Ⅲ. Balance at June 30, 2020 2,446,554 15,449,878 37,267 15,251 240,162 459,661 18,648,773
For the six months ended June 30, 2019
Attributable to shareholders of the Company
Other
Share Capital comprehensive Special Surplus Retained
capital reserve income reserves reserve earnings Total
I. Balance at December 31, 2018 2,446,554 15,414,429 43,167 11,564 240,162 1,257,073 19,412,949
II. Changes in equity for the period - 48,816 5,050 2,482 - (275,105) (218,757)
1. Total comprehensive income - - 5,050 - - (37,789) (32,739)
2. Owner’s contributions and reduction - 48,816 - - - - 48,816
2.1 Other - 48,816 - - - - 48,816
3. Appropriation of profits - - - - - (237,316) (237,316)
3.1 Transfer to Distribution to shareholders - - - - - (237,316) (237,316)
4. Special reserve - - - 2,482 - - 2,482
4.1 Transfer to special reserve - - - 5,462 - - 5,462
4.2 Amount utilized - - - (2,980) - - (2,980)
Ⅲ. Balance at June 30, 2019 2,446,554 15,463,245 48,217 14,046 240,162 981,968 19,194,192
-9-
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
I BASIC CORPORATE INFORMATION
ADAMA Ltd. (hereinafter the “Company” or the “Group”) is a company limited by shares established in
China with its head office located in Hubei Jingzhou.
The Company's parent company is Syngenta Group Co., Ltd. (hereinafter “Syngenta Group”), and the
ultimate holding company is China National Chemical Corporation (hereinafter - “ChemChina”).
The principal activities of the Company and its subsidiaries (together referred to as the “Group”) are
engaged in development, manufacturing and marketing of agrochemicals, intermediate materials for other
industries, food additives and synthetic aromatic products, mainly for export. For information about the
largest subsidiaries of the Company, refer to Note VII.
The Company’s consolidated financial statements had been approved by the Board of Directors of the
Company on August 19, 2020.
Details of the scope of consolidated financial statements are set out in Note VII "Interest in other entities",
whereas the changes of the scope of consolidation are set out in Note VI "Changes in consolidation scope".
II BASIS OF PREPARATION
1. Basis of preparation
The Group has adopted the Accounting Standards for Business Enterprises issued by the Ministry of
Finance (the "MoF"). In addition, the Group has disclosed relevant financial information in these financial
statements in accordance with Information Disclosure and Presentation Rules for Companies Offering
Securities to the Public No. 15－General Provisions on Financial Reporting (revised by China Securities
Regulatory Commission (hereinafter "CSRC”) in 2014).
- 10 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
II BASIS OF PREPARATION - (cont’d)
2. Accrual basis and measurement principle
The Group has adopted the accrual basis of accounting. Except for certain financial instruments which are
measured at fair value, deferred tax assets and liabilities, assets and liabilities relating to employee benefits,
provisions, and investments in associated companies and joint ventures, the Group adopts the historical
cost as the principle of measurement in the financial statements. Where assets are impaired, provisions for
asset impairment are made in accordance with relevant requirements.
In the historical cost measurement, assets obtained shall be measured at the amount of cash or cash
equivalents or fair value of the consideration paid. Liabilities shall be measured at the actual amount of
cash or assets received, or the contractual amount in a present obligation, or the prospective amount of
cash or cash equivalents paid to discharge the liabilities.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing market participants in an arm’s length transaction at the measurement date. Fair
value measured and disclosed in the financial statements are determined on this basis whether it is
observable or estimated by valuation techniques.
The following table provides an analysis, grouped into Levels 1 to 3 based on the degree to which the fair
value input is observable and significant to the fair value measurement as a whole:
Level 1 - based on quoted prices (unadjusted) in active markets;
Level 2 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is observable (other than quoted prices included within Level 1), either directly or
indirectly;
Level 3 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
3. Going concern
The financial statements have been prepared on the going concern basis.
The Group has performed going concern assessment for the following 12 months from June 30, 2020 and
have not identified any significant doubtful matter or event on the going concern, as such the financial
statement have been prepared on the going concern basis.
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
1. Statement of compliance
These financial statements are in compliance with the Accounting Standards for Business Enterprises to
truly and completely reflect the Company's consolidated financial position as at June 30, 2020 and the
Company's consolidated operating results, changes in shareholders' equity and cash flows for the six
months then ended.
- 11 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
2. Accounting period
The Group has adopted the calendar year as its accounting year, i.e. from 1 January to 31 December.
3. Business cycle
The company takes the period from the acquisition of assets for processing to their realisation in cash or
cash equivalents as a normal operating cycle. The operating cycle for the company is 12 months.
4. Reporting currency
The Company and its domestic subsidiaries choose Renminbi (hereinafter "RMB") as their functional
currency. Functional currencies of overseas subsidiaries are determined on the basis of the principal
economic environment in which the overseas subsidiaries operate. The functional currency of the overseas
subsidiaries is mainly the United States Dollar (hereinafter "USD"). The presentation currency of these
financial statements is Renminbi.
5. Business combinations
5.1 Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which
all of the combining enterprises are ultimately controlled by the same party or parties both before and after
the combination, and that control is not transitory. Assets and liabilities obtained shall be measured at their
respective carrying amounts as recorded by the combining entities at the date of the combination. The
difference between the carrying amount of the net assets obtained and the carrying amount of the
consideration paid for the combination is adjusted to the share premium in capital reserve. If the share
premium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
Costs that are directly attributable to the combination are charged to profit or loss in the period in which
they are incurred.
5.2 Business combinations not involving enterprises under common control and goodwill.
A business combination not involving enterprises under common control is a business combination in
which all of the combining enterprises are not ultimately controlled by the same party or parties before and
after the combination.
The costs of business combination are the fair value of the assets paid, liabilities incurred or assumed and
equity instruments issued by the acquirer for the purpose of achieving the control rights over the acquiree.
The intermediary costs such as audit, legal services and assessment consulting costs and other related
management costs that are directly attributable to the combination by the acquirer are charged to profit or
loss in the period in which they are incurred. Direct capital issuance costs incurred in respect of equity
instruments or liabilities issued pursuant to the business combination should be charged to the respect
equity instruments or liabilities upon initial recognition of the underlying equity instruments or liabilities.
- 12 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
5. Business combinations - (cont’d)
5.2 Business combinations not involving enterprises under common control and goodwill - (cont’d)
The acquiree’s identifiable assets, liabilities and contingent liabilities acquired by the acquirer in a business
combination, that meet the recognition criteria shall be measured at fair value at the acquisition date.
Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable
net assets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on
initial recognition. Where the cost of combination is less than the acquirer’s interest in the fair value of the
acquiree’s identifiable net assets, the remaining difference is recognized immediately in profit or loss for
the current year.
The goodwill raised because of the business combination should be separately disclosed in the
consolidated financial statement and measured by the initial amount less any accumulative impairment
provision.
6. Basis for preparation of consolidated financial statements
The scope of consolidation in consolidated financial statements is determined on the basis of control.
Control is achieved when the Company has power over the investee; is exposed, or has rights, to variable
returns from its involvement with the investee; and has the ability to use its power to affect its returns.
For a subsidiary disposed of by the Group, the operating results and cash flows before the date of disposal
(the date when control is lost) are included in consolidated income statement and consolidated statement of
cash flows.
For a subsidiary acquired through a business combination not involving enterprises under common control,
the operating results and cash flows from the acquisition date (the date when control is obtained) are
included in consolidated income statement and consolidated statement of cash flows.
For a subsidiary acquired through a business combination involving enterprises under common control, it
will be fully consolidated into consolidated financial statements from the date on which the subsidiary was
ultimately under common control by the same party or parties.
The significant accounting policies and accounting years adopted by the subsidiaries are determined based
on the uniform accounting policies and accounting years set out by the Company.
All significant intra-group balances, transactions and unrealized profits are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as non-controlling
interests and presented as "non-controlling interests" in the shareholders’ equity in consolidated balance
sheet. The portion of net profits or losses of subsidiaries for the period attributable to non-controlling
interests is presented as "non-controlling interests" in consolidated income statement below the "net profit"
line item. Total comprehensive income attributable to non-controlling shareholders is presented separately
in the consolidated income statement below the total comprehensive income line item.
- 13 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
6. Basis for preparation of consolidated financial statements - (cont’d)
When the amount of loss for the period attributable to the non-controlling shareholders of a subsidiary
exceeds the non-controlling shareholders' portion of the opening balance of owners' equity of the
subsidiary, the excess amount is still allocated against non-controlling interests.
Acquisition of non-controlling interests or disposal of equity interest in a subsidiary that does not result in
the loss of control over the subsidiary is accounted for as equity transactions. The carrying amounts of the
Company's interests and non-controlling interests are adjusted to reflect the changes in their relative
interests in the subsidiary. The difference between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received is adjusted to capital reserve under owners'
equity. If the capital reserve is not sufficient to absorb the difference, the excess is adjusted against
retained earnings. Other comprehensive income attributed to the non-controlling interest is reattributed to
the shareholders of the company.
A put option issued by the Group to holders of non-controlling interests that is settled in cash or other
financial instrument is recognized as a liability at the present value of the exercise price. The Group’s share
of a subsidiary’s profits includes the share of the holders of the non-controlling interests to which the
Group issued a put option.
When the Group loses control over a subsidiary due to disposal of certain equity interest or other reasons,
any retained interest is re-measured at its fair value at the date when control is lost. The difference between
(i) the aggregate of the consideration received on disposal and the fair value of any retained interest and (ii)
the share of the former subsidiary's net assets cumulatively calculated from the acquisition date according
to the original proportion of ownership interest is recognized as investment income in the period in which
control is lost. Other comprehensive income associated with the disposed subsidiary is reclassified to
investment income in the period in which control is lost.
7. Classification and accounting methods of joint arrangement
Joint arrangement involves by two or more parties jointly control. Joint control is the contractually agreed
sharing of control over an economic activity, and exists only when the strategic financial and operating
decisions relating to the activity require the unanimous consent of the parties sharing control (the
ventures).
The Group makes the classification of the joint arrangements according to the rights and obligations in the
joint arrangements to either joint operations or joint ventures.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the joint arrangement. Joint ventures are accounted for using the equity method.
8. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are
the Group's short-term, highly liquid investments that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
- 14 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
9. Translation of transactions and financial statements denominated in foreign currencies
9.1 Transactions denominated in foreign currencies
On initial recognition, foreign currency transactions are translated into functional currency using the spot
exchange rate prevailing at the date of transaction.
At the balance sheet date, foreign currency monetary items are translated into functional currency using the
spot exchange rates at the balance sheet date. Exchange differences arising from the differences between
the spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the
previous balance sheet date are recognized in profit or loss for the period, except that (i) exchange
differences related to a specific-purpose borrowing denominated in foreign currency that qualify for
capitalization are capitalized as part of the cost of the qualifying asset during the capitalization period. (ii)
exchange differences related to hedging instruments for the purpose of hedging against foreign currency
risks are accounted for using hedge accounting.
When preparing financial statements involving foreign operations, if there is any foreign currency
monetary items, which in substance forms part of the net investment in the foreign operations, exchange
differences arising from the changes of foreign currency are recorded as other comprehensive income, and
will be reclassified to profit or loss upon disposal of the foreign operations.
Foreign currency non-monetary items measured at historical cost are translated to the amounts in
functional currency at the spot exchange rates on the dates of the transactions and the amounts in
functional currency remain unchanged.
9.2 Translation of financial statements denominated in foreign currency
For the purpose of preparing consolidated financial statements, financial statements of a foreign operation
are translated from the foreign currency into RMB using the following method: assets and liabilities on the
balance sheet are translated at spot exchange rate prevailing at the balance sheet date; shareholders' equity
items, except for retained earnings, are translated at the spot exchange rates at the dates on which such
items arose; all items in the income statement as well as items reflecting the distribution of profits are
translated at average rate or at spot exchange rates on the dates of the transactions; the retained earnings
opening balance is previous year's translated retained earnings closing balance; the closing balance of
retained earnings is calculated and presented on the basis of each translated income statement and profit
distribution item. The difference between the translated assets and the aggregate of liabilities and
shareholders' equity items is recorded as other comprehensive income. Cash Flows arising from transaction
in foreign currency and the cash flows of a foreign subsidiary are translated at the spot exchange rate on
the date of the cash flow, the effect of exchange rate changes on the cash and cash equivalents is regarded
as a reconciling item and present separately in the statement “effect of foreign exchange rate changes on
the cash and cash equivalents".
The opening balances and the comparative figures of prior year are presented at the translated amounts in
the prior year's financial statements.
On disposal of the Group's entire equity interest in a foreign operation, or upon a loss of control over a
foreign operation due to disposal of certain equity interest in it or other reasons, the Group transfers the
- 15 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
accumulated translation differences, which are attributable to the owners' equity of the Company and
presented under other comprehensive income to profit or loss in the period in which the disposal occurs.
- 16 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
9. Translation of transactions and financial statements denominated in foreign currencies - (cont’d)
9.2 Translation of financial statements denominated in foreign currency - (cont’d)
In case of a disposal or other reason that does not result in the Group losing control over a foreign
operation, the proportionate share of accumulated translation differences are re-attributed to
non-controlling interests and are not recognized in profit and loss. For partial disposals of equity interest in
foreign operations, which are associates or joint ventures, the proportionate share of the accumulated
translation differences are reclassified to profit or loss.
10. Financial instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual
provisions of the instrument. At initial recognition, the Group measures a financial asset or financial
liability at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value
through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the
financial asset or financial liability. Initial recognition in trade receivables which do not contain a
significant financing component, shall be made according to their transaction price.
10.1 Classification and measurement of financial assets
After initial recognition, an entity shall measure a financial asset at: (a) amortised cost; (b) fair value
through other comprehensive income (“FVTOCI”); or (c) fair value through profit or loss (“FVTPL”).
10.1.1 Financial assets at amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met: (a) the financial
asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows; and (b) the contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal amount outstanding.
Such financial assets are subsequently measured at amortised cost, using effective interest method. Gains
or losses upon impairment and derecognition are recognized in profit or loss.
10.1.1.1 Effective interest method and amortised cost
Effective interest method represents the method for calculating the amortized costs and interest income or
expense of each period in accordance with the effective interest rate of financial assets or financial
liabilities (inclusive of a set of financial assets or financial liabilities). Effective interest rate represents the
rate that discounts the future cash flow over the expected subsisting period or shorter period, if appropriate,
of the financial asset or financial liability to the current carrying value of such financial asset or financial
liability.
When calculating the effective interest rate, the Group will consider the anticipated future cash flow (not
considering the future credit loss) on the basis of all contract clauses of financial assets or financial
liabilities, as well as consider all kinds of charges which are an integral part of the effective interest rate,
including transaction fees and discount or premium paid or received between both parties of financial asset
or financial liability contract.
- 17 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.1 Classification and measurement of financial assets - (cont’d)
10.1.2 Financial assets at FVTOCI
A financial asset is measured at fair value through other comprehensive income if both of the following
conditions are met: (a) the financial asset is held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets and (b) the contractual terms of the
financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
A gain or loss on a financial asset measured at fair value through other comprehensive income is
recognized in other comprehensive income, except for impairment gains or losses, foreign exchange gains
and losses and interest calculated using the effective interest method, until the financial asset is
derecognized or reclassified. When the financial asset is derecognized the cumulative gain or loss
previously recognized in other comprehensive income is reclassified from equity to profit or loss as a
reclassification adjustment.
10.1.3 Financial assets at FVTPL
Financial assets at FVTPL are either those that are classified as financial assets at FVTPL or designated as
financial assets at FVTPL.
A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVTOCI.
The Group may, at initial recognition, irrevocably designate a financial asset as measured at FVTPL if
doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes
referred to as an ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or
recognizing the gains and losses on them on different bases.
A gain or loss on a financial asset that is measured at FVTPL is recognized in profit or loss unless it is part
of a hedging relationship. Dividends are recognized in profit or loss.
10.1.4 Designated financial assets at FVTOCI
At initial recognition, the Group makes an irrevocable election to designate to FVTOCI an investment in
an equity instrument that is not held for trading.
When a non-trading equity instrument investment is designated as a financial asset that is measured at fair
value through other comprehensive income, the changes in the fair value of the financial asset are
recognised in other comprehensive income. Upon realization the accumulated gains or losses from other
comprehensive income are transferred from other comprehensive income and included in retained earnings.
During the period in which the Group holds these non-trading investment instruments, the right to receive
dividends in the Group has been established, and the economic benefits related to dividends are likely to
flow into the Group, and when the amount of dividends can be reliably measured, the dividend income is
recognized in the current profit and loss.
- 18 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses on financial assets that are classified to
amortised cost and FVTOCI.
The Group always measures the loss allowance at an amount equal to lifetime expected credit losses for
trade receivables.
For financial assets other than trade receivables, the Group initially measure the loss allowance for that
financial instrument at an amount equal to 12-month expected credit losses. At each balance sheet date, if
the credit risk on that financial instrument has increased significantly since initial recognition, the Group
measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit
losses. The Group recognizes in profit or loss, as an impairment gain or loss, the amount of expected credit
losses (or reversal) that is required to adjust the loss allowance to the amount that is required to be
recognized.
10.2.1 Significant increases in credit risk
At each balance sheet date, the Group assesses whether the credit risk on a financial instrument has
increased significantly since initial recognition.
The Group mainly considers the following list of information in assessing changes in credit risk:
(a) significant changes in internal price indicators of credit risk as a result of a change in credit risk
since inception.
(b) significant changes in external market indicators of credit risk for a particular financial instrument
or similar financial instruments with the same expected life.
(c) a significant change in the debtors’ ability to meet its debt obligations.
(d) an actual or expected significant change in the operating results of the debtor.
(e) significant increases in credit risk on other financial instruments of the same debtor.
(f) an actual or expected significant adverse change in the regulatory, economic, or technological
environment of the debtor.
(g) significant changes in the value of the collateral supporting the obligation or in the quality of
third-party guarantees or credit enhancements, which are expected to reduce the debtor’s economic
incentive to make scheduled contractual payments or to otherwise have an effect on the probability
of a default occurring.
(h) significant changes that are expected to reduce the receivable’s economic incentive to make
scheduled contractual payments.
(i) significant changes in the expected performance and behaviour of the debtor.
(j) past due information.
The Group assumes that the credit risk on a financial instrument has not increased significantly since
initial recognition if the financial instrument is determined to have low credit risk at the reporting date.
- 19 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets - (cont’d)
10.2.2 Credit-impaired financial asset
A financial asset is credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is
credit-impaired include observable data about the following events:
(a) significant financial difficulty of the issuer or the receivable;
(b) a breach of contract, such as a default or past due event;
(c) the lender(s) of the receivable, for economic or contractual reasons relating to the receivable’s
financial difficulty, having granted to the receivable a concession(s) that the lender(s) would not
otherwise consider;
(d) it is becoming probable that the receivable will enter bankruptcy or other financial reorganization;
10.2.3 Recognition of expected credit losses
For the purpose of determining significant increases in credit risk and recognizing a loss allowance on a
collective basis, financial instruments are grouped on the basis of shared credit risk. Examples of shared
credit risk characteristics may include, but are not limited to, the:(a) instrument type; (b) credit risk
ratings; (c) collateral type; (d) industry; (e) geographical location of the debtor; and (f) the value of
collateral relative to the financial asset if it has an impact on the probability of a default occurring.
Expected credit losses of financial instruments are determined as the present value of the difference
between: (a) the contractual cash flows that are due to an entity under the contract; and (b) the cash flows
that the entity expects to receive.
For a financial asset that is credit-impaired at the reporting date, an entity shall measure the expected
credit losses as the difference between the asset’s gross carrying amount and the present value of
estimated future cash flows discounted at the financial asset’s original effective interest rate. Any
adjustment is recognized in profit or loss as an impairment gain or loss.
The Group measures expected credit losses of a financial instrument in a way that reflects:
(a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible
outcomes;
(b) the time value of money; and
(c) reasonable and supportable information that is available without undue cost or effort at the
reporting date about past events, current conditions and forecasts of future economic conditions.
- 20 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets - (cont’d)
10.2.4 Written-off of financial assets
The Group directly reduces the gross carrying amount of a financial asset when the entity has no
reasonable expectations of recovering a financial asset in its entirety or a portion thereof. A write-off
constitutes a derecognition event.
10.3 Transfer of financial asset
The Group derecognizes a financial asset if one of the following conditions is satisfied: (i) the contractual
rights to the cash flows from the financial asset expire; or (ii) the financial asset has been transferred and
substantially all the risks and rewards of ownership of the financial asset is transferred to the transferee; or
(iii) although the financial asset has been transferred, the Group neither transfers nor retains substantially
all the risks and rewards of ownership of the financial asset but has not retained control of the financial
asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial
asset, and it retains control of the financial asset, it recognizes the financial asset to the extent of its
continuing involvement in the transferred financial asset and recognizes an associated liability. The extent
of the Group’s continuing involvement in the transferred asset is the extent to which it is exposed to
changes in the value of the transferred asset.
When the company is derecognizing a financial asset in its entirety, except for equity instrument
designated to FVTOCI, the difference between (i) the carrying amount of the financial asset transferred;
and (ii) the sum of the consideration received from the transfer is recognized in profit or loss.
10.4 Classification and measurement of financial liabilities
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a financial liability and an equity
instrument.
All financial liabilities are subsequently measured at FVTPL or other financial liabilities.
Financial liabilities are classified as at FVTPL when the financial liability is (i) held for trading or (ii) it is
designated as at FVTPL. The financial liability other than derivative financial liabilities are stated as
liabilities held for trading.
Other financial liabilities are subsequently measured at amortized cost by using effective interest method.
Gain or loss arising from derecognition or amortization is recognized in current profit or loss.
- 21 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.5 Derecognition of financial liabilities
Financial liabilities are derecognized in full or in part only when the present obligation is discharged in full
or in part. An agreement entered into force between the Group (debtor) and a creditor to replace the
original financial liabilities with new financial liabilities with substantially different terms, derecognize the
original financial liabilities as well as recognize the new financial liabilities. When financial liabilities is
derecognized in full or in part, the difference between the carrying amount of the financial liabilities
derecognized and the consideration paid (including transferred non-cash assets or new financial liability) is
recognized in profit or loss for the current period.
10.6 Derivatives
Derivative financial instruments include forward exchange contracts, currency swaps and foreign exchange
options, etc. Derivatives are initially measured at fair value at the date when the derivative contracts are
entered into and are subsequently re-measured at fair value. The resulting gain or loss is recognized in
profit or loss unless the derivative is designated and highly effective as a hedging instrument, in which case
the timing of the recognition in profit or loss depends on the nature of the hedge relationship (Note III
28.1).
10.7 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be
offset, except for circumstances where the Group has a legal right that is currently enforceable to offset the
recognized financial assets and financial liabilities, and intends either to settle on a net basis, or to realize
the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability
shall be offset and the net amount is presented in the balance sheet.
10.8 Equity instruments
The consideration received from the issuance of equity instruments net of transaction costs is recognized in
shareholders’ equity. Consideration and transaction costs paid by the Company for repurchasing
self-issued equity instruments are deducted from shareholders’ equity.
When the Company repurchases its own shares, those shares are treated as treasury shares. All
expenditures relating to the repurchase are recorded in the cost of the treasury shares, with the transaction
entering into the share capital. Treasury shares are excluded from profit distributions and are stated as a
deduction under shareholders’ equity in the balance sheet.
- 22 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Receivables
Receivables are assessed for impairment on a collective group and/or on an individual basis as follows:
Expected credit losses in respect of a receivables is measured at an amount equal to lifetime expected
credit losses. The assessment is made collectively for account receivables, where receivables share similar
credit risk characteristics based on geographical location, using the expected credit losses model including
inter-alia aging analysis, historical loss experiences adjusted by the observable factors reflecting current
and expected future economic conditions. The ratio of the collective provision for non-overdue account
receivables is between 0%-1.7%.
When credit risk on a receivable has increased significantly since initial recognition, the group records
specific provision or collective provision, which is determined for groups of similar assets in countries in
which there are large number of customers with immaterial balances.
In assessing whether the credit risk on a receivable has increased significantly since initial recognition, the
Group compares the risk of a default occurring on the receivable at the reporting date with the risk of a
default occurring on the receivable at the date of initial recognition and considers both quantitative and
qualitative information that is reasonable and supportable, including observable data that comes to the
attention of the Group about loss events such as a significant decline in the solvency of an individual
debtor or the portfolio of debtors, and significant changes in the financial condition that have an adverse
effect on the debtor.
12. Inventories
12.1 Categories of inventories and initial measurement
The Group's inventories mainly include raw materials, work in progress, semi-finished goods, finished
goods and reusable materials. Reusable materials include low-value consumables, packaging materials and
other materials, which can be used repeatedly but do not meet the definition of fixed assets.
Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of
conversion and other expenditures incurred in bringing the inventories to their present location and
condition including direct labor costs and an appropriate allocation of production overheads.
12.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
12.3 Basis for determining net realizable value of inventories and provision methods for decline in value of
inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the net
realizable value is below the cost of inventories, a provision for decline in value of inventories is made.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs
of completion, the estimated costs necessary to make the sale and relevant taxes.
- 23 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
12. Inventories - (cont’d)
After the provision for decline in value of inventories is made, if the circumstances that previously caused
inventories to be written down below cost no longer exist so that the net realizable value of inventories is
higher than their carrying amount, the original provision for decline in value is reversed and the reversal is
included in profit or loss for the period.
12.4 The perpetual inventory system is maintained for stock system.
13. Long-term equity investments
Long-term equity investments include investments in subsidiaries, joint ventures and associates.
Subsidiaries are the companies that are controlled by the Company. Associates are the companies over
which the Group has significant influence. Joint ventures are joint arrangements over which the Group has
joint control along with other investors and has rights to the net assets of the joint arrangement.
The Company accounts for the investment in subsidiaries at historical cost in the Company's financial
statements. Investments in associates and joint ventures are accounted for under equity method.
13.1 Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprises under
common control, the investment cost of the long-term equity investment is the share of the carrying
amount of the shareholders' equity of the acquiree attributable to the ultimate controlling party at the date
of combination. For a long-term equity investment acquired through business combination not involving
enterprises under common control, the investment cost of the long-term equity investment is the cost of
acquisition. For a business combination not involving enterprises under common control achieved in stages
that involves multiple exchange transactions, the initial investment cost is carried at the aggregate of the
carrying amount of the acquirer’s previously held equity interest in the acquiree and the new investment
cost incurred on the acquisition date.
Regarding the long-term equity investment acquired otherwise than through a business combination, if the
long-term equity investment is acquired by cash, the historical cost is determined based on the amount of
cash paid and payable; if the long-term equity investment is acquired through the issuance of equity
instruments, the historical cost is determined based on the fair value of the equity instruments issued.
- 24 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
13. Long-term equity investments - (cont’d)
13.2 Subsequent measurement and recognition of profit or loss
If the long-term equity investment is accounted for at cost, it should be measured at historical cost less
accumulated impairment losses. Dividend declared by the investee should be accounted for as investment
income.
Under the equity method, where the long-term equity investment initial investment cost exceeds the
Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, no
adjustment is made to the initial investment cost. Where the initial investment cost is less than the Group’s
share of the fair value of the investee’s identifiable net assets at the time of acquisition, the difference is
recognized in profit or loss for the period, and the cost of the long-term equity investment is adjusted
accordingly.
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive
income of the investee for the period as investment income or loss and other comprehensive income for the
period. The Group recognizes its share of the investee’s net profit or loss based on the fair value of the
investee’s individual separately identifiable assets, etc. at the acquisition date after making appropriate
adjustments to be confirmed with the Group's accounting policies and accounting period. The Group
discontinues recognizing its share of net losses of the investee after the carrying amount of the long-term
equity investment together with any long-term interests that in substance form part of its net investment in
the investee is reduced to zero. If the Group has incurred obligations to assume additional losses of the
investee, a provision is recognized according to the expected obligation, and recorded as investment loss
for the period.
13.3 Basis for determining control, joint control and significant influence over investee
Control is achieved when the Company has power over the investee; is exposed, or has rights, to variable
returns from its involvement with the investee; and has the ability to use its power to affect its returns.
Joint control is the contractually agreed sharing of control over an economic activity, and exists only when
the strategic financial and operating policy decisions relating to the activity require the unanimous consent
of the parties sharing control.
Significant influence is the power to participate in the financial and operating policy decisions of the
investee but is not control or joint control over those policies.
When determining whether an investing enterprise is able to exercise control or significant influence over
an investee, the effect of potential voting rights of the investee (for example, warrants and convertible
debts) held by the investing enterprises or other parties that are currently exercisable or convertible shall be
considered.
13.4 Methods of impairment assessment and determining the provision for impairment loss
If the recoverable amounts of the investments to subsidiaries, joint ventures and associates are less than
their carrying amounts, an impairment loss should be recognized to reduce the carrying amounts to the
recoverable amounts (Note III 20).
- 25 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
13. Long-term equity investments - (cont’d)
13.5 The disposal of long-term equity investment
On disposal of a long term equity investment, the difference between the proceeds actually received and
receivable and the carrying amount is recognized in profit or loss for the period.
14. Investment properties
Investment property refers to real estate held to earn rentals or for capital appreciation, or both, including
leased land use rights, land use rights held and provided for transferring after appreciation and leased
constructions, etc.
Investment property is initially measured at cost. Subsequent expenditures related to an investment
property shall be included in cost of investment property only when the economic benefits associated with
the asset will likely flow to the Group and its cost can be measured reliably. All other subsequent
expenditures on investment property shall be included in profit or loss for the current period when
incurred.
The Group adopts cost method for subsequent measurement of investment property, which is depreciated
or amortized using the same policy as that for buildings and land use rights.
When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal
of the property net of the carrying amount and related taxes and surcharges is recognized in profit or loss
for the current period.
15. Fixed assets
15.1 Recognition criteria for fixed assets
Fixed assets include land owned by the Group and buildings, machinery and equipment, transportation
vehicles, office equipment and others.
Fixed assets are tangible assets that are held for use in the production or supply of goods or for
administrative purposes, and have useful lives of more than one accounting year. A fixed asset is
recognized only when it is probable that economic benefits associated with the asset will flow to the Group
and the cost of the asset can be reliably measured. Purchased or constructed fixed assets are initially
measured at cost when acquired.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is
probable that economic benefits associated with the asset will flow to the Group and the subsequent
expenditures can be measured reliably. Other subsequent expenditures are recognized in profit or loss in
the period in which they are incurred.
- 26 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
15. Fixed assets - (cont’d)
15.2 Depreciation of each category of fixed assets
Fixed asset is depreciated based on the cost of fixed asset recognized less expected net residual value over
its useful life using the straight-line method since the month subsequent to the one in which it is ready for
intended use. Depreciation is calculated based on the carrying amount of the fixed asset after impairment
over the estimated remaining useful life of the asset.
The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation
method applied at least once at each financial year-end, and account for any change as a change in an
accounting estimate.
The estimated useful life, estimated net residual value and annual depreciation rate of each category of
fixed assets are as follows:
Residual Annual
Useful life value depreciation rate
Category Depreciation (years) (%) (%)
Buildings the straight-line method 15-50 0-4 1.9-6.7
Machinery and equipment the straight-line method 3-22 0-4 4.4-33.3
Office and other equipment the straight-line method 3-17 0-4 5.6-33.3
Motor vehicles the straight-line method 5-9 0-2 10.9-20.0
Land owned by the Group is not depreciated.
15.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or
disposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, the
amount of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognized
in profit or loss for the period.
The difference between recoverable amounts of the fixed assets under the carrying amount is referred to as
impairment loss (Note III 20).
16. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various construction,
installation costs, borrowing costs capitalized and other expenditures incurred until such time as the
relevant assets are completed and ready for its intended use. When the asset concerned is ready for its
intended use, the cost of the asset is transferred to fixed assets and depreciated starting from the following
month.
The difference between recoverable amounts of the construction in progress under the carrying amount is
referred to as impairment loss (Note III 20).
- 27 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
17. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are
capitalized when expenditures for such asset and borrowing costs are incurred and activities relating to the
acquisition, construction or production of the asset that are necessary to prepare the asset for its intended
use or sale have commenced. Capitalization of borrowing costs ceases when the qualifying asset being
acquired, constructed or produced becomes ready for its intended use or sale. Borrowing costs incurred
subsequently should be charged to profit or loss. Capitalization of borrowing costs is suspended during
periods in which the acquisition, construction or production of a qualifying asset is suspended abnormally
and when the suspension is for a continuous period of more than 3 months. Capitalization is suspended
until the acquisition, construction or production of the asset is resumed.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is
the actual interest expenses incurred on that borrowing for the period less any bank interest earned from
depositing the borrowed funds before being used on the asset or any investment income on the temporary
investment of those funds.
Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interest
to be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excess
of cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The
capitalization rate is the weighted average of the interest rates applicable to the general-purpose
borrowings.
During the capitalization period, exchange differences on foreign currency specific-purpose borrowing are
fully capitalized whereas exchange differences on foreign currency general-purpose borrowing, charged to
profit or loss.
18. Intangible assets
18.1 Valuation methods, useful life, impairment test
The Group’s intangible assets include product registration assets, intangible assets upon purchase of
products, marketing rights and rights to use tradenames and trademarks, land use rights, software and
customer relations. Intangible assets are stated at cost less accumulated amortization and impairment
losses.
When an intangible asset with a finite useful life is available for use, its original cost less any accumulated
impairment losses is amortized over its estimated useful life using the straight-line method. An intangible
asset with an indefinite useful life is not amortized.
For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method
at the end of the year, and makes adjustments when necessary.
The respective amortization periods for such intangible assets are as follows:
Item Amortization period (years)
Land use rights 49-50 years
Product registration 8 years
Intangible assets on purchase of products 7-11, 20 years
Marketing rights, tradename and trademarks 4-10, 30 years
Software 3-5 years
Customer relations 5-10 years
- 28 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
The difference between recoverable amounts of the intangible assets under the carrying amount is referred
to as impairment loss (see Note III 20 – Impairment of long-term assets).
- 29 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
18. Intangible assets - (cont’d)
18.2 Research and development expenditure
Internal research and development project expenditures were classified into research expenditures and
development expenditures depending on its nature and the greater uncertainty whether the research
activities becoming to intangible assets.
Expenditure during the research phase is recognized as an expense in the period in which it is incurred.
Expenditure during the development phase that meets all of the following conditions at the same time is
recognized as intangible asset:
- It is technically feasible to complete the intangible asset so that it will be available for use or sale;
- The Group has the intention to complete the intangible asset and use or sell it;
- The Group can demonstrate the ways in which the intangible asset will generate economic benefits;
- The availability of adequate technical, financial and other resources to complete the development and the
ability to use or sell the intangible asset;
- The expenditure attributable to the intangible asset during its development phase can be reliably
measured.
Expenditures that do not meet all of the above conditions at the same time are recognized in profit or loss
when incurred. If the expenditures cannot be distinguished between the research phase and development
phase, the Group recognizes all of them in profit or loss for the period. Expenditures that have previously
been recognized in the profit or loss would not be recognized as an asset in subsequent years. Those
expenditures capitalized during the development stage are recognized as development costs incurred and
will be transferred to intangible asset when the underlying project is ready for an intended use.
19. Goodwill
The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’s interest in the
fair value of the identifiable net assets of the acquiree under a business combination not involving
enterprises under common control.
Goodwill is not amortized and is stated in the balance sheet at cost less accumulated impairment losses
(see Note III 20 – Impairment of long-term assets). On disposal of an asset group or a set of asset groups,
any attributable goodwill is written off and included in the calculation of the profit or loss on disposal.
20. Impairment of long-term assets
The Company assesses at each balance sheet date whether there is any indication that the fixed assets,
construction in progress, right of use assets, intangible assets with finite useful lives, investment properties
measured at historical cost, investments in subsidiaries, joint ventures and associates may be impaired. If
there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets.
The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value of
the future cash flow estimated to be derived from the asset. The Group estimates the recoverable amount
on an individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the
Group determines the recoverable amount of the asset group to which the asset belongs. Identification of
an asset group is based on whether major cash inflows generated by the asset group are largely
independent of the cash inflows from other assets or asset groups.
- 30 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
20. Impairment of long-term assets - (cont’d)
Goodwill arising from a business combination is tested for impairment at least at each year end,
irrespective of whether there is any indication that the asset may be impaired. For the purpose of
impairment testing, the carrying amount of goodwill acquired in a business combination is allocated from
the acquisition date on a reasonable basis to each of the related asset groups; if it is impossible to allocate
to the related asset groups, it is allocated to each of the related set of asset groups. Each of the related asset
groups or set of asset groups is an asset group or set of asset group that is able to benefit from the synergies
of the business combination and shall not be larger than a reportable segment determined by the Group. If
the carrying amount of the asset group or set of asset groups is higher than its recoverable amount, the
amount of the impairment loss first reduced by the carrying amount of the goodwill allocated to the asset
group or set of asset groups, and then the carrying amount of other assets (other than the goodwill) within
the asset group or set of asset groups, pro rata based on the carrying amount of each asset.
Once the impairment loss of such assets is recognized, it will not be reversed in any subsequent period.
21. Employee benefits
21.1 Short-term employee benefits
Employee wages or salaries, bonuses, social security contributions, measured on a non-discounted basis,
and the expense is recorded when the related service is provided. A provision for short-term employee
benefits in respect of cash bonuses is recognized in the amount expected to be paid where the Group has a
current legal or constructive obligation to pay the said amount for services provided by the employee in the
past and the amount can be estimated reliably.
21.2 Post-employment benefits
Post-employment benefits are classified into defined contribution plans and defined benefit plans.
A defined contribution plan is a post-employment benefit plan under which the Group pays contributions
to a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution plans are recognized as an expense in profit or loss in the periods
during which related services are rendered by employees.
Defined benefit plans of the Group are post-employment benefit plans other than defined contribution
plans. In accordance with the projected unit credit method, the Group measures the obligations under
defined benefit plans using unbiased and mutually compatible actuarial assumptions to estimate related
demographic variables and financial variables, and discount obligations under the defined benefit plans to
determine the present value of the defined benefit liability. The discount rate used is the yield on the
reporting date on highly-rated corporate debentures denominated in the same currency, that have maturity
dates approximating the terms of the Group’s obligation.
The Group attributes benefit obligations under a defined benefit plan to periods of service provided by
respective employees. Service cost and interest expense on the defined benefit liability are charged to
profit or loss and remeasurements of the defined benefit liability are recognized in other comprehensive
income.
- 31 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
21. Employee benefits - (cont’d)
7011 Termination benefits
When the Group terminates the employment with employees or provides compensation under an offer to
encourage employees to accept voluntary redundancy, a provision is recognized with a corresponding
expense in profit or loss at the earlier of the following dates:
- When the Group cannot unilaterally withdraw the offer of termination benefits because of an employee
termination plan or a curtailment proposal.
- When the Group has a formal detailed restructuring plan involving the payment of termination benefits
and has raised a valid expectation in those affected that it will carry out the restructuring by starting to
implement that plan or announcing its main features to those affected by it.
If the benefits are payable more than 12 months after the end of the reporting period, they are discounted to
their present value. The discount rate used is the yield on the reporting date on highly-rated corporate
debentures denominated in the same currency, that have maturity dates approximating the terms of the
Group’s obligation.
20.4 Other long-term employee benefits
The Group’s net obligation for long-term employee benefits, which are not attributable to
post-employment benefit plans, is for the amount of the future benefit to which employees are entitled for
services that were provided during the current and prior periods.
The amount of these benefits is discounted to its present value and the fair value of the assets related to
these obligations is deducted therefrom. The discount rate used is the yield on the reporting date on
highly-rated corporate debentures denominated in the same currency, that have maturity dates
approximating the terms of the Group’s obligation.
22. Share-based payment
Share-based payment refers to the transaction in order to acquire the service offered by the employees or
other parties that grants equity instruments or liabilities on the basis of the equity instruments. Share-based
payment classified into equity-settled share-based payment and cash-settled share-based payment.
22.1 Cash-settled share-based payment
The cash-settled share-based payment should be measured according to the fair value of the liabilities
recognized based on the shares or other equity instrument undertaken by the Company. For cash-settled
share-based payment made in return for the rendering of employee services that cannot be exercised until
the services are fully provided during the vesting period or specified performance targets are met, on each
balance sheet date within the vesting period, the services acquired in the current period shall, based on the
best estimate of the number of exercisable instruments, be recognized in relevant expenses and the
corresponding liabilities at the fair value of the liability incurred by the Company.
On each balance sheet date and the settlement date before the settlement of the relevant liabilities, the
Company should re-measure the fair value of the liabilities and the changes should be included in the
current period profit and loss.
- 32 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
23. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency, it is probable
that an outflow of economic benefits will be required to settle the obligation, and the amount of the
obligation can be measured reliably.
The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation at the settlement date, taking into account factors pertaining to a contingency such as the risks,
uncertainties and time value of money. Where the effect of the time value of money is material, the amount
of the provision is determined by discounting the related future cash outflows. The increase in the
provision due to passage of time is recognized as interest expense.
If all or part of the provision settlements is reimbursed by third parties, when the realization of income is
virtually certain, then the related asset should be recognized. However, the amount of related asset
recognized should not be exceeding the respective provision amount.
At the balance sheet date, the amount of provision should be re-assessed to reflect the best estimation then.
24. Revenue
Revenue of the Group is mainly from sale of goods.
The Group recognizes revenue when transferring goods to a customer, at the amount of the transaction
price. Goods are considered transferred when the customer obtains control of the goods. Transaction price
is the amount of consideration to which an entity expects to be entitled in exchange for transferring goods
to a customer, excluding amounts collected on behalf of third parties.
Significant financing component
For a contract with a significant financing component, the Group recognize revenue at an amount that
reflects the price that a customer would have paid for the goods if the customer had paid cash for those
goods at receipt. The difference between the amount of consideration and the cash selling price of the
goods, is amortized in the contract period using effective interest rate. The Group does not adjust the
amount of consideration for the effects of a significant financing component if the Group expects, at
contract inception, that the period between when the entity transfers a good to a customer and when the
customer pays for that good will be one year or less.
Sale with a right of return
For sale with a right of return, the Group recognizes revenue at the amount of consideration to which the
Group expects to be entitled (ie excluding the products expected to be returned). For any amounts received
(or receivable) for which an entity does not expect to be entitled, the entity shall not recognize revenue
when it transfers products to customers but shall recognize those amounts received (or receivable) as a
refund liability. An asset recognized for the Group’s right to recover products from a customer on settling a
refund liability shall initially be measured by reference to the former carrying amount of the product less
any expected costs to recover those products.
- 33 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
25. Government grants
Government grants are transfer of monetary assets and non-monetary assets from the government to the
Group at no consideration, including tax returns, financial subsidies and so on. A government grant is
recognized only when the Group can comply with the conditions attached to the grant and the Group will
receive the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received
or receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If
the fair value cannot be reliably determined, it is measured at a nominal amount.
Government grants are either related to assets or income.
(1) The basis of judgment and accounting method of the government grants related to assets
Government grants obtained for acquiring long-term assets are government grants related to assets. A
government grant related to an asset is offset with the cost of the relevant asset.
(2) The basis of judgment and accounting method of the government grants related to income
For a government grant related to income, if the grant is a compensation for related expenses or losses to
be incurred in subsequent periods, the grant is recognized as deferred income, and recognized in profit or
loss over the periods in which the related costs are recognized. If the grant is a compensation for related
expenses or losses already incurred, the grant is recognized immediately in profit or loss for the period.
Government grants related to the Group’s normal course of business are offset with related costs and
expenses. Government grants related that are irrelevant with the Groups’s normal course of business are
included in non-operating gains.
26. Current and deferred tax
The income tax expenses include current income tax and deferred income tax.
26.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are
measured at the amount expected to be paid (or recovered) according to the requirements of tax laws.
26.2 Deferred tax assets and deferred tax liabilities
Temporary differences are differences between the carrying amounts of certain assets or liabilities and
their tax base.
All taxable temporary differences are recognized as related deferred tax liabilities. Deferred tax assets are
recognized to the extent that it is probable that future taxable profits will be available against which the
deductible losses and tax credits can be utilized.
- 34 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
26. Current and deferred tax - (cont’d)
26.2 Deferred tax assets and deferred tax liabilities - (cont’d)
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the
extent that it is probable that future taxable profits will be available against which the deductible losses and
tax credits can be utilized. However, for deductible temporary differences associated with the initial
recognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a
business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at
the time of transaction, no deferred tax asset or liability is recognized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to tax
laws, that are expected to apply in the period in which the asset is realized or the liability is settled.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the
timing of the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The Group may be required to pay additional tax in case of distribution of dividends by the Group
companies. This additional tax was not included in the financial statements, since the policy of the Group
is not to distribute in the foreseeable future a dividend which creates a significant additional tax liability.
Except for those current income tax and deferred tax charged to comprehensive income or shareholders’
equity in respect of transactions or events which have been directly recognized in other comprehensive
income or shareholders’ equity, and deferred tax recognized on business combinations, all other current
income tax and deferred tax items are charged to profit or loss in the current period.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no
longer probable that sufficient taxable profits will be available in the future to allow the benefit of deferred
tax assets to be utilized. Such reduction is reversed when it becomes probable that sufficient taxable profits
will be available.
26.3 Offset of income tax
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and tax assets and
tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity
or different taxable entities which intend to realize the assets and liabilities simultaneously, current tax
assets and liabilities are offset and presented on a net basis.
When the Group has a legal right to settle deferred tax assets and liabilities on a net basis which relates to
income taxes levied by the same taxation authority, on either the same taxable entity or different taxable
entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets
and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or
liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and
presented on a net basis.
- 35 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
27. Leases
Lease is a contract, that conveys the right to use an asset for a period of time in exchange for consideration.
27.1 Determining whether an arrangement contains a lease
On the inception date of the lease, the Group determines whether the arrangement is a lease or contains a
lease, while assessing if it conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. In its assessment of whether an arrangement conveys the right to control the
use of an identified asset, the Group assesses whether it has the following two rights throughout the lease
term:
(a) The right to obtain substantially all the economic benefits from use of the identified asset; and
(b) The right to direct the identified asset’s use.
An arrangement does not contain a lease if an asset is leased for a period of less than 12 months, or to lease of
asset with low economic value.
27.2 Initial recognition of leased assets and lease liabilities
Upon initial recognition, the Group recognizes a liability at the present value of future lease payments
(exclude certain variable lease payments, as detailed in note III 27.4), and concurrently the Group
recognizes a right-of-use asset at the same amount, adjusted for any prepaid lease payments paid at the
lease date or before, plus initial direct costs incurred in respect of the lease.
When the interest rate implicit in the lease is not readily determinable, the incremental borrowing rate of
the lessee is used.
The Group presents right-of-use assets separately from other assets in the balance sheet.
27.3 The lease term
The lease term is the non-cancellable period of the lease plus periods covered by an extension or
termination option, if it is reasonably certain that the lessee will exercise or not exercise the option,
respectively.
If there is a change in the lease term, or in the assessment of an option to purchase the underlying asset, the
Group remeasures the lease liability, on the basis of the revised lease term and the revised discount rate and
adjust the right-of-use assets accordingly.
27.4 Variable lease payments
Variable lease payments that depend on an index or a rate, are initially measured using the index or rate
existing at the commencement of the lease. When the cash flows of future lease payments change as the
result of a change in an index or a rate, the balance of the liability is adjusted with a correspondence
change in the right-of-use asset.
Other variable lease payments that are not included in the measurement of the lease liability are recognized
in profit or loss in the period in which the condition that triggers payment occurs.
- 36 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
27. Leases (cont’d)
27.5 Subsequent measurement
After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation
and accumulated impairment losses and is adjusted for re-measurements of the lease liability. The asset is
depreciated on a straight-line basis over the useful life or contractual lease period, whichever earlier.
The Group applies ASBE8 Impairment of Assets, to determine whether the right-of-use asset is impaired
and to account for any impairment loss identified.
A lease liability is measured after the lease commencement date at amortized cost using the effective
interest method.
28. Other significant accounting policies and accounting estimates
28.1 Hedging
The Group uses derivative financial instruments to hedge its risks related to foreign currency and inflation
risks and derivatives that are not used for hedging.
Hedge accounting
The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing
basis, whether the hedge is expected to be effective in offsetting the changes in the fair value of cash flows
that can be attributed to the hedged risk during the period for which the hedge is designated.
An effective hedge exists when all of the below conditions are met:
There is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not dominate the value changes that result from that economic
relationship;
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the
hedged item that the entity actually hedges and the quantity of the hedging instrument that the
entity actually uses to hedge that quantity of hedged item.
On the commencement date of the accounting hedge, the Group formally documents the relationship
between the hedging instrument and hedged item, including the Group’s risk management objectives and
strategy in executing the hedge transaction, together with the methods that will be used by the Group to
assess the effectiveness of the hedging relationship.
With respect to a cash-flow hedge, a forecasted transaction that constitutes a hedged item must be highly
probable and must give rise to exposure to changes in cash flows that could ultimately affect profit or loss.
- 37 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.1 Hedging (cont’d)
Measurement of derivative financial instruments
Derivative financial instruments are recognized initially at fair value; attributable transaction costs are
recognized in profit or loss as incurred.
Cash-flow hedges
Subsequent to the initial recognition, changes in the fair value of derivatives used to hedge cash flows are
recognized through other comprehensive income directly in a hedging reserve, with respect to the part of
the hedge that is effective. Regarding the portion of the hedge that is not effective, the changes in fair value
are recognized in profit and loss. The amount accumulated in the hedging reserve is reclassified to profit
and loss in the period in which the hedged cash flows impact profit or loss and is presented in the same line
item in the statement of income as the hedged item.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated
or exercised, the hedge accounting is discontinued. The cumulative gain or loss previously recognized in a
hedging reserve through other comprehensive income remains in the reserve until the forecasted
transaction occurs or is no longer expected to occur. If the forecasted transaction is no longer expected to
occur, the cumulative gain or loss in respect of the hedging instrument in the hedging reserve is reclassified
to profit or loss.
Economic hedge
Hedge accounting is not applied with respect to derivative instruments used to economically hedge
financial assets and liabilities denominated in foreign currency or CPI linked. Changes in the fair value of
such derivatives are recognized in profit or loss as gain (loss) from changes in fair value or investment
income.
Derivatives that are not used for hedging
Changes in the fair value of derivatives that are not used for hedging are recognized in profit or loss as gain
(loss) from changes in fair value or investment income.
28.2 Securitization of assets
Details of the securitization of asset agreements and accounting policy are set out in Note V.5 - Account
receivables.
28.3 Segment reporting
Reportable segments are identified based on operating segments which are determined based on the
structure of the Group’s internal organization, management requirements and internal reporting system.
- 38 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.3 Segment reporting - (cont’d)
Two or more operating segments may be aggregated into a single operating segment if the segments have
similar economic characteristics and are same or similar in respect of the nature of each product and
service, the nature of production processes, the type or class of customers for the products and services, the
methods used to distribute the products or provide the services, and the nature of the regulatory
environment.
Inter-segment revenues are measured on the basis of actual transaction price for such transactions for
segment reporting. Segment accounting policies are consistent with those for the consolidated financial
statements.
28.4 Profit distributions to shareholders
Dividends which are approved after the balance sheet date are not recognized as a liability at the balance
sheet date but are disclosed in the notes separately.
29. Changes in significant accounting policies and accounting estimates
29.1 Changes in significant accounting policies
There are no significant changes in accounting policies in the reporting period.
29.2 Changes in significant accounting estimates
There are no significant changes in accounting estimates in the reporting period.
- 39 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments
The preparation of the financial statements requires management to make estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates. Estimates as well as underlying assumptions and
uncertainties involved are reviewed on an ongoing basis. Revisions to accounting estimates are recognized
in the period in which the estimate is revised and in any future periods affected.
Notes V.34, Note VIII, Note IX and Note XIII contain information about the assumptions and their risk
factors relating to post-employment benefits – defined benefit plans, fair value of financial instruments and
share-based payments. Other key sources of estimation uncertainty are as follows:
30.1 Expected credit loss of trade receivables
As described in Note III.11, trade receivables are reviewed at each balance sheet date to determine whether
credit risk on a receivable has increased significantly since initial recognition, lifetime expected losses is
accrued for impairment provision1 Evidence of impairment includes observable data that comes to the
attention of the Group about loss events such as a significant decline in the solvency of an individual
debtor or the portfolio of debtors, and significant changes in the financial condition that have an adverse
effect on the debtor. If there is objective evidence of a recovery in the value of receivables which can be
related objectively to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reversed1
30.2 Provision for impairment of inventories
As described in Note III.12, the net realisable value of inventories is under management’s regular review,
and as a result, provision for impairment of inventories is recognized for the excess of inventories’
carrying amounts over their net realisable value. When making estimates of net realisable value, the Group
takes into consideration the use of inventories held on hand and other information available to form the
underlying assumptions, including the inventories’ market prices and the Group’s historical operating costs.
The actual selling price, the costs of completion and the costs necessary to make the sale and relevant taxes
may vary based on the changes in market conditions and product saleability, manufacturing technology
and the actual use of the inventories, resulting in the changes in provision for impairment of inventories.
The net profit or loss may then be affected in the period when the impairment of inventories is adjusted.
- 40 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments - (cont’d)
30.3 Impairment of assets other than inventories and financial assets
As described in Note III.20, if impairment indication exists, assets other than inventories and financial
assets are assessed at balance sheet date to determine whether the carrying amount exceeds the recoverable
amount of the assets. If any such case exists, an impairment loss is recognized.
The recoverable amount of an asset (or an asset group) is the greater of its fair value less costs to sell and
its present value of expected future cash flows. Since a market price of the asset (or the asset group) cannot
be obtained reliably, the fair value of the asset cannot be estimated reliably, the recoverable amount is
calculated based on the present value of estimated future cash flows. In assessing the present value of
estimated future cash flows, significant judgements are exercised over the asset’s production, selling price,
related operating expenses and discount rate to calculate the present value. All relevant materials which
can be obtained are used for estimation of the recoverable amount, including the estimation of the
production, selling price and related operating expenses based on reasonable and supportable assumptions.
30.4 Depreciation and amortisation of assets such as fixed assets and intangible assets
As described in Note III.15 and III.18, assets such as fixed assets and intangible assets are depreciated and
amortised over their useful lives after taking into account residual value. The estimated useful lives of the
assets are regularly reviewed to determine the depreciation and amortisation costs charged in each
reporting period. The useful lives of the assets are determined based on historical experience of similar
assets and the estimated technical changes. If there have been significant changes in the factors used to
determine the depreciation or amortisation, the rate of depreciation or amortisation is revised
prospectively.
30.5 Income taxes and deferred income tax
The Company and Group companies are assessed for income tax purposes in a large number of
jurisdictions and, therefore, Company management is required to use considerable judgment in
determining the total provision for taxes and attribution of income.
When assessing whether there will be sufficient future taxable profits available against which the
deductible temporary differences can be utilised, the Group recognizes deferred tax assets to the extent that
it is probable that future taxable profits will be available against which the deductible temporary
differences can be utilised, using tax rates that would apply in the period when the asset would be utilised.
In determining the amount of deferred tax assets, the Group makes reasonable judgements and estimates
about the timing and amount of taxable profits to be utilised in the following periods, and of the tax rates
applicable in the future according to the existing tax policies and other relevant regulations. If the actual
timing and amount of future taxable profits or the actual applicable tax rates differ from the estimates made
by management, the differences affect the amount of tax expenses.
- 41 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments - (cont’d)
30.6 Contingent liabilities
When assessing the possible outcomes of legal claims filed against the Company and its investee
companies, the company positions are based on the opinions of their legal advisors. These assessments by
the legal advisors are based on their professional judgment, considering the stage of the proceedings and
the legal experience accumulated regarding the various matters. Since the results of the claims will be
determined by the courts, the outcomes could be different from the assessments.
In addition to the said claims, the Group is exposed to unasserted claims, inter alia, where there is doubt as
to interpretation of the agreement and/or legal provision and/or the manner of their implementation. This
exposure is brought to the Company’s attention in several ways, among others, by means of contacts made
to Company personnel. In assessing the risk deriving from the unasserted claims, the Company relies on
internal assessments by the parties dealing with these matters and by management, who weigh assessment
of the prospects of a claim being filed, and the chances of its success, if filed. The assessment is based on
experience gained with respect to the filing of claims and the analysis of the details of each claim. By their
nature, in view of the preliminary stage of the clarification of the legal claim, the actual outcome could be
different from the assessment made before the claim was filed.
30.7 Employee benefits
The Group’s liabilities for long-term post-employment and other benefits are calculated according to the
estimated future amount of the benefit to which the employee will be entitled in consideration for his
services during the current period and prior periods. The benefit is stated at present value net of the fair
value of the plan’s assets, based on actuarial assumptions. Changes in the actuarial assumptions could lead
to material changes in the book value of the liabilities and in the operating results.
30.8 Derivative financial instruments
The Group enters into transactions in derivative financial instruments for the purpose of hedging risks
related to foreign currency and inflationary risks. The derivatives are recorded at their fair value. The fair
value of derivative financial instruments is based on quotes from financial institutions. The reasonableness
of the quotes is examined by discounting the future cash flows, based on the terms and length of the period
to maturity of each contract, while using market interest rates of a similar instrument as of the
measurement date. Changes in the assumptions and the calculation model could lead to material changes in
the fair value of the assets and liabilities and in the results.
- 42 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IV. Taxation
1. Main types of taxes and corresponding tax rates
The income tax rate in China is 25% (2019: 25%). The subsidiaries outside of China are assessed based on
the tax laws in the country of their residence.
Set forth below are the tax rates outside China relevant to the subsidiaries with significant sales to third
party:
Name of subsidiary Location 2020
ADAMA agriculture solutions Ltd. Israel 23.0%
ADAMA Makhteshim Ltd. Israel 7.5%
ADAMA Agan Ltd. Israel 16.0%
ADAMA Brasil S/A Brazil 34.0%
Makhteshim Agan of North America Inc. U.S. 24.7%
ADAMA India Private Ltd India 25.2%
ADAMA Deutschland GmbH Germany 32.5%
Control Solutions Inc. U.S. 24.0%
Adama Australia Pty Ltd Australia 30.0%
ADAMA France S.A.S France 28.0%
ADAMA Northern Europe B.V. Netherlands 25.0%
ADAMA Italia S.R.L. Italy 27.9%
Alligare Inc. U.S. 27.5%
The VAT rate of the Group's subsidiaries is in the range between 2.5% to 27%.
- 43 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(1) Benefits from Hi-Tech Certificate
Adama Anpon (Jiangsu) Ltd. (Formally know as Jiangsu Anpon Electrochemical Co. Ltd), a subsidiary of
the Company, was jointly approved as new and high-tech enterprise, by the Jiangsu Provincial Department
of Science and Technology, Department of Finance of Jiangsu Province, Jiangsu Provincial Office of the
State Administration of Taxation. The applicable income tax rate from 2018 to 2020 is 15%.
(2) Benefits under the Law for the Encouragement of Capital Investments
Industrial enterprises of subsidiaries in Israel were granted “Approved Enterprise” or “Beneficiary
Enterprise” status under the Israeli Law for the Encouragement of Capital Investments, 1959. Should a
dividend be distributed from the retained earning produced in which the company was considered as an
“Approved Enterprise” or “Beneficiary Enterprise”, the company may be liable for tax at the time of
distribution.
On December 29, 2010 the Knesset approved the Economic Policy Law for 2011-2012, which includes an
amendment to the Law for the Encouragement of Capital Investments - 1959 (hereinafter - “the
Amendment”). The Amendment is effective from January 1, 2011 and its provisions apply to preferred
income derived or accrued in 2011 and thereafter by a preferred company, per the definition of these terms
in the Amendment.
As of the date of the report, all subsidiaries in Israel adopted the amendment and the deferred taxes were
calculated accordingly.
The Amendment provides that only companies in Development Area A will be entitled to the grants track
and that they will be entitled to receive benefits under this track and under the tax benefits track at the
same time. The tax benefit tracks under the law are: a preferred enterprise and a special preferred
enterprise, which mainly provide a uniform and reduced tax rate for all the company’s income entitled to
benefits. Tax rates on preferred income as from the 2017 tax year as follows: 7.5% for Development Area
A and 6% for the rest of the country.
The amendment further determined that no tax shall apply to dividend distributed out of preferred income
to shareholder who is Israel resident company.
- 44 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(2) Benefits under the Law for the Encouragement of Capital Investments - (cont’d)
On December 21, 2016 the Knesset plenum passed the second and third reading of the Economic
Efficiency Law (Legislative Amendments for Achieving Budget Objectives in the Years 2017 and 2018) –
2016 in which the Encouragement Law was also amended (hereinafter: “the Amendment”). The
Amendment added new tax benefit tracks for a “preferred technological enterprise” and a “special
preferred technological enterprise” which award reduced tax rates to a technological industrial enterprise
for the purpose of encouraging activity relating to the development of qualifying intangible assets.
The benefits will be awarded to a “preferred company” that has a “preferred technological enterprise” or a
“special preferred technological enterprise” with respect to taxable “preferred technological income” per
its definition in the Encouragement Law.
Preferred technological income that meets the conditions required in the law, will be subject to a reduced
corporate tax rate of 12%, and if the preferred technological enterprise is located in Development Area A
to a tax rate of 7.5%. A company that owns a special preferred technological enterprise will be subject to a
reduced corporate tax rate of 6% regardless of the development area in which the enterprise is located. The
Amendment is effective as from January 1, 2017.
On May 16, 2017 the Knesset Finance Committee approved Encouragement of Capital Investment
Regulations (Preferred Technological Income and Capital Gain of Technological Enterprise) – 2017
(hereinafter: “the Regulations”), which provides rules for applying the “preferred technological enterprise”
and “special preferred technological enterprise” tax benefit tracks including the Nexus formula that
provides the mechanism for allocating the technological income eligible for the benefits.
ADAMA Agan applied to the Tax Authority in order to be included under the applicability of the amended
law.
(3) Benefits under the Law for the Encouragement of Industry (Taxes), 1969
Under the Israeli Law for the Encouragement of Industry (Taxes) 1969, ADAMA Agricultural Solutions
Ltd. (hereinafter: “Solutions”) is an Industrial Holding Company and some of the subsidiaries in Israel are
“Industrial Companies”. The main benefit under this law is the filing of consolidated income tax returns
(Solutions files a consolidated income tax return with Adama Makhteshim and submission of a
consolidated report together with Adama Agan as of 2017) and amortization of know-how over 8 years,
higher rates of depreciation.
- 45 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements
1. Cash at Bank and On Hand
June 30 December 31
2020 2019
Cash on hand 3,651 6,265
Deposits in banks 6,252,456 4,313,642
Other cash and bank 37,068 28,681
6,293,175 4,348,588
Including cash and bank placed outside China 4,212,790 2,443,065
As at June 30, 2020, restricted cash and bank balances was 37,068 thousand RMB (as at December 11, 2019-
28,681 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Financial assets held for trading
June 30 December 31
2020 2019
Debt instruments - 15,788
Other 12,609 13,722
12,609 29,510
3. Derivative financial assets
June 30 December 31
2020 2019
Economic hedge 949,757 436,201
Accounting hedge derivatives 67,545 53,912
1,017,302 490,113
4. Bills Receivable
June 30 December 31
2020 2019
Post-dated checks receivable 14,478 13,757
Bank acceptance draft 32,955 12,243
47,433 26,000
All bills receivables are due within 1 year.
- 46 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable
a. By category
June 30, 2020
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 491,187 5 252,313 51 238,874
Account receivables assessed
collectively for impairment 8,523,290 95 84,772 1 8,438,518
9,014,477 100 337,085 4 8,677,392
December 31, 2019
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 534,532 6 299,267 56 235,265
Account receivables assessed
collectively for impairment 7,868,077 94 99,185 1 7,768,892
8,402,609 100 398,452 5 8,004,157
b. Aging analysis
June 30, 2020
Within 1 year (inclusive) 8,564,893
Over 1 year but within 2 years 192,265
Over 2 years but within 3 years 79,439
Over 3 years but within 4 years 38,626
Over 4 years but within 5 years 14,301
Over 5 years 124,953
9,014,477
- 47 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
Main groups of account receivables assessed collectively for impairment based on geographical
location:
Geographical location A:
Account receivables in geographical location A are grouped based on similar credit risk:
June 30, 2020
Provision for expected Percentage
Book value credit loss (%)
A 1,098,319 3,922 0.03-0.75
B 409,756 5,037 1.23
C 181,019 9,510 5.25
D 53,073 1,654 3.12
1,742,167 20,123 1.16
Geographical location B:
Account receivables in geographical location B are grouped based on aging analysis:
June 30, 2020
Provision for expected Percentage
Book value credit loss (%)
Accounts receivable that are not overdue 349,885 3,145 0.9
Debts overdue less than 60 days 19,725 592 3.0
Debts overdue less than 180 days but 30,484 3,048 10.0
more than 60 days
Debts overdue above 180 days 19,969 7,987 40.0
Legal Debtors 38,214 38,214 100.0
458,277 52,986 11.2
Other geographical locations:
June 30, 2020
Provision for expected Percentage
Book value credit loss (%)
Other account receivables assessed
collectively for impairment 6,322,846 11,663 0-6.84
- 48 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
c. Addition, written-back and written-off of provision for expected credit losses during the period
Addition of provision for expected credit loss during the period
Lifetime expected credit Lifetime expected
loss (credit losses has credit loss (credit losses
not occurred) has occurred) Total
January 1, 2020 47,908 350,544 398,452
Addition during the period, net - 14,664 14,664
Write back during the period (4,843) (15,601) (20,444)
Write-off during the period - (671) (671)
Exchange rate effect (8,134) (46,987) (54,916)
Balance as of June 30, 2020 34,931 302,154 337,085
d. Five largest accounts receivable at June 30, 2020:
Allowance of expected
Proportion of Accounts credit losses (credit losses
Name Closing balance receivable (%) has occurred)
Party 1 189,320 2 -
Party 2 156,922 2 -
Party 3 128,104 1 -
Party 4 122,603 1 -
Party 5 102,837 1 2,011
Total 699,786 7 2,011
e. Derecognition of accounts receivable due to transfer of financial assets
Certain subsidiaries of the group entered into a securitization transaction with Rabobank International for
sale of trade receivables (hereinafter – “the Securitization Program” and/or “the Securitization
Transaction”).
Pursuant to the Securitization Program, the companies will sell their trade receivables debts, in various
different currencies, to a foreign company that was set up for this purpose and that is not owned by the
Adama Ltd. (hereinafter – “the Acquiring Company”). Acquisition of the trade receivables by the
Acquiring Company is financed by a U.S. company, Nieuw Amsterdam Receivables Corporation for the
Rabobank International Group.
The trade receivables included as part of the Securitization Transaction are trade receivables that meet the
criteria provided in the agreement.
Every year the credit facility is re approved in accordance with the Securitization Program. Subsequent to
the report date, the Securitization agreement was extended up to October 31, 2020 and will be renewed
then for an additional year.
- 49 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The maximum scope of the securitization is adjusted for the seasonal changes in the scope of the
Company’s activities, as follows: during the months March through June the maximum scope of the
securitization is $350 million (as of June 30, 2020 - 2,478 million RMB), during the months July through
September the maximum scope of the securitization is $300 million (as of June 30, 2020 - 2,124 million
RMB) and during the months October through February the maximum scope of the securitization is $250
million (as of June 30, 2020 - 1,770 million RMB). The proceeds received from those customers whose
debts were sold are used for acquisition of new trade receivables.
The price at which the trade receivables debts are sold is the amount of the debt sold less a discount
calculated based on, among other things, the expected length of the period between the date of sale of the
trade receivable and its anticipated repayment date. In the month following acquisition of the debt, the
Acquiring Company pays in cash most of the debt while the remainder is recorded as a subordinated note
and as continuing involvement that is paid after collection of the debt sold. If the customer does not pay its
debt on the anticipated repayment date, the Company bears interest up to the earlier of the date on which
the debt is actually repaid or the date on which debt collection is transferred to the insurance company (the
actual costs are not significant and are not expected to be significant).
The Acquiring Company bears 95% of the credit risk in respect of the customers whose debts were sold
and will not have a right of recourse to the Company in respect of the amounts paid in cash, except
regarding debts with respect to which a commercial dispute arises between the companies and their
customers, that is, a dispute the source of which is a claim of non-fulfillment of an obligation of the seller
in the supply agreement covering the product, such as: a failure to supply the correct product, a defect in
the product, delinquency in the supply date, and the like.
The Acquiring Company appointed a policy manager who will manage for it the credit risk involved with
the trade receivables sold, including an undertaking with an insurance company.
Pursuant to the Receivables Servicing Agreement, the Group subsidiaries handle collection of the trade
receivables as part of the Securitization Transaction for the benefit of the Acquiring Company.
As part of the agreement, Solutions is committed to comply with certain financial covenants, mainly the
ratio of the liabilities to equity and profit ratios. As of June 30, 2020, Solutions was in compliance with the
financial covenants.
The accounting treatment of sale of the trade receivables included as part of the Securitization Program is:
The Company is not controlling the Acquiring Company, therefore the Acquiring Company is not
consolidated in the financial statements.
The Company continues to recognize the trade receivables included in the Securitization Program based on
the extent of its continuing involvement therein.
In respect of the part of the trade receivables included in the securitization Program with respect to which
cash proceeds were not yet received, however regarding which the Company has transferred the credit risk,
a subordinated note is recorded.
The continuing involvement and subordinated note recorded in the balance sheet as part of the “other
receivables” line item.
- 50 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The loss from sale of the trade receivables is recorded at the time of sale in the statement of income in the
“financing expenses” line item.
In the third quarter of 2019, a subsidiary in Brazil (hereinafter - “the subsidiary”) renewed a 3 years
securitization agreement with Rabobank Brazil for sale of trade receivables. Under the agreement, the
subsidiary will sell its trade receivables to a securitization structure (hereinafter - “the entity”) that was
formed for this purpose where the subsidiary has subordinate rights of 5% of the entity's capital.
During June 2020 the maximum securitization scope increased up to BRL 560 million (as of June 30, 2020
- 724 million RMB).
On the date of the sale of the trade receivables, the entity pays the full amount which is the debt amount
sold net of discount calculated, among others, over the expected length of the period between the date of
sale of the customer receivable and its anticipated repayment date.
The entity bears 95% of the credit risk in respect of the customers whose debts were sold such that the
entity has the right of recourse of 5% of the unpaid amount. The subsidiary should make a pledged deposit
equal to the amount the entity’s right of recourse.
The subsidiary handles the collection of receivables included in the securitization for the entity.
The subsidiary does not control the entity and therefore the entity is not consolidated in the group's
financial statements.
The subsidiary continues to recognize the trade receivables sold to the entity based on the extent of its
continuing involvement therein (5% right of recourse) and also recognizes an associated liability in the
same amount.
The loss from the sale of the trade receivables is recorded at the time of sale in the statement of income in
the “financing expenses” category.
June 30 December 31
2020 2019
Accounts receivables derecognized 3,299,603 2,994,917
Continuing involvement 140,995 134,243
Subordinated note in respect of trade receivables 777,145 808,807
Liability in respect of trade receivables 286,642 26,370
Six months ended June 30
2020 2019
Loss in respect of sale of trade receivables 36,790 33,129
- 51 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
6. Receivables financing
June 30 December 31
2020 2019
Bank acceptance draft 35,552 78,948
35,552 78,948
As at June 30, 2020, bank acceptance endorsed but not yet due amounts to 424,044 thousands RMB.
7. Prepayments
(1) The aging analysis of prepayments is as follows:
June 30 December 31
2020 2019
Amount Percentage (%) Amount Percentage (%)
Within 1 year (inclusive) 341,411 97 370,607 98
Over 1 year but within 2 years (inclusive) 7,418 2 1,690 1
Over 2 years but within 3 years (inclusive) 665 - 670 -
Over 3 years 7,510 1 7,889 1
351,999 100 377,808 100
(2) Total of five largest prepayments by debtor at the end of the period:
Amount Percentage of prepayments (%)
June 30, 2020 89,499 25
- 52 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables
(1) Other receivables by nature
June 30 December 31
2020 2019
Dividends receivable 10,768 -
Others 1,224,550 1,195,253
1,235,318 1,195,253
a. Others breakdown by categories
June 30 December 31
2020 2019
Trade receivables as part of securitization transactions
not yet eliminated 140,995 134,243
Subordinated note in respect of trade receivables 777,145 808,807
Financial institutions 31,150 5,107
Receivables in respect of disposal of fixed assets 23,950 28,762
Other 266,404 233,238
Sub total 1,239,645 1,210,157
Provision for expected credit losses - other receivables (15,095) (14,904)
1,224,550 1,195,253
b. Other receivables by aging
June 30
2020
Within 1 year (inclusive) 1,195,783
Over 1 year but within 2 years 15,494
Over 2 years but within 3 years 3,124
Over 3 years but within 4 years 2,307
Over 4 years but within 5 years 11,090
Over 5 years 11,847
1,239,645
- 53 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables - (cont'd)
(2) Additions, recovery or reversal and written-off of provision for expected credit losses during the
period:
Six months
ended
June 30, 2020
Balance as of January 1 2020, 14,904
Addition during the period 191
Written back during the period -
Write-off during the period -
Balance as of June 30, 2020 15,095
(3) Five largest other receivables at June 30, 2020:
Allowance of
Proportion of other expected credit
Name Closing balance receivables (%) losses
Party 1 777,145 63 -
Party 2 31,150 3 -
Party 3 18,329 1 -
Party 4 13,324 1 -
Party 5 10,627 1 -
Total 850,575 69 -
9. Inventories
(1) Inventories by category:
June 30, 2020
Provision for
Book value impairment Carrying amount
Raw materials 3,956,321 31,492 3,924,829
Work in progress 495,996 4,167 491,829
Finished goods 6,058,038 167,373 5,890,665
Others 321,216 9,745 311,471
10,831,571 212,777 10,618,794
December 31, 2019
Provision for
Book value impairment Carrying amount
Raw materials 3,100,027 22,344 3,077,683
Work in progress 633,731 5,351 628,380
Finished goods 6,131,386 184,900 5,946,486
Others 288,794 8,689 280,105
10,153,938 221,284 9,932,654
- 54 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
9. Inventories - (cont'd)
(2) Provision for impairment of inventories:
For the six months ended June 30, 2020
Reversal or
January 1, 2020 Provision write-off Other June 30, 2020
Raw material 22,344 12,704 (3,869) 313 31,492
Work in
progress 5,351 - (1,193) 9 4,167
Finished goods 184,900 53,233 (72,580) 1,820 167,373
Others 8,689 1,091 (159) 124 9,745
221,284 67,028 (77,801) 2,266 212,777
10. Other Current Assets
June 30 December 31
2020 2019
Deductible VAT 441,875 459,209
Current tax assets 140,713 170,505
Others 28,708 29,481
611,296 659,195
11. Long-Term Receivables
June 30 December 31
2020 2019
Long term account receivables from sale of goods 120,550 170,896
120,550 170,896
- 55 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
12. Long-Term Equity Investments
(1) Long-term equity investments by category:
June 30 December 31
2020 2019
Investments in joint ventures 93,419 92,695
Investments in associates 41,001 40,403
134,420 133,098
(2) Movements of long-term equity investments for the period are as follows:
Other Declared Balance at
January 1, Investment Comprehensive distribution of Capital the end of the
2020 income (loss) income cash dividend investment Other period
Joint ventures
Company A 75,924 11,118 1,070 (62,600) 51,435 2,404 79,351
Company B 5,441 57 83 (2,480) - - 3,101
Company C 1,046 - (119) - - - 927
Company D 10,284 3,217 (3,461) - - - 10,040
Sub-total 92,695 14,392 (2,427) (65,080) 51,435 2,404 93,419
Associates
Company E 40,403 - 598 - - - 41,001
Sub-total 40,403 - 598 - - - 41,001
133,098 14,392 (1,829) (65,080) 51,435 2,404 134,420
13. Other equity investments
June 30 December 31
2020 2019
Company A 85,495 85,495
Company B 68,784 67,781
Company C 1,813 1,786
156,092 155,062
Other equity investments are non-core businesses that are intended to be held in the foreseeable future. For the
six months period ended at June 30, 2020 the company did not recognize dividend income from other equity
investments.
- 56 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
14. Fixed assets
Land & Machinery & Office & other
Buildings equipment Motor vehicles equipment Total
Cost
Balance as at January 1, 2020 3,377,533 14,383,742 119,900 365,798 18,246,973
Purchases 46,231 110,441 7,981 16,006 180,659
Transfer from construction in progress 37,001 134,640 1,546 337 173,524
Disposals (2,432) (48,359) (7,841) (2,608) (61,240)
Currency translation adjustment 3,892 133,054 (1,264) 155 135,837
Balance as at June 30, 2020 3,462,225 14,713,518 120,322 379,688 18,675,753
Accumulated depreciation
Balance as at January 1, 2020 (1,667,208) (8,690,076) (60,679) (276,110) (10,694,073)
Charge for the period (55,955) (307,076) (8,719) (19,198) (390,948)
Disposals 1,329 39,193 6,535 2,411 49,468
Currency translation adjustment (6,241) (80,105) 992 (25) (85,379)
Balance as at June 30, 2020 (1,728,075) (9,038,064) (61,871) (292,922) (11,120,932)
Provision for impairment
Balance as at January 1, 2020 (196,295) (416,011) (733) (251) (613,290)
Charge for the period - - - - -
Disposals - 2,452 82 - 2,534
Currency translation adjustment (139) (1,179) - (4) (1,322)
Balance as at June 30, 2020 (196,434) (414,738) (651) (255) (612,078)
Carrying amounts
As at June 30, 2020 1,537,716 5,260,716 57,800 86,511 6,942,743
As at January 1, 2020 1,514,030 5,277,655 58,488 89,437 6,939,610
The lands reported as fixed assets are owned by the group subsidiaries and are located outside of China.
- 57 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
15. Construction in Progress
(1) Construction in progress
June 30 December 31
2020 2019
Provision for Provision for
Book value impairment Carrying amount Book value impairment Carrying amount
1,023,811 (25,740) 998,061 814,126 (25,740) 788,386
(2) Details and Movements of major construction projects in progress during the six months ended
June 30, 2020
Provision Actual
Currency Transfer for cost to Project
December translation to fixed impairment June 30, budget progress Source
Budget 31, 2019 Additions differences assets * 2020 (%) (%) of funds
Bank
Project A 1,509,420 376,996 166,700 - (86,956) - 456,740 38 38 loan
Bank
Project B 505,643 13,064 8,139 - - - 21,203 4 4 loan
Internal
Project C 172,055 18,434 10,120 - (1,783) - 26,771 16 16 finance
Internal
Project D 80,924 45,073 2,990 689 - - 48,752 60 60 finance
Internal
Project E 70,035 14,344 8,782 - - - 23,126 33 33 finance
Bank
Project F 32,000 31,912 1,176 - - - 33,088 100 100 loan
Internal
Project G 146,900 5,246 22,542 812 - - 28,600 19 19 finance
Internal
Project H 29,153 18,867 4,007 29 - - 22,903 79 79 finance
- 58 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
16. Right-of-use assets
Land & Machinery & Office & other
Buildings equipment Motor vehicles equipment Total
Cost
Balance as at January 1, 2020 456,983 46,714 178,402 3,187 685,286
Additions 29,392 27 33,651 - 63,070
Disposals (3,423) (998) (14,862) (7) (19,290)
Currency translation adjustment (630) 415 865 41 691
Balance as at June 30, 2020 482,322 46,158 198,056 3,221 729,757
Accumulated depreciation
Balance as at January 1, 2020 (77,196) (7,820) (63,238) (998) (149,252)
Charge for the period (40,534) (893) (36,557) (584) (78,568)
Disposals 963 984 12,914 14 14,875
Currency translation adjustment (631) (9) (438) 45 (1,033)
Balance as at June 30, 2020 (117,398) (7,738) (87,319) (1,523) (213,978)
Provision for impairment
Balance as at January 1, 2020 - - - - -
Balance as at June 30, 2020 - - - - -
Carrying amounts
As at June 30, 2020 364,924 38,420 110,737 1,698 515,779
As at January 1, 2020 379,787 38,894 115,164 2,189 536,034
- 59 -
ADAMA LTD.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
17. Intangible Assets
Marketing
Intangible assets rights,
Product on Purchase of tradename and Customers
registration Products Software trademarks relations Land use rights (1) Others(2) Total
Costs
Balance as at January 1, 2020 10,769,146 4,189,417 761,236 743,734 399,193 144,909 326,115 17,533,758
Purchases 223,712 - 99,989 162 - 1,513 6,769 100,945
Currency translation adjustment 146,007 67,115 10,066 9,859 4,220 10 4,551 236,747
Disposal )51,461( - - (169) - (441) (8,660) (59,911)
Balance as at June 30, 2020 00,188,417 4,750,457 850,190 753,586 403,413 345,999 328,774 18,022,719
Accumulated amortization
Balance as at January 1, 2020 )7,873,186( )2,278,371( )513,028( )441,587( )196,458( )65,790( )164,844( )11,532,745(
Charge for the period (408,542) (176,314) (31,746) (01,184) (08,654) (4,180) (20,285) (691,015)
Currency translation adjustment (114,605) (34,999) (6,607) (5,581) (0,150) (1) (1,826) (164,971)
Disposal 29,361 - (7) - - - 3,939 33,293
Balance as at June 30, 2020 (8,366,972) (2,489,684) (551,388) (460,550) (216,463) (69,454) (183,016) (12,337,528)
Provision for impairment
Balance as at January 1, 2020 )108,075( )52,182( - - - - )4,971( )165,228(
Charge for the period )70( - - - - - )189( )418(
Currency translation adjustment )0,451( )991( - - - - - )7,771(
Disposal 70,188 - - - - - 5,018 76,096
Balance as at June 30, 2020 )88,458( )57,955( - - - - )751( )040,661(
Carrying amount
As at June 30, 2020 7,617,997 0,918,801 799,911 791,115 086,951 796,545 045,518 5,541,576
As at January 1, 2020 2,787,885 1,858,864 248,208 302,147 717,915 279,646 156,300 5,835,785
(1) Include land parcel in Israel that has not yet been registered in the name of the Group subsidiaries at the Land Registry Office, mostly due to registration procedures or technical problems.
(2) Mainly non-compete.
- 60 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
18. Goodwill
Changes in goodwill
The Group identified two cash generating units ("CGU"), Crop Protection (Agro) and Intermediates and
ingredients (formerly known as “Other”) units. Operations are allocated into either one of the two cash
generating units according to their business.
At the end of the year, or more frequently whether indicators for impairment exists, the Group estimates the
recoverable amount of Crop Protection and Intermediates and ingredients units, which are the cash generating
units of the Group that contain goodwill.
For the purpose of evaluating the groups Goodwill, the Group used a comparable trading multiple as well as the
DCF model analysis in order to benchmark each of its CGU’s valuation against that of the markets peer
companies.
As of December 31, 2019 the fair value of the cash generating units to which the goodwill relates exceeds its
carrying amount.
As at the reporting period, there were no indicators for impairment.
Currency
January 1, translation Balance at
2020 Additions adjustment June 30, 2020
Book value 4,511,193 49,118 66,800 4,679,110
Impairment provision - - - -
Carrying amount 4,511,193 49,118 66,800 4,679,110
19. Deferred Tax Assets and Deferred Tax Liabilities
(1) Deferred tax assets without taking into consideration of the offsetting of balances within the same
tax jurisdiction
June 30 December 31
2020 2019
Deductible Deductible
temporary Deferred tax temporary Deferred tax
differences assets differences assets
Deferred tax assets
Deferred tax assets in respect of carry
forward losses 861,415 700,504 600,496 016,594
Deferred tax assets in respect of
inventories 0,544,685 419,111 0,557,966 401,903
Deferred tax assets in respect of
employee benefits 861,796 001,977 973,434 015,477
Other deferred tax asset 0,554,784 145,410 0,616,933 189,009
4,809,911 0,196,869 4,744,629 0,197,838
- 61 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont’d)
(2) Deferred tax liabilities without taking into consideration of the offsetting of balances within the
same tax jurisdiction
June 30 December 31
2020 2019
Taxable Taxable
temporary Deferred tax temporary Deferred tax
differences liabilities differences liabilities
Deferred tax liabilities
Deferred tax liabilities in respect of
fixed assets and intangible assets 1,911,710 616,111 1,550,402 569,446
1,911,710 616,111 1,550,402 569,446
(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting
June 30 December 31
2020 2019
The offset The offset
amount of Deferred tax amount of Deferred tax
deferred tax assets or deferred tax assets or
assets and liabilities assets and liabilities after
liabilities after offset liabilities offset
Presented as:
Deferred tax assets 709,554 859,101 746,042 876,696
Deferred tax liabilities 709,554 406,449 746,042 171,114
(4) Details of unrecognized deferred tax assets
June 30 December 31
2020 2019
Deductible temporary differences 595,170 505,589
Deductible losses carry forward 096,900 047,147
997,717 659,610
(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets
June 30 December 31
2020 2019
2020 06,401 06,090
2021 01,169 01,110
2022 0,471 0,417
2023 79,991 79,969
After 2023 008,706 81,690
096,900 047,147
- 62 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont'd)
(6) Unrecognized deferred tax liabilities
When calculating the deferred taxes, taxes that would have applied in the event of realizing investments
in subsidiaries were not taken into account since it is the Company’s intention to hold these investments
and not realize them.
20. Other Non-Current Assets
June 30 December 31
2020 2019
Assets related to securitization 43,836 38,648
Advances in respect of non-current assets 75,311 58,689
Judicial deposits 91,134 56,347
Call option in respect of business combination - 9,216
Others 85,607 83,283
295,888 246,183
21. Short-Term Loans
Short-term loans by category:
June 30 December 31
2020 2019
Guaranteed loans 528,000 414,000
Unsecured loans 1,365,876 1,595,882
1,893,876 2,009,882
Details of the guarantees are set out in note X.5(2) Related parties and related party transactions.
22. Derivative financial liabilities
June 30 December 31
2020 2019
Economic hedge 867,381 603,009
Accounting hedge derivatives 197,653 88,466
1,065,034 691,475
- 63 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
23. Bills Payables
June 30 December 31
2020 2019
Post-dated checks payables 136,089 224,878
Note payables draft 119,328 96,796
255,417 321,674
As at June 30, 2020, none of the bills payable are overdue.
24. Accounts payable
June 30 December 31
2020 2019
Within 1 year (including 1 year) 4,729,959 4,172,996
1-2 years (including 2 years) 17,041 10,458
2-3 years (including 3 years) 6,776 2,881
Over 3 years 19,932 19,566
4,773,708 4,205,901
There are no significant accounts payables aging over one year.
25. Contract liabilities
June 30 December 31
2020 2019
Discount for customers 857,186 522,614
Advances from customers 195,147 141,614
1,052,333 664,228
26. Employee Benefits Payable
June 30 December 31
2020 2019
Short-term employee benefits 406,604 656,272
Post-employment benefits* 180,318 774,115
Share based payment (See note XIII) 54,158 -
Other benefits within one year 305,391 304,366
946,491 0,084,693
Current maturities 19,161 79,140
985,531 0,700,903
* For further information regarding the termination benefits to employees during the periods see note XI.2 –
Commitments and contingent liabilities.
- 64 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
27. Taxes Payable
June 30 December 31
2020 2019
Corporate income tax 201,764 157,548
VAT 164,029 180,818
Others 20,277 30,672
386,071 369,038
28. Other Payables
June 30 December 31
2020 2019
Dividends payables 23,916 750
Other payables 1,318,549 1,048,844
1,342,465 1,049,594
(1) Other payables
June 30 December 31
2020 2019
Accrued expenses 596,207 613,183
Liability in respect of securitization transactions 286,642 26,370
Payables in respect of intangible assets 132,606 130,329
Financial institutions 61,847 1,137
Other payables 241,252 277,825
1,318,549 1,048,844
As at June 30, 2020, the Group did not have any significant overdue other payables.
29. Non-Current Liabilities Due Within One Year
Non-current liabilities due within one year by category are as follows:
June 30 December 31
2020 2019
Long-term loans due within one year 651,027 420,086
Lease liabilities due within one year 144,736 148,287
Debentures payable due within one year 540,612 497,870
1,336,375 1,066,243
- 65 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
30. Other Current Liabilities
June 30 December 31
2020 2019
Put options to holders of non-controlling interests 148,974 148,886
Provision in respect of returns 217,411 191,065
Provision in respect of claims 14,407 14,901
Others 396 391
381,188 355,243
31. Long-Term Loans
Long-term loans by category
June 30 December 31
2020 Interest range 2019 Interest range
Long term loans
Loan secured by tangible assets
other than monetary assets - - 2,860 2.4%-2.7%
Unsecured loans 2,875,705 1.6%-4.8% 1,344,385 1.5%-6.2%
Total Long term loans 2,875,705 1,347,245
Less: Long term loans due within 1 year (651,027) (420,086)
Long term loans, net 2,224,678 927,159
For the maturity analysis, see note VIII.C - Liquidity risk.
There are no long-term loans mortgaged by fixed assets as at June 30, 2020 (10107109: 900 thousand RMB).
Details of the guarantees are set out in note X(5) Related parties and related party transactions.
32. Debentures Payable
June 30 December 31
2020 2019
Debentures Series B 9,204,385 8,461,802
Current maturities (540,612) (499,891)
8,663,773 7,965,942
June 30
2020
First year (current maturities) 540,612
Second year 540,612
Third year 540,612
Fourth year 540,612
Fifth year and thereafter 7,041,937
9,204,385
- 66 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
32. Debentures Payable - (cont'd)
Movements of debentures payable:
For the six months ended June 30, 2020
Issuance
Balance at during Amortization CPI and Repayment Currency Balance at
Maturity Face value Face value Issuance Maturity Issuance January 1, the of discounts exchange during the translation June 30,
period in RMB NIS date period amount 2091 period or premium rate effect period adjustment 2020
Debentures November
Series B 2,673,640 1,650,000 4.12.2006 2020-2036 3,043,742 3,839,289 - 124 (35,993) - 54,569 3,857,989
Debentures November
Series B 843,846 513,527 16.1.2012 2020-2036 842,579 1,137,246 - 5,481 (10,724) - 16,271 1,148,274
Debentures November
Series B 995,516 600,000 7.1.2013 2020-2036 1,120,339 1,417,383 - 2,404 (13,301) - 20,701 1,426,696
Debentures November
Series B 832,778 533,330 1.2.2015 2020-2036 1,047,439 1,335,461 - (1,507) (12,535) - 18,957 1,340,376
Debentures November
Series B 418,172 266,665 1-6.2015 2020-2036 556,941 734,433 - (4,140) (6,894) - 10,361 733,762
Debentures November
Series B 497,989 246,499 5.5.2020 2020-2036 697,891 - 697,896 (1,445) 4,549 - 0,788 697,288
8,463,812 697,896 917 (74,898) - 070,658 9,204,385
On May 5, 2020, Solutions issued debentures through an expansion of Series B totaling NIS 246.5 million par value of debentures, in consideration for 115.6% of their par
value. The total net proceeds amounted to $98 million. The issuance costs were $341 thousand.
Series B constitutes CPI-linked debentures, bearing basic annual interest of 5.15%. The principal will be repaid in 17 equal payments in the years 2020 to 2036.
- 67 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
33. Lease liabilities
June 30 December 31
2020 Interest range 2019 Interest range
Lease liabilities 532,371 1.3% - 6.1% 554,645 1.9% - 6.1%
Less: Lease liabilities due within one year (144,736) (148,287)
Long term lease liabilities, net 387,635 406,358
34. Long-Term Employee Benefits Payable
Post-employment benefit plans – defined benefit plan and early retirement
June 30 December 31
2020 2019
Total present value of obligation 581,853 651,803
Less: fair value of plan's assets )97,565( (104,448)
Net liability related to Post-employment benefits 488,788 547,355
Termination benefits 004,541 70,128
Total recognized liability for defined benefit plan, net (1) 617,810 617,483
Share based payment (See note XIII) 59,549 94,014
Other long-term employee benefits 53,308 54,119
Total long-term employee benefits, net 905,688 765,894
Including: Long-term employee benefits payable due within one year 19,164 27,040
696,674 738,854
(1) Movement in the net liability and assets in respect of defined benefit plans, early retirement and
their components
Defined benefit obligation Fair value of
and early retirement plan's assets Total
2020 2019 2020 2019 2020 2019
Balance as at January 1, 970,910 638,355 014,448 87,492 609,481 550,863
Expense/income recognized
in profit and loss:
Current service cost 65,196 11,429 - - 65,196 11,429
Interest costs 9,517 10,931 0,199 1,749 8,011 9,182
Changes in exchange rates )7,719( 22,709 )761( 4,265 )0,949( 18,444
Actuarial gain (losses) due to early retirement )0,877( 707 - - )0,877( 707
Included in other comprehensive income:
Actuarial gain (losses) as a result of changes in
actuarial assumptions )55,887( 17,515 )8,449( 1,953 )49,411( 15,562
Foreign currency translation differences in respect of
foreign operations 8,916 1,359 0,708 350 9,688 1,009
Additional movements:
Benefits paid )51,056( (33,628) )8,051( (5,404) )47,111( (28,224)
Contributions paid by the Group - - 7,167 3,180 )7,167( (3,180)
Balance as at June 30, 695,196 669,377 97,565 93,585 617,810 575,792
- 68 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
34. Long-Term Employee Benefits Payable - (cont'd)
Post-employment benefit plans – defined benefit plan and early retirement - (cont'd)
(2) Actuarial assumptions and sensitivity analysis
The principal actuarial assumptions at the reporting date for defined benefit plan
June 30 December 31
2020 2019
Discount rate (%)* 111%-017% 0.4%-3.3%
*According to the demographic and the benefit components.
The assumptions regarding the future mortality rate are based on published statistical data and acceptable
mortality rates.
Possible reasonable changes as of the date of the report in the discount rate, assuming the other
assumptions remain unchanged, would have affected the defined benefit obligation as follows:
As of June 30, 2020
Increase of 1% Decrease of 1%
Discount rate )49,117( 58,711
35. Provisions
June 30 December 31
2020 2019
Liabilities in respect of contingencies* 79,479 90,051
Provision in respect of site restoration 80,475 84,211
Other 2,591 2,560
162,545 176,822
* Liabilities in respect of contingencies includes obligations of pending litigations, where an outflow of
resources had been reliably estimated.
- 69 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
36. Other Non-Current Liabilities
June 30 December 31
2020 2019
Put options to holders of non- controlling interests 221,072 207,472
Long term transactions in derivatives 2,996 25,582
Long term loans - others 171,791 171,770
395,838 404,824
37. Share Capital
Balance at Issuance of new Cancellations of Balance at
January 1, 2020 shares shares June 30, 2020
Share capital 2,446,554 - - 2,446,554
38. Capital Reserve
Balance at
Balance at Additions during Reductions during December 31,
January 0, 2020 the period the period 2019
Share premiums 12,550,177 - - 12,550,177
Other capital reserve 352,991 - - 352,991
12,903,168 - - 12,903,168
39. Other Comprehensive Income, net of tax
Attributable to shareholders of the company
Less: Less: Less:
Balance at Before transfer to Income transfer to Balance at
January 1, tax profit or tax Net-of-ta retained June 30,
2020 amount loss expenses x amount earnings 2020
Items that will not be
reclassified to profit or
loss 13,824 47,433 - 8,060 39,373 - 53,197
Re-measurement of changes
in liabilities under defined
benefit plans (34,876) 47,433 - 8,060 39,373 - 4,497
Changes in fair value of
other equity investment 48,700 - - - - - 48,700
Items that may be
reclassified to profit or -
loss 1,178,857 187,982 83,672 (3,690) 108,000 1,286,857
Effective portion of gain or
loss of cash flow hedge (45,532) 1,697 83,672 (3,690) (78,285) - (123,817)
Translation difference of
foreign financial statements 1,224,389 186,285 - - 186,285 - 1,410,674
1,192,681 235,415 83,672 4,370 147,373 - 1,340,054
- 70 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
40. Surplus reserve
Additions Reductions
Balance at during the during the Balance at
January 1, 2091 period period June 30, 2020
Statutory surplus reserve 236,348 - - 236,348
Discretional surplus reserve 3,814 - - 3,814
240,162 - - 240,162
41. Retained Earnings
2020 2019
Retained earnings as at December 31 of preceding year 5,574,173 5,513,466
Adjustment for business combination under common control (Note 1) - 115,826
Retained earnings as at January 1 5,574,173 5,629,292
Net profits for the period attributable to shareholders of the Company 204,649 588,638
Dividends to non-controlling Interest (26,828) (28,936)
Dividend to the shareholders of the company (Note 2) (29,359) (293,628)
Transfer from other comprehensive income - 4,511
Retained earnings as at June 30 5,722,635 5,899,877
Note 1:
During the first quarter of 2019 the acquisition of Adama Anpon (Jiangsu) Ltd., a wholly-owned subsidiary of
CNAC, was successfully completed. Anpon became a wholly owned subsidiary of the Company. The
combination was considered as a business combination under common control.
Note 2:
On April 27, 2020, following approval of the 25th meeting of the Company's 8th session of the Board of
Directors, the Company declared RMB 0.12 (before tax) per 10 shares as cash dividend to all shareholders,
resulting in a total cash dividend of 29,359 thousands RMB (before tax). No shares were distributed as share
dividend and no reserve was transferred to equity capital. The proposal was approved by the 2019 Annual
General Meeting of the Company held on May 20, 2020. As of the date of the approval of this report, the
dividend was fully paid.
- 71 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
42. Operating Income and Cost of Sales
Six months ended June 30 Six months ended June 30
2020 2019
Income Cost of sales Income Cost of sales
Principal activities 14,100,337 9,894,415 13,579,047 8,999,083
Other businesses 20,703 10,055 36,985 24,159
14,121,040 9,904,470 13,616,032 9,023,242
43. Taxes and Surcharges
Six months ended June 30
2020 2019
Tax on turnover 11,087 8,785
Others 35,030 37,941
46,117 46,226
44. Selling and Distribution Expenses
Six months ended June 30
2020 2019
Salaries and related expense 804,371 811,280
Depreciation and amortization 712,432 703,980
Transportation and Commissions 384,906 372,574
Advertising and sales promotion 161,027 178,645
Travel expenses 42,169 68,795
Warehouse expenses 77,121 75,558
Registration 81,676 74,483
Professional services 45,113 38,998
Insurance 36,863 41,668
Others 122,890 133,793
2,468,568 2,499,774
- 72 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
45. General and Administrative Expenses
Six months ended June 30
2020 2019
Salaries and related expenses 263,523 248,290
Idleness expenses 87,755 155,214
Professional services 56,030 64,171
Depreciation and amortization 44,550 45,283
IT systems 46,259 41,929
Office rent, maintenance and expenses 17,759 25,925
Other 37,310 47,447
553,186 628,259
46. Research and development expenses
Six months ended June 30
2020 2019
Salaries and related expenses 91,566 90,220
Field trial 17,652 33,143
Professional services 31,068 27,519
Depreciation and amortization 13,942 18,826
Materials 3,251 14,860
Office rent, maintenance and expenses 3,631 4,316
Other 27,075 21,815
188,185 210,699
47. Financial expenses, net
Six months ended June 30
2020 2019
Interest expenses on debentures and loans 352,342 349,941
CPI expense (income) in respect of debentures (63,213) 96,329
Loss in respect of sale of trade receivables 36,790 33,129
Interest expense in respect of post-employment benefits and early
retirement, net 8,133 9,087
Revaluation of put option, net 8,566 (14,954)
Interest income from customers, banks and others (29,625) (41,104)
Exchange rate differences, net 507,673 481,696
Interest expense on lease liabilities 11,955 12,894
Other expenses 10,171 11,103
842,792 938,196
- 73 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
48. Investment income, net
Six months ended June 30
2020 2019
Investment income (expenses) from disposal of derivatives 37,737 (536,167)
Income from long-term equity investments accounted for using
the equity method 14,392 21,724
52,129 (514,443)
49. Gain (loss) from Changes in Fair Value
Six months ended June 30
2020 2019
Gain from changes in fair value of derivative financial instruments 267,775 881,007
Others (2,265) 3,128
265,510 884,135
50. Credit impairment reversal (losses)
Six months ended June 30
2020 2019
Bills receivable and accounts receivable 5,780 3,356
Other receivables (191) (9)
5,589 3,347
51. Asset impairment reversal (losses)
Six months ended June 30
2020 2019
Inventories (24,724) (19,371)
Intangible asset (21) -
Other (631) (4,438)
(25,376) (23,809)
52. Gain from Disposal of Assets
Six months ended June 30 Included in
non-recurring
2020 2019 items
Gain from disposal of fixed assets 720 115,730 720
Gain (loss) from disposal of intangible assets 6,974 (216) 6,974
7,694 115,514 7,694
- 74 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
53. Income Tax Expenses
Six months ended June 30
2020 2019
Current year 211,779 192,289
Deferred tax expenses (income) 17,036 (54,959)
Adjustments for previous years, net 15,383 3,207
244,198 140,537
(1) Reconciliation between income tax expense and accounting profit is as follows:
Six months ended June 30
2020 2019
Profit before taxes 448,847 729,175
Statutory tax in china 25% 25%
Tax calculated according to statutory tax in china 007,702 182,294
Tax benefits from Approved Enterprises )11,099( (29,962)
Difference between measurement basis of income for financial
statement and for tax purposes 018,790 870
Taxable income and temporary differences at other tax rate )40,804( (6,378)
Taxes in respect of prior years 05,181 3,207
Utilization of tax losses prior years for which deferred taxes were
not created )990( -
Temporary differences and losses in the report year for which
deferred taxes were not created 11,194 899
Non-deductible expenses and other differences 07,994 (5,907)
Neutralization of tax calculated in respect of the Company’s share
in results of equity accounted investees )1,889( (6,304)
Effect of change in tax rate in respect of deferred taxes 05,415 442
Creation and reversal of deferred taxes for tax losses and temporary
differences from previous years )6,558( 1,378
Income tax expenses 744,098 140,537
54. Other comprehensive income
Details of the Other comprehensive income are set out in Note V.39
- 75 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
55. Notes to items in the cash flow statements
(1) Cash received relating to other operating activities
Six months ended June 30
2020 2019
Derivatives transactions 404,824 44,546
Financial institutions 126,770 -
Interest income 26,314 29,257
Government subsidies 6,236 363
Others 66,371 184,212
630,515 258,378
(2) Cash paid relating to other operating activities
Six months ended June 30
2020 2019
Transportation, Commissions and Warehouse 389,972 386,468
Advertising and sales promotion 145,267 159,574
Professional services 134,480 141,127
Financial institutions 136,897 39,402
IT and Communication 94,321 77,596
Registration and Field trials 81,576 92,911
Derivatives transactions 90,297 54,030
Travel 51,360 69,405
Insurance 36,663 29,015
Others 297,735 325,262
Net cash flow from operating activities 1,458,568 1,374,790
(3) Cash received relating to other investing activities
Six months ended June 30
2020 2019
Proceeds from loan to affiliate company - 7,491
Investment grant - 1,808
Other - 28
- 9,327
(4) Cash paid relating to other investing activities
Six months ended June 30
2020 2019
Increase in securitization facility 31,483 -
Other 15,357 778
46,840 778
- 76 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
55. Notes to items in the cash flow statements - (cont'd)
(5) Cash received from other financing activities
Six months ended June 30
2020 2019
Cash received in respect of hedging transactions on debentures - 41,144
Deposit for issuing bills payables 4,449 20,557
4,449 61,701
(6) Cash paid relating to other financing activities
Six months ended June 30
2020 2019
Payment in respect of hedging transactions on debentures 154,335 325,474
Repayment of lease liability 81,915 74,182
Realization of call option - 35,625
Deposit for issuing bills payable 13,036 8,610
249,286 443,891
56. Supplementary Information on Cash Flow Statement
(1) Supplementary information on Cash Flow Statement
a. Reconciliation of net profit to cash flows from operating activities:
Six months ended June 30
2020 2019
Net profit 204,649 588,638
Add: Impairment provisions for assets 25,376 23,809
Credit impairment loss (5,589) (3,347)
Depreciation of fixed assets and investment property 391,110 413,802
Depreciation of right-of-use asset 78,568 75,529
Amortization of intangible asset 673,105 670,019
Gains on disposal of fixed assets, intangible assets, and other
long-term assets, net (7,694) (115,514)
Gains from changes in fair value (265,510) (884,135)
Financial expenses 245,591 806,091
Investment loss (income), net (245,248) 900,426
Decrease (increase) in deferred tax assets (43,845) (50,833)
Increase (decrease) in deferred tax liabilities 60,881 (4,126)
Decrease (increase) in inventories, net (717,127) (777,827)
Increase in operating receivables (701,359) (1,263,516)
Increase (decrease) in operating payables 1,525,228 (751,460)
Others 16,395 67,494
Net cash flow from operating activities 1,234,531 (304,950)
- 77 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
56. Supplementary Information on Cash Flow Statement - (cont'd)
b. Net increase (decrease) in cash and cash equivalents
Six months ended June 30
2020 2019
Closing balance of cash 6,256,107 5,381,820
Less: Opening balance of cash 4,319,907 6,346,196
Net increase (decrease) in cash and cash equivalents 1,936,200 (964,376)
(2) Details of cash and cash equivalents
June 30 January 1
2020 9191
Cash on hand 3,651 6,265
Bank deposits available on demand without restrictions 6,252,456 4,313,642
6,256,107 4,319,907
57. Assets with Restricted Ownership or Right of Use
June 30
2020 Reason
Cash 37,068 Pledged
Other non-current assets 109,312 Guarantees
146,380
- 78 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items
(1) Foreign currencies denominated items
As at June 30, 2020
Foreign currency at
the end of the RMB at the end of
period Exchange rate the period
Cash and bank balances
EUR 69,566 7.9366 552,116
ILS 247,542 2.0440 505,986
BRL 239,855 1.2938 310,316
USD 39,157 7.0846 277,417
PLN 125,210 1.7798 222,849
ZAR 184,159 0.4109 75,673
Other 395,822
Total 2,340,179
Bills and Accounts receivable
BRL 791,834 1.2938 1,024,446
EUR 119,802 7.9366 950,821
CAD 74,365 5.1731 384,693
RON 233,146 1.6387 382,059
TRY 247,993 1.0354 256,781
HUF 7,416,257 0.0223 165,313
RUB 1,347,746 0.1013 136,500
ZAR 236,432 0.4109 97,152
USD 37,490 7.0846 265,604
ILS 33,980 2.0440 69,457
Other 305,004
Total 4,037,830
Other receivables
EUR 52,928 7.9366 420,068
AUD 59,549 4.8491 288,759
ILS 120,764 2.0440 246,846
GBP 15,050 8.6956 130,872
BRL 16,909 1.2938 21,876
Other 77,684
Total 1,186,105
Other current assets
ILS 59,308 2.0440 121,229
BRL 42,578 1.2938 55,086
EUR 6,372 7.9366 50,569
ARS 291,633 0.1005 29,323
UAH 89,541 0.2654 23,766
Other 72,522
Total 352,495
- 79 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at June 30, 2020
Foreign currency at
the end of the RMB at the end of
period Exchange rate the period
Long-term receivables
BRL 93,178 1.2938 120,550
Total 120,550
Other non-current assets
BRL 71,580 1.2938 92,607
Other 8,453
Total 101,060
Short-term loans
EUR 45,454 7.9366 360,750
TRY 153,940 1.0354 159,395
UAH 397,692 0.2654 105,555
Total 625,700
Bills and Accounts payable
ILS 311,163 2.0440 636,029
EUR 51,014 7.9366 404,877
USD 18,843 7.0846 133,497
BRL 61,883 1.2938 80,062
COP 30,537,740 0.0019 57,556
RON 19,324 1.6387 31,667
Other 57,684
Total 1,401,372
Other payables
ILS 139,454 2.0440 285,050
AUD 24,913 4.8491 120,805
BRL 37,248 1.2938 48,190
OTHER 19,049
TOTAL 473,094
Contract liabilities
EUR 40,015 7.9366 317,586
CAD 16,209 5.1731 83,850
BRL 49,057 1.2938 63,468
TRY 37,912 1.0354 39,256
USD 2,125 7.0846 15,058
Other 58,675
Total 577,893
- 80 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at June 30, 2020
Foreign currency at RMB at the end of
the end of the period Exchange rate the period
Non-current liabilities due within one year
ILS CPI 282,703 2.0440 577,857
EUR 23,891 7.9366 189,610
USD 1,303 7.0846 9,232
Other 36,565
Total 813,264
Other current liabilities
EUR 4,638 7.9366 36,813
Other 2,768
Total 39,581
Long-term loan
EUR 55,302 7.9366 438,908
Total 438,908
Debentures payable
ILS CPI 4,238,551 2.0440 8,663,772
Total 8,663,772
Provision and Long-term payables
BRL 45,566 1.2938 58,951
EUR 372 7.9366 2,952
Total 61,903
Other non-current liabilities
EUR 7,852 7.9366 62,321
USD 5,577 7.0846 39,511
ILS CPI 18,647 2.0440 38,116
GBP 1,038 8.6956 9,026
Other 49,387
Total 198,361
- 81 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items - (cont'd)
(2) Major foreign operations
Registration &
Principal place of Functional
Name of the Subsidiary business Business nature currency
ADAMA France S.A.S France Distribution USD
ADAMA Brasil S/A Brazil Manufacturing; Distribution; USD
Registration
ADAMA Deutschland GmbH Germany Distribution; Registration USD
ADAMA India Private Ltd. India Manufacturing INR
Distribution; Registration
Makhteshim Agan of North United States Manufacturing; Distribution; USD
America Inc. Registration
Control Solutions Inc. United States Manufacturing; Distribution; USD
Registration
ADAMA Agan Ltd. Israel Manufacturing; Distribution; USD
Registration
ADAMA Makhteshim Ltd. Israel Manufacturing; Distribution; USD
Registration
ADAMA Australia Pty Australia Distribution AUD
Limited
ADAMA Italia SRL Italy Distribution USD
ADAMA Northern Netherlands Distribution USD
Europe B.V.
Alligare LLC United States Manufacturing; Distribution; USD
Registration
The functional currency of the subsidiaries above is the main currency that represent the principal
economic environment.
VI. Change in consolidation Scope
There were no changes in consolidation scope during the reporting period.
- 82 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VII. Interest in Other Entities
1. Interests in subsidiaries
Composition of the largest subsidiaries of the Group in respect of assets and operating income
Registration & Method of
Principal place of obtaining the
Name of the Subsidiary business Business nature Direct Indirect subsidiary
ADAMA France S.A.S FRANCE Distribution 100% Established
ADAMA Brasil S/A BRAZIL Manufacturing; Distribution; 100% Purchased
Registration
ADAMA Deutschland GmbH GERMANY Distribution; Registration; 100% Established
ADAMA India Private Ltd. INDIA Manufacturing; 100% Established
Distribution; Registration
Makhteshim Agan of North America UNITED STATES Manufacturing; Distribution; 100% Established
Inc. Registration
Control Solutions Inc. UNITED STATES Manufacturing; Distribution; 67% Purchased
Registration
ADAMA Agan Ltd. ISRAEL Manufacturing; Distribution; 100% Restructure
Registration
ADAMA Makhteshim Ltd. ISRAEL Manufacturing; Distribution; 100% Restructure
Registration
ADAMA Australia Pty Limited AUSTRALIA Distribution 100% Purchased
ADAM Italia SRL ITALY Distribution 100% Established
ADAMA Northern Europe B.V. NETHERLANDS Distribution 55% Purchased
Manufacturing; Distribution;
Alligare LLC UNITED STATES 100% Purchased
Registration
Adama Anpon (Jiangsu) Ltd. CHINA Manufacturing; Distribution 100% Purchased
2. Interests in joint ventures or associates
June 30 December 31
2020 2019
Joint ventures 93,419 92,695
Associates 41,001 40,403
134,420 133,098
3. Summarized financial information of joint ventures and associates
June 30, 2020 and six June 30, 2019 and six
months then ended months then ended
Joint ventures:
Total carrying amount 93,419 95,258
The Group's share of the following items:
Net profit 14,392 21,740
Other comprehensive income (2,427) 158
Total comprehensive income 11,965 21,898
Associates:
Total carrying amount 41,001 39,817
The Group's share of the following items:
Net profit - (16)
Other comprehensive income 598 67
Total comprehensive income 598 51
- 83 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments
A. General
The Group has extensive international operations, and, therefore, it is exposed to credit risks, liquidity risks
and market risks (including currency risk, interest risk and other price risk). In order to reduce the exposure
to these risks, the Group uses financial derivatives instruments, including forward transactions and options
(hereinafter - “derivatives”).
Transactions in derivatives are undertaken with major financial institutions, and therefore, in the opinion of
Group Management the credit risk in respect thereof is low.
This note provides information on the Group’s exposure to each of the above risks, the Group’s objectives,
policies and processes regarding the measurement and management of the risk. Additional quantitative
disclosure is included throughout the consolidated financial statements.
The Board of Directors has overall responsibility for establishing and monitoring the framework of the
Group's risk management policy. The Finance Committee is responsible for establishing and monitoring the
Group's actual risk management policy. The Chief Financial Officer reports to the Finance Committee on a
regular basis regarding these risks.
The Group’s risk management policy, established to identify and analyze the risks facing the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. The policy and methods for
managing the risks are reviewed regularly, in order to reflect changes in market conditions and the Group's
activities. The Group, through training, and management standards and procedures, aims to develop a
disciplined and constructive control environment in which all the employees understand their roles and
obligations.
B. Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations, and derives mainly from trade receivables and other receivables as
well as from cash and deposits in financial institutions.
Accounts and other receivables
The Group’s revenues are derived from a large number of widely dispersed customers in many countries.
Customers include multi-national companies and manufacturing companies, as well as distributors,
agriculturists, agents and agrochemical manufacturers who purchase the products either as finished goods or
as intermediate products for their own requirements.
The Company entered into an agreement for the sale of trade receivables in a securitization transaction, for
details see note V.5.e.
In April 2019, a two-years agreement with an international insurance company was renewed. The amount of
the insurance coverage was fixed at $150 million cumulative per year. The indemnification is limited to
about 90% of the debt.
The Group’s exposure to credit risk is influenced mainly by the personal characterization of each customer,
and by the demographic characterization of the customer’s base, including the risk of insolvency of the
industry and geographic region in which the customer operates. No single customer accounted for greater
than 5% of total accounts receivable.
- 84 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
B. Credit risk - (cont’d)
The Company management has prescribed a credit policy, whereby the Company performs current ongoing
credit evaluations of existing and new customers, and every new customer is examined thoroughly regarding
the quality of his credit, before offering him the Group’s customary shipping and payment terms. The
examination made by the Group includes an outside credit rating, if any, and in many cases, receipt of
documents from an insurance company. A credit limit is prescribed for each customer, outstanding amount
of the accounts receivable balance. These limits are examined annually. Customers that do not meet the
Group’s criteria for credit quality may do business with the Group on the basis of a prepayment or against
furnishing of appropriate collateral.
Most of the Group’s customers have been doing business with it for many years. In monitoring customer
credit risk, the customers were grouped according to a characterization of their credit, based on geographical
location, industry, aging of receivables, maturity, and existence of past financial difficulties. Customers
defined as “high risk” are classified to the restricted customer list and are supervised by management. In
certain countries, mainly, Brazil, customers are required to provide property collaterals (such as agricultural
lands and equipment) against execution of the sales, the value of which is examined on a current ongoing
basis by the Company. In these countries, in a case of expected credit risk, the Company records a provision
for the amount of the debt less the value of the collaterals provided and acts to realize the collaterals.
The Group closely monitors the economic situation in Eastern Europe and South America on an ongoing
basis. As a result of the Covid-19 pandemic, the Group also closely monitors the economic situation
worldwide. Where necessary, the Group operates to limit its exposure to customers.
The Group recognizes an impairment provision, which reflects its assessment regarding the credit risk of
account receivables, Other receivables and investments on a lifetime expected credit loss basis. See also
notes Ⅲ.10 – Financial instruments and Ⅲ.11 – Receivables.
Cash and deposits in banks
The Company holds cash and deposits in banks with a high credit rating. These banks are also required to
comply with capital adequacy or maintain a level of security based on different situations.
Guarantees
The Company’s policy is to provide financial guarantees only to investee companies.
Aging of receivables and expected credit risk
Presented below is the aging of the past due trade receivables:
June 30, 2020
Past due by less than 90 days 490,268
Past due by more than 90 days 591,410
1,081,678
- 85 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
B. Credit risk - (cont’d)
The company measure the provision for credit losses on a collective group basis, where receivables share
similar credit risk characteristics based on geographical locations. The examination for expected credit
losses is performed using model including aging analysis and historical loss experiences, and adjusted by the
observable factors reflecting current and expected future economic conditions.
When credit risk on a receivable has increased significantly since initial recognition, the group records
specific provision or general provision which is determined for groups of similar assets in countries in which
there are large number of customers with immaterial balances.
The Group has credit risk exposures for accounts receivables amounted to RMB 8,414,898 thousand relate to
category of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 599,579
thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has
credit risk exposures for other receivables amounted to RMB 15,095 thousand related to category of
"Lifetime expected credit losses (credit losses occurred)". The credit risk exposures for all remaining balance
of financial assets at amortised cost and financial assets at FVTOCI are related to "12-month expected credit
losses".
C. Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligation when
they come due. The Group's approach to managing its liquidity risk is to assure, to the extent possible, an
adequate degree of liquidity for meeting its obligations timely, under ordinary conditions and under pressure
conditions, without sustaining unwanted losses or hurting its reputation.
The cash-flow forecast is determined both at the level of the various entities as well as of the consolidated
level. The Company examines the current forecasts of its liquidity requirements in order to ascertain that
there is sufficient cash for the operating needs, including the amounts required in order to comply with the
financial liabilities, while taking strict care that at all times there will be unused credit frameworks so that
the Company will not exceed the credit frameworks granted to it and the financial covenants with which it is
required to comply with. These forecasts take into consideration matters such as the Company’s plans to use
debt for financing its activities, compliance with required financial covenants, compliance with certain
liquidity ratios and compliance with external requirements such as laws or regulation.
The surplus cash held by the Group subsidiaries, which is not required for financing the current ongoing
operations, is invested in short-term interest-bearing investment channels.
- 86 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
C. Liquidity risk - (cont’d)
(1) Presented below are the contractual maturities of the financial liabilities at undiscounted amounts,
including estimated interest payments:
As at June 30, 2020
Third- Fifth year Contractual Carrying
First year Second year Fourth year and above Cash flow amount
Non-derivative financial
liabilities
Short-term loans 1,918,865 - - - 1,918,865 1,893,876
Bills payables 255,417 - - - 255,417 255,417
Accounts payables 4,773,708 - - - 4,773,708 4,773,708
Other payables 1,342,465 - - - 1,342,465 1,342,465
Other current liabilities 148,974 - - - 148,974 148,974
Debentures payable 959,646 970,651 1,857,907 9,366,047 13,154,251 9,204,385
Long-term loans 719,769 680,316 1,401,467 314,685 3,116,237 2,875,705
Long-term payables 64 64 128 26,612 26,868 26,860
Lease Liabilities 162,885 126,886 133,534 236,625 659,930 532,370
Other non-current liabilities 2,061 30,690 281,420 87,946 402,117 392,847
Derivative financial liabilities
Foreign currency derivatives 1,044,945 2,996 - - 1,047,940 1,047,940
CPI/shekel forward transactions 20,089 - - - 20,089 20,089
11,348,888 1,811,601 3,674,456 10,031,915 26,866,867 22,514,631
D. Market risks
Market risk is the risk that changes in market prices, such as foreign exchange rates, CPI, interest rates and
prices of capital instruments, will affect the Group’s revenues or the value of its holdings in its financial
instruments. The objective of market risk management is to manage and monitor the exposure to market
risks within acceptable parameters, while optimizing the return.
During the ordinary course of business, the Group purchases and sells derivatives and assumes financial
liabilities for the purpose of managing market risks.
(1) CPI and foreign currency risks
Currency risk
The Group is exposed to currency risk from its sales, purchases, expenses and loans denominated in
currencies that differ from the Group’s functional currency. The main exposure is in Euro, Brazilian real,
USD and in NIS. In addition, there are smaller exposures to various currencies such as the British pound,
Polish zloty, Australian dollar, Indian rupee, Argentine peso, Canadian dollar, South African Rand, Ukraine
Hryunia, the Turkish lira and Chinese Yuan Renminbi.
The Group uses foreign currency derivatives – forward transactions and currency options – in order to hedge
the cash flows risk, which derive from existing monetary assets and liabilities and anticipated sales and
purchases, which may be affected by exchange rate fluctuations.
- 87 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
The Group hedged a part of the estimated currency exposure to anticipate sales and purchases for the
subsequent year. Likewise, the Group hedges most of its monetary assets and liabilities denominated in a
non- U.S. dollar currency. The Group uses foreign currency derivatives to hedge its currency risk, mostly
with maturity dates of less than one year from the reporting date.
Solutions debentures are linked to the NIS-CPI and, therefore, an increase in the NIS-CPI, as well as
changes in the NIS exchange rate, could cause significant exposure with respect to the subsidiary functional
currency – the U.S. dollar. As of the approval date of the financial statements, the subsidiary had hedged
most of its exposure deriving from issuance of the debentures, in options and forward contracts.
(A) The Group’s exposure to NIS-CPI and foreign currency risk, except in respect of derivative financial
instruments is as follows:
June 30, 2020
Total assets Total liabilities
In US Dollar 1,483,757 1,355,563
In Euro 2,074,195 1,763,078
In Brazilian real 1,634,318 193,476
CPI-linked NIS - 9,316,928
In New Israeli Shekel 943,518 929,318
Denominated in or linked to other foreign currency 4,326,664 990,532
10,462,452 14,548,895
(B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows:
June 30, 2020
Currency/ Currency/ Average USD RMB
linkage linkage expiration thousands thousands
receivable payable date Par value Par value Fair value
Forward foreign currency USD EUR 2020/08/30 202,693 1,434,967 (208,857)
Contracts and call options USD PLN 2020/09/14 71,275 504,593 (15,478)
USD BRL 2020/09/19 377,868 2,675,116 194,775
USD GBP 2020/08/12 31,482 222,880 1,090
USD ZAR 2020/07/30 22,749 161,050 (12,747)
ILS USD 2021/01/31 1,395,087 9,876,519 152,787
USD OTHER 523,287 3,704,608 (135,455)
CPI forward contracts CPI ILS 2020/11/06 577,034 4,085,113 (23,172)
- 88 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
(C) Sensitivity analysis
The appreciation or depreciation of the Dollar against the following currencies as of June 30, 2020 and
the increase or decrease in the CPI would increase (decrease) the equity and profit or loss by the
amounts presented below. This analysis assumes that all the remaining variables, among others interest
rates, remains constant.
June 30, 2020
Decrease of 5% Increase of 5%
Equity Profit (loss) Equity Profit (loss)
New Israeli shekel 67,527 55,863 (14,957) (4,407)
British pound (1,369) 698 1,369 (698)
Euro (101,708) 792 103,565 2,335
Brazilian real (55,508) 22,957 43,005 (29,116)
Polish zloty (18,054) (6,391) 15,441 4,890
South African Rand (1,080) (427) 218 (372)
Chinese Yuan Renminbi (11,098) (11,098) 11,098 11,098
CPI-linked NIS 255,959 255,959 (255,959) (255,959)
(2) Interest rate risks
The Group has exposure to changes in the variable interest rate. The Group has different assets and
liabilities in different countries which bear interest according to the economic environment in each
country. Most of the loans, other than the debentures, bear Dollar and Euro Libor interest. As a result,
most of the variable interest exposure of those loans is to the Libor interest. Due to market conditions,
the variable interest rates on cash are relatively low.
The Company prepares a quarterly summary of exposure to a change in the Libor interest rate. As at the
approval date of the financial statements, the Company had not hedged this exposure.
- 89 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(2) Interest rate risks - (cont’d)
(A) Type of interest
The interest rate profile of the Group’s interest-bearing financial instruments was as follows:
June 30, 2020
Fixed-rate instruments – unlinked to the CPI
Financial assets
Cash at banks -
Other non-current assets 44,346
Financial liabilities
Long-term loans 1,439,374
Long-term payables 21,345
Other non-current liabilities 171,770
(1,588,143)
Fixed-rate instruments – linked to the CPI
Financial liabilities
Debentures payable 9,204,385
Variable-rate instruments
Financial assets
Cash at banks 1,239,860
Financial assets at fair value through profit or loss 12,609
Other non-current assets 24,502
Financial liabilities
Short-term loans and credit from banks 1,893,876
Long-term loans(1) 1,436,331
(2,053,236)
(1) Including long-term loans current maturities.
(B) Sensitivity analysis of cash flows regarding variable-interest instruments
A change of 5% in the interest rates on the reporting date would increase or reduce equity and profit or loss
by the amounts presented below. This analysis assumes that all the remaining variables, among others
exchange rates, remained fixed.
Profit or loss Equity
Increase in Decrease in Increase in Decrease in
interest interest interest interest
As at June 30, 2020 1,467 (1,425) 1,467 (1,425)
90
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IX. Fair Value
The fair value of forward contracts on foreign currency is based on their listed market price, if available. In
the absence of market prices, the fair value is estimated based on the discounted difference between the stated
forward price in the contract and the current forward price for the residual period until redemption, using an
appropriate interest rate.
The fair value of foreign currency options is based on bank quotes. The reasonableness of the quotes is
evaluated through discounting future cash flow estimates, based on the conditions and duration to maturity of
each contract, using the market interest rates of a similar instrument at the measurement date and in
accordance with the Black & Scholes model.
1. Financial instruments measured at fair value for disclosure purposes only
The carrying amount of certain financial assets and liabilities, including cash at bank and on hand, bills and
accounts receivable, receivables financing, other receivables, derivatives financial assets, short-term loans,
bills and accounts payable and other payable, are the same or proximate to their fair value.
The following table details the carrying amount in the books and the fair value of groups of non-current
financial instruments presented in the financial statements not in accordance with their fair values:
June 30, 2020
Carrying amount Fair value
Financial assets
Other non-current assets (a – Level 2) 65,783 61,900
Financial liabilities
Long-term loans and others (b – Level 2) 3,609,306 3,678,891
Debentures (c – Level 1) 9,204,384 11,227,319
a) The fair value of the other non-current assets is based on a discounted future cash flows, using the acceptable
interest rate for similar investment having similar characteristics (Level 2).
b) The fair value of the long-term loans and others is based on a discounted future cash flows, using the acceptable
interest rate for similar loans having similar characteristics (Level 2).
c) The fair value of the debentures is based on stock exchange quotes (Level 1).
2. The interest rates used in determining fair value
The interest rates used to discount the estimate of anticipated cash flows are:
June 30, 2020
%
U.S. dollar interest 0.15 – 0.88
Euro (0.51) – 0.21
91
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IX. Fair Value - (cont’d)
3. Fair value hierarchy of financial instruments measured at fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The table below presents an analysis of
financial instruments measured at fair value. The various levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active market for identical instrument.
Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.
Level 3: inputs that are not based on observable market data (unobservable inputs).
The Company’s forward contracts and options are carried at fair value and are evaluated by observable inputs
and therefore are concurrent with the definition of level 2.
June 30
2020
Forward contracts and options used for hedging the cash flow (Level 2) (132,245)
Forward contracts and options used for economic hedging (Level 2) 85,188
Other equity investment (Level 2) 156,092
Other non-current asset (Level 2) 35,235
Receivables financing (Level 2) 35,552
Call option in respect of business combination (Level 2) 7,179
Other (Level 2) 12,609
Financial Instrument Fair value
Fair value measured on the basis of discounting the difference between the
stated forward price in the contract and the current forward price for the
Forward contracts
residual period until redemption using an appropriate interest rates.
Foreign currency options The fair value is measured based on the Black&Scholes model.
No transfer between any levels of the fair value hierarchy in the reporting period.
No change in the valuation techniques in the reporting period.
- 92 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions
1. Information on parent Company
Company Registered Registered capital Shareholding Percentage
name place Business nature (Thousand RMB) percentage of voting rights
Production and sales
of agrochemicals,
Syngenta Shanghai, fertilizers and GM
Group China seeds 10,000,000 74.02% 74.02%
In June 2020, ADAMA became a distinctive member of the newly established Syngenta Group through the
contribution of 74.02% of the shares that CNAC owned in ADAMA into the group. As such, there is no
change in the Company’s ultimate controlling shareholder China National Chemical Co., Ltd.
2. Information on the largest subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
3. Information on largest joint ventures and associates of the Company
For information about the joint ventures and associates of the Company, refer to Note V.12.
Other joint ventures and associates that have related party transactions with the Group during this period or
the previous periods are as follows:
Name of entity Relationship with the Company
Alfa Agricultural Supplies S. Joint venture of the Group
Innovaroma SA Joint venture of the Group
Agribul Ltd. Joint venture of the Group
- 93 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties
Name of other related parties Related party relationship
Jingzhou Sanonda holdings Co., Ltd. Common control
CNAC International Co., Ltd. (SPV Company) Common control
ChemChina Asset Management Co., Ltd. Common control
ChemChina Information Center Co., Ltd. Common control
Syngenta (China) Investment Co.Ltd Common control
Syngenta Crop Protection AG Common control
Syngenta Crop Protection S.A. Common control
Syngenta Supply AG Common control
Syngenta Crop Protection LLC. Common control
Syngenta Romania SRL Common control
Syngenta France SAS Common control
Syngenta Australia Pty Ltd Common control
Syngenta Agro Sociedad Anonima Common control
Syngenta Protecao De Cultivos LTDA Common control
Syngenta Canada Inc. Common control
Syngenta Korea Ltd. Common control
Syngenta Vietnam Ltd. Common control
Syngenta Czech s.r.o. Common control
Syngenta Espana S.A. Common control
Syngenta India Limited Common control
Syngenta South Africa (Pty) Ltd. Common control
PT Syngenta Indonesia Common control
Syngenta Agro AG Common control
Syngenta Agro S.A. Common control
Syngenta Agro S.r.l. Common control
Syngenta Polska Sp. z o.o. Common control
Syngenta Agro, S.A. DE C.V. Common control
Syngenta Italia S.p.A. Common control
Syngenta Crop Protection Lda. Common control
Syngenta Crop Protection B.V. Common control
Syngenta Crop Protection NV Common control
Syngenta Nordics A.S. Common control
Syngenta Tarim Sanayi ve Ticaret A.S. Common control
Syngenta Agro GmbH Common control
Syngenta Kazakhstan Limited Liability Partnership Common control
Syngenta Slovakia S.R.O. Common control
Syngenta Hungary Kft. Common control
Syngenta UK Ltd Common control
Syngenta Ireland Ltd Common control
Syngenta Comercial Agricola Ltda Common control
Syngenta S.A. (Colombia) Common control
Bluestar Engineering Co.,Ltd. Common control
China National Bluestar Co., Ltd. Common control
China Bluestar Chengrand Common control
Bluestar (Beijing) Chemical Machinery Co., Ltd. Common control
Hangzhou (Torch) Xidoumen Membrane Industry Co., Ltd Common control
Shandong Dacheng International Trading Common control
Shandong Dacheng agricultural chemical co. LTD. Common control
Southwest Chemical Research and Design Institute Co., Ltd. Common control
Beijing Guangyuan Yinong Chemical Co., Ltd. Common control
- 94 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties - (cont’d)
Name of other related parties Related party relationship
Anhui Research Institute of Chemical Industry Common control
Bluestar Engineering Co.,Ltd. Common control
Elkem Silicones Brasil Ltda. Common control
Shanghai branch of China blue lianhai design and research institute. Common control
Jiangsu Huaihe Chemical Co.,Ltd. Common control
Sinochem Fertilizer Co., Ltd Jiangsu Branch Common control
Sinochem Fertilizer Co., Ltd Fujian Branch Common control
Sinochem Fertilizer Co., Ltd Guangxi Branch Common control
Sinochem Agriculture Biotechnology Co. LTD Xinjiang Branch Common control
Sinochem Fertilizer Co., Ltd Southwest Branch Common control
Sinochem Modern Agriculture Xinjiang Co. LTD Common control
Sinochem Modern Agriculture Co. LTD. Anhui Branch Common control
Zhonglan Lianhai Design & Research Institute Co.,Ltd. Common control
Zhonglan International Chemical Co., Ltd Common control
Jiangsu Youshi Chemical Co., Ltd. Associate of the Group
Jiangsu Ruixiang Chemical Co., Ltd. Associate of the Group
Jiangsu Yangnong Chemical Co., Ltd. Associate of the Group
Jiangsu Yangnong Chemical Group Co., Ltd. Associate of the Group
5. Transactions and balances with related parties
(1) Transactions with related parties
Six months ended June 30
Type of purchase Related Party Relationship 2020 2019
Summary of purchase of goods/services:
Purchase of goods/services received Common control under
ChemChina 618,225 734,273
Joint venture 1,891 3,332
Purchase of fixed assets and other assets Common control under
ChemChina 163,931 13,098
Summary of Sales of goods:
Sale of goods/ Service rendered Common control under
ChemChina 408,470 408,089
Joint venture 96,378 108,664
- 95 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties
(2) Guarantee
The Group as the guarantee receiver
Amount of Inception date Maturity date Guaranty
Guarantee provider guaranteed loan of guaranty of guaranty completed (Y / N)
Parent company 300,000 20/11/2017 20/11/2022 N
30,000 01/08/2019 30/07/2020 N
2,000 11/02/2020 11/08/2020 N
20,000 28/06/2019 18/06/2020 Y
20,000 01/03/2019 20/02/2020 Y
50,000 01/06/2019 29/05/2020 Y
50,000 28/06/2019 27/06/2020 Y
64,000 19/02/2019 18/02/2020 Y
80,000 02/02/2019 30/01/2020 Y
(3) Remuneration of key management personnel and directors
Periods ended June 30
2020 2019
Remuneration of key management personnel and directors 22,043 32,756
(4) Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
2020 2019
Expected Expected
Book credit Book credit
Items Related Party Relationship Balance losses Balance losses
Trade receivables Common control under 056,819 - 153,197 -
ChemChina
Joint venture 43,645 - 24,026 -
Associates 5,694 - - -
Other receivables Common control under 416 - 25,346 -
ChemChina
Prepayments Common control under 41,032 - 69,610 -
ChemChina
Associates 669 - - -
Dividends receivable Joint venture 10,768 - - -
Other assets Joint venture - - 314 -
- 96 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties - (cont'd)
(4) Receivables from and payables to related parties (including loans) - (cont'd)
Payable Items
June 30 December 31
Items Related Party Relationship 2020 2019
Trade payables Common control under ChemChina 282,447 239,360
Joint venture 637 258
Associates 28,042 -
Other payables Common control under ChemChina 29,118 23,195
Joint venture 538 -
Other non-current
liabilities * Common control under ChemChina 171,770 171,770
* The liability is a loan from a related party, the interest expense for the six months ended June 30, 2020
is 1,048 thousand RMB (six months ended June 30, 2019: 1,042 thousand RMB).
(5) Acquisition of a subsidiary
June 30 December 31
Related Party Related Party Relationship 2020 2019
Parent Acquisition of a subsidiary - 415,000
(6) Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 273,383 thousand RMB
(10107109: 396,355 thousand RMB) Interest income of bank deposit for the current period was 670
thousand RMB (amount for six months ended June 30, 2019 is 2,106 thousand RMB).
The closing balance of a loan received from ChemChina Finance corporation was 4,000 thousand RMB
(10107109: 100,000 thousand RMB). Interest expenses in the current period was 370 thousand RMB
(amount for six months ended June 30, 2019 is 0 thousand RMB).
- 97 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies
1. Significant commitments
June 30 December 31
2020 2019
Investment in Fixed assets 710,474 588,243
2. Commitments and Contingent Liabilities
On December 10, 2018 the 9th meeting of the 8th session of the Board of Directors of the Company approved
the extension of the engagement in annual liability insurance policies for directors, supervisors and senior
officers of the Company (“D&O Liability Insurance) as originally approved by the 22nd meeting of the 7th
session of Board of Directors and the 4th Interim Shareholders Meeting, and authorized the management to
annually deal with all matters relating to renewal/extension of the customary D&O Liability Insurance policies,
with up to 20% flexibility in the relevant terms of the original policy. On December 26, 2018 the 3rd Interim
Shareholders Meeting approved the above resolution.
Environmental protection
The manufacturing processes of the Company, and the products it produces and markets, entail environmental
risks that impact the environment. The Company invests substantial resources in order to comply with the
applicable environmental laws and attempts to prevent or minimize the environmental risks that could occur
as a result of its activities. To the best of the Company’s knowledge, at the balance sheet date, none of its
applicable permits and licenses regarding environmental issues have been revoked.
Other
Two of the Company’s production sites, Jingzhou old site in Jingzhou, Hubei Province and Anpon old site in
Huai’An, Jiangsu Province (hereinafter the “Sites”) are in the process of relocating to new sites. As part of the
relocation process, the number of employees in the Company and its subsidiary Anpon is to be reduced.
The Company and its subsidiary Anpon began to execute the employees’ reduction plan during the fourth
quarter of 2019 and through the first half of 2020. The fourth quarter of 2019 includes expenses of RMB 243
million with regard to termination benefits to employees.
- 98 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies - (cont’d)
2. Commitments and Contingent Liabilities - (cont’d)
Claims against subsidiaries
In the ordinary course of business, legal claims are filed against subsidiaries, including lawsuits, regarding
claims for patent infringement. Inter alia, from time to time, the Company, similar to other companies
operating in the plant protection industry, is exposed to class actions for large amounts, which it must defend
against while incurring considerable costs, even if these claims, from the start, have no basis. In the estimation
of the Company’s management, based, inter alia, on opinions of its legal counsel regarding the prospects of
the proceedings, the financial statements include appropriate provisions where necessary to cover the exposure
resulting from the claims.
Various immaterial claims have been filed against Group companies in courts throughout the world, in
immaterial amounts, for causes of action involving mainly employee-employer relations and various civil
claims, for which the Company did not record a provision in the financial statements. Furthermore, claims
were filed for product liability damages, for which the Company has appropriate insurance coverage, such that
the Company’s exposure in respect thereof is limited to the amount its deductible requirement or the amount
thereof does not exceed the deductible amount.
Performance Compensation Agreement
Within the context of the 2017 combination between the Company and Solutions, the Company entered into a
Performance Compensation Agreement with CNAC, then the 100% owner of Solutions and the controlling
shareholder of the Company, according to which, CNAC made a commitment regarding Solutions’ aggregate
net profit in the years 2017-2019 (the “Compensation Period”). In case of failure to meet such commitment,
CNAC committed to compensate the Company either through shares or cash according to a predetermined
formula.
The calculated net profit of Solutions for the Compensation Period was lower than committed. As a result,
Syngenta Group (the current direct shareholder of the Company since June 15, 2020), executed such
compensation commitment, which consists of two parts: (1) the buyback and cancellation of 102,432,280 A
shares for a consideration of RMB 1, executed on July 13, 2020, and (2) the return of the cumulative dividend
declared during the Compensation Period from the Compensation Shares amounting to RMB 17.6 million free
of charge, executed on July 14, 2020.
As a result, the Company's total share and registered capital was reduced from 2,446,553,582 to
2,344,121,302, and CNAC’s effective ownership in the Company was reduced from 78.9% to 78.0%.
- 99 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies - (cont’d)
2. Commitments and Contingent Liabilities - (cont’d)
COVID-19 pandemic
During the first half of 2020, the global agrochemical market, amongst many others, was impacted by the
unprecedented COVID-19 pandemic. As a result, farmers’ incomes have been, and continue to be, negatively
impacted in most regions by lower crop prices, reduced demand due to the relative shutdown of the food
sector, and labor shortages owing to mobility restrictions, all leading to increased costs for farmers.
Governments across the world continue to include farmers in extensive support programs, partially offsetting
lost income due to the pandemic.
One of the most widespread economic consequences of the pandemic is the significant weakening of many
global currencies against the US dollar, which started abruptly towards the end of the first quarter and
throughout the duration of the second quarter. This has been seen most notably in the Brazilian Real, Indian
Rupee and Turkish Lira, and has contributed to increased volatility in the Euro and Australian dollar.
Following tight supply in the first quarter due to COVID-19 disruptions, chemical production in China has
largely returned to prior levels and prices of raw materials and intermediates are starting to reflect such
increase in supply.
The ongoing spread of the COVID-19 pandemic is expected to continue to negatively impact the performance
and profitability of the Company in the coming months. The Company continues to actively manage its
response to the pandemic in order to ensure the safety of its employees and limit its impact on the Company’s
business and its financial performance.
XII. Events subsequent to the balance sheet date
Subsequent to the report date, the Company’s Board of Directors has approved a limited B-share repurchase
program. In terms of this program, the Company intends to repurchase up to 26 million of its B-shares
(constituting up to 15.6% of the Company's B-shares and up to 1.1% of its total shares outstanding), at an
expected cost in the range of approximately RMB 66.3 million to RMB 132.6 million. This proposal will be
submitted to the Shareholders’ Meeting for confirmation in the coming weeks. If confirmed, the program will
be completed within three months. The actual timing, number and value of B-shares to be repurchased under
the share repurchase program will be determined by the Company’s management at its discretion and will
depend on a variety of factors.
- 100 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments
1. In February 2019, the remuneration committee and the Company's Board of Directors (and the General
Meeting with respect to the CEO and Vice President who also serves as a director) approved the allocation of
77,864,910 phantom warrants to officers and employees in accordance with the long-term phantom
compensation plan (hereinafter - "the 2019 Plan"). The allocation date is February 21, 2019.
The warrants will vest in four equal portions, where the first and second quarters are exercisable after two
years, the third quarter after three years and the fourth quarter after four years from January 1, 2019. The
warrants will be exercisable, in whole or in part, in accordance with the terms of the 2019 plan, and subject
to achieving financial targets as determined in the plan. The warrants will be exercisable until the end of
2025.
Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the difference
between the base price as determined at the time of the grant and the closing price of one share the company
on the Shenzhen Stock Exchange, as it will be on the exercise date up to the ceiling that was determined
under the plan.
The fair value of the granted warrants as aforesaid was estimated using the binomial pricing model.
The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at
the grant date, amounted to a total of approximately 086 million RMB. The liability at the end of the
reporting period was recorded according to the vesting period as determined in the plan, taking into account
the extent of the service that the employees provided until that date.
Statement of share based payments in the period Phantom warrants
Total number of Phantom warrants at the beginning of the period 67,226,416
Total number of Phantom warrants granted in current period 1,613,348
Total number of Phantom warrants exercised in current period -
Total number of Phantom warrants forfeited in current period (4,963,172)
Total number of Phantom warrants at the end of the period 63,876,592
The exercise prices and the remainder of the contractual period for Phantom RMB 9.92 – 10.85
warrants outstanding at the end of period 5.5 years
The parameters used in implementing the model are as follows:
Stock price (RMB) 10.85
Exercise increment (RMB) 10.03/10.85
Expected volatility 43.97%
Risk-free interest rate 3.06%
Economic value as of February 21, 2019 (in thousands RMB) 186,206
The methods for the determination of the fair value of liabilities arising from
cash-settled share-based payments The binomial pricing model
Accumulated amount of liabilities arising from cash-settled share-based
payments (in thousands RMB) 82,667
Expenses arising from cash-settled share-based payments in current period
(in thousands RMB) 15,358
- 101 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments - (cont’d)
2. In September 2019, the remuneration committee and the Company's Board of Directors (and the General
Meeting with respect to the CEO and Vice President who also serves as a director) approved the cancellation
of 2017 Plan against the allocation of 28,258,248 warrants in accordance with the long-term phantom
compensation plan (hereinafter - "The Alternative Warrants" and "The Alternative Plan"). The cancellation
and allocation date is September 26, 2019.
The alternative warrants will vest in four equal portions, where the first quarter is exercisable after one year,
the second quarter after two years, the third quarter after three years and the fourth quarter after four years
from October 1, 2019. The warrants will be exercisable, in whole or in part, in accordance with the terms of
the Alternative Plan, and subject to achieving financial targets as determined in the plan. The warrants will
be exercisable until October 1, 2026.
Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the difference
between the base price as determined at the time of the grant and the closing price of one share of the parent
company on the Shenzhen Stock Exchange, as it will be on the exercise date up to the ceiling that was
determined under the plan.
The fair value of the total granted alternative Warrants at the allocated date is equal to the fair value of the
total warrants canceled from the 2017 plan.
The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at
the cancellation and allocation date, amounted to a total of approximately 69 million RMB. The liability in
the financial statements at the end of the reporting period was recorded at the fair value estimated using the
binomial option pricing model and by the vesting period from the original grant date of the 2017 plan to the
end of the service period determined by the alternative plan, taking into account the extent of the service that
the employees provided until that date and the stock price at the reporting date.
Statement of share based payments in the period
Phantom warrants
Changes in the number of 2017 Plan:
Total number of Phantom warrants at the beginning of the period 24,266,876
Total number of Phantom warrants granted in current period -
Total number of Phantom warrants exercised in current period -
Total number of Phantom warrants forfeited in current period (1,842,443)
Total number of Phantom warrants at the end of the period 22,424,433
The range of the exercise prices and the remainder of the contractual period RMB 9.42
for Phantom warrants outstanding at the end of period 6.25 years
- 102 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments - (cont’d)
The parameters used in implementing the model are as follows:
Stock price (RMB) 9.23
Exercise increment (RMB) 9.43
Expected volatility 40.29%
Risk-free interest rate 3.14%
Economic value as of September 26, 2019 (in thousands RMB) 68,836
The methods for the determination of the fair value of liabilities arising from
cash-settled share-based payments related to the alternative plan The binomial pricing model
Accumulated amount of liabilities arising from cash-settled share-based
payments related to the alternative plan (in thousands RMB) 31,041
Expenses arising from cash-settled share-based payments in current period
related to the alternative plan (in thousands RMB) 1,036
XIV. Other significant items
1. Segment reporting
The Company presents its segment reporting based on a format that is based on a breakdown by business
segments:
Crop Protection (Agro)
This is the main area of the Company’s operations and includes the manufacture and marketing of
conventional agrochemical products.
Intermediates and ingredients (formerly known as “Other”)
This field of activity includes a large number of sub-fields, including: Lycopan (an oxidization retardant),
aromatic products, and other chemicals. It combines all the Company’s activities not included in the Crop
Protection products segment.
Segment results reported to the chief operating decision maker include items directly attributable to a
segment as well as items that can be allocated on a reasonable basis. Unallocated items comprise mainly
financing expenses, net, gains from changes in fair value, investment income and tax expenses.
All assets and liabilities that can be attributed to a specific segment were allocated accordingly. Attributed
assets include: accounts and bills receivables, receivables financing, inventory, fixed assets, right-of-use
assets, construction in progress, intangible assets, goodwill, non-current trade receivables and long-term
equity investments. Attributed liabilities include account payables, bill payablesand lease liabilities. All
other assets and liabilities which are not attributable to a specific segment are presented as unallocated assets
and liabilities.
- 103 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Information regarding the results and assets and liabilities of each reportable segment is included below:
Crop Protection Intermediates and ingredients Elimination among segments Total
Six months ended Six months ended Six months ended Six months ended
June 30 June 30 June 30 June 30
2020 2019 2020 2019 2020 2019 2020 2019
Operating income from external
customers 12,834,364 12,302,544 1,286,676 1,313,488 - - 14,121,041 13,616,032
Inter-segment operating income - - 665 692 (665) (692) - -
Interest in the profit or loss of
associates and joint ventures 11,118 11,462 3,274 10,262 - - 14,392 21,724
Segment's results 927,549 1,244,460 60,843 74,943 - - 988,392 1,319,403
Financial expenses, net 842,792 938,196
Gain (loss) from changes in fair
value 265,510 884,135
Investment income 37,737 (536,167)
Profit before tax 448,847 729,175
Income tax expense (244,198) 140,537
Net profit 204,649 588,638
Crop Protection Intermediates and ingredients Unallocated assets and liabilities Total
June 30 December 31 June 30 December 31 June 30 December 31 June 30 December 31
2020 2019 2020 2019 2020 2019 2020 2019
Total assets 36,682,597 35,506,894 2,497,137 2,392,909 9,916,445 7,389,137 49,096,179 45,288,940
Total liabilities 5,105,591 4,682,416 311,169 286,109 21,009,641 17,948,750 26,426,401 22,917,275
- 104 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Geographic information
The following tables sets out information about the geographical segments of the Group’s operating income
based on the location of customers (sales target) and the Group's non-current assets (including fixed assets,
right-of-use assets, construction in progress, investment properties intangible assets and goodwill). In the
case of investment property, fixed assets, right of used assets and construction in progress, the geographical
location of the assets is based on its physical location. In case of intangible assets and goodwill, the
geographical location of the company which owns the assets.
Operating income from external
customers
Six months ended June 30
2020 2019
Europe 4,275,020 4,252,479
North America 2,622,636 2,715,528
Latin America 2,669,490 2,411,530
Asia Pacific 2,456,818 2,426,931
Africa, Middle East (including Israel) and India 2,097,076 1,809,564
14,121,040 13,616,032
Specified non-current assets
June 30 December 31
2020 2019
Europe 1,055,760 1,047,505
Latin America 2,259,179 2,298,654
North America 1,272,965 1,282,267
Asia Pacific 2,825,394 2,709,786
Africa, Middle East (including Israel) and India 11,468,388 11,512,105
18,881,686 18,850,317
The dependency on major customers
No single customer's proportion of the total amount of sales is over 10%.
- 105 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
2. Calculation of Earnings per share and Diluted earnings per share
Amount for Amount for
the current the prior
period period
Net profit from continuing operations attributable to ordinary shareholders 204,649 588,638
Amount for Amount for
the current the prior
Thousands shares period period
Number of ordinary shares outstanding at the beginning of the year 2,446,554 2,446,554
Add: weighted average number of ordinary shares issued during the year - -
Less: weighted average number of ordinary shares repurchased during the
year - -
Weighted average number of ordinary shares outstanding at the end of the
year 2,446,554 2,446,554
Amount for Amount for
the current the prior
period period
Calculated based on net profit attributable to ordinary shareholders
Basic earnings per share 0.08 0.24
Diluted earnings per share N/A N/A
Calculated based on net profit from continuing operations
attributable to ordinary shareholders:
Basic earnings per share 0.08 0.24
Diluted earnings per share N/A N/A
Calculated based on net profit from discontinued operations
attributable to ordinary shareholders:
Basic earnings per share N/A N/A
Diluted earnings per share N/A N/A
- 106 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements
1. Cash at bank and on hand
June 30 December 31
2020 2019
Deposits in banks 1,423,296 1,395,994
Other cash and bank 22,608 27,057
1,445,904 1,423,051
As at June 30, 2020, restricted cash and bank balances was 22,608 thousand RMB (as at December 11,
2019- 27,057 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Accounts receivable
a. By category
June 30, 2020
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed 131,888 25 131,888 100 -
individually for impairment
Account receivables assessed 400,047 75 18 - 400,029
collectively for impairment
531,935 100 131,906 27 400,029
December 31, 2019
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 131,375 27 131,375 100 -
Account receivables assessed
collectively for impairment 349,157 73 48 - 349,109
480,532 100 131,423 27 349,109
b. Aging analysis
June 30, 2020
Within 1 year (inclusive) 402,496
Over 1 year but within 2 years 74,629
Over 2 years but within 3 years 40,933
Over 3 years but within 4 years 1,700
Over 4 years but within 5 years 2,634
Over 5 years 9,543
531,935
- 107 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
2. Accounts receivable - (cont'd)
c. Addition, written-back and written-off of provision for expected credit losses during the period
Six months ended June 30, 2020
Balance as of January 1, 131,423
Addition during the year, net 518
Write back during the year (35)
Write-off during the year -
Exchange rate effect -
Balance as of June 30 131,906
d. Five largest accounts receivable at June 30, 2020:
Proportion of Allowance of
Accounts expected
Name Closing balance receivable (%) credit losses
Party 1 270,467 51 -
Party 2 118,009 22 118,009
Party 3 95,472 18 -
Party 4 8,788 2 5
Party 5 7,650 1 4
500,386 94 118,018
3. Receivable financing
June 30 December 31
2020 2019
Bank acceptance draft 8,512 00,977
8,512 00,977
As at June 30, 2020, bank acceptance endorsed but not yet due amounts to 138,699 thousands RMB.
- 108 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables
June 30 December 31
2020 2019
Interest receivable - 64
Other receivables 45,492 13,987
45,492 14,051
(1) Other receivables
a. Other receivables by categories
June 30 December 31
2020 2019
Other 51,350 19,655
Provision for expected credit losses (5,858) (5,668)
45,492 13,987
b. Other receivables by aging
June 30, 2020
Within 1 year (inclusive) 32,606
Over 1 year but within 2 years 13,679
Over 2 years but within 3 years -
Over 3 years but within 4 years -
Over 4 years but within 5 years 10
Over 5 years 5,055
51,350
- 109 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables - (cont'd)
(2) Other receivables - (cont'd)
c. Additions, recovery or reversal and written-off of provision for expected credit losses during the
period:
Six months ended
June 30, 2020
Balance as of January 1, 2020 5,668
Addition during the period 262
Written back during the period (72)
Write-off during the period -
Balance as of June 30, 2020 5,858
d. Five largest other receivables at June 30 2020:
Proportion of other
Name Closing balance receivables (%) Credit loss provision
Party 1 16,985 33 -
Party 2 13,322 26 -
Party 3 12,716 25 -
Party 4 3,125 6 3,125
Party 5 1,053 2 -
47,710 92 3,125
- 110 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
5. Long-term equity investments
June 30, 2020 December 31, 2019
Impairment Impairment
Amount balance loss Book value Amount balance loss Book value
Invest in
subsidiaries. 16,390,275 18,864 16,371,411 16,390,275 18,864 16,371,411
16,390,275 18,864 16,371,411 16,390,275 18,864 16,371,411
Investments in subsidiaries
Current Balance
provision provision
Opening Closing Impairment Impairment
Invested unit balance Increase Decrease balance loss loss
Jingzhou Hongxiang Chemical Co.
Ltd. 18,756 - - 18,756 - 18,864
Hubei Sanonda Foreign Trade Co. Ltd. 11,993 - - 11,993 - -
Adama Anpon (Jiangsu) Ltd. 450,449 - - 450,449 - -
ADAMA Agricultural Solutions Ltd. 15,890,213 - - 15,890,213 - -
16,371,411 - - 16,371,411 - 18,864
6. Operating Income and operating costs
Six months ended June 30, 2020 Six months ended June 30, 2019
Operating Operating
Revenue costs Revenue costs
Main operations 653,055 526,904 704,594 493,979
Other operations 20,591 10,410 30,832 24,582
673,646 537,314 735,426 518,561
- 111 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
7. Notes to items in the cash flow statements
(1) Other cash received relevant to operating activities
Six months ended Six months ended
June 30, 2091 June 30, 2019
Interest income 8,507 14,333
Government subsidies 4,992 4,414
Other 1,564 211
15,063 18,958
(2) Other cash paid relevant to operating activities
Six months ended Six months ended
June 30, 2091 June 30, 2019
Professional services 56,487 44,848
Transportation and Commissions 13,067 28,438
Other 21,253 16,284
90,807 89,570
(3) Other cash received relevant to financing activities
Six months ended Six months ended
June 30, 2091 June 30, 2019
Deposit for issuing bills payables 4,449 11,947
(4) Other cash paid relevant to financing activities:
Six months ended Six months ended
June 30, 2091 June 30, 2019
Other 1,, 200
1,, 200
- 112 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
8. Supplementary information to cash flow statement
(1) Reconciliation of net profit to net cash flows generated from operating activities:
Six months ended June 30
2020 2019
Net profit (42,764) (37,789)
Add: Assets impairment loss 2,864 272
Credit impairment loss 674 1,633
Depreciation of fixed assets 76,057 99,602
Depreciation of-right-of use assets 233 209
Amortization of intangible assets 2,222 2,347
Loss on disposal of fixed assets, intangible assets and other
long-term assets (101) 293
Financial expenses 3,518 12,588
Decrease (increase) in deferred income tax assets 27,873 (11,220)
Decrease (increase) in inventory 11,596 39,895
Increase in accounts receivable from operating activities (102,463) 400,590
Increase in payables from operating activities (41,958) (236,900)
Net cash flows generated from operating activities (62,249) 787,570
(2) Net increase in cash and cash equivalents
Closing balance of cash 1,423,296 2,132,174
Less: Opening balance of cash ,193,1337 2,005,313
Net increase in cash and cash equivalents 27,302 126,861
- 113 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Related parties and related parties transactions
(1) Information on parent Company
Registered
capital
Company Registered (Thousand Shareholding Percentage
name place Business nature RMB) percentage of voting rights
Production and sales
of agrochemicals,
Syngenta Shanghai, fertilizers and GM
Group China seeds 10,000,000 74.02% 74.02%
The ultimate controller of the company is China National Chemical Corporation.
(2) Information on the subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
(3) Transactions with related parties
a. Transactions of goods and services
Six months ended June 30
2020 2019
Summary of Purchase of goods/services Related Party Relationship
received:
Purchase of goods/services received Common control
under ChemChina 2,063 9,590
Subsidiary 45,630 48,164
Purchase of fixed assets and other assets Common control
under ChemChina 155,616 07,966
Subsidiary 136 -
Summary of Sales of goods:
Sale of goods Subsidiary 450,283 761,766
Sale of raw materials Subsidiary - 110
- 114 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
b. Guarantees
The Company as the guarantor
Amount of Inception Maturity Guaranty
guaranteed date of date of completed
loan guaranty guaranty (Y/ N)
Subsidiary 20,000 26/12/2019 25/12/2020 N
40,000 10/10/2019 09/10/2020 N
50,000 30/12/2019 25/12/2020 N
50,000 12/12/2019 09/12/2020 N
50,000 21/11/2019 18/11/2020 N
50,000 19/11/2019 18/11/2020 N
64,000 26/02/2020 25/02/2021 N
20,000 27/02/2020 18/02/2021 N
20,000 16/06/2020 11/06/2021 N
30,000 19/05/2020 18/05/2021 N
50,000 27/05/2020 05/02/2021 N
50,000 29/06/2020 27/06/2021 N
The Company as the guarantee receiver
Amount of Inception Maturity Guaranty
guaranteed date of date of completed
Guarantee provider loan guaranty guaranty (Y/ N)
Parent 300,000 20/11/2017 20/11/2022 N
- 115 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
c. Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
2020 2019
Expected Expected
Related Party Book credit Book credit
Items Relationship Balance losses Balance losses
Trade receivables Subsidiary 483,948 118,009 424,182 117,491
Associates of ChemChina 3,401 2 - -
Other receivables Subsidiary 29,701 - - -
Payable Items
June 30 December 31
Items Related Party Relationship 2020 2019
Trade payables Common control under ChemChina 115,589 9,195
Other payables Subsidiary 163,510 163,877
Common control under ChemChina 97 97
Other non-current
liabilities* Common control under ChemChina 171,770 171,770
* loans from related party, the interest expense for the 6 months ended June 30, 2020 and 2019
was 1,048 thousand RMB for each of the periods.
d. Acquisition of a subsidiary
Six months ended June 30
Related Party Related Party Relationship 2020 2019
Parent Acquisition of a subsidiary - 415,000
e. Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 166,383 thousand
RMB (10107109: 163,630 thousand RMB). Interest income of bank deposit for the current period
was 219 thousand RMB (amount for six months ended June 30, 2019 is 1,654 thousand RMB ).
The closing balance of a loan received from ChemChina Finance corporation was 2,000 thousand
RMB (10107109: 100,000 thousand RMB). Interest expenses in the current period was 370
thousand RMB (amount for six months ended June 30, 2019 is 0 thousand RMB).
- 116 -
ADAMA Ltd. Semi-Annual Report 2019
Supplementary information
(Expressed in RMB '000)
1. Extraordinary Gain and Loss
Six months ended
June 30, 2020
Disposal of non-current assets 7,694
Government grants recognized through profit or loss 17,834
Recovery or reversal of expected credit losses which is assessed individually during the
years 15,508
Other non-operating income or expenses other than the above 19,274
Other profit or loss that meets the definition of non-recurring profit or loss (66,192)
Tax effect (9,241)
(15,123)
Note 1: Extraordinary gain and loss items listed above are presented in the amount before taxation
2. Return on net assets and earnings per share (“EPS”)
The information of Return on net assets and EPS is in accordance with the Preparation Rules for
Information Disclosure by Companies Offering Securities to the Public No. 9 – Calculation and
Disclosure of Return on net assets and Earnings per share (2010 Amendment) issued by China
Securities Regulatory Commission
Weighted average
rate of return on net Basic EPS Diluted EPS
Profit during the reporting period assets (RMB/share) (RMB/share)
Net profit attributable to ordinary
shareholders of the Company 0.91% 0.08 N/A
Net profit after deduction of extraordinary
gains/losses attributable to ordinary
shareholders of the Company 0.98% 0.09 N/A
