ADAMA Reports Second Quarter Results,
Returns to Growth Despite COVID-19 Headwinds
Widespread pandemic-related currency weakness against USD continues to restrain
sales growth and impact profitability
Q2 Sales of $1,036 million, +12% at constant exchange rates (CER), +3% in USD (RMB:
+8%)
Resilient performance driven by 12% volume growth, led by robust growth in emerging
markets
US dollar sales impacted by an estimated $85 million due to weaker currencies
H1 Sales of $2,008 million, +7% in CER terms; in line with 2019 record high in USD (RMB:
+4%)
Q2 growth bringing a full recovery in H1 sales, with a 10% increase in volumes, despite Q1
COVID-19 challenges
US dollar sales impacted by an estimated $135 million due to weaker currencies
Q2 EBITDA of $163 million (Q2’19: $177 million); impacted by estimated $61 million in
currency headwinds
Strong Q2 volume growth alongside improved product mix more than offset by significant
currency weakness
Maintained tight control of operating expenses, also benefiting from weaker currencies
H1 EBITDA of $306 million (H1’19: $365 million); impacted by estimated $94 million in
currency headwinds
Significant impact of global COVID-19 related currency weakness more than offsetting
volume growth and reduction in operating expenses
Q2 Net Income of $47 million (Q2’19: $51 million); estimated FX impact of $55 million
Lower financial expenses only partially mitigating the lower Q2 operating income
H1 Net Income of $74 million (H1’19: $131 million); estimated FX impact of $117 million
Reduced financial expenses more than offset by higher Q1 tax expense largely due to BRL
weakness against USD
BEIJING, CHINA and TEL AVIV, ISRAEL, August 20, 2020 – ADAMA Ltd. (the “Company”) (SZSE
000553), today reported its financial results for the second quarter and six-month period ended June
30, 2020.
Ignacio Dominguez, President and CEO of ADAMA, said, “In these challenging times, we have
delivered a second quarter marked by strong underlying business growth, despite the many
headwinds posed by the persistent COVID-19 pandemic which has continued to disrupt lives and
economies around the globe. While some countries have been able to emerge from pandemic-
related shutdowns, many parts of the world continue to see new infections and deaths rising
tragically on a daily basis. During this troubling and uncertain period, I am proud of the response of
our teams across the world to ensure the health and safety of our employees, and not only to
mitigate the impact of the pandemic on our business, but to keep us on a growth trajectory and
delivering solutions to farmers. Their efforts have enabled the Company to maintain more than $2
1
billion in sales in the first half of 2020, despite the challenges posed by COVID-19, including its
significant impact on global currencies.”
Table 1. Financial Performance Summary
% %
Q2 Q2 % FX H1 H1 % FX
Adjusted, USD (m) Change Change
2020 2019 Change Impact 2020 2019 Change Impact
CER CER
Revenues 1,036 1,002 +3% -85 +12% 2,008 2,008 0% -135 +7%
Gross profit 306 327 -7% -70 +15% 595 673 -12% -109 +5%
% of sales 29.5% 32.6% 29.6% 33.5%
Operating income (EBIT) 104 116 -10% -61 +43% 186 242 -23% -94 +16%
% of sales 10.1% 11.5% 9.3% 12.1%
Net income 47 51 -8% -55 +100% 74 131 -44% -117 +46%
% of sales 4.5% 5.1% 3.7% 6.5%
EBITDA 163 177 -8% -61 +27% 306 365 -16% -94 +10%
% of sales 15.8% 17.7% 15.2% 18.2%
EPS
- USD 0.0191 0.0208 -8% 0.0301 0.0535 -44%
- RMB 0.1351 0.1419 -5% 0.2117 0.3626 -42%
CER: Constant Exchange Rates
All income statement items contained in this release are presented on an adjusted basis. EPS are the same for basic and diluted.
These “Adjusted” results exclude items that are of a one-time or non-cash/non-operational nature
that do not impact the ongoing performance of the business, and reflects the way the Company’s
management and the Board of Directors view the performance of the Company internally. The
Company believes that excluding the effects of these items from its operating results allows
management and investors to effectively compare the true underlying financial performance of its
business from period to period and against its global peers.
A summary of these adjustments and a reconciliation between the Adjusted and Reported financials
appears below:
Q2 Adjusted Adjustments Reported
USD (m) Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019
Revenues 1,036 1,002 1,036 1,002
Gross profit 306 327 0 -1 306 328
Operating income (EBIT) 104 116 16 21 88 95
Income before taxes 62 66 18 20 44 46
Net income 47 51 16 18 31 33
EBITDA 163 177 -5 -3 168 180
Earnings per share 0.0191 0.0208 0.0128 0.0133
2
H1 Adjusted Adjustments Reported
USD (m) H1 2020 H1 2019 H1 2020 H1 2019 H1 2020 H1 2019
Revenues 2,008 2,008 2,008 2,008
Gross profit 595 673 1 2 593 671
Operating income (EBIT) 186 242 48 51 138 191
Income before taxes 113 155 49 47 64 108
Net income 74 131 45 44 29 87
EBITDA 306 365 5 2 301 363
Earnings per share 0.0301 0.0535 0.0118 0.0355
For a detailed description and analysis of differences between the adjusted income statement and
that reported in the financial statements, refer to the appendix to this release.
Performance in Context of Market Environment
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 Q1 and
continued throughout the duration of Q2. 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 Company expects to benefit from this trend in the upcoming
quarters.
The ongoing spread of the COVID-19 pandemic is expected to continue to impact the performance
and profitability of the Company in the coming months. ADAMA 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 financial performance.
Becoming Part of the Syngenta Group
In June 2020, ADAMA became a distinctive member of the newly established Syngenta Group. The
new group is a world leader in agricultural inputs, spanning crop protection, seeds, fertilizers,
additional agricultural and digital technologies, as well as an advanced distribution network in China.
ADAMA joined this newly-formed ag-industry leader through the contribution of most of the stake
that ChemChina indirectly owned in ADAMA, into the group. As such, there is no change in the
Company’s ultimate controlling shareholder. ADAMA continues to be headquartered in Israel, and
remains traded on the Shenzhen Stock Exchange, and maintains its unique brand and positioning.
B-Share Repurchase Proposal
The overall B-share market in China has suffered for many years from a lack of liquidity and small
market size, contributing to the share price of the Company’s B-Shares being significantly lower than
the net asset value per share. Therefore, in order to enhance investor confidence, and reinforce the
Company’s commitment to effectively and efficiently return value to its shareholders, the Company’s
3
Board of Directors has approved a limited B-share repurchase program. In terms of this program,
the Company intends to repurchase up to 62 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 $10 million to $20 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, including the market price of the Company’s B-
shares, general market and economic conditions, and other business considerations.
Financial Highlights
Revenues in the second quarter were $1,036 million, up by 12% in CER terms, driven by robust 12%
volume growth, alongside generally stable prices. This performance was achieved despite the
various impacts of COVID-19, which continued to pose numerous challenges to the way the
Company conducts its business, as well as materially impacting global currencies. In US dollar
terms, sales grew by a more moderate 3% (+8% in RMB terms), reflecting an estimated $85 million
negative impact from the weaker currencies, and reflecting the Company’s strong growth in
emerging markets which were among the most significantly impacted by the global currency
weakness.
Growth in the second quarter was fueled by a strong performance in emerging markets, most
notably in Latin America, with strong volume growth overcoming the material depreciation of
regional currencies, as well as in the India, Middle East & Africa region, which benefited from
favorable weather. The second quarter also saw a return to growth in China, with a strong recovery
from the first quarter’s COVID-19 pandemic-related impact on operations at the Company’s
Jingzhou site in Hubei province. ADAMA also delivered solid growth in Asia-Pacific (outside China),
led by a strong performance in Australia.
Sales were lower in both Europe and North America in the second quarter. Steady growth in
northern and western Europe only partially compensated for a challenging season seen in central
and eastern Europe, where volatile weather posed challenges for growers, reducing planting in
some crops earlier in the season, and preventing application in the latter part. In North America,
challenging weather reduced purchasing from customers in some US crops, while COVID-19 related
uncertainty impacted demand from distribution channels.
The return to growth in the second quarter saw ADAMA generate sales growth of almost 7% in CER
terms over the first half of the year, driven by a 10% increase in volumes, while in USD terms the
Company was able to match the first-half record-high sales of $2,008 million seen in 2019 (+4% in
RMB terms). This reflects the overcoming of an estimated $56 million impact from the COVID-19
pandemic over the first half of the year, as well as the material impact of widespread global currency
weakness against the US dollar, which constrained sales in USD terms in the period by an
estimated $135 million.
Gross profit in the second quarter was $306 million (gross margin of 29.5%) and $595 million
(gross margin of 29.6%) in the first half, compared to $327 million (gross margin of 32.6%) and $673
million (gross margin of 33.5%) in the corresponding periods last year, respectively.
In the second quarter, the strong volume growth alongside somewhat higher prices and an improved
product mix were more than offset by the material depreciation of global currencies and slightly
higher manufacturing costs. Similarly, over the half-year period, the significant currency weakness
and somewhat higher manufacturing costs outweighed the Company’s strong volume growth.
The widespread currency depreciation resulting largely from the COVID-19 outbreak constrained
gross profit by an estimated $70 million in the quarter. The pandemic impacted H1 gross profit by an
estimated $16 million, in addition to an estimated $109 million in currency headwinds.
4
Operating expenses: Total operating expenses in the second quarter were $202 million (19.5% of
sales) and $408 million (20.3% of sales) in the half-year, compared to $211 million (21.1% of sales)
and $430 million (21.4% of sales) in the corresponding periods last year, respectively. The Company
continues to exercise tight control of its operating expenses, which were also naturally constrained
by the impact of COVID-19, and was able to achieve significant savings in the quarter and first half,
despite the inclusion of the companies acquired during 2019. Operating expenses in the 2020
periods also benefited from the global currency weakness against the US dollar, while operating
expenses in the 2019 periods were net of income related to expropriation of land recorded in those
periods.
Operating income in the second quarter was $104 million (10.1% of sales) and $186 million (9.3%
of sales) in the first half, compared to $116 million (11.5% of sales) and $242 million (12.1% of sales)
in the corresponding periods last year, respectively. The impact of global currency weakness
constrained operating income by an estimated $61 million in the quarter and $94 million in the half-
year.
EBITDA in the quarter was $163 million (15.8% of sales) and $306 million (15.2% of sales) in the
first half, compared to $177 million (17.7% of sales) and $365 million (18.2% of sales) recorded in
the corresponding periods last year, respectively. The impact of global currency weakness
constrained EBITDA in the second quarter by an estimated $61 million. The COVID-19 pandemic
constrained H1 EBITDA by an estimated $15 million, in addition to an estimated $94 million in
currency headwinds.
Financial expenses and investment income: Total net financial expenses and investment income
were $43 million in the quarter and $74 million in the first half, compared to $49 million and $87
million in the corresponding periods last year, respectively. The lower financial expenses in both the
quarter and the half-year largely reflect a reduction in financing costs on the NIS-denominated, CPI-
linked bonds due to a lower CPI in Israel.
Tax expenses: Net tax expenses were $15 million in the quarter, in line with those recorded in the
second quarter of 2019. In the first half of the year, net tax expenses were $39 million compared to
$24 million in the corresponding period last year. The higher tax expenses in the first half are largely
due to the first-quarter impact of the weakening of the Brazilian Real against the US dollar, which
resulted in non-cash tax expenses due to differences between the functional currency (US dollar)
and tax currency (BRL) with respect to the value of non-monetary assets.
Net income in the second quarter was $47 million (4.5% of sales) and $74 million (3.7% of sales) in
the first half compared to $51 million (5.1% of sales) and $131 million (6.5% of sales) in the
corresponding periods last year. The Company estimates the net impact of the global currency
headwinds on Net Income to be $55 million in the second quarter and $117 million in the half year
period, in addition to the impact from COVID-19 of an estimated $12 million over the half year period.
Trade working capital at June 30, 2020 was $2,173 million compared to $2,067 million at the same
point last year. This moderate increase reflects similar inventory levels alongside higher trade
payables, which were more than offset by higher trade receivables, driven largely by the Company’s
strong growth over the last year in emerging markets, most notably in Latin America and Brazil,
where customer credit terms are generally longer.
Cash Flow: Operating cash flow of $229 million was generated in the quarter and $173 million was
generated in the first half, compared to $144 million generated and $47 million consumed in the
corresponding periods last year, respectively. The improved operating cash flow in both the quarter
and first half mainly reflects the improvement in working capital during the periods compared to the
parallel periods last year.
Net cash used in investing activities was $62 million in the second quarter and $116 million in the
first half, compared to $44 million and $203 million in the corresponding periods last year,
5
respectively. The increase in investments in the second quarter reflect capital investments in
infrastructure, including relocations, as well as portfolio expansion, while the higher spend in the
2019 half-year period reflected the acquisition of Bonide in Q1 2019.
Free cash flow of $127 million was generated in the second quarter and $12 million in the first half
compared to $59 million generated and $297 million consumed in the corresponding periods last
year, respectively, reflecting the improvement in operating cash flow in the second quarter of this
year, contrasted with the higher investment levels and acquisitions over the half-year period in 2019.
Leverage: Balance sheet net debt at June 30, 2020 was $1,066 million, compared to $865 million at
June 30, 2019, reflecting the 2019 acquisitions and the assumption of their debt, as well as higher
capital investment.
Table 2. Regional Sales Performance
Q2 2020 Q2 2019 Change Change H1 2020 H1 2019 Change Change
$m $m USD CER $m $m USD CER
Europe 252 267 -5.6% -2.3% 609 628 -3.0% +0.6%
North America 205 220 -7.0% -6.5% 373 400 -6.9% -6.3%
Latin America 220 196 +12.4% +39.8% 379 355 +6.7% +27.6%
Asia Pacific 191 173 +11.0% +16.1% 349 358 -2.4% +2.7%
Of which China 99 86 +15.6% +19.8% 168 179 -6.7% -3.4%
India, Middle East & Africa 167 146 +14.6% +23.2% 298 267 +11.7% +18.3%
Total 1,036 1,002 +3.4% +11.9% 2,008 2,008 +0.0% +6.7%
CER: Constant Exchange Rates
Europe: Sales were lower by 2.3% in the second quarter but increased slightly in the first half of the
year, in CER terms, compared with the corresponding periods last year. The lower sales in the
quarter were caused to some extent by higher inventories in the distribution channels remaining
from the poor season last year, as well as some advanced purchasing of products generally by
distributors in the first quarter of 2020 due to emerging COVID-19 concerns, both of which served to
constrain demand and increase pricing pressure.
Steady growth in northern and western Europe, only partially compensated for a challenging season
seen in central and eastern Europe, where volatile weather posed challenges for growers, with dry
weather reducing planting in some crops earlier in the season, while the sudden wet weather which
followed hampered application in the latter part.
On 1 July 2020, ADAMA acquired the remaining 51% stake in Alfa Agricultural Supplies, S.A., a
leading Greek provider of crop protection and other agriculture-related inputs. Through this
acquisition, ADAMA will further bolster its position and offering in this relevant market by driving the
continued development of its value-added product portfolio, deepening Alfa’s already strong
relationships with local ag-input distributors, retailers and farmers, aiming at meeting the growing
needs of farmers in Greece.
In US dollar terms, sales were lower by 5.6% in the quarter and by 3.0% in the half-year period,
compared to the corresponding periods last year, also reflecting the net impact of weaker currencies,
largely attributed to the COVID-19 outbreak.
North America: Sales were lower by 6.5% in the second quarter and by 6.3% in the first half of the
year, in CER terms, compared with the corresponding periods last year. This was largely due to
challenging weather conditions, primarily in southern US, which delayed planting and reduced cotton
6
acreage alongside a reduction in cotton demand due to lower retail apparel sales as a result of
COVID-19. In addition, COVID-19 related uncertainty saw distributors reducing inventories, putting
pressure on prices.
The Company recorded robust growth in Canada, partially offsetting the lower sales in the US,
supported by successful product launches including ORIUS a broad-spectrum herbicide in wheat,
barley and oats, PYTHONTM a broad-spectrum, dual mode of action herbicide in field peas and
soybeans, as well as LEOPARD, a fast-acting, selective graminicide for use against grassy weeds
in multiple crops.
In US dollar terms, sales were lower by 7.0% in the quarter and by 6.9% in the first half, compared
to the corresponding period last year, reflecting the weakening of the Canadian Dollar.
Latin America: Sales grew by 39.8% in the second quarter and by 27.6% in the first half of the year,
in CER terms, compared to the corresponding periods last year, driven by significant volume growth
in key countries and continued price increases throughout the region.
ADAMA delivered strong growth in Brazil, supported by favorable weather conditions and increased
soybean and corn acreage. The Company continues to expand its differentiated product offering in
the country, recently launching PLETHORA, an innovative insecticide mixture with dual mode of
action, addressing a broad spectrum of caterpillar and other pests.
Noteworthy performances were also recorded with continued market share gains in Argentina,
supported by favorable weather conditions that accelerated the pace of summer crop harvesting and
winter grain planting, Peru where the Company’s activities were bolstered by its Q4 2019 acquisition
in the country, as well as a strong performance in Paraguay.
In US dollar terms, sales in the region grew by 12.4% in the quarter and 6.7% in the first half of the
year, compared to the corresponding periods last year, as the robust business growth was heavily
impacted by weaker currencies in the region, in particular the significant decline in the Brazilian Real
against the US dollar.
Asia-Pacific: Sales grew by 16.1% in the quarter and by 2.7% in the first half of the year, in CER
terms, compared to the corresponding periods last year, driven by strong volume growth and
continued price increases, recovering from the first quarter COVID-19 impact.
In Asia-Pacific (outside of China), a noteworthy performance was recorded in Australia which has
seen a strong season supported by favorable weather. This compensated for challenging seasonal
and COVID-19 related conditions in many parts of South East Asia. However, good rice cropping
conditions in the region drove increased sales of the Company’s leading rice insecticide offering.
During the quarter, the Company obtained multiple new product registrations in the region, including
NEGATE, a dual-mode of action herbicide for use in turf in Australia, GOLTIX GOLD, a unique
herbicide formulation with improved efficacy for controlling weeds in beets in New Zealand, and
Banjo Forte, a fungicide for use in black pepper in Vietnam.
In China, ADAMA saw a strong recovery in business growth in the second quarter, supported by
new product launches including XISHENG LV, a protective fungicide for fruits and vegetables, as
well as FEIDIAN #1, an insecticide for drone application, mainly in rice. This second quarter
performance saw the Company almost fully overcoming the loss of sales in the first quarter caused
largely by the COVID-19 impact on operations at the Company’s Jingzhou site in Hubei province.
The second quarter saw a recovery in sales of raw materials and intermediates, albeit at lower
prices due to increased supply generally from Chinese producers.
In US dollar terms, sales in the region grew by 11.0% in the second quarter but were lower by 2.4%
in the first half of the year, compared to the corresponding periods last year, reflecting the impact of
weaker currencies, most notably the Australian Dollar and Chinese Renminbi.
7
India, Middle East & Africa: Sales grew by 23.2% in the quarter and by 18.3% in the first half of the
year, in CER terms, compared to the corresponding periods last year. The Company delivered
robust business growth in the region, led by India, alongside continued price increases.
In India, the timely arrival of the monsoon and its associated rains facilitated the good sowing of
summer crops, encouraging application of crop protection products, following the lifting of the
lockdown imposed by the Indian government. Favorable rainfall in South Africa improved cropping
conditions, more than offsetting a challenging cotton season in Turkey.
In US dollar terms, sales in the region grew by 14.6% in the quarter and by 11.7% in the first half of
the year, compared to the corresponding periods last year, reflecting the impact of softer currencies,
most notably the Turkish Lira, the Indian Rupee and the South African Rand.
Table 3. Revenues by operating segment
Second quarter sales by segment
Q2 2020 Q2 2019
% %
USD (m) USD (m)
Crop Protection 941 90.8% 905 90.3%
Intermediates and Ingredients 95 9.2% 97 9.7%
Total 1,036 100.0% 1,002 100.0%
Second quarter sales by product category
Q2 2020 Q2 2019
% %
USD (m) USD (m)
Herbicides 446 43.0% 457 45.6%
Insecticides 312 30.2% 275 27.4%
Fungicides 183 17.7% 173 17.3%
Intermediates and Ingredients 95 9.2% 97 9.7%
Total 1,036 100.0% 1,002 100.0%
Note: the sales split by product category is provided for convenience purposes only and is not representative of the way the Company is
managed or in which it makes its operational decisions.
First half sales by segment
H1 2020 H1 2019
% %
USD (m) USD (m)
Crop Protection 1,825 90.9% 1,814 90.4%
Intermediates and Ingredients 183 9.1% 194 9.6%
Total 2,008 100.0% 2,008 100.0%
8
First half sales by product category
H1 2020 H1 2019
% %
USD (m) USD (m)
Herbicides 886 44.1% 912 45.4%
Insecticides 530 26.4% 547 27.2%
Fungicides 410 20.4% 356 17.7%
Intermediates and Ingredients 183 9.1% 194 9.6%
Total 2,008 100.0% 2,008 100.0%
Note: the sales split by product category is provided for convenience purposes only and is not representative of the way the Company is
managed or in which it makes its operational decisions.
Further Information
All filings of the Company, together with a presentation of the key financial highlights of the period,
can be accessed through the Company website at www.adama.com.
##
About ADAMA
ADAMA Ltd. is a global leader in crop protection, providing solutions to farmers across the world to
combat weeds, insects and disease. ADAMA has one of the widest and most diverse portfolios of
active ingredients in the world, state-of-the art R&D, manufacturing and formulation facilities,
together with a culture that empowers our people in markets around the world to listen to farmers
and ideate from the field. This uniquely positions ADAMA to offer a vast array of distinctive
mixtures, formulations and high-quality differentiated products, delivering solutions that meet local
farmer and customer needs in over 100 countries globally. For more information, visit us at
www.ADAMA.com and follow us on Twitter at @ADAMAAgri.
Contact
Ben Cohen Zhujun Wang
Global Investor Relations China Investor Relations
Email: ir@adama.com Email: irchina@adama.com
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Abridged Consolidated Financial Statements
The following abridged consolidated financial statements and notes have been prepared as
described in Note 1. While prepared based on the principles of PRC GAAP, they do not contain all
of the information which either PRC GAAP or IFRS would require for a complete set of financial
statements and should be read in conjunction with the consolidated financial statements of both
ADAMA Ltd. and Adama Agricultural Solutions Ltd. as filed with the Shenzhen and Tel Aviv Stock
Exchanges, respectively.
Abridged Consolidated Income Statement for the Second Quarter
Q2 2020 Q2 2019 Q2 2020 Q2 2019
Adjusted1
USD (m) USD (m) RMB (m) RMB (m)
Revenues 1,036 1,002 7,339 6,828
Cost of Sales 726 672 5,145 4,577
Business taxes and surcharges 4 3 27 22
Gross profit 306 327 2,167 2,229
% of revenue 29.5% 32.6% 29.5% 32.6%
Selling & Distribution expenses 152 160 1,076 1,092
General & Administrative expenses 33 37 233 248
Research & Development expenses 14 15 97 105
Other 3 -1 23 -4
Total operating expenses 202 211 1,428 1,441
% of revenue 19.5% 21.1% 19.5% 21.1%
Operating income (EBIT) 104 116 739 788
% of revenue 10.1% 11.5% 10.1% 11.5%
Financial expenses and investment income 43 49 303 337
Income before taxes 62 66 436 451
Taxes on Income 15 15 105 104
Net income 47 51 331 347
% of revenue 4.5% 5.1% 4.5% 5.1%
EBITDA 163 177 1,156 1,207
% of revenue 15.8% 17.7% 15.8% 17.7%
Earnings per Share – Basic 0.0191 0.0208 0.1351 0.1419
– Diluted 0.0191 0.0208 0.1351 0.1419
The number of shares used to calculate both basic and diluted earnings per share is 2,446.6 million shares.
1
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the
financial statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
10
Abridged Consolidated Income Statement for the First Half
H1 2020 H1 2019 H1 2020 H1 2019
Adjusted2
USD (m) USD (m) RMB (m) RMB (m)
Revenues 2,008 2,008 14,121 13,616
Cost of Sales 1,407 1,329 9,895 9,010
Business taxes and surcharges 7 7 46 46
Gross profit 595 673 4,180 4,560
% of revenue 29.6% 33.5% 29.6% 33.5%
Selling & Distribution expenses 310 324 2,182 2,195
General & Administrative expenses 61 69 427 464
Research & Development expenses 27 31 189 211
Other 10 7 71 49
Total operating expenses 408 430 2,868 2,919
% of revenue 20.3% 21.4% 20.3% 21.4%
Operating income (EBIT) 186 242 1,311 1,641
% of revenue 9.3% 12.1% 9.3% 12.1%
Financial expenses and investment income 74 87 519 589
Income before taxes 113 155 792 1,052
Taxes on Income 39 24 274 165
Net income 74 131 518 887
% of revenue 3.7% 6.5% 3.7% 6.5%
EBITDA 306 365 2,149 2,471
% of revenue 15.2% 18.2% 15.2% 18.1%
Earnings per Share – Basic 0.0301 0.0535 0.2117 0.3626
– Diluted 0.0301 0.0535 0.2117 0.3626
The number of shares used to calculate both basic and diluted earnings per share is 2,446.6 million shares.
2
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the
financial statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
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Abridged Consolidated Balance Sheet
June 30 June 30 June 30 June 30
2020 2019 2020 2019
USD (m) USD (m) RMB (m) RMB (m)
Assets
Current assets:
Cash at bank and on hand 889 789 6,293 5,425
Bills and accounts receivable 1,367 1,201 9,679 8,254
Inventories 1,500 1,504 10,619 10,338
Other current assets, receivables and
326 285 2,310 1,959
prepaid expenses
Total current assets 4,082 3,779 28,901 25,976
Non-current assets:
Fixed assets, net 1,122 1,121 7,941 7,708
Rights of use assets 73 80 516 548
Intangible assets, net 1,437 1,469 10,171 10,102
Deferred tax assets 121 112 857 768
Other non-current assets 100 103 710 708
Total non-current assets 2,853 2,885 20,195 19,834
Total assets 6,935 6,664 49,096 45,810
Liabilities
Current liabilities:
Loans and credit from banks and
456 397 3,230 2,731
other lenders
Bills and accounts payable 711 662 5,029 4,554
Other current liabilities 736 767 5,213 5,270
Total current liabilities 1,903 1,826 13,472 12,555
Long-term liabilities:
Loans and credit from banks and
314 98 2,225 674
other lenders
Debentures 1,224 1,186 8,664 8,153
Deferred tax liabilities 59 51 416 351
Employee benefits 96 94 676 644
Other long-term liabilities 137 139 973 954
Total long-term liabilities 1,830 1,567 12,954 10,776
Total liabilities 3,733 3,393 26,426 23,331
Equity
Total equity 3,202 3,270 22,670 22,479
Total equity 3,202 3,270 22,670 22,479
Total liabilities and equity 6,935 6,664 49,096 45,810
12
Abridged Consolidated Cash Flow Statement for the Second Quarter
Q2 2020 Q2 2019 Q2 2020 Q2 2019
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 229 144 1,619 985
Cash flow from operating activities 229 144 1,619 985
Investing activities:
Acquisitions of fixed and intangible assets -63 -47 -446 -319
Cash (paid) received for disposal of investments, net -7 2 -51 12
Proceeds from disposal of fixed and intangible assets - - - -
Acquisition of subsidiaries - - - -2
Other investing activities 6 1 48 9
Cash flow used for investing activities -62 -44 -442 -300
Financing activities:
Receipt of loans from banks and other lenders 230 66 1,628 451
Repayment of loans from banks and other lenders -45 -30 -317 -205
Interest payment and other -44 -42 -311 -288
Other financing activities -22 -8 -154 -55
Cash flow from (used for) financing activities 119 -14 846 -98
Effects of exchange rate movement on cash and cash - -7 -5 57
equivalents
Net change in cash and cash equivalents 286 79 2,018 643
Cash and cash equivalents at the beginning of the period 598 704 4,238 4,739
Cash and cash equivalents at the end of the period 884 783 6,256 5,382
Free Cash Flow 127 59 900 404
13
Abridged Consolidated Cash Flow Statement for the First Half
H1 2020 H1 2019 H1 2020 H1 2019
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 173 -47 1,234 -305
Cash flow from operating activities 173 -47 1,234 -305
Investing activities:
Acquisitions of fixed and intangible assets -114 -89 -803 -606
Cash (paid) received for acquisition of investments, net -7 3 -51 20
Proceeds from disposal of fixed and intangible assets 2 5 16 31
Acquisition of subsidiaries - -123 - -827
Other investing activities 5 2 39 12
Cash flow used for investing activities -116 -203 -815 -1,370
Financing activities:
Receipt of loans from banks and other lenders 401 294 2,823 1,988
Repayment of loans from banks and other lenders -106 -68 -746 -464
Interest payments and other -50 -52 -357 -351
Other financing activities -35 -65 -245 -437
Cash flow from (used for) financing activities 210 109 1,475 736
Effects of exchange rate movement on cash and cash -3 -2 42 -25
equivalents
Net change in cash and cash equivalents 264 -142 1,936 -964
Cash and cash equivalents at the beginning of the period 619 925 4,320 6,346
Cash and cash equivalents at the end of the period 883 783 6,256 5,382
Free Cash Flow 12 -297 95 -1,996
14
Notes to Abridged Consolidated Financial Statements
Note 1: Basis of preparation
Basis of presentation and accounting policies: The abridged consolidated financial statements for the
quarters ended June 30, 2020 and 2019 incorporate the financial statements of ADAMA Ltd. and of all of its
subsidiaries (the “Company”), including Adama Agricultural Solutions Ltd. (“Solutions”) and its subsidiaries.
The Company has adopted the Accounting Standards for Business Enterprises issued by the Ministry of
Finance (the "MoF") and the implementation guidance, interpretations and other relevant provisions issued or
revised subsequently by the MoF (collectively referred to as "CASBE").
The abridged consolidated financial statements contained in this release are presented in both Chinese
Renminbi (RMB), as the Company’s shares are traded on the Shenzhen Stock Exchange, as well as in United
States dollars ($) as this is the major currency in which the Company’s business is conducted. For the
purposes of this release, a customary convenience translation has been used for the translation from RMB to
US dollars, with Income Statement and Cash Flow items being translated using the quarterly average
exchange rate, and Balance Sheet items being translated using the exchange rate at the end of the period.
The preparation of financial statements requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimated.
Note 2: Abridged Financial Statements
For ease of use, the Financial Statements shown in this release have been abridged as follows:
Abridged Consolidated Income Statement:
“Operating expenses” includes selling and distribution expenses; general and administrative expenses;
research and development expenses; impairment losses; gain (loss) from disposal of assets and non-
operating income and expenses
“Financial expenses and investment income” includes net financing expenses; gains from changes in
fair value; and investment income (including share of income of equity accounted investees)
Abridged Consolidated Balance Sheet:
“Other current assets, receivables and prepaid expenses” includes financial assets held for trading;
financial assets in respect of derivatives; prepayments; other receivables; and other current assets
“Fixed assets, net” includes fixed assets and construction in progress
“Intangible assets, net” includes intangible assets and goodwill
“Other non-current assets” includes other equity investments; long-term equity investments; long-term
receivables; investment property; and other non-current assets
“Loans and credit from banks and other lenders” includes short-term loans and non-current liabilities
due within one year
“Other current liabilities” includes financial liabilities in respect of derivatives; payables for employee
benefits, taxes, interest, dividends and others; advances from customers and other current liabilities
“Other long-term liabilities” includes long-term payables, provisions, deferred income and other non-
current liabilities
15
Analysis of Gaps between Adjusted Income Statement and Reported
Income Statement in Financial Statements
Q2 Adjusted Adjustments Reported
RMB(m) Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019
Revenues 7,339 6,828 7,339 6,828
Gross profit 2,167 2,229 2 -4 2,165 2,233
Operating expenses 1,428 1,441 -116 -145 1,544 1,586
Operating income (EBIT) 739 788 119 141 620 647
Income before taxes 436 451 124 137 312 314
Net income 331 347 110 125 221 222
EBITDA 1,156 1,207 -35 -22 1,191 1,229
Earnings per share 0.1351 0.1419 0.0905 0.0907
H1 Adjusted Adjustments Reported
RMB(m) H1 2020 H1 2019 H1 2020 H1 2019 H1 2020 H1 2019
Revenues 14,121 13,616 14,121 13,616
Gross profit 4,180 4,560 10 13 4,170 4,547
Operating expenses 2,868 2,919 -328 -330 3,196 3,249
Operating income (EBIT) 1,311 1,641 337 343 974 1,298
Income before taxes 792 1,052 343 323 449 729
Net income 518 887 313 298 205 589
EBITDA 2,149 2,471 30 10 2,119 2,461
Earnings per share 0.2117 0.3626 0.0836 0.2406
16
Income Statement Adjustments
Q2 2020 Q2 2019 Q2 2020 Q2 2019
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 31.2 32.6 221.4 221.9
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash) 11.5 11.5 81.1 78.1
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
7.5 9.2 53.3 62.5
Syngenta transaction (non-cash)
3. China Relocation & Upgrade related costs 0.9 2.2 6.5 15.2
4. Long-term incentive (non-cash) -5.9 -3.3 -41.9 -22.7
5. Amortization of acquisition-related PPA (non-cash) 1.8 1.2 13.1 8.0
6. Employee early retirement expenses 0.9 - 6.4 -
Total Adjustments to Operating Income (EBIT) 16.7 20.7 118.5 141.1
Total Adjustments to EBITDA -5.0 -3.2 -35.5 -21.6
Adjustments to Financing Expenses:
7. Revaluation of non-cash adjustment related to non-controlling interest 0.8 -0.7 5.6 -4.5
Total Adjustments to Income before Taxes 17.5 20.0 124.2 136.7
Adjustments to Taxes
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions 1.9 1.9 13.8 13.3
5. Deferred tax due to PPA 0.2 -0.3 1.2 -1.9
Total adjustments to Net Income 15.4 18.4 109.2 125.2
Net Income (Adjusted) 46.6 50.9 330.6 347.1
H1 2020 H1 2019 H1 2020 H1 2019
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 28.8 86.9 204.6 588.6
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash) 22.9 22.9 159.7 155.3
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
15.4 19.8 107.4 134.2
Syngenta transaction (non-cash)
3. China Relocation & Upgrade related costs 1.8 4.5 12.8 30.7
4. Long-term incentive (non-cash) -5.2 1.4 -36.8 9.2
5. Amortization of acquisition-related PPA (non-cash) 3.7 2.1 28.1 14.1
6. Employee early retirement expenses 9.5 - 66.2 -
Total Adjustments to Operating Income (EBIT) 48.1 50.7 337.4 343.5
Total Adjustments to EBITDA 4.3 1.6 29.4 10.2
Adjustments to Financing Expenses:
7. Revaluation of non-cash adjustment related to non-controlling interest 0.8 -3.0 5.6 -20.5
Total Adjustments to Income before Taxes 48.9 47.7 343.0 322.9
Adjustments to Taxes
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions 3.9 3.9 27.2 26.4
5. Deferred tax due to PPA 0.3 -0.3 2.5 -1.9
Total adjustments to Net Income 44.7 44.1 313.3 298.4
Net Income (Adjusted) 73.5 131.0 518.0 887.1
17
Notes:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash): Under PRC GAAP, the Company has inherited the historical
“legacy” amortization charge from the first combined reporting for Q3 2017 that ChemChina previously was incurring in respect of its acquisition
of Solutions in 2011. This amortization is done in a linear manner on a quarterly basis, most of which will be completed and removed in the
second half of 2020.
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash): The proceeds from
the Divestment of crop protection products in connection with the approval by the EU Commission of the acquisition of Syngenta by
ChemChina, net of taxes and transaction expenses, were paid to Syngenta in return for the transfer of a portfolio of products in Europe of
similar nature and economic value. Since the products acquired from Syngenta are of the same nature and with the same net economic value
as those divested, and since in 2018 the Company excluded the one-time gain that it made on the divested products, the additional
amortization charge incurred due to the written-up value of the acquired assets is also excluded to present a consistent view of Divestment and
Transfer transactions, which had no net impact on the underlying economic performance of the Company. These additional amortization
charges will continue until 2032 but at a reducing rate, yet will still be at a meaningful level (more than $10 million per year) until 2028.
3. China Relocation & Upgrade related costs: These are non-cash accelerated depreciation charges related to the three-year Relocation &
Upgrade program in China. Production assets located in the old production sites in Jingzhou and Huai’An will be relocated to the new sites in
the coming years. Since some of the older production assets may not be able to be relocated, their economic life has been shortened and
therefore will be depreciated over a shorter period. Since these are older assets that were built many years ago and will be replaced by newer
production facilities at the new sites, and since the ongoing operations of the business will not be impacted thereby, the Company adjusts for
the impact of the accelerated depreciation of these assets.
4. Long-term Incentive (non-cash): The Company granted its employees, who are mainly non-Chinese residents, a long-term incentive (LTI) in
the form of 'phantom' options, due to the complexity of granting Chinese-listed, equity-settled options to non-Chinese employees. As such, the
Company records an expense, or recognizes income, depending on the fluctuation in the Company’s share price, even though the Company
will not incur any cash impact prior to exercise of the phantom options. To neutralize the impact of such share price movements on the
measurement of the Company’s performance and expected employee compensation and to reflect the existing phantom options, in the
Company’s adjusted financial performance, the LTI is presented on an equity-settled basis in accordance with the value of the existing plan at
the grant date.
5. Amortization of acquisition-related PPA (non-cash): Related to the amortization of non-cash intangible assets created as part of the
allocation of the purchase price (PPA) on acquisitions; has no impact on the ongoing performance of the companies acquired.
6. Employee early retirement expenses: Provision for early retirement plan of employees at the Company’s Israeli manufacturing sites
7. Revaluation of non-cash adjustment related to non-controlling interest: Relates to put options issued to non-controlling interests as part
of historical business combinations which took place before January 1, 2010. The put options are presented as a liability at the present value of
the future exercise price. The revaluation of these put options in Solutions is recognized under IFRS to Goodwill, but due to the acquisition of
Solutions by the Company in 2017, which is treated from an accounting perspective as a “Business Combination Under Common Control”,
such revaluation is recorded as a profit or loss item in the financial reports of the Company. The revaluations of such put options have no
bearing on the ongoing performance of the Company and are therefore adjusted for.
18
Exchange Rate Data for the Company's Principal Functional
Currencies
June 30 Q2 Average H1 Average
2020 2019 Change 2020 2019 Change 2020 2019 Change
EUR/USD 1.120 1.138 (1.5%) 1.100 1.124 (2.2%) 1.101 1.130 (2.6%)
USD/BRL 5.476 3.832 (42.9%) 5.839 3.919 (37.5%) 4.923 3.845 (28.1%)
USD/PLN 3.981 3.734 (6.6%) 4.096 3.812 (7.5%) 4.008 3.801 (5.5%)
USD/ZAR 17.241 14.140 (21.9%) 17.976 14.407 (24.8%) 16.664 14.213 (17.2%)
AUD/USD 0.684 0.703 (2.6%) 0.655 0.700 (6.5%) 0.656 0.706 (7.1%)
GBP/USD 1.227 1.270 (3.4%) 1.241 1.285 (3.5%) 1.260 1.294 (2.6%)
USD/ILS 3.466 3.566 2.8% 3.516 3.595 2.2% 3.507 3.620 3.1%
USD LIBOR 3M 0.30% 2.32% (87.0%) 0.60% 2.51% (76.1%) 1.08% 2.69% (59.9%)
June 30 Q2 Average H1 Average
2020 2019 Change 2020 2019 Change 2020 2019 Change
USD/RMB 7.080 6.875 3.0% 7.085 6.816 3.9% 7.029 6.780 3.7%
EUR/RMB 7.931 7.821 1.4% 7.791 7.661 1.7% 7.739 7.661 1.0%
RMB/BRL 0.774 0.557 (38.8%) 0.761 0.575 (32.3%) 0.700 0.567 (23.5%)
RMB/PLN 0.562 0.543 (3.5%) 0.559 0.559 0.0% 0.570 0.561 (1.7%)
RMB/ZAR 0.411 0.486 15.5% 0.394 0.473 16.7% 0.422 0.477 11.6%
AUD/RMB 4.846 4.832 0.3% 4.638 4.773 (2.8%) 4.612 4.790 (3.7%)
GBP/RMB 8.689 8.734 (0.5%) 8.790 8.762 0.3% 8.857 8.773 1.0%
RMB/ILS 0.490 0.519 5.6% 0.496 0.527 5.9% 0.499 0.534 6.6%
19
