ADAMA Ltd. Annual Report 2020
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ADAMA LTD.
ANNUAL REPORT 2020
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 further important additional information and details, please refer to the Annex.
March 2021
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ADAMA Ltd. Annual Report 2020
Section I - Important Notice, Table of Contents and Definitions
The Company’s Board of Directors, Board of Supervisors, directors, supervisors and senior managers confirm
that the content of the Report is true, accurate and complete and contains no false statements, misleading
presentations or material omissions, and assume joint and several legal liability arising therefrom.
Ignacio Dominguez, the person leading the Company (President and Chief Executive Officer) as well as its legal
representative, and Aviram Lahav, the person leading the accounting function (Chief Financial Officer & Deputy
Chief Executive Officer), hereby assert and confirm the truthfulness, accuracy and completeness of the Financial
Report.
All of the Company’s directors attended the board meeting for the review of this Report.
The forward looking information described in the Report, such as future plans, development strategy etc., does
not constitute, in any manner whatsoever, a substantial commitment of the Company to investors. Investors and
other relevant people are cautioned to be sufficiently mindful of investment risks as well as the difference between
plans, forecasts and commitments.
The Company has described its future development strategies, work plan for 2021 and possible risks in “IX.
Outlook of future development of the Company” in Section IV. The major risks of the Company include, among
others, exchange rate fluctuations; exposure to interest rate, Israel CPI and NIS exchange rate fluctuations;
fluctuations in raw material inputs and prices, and in sales. Investors and other relevant people are cautioned to
be sufficiently mindful of investment risks. For the complete “Risk factors and countermeasures” of the Company,
please see the relevant section below.
The pre-plan of the dividend distribution approved by the meeting of the Board of Directors on March 29, 2021
refers to the total outstanding 2,329,811,766 shares of the Company which are entitled to the dividends as of the
record day when the profit distribution proposal is implemented as the basis for the distribution as cash dividend
of RMB 0.16 (before tax) per 10 shares, to all the shareholders of the Company. No shares will be distributed as
share dividend, and no reserve will be transferred to equity capital.
This Report and its abstract have been prepared in both Chinese and English. Should there be any discrepancies
between the two versions, the Chinese version shall prevail.
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ADAMA Ltd. Annual Report 2020
Table of Contents
Section I - Important Notice, Table of Contents and Definitions.................................... 2
Section II - Corporate Profile and Financial Results ....................................................... 5
Section III - Business Profile ........................................................................................... 10
Section IV - Performance Discussion and Analysis ..................................................... 16
Section V - Significant Events ........................................................................................ 58
Section VI. - Change in Shares & Shareholders ............................................................ 92
Section VII. - Preferred stock ........................................................................................ 105
Section VIII. - Convertible Bonds.................................................................................. 106
Section IX. - Directors, Members of the Supervisory Board, ..................................... 107
Section X. - Corporate Governance.............................................................................. 118
Section XI - Corporate Bonds ....................................................................................... 125
Section XII - Financial Report ....................................................................................... 126
Section XIII - Documents Available for Reference ...................................................... 254
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ADAMA Ltd. Annual Report 2020
Definitions
In this Report, the following terms have the meaning appearing alongside them, unless otherwise specified:
General Terms Definition
Company, the Company ADAMA Ltd.
Adama Agricultural Solutions Ltd., a wholly-owned subsidiary of the Company,
Adama Solutions
incorporated in Israel according to its laws
Anpon, ADAMA Anpon ADAMA Anpon (Jiangsu) Ltd., a wholly-owned subsidiary of the Company
Board of Directors/Board The Board of Directors of the Company
Board of Supervisors The Board of Supervisors of the Company
Articles of Association / AOA The Articles of Association of the Company
Group, the Group, ADAMA The Company, including all its subsidiaries, unless expressly stated otherwise
ChemChina China National Chemical Co., Ltd.
ChemChina-Syngenta
The acquisition of Syngenta AG by ChemChina in 2017
Transaction
CNAC China National Agrochemical Co., Ltd.
CSRC China Securities Regulatory Commission
SZSE Shenzhen Stock Exchange
SASAC State Assets Supervision and Administration Commission of China
Syngenta Group Co., Ltd., the controlling shareholder of the Company as of June
Syngenta Group
15, 2020, a wholly-owned subsidiary of CNAC
Report This 2020 Annual Report
Financial Report The Financial Reports for the year 2020, as contained in this Report
Reporting Period, this Period,
Year 2020
Current Year
In July 2017, the Company acquired 100% of the shares of Adama Solutions from
CNAC in exchange for the issuance and allotment of 1,810,883,039 new A-shares
The Combination Transaction,
of the Company to CNAC. In addition, the Company issued 104,697,982 new A-
the Major Assets Restructuring
shares to selected investors in an A-Share Private Placement conducted as
Supporting Finance for the transaction.
Company Law Company Law of the People’s Republic of China
Securities Law Securities Law of the People’s Republic of China
Listing Rules Listing Rules of the SZSE
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ADAMA Ltd. Annual Report 2020
Section II - Corporate Profile and Financial Results
I. Corporate information
Stock name ADAMA A, ADAMA B Stock code 000553, 200553
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 安道麦股份有限公司
Abbr. 安道麦
Company name in English (if any) ADAMA Ltd.
Abbr. (if any) ADAMA
Legal representative Ignacio Dominguez
Registered address No. 93, East Beijing Road, Jingzhou, Hubei
Zip code 434001
Office address No. 93, East Beijing Road, Jingzhou, Hubei
Zip code 434001
Company website www.adama.com
Email irchina@adama.com
II. Contact information
Board Secretary Securities Affairs Representative Investor Relations Manager
Name Guo Zhi Wang Zhujun Wang Zhujun
Address 6/F, No.7 Office Building, No.10 Courtyard, Chaoyang Park South Road, Chaoyang District, Beijing
Tel. 010-56718110 010-56718110 010-56718110
Fax 010-59246173 010-59246173 010-59246173
E-mail irchina@adama.com irchina@adama.com irchina@adama.com
III. Information disclosure
China Securities Journal
Newspapers designated by the Company for information
Securities Times
disclosure
Kung Pao
Website designated by the CSRC for the publication of this Report http://www.cninfo.com.cn
Place where this Report is kept Securities office of the Company
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ADAMA Ltd. Annual Report 2020
IV. Company registration and alteration
Credibility code 91420000706962287Q
Changes in main business activities of the Company after going public (if any) None in the reporting period.
During the Reporting Period, the
controlling shareholder of the
Company changed from CNAC to
Syngenta Group, a wholly-owned
subsidiary of CNAC. For
additional information, please
Changes of controlling shareholder (if any) refer to the Announcement on the
Completion of the Registration of
the Transfer of State-owned
Shares held by the Controlling
Shareholder (Announcement No.
2020-33) disclosed by the
Company on June 17, 2020.
V. Other information
Company’s Name Deloitte Touche Tohmatsu Certified Public Accountants LLP
Auditors
Office address 30/F, Bund Center, 222 Yan An Road East, Shanghai PRC
Mou Zhengfei and Ma Renjie
Signing Certified Public Accountant
Sponsor engaged by the Company to continuously perform its supervisory function during the Reporting Period
□ Applicable √ Not applicable
Financial advisor engaged by the Company to continuously perform its supervisory function during the Reporting Period
□ Applicable √ Not applicable
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ADAMA Ltd. Annual Report 2020
VI. Main accounting and financial results
Whether the Company performed any retroactive adjustments to or restatement of its accounting data
□ Yes √ No
2020 2019 +/- (%) 2018
Operating revenue (RMB’000) 28,444,833 27,563,239 3.20% 26,867,308
Net profit attributable to the
352,753 277,041 27.33% 2,447,876
shareholders (RMB’000)
Net profit attributable to the
shareholders, excluding
287,724 610,059 -52.84% 859,448
non-recurring profit and loss
(RMB’000)
Net cash flows from operating
2,023,015 843,487 139.84% 2,299,153
activities (RMB’000)
Basic EPS (RMB/share) 0.1505 0.1132 32.89% 1.0005
Diluted EPS (RMB/share) N/A N/A N/A N/A
Weighted average return on equity 1.61% 1.23% 0.38% 11.66%
31.12.2020 31.12.2019 31.12.2018
+/- (%)
Total assets (RMB’000) 46,801,034 45,288,940 3.34% 44,135,063
Net assets attributable to the
21,353,752 22,371,665 -4.55% 22,744,862
shareholders (RMB’000)
Current issued corporate bonds
□ Yes √ No
VII. Differences in accounting data under domestic and foreign accounting
standards
1. Differences in the net profit and the net assets disclosed in the financial reports prepared
under Chinese and international accounting standards
□ Applicable √ Not applicable
None during the Reporting Period.
2. Differences in the net profit and the net assets disclosed in the financial reports prepared
under Chinese and foreign accounting standards
□ Applicable √ Not applicable
None during the Reporting Period.
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ADAMA Ltd. Annual Report 2020
3. Explanation on the differences in accounting data
□ Applicable √ Not applicable
VIII. Main Financial results by quarter
Unit: RMB’000
Q1 2020 Q2 2020 Q3 2020 Q4 2020
Operating revenue 6,782,243 7,338,797 6,768,583 7,555,210
Net profit attributable to the shareholders (16,707) 221,356 20,409 127,695
Net profit attributable to the shareholders excluding non- 16,813 202,960 9,876 58,075
recurring profit and loss
Net cash flows from operating activities (384,708) 1,619,239 157,469 631,015
Any material differences between the financial indicators above or their summations and those which have been disclosed
in quarterly or semi-annual reports
□ Yes √ No
IX. Non-Recurring profit/loss
√ Applicable □ Not applicable
Unit: RMB’000
Item 2020 2019 2018 Note
Gains/losses on the disposal of non-current 2018 amount is mainly from
assets (including the offset part of asset divestment in Europe, related
69,710 127,073 1,959,005
impairment provisions) to the ChemChina-Syngenta
Transaction.
Government grants charged to the profit/loss for
the Reporting Period (except for the government
grants closely related to the business of the 41,871 27,410 21,089
Company and given at a fixed quota or amount in
accordance with the State’s uniform standards)
Profit or loss of subsidiaries generated before
combination date of a business combination - 38,027 45,414
involving enterprises under common control
Profit or loss arising from contingencies other
- (45,989) -
than those related to normal operating business
Recovery or reversal of provision for bad debts
26,102 25,821 17,303
which is assessed individually during the years
Other non-operating income and expenses other
19,989 (40,992) (11,719)
than the above
Mainly provision for early
Other profit or loss that meets the definition of retirement plan of employees
(62,855) (574,500) -
non-recurring profit or loss at the Company’s Israeli
manufacturing facilities.
Less: Income tax effects 29,788 (110,132) 442,664
NCI (after tax) - -
Total 65,029 (333,018) 1,588,428
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ADAMA Ltd. Annual Report 2020
Explanation whether the Company has classified an item as exceptional profit/loss according to the definition in the
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public-Non-
Recurring Profit and Loss, and reclassified any non-recurring profit/loss item given as an example in the said explanatory
announcement to recurrent profit/loss
□ Applicable √ Not applicable
No such cases during the Reporting Period.
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ADAMA Ltd. Annual Report 2020
Section III - Business Profile
I. Main business of the Company during the Reporting Period
The Company is a corporation incorporated in the People's Republic of China.
The Group is a global leader in crop protection, engaging in the development, manufacturing and commercialization of a
wide range of crop protection products, that are largely off-patent. The Group provides solutions to farmers to combat
weeds, insects and disease, and sells its products in approximately 100 countries, through approximately 60 subsidiaries
worldwide.
The Group's business model integrates end-customer access, regulatory expertise, state-of-the art global R&D, production
and formulation facilities, thereby providing the Group a significant competitive edge and allowing it to launch new and
differentiated products that meet local farmers and customer needs in key markets.
The Group's primary operations are global, spanning activities in Europe, North America, Latin America, Asia-Pacific
(including China) and India, the Middle-East and Africa.
The Group also utilizes its expertise to adapt such products also for the development, manufacturing and commercialization
of similar products for non-agricultural purposes (Consumer and Professional Solutions).
In addition, the Group leverages its core capabilities in the agricultural and chemical fields and operates in several other
non-agricultural areas, none of which, individually, is material for the Group. These activities, collectively reported as Inter-
mediates and Ingredients, include primarily, (a) the manufacturing and marketing of dietary supplements, food colors,
texture and flavor enhancers, and food fortification ingredients; (b) fragrance products for the perfume, cosmetics, body
care and detergents industries; (c) the manufacturing of industrial products and (d) other non-material activities.
Distinctive member of the Syngenta Group
In June 2020, ADAMA Group became a distinctive member of the newly established Syngenta Group, 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 the Company into Syngenta Group. The Syngenta Group is owned by ChemChina, and as such, ChemChina
remains the Company’s ultimate controlling shareholder.
ADAMA continues to be headquartered in Israel and remains traded on the Shenzhen Stock Exchange, while maintaining
its unique brand and positioning.
Performance in the context of general crop protection market environment
In 2020, the global agrochemical market saw resilient growth, with robust demand for crop protection products despite the
ongoing COVID-19 pandemic, demonstrating the industry’s importance in the global food production chain.
Crop prices mostly declined in the first half of the year as the demand for some agricultural crops, especially corn, cotton,
sugar and some fresh fruits and vegetables, softened in the first half of the year as a result of widespread pandemic-related
shutdowns. Crop prices improved significantly in the second half of the year as crop demand recovered, fueled by
pandemic-related food security concerns, the recovery of oil prices (benefiting corn and sugar prices) and the recovery in
textile demand (benefiting cotton prices). The spike in agricultural import demand is led by China, the world’s largest
agricultural importer, which is rebuilding its crop reserves. Dryness in Latin America due to the La Nia weather event also
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ADAMA Ltd. Annual Report 2020
pushed crop prices higher in the latter part of 2020.
Overall, worldwide crop protection volumes were strong in 2020, driven by increased global planted acreages, higher pest
pressure and improved weather conditions in key growing regions. Growth was also bolstered by demand for crop
protection products in developing markets such as India, where pandemic-induced labor shortages encouraged higher use
of herbicides.
The non-crop industry, especially the consumer segment, saw strong demand as COVID-19 lockdowns drove investments
in the Home & Garden segments.
During most of 2020, prices of active ingredients in China declined as the cost of oil and related basic chemicals decreased
sharply at the initial onset of the pandemic. However, towards the end of the year, prices began to increase due to the
recovery of oil prices alongside higher raw material costs. This, combined with stronger demand for crop protection products
and a strengthening of the RMB when compared to the US dollar, has contributed to a recent increase in the procurement
costs of raw materials, intermediates and active ingredients, a trend which is continuing into 2021. This increase in
procurement costs, if sustained for an extended period, may challenge the Company’s gross margin over the coming
quarters. The Company actively manages its procurement and supply chain activities in order to mitigate these higher
procurement costs, and adjusts its pricing wherever possible to compensate. However, intense competitive dynamics in
markets worldwide may constrain the Company's ability to fully and timely pass on these increases in procurement costs.
2020 saw significant volatility in global currency markets, with the rapid depreciation of many currencies against the US
dollar in the first half of the year, most notably the Brazilian Real, Australian dollar, Turkish Lira and Indian Rupee, as well
as volatility in the Euro. These trends, although stabilizing to some extent in the second half of the year, impacted the
financial performance of multi-national companies throughout the world, including the Company. It should be noted that
developed market currencies have strengthened more than those in developing markets where the Company is
experiencing its strongest growth, another trend which is continuing into 2021. Furthermore, the relatively strong currencies
of the Company’s two main production hubs, Israel and China, have brought, and are expected to continue to bring, upward
pressure on manufacturing costs in USD terms.
Crop Protection Products
The Group is focused on the development, manufacturing and commercialization of largely off-patent crop protection
products, which are generally herbicides, insecticides and fungicides, which protect agricultural and other crops against
weeds, insects and disease, respectively.
Herbicides - During cultivation, crops are exposed to various weeds that grow in their environment and compete for water,
light and nutrients. Herbicides are designed to prevent or stunt the development of such weeds to allow the cultivated crop
to develop optimally throughout the different stages of its growth, and therefore to reach optimum yield. The herbicides sold
by the Company are both selective (do not affect or harm the crop itself) and non-selective. The best-selling herbicides are
those designed to protect soy, corn, cereals, rice and cotton.
Insecticides - Insecticides are designed to control various types of insects and pests in a selective manner (without harming
the crop itself). The best-selling insecticides are designed to protect fruits and vegetables, corn, cotton and soy.
Fungicides - Fungicides are designed to combat various diseases and parasitical fungi. In general, when weather conditions
in the agricultural season are dry, the prevalence of crop diseases is much smaller, reducing demand for such products.
Crops in which fungicides are used most frequently are cereals, fruit, vegetables, soy, grapevines and rice.
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ADAMA Ltd. Annual Report 2020
Main production processes, and upstream and downstream elements
Production - The Group's manufacturing sites house two types of facilities: (1) dedicated facilities designed to produce a
single product or product family; and (2) multi-purpose facilities - comprising the majority of the Group's facilities where
several kinds of products may be manufactured. The latter provide the Group with manufacturing flexibility and enable it to
prepare for the manufacturing of new products, subject to maintaining and ensuring quality standards.
Value chain - Generally, the value chain between the Group and the end customer who ultimately purchases its products
around the world may be characterized as follows: Importer / Formulator -> Distributor -> Retailer -> Farmer. Due to the
expansion of the Company's activities and the acquisition and establishment of subsidiary companies in different regions
of the world in recent years, in most cases companies owned by the Group carry out the role of the formulator and/or the
importer, and occasionally also the role of the distributor and sometimes the retailer. In the past, farmers stored the inventory
in their own warehouses, but this trend has changed and today most of inventories are stored either in the importers' or the
distributors’ warehouses.
Raw materials and suppliers - The Group procures and manufactures a large variety of raw materials, which may not be
uniformly characterized, together with complementary raw materials or intermediates required to produce the finished
products and/or their formulations. The most significant element of the Group's cost of sales is the cost of raw materials
used in its production processes, which is primarily influenced by global changes in the supply of raw materials, and, to a
certain extent, extreme fluctuations in international oil prices. Similarly, the cost of purchasing finished products for sale to
third parties is also significant. The Group purchases its raw materials from various suppliers, primarily in China, Europe,
the U.S.A., and South America. The Group's supplier network has not changed significantly over the past few years, while
suppliers from China are still a main source for raw material, due to the wide range of products and competitive prices
offered by them, together with the improved quality of the products that are examined by the Group through product quality
testing.
Customers - The Company’s customers are numerous and are distributed across many countries throughout the world,
although in some countries, sales are made to a relatively small number of customers. Generally, the Group's products are
primarily sold to regional and local distributors in the different countries, who in turn market them to end customers in that
country, some of whom are large cooperatives. The Group also sells, inter alia, to multinational companies and to other
producers that manufacture end-use products based on active ingredients sourced from the Group's. The vast majority of
sales are made to returning customers, typically without long-term supply contracts, as is customary in the industry. In most
countries, purchases are made without long-term advance orders, while in some areas they are made based on (non-
binding) rolling sales forecasts and actual orders. The Group's actual production is based on these forecasts.
Distribution and marketing - The Group's marketing operations are global and designed to consistently increase profits and
market share. The Group markets its products directly through local representation in all of the largest agricultural markets
worldwide by means of local salespeople and commercial activities directed at the distributors, agricultural consultants and
farmers.
General environment and the effect of external factors on the Company’s operations
Major trends, events and key developments in the Group's macro-economic environment may materially impact the Group’s
business results and development. The impact of these factors may differ by geographic region and the different products
of the Group. Since the Group offers one of the a widest and most diverse product portfolios of crop protection products
and since it operates in many geographic regions, the aggregate effect of these factors in any given year, and during the
course thereof, is not uniform and may sometimes be mitigated by offsetting effects. The activities and results of the Group
are further subject to, and affected by, certain global, localized and other factors, such as: demographic changes; economic
growth and rising standards of living; agricultural commodity prices; significant fluctuations in raw material costs and global
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ADAMA Ltd. Annual Report 2020
energy prices; development of new crop protection technologies; patent expiries and growth in volumes of off-patent
products; the global agricultural markets and volatile weather conditions; regulatory changes; government policies; world
ports, international monetary policies and the financial markets.
For further important additional information and details, please refer to the Annex.
II. Significant changes to main assets
1. Significant changes to main assets
Main Assets Significant Change
Decrease due to the acquisition of Alfa, a previous joint venture of the Company, after
Stock rights/Equity assets
which it became a subsidiary of the Company.
Fixed assets No significant change
Intangible assets No significant change
Construction in progress Investments in relocation projects
2. Main overseas assets
√ Applicable □ Not applicable
Control Proportion
Scale
measures Net Profit of
Specific (Amount) Operation Significant
to of the overseas
contents of the Reason of the Location /Management impairment
guarantee assets assets out
assets assets mode risk?
safety of (RMB’000) of total net
(RMB’000)
the assets assets (%)
Equity Acquired
investment in through Israel and Corporate Corporate
18,577,615 201,814 87% No
Adama Major Assets globally Governance Governance
Solutions Restructuring
Other explanations
III. Core competitiveness analysis
As a leading off-patent crop protection provider in the global crop protection market, the Group believes that the following
strengths provide it with sustainable competitive advantages and the foundation to capitalize on favorable underlying
agriculture and crop protection industry trends:
Off-patent Industry Leader. The Group’s success as one of the world’s leading off-patent companies has given
it a deep understanding of the industry and enabled it to build one of the most extensive off-patent product
offerings, giving it the ability to provide efficient, value-added solutions to farmers of every major crop around the
world. Moreover, the breadth of the Group’s product portfolio, with no single active ingredient constituting more
than 5% of its sales in 2020, combined with its extensive geographic reach, provide effective diversification and
enhanced stability. The Group strives to continue to gain market share, building on its leading role in the market,
farmer-centric focus and broad product portfolio. Furthermore, the Group’s addressable market continues to
expand as the crop protection market globally continues to shift towards off-patent products, the segment of the
market on which the Group focuses. This shift is the result of significant increases in the costs and risks of
discovering and developing novel and effective Active Ingredients (AIs), which over time has led to fewer
introductions of new molecules each year by the Company’s Research-Based Company (RBC) competitors. The
Group believes that its strength in the off-patent market provides it with a certain competitive advantage relative
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ADAMA Ltd. Annual Report 2020
to RBCs, as it is able, with its research, technology and know-how, to access off-patent crop protection products
developed by all of the various major RBCs. This allows the Group to enhance existing crop protection products
and introduce unique mixtures and formulations. In parallel, the Group’s global scale, registration expertise and
manufacturing footprint are competitive advantages in comparison to many of its off-patent peers.
Global Reach and Strength in Emerging Markets. The Group has an industry leading global footprint with
extensive market presence. The Group enjoys broad geographic diversification by selling in over 100 countries
with a balanced regional split, as evidenced by its 2020 revenue breakdown of approximately 25% in Europe,
26% in Latin America, 19% in North America, 16% in Asia Pacific, and 14% in India, the Middle East and Africa.
This regional balance enhances the Group’s growth profile and provides diversification across different countries,
climates, crops and planting seasons. The Group has a particularly strong presence in emerging markets, where
growth is expected to outpace developed markets, and from which it derived more than half of its 2020 sales.
Unique Positioning and Access to China. The Group believes that the foundation provided by the integration
of Adama Solutions with the operational and commercial infrastructure of the Company in China, together with its
unique relationship with its ultimate controlling shareholder, ChemChina, provides it with a clear advantage in
penetrating the Chinese market, one of the largest and fastest growing agricultural markets in the world. The
Group is one of the only global crop protection providers with a significant integrated commercial and operational
infrastructure within China. The Group intends to leverage this infrastructure to pursue a leading position in the
Chinese crop protection market and capitalize on the growing importance of high-quality global brands in China.
With its activities in China also forming part of Syngenta Group China, the Group believes it is uniquely positioned
to capitalize on the trend toward consolidation within the high-growth, highly fragmented Chinese crop protection
market. In addition to helping it become a leader in the Chinese crop protection market, the integration of the
Company’s China-based manufacturing facilities into the Group’s global manufacturing operations provides it with
the ability to more effectively develop and commercialize advanced, differentiated products, as well as benefit
from improved cost positions in key molecules, enhance the optimization of its global supply chain over time, drive
greater efficiency throughout the organization, and secure both revenue growth as well as increased profitability.
Collaborations with members of the Syngenta Group.
The Group is working together with the other companies within the Syngenta Group to create value for itself and
the Syngenta Group through increasing the Group’s sales, reducing costs and improving processes. Such efforts
include various collaboration initiatives for the sale and distribution of finished products, raw materials supply and
procurement, logistics and supply chain, as well as in the R&D and products’ registration fields.
Vertically Integrated Business with Global Scale. The Group is one of the few off-patent crop protection
providers that is active across virtually the entire value chain, from worldwide marketing, sales and distribution, to
registration, production and R&D. As a result, the Group is able to efficiently manage its product portfolio and
operations in response to the dynamic needs of farmers, changing weather conditions, government policies and
regulations, and capture value at each point in the value chain. Approximately 85% of the Group’s products are
produced, formulated or both in its world-class, well-invested facilities across the globe. Having deep knowledge,
expertise and experience in all aspects of the development process, integrated chemical synthesis and
formulation production and control over the entire supply chain, provides the Group with cost and control
advantages, and the agility to address market challenges and capture value. Further, its global registration
network, providing local registration capabilities in over 100 countries, enables the Group to efficiently introduce
new products in all major markets and provide farmers with a comprehensive portfolio of crop protection solutions.
In the last five years, the Group’s registration network of highly-skilled professionals has obtained approximately
1,000 new product registrations. These capabilities are increasingly important as regulatory requirements
continue to increase globally. The Group’s sales and marketing infrastructure is characterized by its local sales
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ADAMA Ltd. Annual Report 2020
forces in each of its strategic markets, who build strong relationships with local distributors and with the end users,
the farmers, to better understand their needs. This drives demand at the wholesale, retail and farmer level and
provides the Group with valuable market insight and understanding.
Extensive, Differentiated Offering. The Group offers farmers a hybrid portfolio of increasingly differentiated
products and solutions that are tailored to the specific needs of each geographic region and each type of crop.
The Group utilizes an integrated, solutions-based approach to its entire offering in order to meet the unique
demands of its global customer base. The Group strives to offer farmers a branded portfolio that is comprised of
both high-value differentiated products as well as high-volume off-patent products, alongside an increasing
number of unique mixtures and formulations and novel, innovative products and services, aimed to provide
solutions to farmers in nearly every region, and for all major crops. The Group’s extensive portfolio is composed
of over 200 centrally managed AIs and over 1,400 mixtures and formulations.
Experienced and Empowered Management Team. With a deep understanding of the crop protection industry
and firm focus on sustaining the Group’s leadership and financial strength, its management team is a cohesive
and integrated team that has the knowledge, skills and experience required to guide the Group on its path to
achieving its ambition of global leadership. The Group believes in empowering its teams and creating leaders
from its strongest performers, with the result that its management team is composed of the people who have
successfully managed its business, and developed and executed its strategy over the last few years, continuing
its track record of consistent, profitable growth.
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ADAMA Ltd. Annual Report 2020
Section IV - Performance Discussion and Analysis
I. Overview
For general crop protection market environment, please refer to I. Main business of the Company during the Reporting
Period of Section III above.
Same period of last year as
Reporting Period
Item previously reported +/-%
(000’RMB)
(000’RMB)
Revenues 28,444,833 27,563,239 3.20%
Pre-Tax Profits 575,212 451,572 27.38%
Pre-tax profit margin 2.0% 1.6% -
Net income 352,753 277,041 27.33%
Net income margin 1.2% 1.0% -
EBITDA 4,088,571 4,195,328 -2.54%
EBITDA margin 14.4% 15.2% -
Same period of last year as
Reporting Period
Item previously reported +/-%
(000’USD)
(000’USD)
Revenues 4,127,751 3,996,773 3.28%
Pre-Tax Profits 82,620 68,337 20.90%
Pre-tax profit margin 2.0% 1.6% -
Net income 51,068 42,790 19.35%
Net income margin 1.2% 1.0% -
EBITDA 592,480 610,440 -2.94%
EBITDA margin 14.4% 15.2% -
Note: Since the functional currency of main overseas subsidiaries is the USD, and the Company’s management review of
the Company’s performance is based on the USD results, following explanations and analysis are based on USD-
denominated numbers.
Procurement model of major raw materials
Significant
change in Average price Average price
Procurement Proportion out of total
Main raw materials the in H1 in H2
model purchase amount
settlement (RMB/Kg)* (RMB/Kg)*
method
AI Tech 41.9% No 58.3 61.6
Raw Materials 27.2% No 15.8 21.3
Purchase through
Co-Formulants 5.4% No 10.8 12.3
multiple channels
Packaging 5.3% No 1.3 1.4
Other 20.3% No 4.0 2.1
* Prices in RMB are based on average exchange rates for the relevant period.
Reasons for significant changes in raw material prices compared with the previous reporting period
□ Applicable √ Not applicable
16
ADAMA Ltd. Annual Report 2020
Whether the Company spends more than 30% of its total production cost on energy supply
□ Applicable √ Not applicable
Reasons that there is material change to the main energy types during the reporting period
□ Applicable √ Not applicable
Production technologies of main products
Main Products Stage of Key Technical Experts Patents
Production
R&D advantages
Technologies of
Main Products
Herbicides Industrialized Employed by the Group Some are Off-patent AIs
production patent developed into
protected differentiated mixtures
and formulations, in
combination with new
formulation and delivery
technologies that
provide more efficient
ways to deliver the
products into the plants
Fungicides Industrialized Employed by the Group Some are Off-patent AIs
production patent developed into
protected differentiated mixtures
and formulations, in
combination with new
formulation and delivery
technologies that
provide more efficient
ways to deliver the
products into the plants
Insecticides Industrialized Employed by the Group Some are Off-patent AIs
production patent developed into
protected differentiated mixtures
and formulations, in
combination with new
formulation and delivery
technologies that
provide more efficient
ways to deliver the
products into the plants
17
ADAMA Ltd. Annual Report 2020
Capacity of main products
Main Products Normal Capacity Utilization Capacity construction
Capacity (%) Under Investment in the
(tons/year) Construction production of Main
(tons/year) Products
Herbicides 53,545 95 13,000 Ongoing
Fungicides 54,802 84 1,500 Ongoing
Insecticides 39,874 79 20,400 Ongoing
Products produced in major chemical industry parks
Major Chemical Industry Parks Products
Neot Hovav, Israel Plant for production of insecticides and
fungicides active ingredients as well as
formulations, R&D center and Non-Agro activity
Ashdod, Israel Manufacturing of the herbicides’ active
ingredients, formulations and Non-Agro activity
as well
Anpon, China Plant for the manufacturing of insecticides and
herbicides active ingredients, formulations,
Flame Retardants and Non-Agro activity
Sanonda, China Plant for the manufacturing of insecticides active
ingredients as well as number of formulations
and Non-Agro activity
Taquari, Brazil Plant for the manufacturing of active ingredients
as well as number of formulations used for the
manufacturing of insecticides, fungicides and
herbicides
EIA approval status that is being applied or newly obtained during the reporting period
√ Applicable □ Not applicable
During the reporting period, the Company received the following EIA approvals:
“Environmental Impact Reporting Form of the Reconstruction Project for Ultra-low Emission”.
“Environmental Impact Reporting Form of the Supporting Engineering Project for the Insecticide Relocation and
Upgrading Project”.
“Relocation and Upgrading Project for Ethephon with Annual Capacity of 13,000 Tons". The original annual capacity of
the project was 10,000 tons, and the required EIA for the expansion was already obtained.
“Relocation and Upgrading Project for Pesticide Formulation Facilities with Annual Capacity of 3,500 Tons”.
Abnormal production suspension during the reporting period
□ Applicable √ Not applicable
18
ADAMA Ltd. Annual Report 2020
Relevant approvals, permits and qualifications
√ Applicable □ Not applicable
Entity in China Name of the Certificate Number Expiration
Pesticide Production Pesticide Production Permit
March 15th, 2023
Permit (E) 0010
（E）WH [2020] extended No.
Safety Production Permit March 1st, 2023
0011
Special Permit for the HW-D42I0001
Manufacturing of April 3rd, 2024
Monitored Chemicals
Special Permit for the HW-C0110173
Manufacturing of January 12th, 2022
Monitored Chemicals
National Industrial XK13-008-00019 of Hubei
November 13th, 2023
Production Permit
Veterinary Drug （ 2016 ） No.17027 for
ADAMA Ltd. December 26th, 2021
Production License Veterinary Drug Production
Veterinary Drug GMP （ 2016 ） No. 17012 for
December 26th, 2021
Certificate Veterinary Drug GMP
Business License for No. [2019]000348 of Safety
July 5th, 2021
Hazardous Chemicals Operation of Hubei D
No.（0045）for Port Operation
Port Operation Permit January 16th, 2022
of Jingzhou of Hubei
No. 5, 2015 for Use of Port
Port Shoreline Use Permit August 7th, 2061
Shoreline
No. 3, 2020 for Water
Water Extraction Permit August 13th, 2025
Extraction of Jingzhou of Hubei
Registration Certificate of 421012001
December 9th, 2021
Hazardous Chemicals
Pollutant Emission Permit 91420000706962287Q001P December 25th, 2025
WH No. [H00029] for Safety
Safety Production Permit January 17th, 2021
Production of Jiangsu
No. 00394 for Business of
Business License for
Hazardous Chemicals of November 1st, 2021
Hazardous Chemicals
Huai’an of Jiangsu
Pesticide Business No. 32080020034 for Pesticide
December 26th, 2024
License Business of Jiangsu
Pesticide Production No. 0014 for Pesticide
ADAMA Anpon Permit December 6th, 2022
Production of Jiangsu
(Jiangsu) Ltd.
Pollutant Emission Permit 91320800139433337K001P May 31th,2025
National Industrial XK13-010-00189 of Jiangsu
January 12th, 2024
Production Permit
National Industrial XK13-008-00007 of Jiangsu
September 23rd, 2023
Production Permit
National Industrial XK13-014-00235 of Jiangsu
July 11th, 2024
Production Permit
Mining License C3200002009096120039192 September 30th, 2025
Safety Production Permit FM No. [2020]0801 of Jiangsu November 25th, 2021
Maidao, Business License for No. 00641 for Business of December 30th, 2022
19
ADAMA Ltd. Annual Report 2020
Entity in China Name of the Certificate Number Expiration
Branch of Hazardous Chemicals Hazardous Chemicals of
ADAMA Anpon Jiangsu
(Jiangsu) Ltd. WH No. [H00015] for Safety
Safety Production Permit July 22nd, 2021
Production of Jiangsu
Pollutant Emission Permit 91320800MA1NX3QW56001P November 26th, 2025
Hubei Sanonda No. 42000010083 for Pesticide
Pesticide Business
Trading Co., Business of Hubei September 3rd, 2023
License
Ltd.
ADAMA No. 11000010005 for Pesticide
(Beijing) Business of Beijing
Agricultural Pesticide Business
April 11th, 2023
Technology License
Company
Limited
Shanghai Dibai No. 31011420006 for Pesticide
Plant Pesticide Business Business of Shanghai
September 3rd, 2023
Protection Co., License
Ltd.
Company focused on oil processing and trade
□Applicable √Not applicable
Company focused on fertilizer
□Applicable √Not applicable
Company focused on agrochemicals
√ Applicable □ Not applicable
Market share - As mentioned herein, ADAMA is a leading company among the crop-protection companies that focus on
off-patent crop protection solutions. The Group’s global crop protection market share was approximately 6.1% in 2020,
based on AgBio Investor’s preliminary estimation of the global agrochemical industry in 2020, and 5.5% in 2019.
Registrations - The materials and products marketed by the Group require, at various stages of their production and
marketing, registration in every country where the Company intends to market them. The Company has development and
registration centers, located in Europe, Israel, Latin America, Brazil, North America, India and Asia. Further, its global
registration network, providing local registration capabilities in over 100 countries, enables the Group to efficiently introduce
new products in all major markets and provide farmers with a comprehensive portfolio of crop protection solutions. In the
last five years, the Group’s registration network of highly-skilled professionals has obtained approximately 1,000 new
product registrations. These capabilities are increasingly important as regulatory requirements continue to increase globally.
Tax policies - In order to assist and effectively support companies located in Hubei province, that have been impacted by
the COVID-19 pandemic, the government has provided more preferential tax policies to such companies, including by
reducing or by exempting land use tax, and/or by and exempting various employment-related taxation borne by the
companies. In addition, the Company can apply for higher value-added tax (VAT) refund rate with regard to some of its
products, as of March 20, 2020, benefiting the Company’s export business.
Company focused on chlorine alkali and caustic soda business
□Applicable √Not applicable
20
ADAMA Ltd. Annual Report 2020
Company focused on chemical fiber industry
□Applicable √Not applicable
Company focused on plastic and rubber making
□Applicable √Not applicable
II. Main business analysis
1. Overview
See details on the relevant contents of “I. Overview” of “Section IV. Performance Discussion and Analysis”.
2. Revenues and costs
Revenues
Revenues grew by 17% in the fourth quarter and by 11% in the full-year period, in constant exchange rates (CER) terms,
compared to the corresponding periods last year, driven by a 16% increase in volumes in the quarter and a 10% increase
over the full year.
In the fourth quarter, the Company delivered strong, double-digit growth in all key regions in constant currency terms. A
particularly strong performance in the quarter in North America saw the region almost fully recover from the severe weather
and other challenges seen mainly in the US earlier in the year. Similarly strong growth was achieved in Europe in the
quarter, bolstered by good consumption by farmers and the Company’s acquisition in Greece in mid-year, bringing the
region into positive growth territory for the full year. Favorable weather conditions in the quarter in Asia-Pacific supported
growth across the region, with noteworthy performances seen in Australia, Japan and across south-east Asia. The India,
Middle East & Africa region delivered continued growth, with noteworthy performances seen in India and South Africa,
which also enjoyed supportive seasonal conditions. The Company continues to grow its market share in Latin America, led
by strong business growth in Brazil, despite challenging weather in some parts which delayed the soybean planting season,
as well as solid performances in Chile, Peru, Colombia and Mexico.
The robust growth in the fourth quarter drove ADAMA to achieve record-high sales in 2020. The Company saw its strongest
growth over the year in the emerging markets of Latin America and the India, Middle East and Africa region, as well as in
APAC. Its performance was further bolstered by various acquisitions completed in 2020, including in Greece and Paraguay.
In US dollar terms, sales in the fourth quarter grew by 10% and by 3% in the full-year period, compared to the corresponding
periods last year, reflecting the impact of the generally weaker currencies, especially in the emerging market regions where
the Company is growing the fastest. The currency weakness constrained sales in US dollar terms by an estimated $71
million in the fourth quarter and by an estimated $293 million over the full year.
21
ADAMA Ltd. Annual Report 2020
(1) Operating revenues
Unit: RMB’000
2020 2019
Ratio of the Ratio of the
YoY +/-%
Amount operating Amount operating
revenue revenue
Total operating revenue 28,444,833 100% 27,563,239 100% 3.20%
Classified by industries
Manufacture of chemical raw materials
28,444,833 100% 27,563,239 100% 3.20%
and chemical products
Classified by products
Herbicides 11,763,783 41.4% 11,848,417 42.99% -0.7%
Fungicides 5,898,321 20.7% 5,189,971 18.83% 13.6%
Insecticides 8,095,679 28.5% 7,867,286 28.54% 2.9%
Ingredients and Intermediates (Formerly
2,687,050 9.4% 2,657,565 9.64% 1.1%
referred to as Non-Agro)
Classified by regions
Europe 7,155,152 25.2% 7,078,409 25.68% 1.1%
North America 5,333,514 18.8% 5,418,509 19.66% -1.6%
Latin America 7,460,282 26.2% 7,085,817 25.71% 5.3%
Asia-Pacific 4,533,778 15.9% 4,351,929 15.79% 4.2%
India, Middle East and Africa 3,962,107 13.9% 3,628,575 13.16% 9.2%
Unit: USD’000
2020 2019
Ratio of the Ratio of the
YoY +/-%
Amount operating Amount operating
revenue revenue
Total operating revenue 4,127,751 100% 3,996,773 100% 3.3%
Classified by industries
Manufacture of chemical raw materials
4,127,751 100% 3,996,773 100% 3.3%
and chemical products
Classified by products
Herbicides 1,707,193 41.4% 1,719,666 43.03% -0.7%
Fungicides 856,648 20.8% 751,752 18.81% 14.0%
Insecticides 1,174,463 28.4% 1,139,961 28.52% 3.0%
Ingredients and Intermediates (Non-Agro) 389,447 9.4% 385,394 9.64% 1.1%
Classified by regions
Europe 1,035,865 25.1% 1,030,551 25.78% 0.5%
North America 775,744 18.8% 785,519 19.65% -1.2%
Latin America 1,087,796 26.4% 1,021,819 25.57% 6.5%
Asia-Pacific 656,276 15.9% 632,542 15.83% 3.8%
India, Middle East and Africa 572,070 13.8% 526,342 13.17% 8.7%
Note: the sales split per 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.
Regional Performance Review
Europe: Sales grew by 10.7% in the fourth quarter and by 1.7% in the full-year period, in CER terms, compared with the
corresponding periods last year. The strong double-digit growth in the quarter was driven by good consumption of cereal
herbicides by farmers, which more than offset the lower insecticide applications on key crops such as oilseed rape, due to
weather challenges. Northern Europe benefited in the quarter from an early start to the 2021 season. The Company
22
ADAMA Ltd. Annual Report 2020
continued to deliver a pleasing performance in Greece, following its recent acquisition in the country.
The robust performance in the quarter saw the Company deliver positive growth in the region over the full year period,
driven by moderate volume growth which was partially offset by a somewhat softer pricing environment. The Company
continues to gain market share in key countries in the region, with strong performances over the full year in Germany,
Poland and Ukraine, as well as in Italy and France, despite an overall contraction of the market in the country.
During the quarter, the Company obtained multiple new registrations, including the Company’s self-produced prothiocon-
azole-based solution in the UK, a further milestone in the journey of this molecule that is expected to be a key contributor
to the Company’s future growth. the Company achieved the registration of TIMELINE FX, a cross-spectrum herbicide for
spring cereal, in Lithuania, penetrating an important segment in the region.
In US dollar terms, sales grew by 14.7% in the quarter and by 0.5% in the full-year period, compared to the corresponding
periods last year, reflecting the net impact of the relative strengthening of European currencies against the US dollar in the
quarter, contrasted with their relatively weaker levels over much of the full-year period.
North America: Sales grew by 14.7% in the fourth quarter but were lower by 0.9% in the full-year period, in CER terms,
compared with the corresponding periods last year. The robust business growth in the quarter saw the Company almost
fully overcome the severe weather-related challenges and COVID-19 impact seen earlier in the year. Sales of crop protec-
tion products in the US and Canada in the quarter benefited from strong demand, especially for fall burndown herbicides,
which more than offset a challenging season for cotton growers. The quarter also saw good momentum being generated
by the Company’s portfolio of recently launched products targeting the Spring 2021 season, among them the FullPageTM
rice cropping system, which enjoyed early demand from growers following the considerable increases in rice yields seen
in the 2020 season.
Continued growth of the Company’s Consumer and Professional Solutions business in the quarter brought a resilient finish
and a pleasing performance in what was a challenging year.
In US dollar terms, sales grew by 14.4% in the quarter but were lower by 1.2% in the full-year period, compared to the
corresponding periods last year, reflecting the moderate weakening of the Canadian Dollar seen in the first half of the year.
Latin America: grew by a robust 24.9% in the fourth quarter and by 29.9% in the full-year period, in CER terms, compared
to the corresponding periods last year, driven by significant volume growth in key countries and continued price increases
to partially compensate for the material weakening of the currencies in the region.
In Brazil, a strong performance in the quarter resulted in continued market share gain, despite experiencing unstable
weather which delayed soybean planting and reduced cotton acreage, as well as continued COVID-19-related challenges.
The Company also recorded strong growth in the quarter in Colombia and Chile, as well as in Peru and Paraguay, bolstered
by its recent acquisitions in those countries, and offsetting the impact of severe drought conditions in several countries in
the region, including Argentina. Over the full-year period, the Company delivered strong business growth in the region in
CER terms, driven by significant volume growth, most notably in Brazil as well as Mexico, Chile and Argentina, alongside
local currency price increases, mainly in Brazil.
During the quarter, the Company obtained more than a dozen new product registrations in the region, including ACROSS
broad spectrum fungicide, ARREMATE triple mode herbicide, both in Brazil, as well as MATTOK a differentiated combi-
nation fungicide and bio-stimulant, in Colombia and Honduras, and PLETHORA a unique and highly efficient combination
insecticide for key crops in Colombia.
In US dollar terms, sales in the region grew by 2.5% in the quarter and 6.5% in the full-year period, 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.
23
ADAMA Ltd. Annual Report 2020
Asia-Pacific: Sales grew by 12.9% in the quarter and by 5.4% in the full-year period, in CER terms, compared to the
corresponding periods last year.
In Asia-Pacific (outside of China), the Company delivered strong business growth across the region in the quarter, with
noteworthy performances seen in Australia and across South East Asia and Japan, benefiting from favorable weather
conditions. The strong growth in the quarter capped a pleasing performance over the full year period in this part of the
region, despite COVID-related challenges seen throughout the year. During the quarter, the Company launched a new
product in New Zealand, GOLTIX GOLD, featuring a unique formulation with reduced hazard profile and improved efficacy
for controlling weeds in beet crops.
In China, the Company recorded double-digit volume growth in the quarter, with strong sales of raw materials and inter-
mediates, albeit at lower prices due to increased supply generally from Chinese producers. In the full-year period, the
Company continued to deliver solid growth of its branded, formulated portfolio. The Company significantly enhanced its
commercial reach in China, by acquiring a majority stake in Dibai, Jiangsu Huifeng’s domestic commercial crop protection
business. This transaction is a significant milestone in the Company’s continuous commercial expansion in China, and will
significantly bolster the Company’s commercial activities, positioning and offering in this key strategic market. In addition,
the Company continues to work towards the Closing of the second phase of the transaction with Huifeng (the acquisition
of a majority stake in most of Huifeng’s manufacturing operations), which is currently expected to close during the second
quarter of 2021.
In US dollar terms, sales in the region grew by 16.8% in the fourth quarter by 3.8% in the full-year period, compared to the
corresponding periods last year, reflecting mainly the strengthening of the Chinese Renminbi and the Australian dollar
against the US dollar in the quarter, contrasted with the generally weaker currencies over the full-year period.
India, Middle East & Africa: Sales grew by 12.8% in the quarter and by 13.9% in the full-year period, in CER terms,
compared to the corresponding periods last year, driven by strong volume growth.
The growth in the region over the quarter was driven by strong performances in all key countries, notwithstanding the
ongoing COVID-19 restrictions, with noteworthy performances seen in India and South Africa, which benefited from favor-
able weather and cropping conditions. Turkey continued to grow in the quarter, despite experiencing a major earthquake
which temporarily suspended commerce in the country, and following challenges seen earlier in the year due to lower
demand for cotton as a result of the pandemic. The strong performance over the full year saw the Company take advantage
of the good monsoon season in India as well as positive seasonal conditions in South Africa, to drive significant volume-
led business growth across the region.
During the quarter, the Company launched multiple new products in India, including ZAMIR, a systemic and long-acting
fungicide in wheat, as well as FLAMBERGE, a bio-stimulant, strengthening its portfolio in this key segment.
In US dollar terms, sales in the region grew by 10.5% in the quarter and by 8.7% in the full-year period, 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.
24
ADAMA Ltd. Annual Report 2020
(2) List of the industries, products or regions exceed 10% of the operating revenues or operating
profits of the Company
√ Applicable □ Not applicable
Average Average Reason of
sales in Revenue Selling Price Selling Price YoY sales the Change
Region
volume (ton) (RMB’000) for H1 for H2 Change (regions
(RMB/ton) (RMB/ton) sales YOY)
Different
product mix in
Europe
H2 with lower
256,994 7,155,152 81.8 69.2 -15.4% selling price
North America 526,552 5,333,514 34.2 34.7 1.4%
Latin America 146,319 7,460,282 50.9 51.4 0.8%
Non Agro
segment
proportion in
H2 much
bigger,
Asia-Pacific
Average
selling price
of this
segment is
1,279,504 4,533,778 8.5 5.0 -41.3% lower
India, Middle
East and
Africa 319,974 3,962,107 48.5 48.5 -0.1%
Total 2,529,343 28,444,833 28.3 22.4 -21.0%
* Sales of crop protection products are directly influenced by the agricultural seasons, weather and crop cycles;
** Prices in RMB are based on average exchange rates for the relevant period
Whether the Company generates more than 10% revenue or net profit from its overseas business against the audited
annual revenue and net profit for the most recent accounting year
√ Applicable □ Not applicable
Overseas Business How it operates in Whether the tax policy measures it takes during
foreign markets influences the business the reporting period
overseas
The Group develops, No material influence The Group’s services or
purchases, manufactures exists. products are priced based
and markets its products on transfer pricing studies
through many companies conducted to reflect the
worldwide. As such, the market price that would
Group operates through have been determined for
Adama Solutions approximately 60 these services or products
subsidiaries, with each of were they to be provided to
the Group companies being non-group members. Such
independent and fulfilling a transfer prices are
different role and making a reviewed on a quarterly
different contribution to the basis.
Group's operations, and
25
ADAMA Ltd. Annual Report 2020
Overseas Business How it operates in Whether the tax policy measures it takes during
foreign markets influences the business the reporting period
overseas
being assessed according
to the tax laws in their
specific localities.
(3) Whether the Company’s revenue from sale of goods exceed the revenue from services
√ Yes □ No
Industries Items Units 2020 2019 YoY +/-%
Sales volume Ton 768,688 662,752 16.0%
Crop Protection Production Ton 491,925 405,518 21.3%
Inventory Ton 223,176 213,387 4.6%
Reasons for any over -30% YoY movement of the data above:
□ Applicable √ Not applicable
(4) Execution of the significant sales contracts signed by the Company up to the Reporting Period
□ Applicable √ Not applicable
(5) Composition of Operating Costs
Category of the industries
Unit: RMB’000
2020 2019
Industries Items Ratio of the Ratio of the YoY +/-%
Amount Amount
operating costs operating costs
Industry of Cost of
manufacturing chemical materials
16,740,996 83.4% 15,463,150 84.3% 8.3%
raw materials and (procurement
chemical products costs)
Industry of
manufacturing chemical
Labor cost 1,153,968 5.7% 1,105,014 5.9% 4.4%
raw materials and
chemical products
Industry of
manufacturing chemical Depreciation
669,414 3.3% 660,812 3.5% 1.3%
raw materials and expense
chemical products
Explanations:
China Relocation & Upgrade Program
The Company continues to progress on the relocation and upgrade of its production and environmental facilities at both its
26
ADAMA Ltd. Annual Report 2020
Jingzhou (Hubei Province) and Huai’An (Jiangsu Province) sites. Despite the temporary suspension of the Jingzhou site
at the outbreak of the COVID-19 pandemic in Q1 2020, and some delays due to severe flooding in the area a few months
later, the Company is expecting to start production at the new site in Jingzhou within the next few months. The first phase
of the Huai’An relocation is expected to be completed by the end of 2022.
In addition to the significant capital sums being invested in the Relocation & Upgrade program, the Company recorded
largely relocation-related costs within its Cost of Goods Sold of approximately RMB 174 million (USD 26 million) in the full-
year period compared with RMB 70 million (USD 10 million) in 2019. These charges include mainly (i) higher procurement
costs incurred as the Company continued to fulfill demand for its products, in order to protect its market position, through
replacement sourcing at significantly higher costs from third-party suppliers, and (ii) non-cash accelerated depreciation
charges related to terminated facilities at the old sites.
Excluding the impact of the abovementioned, largely non-recurring and relocation-related costs, over the full-year period,
the significant currency weakness constrained gross profit by an estimated USD 247 million, outweighing the Company’s
robust business growth and lower procurement costs, resulting in lower gross profit when compared to the same period
last year.
(6) Has the consolidated scope changed during the Reporting Period
√ Yes □ No
During the reporting period, the Group executed a number of acquisitions:
1. Alfa Agricultural Supplies Commercial and Industrial S.A. - acquired the remaining 51% holdings
2. FNV S.A - acquired 51% of outstanding share
3. Shanghai Dibai Plant Protection Co., Ltd. - acquired 51% of outstanding shares
(7) List of significant changes or adjustment of the industries, products or services of the
Company during the reporting period
□ Applicable √ Not applicable
(8) List of major trade debtors and major suppliers
List of the major trade debtors of the Company
Total sales to top 5 customers (RMB’000) 1,705,367
Ratio of total sales to top 5 customers to annual total sales 6.00%
Ratio of total sales to related parties (within top 5 customers) to annual total sales 2.49%
Information of the Top 5 Customers
Customers Sales Amount Ratio of the sales to this customer to
(RMB’000) the annual total sales
1 A 670,231 2.36%
2 B 281,034 0.99%
3 C 280,336 0.99%
4 D 240,558 0.85%
5 E 233,208 0.82%
Aggregated 1,705,367 6.00%
27
ADAMA Ltd. Annual Report 2020
Notes of other situation of the major customers
□ Applicable √ Not applicable
List of the major suppliers of the Company
Total purchase to top 5 suppliers (RMB’000) 2,900,911
Ratio of total purchase to top 5 suppliers to annual total purchase 17.7%
Ratio of total purchase from related parties (within top 5 suppliers) to annual total purchase 6.55%
Information of the Top 5 Suppliers
Suppliers Purchase Amount Ratio of the purchases to this supplier
(RMB’000) to the annual total sales
1 A 1,075,518 6.55%
2 B 921,307 5.61%
3 C 357,237 2.17%
4 D 303,871 1.85%
5 E 242,978 1.48%
Aggregated 2,900,911 17.66%
Notes of the other situation of the major suppliers
□ Applicable √ Not applicable
3. Expenses
In RMB ’000 In USD ’000
2020 2019 YoY +/-% 2020 2019 YoY +/-%
Sales and Marketing expenses 4,945,345 4,873,256 1.48% 717,453 707,156 1.46%
General and Administrative expenses 1,043,708 1,562,317 -33.19% 151,517 225,707 -32.87%
R&D expenses 478,778 436,325 9.73% 70,058 63,230 10.80%
Financial (income) / expenses 1,847,189 1,665,885 10.88% 269,341 242,331 11.15%
Tax expenses 222,459 174,531 27.46% 31,552 25,547 23.50%
Explanations for the change of above expenses:
Note: As noted above and since functional currency of main overseas subsidiaries is the USD, and the Company’s
management review of the Company’s performance is based on the USD results, following explanations and analysis are
based on USD-denominated numbers.
(1) Sales and Marketing expenses
In recent years, the Company conducted various corporate development activities, including mergers and acquisitions,
which resulted in the inclusion within its sales and marketing expenses of various one-time or non-cash or non-operational
items affecting the Company’s reported numbers, mainly as follows:
Amortization of Legacy Purchase Price Allocation (PPA) of 2011 acquisition of Solutions (non-cash): Under
ASBE, since the first combined reporting for Q3 2017, the Company has inherited the historical “legacy” amortization
28
ADAMA Ltd. Annual Report 2020
charge that ChemChina was previously 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 have been completed by the end of 2020. Its reported
financial impact in the full year of 2020 is RMB 255 million (USD 37 million), net of tax.
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 were of the same nature and with the same net economic value as those
divested, the Divestment and Transfer transactions had no net impact on the underlying economic performance of
the Company. These additional amortization charges will continue until 2032 but at a reducing rate, yet will still be
at a meaningful level until 2028. Its reported financial impact in the full year of 2020 is RMB 211 million (USD 31
million), while in 2021 it is expected to be further reduced to approximately RMB 151 million (USD 23 million)
Amortization of acquisition-related PPA (non-cash) and other acquisition-related costs: Mainly the non-cash
amortization of intangible assets created in the course of acquisitions as well as other M&A-related costs, and has
no impact on the ongoing performance of the companies acquired. Its reported financial impact in the full year of
2020 is RMB 64 million (USD 9 million), net of tax.
The Company continues to maintain strong operating cost discipline while accommodating significantly higher sales and
the inclusion of acquisitions. Sales and marketing expenses in the 2020 periods benefited from the global currency weak-
ness against the US dollar when compared to prior periods, and were further aided by the impact of COVID-19 restrictions
that caused savings on certain expenses.
(2) General and Administrative expenses
The Company is in the process of its multi-year Upgrade & Relocation program in China, where its production assets
located in the old production sites in Jingzhou and Huai’An are being relocated to the new sites, both in 2020 and in the
coming years. Related to that, the Company recorded in the general and administrative expenses and idleness cost of
RMB 134 million (USD 19 million) mainly in Jingzhou site for its temporary suspensions mostly during Q1 2020 at the
outbreak of COVID-19 in Hubei Province compared with RMB 342 million (USD 50 million) in 2019 due to environmental
inspections carried out at that time). As part of the relocation process, Jingzhou and Huai’An sites began to execute a
reduction plan to reduce the number of employees related to which. The fourth quarter of 2019 included one-time
severance expenses of RMB 243 (USD 35 million).
This largely explained for the big changes of the general and administrative expenses between 2020 and 2019.
In addition, the Company recorded a provision for an early retirement plan of employees at the Company’s Israeli
manufacturing facilities. Its financial impact in the FY is RMB 73 million (USD 11 million), most of which was incurred during
Q1 2020.
Despite the above, the Company continues to maintain strong operating cost discipline. General and administrative
expenses in the 2020 periods benefited from the global currency weakness against the US dollar when compared to prior
periods, and were further aided by the impact of COVID-19 restrictions that caused savings on certain expenses.
(3) Financial expenses
“Financial Expenses” alone mainly reflect interest payments on corporate bonds and bank loans as well as foreign
exchange gains/losses on the bonds and other monetary assets and liabilities before the Company carries out any
hedging. The impact of Financial Expenses (before hedging) is RMB 1,847 million (USD 269 million) for the full year
of 2020 compared with RMB 1,666 million (USD 242 million) for 2019.
Given the global nature of its operational activities and the composition of its assets and liabilities, the Company, in
the ordinary course of its business, uses foreign currency derivatives (forwards and options) to hedge the cash flow
risks associated with existing monetary assets and liabilities that may be affected by exchange rate fluctuations. Net
29
ADAMA Ltd. Annual Report 2020
gains/losses from hedging of those positions, are recorded in “Gains/Losses from Changes in Fair Value”, and are
then transferred to “Investment Income” upon realization. The combined impact of the hedging transactions on
Gains/Losses from Changes in Fair Value and Investment Income, excluding capital gain/loss from realization of com-
panies, is a net gain of RMB 681 million (USD 100 million) in the full year of 2020 compared with RMB 574 million
(USD 84 million) for 2019.
The aggregate of Financial Expenses, Gains/Losses from Changes in Fair Value and Investment Income, which more
comprehensively reflects the financial expenses of the Company in supporting its main business and protecting its
monetary assets/liabilities, amounts to RMB 1,166 million (USD 169 million) in the full year of 2020, compared with
RMB 1,092 million (USD 158 million) for 2019. The higher financial expenses in the full year period were largely due
to the effect on balance sheet positions of the strengthening of the RMB when compared to 2019, alongside higher
financing costs on the NIS-denominated, CPI-linked bonds publicly traded at Tel Aviv Stock Exchange due to the
expansion of the series in mid-2020, which were partially offset by a lower CPI in Israel over the year.
In addition, Investment Income also mainly includes an amount of RMB 16 million (USD 2 million) in respect of equity
accounted investees in the full year of 2020 compared with RMB 20 million (USD 3 million) in the corresponding period
in 2019 and RMB 59 million (USD 9 million) recognized as capital gain due to gaining control over an equity investee,
bringing the total Gains/Losses from Changes in Fair Value and Investment Income to RMB 747 million (USD 110
million) in the full year of 2020 compared with expense of RMB 594 million (USD 87 million) for 2019.
(4) Tax Expenses
The Company reported net tax expenses of RMB 222 million (USD 32 million) for the full year of 2020 compared to
RMB 175 million (USD 26 million) in 2019. It’s largely due to the impact of the significant weakening of the Brazilian
Real against the US dollar, which resulted in an increase in non-cash tax expenses.
4. R&D Investment
√ Applicable □ Not applicable
In order to capitalize on future opportunities in the agrochemical market, the Group has intensified its efforts in recent years
to develop a leading pipeline of crop protection products aimed at providing value-added solutions to farmers around the
world and build significant positions in a number of strategic market segments, based on dozens of AIs that are expected
to come off-patent in the coming years, under a strategic plan named “Core Leap” adopted by the Company. These newly
off-patent AIs will be developed into new differentiated mixtures and formulations, in combination with new formulation and
delivery technologies that provide more efficient ways to deliver the products into the plants, thereby creating truly unique
and differentiated, value-added solutions to farmers. Since the strategy was launched, the Company has already added
more than 100 product concepts to its pipeline, some of which have already been launched and are driving growth in key
markets. In this way, the Group strives to achieve a double competitive advantage - to be the first to market launching new
products after the expiry of the patent on the AI, and to capitalize on cost leadership through increased backward integration
through the Group’s global operations capabilities.
30
ADAMA Ltd. Annual Report 2020
List of the R&D investment of the Group
2020 2019 Change (%)
R&D headcount personnel (person) 259 269 -3.72%
R&D headcount as % of total headcount 3.34% 3.47% -0.13%
R&D Investment (RMB’000) 478,778 437,802 9.36%
Ratio of R&D investment to operating income 1.68% 1.59% 0.09%
Amount of capitalized R&D investment (RMB’000) - - -
Ratio of capitalized R&D investment to total R&D investment - - -
Reason of notable changes over the last year in the ratio of total R&D investment amount to operating income
□ Applicable√ Not applicable
Reason of notable change in the ratio of R&D investment capitalization and its reasonable explanation
□ Applicable √ Not applicable
5. Cash flow
Unit: RMB’000
Item 2020 2019 YoY +/-%
Subtotal of cash inflows from operating activities 27,729,885 25,613,708 8.26%
Subtotal of cash outflows from operating activities 25,706,870 24,770,221 3.78%
Net cash flows from operating activities 2,023,015 843,487 139.84%
Subtotal of cash inflows from investing activities 110,787 263,924 -58.02%
Subtotal of cash outflows from investing activities 2,442,755 2,942,447 -16.98%
Net cash flows from investing activities -2,331,968 -2,678,523 -12.94%
Subtotal of cash inflows from financing activities 4,685,824 3,212,045 45.88%
Subtotal of cash outflows from financing activities 4,542,773 3,424,071 32.67%
Net cash flows from financing activities 143,051 -212,026 -167.47%
Net increase in cash and cash equivalents -484,836 -2,026,289 -76.07%
Notes of the major effects on the YoY significant changes occurred of the data above
√ Applicable □ Not applicable
Cash flow from Operating Activities: The stronger operating cash flow generated in the full-year period reflects the
stronger operating income generated this year, alongside a more muted increase in working capital levels this year
compared to the marked increase seen over the course of the 2019 period.
Cash flow from Investing Activities: The lower level of cash used in investing activities over the 2020 full-year period
reflects the relatively higher spend in 2019 due to the larger acquisitions made in that period, although 2020 did see an
increase in investments in fixed assets, predominantly related to the relocations in China.
Cash flow from Financing Activities: Net cash flow from financing activities improved, primarily due to the RMB 693
million (USD 100 million) expansion of the NIS-denominated, CPI-linked bonds of Adama Solutions in May 2020, the lower
dividend paid in 2020 compared with the prior year, as well as the fact that in 2019 the Company acquired equity stakes in
related parties (reflected in financing activities and not investing activities since the acquired stakes were of related parties).
These were partially offset by a lower level of bank loans in 2020 compared to the prior year, as well as the first of the
annual repayments in November 2020 of approximately RMB 530 million (USD 80 million) in principal on the NIS-
denominated, CPI-linked bonds of Adama Solutions, and the repurchase of approximately RMB 60 million (USD 9 million)
of the Company’s B-shares in Q4 2020.
Notes to the reason of the significant differences between the net cash flow from the operating activities and the net profits
31
ADAMA Ltd. Annual Report 2020
of 2020 of the Company during the Reporting Period
√ Applicable □ Not applicable
Please refer to the notes provided above under this item.
III. Analysis of the non-core business
√ Applicable □ Not applicable
Unit: RMB’000
Amount % of total profit Explanation Recurrence
206,502 35.90% Mainly from realization of hedging
derivatives (Refer to explanation
to Financial expenses above) as
Investment income well as 59 million as a result of No
change in consolidation scope of
an equity investee as the group
gained control.
540,698 94.00% Mainly foreign currency effect on
financial assets and liabilities
Gain/loss from change of FV No
(refer to explanation to Financial
expenses above).
Impairment of asset -164,154 -28.54% No
Gain from disposal of assets 10,750 1.87% No
Non-operating income 77,025 13.39% No
Non-operating loss 39,847 6.93% No
IV. List of the assets and liabilities
1. List of significant changes of assets
Unit: RMB’000
As at 31 Dec. 2020 As at 31 Dec. 2019 Explanation
%
Item % of total % of total for any major
Amount Amount change
assets assets change
Cash at bank and on 3,863,886 8.26%
4,348,588 9.60% -1.34%
hand
Accounts receivable 8,766,869 18.73% 8,004,157 17.67% 1.06%
Inventories 10,338,273 22.09% 9,932,654 21.93% 0.16%
Investment property 4,364 0.01% 3,771 0.01% 0%
Long term equity 14,081 0.03%
133,098 0.29% -0.26%
investments
Fixed assets 6,576,116 14.05% 6,939,610 15.32% -1.27%
Construction in 1,405,328 3.00%
788,386 1.74% 1.26%
progress
Short-term loans 1,205,498 2.58% 2,009,882 4.44% -1.86%
Long-term loans 2,387,628 5.10% 927,159 2.05% 3.05%
32
ADAMA Ltd. Annual Report 2020
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB’000
Fair value Fair value
Opening change change Impairment
Item Purchase Sale Closing
balance recognized in recognized in recognized
balance
P&L equity
Financial assets
1. Financial assets
measured at FVTPL
29,510 - - - - (28,257) 1,253
(excluding derivative
financial assets)
2. Derivative financial
508,705 1,439,034 (201,874) - 337,400 (522,484) 1,560,781
assets
3. Other equity
155,062 - (2,862) - - - 152,200
investments
Total financial assets 693,277 1,439,034 (204,736) - 337,400 (550,741) 1,714,234
Others 126,812 16,889 - - 30,535 - 174,236
Total of above 820,089 1,455,923 (204,736) - 367,935 (550,741) 1,888,470
Financial liabilities 717,057 746,555 - - - - 1,463,612
Significant changes in the measurement attributes of the main assets in the Reporting Period
□ Applicable √ Not applicable
3. Restriction / limitation on asset rights
At the end of the Reporting Period, restricted assets including Company’s bank balance of RMB 28,815,000 as cash
deposit for bills receivable; and other non-current assets of RMB 101,619,000 as deposit for asset securitization and legal
suits.
V. List of the investment
1. Overall condition
√ Applicable □ Not applicable
Investment during the Investment during the Same +/-% YoY
Reporting Period (RMB'000) Period Last Year (RMB'000)
52,081,331 36,425,306 43%
2. List of the significant equity investment during the Reporting Period
□ Applicable √ Not applicable
3. List of the significant non-equity investments executed during the Reporting Period
□ Applicable √ Not applicable
4. Investment on the financial assets
(1) List investments in securities
□ Applicable √ Not applicable
No such investments were executed during the Reporting Period.
33
ADAMA Ltd. Annual Report 2020
(2) Investment in derivative financial instruments
√ Applicable □ Not applicable
Unit: RMB’000
The party Relation Related Type Initial Starting Expiring Investment Amount Amount Impairment Investment Percentage Gain/loss
that with the party investment date date amount at purchased sold accrued (if amount at of during the
operates Company transaction amount beginning during the during the any) end of the investment Reporting
the or not? of the Reporting Reporting period amount Period
investment period Period Period divided by
net asset at
end of the
period
Banks No No Option 2,078,908 04/07/2020 14/12/2020 2,078,908 4,937,231 -5,021,901 No 1,994,238 9.08% 207,744
Banks No No Forward 19,122,640 22/04/2020 19/01/2021 19,122,640 47,144,100 -45,469,816 No 20,796,924 94.69% 484,735
Total 21,201,548 -- -- 21,201,548 52,081,331 -50,491,717 No 22,791,162 103.77% 692,479
Source of fund for the investment Internal.
Litigation-related situations (if applicable) N/A
Date of disclosure of Board approval (if
December 30, 2017
any)
Date of disclosure of Shareholders’
N/A
approval (if any)
The aforesaid refers to short term hedging currency transactions made with banks.
Risk and control analysis for the Reporting
The Group’s transactions are not traded in the market. The Transactions are between the applicable company in the Group
Period (including but not limited to market
and the applicable bank until the expiration date of the transaction, therefore no market risk is involved.
risk, liquidity risk, credit risk, operational
Regarding credit and liquidity risk, the Group is working with large and substantial banks only and with some of them the
risk, legal risk, etc.)
Group has ISDA agreements.
34
ADAMA Ltd. Annual Report 2020
As to operational risk, the Group is working with relevant software, which is its back office for all transactions.
No legal risk is involved.
The actions taken in order to further reduce risks are:
The relevant subsidiaries have specific guidelines, under the Group’s policy, which were approved by the
subsidiaries' financial statements committee of the board, which specifies, inter alia, the hedging policy, the persons
that have the authorization to deal with hedging, the tools, ranges etc. The only subsidiary that has hedging positions
in the Group in the period was Solutions and its subsidiaries.
The relevant subsidiaries apply management designed procedures and controls, which among other things, monitor
the working process and the controls of the hedging transactions and are quarterly reviewed and annually audited.
The controllers of the relevant subsidiaries are involved in the process and are monitoring the hedging accounting
treatment.
Every 2-3 years the internal audit of the relevant subsidiaries’ department is auditing the entire procedure.
The aforesaid refers to short time hedging currency transactions made by the relevant subsidiary with banks.
Market price or fair value change of
Segregation of duties as follows:
investments during the Reporting Period.
For the fair value evaluation, the relevant subsidiary is usually using external experts. The relevant subsidiary hedges
Specific methodology and assumptions
currencies only; the relevant transactions are simple (Options and forwards) for short terms. For fair value methodology see
should be disclosed in the analysis of fair
section XII of this report, note IX. Fair Value. The exchange rates are provided by the accounting department of the relevant
value of the investments
subsidiary and all other parameters are provided by the experts.
Explanation for any significant changes in
accounting policies and principles, N/A
compared with last reporting period
The derivative investments carried by the Company are for hedging and narrowing down the risk of market fluctuations. The
Independent Directors’ opinion on the investments respond to the Company’s routine business demands and are in accordance with the relevant laws and regulations.
investment in derivative financial Additionally, the Company has adopted Currency Risk Hedging Policy to strengthen the risk management and control which
instruments and related risk controls benefit the Company’s ability to protect against market risk. The derivative investments do not harm the interests of the Company
and its shareholders.
35
ADAMA Ltd. Annual Report 2020
5. Use of raised funds
√ Applicable □ Not applicable
(1) Overall Situation of Use of the Funds Raised
√ Applicable □ Not applicable
RMB’0000
Proportion of
Total Total Amount of
Accumulated
Amount Fund with Accumulated Usage and
Amount of Fund Total Amount of Funds
Year of Type of Total Amount Used during Accumulated Purpose Being Amount of Fund Destination of
with Purpose Amount Not Being Idle for
Raising Raising Raised the Amount Used Changed during with Purpose Funds Not
Being Changed Used Yet over Two Years
Reporting the Reporting Being Changed Used Yet
against Total
Period Period
Amount Raised
Acquisition of
Non-public
51% Dibai and 62,062
2017 offering of 155,999.99 27,600 99,337 89,373(Note) 129,381 83% 62,062
51% Kelinong
shares
(Note)
Total -- 155,999.99 27,600 99,337 89,373(Note) 129,381 83% 62,062 -- 62,062
General Summary of Use of Raised Funds
The Company received the raised funds on December 27, 2017. More details of the usage of the raised funds can be founded in the annual Special Reports on the Deposit and
Actual Usage of the Raised Funds disclosed by the Company on March 29, 2018, March 21, 2019, April 28, 2020 and March 31 2021; Special Reports on the Deposit and Actual
Usage of the Raised Funds in the First-Half Year disclosed by the Company on August 28, 2018, August 22, 2019 and August 21, 2020.
Note: On May 20, 2020, the Annual Shareholders Meeting approved a Proposal on the Termination of the Use of Raised Funds for Certain Designated Projects included in the Project
of Share Issuance for Assets Purchase and Supporting Finance. The Company will no longer use of the raised funds for the following previously designated projects: Projects of
product development and registration, and fixed-asset Investment of ADAMA Agricultural Solutions Ltd. (the “Solutions”).
On October 28, 2020, the 27th meeting of the 8th session of the Board of Directors and the 14th meeting of the 8th session of the Board of Supervisors approved a Proposal on the
Use of the Raised Funds for the Acquisition of the 51% Equity Stake in Jiangsu Kelinong Agrochemical Co., Ltd. as well as that in Shanghai Dibai Plant Protection Co., Ltd.. In order
to efficiently use the raised funds, the Company plans to use the balance of the raised funds, in the amount of approximately RMB 893,731,302.67 (balance as at 30 September
2020, including interest income and the actual amount is subject to the bank settlement balance on the date of transfer ), and which are no longer designated for previously approved
projects according to the resolutions of the Company’s Board and Shareholders meeting held on April 27, 2020 and May 20, 2020 respectively, for the payment for the acquisitions
of a 51% equity stake in Shanghai Dibai Plant Protection Co., LTD. (“Dibai”) and a 51% equity stake in Jiangsu Kelinong Agrochemical Co., Ltd. (“Kelinong”) from Jiangsu Huifeng
36
ADAMA Ltd. Annual Report 2020
Agrochemical Co., Ltd. (“Huifeng”). This proposal had been approved by the 4th Interim Shareholders Meeting on 16 November, 2020..
(2) The Status of Designated Projects of Raised Funds
√ Applicable □ Not applicable
RMB’0000
Any Accumulated Investment Date by
Total Amount Benefits Any
Project Invested Progress by which the Expected
Total Investment Invested Realized Material
Designated Projects and Investment of Change Amount by the the End of Project Can Benefits
Investment after during the during the Change to
Extra Funds Raised (Including End of the the Reporting be Put into Reached
Committed Adjustment Reporting Reporting Project
Partial Reporting Period Use as or Not
(1) Period Period Feasibility
Change) Period (2) (3)＝(2)/(1) Planned
Designated Projects
Not Not
Acquisition of Anpon No - 40,008 0 40,008 100% 2019 No
applicable applicable
Acquisition of 51% Dibai and 51% Not Not Not
No - 89,373 27,600 27,600 31% No
Kelinong applicable applicable applicable
Not Not Not
Huai’an Pesticide Formulation Center Yes 24,980 - 0 0 0.00% Yes
applicable applicable applicable
Not Not
Project development and registration Yes 93,507 13,103 0 13,103 100% Terminated Yes
applicable applicable
Not Not
Fixed-asset Investment of ADAMA Yes 66,204 5,913 0 5,913 100% Terminated Yes
applicable applicable
Fees for the intermediary agencies and Not Not Not
No 13,600 12,713 0 12,713 100%
transaction taxes applicable applicable applicable
198,291
Sub-total of Designated Projects -- 161,110 27,600 99,337 -- -- -- --
(Note 1)
Investment of Extra Funds Raised
Not Applicable
1 Construction of Huai’an Pesticide Formulation Center
How and why the planned progress or
Since Adama Pesticide (Jiangsu) Co., Ltd., a subsidiary company of the third-tier subsidiary of Solutions, is the entity to implement the
expected income is not met (per
construction project of Huai’an Pesticide Formulation Center, the Company needs to increase the capital of Solutions first, and then
project)
increase the capital of the subsidiaries by Solutions. The time and process required for the relevant approval process, such as funds entry
37
ADAMA Ltd. Annual Report 2020
Any Accumulated Investment Date by
Total Amount Benefits Any
Project Invested Progress by which the Expected
Total Investment Invested Realized Material
Designated Projects and Investment of Change Amount by the the End of Project Can Benefits
Investment after during the during the Change to
Extra Funds Raised (Including End of the the Reporting be Put into Reached
Committed Adjustment Reporting Reporting Project
Partial Reporting Period Use as or Not
(1) Period Period Feasibility
Change) Period (2) (3)＝(2)/(1) Planned
Designated Projects
and exist, is complicated. In order to avoid delays of the project, the Company invested its own capital on the project. Following approval
of the 2018 Annual Shareholders Meeting, this project had been replaced by the Anpon acquisition.
2. Development and Registration
Since ADAMA Makhteshim Ltd., ADAMA Agan Ltd., and ADAMA Brazil S/A, the subsidiaries of Solutions, are the entities to implement the
projects of products development and registration, this project also involves approval procedures for cross boarder investments. In order
to avoid delays of this project, the Company invested its own capital in the project.
3. ADAMA Fixed-Assets Investment
(1) Capacity Expansion Project for Pesticide Product A
Since Product A is the Company’s newly developed product, it takes time to develop the market. In view of this, the management made
changes to the time schedule of original expansion plan and suspended the investment in the second phase after careful deliberation.
While adjusting the capacity expansion of the first stage in accordance with the needs of the market, the process is optimized to further
enhance the product’s market advantage. Based on the changes in the market environment and in order to reduce the investment risk of
raised funds, the Company decided to complete its replacement of the raised funds in 2017 (RMB 6.84 million). The follow-up investment
of this project will be carried out by the Company with its own capital.
(2) Equipment Investment for Fungicide product B for Brazilian market & Project on Capacity Expansion Investment for New Fragrance
Ingredient Product C
The above two projects started in 2017. Both projects involve cross-border investment by the Company, while the local approval process
for cross-border investment might take some time. In order to meet the increasing demand of the market for Fungicide product B and New
Fragrance Ingredient Product C as soon as possible, the Company decided that its overseas subsidiaries shall be responsible for meeting
project investment needs through their own funds and local financing. The fungicide project for Brazilian market was carried out in
accordance with the original investment plan and officially delivered for use in January 2020, and the fragrance ingredient product project
has been completed and delivered for use in May 2020.
(3) Investment of the Equipment of Liquid Product Packaging
38
ADAMA Ltd. Annual Report 2020
Any Accumulated Investment Date by
Total Amount Benefits Any
Project Invested Progress by which the Expected
Total Investment Invested Realized Material
Designated Projects and Investment of Change Amount by the the End of Project Can Benefits
Investment after during the during the Change to
Extra Funds Raised (Including End of the the Reporting be Put into Reached
Committed Adjustment Reporting Reporting Project
Partial Reporting Period Use as or Not
(1) Period Period Feasibility
Change) Period (2) (3)＝(2)/(1) Planned
Designated Projects
The project aims to increase liquid packaging capacity to cope with expected future incremental demand and make inventory management
more flexible and effective. However, due to the continuous climate change in Europe and North America in the past two years, there has
been some changes in the incremental demand of the market. Based on the principle of prudence, the Company postponed the investment
progress of the project and terminated the use of raised funds on this project.
(4) Investment for the Relocation of Be’er Sheva Plant and Its Integration with Neot-Hovav Plant in Israel
The purpose of this project is to improve the overall production efficiency and product quality through the integration and optimization of
the two plants in production and operation. Since the integration of the plants involves a wide range, it will take a long time to carry out
master planning procedures in Israel. At present, the project is in the planning and design stage. The Company believes that there will be
some differences in the implementation time of the project and the schedule of use of raised funds. Therefore, the Company terminated
the use of raised funds on this project.
The proposal on terminating the above projects has been approved by the shareholders of the Company, on May 20, 2020. The Company
will no longer use the raised funds for the following previously designated projects: Projects of product development and registration and
fixed-asset Investment of Solutions.
On October 28, 2020, the 27th meeting of the 8th session of the Board of Directors and the 14th meeting of the 8th session of the Board
of Supervisors approved a Proposal on the Use of the Raised Funds for the Acquisition of the 51% Equity Stake in Jiangsu Kelinong
Agrochemical Co., Ltd. as well as that in Shanghai Dibai Plant Protection Co., Ltd.. In order to efficiently use the raised funds, the Company
plans to use the balance of the raised funds, in the amount of approximately RMB 893,731,302.67 (balance as at 30 September 2020,
including interest income and the actual amount is subject to the bank settlement balance on the date of transfer), and which are no longer
designated for previously approved projects according to the resolutions of the Company’s Board and Shareholders meeting held on April
27, 2020 and May 20, 2020 respectively, for the payment for the acquisitions of a 51% equity stake in Dibai and a 51% equity stake in
Kelinong from Huifeng. This proposal had been approved by the 4th Interim Shareholders Meeting on November 16, 2020. As of December
31, 2020, the Company has paid RMB 276 Million and already obtained 51% equity interests in Dibai and has completed corresponding
procedures with competent administration for market regulation on the 51% Dibai Transaction..
39
ADAMA Ltd. Annual Report 2020
Any Accumulated Investment Date by
Total Amount Benefits Any
Project Invested Progress by which the Expected
Total Investment Invested Realized Material
Designated Projects and Investment of Change Amount by the the End of Project Can Benefits
Investment after during the during the Change to
Extra Funds Raised (Including End of the the Reporting be Put into Reached
Committed Adjustment Reporting Reporting Project
Partial Reporting Period Use as or Not
(1) Period Period Feasibility
Change) Period (2) (3)＝(2)/(1) Planned
Designated Projects
Explanation on material change to
Please see the above the reasons why planned progress is not met.
project feasibility
Amount, purpose of use and progress
Not applicable
of extra funds raised
Change of location of designated
Not applicable
projects
Adjustment to way of execution of
Not applicable
designated projects
Applicable; The fifth meeting of the 8th session of the Board of Directors approved the utilization of RMB 276,530,000 of the Raised Funds
Advance investment in designated for replacing capital previously invested in the Designated Projects on June 25, 2018. The Company completed the replacement in 2018.
projects and replacement of funds Please refer to the “Announcement on Utilization of Part of the Raised Funds for Replacing Capital Previously Invested in the Designated
Projects” published on June 26, 2018 (announcement number 2018-32).
Temporary supplement to working
Not applicable
capital with idle raised funds
Amount of surplus funds out of
Not applicable
projects and causes
Usage and destination of funds that The remaining unused raised funds and interest will continue to be deposited in the corresponding raised funds account. The Company
have not been used will continue to invest in the acquisition of 51% of Dibai and 51% of Kelinong.
Problems or other issues in the use
Not applicable
raised funds and disclosure
40
ADAMA Ltd. Annual Report 2020
Note 1: The Company intends to raise funds of no more than 198,291 RMB’0000 in the supporting finance program, while the actual funds raised was 155,999.99 RMB’0000 on
December 27, 2017.
(3) Change to the Designated Projects of Raised Funds
√ Applicable □ Not applicable
Unit: RMB ’0000
Accumulated
Date of
Total investment Investment Realized Whether Whether the
Investment projects
Original committed progress as benefits of the feasibility of the
amount for amount as at the reaching
New Committed Project Committed investmen at the end of the expected project has
the current end of the intended
Projects t amount period (%) current benefits are changed
period useable
(1) current period (3) = (2)/ (1) period achieved significantly
condition
(2)
Huai’an pesticide
formulation center
Acquisition of Anpon
project 40,008 0 40,008 100% 2019 N/A N/A No
ADAMA fixed asset
investment project
Product
Acquisition of 51% Dibai and
development and 89,373 27,600 27,600 31% N/A N/A N/A N/A
51% Kelinong
registration project
Total - 129,381 27,600 67,608 - - - - -
1. Project of the Construction of Huai’an Pesticide Formulation Center
Since Adama Pesticide (Jiangsu) Co., Ltd., a subsidiary company of the third-tier subsidiary of Solutions, is the entity to implement the
construction project of Huai’an Pesticide Formulation Center, the Company needs to increase the capital of Solutions first, and then
increase the capital of the subsidiaries by Solutions. The time and process required for the relevant approval process, such as funds entry
The reason for changes, and exist, is complicated. In order to avoid delays of the project, the Company invested its own capital into the project.
decision-making procedures, 2. Fixed Assets Investment-Product A 600t/a
and disclosure of information The project also needs to be carried out through the Company's capital increase for its subsidiaries, involving the relevant approval
process for cross-border investment, which takes a long time. Product A is an innovative product. The market needs to accept innovative
products for a certain period. Additionally, due to the extreme weather in the European market, the project has been delayed. Therefore,
the Company replaced this original designated project.
41
ADAMA Ltd. Annual Report 2020
Accumulated
Date of
Total investment Investment Realized Whether Whether the
Investment projects
Original committed progress as benefits of the feasibility of the
amount for amount as at the reaching
New Committed Project Committed investmen at the end of the expected project has
the current end of the intended
Projects t amount period (%) current benefits are changed
period useable
(1) current period (3) = (2)/ (1) period achieved significantly
condition
(2)
Decision-making Procedures: The matter on change of fund use was approved by the 12th Meeting of the 8th BOD and 2018 Annual
Shareholder meeting. The Company’s independent directors, the Board of Supervisors and the agency for continuous supervision have
provided clear consent on this matter.
Information Disclosure: Please refer to the Announcement on the Change of Certain Designated Projects disclosed on March 21 st, 2019 at
www.cninfo.com.cn
Acquisition of 51% Dibai and 51% Kelinong
On May 20, 2020, the Company's Annual Shareholding Meeting approved a Proposal on Terminating the Use of Raised Funds on Certain
Designated Projects Included in the Project of Share Issuance for Assets Purchase and Supporting Finance. The Company plans to stop using
the raised funds on the projects of products development and registration, and fixed-asset Investment of ADAMA. After the termination of the
use of the raised funds for the certain designated projects, the remaining unused raised funds (including the resulting interest) will continue to
be deposited in the corresponding raised funds account. The Company will actively deliberate on new investment projects which the remaining
raised funds can be used for. Under the premises of ensuring the good market prospects of new investment projects and being able to
effectively manage investment risks, the Company will perform the corresponding approval procedures for use of the remaining raised funds
in accordance with relevant laws and regulations.
Decision-making procedure:
On October 28, 2020, the 27th meeting of the 8th session of the Board of Directors and the 14th meeting of the 8th session of the Board of
Supervisors approved a Proposal on the Use of the Raised Funds for the Acquisition of the 51% Equity Stake in Jiangsu Kelinong Agrochemical
Co., Ltd. as well as that in Shanghai Dibai Plant Protection Co., Ltd.. In order to efficiently use the raised funds, the Company plans to use the
balance of the raised funds, in the amount of approximately RMB 893,731,302.67 (balance as at 30 September 2020, including interest income
and the actual amount is subject to the bank settlement balance on the date of transfer ), and which are no longer designated for previously
approved projects according to the resolutions of the Company’s Shareholders meeting held on May 20, 2020, for the payment for the
acquisitions of a 51% equity stake in Dibai and a 51% equity stake in Kelinong from Huifeng. This proposal had been approved by the 4th
Interim Shareholders Meeting on November 16, 2020.
42
ADAMA Ltd. Annual Report 2020
Accumulated
Date of
Total investment Investment Realized Whether Whether the
Investment projects
Original committed progress as benefits of the feasibility of the
amount for amount as at the reaching
New Committed Project Committed investmen at the end of the expected project has
the current end of the intended
Projects t amount period (%) current benefits are changed
period useable
(1) current period (3) = (2)/ (1) period achieved significantly
condition
(2)
Information disclosure of the Company: The detailed information please refer to Announcement on the Use of the Raised Funds for the
Acquisition of the 51% Equity Stake in Jiangsu Kelinong Agrochemical Co., Ltd. as well as that in Shanghai Dibai Plant Protection Co., Ltd.,
published on the Cninfo (http://www.cninfo.com.cn), 29, October, 2020.
Situations failing to meet the
planned schedule or achieve
N/A
expected benefits and the
reasons
Explanation of the new
committed project whose
N/A
feasibility changed
significantly
43
ADAMA Ltd. Annual Report 2020
VI. Sale of significant assets and equities
1. Sale of significant assets
□ Applicable √ Not applicable
No selling of significant assets occurred during the reporting period.
2. Sale of significant equities
□ Applicable √ Not applicable
VII. Analysis of major controlling and stock-participating companies
√ Applicable □ Not applicable
List of stock-participating companies responsible for over 10% of the net profits of the Company:
Unit: RMB’000
Name Type Registered Total Operating Operating
Main services Net assets Net profit
capital assets revenues profit
Development,
manufacturing and
marketing of
agrochemicals,
Adama intermediate
Subsidiary 720,085 38,930,013 15,961,884 26,679,696 676,644 453,237
Solutions materials for other
industries, food
additives and synthetic
aromatic products,
mainly for export.
Subsidiaries acquired or disposed during the Reporting Period
√ Applicable □ Not applicable
Company Name Way of Acquirement or Impact on the Business Operation and Performance of
Disposal the Company
FNV S.A. Purchase of 51% Share No significant impact
Equity
Alfa Agricultural Supplies Purchase of the remainder No significant impact
Commercial and Industrial (51%) Share Equity
S.A.
Shanghai Dibai Plant Purchase 51% of Share Dibai’s commercial presence, numerous differentiated,
Protection Co., Ltd. Equity patented products and wide portfolio of product
registrations are highly complementary to the
Company’s. This strategic acquisition is a significant
milestone in the Company’s ongoing, rapid expansion
in China, and will significantly bolster the Company’s
commercial activities, positioning and offering in this
key crop protection market.
44
ADAMA Ltd. Annual Report 2020
VIII. List of the structured main entities controlled by the Company
□ Applicable √ Not applicable
IX. Outlook of the Company’s future development
(I) Industry structure and trends
1. The competitive structure of crop protection industry
(1) The competitive structure of the global crop protection industry
The global crop protection market is dominated by seven multinational companies, including the Group, five of which
are originator companies. In recent years, a number of mergers and acquisitions were completed among the largest players
in the crop protection industry - the merger between Dow and DuPont to create Corteva; the acquisition of Monsanto by
Bayer; the acquisition of a large part of DuPont’s crop protection portfolio, including products under development and R&D
infrastructure, by FMC; the acquisition of Arysta by UPL, and the acquisition of Syngenta by ChemChina, resulting in the
formation of Syngenta Group. Nonetheless, the crop protection industry as a whole is relatively decentralized, with a
number of local manufacturers competing in each country against the global multinational companies. The Group believes
that entry barriers for the crop protection market are relatively high, although they vary from region to region.
ADAMA is a leading company (in sales terms) among the crop-protection companies that focus on off-patent crop
protection solutions. The Group’s global crop protection market share was approximately 6.1% in 2020, based on AgBio
Investor’s preliminary estimation of the global agrochemical industry in 2020.
The Group's competitors are multinational Originator Companies that continue producing and marketing their original
products after their patent expiry (“Originator Companies”), as well as other crop protection companies. In the Group's
experience, in most cases the Originator Company’s market share in a particular product falls to approximately 30% - 70%
within a number of years following the expiry of the relevant patent, leaving the remaining market share open to competition
among off-patent crop protection companies, in addition to their competition with the Originator Company (which continues
manufacturing the product and even leads its market prices and sales terms).
The Group competes with Originator Companies and other international off-patent crop protection companies in all
the markets in which it operates, as these companies generally also have global marketing and distribution networks. In
addition, there are several smaller Originator Companies that also compete with the Group. As a rule, other off-patent crop
protection companies that do not have international marketing and distribution networks compete with the Group locally in
those geographical markets in which they operate.
(2) The competitive structure of the crop-protection industry in China
The chemicals industry in China, which the Company understands to be the largest in the world, as well as the
agrochemicals industry, includes thousands of companies who have invested in manufacturing infrastructure, of which
most of their production capacity is currently aimed at exports, intended for sale through small and large companies across
the world, including the Group and its competitors. The growth in production capacity, on one hand, and the price levels
and competitiveness of the products produced in China on the other, affect the structure of competition in the entire industry.
However, price levels of the products manufactured in China have risen in recent years, mainly stemming from the increase
of costs relating to environment protection and regulation in China, including by way of limited granting of production
permits, shutting down of plants, fines, etc. Active Ingredient prices in China declined through 2020 as the cost of oil and
related basic chemicals decreased sharply. However, towards the end of 2020 prices begun to increase again due to the
recovery of oil price together with reduced capacities of chemical manufactures caused by higher raw material costs. This
together with stronger demand due to crop commodities price increase and a strong RMB has led to the recent increase
45
ADAMA Ltd. Annual Report 2020
in the price of Active Ingredients. The Company estimates that prices will continue to increase for some Active Ingredients
at least during the first half of 2021.
2. The development trends of the crop-protection industry
In the last few years, some new emerging trends that may affect the nature of competition in this sector can be
identified: (1) The market share of products whose patents have expired continues to rise relative to that of patented original
products, primarily due to the fact that the rate of patent expiry exceeds that of the launching of new patent-protected
products; (2) a trend of some off-patent companies expanding and becoming stronger (inter alia, as a result of corporate
mergers and acquisitions as well as product acquisitions), which may lead to them competing with the Group in geographic
markets in which they have not operated up to now; (3) smaller companies have begun operating, in limited scale, in certain
markets with relatively low entry barriers; (4) improvement of the agrochemicals industry in China inter alia, increasing
market entry barriers; (5) price competition in certain markets by multinational Originator Companies and/or increasing the
credit days to its customers; and (6) large mergers and acquisitions among leading companies in the sector.
The Group believes that in view of the industry's development trends, the following are critical success factors: (i)
reputation, branding, expertise and accumulated knowledge in the sector in the various countries and among customers
and suppliers; (ii) financial strength and resilience combined with consistent growth, allowing the Group to realize a
corporate development strategy including the potential for mergers and acquisitions with other companies in the sphere,
and being able to respond efficiently to attractive business opportunities in order to expand its product portfolio and the
scale of its operations; and (iii) access to funding sources and reasonable funding terms allowing the Group to make
investments that earn a positive return.
(II) Development strategy of the Company
The Group strives to be a global leader in the Crop Protection industry, and intends to achieve this aim by execution
of the following strategies:
Utilize the Group’s Differentiated Offering to Strengthen and Grow its Market Position. The Group intends to
continue to drive the growth of its business through effective commercialization of differentiated, high quality products
that meet farmers’ needs efficiently. To that end, the Group will leverage its extensive R&D and registration capabilities
to continue to provide unique yet simple solutions to farmers. In addition, the Group adds value by enhancing the
functionality and efficacy of the industry’s most successful and commercially proven molecules, by developing new and
unique mixtures and advanced formulations. These innovative products are designed to provide farmers with better
solutions to the challenges they face, including weeds, insects and disease, increasing resistance and insufficient pest
control related to the use of genetically modified seeds.
Aiming to provide distinct benefit to farmers and enhance the sustainability of the business, in addition to the ongoing
efforts to expand existing product registrations to additional crops and regions, a key portion of the Group’s strategy
involves the deliberate shift of its product offering towards more innovative and value-added solutions. Such solutions
include higher-margin, higher-value complex off-patent products, unique mixtures and formulations as well as innovative,
novel products that are protected by patents and other intellectual property rights. As evidence of this effort, the Group
has significantly increased the proportion of unique mixtures and formulations in its R&D pipeline over the last several
years. Over the coming years, as this shift in the pipeline towards more differentiated and innovative solutions starts to
be reflected in the Group’s commercial offering, it is expected to be a significant driver of growth, both in revenues and
in profitability. In this respect, and in order to capitalize on future opportunities in the agrochemical market, the Group
has intensified its efforts to develop a leading pipeline of crop protection products aimed at providing value-added
solutions to farmers around the world, based on AIs that are expected to come off-patent in the coming years. These
newly off-patent AIs will be developed into new mixtures and formulations, in combination with new formulation and
delivery technologies that provide more efficient ways to deliver the products into the plants, thereby creating truly unique
and differentiated, value-added solutions to farmers. In this way, the Group strives to achieve a double competitive
46
ADAMA Ltd. Annual Report 2020
advantage – to be the first to market launching new products after the expiry of the patent on the AI, and to capitalize on
cost leadership through increased backward integration through the Group’s global operations capabilities.
Bridge China and the World. The Group is striving to become a leading global crop protection company in China, both
commercially and operationally, and in so doing, to drive its global growth in the future.
China is currently the third largest, and one of the fastest growing, agricultural markets in the world. Furthermore, the
Group believes that, over the long term, China has the potential to grow into the world’s largest crop protection market.
Also, as the Chinese domestic market is highly fragmented, with limited penetration by the global agrochemical
companies, the Group believes that there is a unique opportunity for it to capitalize on the significant untapped potential
of the Chinese market and to gain market share. Moreover, in recent decades, China has become the leading
manufacturing center for the global crop protection industry - from the sourcing of raw materials and chemical
intermediates to the synthesizing of active ingredients and the formulation of finished products.
The Group intends to capitalize on its status in China and its relationship with ChemChina, as well as the combination
with Solutions, to increase its commercial activity in the country, where it is already building additional infrastructure. The
Group’s commercial teams are working closely together. Through the commercial collaborations, the Group has an
operational infrastructure and commercial foundation upon which a leading Chinese domestic distribution network has
been built, and which the Group believes will make it one of the only global crop protection providers with significant
integrated commercial and operational infrastructures both within and outside of China.
Through the establishment of a significant operational presence in China and the combination with Solutions, the Group
intends to achieve cost savings and improved margins and efficiencies through the vertical integration of manufacturing
and formulation together with the Group’s global supply chain and logistics capabilities. In particular, the Group’s global
R&D efforts are being complemented by a new R&D center in Nanjing to service the Group’s expanded product
development needs and enable the introduction of advanced technologies into China and globally. The Group expects
to drive significant demand for its products by launching new and advanced active ingredients and intermediates with
higher R&D content. In addition, the advanced formulation center in Jiangsu Province will serve as a platform to introduce
cost-advantaged crop protection solutions into China and globally.
The Group expects that its unique positioning and profile in China, including the relationship with ChemChina, should
establish it as a partner of choice for companies outside China seeking to access its domestic market, as well as for
Chinese companies looking to expand their global footprint. In addition to the combination and the commercial
collaboration, the Group is assessing strategic joint ventures and selected acquisitions to further bolster its commercial
and operational platform in China.
Collaboration of the Company with Syngenta and Sinochem as members of the Syngenta Group. The Company
engaged with Syngenta in collaboration agreements for sale and distribution of finished products, raw materials supply,
joint ventures in the fields of procurement, logistics, production and supply chain as well as in the R&D and products’
registration fields, in order to reduce costs, to improve processes and to increase the Company’s sales.
Continue to Strengthen Position in Emerging Markets. In addition to developing its China platform, the Group enjoys
strong and leading positions in key emerging agricultural markets such as Latin America, India, Asia and Eastern Europe,
with around half of its global sales achieved in these emerging markets. Over the last several years, in order to establish
direct market access and distribution capabilities in these markets, the Group has successfully integrated acquisitions in
Colombia, Chile, Poland, Serbia, Romania, the Czech Republic, Slovakia, and South Korea. Similarly, the Group has
implemented a direct go-to-market strategy in many high-growth markets including India, Turkey, Indonesia, Vietnam
and South Africa, leveraging a direct sales force and driving demand at the retail and farmer level. The Group intends to
continue to invest in its growth in the key emerging markets with high growth potential. The Group’s strong global platform
and leading commercial infrastructure in such markets will allow it to capitalize on worldwide growth opportunities, and
continue to drive its profitable growth.
47
ADAMA Ltd. Annual Report 2020
Grow Revenues and Increase Profitability. The Group believes that it has the capacity and operational leverage to
increase profitability through focused execution of its strategy within the framework of prudent working capital
management. The Group is aiming to increase its revenues and margins consistently over time as it shifts to a more
differentiated, higher-margin product portfolio and continues to strengthen its product pipeline with significant number of
higher-value products, based on AIs which patent protection has just expired, unique mixtures and formulations, as well
as innovative and, in some cases, patent-protected products. Similarly, the Group intends to drive revenue growth
through increased penetration of high-growth markets including China, Brazil and other key markets in Latin America,
Asia-Pacific and eastern Europe. The Group believes that its investment in developing an operational footprint in China
will lower costs and improve manufacturing efficiency and distribution logistics and reduce inventory requirements in
many markets worldwide.
In recent years, the Group has focused on growing and improving its business, infrastructure and brand. Other than
investments in the further development of its China operations, the Group believes that its existing global infrastructure
is largely of sufficient scale to support higher revenues, allowing it to enjoy economies of scale and continually improve
profitability over time.
Continue to Capitalize on the Global Portfolio Integration and Rebranding Initiative. In 2014 the ADAMA brand
was launched, integrating dozens of legacy brands across the globe to form a single, streamlined sales and distribution
entity under a unified brand name. In 2019, following extensive farmer and customer research in 13 major markets, the
Company further evolved its brand, creating a unique and compelling brand story that elevates ADAMA’s distinct
entrepreneurial and agile culture; increases its relevance to its customers (channel partners and growers); and further
differentiates the Company from key competitors. The evolved brand positioning, known as “Listen, Learn, Deliver”,
focuses on a process of listening to customer needs, bringing insights from the field and combining them with the
extensive know-how and experience in the Company; and delivering solutions that meet local farmer and customer pain
points. The Core Leap strategy discussed above provides the platform needed to create distinct mixtures and
formulations based on farmer needs. With this new brand positioning the Company is investing in platforms to ensure
ongoing and intimate farmer and customer interactions which will provide the source for future product and solution
ideation.
Strategically Pursue Acquisitions to Enhance Market Access and Strengthen the Product Portfolio. Throughout
its history, the Group has successfully completed and integrated several add-on acquisitions across the globe. The Group
intends to continue to pursue acquisitions, in-licensing agreements and joint ventures that offer attractive opportunities
to enhance its market access and position, as well as strengthen and further differentiate its product portfolio. The Group
plans to focus these efforts largely in high-growth geographies, particularly in emerging markets where it aims to gain
market share, as well as access to selected sources of innovation. The Group continues with its track record of making
and integrating selective.
(III) 2021 Business plan
In 2021, the Company is expecting moderate growth, supported by higher crop commodity prices, which in recent
months have bolstered farmer profitability levels. Overall, the Group is expecting to see revenue growth driven by volume
growth and the continued launch of new products. The overall pricing environment is expected to be moderate, as
relatively higher crop prices, alongside higher input costs are counterbalanced by intensive competitive dynamics in most
key markets across the globe.
Raw material and Active Ingredient (AI) procurement costs are expected to remain relatively high resulting from
continued tight supply conditions that have driven recent increases in the costs of raw materials and AIs.
The Group will continue to exercise discipline in management of its operating expenses, while focusing on continued
improvement in working capital efficiency and quality of business.
In 2021, the Group will continue to pursue its comprehensive portfolio development strategy, driven by further
48
ADAMA Ltd. Annual Report 2020
momentum and investment in Innovation, Research and Development, and focusing on all aspects of development of its
portfolio - product development, obtaining of registrations, development of advanced formulations and innovative delivery
technologies, as well as differentiated mixtures, alongside further investments in chemical R&D.
During 2021, the Group will remain focused on the ongoing optimization and implementation of its global AI synthesis
layout transformation, a long-term initiative that seeks to align the Group’s AI synthesis layout with the Group’s identified
pipeline opportunities.
Furthermore, in the coming year the Group will continue to focus on the upgrading and relocation of the production
facilities in both Jingzhou and Huai’An, as well as the continued build-up of its commercial and operational presence in
China, including potential acquisitions it intends to make in the near future.
The Group is continuing to invest in the upgrading and expansion of its IT capabilities, including the implementation of
its ERP project in the production facilities in Israel and China.
Note: The business plan described above does not constitute a commitment to investors on the Company's
performance, and the Company suggests that investors should maintain adequate risk awareness therefor, and
understand the difference between the Company’s business plan and a performance commitment.
(IV) Company’s financing and credit
The Group finances its business activities by means of its equity as well as credit from external sources. The primary
external financing is by means of long term bonds issued by Solutions.
The Group has additional sources of external funding from: (1) long-term bank credit; (2) short-term bank credit as
well as non-tradable commercial securities; and (3) supplier credit. In addition, the Group has significant cash balances as
well as unused set bank credit lines.
(V) Risk factors and countermeasures
The Group is exposed to several major risk factors, resulting from its economic environment, the industry and the
Group's unique characteristics, as follows (the order below does not indicate priority):
Exchange rate fluctuations
Although the Company reports its consolidated financial statements in RMB, the Company’s material subsidiary Solutions
reports its consolidated financial statements in US dollars, which is its functional currency, while its operations, sales and
purchases of raw materials are carried out in various currencies. Therefore, fluctuations in the exchange rate of the selling
currency against the purchasing currency impact the Company’s results. The Group's most significant exposures are to
the Euro, the Israeli Shekel and the Brazilian Real. The Group has lesser exposures to other currencies. The strengthening
of the US dollar against other currencies in which the Company operates reduces the dollar value of such sales and vice
versa.
On an annual perspective, approximately 25% of the Group’s sales are to the European market and therefore the impact
of long-term trends on the Euro may affect the Company's results and profitability.
Concentration of currency exposure from foreign currency exchange rate fluctuations against assets, including inventory
of finished products in countries of sale, liabilities and cash flow denominated in foreign currencies are done constantly.
High volatility of the exchange rates of these currencies could increase the costs of transactions to hedge against currency
exposure, thereby increasing the Company's financing costs.
The Group uses commonly accepted financial instruments to hedge most of its substantial net balance sheet exposure to
any particular currency. Nonetheless, since as part of these operations the Group hedges against most of its balance sheet
exposure and only against part of its economic exposure, exchange rate volatility might impact the Group’s results and
profitability. As of the date of approval of the financial statements, the Group has hedged most of its balance sheet exposure
for 2020 as it is on the date of publication of this report.
49
ADAMA Ltd. Annual Report 2020
In addition, as the Company’s product sales depend directly on the cyclical nature of the agricultural seasons, therefore
the Company’s income and its exposure to the various currencies is not evenly distributed over the year. Countries in the
northern hemisphere have similar agricultural seasons and therefore, in these countries, the highest sales are usually
during the first half of the calendar year. During this period, the Company is most exposed to the Euro. In the southern
hemisphere, the seasons are opposite and most of the local sales are carried out during the second half of the year. During
these months, most of the Company's exposure pertains to the Brazilian Real. The Company has more sales in markets
in the northern hemisphere and therefore, the Company's sales volume during the first half of the year is higher than the
sales volume during the second half of the year.
Exposure to Interest rate, Israel CPI and NIS exchange rate fluctuations
The debentures issued by Solutions, the material subsidiary of the Company, are Israeli Shekel based and linked to the
Israel Consumer Price Index (CPI) and therefore an increase in the CPI and an appreciation of the shekel rate against the
dollar might lead to a significant increase in its financing expenses. As of the date of approval of the financial statements,
Solutions hedged most of its exposure to these risks on an ongoing basis, through CPI hedging and USD-ILS exchange
rate hedging transactions.
The Group is exposed to changes in the US dollar LIBOR interest rate as the Group has dollar denominated liabilities,
which bear variable LIBOR interest. The Group prepares a quarterly summary of its exposure to changes in the LIBOR
interest rate and periodically examines hedging the variable interest rate by converting it to a fixed rate. As part of the
global reform in interest rate benchmarks, the phasing out of LIBOR (the so-called LIBOR fallback) is scheduled for the
end of 2021. Three global interest rate benchmarks are expected to transition to alternative risk-free rates and to replace
the existing benchmark London Interbank Offered Rates (LIBOR): SOFR (USD), ESTR (EUR) and SONIA (GBP). As of
the date of approval of the financial statements, the Group has not carried out hedging for such exposure, since US dollar
interest rates have been relatively stable.
Business operations in emerging markets
The Group conducts business - mainly product sales and raw material procurement – inter alia, in emerging markets such
as Latin America (particularly in Brazil, the largest market, country wise, in which the Group operates), Eastern Europe,
South East Asia and Africa. The Group's activity in emerging markets is exposed to risks typical of those markets, including:
political and regulatory instability; volatile exchange rates; economic and fiscal instability and frequent revisions of
economic legislation; relatively high inflation and interest rates; terrorism or war; restrictions on import and trade; differing
business cultures; uncertainty as to the ability to enforce contractual and intellectual property rights; foreign currency
controls; governmental price controls; restrictions on the withdrawal of money from the country; barter deals and potential
entry of international competitors and accelerated consolidations by large-scale competitors in these markets.
Developments in these regions may have a significant effect on the Group's operations. Distress to the economies of these
markets could impair the ability of the Group's customers to purchase its products or the ability to market them at
international market prices, as well as harm the Group's ability to collect customer debts, in a way that could have a
significant adverse effect on the Group's operating results.
The Group’s operations in multiple regions allows for the diversification of such risks and for the reduction of its dependency
on particular economies. In addition, changes in registration requirements or customers' preferences in developed western
countries, which may limit the use of raw materials purchased from emerging economies, may require redeployment of the
Group's procurement organization, which might negatively affect its profitability for a certain period.
Operating in a competitive market
The crop protection products industry is highly competitive. Currently, seven multinational companies, including the
Company, lead the global industry. Five of these, Bayer, Syngenta, Corteva, BASF and FMC, are Originator Companies,
which develop, manufacture and market both patent-protected as well as off-patent products. The Group competes with
50
ADAMA Ltd. Annual Report 2020
the original products with the aim of maintaining and increasing its market share.
The Originator Companies possess resources enabling them to compete aggressively, in the short-to-medium term, on
price and profit margins, so as to protect their market share. Loss of market share or inability to acquire additional market
share from the Originator Companies can affect the Group's position in the market and adversely affect its financial results.
For details regarding the Group’s competitive advantages see section III - subsection III. Core competitiveness analysis
above.
Similarly, the Group also competes in the more decentralized off-patent segment of the market, against other off-patent
companies and smaller-scale Originator Companies, which have significantly grown in number in recent years and are
materially changing the face of the crop protection industry, the majority of whom have not yet deployed global distribution
networks, and are only active locally. These companies often price their products aggressively and at times have lower
profit margins than the Group, which may adversely impact the Group's sales and product prices. The Group's ability to
maintain its revenues and profitability from a specific product in the long term is affected by the number of companies
producing and selling comparable off-patent products and the timing of their entrance to the relevant market.
Any delay in developing or obtaining registrations for products and/or delayed penetration into markets and/or growth of
competitors that focus on off-patent active ingredients (whether by the expansion of their product portfolio, granting
registrations to other manufacturers (including manufacturers in China and India) to operate in additional markets,
transforming their distribution network to a global scale or increasing the competition for distribution access), and/or
difficulty in purchasing low cost raw materials, may harm the Group’s sales, affect its global position and lead to price
erosion.
Decline in scope of agricultural activities; exceptional changes in weather conditions
The scope of general agricultural activities worldwide may be negatively affected by many exogenous factors, such as
extreme weather conditions, natural disasters, a decrease in agricultural commodity prices, government policies and the
economic condition of farmers. A material decline in the scope of agricultural activities would by necessary implication
cause a decline in the demand for the Group’s products, erosion of its prices and collection difficulties, which may have a
significant adverse effect on the Group's results. Extreme weather conditions as well as other damages caused by nature
may have an impact on the demand for the Group's products. The Group believes, that should a number of such bad
seasons occur in succession, without favorable seasons in the interim, its results may sustain significant harm.
Environmental, health and safety legislation, standards, regulation and exposure
Many aspects of the Group's operations are strictly regulated, including in relation to production and trading, and particularly
in relation to the storage, treatment, manufacturing, transport, usage and disposal of its products, their ingredients and
byproducts, some of which are considered hazardous. The Group's activities involve hazardous materials. Defective
storage or handling of hazardous materials may cause harm to human life or to the environment in which the Group
operates. The regulatory requirements regarding the environment, health and safety could, inter alia, include soil and
groundwater clean-up requirements; as well as restrictions on the volume and type of emissions the Group is permitted to
release into the air, water and soil.
The regulatory requirements applicable to the Group vary from product to product and from market to market, and tend to
become stricter with time. In recent years, both government authorities and environmental protection organizations have
been applying increasing pressure, including through investigations and indictments as well as increasingly stricter
legislative proposals and class action suits related to companies and products that may potentially pollute the environment.
Compliance with these legislative and regulatory requirements and protection against such legal actions requires the Group
to commit considerable human and financial resources (both in terms of substantial ongoing costs and in terms of material
one-time investments) to meet mandatory environmental standards. In some instances, this may result in delaying the
introduction of products into new markets or in adverse effects on the Group’s profitability. In addition, the toughening,
51
ADAMA Ltd. Annual Report 2020
material alteration or revocation of environmental licenses or permits, or their stipulations, or the inability to obtain such
licenses and permits, may significantly affect the Group's ability to operate its production facilities, which in turn may have
a material adverse effect on the financial and business results of the Group. The Group may be required to bear significant
civil liabilities (including due to class actions) or criminal liabilities (including high penalties and/or high compensation
payments and/or costs of environmental monitoring and rehabilitation), resulting from violation of environmental, health
and safety regulations, while some of the existing legislation may impose obligations on the Group for strict liability,
regardless of proof of negligence or malice.
While the Group invests material sums in adapting its facilities and in constructing special facilities in accordance with
environmental requirements, it is currently unable to assess with any certainty whether these investments (current and
future) and their outcomes may satisfy current or future requirements, should these be significantly increased or changed.
In addition, the Group is unable to predict with any certainty the extent of future costs and investments it may incur in order
to meet the requirements of the environmental authorities in the relevant countries in which it operates since, inter alia, the
Group is unable to estimate the extent of potential pollutions, their duration, the extent of the measures required to be
taken by the Group in handling them, the division of responsibility among other parties and the amounts recoverable from
third parties.
Furthermore, the Group may be the target of bodily injury claims and property damage claims caused by exposure to
hazardous materials, which are largely covered under the Group’s insurance policies.
Legislative, standard and regulatory changes in product registration
The majority of the substances and products marketed by the Group require registration at various stages of their
development, production, import, utilization and marketing, and are also subject to strict regulatory supervision by the
regulatory authorities in each country. Compliance with the regulatory requirements that vary from country to country and
which are becoming more stringent with time, involves significant time and costs, and rigorous compliance with individual
registration requirements for each product. Noncompliance with these regulatory requirements might materially adversely
affect the Group’s expenses, cost structure and profit margins, as well as penetration of its products in the relevant market,
and may even lead to suspension of sales of the relevant product, and recall of those products already sold, or to legal
action. Moreover, to the extent new regulatory requirements are imposed on existing registered products (requiring
additional investment or leading to the existing registration's revocation) and/or the Group is required to compensate
another company for its use of the latter's product registration data, these might amount to significant sums, considerably
increasing the Group's costs and adversely affecting its results and reputation. In recent years the industry has been
suffering from revocation of registration for many products around the world. This trend is particularly evident in European
countries as well as in many other countries worldwide.
Nevertheless, the Group believes that, in countries where the Group maintains a competitive edge, any toughening of
registration requirements may actually increase this edge, since this will make it difficult for its competitors to penetrate the
same market, whereas in countries in which the Group possesses a small market share, if any, such toughening may make
further penetration of the Group's products into that market more difficult.
Product liability
Product and producer liability are a risk for the Group. Regardless of their prospects or actual results, product liability
lawsuits might involve considerable costs as well as tarnish the Group's reputation, thus potentially impacting its profits.
The Group has a third-party and defective product liability insurance cover. However, there is no certainty that the scope
of insurance cover is sufficient. Any future product liability lawsuit or series of lawsuits could materially affect the Group’s
operations and results, should the Group lose the lawsuit or should its insurance cover not suffice or apply in a particular
instance. In addition, while the Group has not currently encountered any difficulty renewing such insurance policy, it is
possible that it will encounter future difficulties in renewing an insurance policy for third party liability and defective products
on terms acceptable to the Group.
52
ADAMA Ltd. Annual Report 2020
Successful market penetration and product diversification
The Group’s growth and profit margins are affected, inter alia, by the extent of its success in developing differentiated
products and obtaining registrations for them, so as to enable it to gain market share at the expense of its competitors.
Usually, being the first to launch a certain off-patent product affords the Group continuing advantage, even after other
competitors penetrate the same market. As such, the Group's revenues and profit margins from a certain new off-patent
product could be materially affected by its ability to launch such product ahead of the launch of a comparable product by
its competitors.
Should new products fail to meet registration requirements in the different countries or should it take a long period of time
to obtain such registrations, the Group's ability to successfully introduce a new product to the relevant market in the future
may be affected, since entry into the market prior to other competitors is important for successful market penetration.
Furthermore, successful market penetration involves, inter alia, product diversification in order to suit each market's
changing needs. Therefore, if the Group fails to adapt its product mix by developing new products and obtaining the
required regulatory approvals, its future ability to penetrate that market and to maintain its existing market share could be
affected. Failure to introduce new products to given markets and meet Group objectives (given the considerable time and
resources invested in their development and registration) might affect the sales of the product in question in the relevant
market, the Group’s results and margins.
Intellectual property rights of the Group and of third parties
The Group's ability to develop off-patent products is dependent, inter alia, on its ability to oppose patents or patent
application of Originator Companies or other third parties, or to develop products that do not otherwise infringe intellectual
property rights in a manner that may involve significant legal and other costs. Originator Companies tend to vigorously
defend their products and may attempt to delay the launch of competing off-patent products by registering patents on
slightly different versions of products for which the original patent protection is about to expire or has expired, with the aim
of competing against the off-patent versions of the original product. The Originator Companies may also change the
branding and marketing of their products. Such actions may increase the Group's costs and the risk it entails, and harm or
even prevent its ability to launch new products.
The Group is also exposed to legal claims that its products or production processes infringe on third-party intellectual
property rights. Such claims may involve time, costs, substantial damages and management resources, impair the value
of the Group's brands and its sales and adversely affect its results. Such lawsuits that were concluded involved non-
material amounts.
Furthermore, although the Group protects its brands and trade secrets with patents, trademarks and other methods of
intellectual property protection, these protective means may not be sufficient for fully safeguarding its intellectual property.
Any unlawful or other unauthorized use of the Group's intellectual property rights could adversely affect the value of its
intellectual property and goodwill. In addition, the Group may be required to take legal actions involving financial costs and
resources to safeguard its intellectual property rights.
Fluctuations in raw material inputs and prices, and in sales costs
Significant percentage of the Groups’ cost of sales derives from raw material costs. Hence, significant increases or
decreases in raw material costs affect the cost of goods sold, and are, due to the length of the Company’s inventory cycle,
generally reflected in the Company’s financials. Most of the Group's raw materials are distant derivatives of oil prices and
therefore, extreme changes or decrease in oil prices may affect the costs of raw materials, although only partially.
To reduce exposure to fluctuations in the prices of raw materials, the Group customarily engages in long-term purchase
contracts for key raw materials, wherever possible. Similarly, the Group acts to adjust its sales prices, wherever possible,
to reflect the changes in the costs of raw materials.
As of the date of approval of the financial statements, the Group has not engaged in any hedging transactions against
53
ADAMA Ltd. Annual Report 2020
increases in oil and other raw material costs.
Exposure due to recent developments in the genetically modified seeds market
Any significant development in the market of genetically modified seeds for agricultural crops, including as a result of
regulatory changes in certain countries currently prohibiting the use of genetically modified seeds, and/or any significant
increase in the sales of genetically modified seeds and/or to the extent new crop protection products are developed for
further crops that would be widely used (substituting traditional products), will affect demand for crop protection products,
requiring the Group to respond by adapting its product portfolio to the new demand structure. Consequently, to the extent
that the Group fails to adapt its product mix accordingly, this may reduce demand for its products, erode their sales price
and by implication affect the Group’s results and market share.
Nevertheless, the fact that the Group itself markets some of the products for which herbicide tolerance traits have been
developed, acts to mitigate this exposure (albeit only in terms of marketing margins).
In addition, natural and/or biological substances that attack weeds, pests and diseases are potential alternatives for the
Company’s products, though as of the date of the report, their efficiency is relatively limited, and they are commercialized
in a relatively small volumes.
Operational risks
The Group’s operations, including its manufacturing activities, rely, inter alia, on state-of-the-art computer systems. The
Group continually invests in upgrading and protecting these systems from malfunctions and attack. Any unexpected failure
of these systems, as well as the integration of new systems, could involve substantial costs and adversely affect the
Group's operations until completion of the repair or integration. The potential occurrence of a substantial failure that cannot
be repaired within a reasonable time frame may also affect the Group's operations and its results. Currently, the Group
has a property and loss-of-profit insurance policy.
Data protection and cyber security
During its activity, the Group may be exposed to risks and threats, related to the stability of its information technologies
systems, data protection and cyber security, which could appear in many different forms (such as service denial, misleading
employees, malfunction, encryption or data erasing and other cyber-attacks via E-mail or malicious software). An attack
on such computerized systems, mainly network based systems may cause the group material damages and expenses and
even partial suspension and disruption of their proper functioning. In order to minimize the abovementioned risks, the group
invests resources in its technological resilience and in proper protection of its systems.
Raw material supply and/or shipping and port service disruptions
Lack of raw materials or other inputs utilized in the manufacture of the Group’s products may prevent the Group from
supplying its products or significantly increase production costs. Moreover, the Group imports raw materials to its
production facilities worldwide, from where it then exports the technical or formulated products to its subsidiaries around
the world for formulation and/or commercialization purposes. Disruptions in the supply of raw materials from regular
suppliers may adversely affect operations until an alternative supplier is engaged. If any of the Group's suppliers are unable
to supply raw materials for a prolonged period, including due to ongoing disruptions and/or prolonged strikes and/or
infrastructure defects in the operating of a relevant port, and if the Group is unable to engage with an alternative supplier
at similar terms and in accordance with the relevant product registration requirements, this may adversely affect the Group's
results, significantly affect its ability to obtain raw materials in general, or obtain them at reasonable prices, as well as limit
its ability to supply products and/or meet customer supply deadlines. These might negatively affect the Group, its finances
and operating results. In order to reduce this risk, it is the Group's practice to occasionally adjust the volume of its product
inventories and at times utilize air freight.
Failed mergers and acquisitions; difficulties in integrating acquired operations
The Group's strategy includes growth through mergers, acquisitions, investments and collaborations designed to expand
54
ADAMA Ltd. Annual Report 2020
its product portfolio and deepen its presence in certain geographical markets.
Growth through mergers and acquisitions requires assimilation of acquired operations and their effective integration in the
Group, including realization of certain forecasts, profitability, market conditions and competition.
Failure to successfully implement the above and/or non-realization of the relevant forecasts may result in not achieving the
incremental value forecasted, loss of customers, exposure to unexpected liabilities, reduced value of the intangible assets
included in the merger or acquisition as well as the loss of professional and skilled human resources.
Production concentration in limited plants
A large portion of the Group’s production operations is concentrated in a relatively small number of locations. Natural
disasters, hostilities, labor disputes, substantial operational malfunction or any other material damage might significantly
affect Group operations, as a result of the difficulty, the time and investment required for relocating the production operation
or any other activity.
International taxation
Most of the Group’s sales are global, through its consolidated subsidiaries worldwide. These individual companies are
assessed in accordance with the tax laws effective in each respective location. The Group’s effective tax rate could be
significantly affected by different classification or attribution of the profits arising from the proportional value of the
components of each of the companies in the Group in the various countries, as is recognized in each tax jurisdiction;
changes in the characteristics (including regarding the location of control and management) of these companies; changes
in the breakdown of the Group's profits into regions where differing tax rates apply; changes in statutory tax rates and other
legislative changes; changes in assessment of the Group's deferred tax assets or deferred tax liabilities; changes in
determining the areas in which the Group is taxed; and potential changes in the Group's organizational structure.
Changes in tax regulations and the manner of their implementation, including with regard to the implementation of BEPS,
may lead to a substantial increase in the Group's applicable tax rates and have a material adverse effect on its financial
position, results and cash flows.
The Group’s Financial Statements do not include a material provision for exposure for international taxation, as stated
above.
Risks arising from the Group’s debt
The Group finances its business operations by means of its own equity and loans from external sources (primarily traded
debentures issued by Solutions and bank credit). The Group's main source for servicing the debt and its operating
expenses is by means of the profits from the Group companies’ operations. Restrictions applying to the Group companies
regarding distribution of dividends to the Group, or the tax rate applicable on these dividends, may affect the Group's ability
to finance its operations and service its debt.
In addition, the Group's Finance Documents, as contained in the bank credit agreements, require meeting certain Financial
Covenants. Failure to meet these covenants due to an exogenous event or non-materialization of Group forecasts, and
insofar as the financing parties refuse to extend or update these Financial Covenants as per the Group’s capabilities, may
lead the financing parties to demand the immediate payment of these liabilities (or part thereof).
Exposure to customer credit risks
The Group’s sales to customers worldwide usually involve customer credit as is customary in each market. A portion of
these credit lines is insured, while the remainder are exposed to risk, particularly during economic slowdowns in the
relevant markets. The Group’s aggregate credit, however, is diversified among many customers in dozens of countries,
mitigating this risk. In addition, in certain regions, particularly in South America, credit days are particularly long (compared
to those extended to customers in regions such as Europe), and on occasion, inter alia, owing to agricultural seasons or
economic downturns in those countries, the Group may encounter difficulty in timely collection of customer debts, with the
collection period being extended over several years.
55
ADAMA Ltd. Annual Report 2020
Generally, such issues arise more often in developing countries where the Group may be less familiar with its customers,
the collaterals might be in double until actual repayment and the insurance cover of these customers is likely to be limited.
Credit default by any of the customers may negatively impact the Group's cash flow and financial results.
The Group’s working capital and cash flow needs
Similar to other companies operating in the crop protection industry, the Group has substantial cash flow and working
capital requirements in the ordinary course of operations. In view of the Group's growth and considering its primary growth
regions, the Group’s broad product portfolio and the Group’s investments in manufacturing infrastructures, the Group has
significant financing and investment needs. The Group acts continually to improve the state and management of its working
capital. While currently the Group is in compliance with all its financial covenants, significant deterioration of its operating
results may in the future lead the Group to fail to comply with its financial covenants and fail to meet its financial needs. As
a result, the Group's ability to meet its goals and growth plans, as well as its ability to meet its financial obligations, may
be harmed.
Contagious disease outbreak
Outbreak of a contagious disease and pandemics, or other adverse public health developments, in territories where
significant production activity is taking place or from which raw materials are supplied to a significant extent, may have a
material adverse effect on the Company’s activity, such that the Company may encounter difficulties with procurement of
raw materials and intermediates, experience a certain decrease of activity within its production facilities due to
governmental instructions, and be constrained with respect to its logistics and supply lines. In addition, the Company sales
could be potentially impacted by a temporary decrease in demand for its products, as well as by temporary disruption of
the Company’s ability to sell and distribute products as mentioned above.
X. Information regarding communication with investors
1. Information regarding communication with investors
√ Applicable □ Not applicable
Reception Type of
Date Place Name of the visitor About Index
mode visitor
Record of the Com-
Everbright Securities, CITIC Introduction on the
munications be-
Securities, CICC, Industrial Se- Q1 performance.
tween the Company
curities, TF Securities, Shen- Corresponding
April 27, Not appli- Institutional and the Investors
Phone call wan Hongyuan Securities, slides was pub-
2020 cable investors (record number-
North East Securities, Haitong lished on the web-
2020-1) published
Securities, Dongxing Securi- site of the Com-
by the Company on
ties, CMS, Zhongtai Securities pany.
April 29, 2020.
Everbright Securities, CICC, Record of the Com-
Introduction on the
Industrial Securities, TF Secu- munications be-
Q2 performance.
rities, Haitong Securities, tween the Company
Corresponding
August Not appli- Institutional Dongxing Securities, CMS, and the Investors
Phone call slides was pub-
20, 2020 cable investors Zhongtai Securities, BOC In- (record number-
lished on the web-
ternational, Nanjing Securities, 2020-2) published
site of the Com-
HSBC Qianhai Securities, by the Company on
pany.
Banc of America Securities August 23, 2020.
56
ADAMA Ltd. Annual Report 2020
Reception Type of
Date Place Name of the visitor About Index
mode visitor
Record of the Com-
Introduction on the
munications be-
H1 and Q2 perfor-
Institutional tween the Company
mance. Corre-
August Not appli- Webcast- and individ- and the Investors
Not applicable sponding slides
21, 2020 cable ing ual inves- (record number-
was published on
tors 2020-3) published
the website of the
by the Company on
Company.
August 25, 2020.
Everbright Securities, CICC,
Record of the Com-
Industrial Securities, TF Secu- Introduction on the
munications be-
rities, Haitong Securities, Q3 and 9M perfor-
tween the Company
Dongxing Securities, CMS, mance. Corre-
October Not appli- Institutional and the Investors
Phone call Zhongtai Securities, BOC In- sponding slides
29, 2020 cable investors (record number-
ternational, Nanjing Securities, was published on
2020-4) published
HSBC Qianhai Securities, the website of the
by the Company on
Guolian Securities, SWHY Se- Company.
November 2, 2020.
curities
Record of the Com-
Introduction on the
munications be-
Q3 and 9M perfor-
Institutional tween the Company
mance. Corre-
October Not appli- Webcast- and individ- and the Investors
Not applicable sponding slides
30, 2020 cable ing ual inves- (record number-
was published on
tors 2020-5) published
the website of the
by the Company on
Company.
November 3, 2020.
Times of reception 5
The number of agencies in reception 5
The number of individuals in reception 2
The number of other objects in reception 0
Whether undisclosed significant
information is disclosed, revealed or No
divulged?
57
ADAMA Ltd Annual Report 2020
Section V - Significant Events
I. Dividend distribution of Company’s securities and turning capital reserve into share
capital of the Company
Dividend distribution policies, especially the formulation, execution or the adjustment of the cash dividend policies during
the Reporting Period
√ Applicable □ Not applicable
The Company did not revise its dividend distribution policy over the Reporting Period. The 2019 Annual General Meeting
which was held on May 20, 2020 approved the dividend distribution plan for the year 2019. The Company accordingly
published an Announcement of Dividend Distribution for the Year 2019 on June 20, 2020 (announcement No.2020-34).
Special explanation of the cash dividend policy
Whether conformed with the regulations of the Articles
of association or the requirements of the resolutions Yes
of the shareholders’ meeting:
Whether the dividend standard and the proportion
Yes
were definite and clear:
Whether the relevant decision-making process and the
Yes
system were complete:
Whether the independent director acted dutifully and
Yes
exerted the proper function:
Whether the medium and small shareholders had the
chances to fully express their suggestions and
Yes
appeals, of which their legal interest had gained fully
protection:
Whether the conditions and the process met the
regulations and was transparent of the adjustment or Not Applicable
altered of the cash dividend policy:
List of the dividend distribution proposals (preplan) of the common shares, and the proposal (preplan) of turning capital
reserve into share capital of the Company of the recent 3 years:
2018 profit distribution proposal: based on the total share capital on February 28, 2019, after obtaining the approval of
Board of Directors, the Company declared a cash dividend of RMB 0.97 (before tax) for every 10 shares to the all
shareholders. No share will be distributed as share dividend, as well as no reserve will be transferred to equity capital.
2019 profit distribution proposal: based on the total share capital on February 28, 2020, after obtaining the approval of
Board of Directors, the Company declared a cash dividend of RMB 0.12 (before tax) for every 10 shares to the all
shareholders. No share will be distributed as share dividend, as well as no reserve will be transferred to equity capital.
2020 profit distribution proposal: based on the total share capital of 2,329,811,766 which are entitled to the dividends
as of the record day when this profit distribution proposal is implemented, the Company declared a cash dividend of RMB
0.16 (before tax) for every 10 shares to the all shareholders. No share will be distributed as share dividend, as well as no
reserve will be transferred to equity capital.
(1) Due to ADAMA Solution’s failure to meet the performance commitment in the Company’s major asset restructuring in
2017, the Company repurchased 102,432,280 shares from Syngenta Group in accordance with the Performance
58
ADAMA Ltd Annual Report 2020
Compensation Agreement and completed the cancellation procedures for those shares on July 13, 2020. The Company’s
total share capital reduced from 2,446,553,582 shares to 2,344,121,302 shares. Up to now, the total share capital of the
Company is 2,344,121,302 shares.
(2) During the reporting period, the Company implemented the B-Shares Repurchase Plan. As of the date of the expiration
of the repurchase period (December 6, 2020), the Company has repurchased 14,309,536 shares of B-Shares by means
of a centralized price bidding transaction through a special securities repurchase account for B-Shares. According to the
Implementation Rules of the Shenzhen Stock Exchange on Share Repurchases of Listed Companies, the Company’s
shares deposited in the special securities repurchase account shall be deprived of the right of profit distribution.
According to the Repurchase Plan for Part of the Company’s Domestically Listed Foreign Shares (B Share), after the
completion of the repurchase of shares, the Board of Directors shall propose to shareholders to approve the cancellation
of the repurchased shares, the decrease of the Company’s registered capital and the corresponding amendments to the
Articles of Association of the Company. The above matters have been reviewed and approved by the 31 st meeting of the
8th Board of Directors of the Company and have yet to be reviewed and approved by the shareholders. It is estimated that
when the profit distribution proposal is implemented, the Company will have completed the relevant cancellation
procedures, and the total share capital of the Company will have been reduced to 2,329,811,766 at that time.
In view of the above reasons, the Company intends to declare a cash dividend of RMB 0.16 (before tax) for every 10
shares to the all shareholders on the basis of 2,329,811,766 shares entitled to dividend distribution on the record day when
the profit distribution plan is implemented (excluding the repurchased shares held by the Company which are not entitled
to dividend and which, subject to the approval of the Company’s Board of Directors and shareholders, shall be cancelled),
resulting in a total cash dividend of RMB 37,276,988.26 (before tax).. No share will be distributed as share dividend, as
well as no reserve will be transferred to equity capital.
(3) According to the Implementation Rules of the Shenzhen Stock Exchange on Share Repurchases of Listed Companies,
where a listed company, with cash as the consideration, conducts a share repurchase by means of centralized bidding,
the amount already paid for buying back shares in the current year shall be deemed as cash dividends and incorporated
into the calculation thereof in a certain proportion for the year.
As of the date of the expiration of the repurchase period (December 6, 2020), the Company has repurchased 14,309,536
shares of B-Shares by means of a centralized price bidding transaction through a special securities repurchase account
for B-Shares. The total payment amount for the repurchase is HKD 69,747,209 (including transaction fees, equivalent to
RMB 60,399,296，which shall be included in the cash dividend in 2020.
Cash dividend distribution of the common shares of the Company in the last 3 years (including the Reporting Period):
59
ADAMA Ltd Annual Report 2020
Unit: RMB
Dividend Amount of Net profit The ratio of Amount of Ratio of the Total amount The ratio of
year cash dividend belonging to the cash the cash cash of cash total amount of
(before tax) shareholders dividends dividend dividend by dividend cash dividend
of the listed accounting by other other (including (including other
company in in net profit methods methods other ways) ways)
consolidated which (such as accounting accounting in
statement of belongs to share in net profit net profit which
dividend year shareholders buyback) which belongs to
of the listed belongs to shareholders of
company in shareholders the listed
consolidated of the listed company in
statement company in consolidated
consolidated statement
statement
2020 37,276,988.26 352,753,000 10.57% 60,399,296 17.12% 97,676,284.26 27.69%
2019 29,358,642.98 277,041,000 10.6% 0.00 0.00% 29,358,642.98 10.6%
2018 237,315,697.45 2,402,462,000 9.88% 0.00 0.00% 237,315,697.45 9.88%
The Company (including its subsidiaries) made profit in the reporting period and the profits distribution of the common
shares held by the shareholders of the Company (without subsidiaries) was positive, but it did not put forward a preplan
for cash dividend distribution of the common shares:
□ Applicable √ Not applicable
II. Situations for dividend distribution and turning capital reserve into share capital
for the Reporting Period
√ Applicable □ Not applicable
The Company plans to distribute cash dividends for the year 2020, and does not intend to issue bonus shares or transfer
capital reserve to share capital.
Bonus shares for every 10-share (Share) Not Applicable.
Dividends for every 10-share (RMB) (Tax included) 0.16
Every 10-share increased the shares’ number 0
Equity base of distribution plan (Share) On the basis of 2,329,811,766 shares
entitled to dividend distribution on the
record day when the profit distribution
plan is implemented
Cash dividend (RMB) (Tax included) 37,276,988.26
Amount of the cash dividend by other methods (e.g. share buyback) 60,399,296
Total cash dividend (RMB) (Tax included) 97,676,284.26
Distributable profits (RMB) 352,753,000
Ratio of the Cash dividend (including the amount to be distributed in 100%
other ways) accounting in the total amount of the distributed
dividend
60
ADAMA Ltd Annual Report 2020
Cash dividends of This Time
If the development phase of the Company was the mature period with significant funds expenditures arrangement, the
proportion of the cash dividend should at least reach 40% of the total profit distribution.
Detailed Description on the Pre-Plan for Profit Allocation or Turning Capital Reserve into Share Capital
As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, the net profit attributable to shareholders
of the Company is RMB 352,753,000. As there is no transfer to statutory surplus reserve (10% of the net profit on a
standalone basis of the Reporting Period is RMB 0), profit available for distribution for the year 2020 is RMB
352,753,000.
The current total share capital of the Company is 2,344,121,302 shares, of which 2,329,811,766 are entitled to dividend
distribution and 14,309,536, repurchased by the Company during 2020 and yet to be canceled, are not entitled to
dividend distribution. It is estimated that when the profit distribution proposal is implemented, the Company will have
completed the relevant cancellation procedures, and the total share capital of the Company will have been reduced to
2,329,811,766 shares at that time.
The proposal for profit distribution for the year 2020 is a distribution of 10% of the total profit available for distribution,
calculated as follows with no transfer of reserves into equity:
On the basis of 2,329,811,766 shares entitled to dividend distribution on the record day when the profit distribution
plan is implemented (excluding the repurchased shares held by the Company which are not entitled to dividend and
which, subject to the approval of the Company’s Board of Directors and shareholders, shall be cancelled), the
Company plans to declare a cash dividend of RMB 0.16 (before tax) for every 10 shares to the all shareholders,
resulting in a total cash dividend of RMB 37,276,988.26 (before tax). No share will be distributed as share dividend,
and no reserve shall be transferred to equity capital.
61
ADAMA Ltd Annual Report 2020
III. Performance of commitments
1. Commitments completed by the Company, the shareholders, the actual controllers, the purchasers, the Directors, the Supervisors and the Senior
Executives or the other related parties during the Reporting Period and those hadn’t been completed execution up to the period-end
√ Applicable □ Not applicable
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
Commitment on - - - - - -
share reform
1. The business of ChemChina’s subsidiaries - Regarding On-going.
Jiangsu Anpon Electrochemical Co., Ltd., Anhui commitment 1, The committed party
Petroleum Chemical Group Co., Ltd., Shangdong September 6, complies with the
Dacheng Agrochemical Co., Ltd., Jiamusi Heilong 2020 commitments:(1)
Agrochemicals Co., Ltd., and Hunan Haohua (According to ChemChina had
Chemical Co., Ltd. and its subsidiary are the same the transferred its shares
or similar business as the main business of commitments in Anpon to ADAMA;
Commitment in
ADAMA. As for horizontal domestic competition, made by (2) ChemChina had
the acquisition Commitments
ChemChina committed to gradually eliminate such September 7, ChemChina on transferred its shares
report or the on the horizontal
kind of horizontal competition in the future and to 2013 October 12, in Jiamusi Heilong to a
report on equity ChemChina competition
fight for the internal assets reconstruction, to 2016, the date third party, such that.
changes
adjust the industrial plan and business structure, to eliminate the Jiangmusi Heilong is
to transform technology and to upgrade products, domestic no longer a subsidiary
to divide the market so as to make each horizontal of ChemChina; (3)
corporation differ in the products and its ultimate competition Shangdong Dacheng
users according to the securities laws and between the is not a subsidiary of
regulations and industry policy within 7 years, thus Company and CNAC and doesn’t
to eliminate the current domestic horizontal Jiangsu Anpon carry out agrochemical
62
ADAMA Ltd Annual Report 2020
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
competition between ChemChina’s controlled Electrochemical business; (4)
subsidiaries and ADAMA. Co., Ltd., Anhui ChemChina is not the
2. Other than the existing and potential horizontal Petroleum actual controller of
competition stated in the acquisition report, Chemical Haohua.
ChemChina will take effective measures to avoid Group Co.,
engagements by itself and its controlled Ltd., and
subsidiaries in new business that is in the same Jiamusi Heilong
or similar business to ADAMA, within the territory Agrochemicals
in future. 3. If ChemChina or its controlled Co., Ltd., is
subsidiaries domestically conduct related January 4,
business which form horizontal competition with 2022).
ADAMA, in the future, ChemChina will actively Regarding
take steps, to gradually eliminate the competition, commitments 2
the concrete measures including but not limited to and 3, long
internal assets reorganization, (including putting term.
the business into ADAMA or operated through
ADAMA) to adjust the industrial plan and business
structure, to modify technology and to upgrade
products, to segment the market so as to
distinguish each corporation in terms of products
and its end users, thus to avoid and eliminate
domestic horizontal competition between
ChemChina’s controlled subsidiaries and ADAMA.
ChemChina will comply with laws, regulations and
Commitments
other regulatory documents to avoid and reduce
on the On-going.
related-party transactions with ADAMA. However, September 7,
independence of The committed party
ChemChina for related-party transactions that are inevitable or 2013 and Long term
ADAMA and complies with the
based on reasonable grounds, ChemChina will January 7, 2020
related- party commitments.
follow the market principles of just, fairness and
transactions
openness, and enter into agreement(s) legally and
63
ADAMA Ltd Annual Report 2020
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
go through lawful procedures. ChemChina will
honor its disclosure obligations and apply for
relevant approvals according to the AoA of
ADAMA, rules regarding related-party transactions
and relevant regulations, not impairing the lawful
rights and interest of ADAMA and its shareholders
by related-party transactions.
After completion of the acquisition transaction,
ADAMA will continue to keep complete
procurement, production and sales systems and to
possess independent intellectual properties.
ChemChina and its affiliated parties will be
completely independent from ADAMA in terms of
staff, assets, finance, business and organization.
ADAMA will have full capacity of operation in
Chinese agricultural chemical market. ChemChina
will continue to follow the Company Law and
Securities Law so as to avoid any action that may
impair the operating independence of ADAMA.
ChemChina will keep taking appropriate measures January 7, 2020 January 4, On-going.
to resolve the same issue between ADAMA and 2022 The committed party
Anhui Petrochemical Co., Ltd. within four years complies with the
after ADAMA buys 100% shares of ADAMA commitments. Note:
Commitments Solutions through the issuance of shares to CNAC On January 4, 2018,
ChemChina on horizontal and finishes the raising of supporting finance in ADAMA completed the
competition accordance with the original commitments as well purchase of the shares
as various the requirements of securities laws and of ADAMA Agricultural
regulations and industry policies. Solutions Ltd. and the
raising of supporting
finance.
64
ADAMA Ltd Annual Report 2020
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
Based on a preliminary review, ChemChina
believes that Syngenta A.G. and ADAMA may
have horizontal competition to some extent. It will
further analyze, confirm and specify if the two
companies share the same or similar businesses
and products in terms of business content,
suppliers and customers, product substitution,
processes and core technologies and distribution On-going.
channels, etc. If the result will be positive, January 7, The committed party
January 7, 2020
ChemChina will gradually solve the issue within 5 2025 complies with the
years after the issuance of this Letter by taking commitments.
appropriate measures, including but not limited to
internal asset restructuring, industrial planning and
business structure adjustment, technology
transformation and product upgrading, market
segmentation or other feasible solutions in
accordance with the requirements of securities
laws and regulations and industry policies.
Once Sinofert and Sinochem Agriculture are the
subsidiaries of ChemChina, ChemChina will
analyze if there are same or similar businesses
among the three subsidiaries. If the result will be On-going.
positive, ChemChina will then propose The committed party
January 7, 2020 Long term
corresponding solutions for any business or product complies with the
that constitutes competition in accordance with the commitments.
requirements of applicable laws, regulations and
regulations to solve the issue of horizontal
competition.
65
ADAMA Ltd Annual Report 2020
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
Other than the foregoing, none of the main On-going.
business of ChemChina and other controlled The committed party
January 7, 2020 Long term
subsidiaries is the same or similar to that of complies with the
ADAMA. commitments.
ChemChina will continue to take effective
measures to prevent itself and its other
subsidiaries from adding new businesses in the
future that are the same as or similar to those of
ADAMA.
If ChemChina or any of its other subsidiaries
develops related businesses that constitutes
On-going.
horizontal competition against the domestic
The committed party
business of ADAMA in the future, it will actively January 7, 2020 Long term
complies with the
take relevant measures, including but not limited
commitments.
to asset restructuring, adjustment of industrial
planning and business structure, technological
transformation and Product upgrades, market
segmentation and other feasible solutions, so that
each enterprise will be different in their portfolio
and end users and avoid and eliminate the
horizontal competition with ADAMA.
From the effective date of the Commitment Letter, On-going.
if ChemChina violates the above commitments, it Long term The committed party
January 7, 2020
should compensate ADAMA for the losses or effective complies with the
expenses suffered or incurred by the violation. commitments.
Commitments ChemChina Commitments The subsidiaries controlled by ChemChina, October 12, January 4, On-going.
66
ADAMA Ltd Annual Report 2020
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
made at the on the horizontal namely Anpon, HH, Maidao, Anhui Petrochemical 2016 2022 The committed party
time of assets competition and Heilong as well as their subsidiaries are in complies with the
reorganization similar or the same business as ADAMA. For the commitments: (1) the
horizontal competition in China, ChemChina reorganization, i.e. the
commits to take appropriate actions to solve the issuance of shares to
horizontal competition between its subsidiaries CNACA for purchasing
and ADAMA step-by-step in an appropriate way assets and
within 4 years after completion of the implementation of
reorganization, in accordance with securities laws, private placement,
regulations and sector/industrial policies. completed on January
The means by which ChemChina addresses the 4, 2018; (2) Anpon
horizontal competition include but are not limited merged with Maidao
to the following, and ChemChina’s
ADAMA acquires crop protection-related assets shares in Anpon had
under ChemChina. ADAMA holds or controls other been transferred to
crop protection-related assets of ChemChina in ADAMA; (3)
line with national laws and by reasonable ChemChina had
commercial means such as entrusted operation. transferred its shares
ChemChina divests other crop protection-related in Heilong to a third
assets or transfers the control power of such party. Heilong is no
subsidiaries to external parties. ChemChina longer a subsidiary of
reorganizes internal assets, adjusts sector ChemChina; (4) HH
planning and business structure, upgrades withdrew from the
technologies and products and makes market agrochemical
segmentation so that each company will business.
differentiate its products and end users to
eliminate horizontal competition between the
subsidiaries controlled by ChemChina and
ADAMA.
ChemChina Commitments ChemChina will take effective actions to avoid that October 12, Long term On-going.
67
ADAMA Ltd Annual Report 2020
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
on Potential it or its controlled subsidiaries will add new 2016 The committed party
Horizontal business in China same or similar to ADAMA. complies with the
Competition If ChemChina or its controlled subsidiaries will in commitments.
the future be engaged in business in China that
constitutes horizontal competition with ADAMA,
ChemChina will take active actions, including but
not limited to reorganizing internal assets,
adjusting sector planning and business structure,
upgrading technologies and products and making
market segmentation so that each company will
differentiate its products and end users to avoid
and eliminate horizontal competition between the
subsidiaries controlled by ChemChina and
ADAMA.
ChemChina will, as required by law, regulation and
other specifications, avoid and reduce related
party transactions with ADAMA; however, for the
related party transactions that are inevitable or
Commitment to based on reasonable grounds, ChemChina will
On-going.
reduce and follow the just, fairness and open principles in
The committed party
ChemChina standardize market, legally enter into agreement(s) by law, go August 4, 2016 Long term
complies with the
related-party through lawful procedures, and perform its
commitments.
transactions disclosure obligations and approving procedures
as required by related systems and regulations.
ChemChina warrants that no related party
transaction will be done to impair lawful rights and
interest of ADAMA and its shareholders.
Commitment to After completion of the acquisition transaction, On-going.
ChemChina maintain ADAMA will continue to keep complete August 4, 2016 Long term The committed party
independence of procurement, production and sales systems and to complies with the
68
ADAMA Ltd Annual Report 2020
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
the ADAMA possess independent intellectual properties, and commitments.
ChemChina its affiliated parties will be
completely independent from ADAMA in terms of
staff, assets, finance, business and organization,
and ADAMA will have full capacity of operation in
Chinese agricultural chemical market. ChemChina
will follow related regulations in Company Law and
Securities Law, and avoid engagement in any
action that impairs the operating independence of
ADAMA.
All new shares purchased and held through the
share issuance for assets purchase shall be
prohibited from transfer in whatever forms within
36 months after date of listing, including but not
limited to public transfer via securities market or
transfer by agreements and will not have such
shares of ADAMA managed by any other person
entrusted, except such transfer is required and
made between ChemChina and its subsidiaries as Completed. The
CNAC October 12,
Commitment on a result of state-owned assets reorganization, restricted shares were
/Syngenta 2016 and August 2, 2020
share lock-up consolidation or free transfer of stock equity, in released on August 3,
Group January 7, 2020
which case the transferee must keep such shares 2020.
obtained locked up until the lock-up period
expires. According to Article 48 of the
Administrative Measures for the Material Asset
Reorganizations of Listed Companies, if within a
period of 6 months after completion of this
transaction, the closing price of the listed company
is lower than the offering price in any continuous
20 trading days, or if within a period of 6 months
69
ADAMA Ltd Annual Report 2020
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
after completion of this transaction, the closing
price at the end of such 6-month period is lower
than the offering price, then the lock-up period of
shares held will be extended automatically by at
least 6 months. Upon expiry of the lock-up period,
such shares shall be subject to applicable laws,
regulations and CSRC and SZSE rules.
CNAC /Syngenta Group shall fulfill the
performance compensation obligations in the
transaction in accordance with the Performance
Compensation Agreement signed with ADAMA
and relevant laws and regulations. In the event
that a performance compensation obligation takes
place, CNAC /Syngenta Group shall first fulfill the
Completed.
obligation of compensation with the shares of
Please refer to
ADAMA and the deficient portion (if any) shall be
Announcement on the
made up in cash. CNAC /Syngenta Group
Completion of
CNAC Commitments commits that the net profits of ADAMA attributable September 13,
December 31, Buyback and
/Syngenta on performance to the parent company after deducting non- 2016 and
2019 Cancellation of the
Group compensation recurring gains and losses shall not be less than January 7, 2020
Compensation
USD 147,675,000, USD 173,321,900 and USD
Shares(Announcement
222,416,800 respectively in 2017, 2018, 2019.
No.36) for details.
After the expiry of the profit compensation period,
if the impairment amount is larger than
compensated amount by CNAC during the profit
compensation period, then CNAC/Syngenta Group
shall compensate ADAMA. The aggregated
adjusted actual net profit of the target company for
the 2017-2019 period was USD 512.6756 million,
implying a
70
ADAMA Ltd Annual Report 2020
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
shortfall of USD 30.7381 million, a 94.34%
completion rate of the committed
performance. According to the Performance
Compensation Agreement and the supplementary
agreements, the number of shares to be returned
to the Company as compensation is 102,432,280.
The cumulative cash dividend distributed during
the profit compensation period generated from the
compensation shares shall be returned to the
Company.
71
ADAMA Ltd Annual Report 2020
2. Assets or projects with profit forecast, still relevant for forecast period
□ Applicable √ Not applicable
IV. Inadequate use of Company’s capital by the controlling shareholder or by its
related parties for non-operating purposes
□ Applicable √ Not applicable
No such situation occurred during the Reporting Period.
V. Explanation by the Board of Directors and the Supervisory Board regarding “non-
standard audit report” issued by Company’s auditor for the Reporting Period
□ Applicable √ Not applicable
VI. Changes in accounting standards, accounting estimates and accounting methods
compared to last financial report
√ Applicable □ Not applicable
"Accounting Standards for Business Enterprises Interpretation No. 13"
Interpretation No. 13 revised the three elements that constitute a business and elaborated the criteria for a business. "The
concentration test" is introduced as an option, for the acquirer in business combinations involving enterprises not under
common control, when determining whether the acquired operation or set of assets constitute a business. At the same
time, Interpretation No. 13 further clarifies the definition of related parties.
In addition, Interpretation No. 13 further clarifies that related parties of an enterprise also include joint ventures or
associates of other members (including parent company and subsidiaries) of the group to which the enterprise belongs,
and other joint ventures and associates of investors who exercise joint control over the enterprise etc.
Interpretation No. 13 was effective from January 1, 2020. Adoption of the interpretation has no significant impact on the
Company’s financial statements.
"Regulations on Accounting Treatment of Rent Concessions Related to the New Coronary Pneumonia Epidemic"
(Caikuai [2020] No. 10)
In June 2020, the Ministry of Finance issued the "Notice on Issuing the "Regulations on Accounting Treatment of Rental
Concessions Related to the New COVID-19 Epidemic" (Financial Accounting Policy [2020] No. 10), which can be used in
accordance with the accounting treatment regulations for rental concessions related to the COVID-19 in order to apply a
simplified approach. The notice did not have a significant impact on the Company’s financial statements.
VII. Financial re-statement during the Reporting Period
□ Applicable √ Not applicable
72
ADAMA Ltd Annual Report 2020
No such cases during the Reporting Period.
VIII. Change of the consolidation scope as compared with the financial reporting of
last year
√ Applicable □ Not applicable
During the reporting period, the Group acquired Alfa Agricultural Supplies, S.A., FNV S.A., and Shanghai Dibai Plant
Protection Co., Ltd. through business combination not under common control.
IX. Engagement of Company’s Auditor
Auditor engaged at present
Name of domestic Auditor Deloitte Touche Tohmatsu Certified Public Accountants LLP
Remuneration for domestic Auditor for the
276
Reporting Period (RMB Ten Thousand Yuan)
Consecutive years of the audit services
4
provided by domestic Auditor
Mou Zhengfei, and Ma Renjie
Name of domestic accountants
Consecutive years of the audit services
3
provided by the domestic accountants
Name of overseas Auditor Not applicable
Remuneration for overseas Auditor for the
--
Reporting Period (RMB Ten Thousand Yuan)
Consecutive years of the audit services
--
provided by overseas Auditor
Name of overseas accountants --
Consecutive years of the audit services
--
provided by the overseas accountants
Change of the Auditor at Reporting Period
□ Yes √ No
Engagement of the Auditor for internal control, financial adviser or sponsor
√ Applicable □ Not applicable
In the Reporting Period, the Company continued to engage Deloitte Touche Tohmatsu Certified Public Accountants LLP as
the auditor of the Company for 2020 annual financial reports and 2020 annual internal control of the Company. Total
remuneration for the Auditor was RMB 2.76 million.
X. Trading termination of Company’s securities that the Company will face after the
disclosure of this annual report
□ Applicable √ Not applicable
73
ADAMA Ltd Annual Report 2020
XI. Bankruptcy and reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XII. Material Legal Claims/proceedings
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIII. Punishment and rectification
√ Applicable □ Not applicable
Compan Person Reason Type of the Conclusion Disclosure Index of the disclosure
y name punishe punishment made by the date
d authority
ADAMA ADAMA On August 26, Punished by On November 11, / Considering the violation
Anpon Anpon 2020, the law the 2020, Huai’an is not serious and the
enforcement environment Ecological amount of the fine is
officers of al protection Environment small, it shall not be
Huai’an authority. Bureau made an deemed as an
Ecological decision on administrative penalty
Environment administrative that shall be disclosed in
Bureau penalty for the ad hoc
conducted an Anpon’s air announcement according
inspection and pollutants to the Listing Rules of
commission test. discharge that SZSE.
The air pollutants exceeded the
discharge from emission limit, and
Anpon’s imposed a fine of
buprofezi RMB 100,000 on
workshop Anpon.
exceeded the
emission
standard of
Jiangsu
Province.
Status of Rectification
74
ADAMA Ltd Annual Report 2020
□ Applicable √ Not applicable
XIV. Credibility of the Company, its controlling shareholders and actual controller
□ Applicable √ Not applicable
XV. Stock incentive plans, ESOPs or other employee incentives
□ Applicable √ Not applicable
To the date of the report, the Company does not have stock incentive plans, ESOP or other staff incentives. It shall be
noted, that Adama Solutions currently has several long-term incentive plans according to which it has granted long-term
cash rewards to executive officers and employees. These long-term incentive plans are based either on the performance
of the Company's shares (phantom cash incentives) and/or the Company's performance.. Adama Solutions has further
adopted an incentive plan linked to the increase in the Syngenta Group EBITDA.
XVI. Significant related-party transactions
1. Related-party transactions in the ordinary course of business
□ Applicable √Not applicable
(1) Please see item 5 below for information on the related party transactions made in 2020 in the ordinary course of
business.
(2) Item XI of Section XI “Financial Report” sets out the related parties and the related-party transactions of the Company.
2. Related-party transactions arising from asset acquisition or sale
□ Applicable √ Not applicable
There were no related-party transactions arising from asset acquisition or sale in the Reporting Period.
3. Related-party transitions with joint investments
□ Applicable √ Not applicable
The Company was not involved in any significant related-party transaction with joint investments during the Reporting
Period.
4. Credits and liabilities with related parties
√ Applicable □ Not applicable
Whether there was non-operating credit and liability with related parties
□ Yes √ No
The Company was not involved in any non-operating credit and liability with related parties.
5. Other material related-party transactions
75
ADAMA Ltd Annual Report 2020
√ Applicable □ Not applicable
(1) The 2019 Annual General Meeting approved the expected related-party transactions in the ordinary business
course of the Company in 2020. Please refer to Item X of Section XII “Financial Report” for details of the related-
party transactions in the ordinary business course.
(2) The 3rd Interim Shareholders Meeting in 2020 approved the proposal on the renewal of the Financial Service
Agreement with ChemChina Finance Co., Ltd.
The website to disclose the interim announcements on significant related-party transactions:
Name of the interim Disclosure date of the interim Website to disclose the interim
announcement announcement announcement
Amended Announcement on
Expected Related-Party
Transactions in the Ordinary Course May 12, 2020 Juchao website www.cninfo.com.cn
of Business in 2020 (Announcement
No.2020-30)
Announcement on the Intended
Renewal of the Financial Service
Agreement with ChemChina
August 21, 2020 Juchao website www.cninfo.com.cn
Finance Co., Ltd. constituting a
related-party transaction
(Announcement No.2020-42)
XVII. Particulars regarding material contracts and execution thereof
1. Particulars about trusteeship, contract and lease
(1) Trusteeship
□ Applicable √ Not applicable
There was no trusteeship of the Company in the reporting period.
(2) Contract Operation
□ Applicable √ Not applicable
There was no contract operation of the Company in the reporting period.
(3) Lease
□ Applicable √Not applicable
There is no major lease in the reporting period.
76
ADAMA Ltd Annual Report 2020
2. Significant guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unless otherwise specified, the unit hereunder is RMB ‘0000
Guarantees provided by the Company in favor of third parties (excluding subsidiaries)
Disclosure date Planned Actual Guarantee
Guaranteed Actual Type of Period of expired
of the guarantee guarantee for a related
party occurrence date guarantee guarantee or not
announcement amount amount party or not
-- -- -- -- -- -- -- -- --
Total amount of the occurred guarantee
Total guarantee line approved in favor
in favor of third parties (excluding
of third parties (excluding subsidiaries) -- --
subsidiaries) during the reporting
during the reporting period (A1)
period (A2)
Aggregated guarantee line in favor of
Total guarantee balance in favor of third
third parties (excluding subsidiaries)
5,000 parties (excluding subsidiaries) by the --
that has been approved by the end of
end of the reporting period (A4)
the reporting period (A3)
Guarantees provided by the Company in favor of its subsidiaries
Disclosure
Planned Actual Guarantee
date of the Actual Type of Period of expired
Guaranteed party guarantee guarantee for a related
announce occurrence date guarantee guarantee or not
amount amount party or not
ment
joint and Two years
ADAMA Anpon May 18, November 13,
80,000 5,000 several after the loan Yes No
(Jiangsu) Ltd. 2019 2019
liability matures
77
ADAMA Ltd Annual Report 2020
joint and Two years
October 10,2019 4,000 several after the loan Yes No
liability matures
joint and Three years
November 19,
5,000 several after the loan Yes No
2019
liability matures
joint and Three years
ADAMA Anpon August 22, December 10,
63,000 5,000 several after the loan Yes No
(Jiangsu) Ltd. 2019 2019
liability matures
joint and Three years
December 26,
5,000 several after the loan Yes No
2019
liability matures
Joint liability Two years
December 26,
2,000 and several after the loan Yes No
2019
liability matures
Joint liability Two years
February 27,2020 2,000 and several after the loan Yes No
liability matures
Joint liability Two years
February 26,2020 6,400 and several after the loan Yes No
liability matures
Joint liability Three years
April 2, 2020 5,000 and several after the loan Yes No
liability matures
Joint liability Three years
May 19, 2020 3,000 and several after the loan No No
liability matures
ADAMA Anpon February
130,900 Joint liability Three years
(Jiangsu) Ltd. 27,2020
May 27, 2020 5,000 and several after the loan Yes No
liability matures
Joint liability Two years
June 16, 2020 2,000 and several after the loan Yes No
liability matures
Joint liability Three years
June 29, 2020 5,000 and several after the loan No No
liability matures
Joint liability Two years
September 1,
3,000 and several after the loan No No
2020
liability matures
July 20, 2020 5,000 Joint liability Three years No No
78
ADAMA Ltd Annual Report 2020
and several after the loan
liability matures
Joint liability Three years
December 14,
5,000 and several after the loan No No
2020
liability matures
Joint liability Three years
December 16,
5,000 and several after the loan No No
2020
liability matures
Joint liability Two years
December 22,
2,000 and several after the loan No No
2020
liability matures
Joint liability Two years
July 21,
3,000 and several after the loan No No
2020
liability matures
Joint liability Two years
August 19,
1,800 and several after the loan No No
2020
liability matures
Joint liability Two years
Hubei Sanonda August 21,
20,000 October 28, 2020 3,444 and several after the loan No No
Foreign Trade Co., Ltd. 2020
liability matures
Total guarantee line approved in Total amount of the occurred
favor of the subsidiaries during 150,900 guarantee in favor of the subsidiaries 56,644
the reporting period (B1) during the reporting period (B2)
Aggregated guarantee line that
Total guarantee balance in favor of the
has been approved in favor of the
293,900 subsidiaries by the end of the 82,644
subsidiaries by the end of the
reporting period (B4)
reporting period (B3)
Guarantees provided by subsidiaries in favor of subsidiaries (USD ’0000)
Disclosure
Planned Actual Guarantee
date of the Actual Type of Period of expired
Guaranteed party guarantee guarantee for a related
announce occurrence date guarantee guarantee or not
amount amount party or not
ment
Generally 7
joint and years
October 31,
Control Solutions, Inc. 1,300 October 30, 2018 1,300 several (subject to
2018 No No
liability the overseas
laws)
The loan term
joint and
January 10, (5 years) and
Control Solutions, Inc. 4,000 January 9, 2019 4,000 several
2019 any applica- No No
liability
ble statute of
79
ADAMA Ltd Annual Report 2020
limitations pe-
riod (gener-
ally 7 years).
The guarantee
existed before the
company was joint and
Not Valid until
ADAMA Brazil 27399.55 consolidated into 7,227.29 several No No
applicable cancelled
the financial liability
statements of the
Company.
The guarantee
existed before the
company was joint and
Adama India Private Not Valid until
9,019.2 consolidated into 4,858.05 several No No
Ltd. applicable cancelled
the financial liability
statements of the
Company.
The guarantee
existed before the
ADAMA (Beijing) company was joint and
Not Valid until
Agricultural Technology 2,500 consolidated into 0 several No No
applicable cancellation
Company Limited the financial liability
statements of the
Company.
The guarantee
existed before the TRY
ADAMA Turkey Tarm company was 154,354.9k joint and
Not Valid until
Sanayi ve Ticaret 3,850 consolidated into (approximat several No No
applicable cancelled
Limited irketi the financial ely USD liability
statements of the 2,184.38)
Company.
Adama Makhteshim Not The guarantee
applicable unlimited existed before the
company was joint and
Valid until
consolidated into 13,471.48 several No No
cancelled
the financial liability
statements of the
Company.
Adama Agan Not unlimited The guarantee joint and
Valid until
applicable existed before the 14,176.48 several No No
cancelled
company was liability
80
ADAMA Ltd Annual Report 2020
consolidated into
the financial
statements of the
Company.
The guarantee
existed before the
ADAMA Agricultural company was joint and
Not Valid until
Solutions UK Ltd. 365.64 consolidated into 0 several
applicable cancelled No No
the financial liability
statements of the
Company.
The guarantee
existed before the
ADAMA CELSIUS BV,
company was joint and
Curacao branch, & Not Valid until
4,500 consolidated into 3,053.68 several
ADAMA Fahrenheit applicable cancelled No No
the financial liability
BV, Curacao Branch
statements of the
Company.
Not 2,500 The guarantee
applicable existed before the
company was joint and
ADAMA Ukraine LLC Valid until
consolidated into 1,336.89 several
cancelled No No
the financial liability
statements of the
Company.
Total guarantee line approved in Total amount of the guarantee in USD 51,608.25
favor of the subsidiaries during Not applicable favor of the subsidiaries occurred (approximately RMB
the reporting period (C1) during the reporting period (C2) 336,738.67)
Aggregated guarantee line that
Total guarantee balance in favor of USD 51,608.25
has been approved in favor of the USD 55,434.39 (approximately
the subsidiaries by the end of the (approximately RMB
subsidiaries by the end of the RMB 361,703.85
reporting period (C4) 336,738.67
reporting period (C3)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total guarantee line approved Total actual occurred amount of
during the reporting period 150,900 guarantee during the reporting 393,382.67
(A1+B1+C1) period (A2+B2+C2)
Total guarantee line that has been
Total actual guarantee balance at
approved at the end of the
660,603.85 the end of the reporting period 419,382.67
reporting period
(A4+B4+C4)
(A3+B3+C3)
Proportion of total guarantee amount (A4+B4+C4) to the net 19.64%
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ADAMA Ltd Annual Report 2020
assets of the Company
Of which:
The balance of the guarantee provided in favor of the
0
controlling shareholder and related party.
Amount of debt guarantee provided for the guaranteed party
whose asset-liability ratio is not less than 70% directly or 56,288.52
indirectly (E)
The amount of the guarantee that exceeds 50% of the net
0
assets
Total amount of the above three guarantees (D+E+F) 56,288.52
As for undue guarantee, liability to guarantee has happened or
joint liquidated liability may be undertaken during this --
Reporting Period (if existing)
Regulated procedures are violated to offer guarantee (if
--
existing)
(2) Illegal guarantee
□ Applicable √ Not applicable
No illegal guarantees were issued during the Reporting Period.
3. Cash assets management entrustment
(1) Wealth management entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Entrustment loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Significant contracts in the routine course of the business
□ Applicable √ Not applicable
5. Other significant contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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ADAMA Ltd Annual Report 2020
XVIII. Social responsibilities
1. Perform social responsibilities
The values of corporate social responsibility are woven throughout the Company’s culture. The Company holds itself to a
high standard of integrity, fairness, reliability and responsibility, and believes that this is essential for the Company’s long
term success. The Company has made a strong commitment, to education, safety, and protection of the environment, and
the development of its employees.
The Company insists on the policy “safety, quality, environmental protection, efficiency”, carries out production and
operation in strict accordance with OHSAS18001 occupational health and safety management system, ISO14001
environment management system, ISO9001 quality management system and national cleaning production standards,
carries forward the construction of SHE system, technically reforms production devices, technologies and tail gas treatment,
enhances the safety of production devices, carries forward lean production, reduces the consumption of energy and
materials and carries forward energy conservation and emission reduction. For output value per ten thousand RMB, the
overall energy consumption and water consumption decrease year by year. The Company will invest more in environmental
protection, carry forward comprehensive treatment on environment and persistently improve the performance of
environmental protection.
The Company relates high promotion of education in agriculture, chemistry, sustainability and other related areas as
integral part of its mission. The Company is dedicated to the nurturing of the next generation of scientist and to strengthen
and invest in the communities in which it operates.
Every two years,, the Group publishes a Corporate Social Responsibility report. Please refer them on the Company’s
website www.adama.com.
(1) Establishment of Safety Production Management System
The Company held series of activities at both Jingzhou and Huai’an Sites in 2020 to enhance HSE awareness and improve
HSE performance. Those activities include drafting, revising and issuing policies, procedures, performance indicators and
mid-and long-term improvement plans. The HSE systems that have been materialized at the two production sites are HSE
procedures, management regulations, dual prevention mechanism, management of personal protective equipment (PPE),
regulations for hot work, environmental management and various rules related to process safety.
(2) Setup and Operation of the Supervisory System
The Company has a well-established supervision system for safety production which has been operating effectively. The
HSE committee and the safety director system are set up while the main responsible persons and employee
representatives of various functional departments and plants are actively engaged in the safety committee.
The committee promotes the implementation of HSE laws and regulations, communication of HSE performance and the
rectification to remove HSE risks. It makes work plans while continuously raising the bar for better HSE performance. A
dedicated HSE department has been established for safety production management in accordance with relevant
regulations. The department is strongly committed to its duties and cooperates with the main responsible persons to
formulate the three-year work plan.
(3) Ongoing Performance of Safety Standardization
The plant has passed the second grade of certification for safety production standardization (for hazardous chemical
manufacturers).
Safety standardization and the HSE system support and supplement each other in efficient operation. The Company runs
a self-assessment over the ongoing performance of safety production standardization and promptly rectify issues found
accordingly.
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ADAMA Ltd Annual Report 2020
(4) Investment in Safety Production
The Company invests the full required amount of expense for safety production in strict accordance with the " Management
Measures for Allocation and Use of Expense for Safety Production in Enterprises" and the "HSE Expenses Allocation
Management Regulations" of its own.
(5) Education and Training for Safety Production
The Company has formulated a relatively comprehensive work plan for safety training. Through the combined internal and
external training programs, the safety awareness and operation skills of workers engaged in production of hazardous
chemicals have been improved.
The Company has ensured that relevant personnel for safety management and special operations should all hold
certificates before being assigned with any work. It also employs a group of registered safety engineers to participate in its
safety production management.
(6) Accepting Safety Inspection of the Competent Authorities
In 2020, the Company accepted safety inspections for more than 100 times by SASAC as well as local authorities at all
levels. Primarily, there was no major safety hazards found in those inspections and the production sites also rectified the
detected problems as required.
(7) Safety Production Accidents
No major safety accidents occurred during the reporting period. The Company adopts the universally applied Injury &
Illness rate, IIR, to evaluate its safety performance. The rolling recordable rate of injuries and occupational disease has
continued to decline for 12 consecutive months and since August 2020, it has further reduced to below 0.2, which is the
global excellence level of industries.
2. Perform the social responsibility of targeted poverty alleviation
(1) Targeted Poverty Alleviation Planning
The Company actively implements targeted poverty alleviation according to relevant instructions from Jingzhou Leading
Group and ChemChina on Poverty Alleviation.
(2) Annual Overview
During the reporting period, the Company actively response the call of Labors Union of Hubei province and Jingzhou city,
and purchased RMB 229,950 goods produced by Xuanen County, a designated poverty alleviation county.
(3) Results of Targeted Poverty Alleviation
Indicator Unit Quantity/ Progress
I. Overview 10,000RMB 22.995
Of which, 1. funds 10,000RMB ——
2. goods 10,000RMB 22.995
II. Input Breakdown —— ——
1. Sector development —— ——
Of which, 1.1 Sector of Project ——
1.2 Number of Project Project
1.3 Inputs 10,000RMB
1.4 No. of people out of poverty Person
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ADAMA Ltd Annual Report 2020
Indicator Unit Quantity/ Progress
2. Employment transfer —— ——
3. Movement and relocation —— ——
4. Education —— ——
5. Health —— ——
6. Ecological conservation —— ——
7. Subsistence support —— ——
10,000RMB 22.995
8. Social activities
a) Investment on East and West Part
of China Poverty Alleviation 10,000RMB ——
b) Investment on On-site Poverty
Alleviation 10,000RMB 22.995
9. Others —— ——
III. Awards —— ——
(4) Follow-up Plan
The Company will continue to steadily promote poverty alleviation with one-on-one subject following instructions of
Jingzhou disciplinary Committee and ChemChina on Poverty Alleviation.
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ADAMA Ltd Annual Report 2020
3. Environmental Protection
Is the Company listed as key polluting entities by environmental protection agencies?
Yes
Main Number
Layout of Total amount Total
Company pollutants Way of of
emission Concentration Pollution standards applied emitted/ amount Exceeding limit
name and special emission emission
points discharged approved
pollutants points
(1) for the old site: Comprehensive
Standard on Discharge of Waste
Water (GB8978-2002) ，
Centralized
COD<100mg/L;
ADAMA COD Continuous 2 discharge Within limit 158.82 391.3 No
(2) for the new site: Discharge Standards
point
for Pollutants from Urban Sewage
Treatment Plant (GB 18918 – 2002),
COD <50mg/L
(1) for the old site: Comprehensive
Standard on Discharge of Waste
Water (GB8978-2002), ammonia
Centralized
Ammonia nitrogen<15mg/L;
ADAMA Continuous 2 discharge Within limit 5.01 50 No
nitrogen (2) for the new site: Discharge
point
Standards for Pollutants from Urban
Sewage Treatment Plant (GB 18918
– 2002), ammonia nitrogen<8mg/L;
for the old site & new site: Discharge
Total Centralized
Standards for Pollutants from Urban
ADAMA Phosphorou Continuous 2 Discharge Within Limit N/A N/A No
Sewage Treatment Plant (GB 18918 –
s Point
2002), total phosphorous <0.5mg/L
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ADAMA Ltd Annual Report 2020
Main Number
Layout of Total amount Total
Company pollutants Way of of
emission Concentration Pollution standards applied emitted/ amount Exceeding limit
name and special emission emission
points discharged approved
pollutants points
Standard on Air Pollution of Power Plant
ADAMA NOx Continuous 1 Power plant Within limit 24.598 212.22 No
（GB13223-2011）NOx <200mg/m
Standard on Air Pollution of Power Plant
ADAMA SO2 Continuous 1 Power plant Within limit 2.467 126.09 No
（GB13223-2011）SO2<200mg/m3
Fume and Standard on Air Pollution of Power Plant
ADAMA Continuous 1 Power plant Within limit 0.457 47.28 No
dust （GB13223-2011）
Centralized Comprehensive Standard on Discharge
Anpon COD Continuous 3 Discharge Within Limit of Waste Water (GB8978-2002)， 278.716 292.88 None
Point COD<100mg/L
Anpon Water Quality Standard for Sewage
Centralized
Ammonia Discharged into Urban Sewerage（GBT
Continuous 3 Discharge Within Limit 2.75 30.11 None
Nitrogen 31962-2015）, Ammonia Nitrogen
Point
<45mg/L
Anpon For Anpon: Water Quality Standard for
Sewage Discharged into Urban
Total Centralized Sewerage （GBT 31962-2015）, total
Phosphorou Continuous 3 Discharge Within Limit phosphorous <8mg/L; N/A N/A None
s Point For Anpon’s branch Maidao: Agreement
on Waste Water Discharge, total
phosphorous <3mg/L;
Anpon Power Standard on Air Pollution of Power Plant
NOx Continuous 1 Within Limit 8.9429 447.366 None
Plant （GB13223-2011）NOx <100mg/m3
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ADAMA Ltd Annual Report 2020
Main Number
Layout of Total amount Total
Company pollutants Way of of
emission Concentration Pollution standards applied emitted/ amount Exceeding limit
name and special emission emission
points discharged approved
pollutants points
Anpon Power Standard on Air Pollution of Power Plant
SO2 Continuous 1 Within Limit 0.9774 447.366 None
Plant （GB13223-2011）SO2<50mg/m3
Anpon Standard on Air Pollution of Power Plant
Fume and Power
Continuous 1 Within Limit （GB13223-2011）Fume and 1.689 67.105 None
Dust Plant
Dust<20mg/m3
88
ADAMA Ltd Annual Report 2020
(1) Development and Operation of Environmental Facilities
1. Development and Operation of Waste Water Facilities
The Company has a 20,000 tons/ D wastewater treatment station.The wastewater treatment facilities are running normally.
After treatment, the COD, ammonia nitrogen and total phosphorus in the discharged wastewater are within the limit.
Anpon, the subsidiary of the Company, has a 11,000 tons/ D wastewater treatment station. As all its facilities are operating
well, COD, ammonia nitrogen, and total phosphorous discharged after the treatment are within the limit.
2. Development and Operation of Waste Gas Facilities
The company's coal-fired thermal power plant has carried out ultra-low emission transformation. After the transformation,
the environmental protection facilities of the power plant operate normally. Sulfur dioxide, nitrogen oxides and dust in flue
gas all meet the ultra-low emission standards.
The exhaust treatment facilities in the coal-based power plants of Anpon are running well. SO2, Nitrogen oxide and fume
and dust discharged after the treatment are within the limit. Anpon adopted the pipe network power distribution in the
second half of 2020 and shut down its own coal-fired power plants. In addition, the chemical plant had been upgraded to
VOC treatment facilities and is now in trial operation.
3. The Company and Anpon disclose production and pollution information according the Interim Measures on
Environmental Information Disclosure and transfers information of main waste water and air pollutants to the information
platform of the local environmental bureau on a daily basis.
(2) EIA of construction projects and other environmental administrative permits
During the reporting period, the Company obtained the approvals on ultra-low emission reconstruction project and pesticide
relocation and upgrading project from the local environmental protection authority. The company has also obtained the
extension approval on the pollutant discharge permit, which will last until December 25, 2025.
Anbang’s "relocation and upgrading project with an annual output of 13,000 tons of ethephon (100%) was approved by the
environmental protection department.
(3) Contingency plan of environmental accidents
The Company and its relevant subsidiaries have formulated the Contingency Plan for Environmental Emergencies
according to their production facilities and industry features, and then submitted files to the local environmental protection
authorities as record.
(4) Environment self-monitoring plan
ADAMA attributes great importance to protecting the environment, out of a sense of responsibility to society and the
environment and strives to meet the relevant regulatory requirements and to even go beyond mere compliance, engaging
in constant dialogue with stakeholders, including the authorities and the community.
In order to improve the environmental management, track the discharge of various pollutants, evaluate the impact on the
surrounding environment, strengthen the discharge management of pollutants in the production process, accept the
supervision and inspection of environmental authorities and provide reference for pollution prevention and control, the
company and its subsidiary Anpon have formulated a self-monitoring plan, which conducts regular tests in strict accordance
with the requirements.
The major monitored indicators and frequency of the Company and Anpon are as the following:
1. Monitored Indicators
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ADAMA Ltd Annual Report 2020
Waste water: COD, NH3-N, PH, SS, Petroleum, TP.
Air Pollutant: SO2, Nitrogen oxide, Fume and Dust, Non Methane Hydrocarbon
Noise: Noise at the Site Border
2. Frequency
Boiler emission and waste water discharged from the centralized point: continuous auto monitoring
Manual sampling: SS, Petroleum, TP, once a month.
Noise: once a quarter.
ADAMA continually examines the implications of the environmental laws, taking actions to prevent or mitigate the
environmental risks and to reduce the environmental effects that may result from its activities, and invests extensive
resources to fulfill those legal provisions that are, and are anticipated to, affect it. ADAMA’s plants are subject to
atmospheric emissions regulations, whether by virtue of the stipulations provided in the business licenses or under the
applicable law. Hazardous materials are stored and utilized in the Company's plants, together with infrastructures and
facilities containing fuels and hazardous materials. ADAMA takes actions to prevent soil and water pollution by these
materials and treats them, if revealed. ADAMA’s plants conduct various soil surveys, risk surveys and tests with regard to
treatment of the soil or ground water at the plants.
ADAMA intends to continue investing in environmental protection, to the extent required and beyond this, whether on its
own volition or in compliance with contractual commitments, regulatory or legal standards relating to environmental
protection, so as to realize its best available policy and comply with any legal requirements.
As part of its policy of ecological process improvement, ADAMA also invests in remediation, changes in production
processes, establishment of sewage facilities, as well as in byproduct storage and recycling.
(5) Other environmental information that should be disclosed
No.
(6) Other environmental information
At the end of January 2019, preceding the Spring Festival, the Company voluntarily suspended operations at Sanonda’s
old site in Jingzhou, which is in the process of being relocated to a nearby advanced site, due to recording of higher than
permitted levels of wastewater compounds. The Company was subsequently instructed by the local government not to
resume operations before rectification. The Company rectified the discharge levels and resumed operations at the old site
at the beginning of April 2019. For details, please see the announcement published on www.cninfo.com.cn on February
13, 2019.
Following resumption of operations at the Jingzhou old site in late March, the Company is advancing the gradual ramp-up
of production. The new state-of-the-art wastewater treatment facility is operational, and the upgraded biological-
decomposition systems are being acclimated to the improved wastewater quality. As this progresses, the Company is
experiencing constrained supply in key products manufactured at the site, especially impacting North America, Latin-
America, Asia-Pacific, China, India, Middle-East and Africa, and recorded approximately RMB 276 million in related
idleness costs during the whole year.
In recent years, the Company has already invested $125 million in the relocation of the Jingzhou old site, and has installed
advanced production and environmental facilities at a new and already operational site, including an investment of $16
million in a new, state-of-the-art wastewater facility, which is ready to commence operation.
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ADAMA Ltd Annual Report 2020
XIX. Other significant events
□ Applicable √ Not applicable
There were no other significant events during the Reporting Period.
XX. Significant events of subsidiaries
□ Applicable √ Not applicable
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ADAMA Ltd Annual Report 2020
Section VI. - Change in Shares & Shareholders
I. Changes in shares
Unit: share
Before the change Increase/decrease (+/-) After the change
Capitalization
Newly issue Bonus
Amount Proportion of public Other Subtotal Amount Proportion
share shares
reserves
I. Restricted shares 1,810,887,539 74.02% -- -- -- -1,810,883,039 -1,810,883,039 4,500 0.0002%
a. State-owned legal person’s
1,810,883,039 74.02% -- -- -- -1,810,883,039 -1,810,883,039 0 0.0000%
shares
b. Shares held by domestic
4,500 0.00% -- -- -- -- -- 4,500 0.0002%
investors
i. Shares held by domestic legal
0 0.00% -- -- -- -- -- 0 0.0000%
person
ii. Shares held by domestic
4,500 0.00% -- -- -- -- -- 4,500 0.0002%
natural person
II. Shares not subject to trading
635,666,043 25.98% -- -- -- 1,708,450,759 1,708,450,759 2,344,116,802 99.9998%
moratorium
a. RMB ordinary shares 468,616,702 19.15% -- -- -- 1,708,450,759 1,708,450,759 2,177,067,461 92.8735%
b. Domestically listed foreign
167,049,341 6.83% -- -- 167,049,341 7.1263%
shares
III. Total shares 2,446,553,582 100.00% -- -- -- -102,432,280 -102,432,280 2,344,121,302 100.0000%
Reason for the change in shares
√ Applicable □ Not applicable
In July 2017, the Company issued 1,810,883,039 common shares to CNAC in consideration for 100% equity of ADAMA Solutions. These shares were listed on August 2, 2017,
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ADAMA Ltd Annual Report 2020
with a trading moratorium period of 36 months. Within the context of the above-mentioned major assets restructuring, the Company entered into a Performance Compensation
Agreement and two supplementary agreements with CNAC. CNAC made a commitment that Solutions' adjusted aggregated net profit for the 2017-2019 period attributed to the
Company shall not be lower than USD 543.4137 million. Under the obligation of performance compensation, shares of ADAMA were to be primarily used for the fulfillment of the
commitment while cash were to be paid if there was any insufficiency of the amount.
On June 15, 2020, CNAC transferred its 1,810,883,039 shares of the Company to Syngenta Group for free (hereinafter referred to as the “Free Transfer of Shares”). Therefore,
Syngenta Group carried on CNAC’s commitment for the lock up of these shares within the remaining lock-up period, and undertook to fulfill CNAC’s relevant compensation
obligations under the Performance Compensation Agreement.
As the aggregated adjusted actual net profit of ADAMA Solutions for the 2017-2019 period was USD 512.6756 million, implying a shortfall of USD 30.7381 million, a 94.34%
completion rate of the committed performance, and to fulfill performance compensation obligations, the Company repurchased the 102,432,280 shares from Syngenta Group
and completed the cancellation procedures for those shares on July 13, 2020. After the completion of the repurchase and cancellation, the number of the Company’s shares held
by Syngenta Group changed to 1,708,450,759, which have been released since August 3, 2020.
Approval of the change in shares
√ Applicable □ Not applicable
1. Regarding the Free Transfer of Shares, the CSRC issued Approval on a Waiver of a Mandatory Tender Offer Obligation Relating to the Share Transfer Implemented by the
Syngenta Group Co., Ltd. (CSRC License [2020] No.351), and exempted Syngenta Group from a tender offer obligation regarding the share transfer, thus Syngenta Group will
hold 1,810,883,039 shares of the Company due to the Free Transfer of Shares.
2. Regarding the repurchase and cancellation of compensation shares, the 25th Meeting of the 8th Session of the Board of Directors and the 2019 Annual General Meeting have
approved the Proposal on the Overall Achievement of the Committed Performance included in the Major Assets Restructuring Project and the Planned Compensation to the
Company by the Obligors and the Proposal on the Share Buyback and Cancellation and the Decrease of the Registered Capital of the Company.
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ADAMA Ltd Annual Report 2020
The registered status for the change in shares
√ Applicable □ Not applicable
1. Regarding the Free Transfer of Shares, On June 16, 2020, Syngenta Group forwarded to the Company the Shares
Registration Confirmation Letter issued by China Securities Depository and Clearing Corporation Limited, approving that
the registration procedures for the Free Transfer of Shares have been completed, please refer to the Announcement on
the Completion of the Registration of the Transfer of State-owned Shares held by the Controlling Shareholder (Announce-
ment No. 2020-33) for details.
2. Regarding the repurchase and cancellation of compensation shares, the number of shares returned to the Company as
compensation was 102,432,280. The Company has completed the cancellation procedures at the China Securities
Depository and Clearing Corporation Limited Shenzhen Branch on July 13, 2020. Please refer to Announcement on the
Completion of Buyback and Cancellation of the Compensation Shares (Announcement No. 2020-36) for details.
Status of share buyback
√ Applicable □ Not applicable
The Company held the 26th Meeting of the 8th Session of the Board of Directors on August 19, 2020 and the 3rd Interim
Shareholders Meeting on September 7, 2020, approving the Repurchase Plan for Part of the Company’s Domestically
Listed Foreign Shares (B Share), and subsequently disclosed the repurchase report and a series of repurchase progress
announcements according to relevant regulations.
As of December 6, 2020, the repurchase period has expired. From September 16, 2020 (the first actual occurrence date
of the share repurchase) to December 6, 2020, the Company repurchased 14,309,536 shares of B-Shares by means of a
centralized price bidding transaction through a special securities repurchase account for B-Shares, which accounts for
0.61% of the Company’s total share capital. The highest transaction price is 5.22 HKD/share, the lowest transaction price
is 4.27 HKD/share, and the total payment amount is HKD 69,747,209 (including transaction fees). Please refer to the
Announcement on the Expiry of the Repurchase Period and the Results of the B-Shares Repurchase (Announcement
No.2020-71) for details.
According to the Repurchase Plan, after the completion of the repurchase of shares, the Board of Directors shall propose
to shareholders to approve the cancellation of the repurchased shares, the decrease of the Company’s registered capital
and the corresponding amendments to the Articles of Association of the Company. The above matters have been reviewed
and approved by the 31st Meeting of the 8th Session of the Board of Directors of the Company, and have yet to be reviewed
and approved by the shareholders. After the shareholders’ meeting will have reviewed and approved the share cancellation,
the reduction of the registered capital and the corresponding amendments to the Company’s Articles of Association, the
Company will submit applications for the cancellation of the repurchased shares and the reduction of the registered capital
to the Shenzhen Stock Exchange and China Registration and Clearing Corporation (Shenzhen Branch), respectively. After
the share cancellation will be completed, the Company will make corresponding amendments to the relevant provisions in
the Articles of Association of the Company, and file the industrial and commercial registration.
Status of share buyback in the way of centralized bidding
□ Applicable √ Not applicable
Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common shareholders
of the Company and other financial indexes over the last year and last period.
□ Applicable √ Not applicable
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ADAMA Ltd Annual Report 2020
The 25th Meeting of the 8th Session of the Board of Directors and the 2019 Annual General Meeting have approved the
Proposal on the Overall Achievement of the Committed Performance included in the Major Assets Restructuring Project
and the Planned Compensation to the Company by the Obligors and the Proposal on the Share Buyback and Cancellation
and the Decrease of the Registered Capital of the Company. Subsequently, the Company’s total share capital reduced
from 2,446,553,582 shares to 2,344,121,302 shares. As this is a small reduction l, it has no significant impact on the basic
EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and other financial indexes
in 2019 and 2020.
Other contents that the Company considered necessary or were required by the securities regulatory authorities to
disclose
□ Applicable √ Not applicable
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ADAMA Ltd Annual Report 2020
2. Changes in restricted shares
√ Applicable □ Not applicable
Shareholders Restricted shares at Shares released in the Restricted shares Ending shares Restricted reasons Date for
the opening of the Reporting Period increased in the restricted released
Reporting Period Reporting Period
Syngenta Group Co., Ltd. Committed not to August 3,
1,810,883,039 1,708,450,759 0 0
trade 2020
Jiang Chenggang six months
Shares held by a
after the
4,500 0 0 4,500 supervisor should be
expiration of
locked up.
the term
Total 1,810,887,539 1,708,450,759 0 4,500 -- --
Note: CNAC transferred 1,810,883,039 shares of the Company, accounting for 74.02% of the Company's total share capital, to Syngenta Group free of charge, and completed
the share transfer registration procedures on June 15, 2020. On July 13, 2020, the Company repurchased and cancelled 102,432,280 shares from Syngenta Group due to
performance commitment compensation. After the repurchase and cancellation, the number of the Company’s shares held by Syngenta Group reduced to 1,708,450,759, and
these shares have been released on August 3, 2020.
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ADAMA Ltd Annual Report 2020
II. Issuance and listing of securities
1. Issuance of securities (excluding preferred stock) during the Reporting Period
□ Applicable √ Not applicable
2. Explanation on changes in share capital & the structure of shareholders, the structure of assets
and liabilities
√ Applicable □ Not applicable
The 25th Meeting of the 8th Session of the Board of Directors held on April 27, 2020 and the 2019 Annual General
Meeting held on May 20, 2020 have approved the Proposal on the Overall Achievement of the Committed Performance
included in the Major Assets Restructuring Project and the Planned Compensation to the Company by the Obligors and
the Proposal on the Share Buyback and Cancellation and the Decrease of the Registered Capital of the Company. The
Company repurchased the 102,432,280 compensation shares from the obligor in consideration of 1 RMB, and completed
the cancellation procedures at the China Securities Depository and Clearing Corporation Limited Shenzhen Branch on
July 13, 2020. The Company’s total share capital reduced from 2,446,553,582 shares to 2,344,121,302 shares, and the
resisted capital reduced from RMB 2,446,553,582 to RMB 2,344,121,302. The Company will complete the industrial and
commercial registration procedures for the above capital reduction.
3. Shares held by internal staffs of the Company as a measure of the reform of State-Owned
Enterprises
□ Applicable √ Not applicable
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ADAMA Ltd Annual Report 2020
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholding
Unit: share
48,018 (the
number of
ordinary A Total number of
Total number of
Total number of share preferred stockholder
shareholders on the 30th Total number of preferred
shareholders as of the shareholders with vote right restored
trading day before the 46,509 stockholder with vote right 0 0
end of the Reporting is 33,680; on the 30th trading day
disclosure date of the restored (if any)
Period the number of before the disclosure
annual report
B share date of the annual report
shareholders
is 14,338)
Shareholding of shareholders holding more than 5% shares
Number of Pledged or frozen shares
Increase and
Holding Number of shareholding shares held Number of shares
Nature of decrease of shares Status
Name of shareholder percentage at the end of the subject to held not subject to
shareholder during Reporting of Amount
(%) Reporting Period trading trading moratorium
Period shares
moratorium
State-owned
Syngenta Group Co., Ltd. 72.88% 1,708,450,759 -102,432,280 -- 1,708,450,759 -- --
legal person
Jingzhou Sanonda Holding State-owned
5.11% 119,687,202 -- -- 119,687,202 -- --
Co., Ltd. legal person
China Cinda Asset State-owned
1.33% 31,115,916 -2,441,130 -- 31,115,916 -- --
Management Co., Ltd. legal person
China Structural Reform State-owned
1.27% 29,828,446 -3,728,600 -- 29,828,446 -- --
Fund Co., Ltd. legal person
Portfolio No.503 of National
Others 0.98% 23,000,052 1,499,955 -- 23,000,052 -- --
Social Security Fund
Huarong Ruitong Equity
State-owned
Investment Management 0.55% 12,885,906 12,885,906 -- 12,885,906 -- --
legal person
Co., Ltd.
Hong Kong Securities Overseas 0.25% 5,948,320 2,143,274 -- 5,948,320 -- --
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ADAMA Ltd Annual Report 2020
Clearing Company Ltd. legal person
(HKSCC)
Qichun County State-owned State-owned
0.18% 4,169,266 -- -- 4,169,266 -- --
Assets Administration legal person
GUOTAI JUNAN
Overseas
SECURITIES(HONGKONG) 0.17% 4,040,329 -359,243 -- 4,040,329 -- --
legal person
LIMITED
Domestic
Zhu Shenglan 0.17% 3,920,000 -4,607,200 -- 3,920,000 -- --
Individual
Strategic investors or the general legal
person due to the placement of new
Not applicable
shares become the top 10
shareholders (if any)
Jingzhou Sanonda Holdings Co., Ltd. and Syngenta Group are related parties, and are acting-in-concert parties as prescribed in the
Explanation on associated relationship Administrative Methods for Acquisition of Listed Companies. Both Jingzhou Sanonda Holdings Co., Ltd. and Syngenta Group are
or/and persons controlled by ChemChina. It is unknown whether the other shareholders are related parties or acting-in-concert parties as prescribed
in the Administrative Methods for Acquisition of Listed Companies.
Details of shares held by top 10 shareholders not subject to trading moratorium
Number of shares held not Type of share
Name of shareholder subject to trading moratorium at
Type of share Amount
the end of the period
Syngenta Group Co., Ltd. 1,708,450,759 RMB ordinary share 1,708,450,759
Jingzhou Sanonda Holding Co., Ltd. 119,687,202 RMB ordinary share 119,687,202
China Cinda Asset Management Co., Ltd. 31,115,916 RMB ordinary share 31,115,916
China Structural Reform Fund Co., Ltd. 29,828,446 RMB ordinary share 29,828,446
National Social Security Fund Portfolio 503 23,000,052 RMB ordinary share 23,000,052
Huarong Ruitong Equity Investment Management Co., Ltd. 12,885,906 RMB ordinary share 12,885,906
Hong Kong Securities Clearing Company Ltd. (HKSCC) 5,948,320 RMB ordinary share 5,948,320
Qichun County State-owned Assets Administration 4,169,266 RMB ordinary share 4,169,266
Domestically listed foreign
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 4,040,329 4,040,329
share
Zhu Shenglan 3,920,000 RMB ordinary share 3,920,000
Explanation on associated relationship among the top ten shareholders of Qichun County Administration of State-Owned Assets held shares of the Company on
tradable share not subject to trading moratorium, as well as among the top ten behalf of the government. It is unknown whether the other shareholders are related
shareholders of tradable share not subject to trading moratorium and top ten parties or acting-in-concert parties as prescribed in the Administrative Methods for
shareholders, or explanation on acting-in-concert Acquisition of Listed Companies.
Particular about shareholder participate in the securities lending and borrowing Shareholder Zhu Shenglan held 3,920,000 shares of the Company through a credit
business ( if any) collateral securities trading account.
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ADAMA Ltd Annual Report 2020
Did any top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company carry out an agreed buy-back in the Reporting
Period?
□ Yes √ No
The top 10 common shareholders or the top 10 common shareholders of the Company were not subject to trading moratorium of the Company carry out an agreed buy-back in
the reporting period
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ADAMA Ltd Annual Report 2020
2. Particulars about the controlling shareholder
Nature of controlling shareholder: The central state-owned
Type of controlling shareholder: legal person
By the end of the Reporting Period, the particulars of the Company’s controlling shareholder are as follows:
Legal
Name of
representative / Date of
controlling Organization code Business scope
company establishment
shareholder
principal
Engaged in technology development, transfer, consultation and services in the fields of agricultural
science and technology, biotechnology and information technology, production and management of
Syngenta crop seeds, genetically modified crop seed production, chemical raw materials and products (except
Ning Gaoning June 27, 2019 91310000MA1FL6MN13
Group Co., Ltd. dangerous chemicals, monitoring chemicals, civil use of explosives and precursor chemicals) R&D
and sales, chemical fertilizer management, warehousing (except dangerous goods), import and export
of goods and technology, and economic information consultation. Projects subject to approval
according to law, can be carried out after approval by relevant departments
Shares held by the controlling shareholder in
other listed companies by holding or By the end of the Reporting Period, Syngenta Group directly holds 52.65% equity of SinoFert Holdings Limited, and indirectly
shareholding during the holds 14.42% equity of Jiangsu Yangnong Chemical Co., Ltd. through Jiangsu Yangnong Chemical Group Co., Ltd.; 21.5%
Reporting equity of Win-All High-tech Seed Co., Ltd. through Sinochem Modern Agriculture Co., Ltd.
Period
Change of the controlling shareholder during the Reporting Period
√ Applicable □ Not applicable
Name of controlling shareholder Syngenta Group Co., Ltd.
Change date June 15, 2020
Announcement on the Completion of the Registration of the Transfer of State-owned Shares held by the Controlling Shareholder
Index to the disclosed
(Announcement NO.：2020-33). Disclosed at the website CNINFO www.cninfo.com.cn
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ADAMA Ltd Annual Report 2020
Disclosure date June 17, 2020
On June 15, 2020, CNAC transferred 1,810,883,039 shares of the Company held by it to Syngenta Group free of charge and completed the registration procedures for the
above transferred shares. After the completion of the share transfer, Syngenta Group has become the direct controlling shareholder of the Company. The shareholding status
of the person acting in concert with Syngenta Group, namely Jingzhou Sanonda Holding Co., Ltd. remains unchanged.
CNAC no longer directly holds the Company’s shares, but as both Syngenta Group as well as Jingzhou Sanonda Holding Co., Ltd. are both owned by CNAC, the Company’s
ultimate controlling shareholder has not changed and remains the State-owned Assets Supervision and Administration Commission of the State Council.
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ADAMA Ltd Annual Report 2020
3. Particulars regarding actual controller and the persons acting in concert
Nature of actual controller: State-owned Assets Supervision and Administration Commission
Type of actual controller: Legal person
Legal representative / Date of Organization Business
Name of the actual controller
company principal establishment code scope
State-owned Assets Supervision and
Administration Commission of the State Hao Peng March 16, 2003 - -
Council
Shares held by the actual controller
in other listed companies by holding
Not applicable
or shareholding during the reporting
period
Change of the actual controller during the Reporting Period
□ Applicable √ Not applicable
The actual controller did not change during the Reporting Period.
Block diagram of equity and control relationship between the Company and actual controller:
The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Not applicable
4. Particulars regarding other corporate shareholders with over 10% holdings
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ADAMA Ltd Annual Report 2020
□ Applicable √ Not applicable
5. Particulars regarding restriction of reducing holding-shares of controlling shareholders, actual
controller, restructuring parties and other commitment entities
□ Applicable √ Not applicable
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ADAMA Ltd Annual Report 2020
Section VII. - Preferred stock
□ Applicable √ Not applicable
There was no preferred stock during Reporting Period.
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ADAMA Ltd Annual Report 2020
Section VIII. - Convertible Bonds
□ Applicable √ Not applicable
There were no convertible bonds during Reporting Period.
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ADAMA Ltd Annual Report 2020
Section IX. - Directors, Members of the Supervisory Board,
Senior Management Staff & Employees
I. Changes in shareholding of directors, supervisors and senior executives
Shares held
Amount of Amount of
Ending Other at the end of
Beginning Shares held shares shares
Office date of changes the
Name Position Gender Age date of at the year- increased at decreased at
Status office increase/de Reporting
office term begin (share) the Reporting the Reporting
term crease Period
Period (share) Period (share)
(share)
Chairman April 9,
Erik Fyrwald In Office Male 62 0 0 0 0 0
of the BOD 2020
Sep 29,
Chen Lichtenstein Director In Office Male 53 0 0 0 0 0
2017
Apr 29,
An Liru Director In Office Male 51 0 0 0 0 0
2015
Independent Dec 25,
Xi Zhen In Office Male 57 0 0 0 0 0
Director 2017
Independent Nov 16,
Ge Ming In Office Male 69 0 0 0 0 0
Director 2020
Ignacio March 1,
President & CEO In Office Male 61 0 0 0 0 0
Dominguez 2020
Chief Financial Sep 29,
Aviram Lahav Officer & Deputy In Office Male 61 2017 0 0 0 0 0
CEO (Deputy
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ADAMA Ltd Annual Report 2020
Shares held
Amount of Amount of
Ending Other at the end of
Beginning Shares held shares shares
Office date of changes the
Name Position Gender Age date of at the year- increased at decreased at
Status office increase/de Reporting
office term begin (share) the Reporting the Reporting
term crease Period
Period (share) Period (share)
(share)
CEO as of
March 1,
2020)
General Legal Sep 29,
Michal Arlosoroff In Office Female 62 0 0 0 0 0
Counsel 2017
Chairman of the Jan 6,
Jiang Chenggang In Office Male 46 6,000 0 0 0 6,000
Supervisory Board 2013
Member of the March 19,
Li Dejun In Office Male 62 0 0 0 0 0
Supervisory Board 2018
Member of the Nov 16,
Clement Tung In Office Male 53 0 0 0 0 0
Supervisory Board 2020
Secretary of the Nov 27,
Guo Zhi In Office Male 43 0 0 0 0 0
BOD 2020
Chairman of the Sep 29, April 9,
Yang Xingqiang Demission Male 53 0 0 0 0 0
BOD 2017 2020
Independent Dec 25, Nov 16,
Tang Yunwei Demission Male 76 0 0 0 0 0
Director 2017 2020
Member of the March 19, Nov 16,
Guo Zhi Demission Male 43 0 0 0 0 0
Supervisory Board 2018 2020
Secretary of the Feb 9, Nov 25,
Li Zhongxi Demission Male 50 0 0 0 0 0
BOD 2000 2020
Total -- -- -- -- -- 6,000 0 0 0 6,000
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ADAMA Ltd Annual Report 2020
II. Particulars regarding changes of Directors, Supervisors and Senior Executives
√ Applicable □ Not applicable
Name Position Type Date Reason
Yang Chairman Due to work arrangements by
Left the position April 9, 2020
Xingqiang of the Board of Directors ChemChina.
Nomination as the CFO of
Chen
President & CEO Left the position March 1, 2020 Syngenta Group responsible also
Lichtenstein
for strategy alignment.
Tang Yunwei Independent Director Left the position Nov 16, 2020 Personal reason
Member of the
Guo Zhi Left the position Nov 16, 2020 Work arrangement
Supervisory Board
Li Zhongxi Secretary of the BOD Left the position Nov 25, 2020 Work arrangement
Ge Ming Independent Director Take up the position Nov 16, 2020 Elected by the shareholders
Member of the
Clement Tung Take up the position Nov 16, 2020 Elected by the shareholders
Supervisory Board
Guo Zhi Secretary of the BOD Take up the position Nov 27, 2020 Appointed by the board of directors
III. Resumes of important personnel
Professional background, main working experience and main responsibilities of current directors, supervisors and senior
management staff
Mr. Erik Fyrwald, American, serves as the Chairman of the Board of Directors of the Company. He is currently the CEO
of Syngenta Group, CEO and Executive Director of Syngenta A.G. and Chairman of Syngenta Foundation for Sustainable
Agriculture. He currently also serves on the board of directors of CropLife International, the Swiss-American Chamber of
Commerce and the listed entities Bunge Limited and Eli Lilly & Company. Previously served as President and CEO of
Univar, a leading distributor of chemistry and related services, President of Ecolab, a cleaning and sanitation, water
treatment, and oil and gas products and services provider, and Chairman, President and CEO of Nalco, a water treatment
and oil and gas products and services company, and Group Vice President of the Agriculture and Nutrition Division of the
DuPont Company. He graduated from the University of Delaware with a bachelor's degree in Chemical Engineering and
completed the Advanced Management Program at Harvard Business School.
Mr. Chen Lichtenstein, Israeli, serves as a Director of the Company and its wholly-owned subsidiary, Adama Solutions,
CFO of the Syngenta Group (with responsibility also for Strategy, Integration and Productivity), and its wholly-owned
subsidiary - Syngenta AG. He holds joint doctoral degrees from Stanford University's Graduate School of Business and
School of Law, and B.Sc. (Physics) and LL.B. from the Hebrew University of Jerusalem. He previously served as the
President & CEO of the Company and its wholly-owned subsidiary, Adama Solutions, after holding several executive
positions in the Company (Deputy CEO, running global operations and heading corporate development and capital market
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ADAMA Ltd Annual Report 2020
activities) and serving as the President & CEO of China National Agrochemical Corporation (CNAC).
Mr. An Liru, serves as a Director of the Company. He holds a master degree of chemical engineering and MBA, senior
engineering, senior economist. He used to be the Assistant of General Manager, Vice General Manager, General Manager,
Deputy Party Secretary of Jiangsu Anpon Electrochemical Co., Ltd., Chairman of Directors, Party Secretary of Jiangsu
Huaihe Chemicals Co., Ltd., Executive Director and CEO of Jiangsu Maidao Agrochemical Co., Ltd., the Chairman of the
Board of Directors of the Company, Executive Director of Jiangsu Anpon Electrochemical Co., Ltd., Chairman of Directors
and Party Secretary of China National Agrochemical Co., Ltd. Currently, he serves also as a Director and the Senior Vice
President of Solutions, Director and General Manager of Adama (China) Investment Co., Ltd., Chairman of Directors of
Adama (Beijing) Agricultural Technology Co., Ltd., Chairman of Directors of Adama Agrochemical (Jiangsu) Co., Ltd.
Mr. Ge Ming, serves as an independent director of the Company. He holds a master’s degree in western accounting, and
he is a senior accountant, a certified Chinese public accountant as well as an Australian certified public accountant. He
previously served as the chairman and chief accountant of Ernst & Young Hua Ming Certified Public Accountants Firm, and
as the managing partner, chief accountant and senior advisor of Ernst & Young Hua Ming Certified Public Accountants
(special general partnership). Mr. Ge currently serves as an independent director on the boards of China Pingan Group,
Focus Media and AsiaInfo. He currently also serves on the supervisory boards of the Bank of Shanghai, Bank of Suzhou,
Tencent Foundation, and serves as the executive director and general manager of Beijing Huaming Fulong Accounting
Consulting Co., Ltd.
Mr. Xi Zhen, serves as an independent director of the Company. He holds a professor degree and a doctor of Bioorganic
Chemistry degree. Mr. Xi was Assistant Professor in Hubei Medical School which is currently the Wuhan University School
of Medicine from 1983 to 1985, was Engineer in Beijing Institute of Chemical Reagents from 1988 to 1990, was a Research
Associate in Department of Biological Chemistry and Molecular Pharmacology of Harvard Medical School from 1997 to
2001. Mr. Xi is currently Cheung Kong Scholar of Pesticide Science of the Ministry of Education of the PRC, Chairman of
Department of Chemical Biology, Professor of Chemistry and Chemical Biology, Fellow of the University Committee of
Nankai University in China, and Director of National Pesticide Engineering Research Center (Tianjin). Mr. Xi is also a
Committee Member of Chinese Chemical Society and Deputy Director of its Division of Chemical Biology, Deputy Director
of the Pesticide Science Division of Chinese Chemical Industry and Engineering Society. In addition, he is a director of
Suzhou Ribo Life Science Co., Ltd.
Mr. Ignacio Dominguez, Spanish, serves as the President & Chief Executive Officer of the Company. He was the CCO of
Solutions and has been with Solutions for more than a decade. Prior to joining Solutions, Ignacio held various management
positions in companies such as Syngenta and American Cyanamid, boasting more than 20 years of experience in the
agrochemical industry. He holds a master's degree in physics from Complutense University of Madrid.
Mr. Aviram Lahav, Israeli, serves as the Chief Financial Officer of the Company. Mr. Lahav also serves as the deputy
Chief Executive Officer of the Company, Chief Executive Officer and Chief Financial Officer of Solutions. Mr. Lahav holds
a Practical Engineering Degree in Mechanical Engineering from Tel Aviv University, Israel. Mr. Lahav has also a BA in
Economics and Finance from the Hebrew University in Jerusalem, Israel and graduated from the Advanced Management
Program at Harvard Business School. Before joining the Group, Mr. Lahav served as CEO of Synergy Cables, a publicly
traded manufacturing company. He had also served as CFO, COO and eventually CEO of Delta Galil Industries (Israel).
In 2000, he was awarded the title of “Israel’s CFO of the Year”.
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ADAMA Ltd Annual Report 2020
Ms. Michal Arlosoroff, Israeli, serves as the Company’s General Legal Counsel. Ms. Arlosoroff also serves as Senior
Vice President, General Legal Counsel, Company Secretary and CSR Officer of Solutions. Ms. Arlosoroff holds an LL.B.
as well as a B.A. in Political Science and Labor Relations (cum laude) from Tel Aviv University, Israel. Ms. Arlosoroff also
graduated from the Advanced Management Program at Harvard Business School. Prior to joining the Group, Ms. Arlosoroff
served for 22 years as full Partner and General Manager of the Tel Aviv branch at E.S. Shimron, I. Molho, Persky & Co.,
one of the most prominent, respected and established law firms in Israel.
Mr. Jiang Chenggang, serves as the Chairman of the Supervisory Board of the Company. He served as a Deputy Director
of the Office and Deputy Secretaries of the Discipline Inspection Commission of the Company.; acted as the Chairman of
the Labor Union, Supervisor, Deputy Director of the Office and Deputy Secretaries of the Discipline Inspection Commission
of the Company from Jun. 2012 to Dec. 2012; has been acting as the Deputy Party Committee Secretary of Jingzhou
Sanonda Holdings Co., Ltd. and Secretary of the Discipline Inspection Commission of the Company since January 2017;
and he has been the Chairman of the Labor Union, Supervisor and Secretaries of the Discipline Inspection Commission of
the Company since Jan. 2013.
Mr. Li Dejun, serves as a member of the Supervisory Board of the Company. Mr. Li holds a Doctor degree. He successively
acted as Chief Officer, Deputy Chief, Chief of CCNU and Research Institute of Wuhan Province Commission for
Restructuring Economic System and Editor in Chief of Overview of Private Economy, Chief of Hubei Regional Economic
Development Research Center, Secretary General of Research Institute of Hubei Province Commission for Restructuring
Economic System and Hubei Province Culture and Economy Research Society as well as Independent Director of J.S.
Machine, Angel Yeast. From Jul. 2010 to December 2017, he was an independent director of the Company.
Mr. Clement Tung, with Hong Kong and Australian citizenship, serves as a member of the Supervisory Board of the
Company. He holds a bachelor degree in accountancy and a master degree in business administration. He owns Hong
Kong CPA, Australian CPA & ACCA (UK) qualifications. He currently serves as the CFO of ADAMA China. He previously
served as the audit supervisor of KPMG, as the finance director of AB Mauri, and as the financial controller of ASSA ABLOY
Greater China.
Mr. Guo Zhi, serves as the secretary of the Board of Directors and the legal head of ADAMA China. Mr. Guo got his Master
of Laws severally from Peking University and Melbourne University. From 2004 to 2017, he practiced law in Commerce &
Finance Law Offices (“C&F”) and had been a partner of C&F for eight years. His practicing area covers IPO, M&A, and
Foreign Investment. From March 19, 2018 to November 16, 2020, he was a member of the Supervisory Board of the
Company.
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ADAMA Ltd Annual Report 2020
Positions in shareholder units
√ Applicable □ Not applicable
Name of the
person Receives
holding any Name of the Position in the Beginning date Ending date payment from
post in any shareholder unit shareholder unit of office term of office term the shareholder
shareholder unit?
unit
Syngenta Group CEO January 2020 -- No
Erik
CEO and Executive
Fyrwald Syngenta AG June 2016 -- Yes
Director
Chen Syngenta Group CFO March, 2020 -- Yes
Lichtenstein Syngenta AG CFO March, 2020 -- Yes
Deputy Party No
Secretary, Secretary
Jiang Jingzhou Sanonda
of the Discipline January 2017 --
Chenggang Holdings Co., Ltd.
Inspection
Commission
Positions in other units
√ Applicable □ Not applicable
Name of the
person
Beginning Receives
holding any Position in other Ending date
Name of other unit date of office payment from
post in any unit of office term
term the other unit?
shareholder
unit
Director of the No
CropLife International -
Board 2016
Swiss-American Chamber of Director of the 2016 No
-
Commerce Board
Erik Fyrwald
Director of the 2018 Yes
Bunge Limited -
Board
Director of the 2005 Yes
Eli Lilly & Co. -
Board
Chen Yes (as of
Solutions Director October 2017 -
Lichtenstein March 1, 2020)
Chen
Solutions President & CEO October 2017 March 2020 Yes
Lichtenstein
Chen Director of the
The Israeli democracy institute - No
Lichtenstein Board
Chen Member of the
Friends of Tel Aviv University - No
Lichtenstein Board of Trustees
An Liru Solutions Director February 2014 - Yes
Head of China September
An Liru Solutions - Yes
Cluster 2017
Adama (China) Investment Co., Director and
An Liru November 2018 - No
Ltd. General Manager
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ADAMA Ltd Annual Report 2020
Name of the
person
Beginning Receives
holding any Position in other Ending date
Name of other unit date of office payment from
post in any unit of office term
term the other unit?
shareholder
unit
Adama (Beijing) Agricultural Chairman of
An Liru November 2018 - No
Technology Co., Ltd. Directors
Adama Agrochemical (Jiangsu) Chairman of -
An Liru June 2017 No
Co., Ltd. Directors
Executive Director November
Jingzhou Hongxiang Chemical
An Liru and General December 2017 2020 No
Co., Ltd.
Manager
Aviram Lahav Solutions CEO & CFO October 2017 - Yes
SVP, General -
Michal Counsel, Company
Solutions October 2017 Yes
Arlosoroff Secretary & CSR
Officer
Independent
Ge Ming China Pingan Group June 2015 -- Yes
Director
Independent
Ge Ming Focus Media January 2016 -- Yes
Director
Independent
Ge Ming AsiaInfo December 2018 -- Yes
Director
Ge Ming Bank of Shanghai Supervisor June 2017 -- Yes
Ge Ming Bank of Suzhou Supervisor July 2017 -- Yes
Ge Ming Tencent Foundation Supervisor Jan 2019 -- No
Executive Director
Beijing Huaming Fulong
Ge Ming and General December 2001 -- No
Accounting Consulting Co., Ltd.
Manager
Professor, -
Chairman of
Department of
Xi Zhen Nankai University Chemical Biology, August 2002 Yes
Fellow of the
University
Committee
National Agrochemical -
Xi Zhen Engineering Research Center Director May 2014 No
(Tianjin)
Division of Chemical Biology of -
Xi Zhen Deputy Director January 2015 No
Chinese Chemical Society
Agrochemical Science Division -
Xi Zhen of Chinese Chemical Industry Deputy Director November 2014 No
and Engineering Society
Suzhou Ribo Life Science Co., -
Xi Zhen Director January 2007 No
Ltd.
Independent -
Li Dejun J.S. Machine October 2016 Yes
Director
* Jingzhou Hongxiang Chemical Co., Ltd. completed the cancellation of registration on November 25, 2020.
Particulars regarding the Company's current directors, supervisors and senior managers who received punishments, if any,
from Securities Regulatory Institution during the recent three years (including the Reporting Period)
□ Applicable √ Not applicable
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ADAMA Ltd Annual Report 2020
IV. Remuneration of directors, supervisors and senior management
Decision-making procedures, basis for determination and actual payment of the remuneration to directors,
supervisors and senior executives
Remuneration of office holders is decided by the authorized organs of the Company according to the Remuneration Policy.
In addition, global professional benchmarks, implementations of performance at the Company level, and the actual
performance of the respective person are also taken into account in the resolutions regarding remuneration.
Independent directors are entitled to receive annual allowance and would not receive salary by the Company. The
Company also adopted a remuneration plan of the non-independent directors. A non-independent director who holds a
management position in the Company and/or any of its subsidiaries, shall receive the remuneration set for such position
and will not be entitled to any additional remuneration for serving as a director; A non-independent director who doesn’t
hold a management position in the Company or any of its subsidiaries, may receive a monthly remuneration. For details,
please see the Announcement of the Resolutions of 25 th meeting of the 7th Session of the Board of Directors
(Announcement no. 2018-5) and the Announcement of the Resolutions of 21 st meeting of the 8th Session of the Board of
Directors (Announcement no. 2020-7).
Internal supervisors, who are full-time employees of the Company (or any of its subsidiaries), will be entitled to receive a
remuneration set for their posts and will not be entitled to any additional remuneration for serving as supervisors.
External supervisors, who are not employees of the Company (or any of its subsidiaries), will be entitled to receive annual
allowance and would not receive salary by the Company.
For details, please see the Announcement of the Resolutions of 4th meeting of the 8th Session of the Board of Supervisors
(Announcement no. 2018-25).
Total remuneration of the directors, supervisors and senior management of the Company during the Reporting Period is
as follow:
Unit RMB’0000
Total before- Whether gained
tax remuneration
Name Position Gender Age Current/Former remuneration from the related
gained from parties of the
the Company Company
Erik Fyrwald Chairman of the BOD Male 62 Current Yes
Chen Director (former
Male 53 Current Yes
Lichtenstein President & CEO)
An Liru Director Male 51 Current No
Ge Ming Independent Director Male 69 Current No
Xi Zhen Independent Director Male 57 Current No
Ignacio
President & CEO Male 61 Current No
Dominguez
Chief Financial Officer
Aviram Lahav Male 61 Current No
and Deputy CEO
Michal
General Legal Counsel Female 62 Current No
Arlosoroff
Jiang Chairman of the
Male 46 Current No
Chenggang Supervisory Board
Li Dejun Member of the Male 63 Current No
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ADAMA Ltd Annual Report 2020
Total before- Whether gained
tax remuneration
Name Position Gender Age Current/Former remuneration from the related
gained from parties of the
the Company Company
Supervisory Board
Member of the
Clement Tung Male 52 Current No
Supervisory Board
Secretary of the BOD
Guo Zhi (former Member of the Male 43 Current No
Supervisory Board)
Yang
Chairman of the BOD Male 53 Former Yes
Xingqiang
Tang Yunwei Independent Director Male 76 Former No
Li Zhongxi Secretary of the BOD Male 50 Former No
Total 6,121
Situations of equity incentives awarded to the directors, supervisors and senior management of the Company during the
reporting period
□ Applicable √ Not applicable
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ADAMA Ltd Annual Report 2020
V. Particulars regarding Group’s employees
1. Number of employees, specialty structure and educational background
The number of on-duty employees in ADAMA Ltd. (person) 969
The number of on-duty employees in main subsidiary
6,799
companies (person)
The total number of on-duty employees of the Group (person) 7,768
The total number of employees of the Group who received
7,768
salaries in the period (person)
The number of retired employees for whom ADAMA Ltd. and
3,267
main subsidiary companies need to pay retirement expense.
Specialty classification
Specialty category Number
Production personnel 2,718
Sales personnel 2,149
Technicians 1,920
Financial personnel 466
Administrative personnel 515
Total 7,768
Education classification
Education category Number
Doctor 10
Master 144
Bachelor 578
College 702
Others 881
Total* 7,768
Note: The figures under “Education Category” represent those of the Company and the domestic subsidiaries held by it
and do not cover the Group’s 5,453 overseas employees.
2. Employee’s remuneration policy
The Company's remuneration policy in 2020 is the same as in 2019. It is still a salary structure that integrates post salary,
quarterly performance bonus and annual performance bonus.
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ADAMA Ltd Annual Report 2020
The Company established an online and offline assessment model. Online assessment is carried out by SF system.
Individual goals are set at the beginning of the year and are assessed at the end of the year. At the end of the year, a total
of 295 middle and senior managers and backbones in Jingzhou Site entered SF system for online assessment in 2020.
Employees who do not participate in online assessment will conduct offline performance assessment.
3. Employee’s training plan
The Group usually conducts seminars, trainings, exercises and refresh of procedures (including with respect to increasing
safety awareness) to its various employees in its various entities, as needed and/or required under its applicable
procedures.
4. Labor outsourcing
√ Applicable □ Not applicable
Details of ADAMA Ltd. on labor sourcing are as follows.
Total number of hours of service outsourcing (hours) 1,435,704
Total remuneration paid for service outsourcing (RMB) 23,719,831.92
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ADAMA Ltd Annual Report 2020
Section X. - Corporate Governance
I. Basic details of corporate governance
During the Reporting Period, the Company continuously improved the awareness of corporate governance and corporate
governance structure and perfected the corporate system as well as standardized the operation of the Company, promoted
internal control activities, and constantly improve the Company's management levels stringently according to requirements of
relevant laws and regulations like the Company Law, Securities Law, and Corporate Governance Principle of Listed Company,
as well as Rules for Listing Shares in Shenzhen Stock Exchange.
1. About Shareholders and the Shareholders’ meeting
During the Reporting Period, the Company has ensured that all shareholders, especially small and medium shareholders, are
treated equal and able to fully exercise their rights. It held one annual general meeting of shareholders and four interim
shareholders' meetings, during which 23 proposals in total were reviewed and approved. Lawyers were invited to attend all the
meetings mentioned above for testimony and issuing legal opinions. Online voting has been applied during all above-mentioned
meetings to ensure that all shareholders, especially small and medium shareholders, enjoy equal status and fully exercise their
rights. Notices of shareholders' meeting, meeting proposals, discussion procedures, voting on proposals and information
disclosure all meet the requirements. Every major decision of the Company has been decided by the shareholders' meeting
according to laws and regulations with lawyers as the witness to ensure that the right to know, to participate and vote on major
issues of all shareholders, especially the small and medium shareholders are properly protected.
2. About Directors and the Board of Directors
During the Reporting Period, the number, composition and qualifications of the board of directors were in compliance with the
laws and regulations as well as the Articles of Association of the Company. All board members are diligent and responsible for
attending the board and shareholders’ meetings in accordance with the relevant provisions of the Company Law and the Articles
of Association. During the Reporting Period, the Company held 10 board meetings during which 52 proposals were reviewed.
The organizing, convening and formation of resolutions were carried out in accordance with relevant provisions of the Articles of
Association and the Rules of Procedure for the Board of Directors. The Company has established an independent director system
in accordance with relevant regulations. Each of the independent directors have expressed independent opinions on important
business of the Company during the Reporting Period. The Company's board of directors consists of one strategy committee,
one nomination committee, one audit committee and one remuneration and assessment committee, all of which are functioning
with respective implementation rules to ensure the scientific and compliant decision-making by the board of directors.
3. About Supervisors and the Board of Supervisors
During the Reporting Period, the board of supervisors of the Company consisted of three supervisors, including an external one.
The number, composition and qualifications of the Board of Supervisors were in compliance with laws and regulations as well as
the Articles of Association of the Company. During the Reporting Period, four meetings were held and 16 proposals were reviewed.
All meetings were organized and convened in accordance with the procedures of the Articles of Association and the Rules of
Procedure for the Board of Supervisors. All supervisors have earnestly performed their duties by reviewing the company's periodic
reports and other matters and issuing verification opinions with a strong sense of responsibilities to the shareholders. All of them
have effectively fulfilled their duties and safeguarded the legitimate rights and interests of the Company and its shareholders
4. About Investors’ Relations
The Company communicates with investors through public announcements, consultations by telephone, interactive platforms, e-
mails and other multiple media to enhance opinion exchange. It has been making various efforts on deepening the understanding
of investors about the Company's operation and development outlook and also maintaining good relations with them. Meanwhile,
it has been serious to receive investors' opinions and suggestions and encouraged the interaction between investors and itself.
During the Reporting Period, the Company has been patient to respond investors by answering calls and questions through all
interactive platforms, which has guaranteed a sound and fair access for investors to obtain information.
Whether there is any difference between the actual corporate governance situation of the Company and the provisions of the
relevant rules of CSRC or not?
□ Yes √ No
There is no difference between the actual corporate governance situation of the Company and the provisions of the relevant rules
of CSRC.
II. Particulars about the Company’s separation from the controlling shareholder in respect
of business, personnel, assets, organization and financial affairs
1. In respect of business: the Company had a complete business system and independent operation, and conducts its
independent and complete business with self-management ability.
2. In the respect of personnel: The Company and controlling shareholder are mutually independent in the labor, personnel and
salary management, the Company CEO and other senior management personnel get the salary in the Company, and not perform
administrative work in the controlling shareholder unit.
3. In respect of assets: The assets relationship between the Company and the controlling shareholder is clear. The company has
complete control over all its assets. There is no such thing as a free possession or usage by the controlling shareholder.
4. In respect of financing, the Company owned independent financial department, established independent accounting system
and financial management system, opened independent bank account, paid tax in line with laws.
5. In respect of organization, the Company has set up the organization that was independent from the controlling shareholder
completely, the Board of Directors, the Supervisory Committee and internal organization could operate independently.
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ADAMA Ltd Annual Report 2020
III. Horizontal competition
√ Applicable □ Not applicable
Type Name of Nature of Cause of the Solutions Work-schedule
Controlling Controlling problem and follow-up
Shareholder Shareholder plan
Horizontal ChemChina State-owned The subsidiaries ChemChina commits itself to take In process/
competition enterprise controlled by appropriate actions to solve the performance.
and related ChemChina are in horizontal competition and related
party similar or the same party transactions between its
transactions business as the subsidiaries and the Company.
Company or the For details, please refer to III
supplier or the client Performance of commitments of
of the Company. Section V of the Annual Report.
IV. Particulars regarding the annual shareholders’ general meeting and special
shareholders’ general meetings held during the Reporting Period
1. Particulars regarding the shareholders’ general meeting during Reporting Period
Proportion of
Disclosure
Session Type investors' Convening date Index to the disclosed
date
participation
Announcement of the
Resolutions of the 1st
1st Interim Interim Interim Shareholders Meeting
March 31,
Shareholders Shareholders 75.55% March 30, 2020 in 2020 (Announcement
2020
Meeting in 2020 Meeting Number: 2020-17). Disclosed
at the website CNINFO
www.cninfo.com.cn
Announcement of the
Resolutions of the 2nd
2nd Interim Interim Interim Shareholders Meeting
Shareholders Shareholders 78.46% April 9, 2020 April 10, 2020 in 2020 (Announcement
Meeting in 2020 Meeting Number: 2020-20). Disclosed
at the website CNINFO
www.cninfo.com.cn
Announcement on the
Resolutions of 2019 Annual
2019 Annual Annual General Meeting
Shareholders Shareholders 76.22% May 20, 2020 May 21, 2020 (Announcement
Meeting Meeting Number: 2020-31). Disclosed
at the website CNINFO
www.cninfo.com.cn
Announcement on the
Resolutions of the 3rd
3rd Interim Interim Interim Shareholders Meeting
September 7, September 8,
Shareholders Shareholders 74.66% in 2020 (Announcement
2020 2020
Meeting in 2020 Meeting Number: 2020-50). Disclosed
at the website CNINFO
www.cninfo.com.cn
Announcement on the
Resolutions of the 4th
4th Interim Interim
November 16, November 17, Interim Shareholders Meeting
Shareholders Shareholders 2.16%
2020 2020 in 2020 (Announcement
Meeting in 2020 Meeting
Number: 2020-67). Disclosed
at the website CNINFO
119
ADAMA Ltd Annual Report 2020
Proportion of
Disclosure
Session Type investors' Convening date Index to the disclosed
date
participation
www.cninfo.com.cn
2. Special Shareholders’ General Meeting applied by the preferred stockholder with restitution of voting
right
□ Applicable √ Not applicable
V. Performance of the Independent Directors
1. Particulars regarding independent directors’ attendance to board sessions and shareholders’
general meetings
1. Details of the independent directors’ attendance to board sessions and shareholders’ meetings
Sessions Attendance to
Non-attendance
required to Attendance by Entrusted shareholder
Independent On-Site Absence in person for two
attend during way of presence meetings
director Attendance rate consecutive
the Reporting communication (times)
times
Period
Tang Yunwei 8 -- 8 -- -- No 5
Xi Zhen 10 -- 10 -- -- No 5
Ge Ming 2 -- 2 -- -- No --
2. Particulars regarding independent directors’ objections
Whether independent directors objected to various events
□ Yes √ No
During the Reporting Period, no independent directors proposed any objection on relevant events of the Company.
3. Other explanations regarding the independent directors’ duty performance
Whether advices independent directors’ advice were adopted
√ Yes □ No
Explanation regarding advices of independent directors:
According to the Company Law, the Listed Corporate Governance Standards, "Articles of Association" and "Company of the
Independent Director System”, the independent directors, in general, including during the Reporting Period, focus actively over
Company’s operation, and independently performs their duties, render professional suggestions to the Company's information
disclosure and daily management decision-making, etc. issue independent and impartial advice to related-party transactions,
engagement of auditors, nomination of directors, dividend distributions, performance compensation, shares repurchase, change
of the use of the raised funds, deposit and using of the raised funds, appointment of the secretary of BOD and other events
which requires the independent directors’ advice. The independent directors play a proper role in improving the supervision, and
safeguard the legitimate rights and interests of the Company and its shareholders. The independent directors especially pay
attention (and paid attention - during the Reporting Period) to the Company’s operation state, dynamic state of the industry, public
opinion and dynamic state report of the Company. They actively and effectively perform the duties of independent directors and
well maintained overall benefits of the Company and the legal interests of all shareholders, especially the middle and small
shareholders. Their roll is required for positive, normal, stable and healthy development of the Company.
VI. Performance of the Special Committees under the Board during the Reporting Period
(I) Performance of the Audit Committee of the Board: According to regulations of CSRC and Shenzhen Stock Exchange, The
Annual Work System of Independent Director and Detailed Rules for the Implementation of the Audit Committee of the Board of
the Company, and based on the principle of compliance, the Company enables full and free authorization of the supervisory
function during the Reporting Period. The Audit Committee carefully reviewed the periodical reports, considered the engaging of
the auditors, dividend distributions, shares repurchase, related party transaction, using of the raised funds, and other relevant
events. Through communicating with the auditors, making annual audit plan and participating in and supervising the whole
process, smooth annual audit work was guaranteed. This fully satisfied the function of examination and supervision.
(II) Duty performance of the Remuneration & Appraisal Committee under the Board: During the reporting period, the Remuneration
& Appraisal Committee of the Company reviewed the remunerations and the payment of the bonus of the senior executives.
VII. Performance of the Supervisory Committee
120
ADAMA Ltd Annual Report 2020
Has the Supervisory Committee, during the Reporting Period, found a risk in the Company within its supervisory activity
□ Yes √ No
The Supervisory Committee had no objection on the supervised events during the Reporting Period.
VIII. Performance Evaluation and Incentive Mechanism for Senior Management
The performance evaluation and incentives of the senior executives of the Company are based on the Remuneration Policy for
Senior Executives. The remuneration of senior executives is composed of three parts: (i) base salary; (ii) variable components -
medium and short-term incentives which includes annual bonuses based on results and contingent upon targets; (iii) long term
incentives - Share-based cash reward and/or other long-term incentive in the form of cash. The Remuneration Policy establishes
a fair and reasonable performance evaluation and incentives system, which helps giving full play to the ‘talents’ of the senior
executives and promote the long-term and healthy development of the Company. For details, please refer to the Remuneration
Policy of Senior Executives published by the Company on February 22, 2019 on the website www.cninfo.com.cn .
121
ADAMA Ltd Annual Report 2020
IX. Internal Control
1. Particulars regarding material deficiencies found in the internal control during the Reporting Period
□ Yes √ No
2. Self-assessment report on internal control
Date of disclosure of self-assessment
March 31, 2021
report on internal control
Reference website of self-assessment
www.cninfo.com.cn
report on internal control
Rate of total Assets of Units within the
Assessment Scope Compared to Total
68.73%
Assets in the Consolidated Statements
of the Company
Rate of total Operating Income of Units
within the Assessment Scope
Compared to Total Operating Income 66.99%
in the Consolidated Statements of the
Company
Criteria of Deficiency
Categories Internal control over financial reporting Internal control not related to financial reporting
Material Deficiency: Resulting in an adverse opinion Material Deficiency:
or disclaimer of opinion, by a CPA, on the Company’s 1) Fraud committed in the Company by any of its
financial statements; or resulting in a material directors, supervisors and senior management
correction of the Company’s publicly announced personnel;
financial statements. 2) The Company materially violates material laws
Significant Deficiency: Resulting in a qualified and regulations, resulting in a material effect on the
opinion, by a CPA, on the Company’s financial Company's business;
statements; or resulting in an adverse opinion or 3) Material design deficiencies in the Company's
disclaimer of opinion, by a CPA, on the Company’s relevant management system;
material subsidiaries’ (i.e. Solutions) financial 4) The Company materially violates the decision-
statements; or resulting in a significant correction of making process thereby causing a material negative
the Company’s material subsidiaries’ (i.e. Solutions) impact on the Company's business (generally related
publicly announced financial statements. to matters that need to be approved by the
General Deficiency: Resulting in an unqualified shareholders meeting or the board of directors).
opinion, with an explanatory paragraph, by a CPA, on 5) Material impact to the Company’s reputation.
Qualitative the Company’s financial statements; or resulting in a Significant Deficiency:
criteria qualified opinion, or unqualified opinion with an 1) Significant fraud committed by any department
explanatory paragraph, by a CPA, on the Company’s head of the Company;
subsidiaries’ financial statements. 2) Significant fraud committed by a head of any of
the Company’s material subsidiaries;
3) The Company violates significant laws and
regulations, resulting in significant fines as well as a
significant effect on the Company's business;
4) Significant design deficiencies found in the
Company's relevant management system; Material
design deficiencies are found in the relevant
management systems of subsidiaries;
5) The Company violates material decision-making
procedures, resulting in a significant effect on the
Company's business (generally referred to matters
subject to senior management's decision);
6) Material Subsidiaries violate decision-making
122
ADAMA Ltd Annual Report 2020
process, thereby causing a material negative impact
on the Company's business (generally referred to
matters that need to be decided by the shareholders’
meeting or the board of directors).
7) Significant impact to the Company’s reputation.
General Deficiency:
1) Fraud committed by any other personnel in the
Company;
2) Fraud committed by any other personnel in
material subsidiaries;
3) The Company materially violates material internal
regulations or non-materially violates material laws
and regulations, resulting in negative feedback from
regulatory authorities;
4) There are other violations of laws and regulations
or internal regulations found in material subsidiaries.
5) There are general design deficiencies in the
relevant management system of the Company; other
design deficiencies exist in the relevant management
system of the material subsidiaries;
6) The Company violates the decision-making
process, resulting in a negative impact on the
Company's business;
7) Material Subsidiaries violate decision-making
process, resulting in a negative impact on the
Company's business.
Material Deficiency:
Net income related:
The corresponding misstatement relates to an
amount that is greater than or equal to RMB 80
million.
Balance sheet related:
The corresponding misstatement relates to an
amount that is greater than or equal to RMB 500 Material Deficiency: Asset Loss ≥ RMB 150 million
million. Significant Deficiency: RMB 80 million ≤ Asset
Quantitative
Significant Deficiency: Net income related: Loss < 150 million RMB
criteria
The corresponding misstatement relates to an General Deficiency: Asset Loss < 80 million RMB
amount that is greater than or equal to RMB 50
million, but less than RMB 80 million.
Balance sheet related:
The corresponding misstatement relates to an
amount that is greater than or equal to RMB 250
million, but less than RMB 500 million.
General Deficiency: Resulting in other misstatement
related amounts.
Number of
material
deficiencies in
0
internal control
over financial
reporting
Number of
material 0
deficiencies in
123
ADAMA Ltd Annual Report 2020
internal control
not related to
financial
reporting
Number of
significant
deficiencies in
0
internal control
over financial
reporting
Number of
significant
deficiencies in
internal control 0
not related to
financial
reporting
X. Audit report on internal control
√ Applicable □ Not applicable
Audit opinion paragraph in the internal control audit report
Disclosure of internal control
Disclose
audit report
Date of disclosure of internal
March 31, 2021
control audit report
Reference website of internal
www.cninfo.com.cn
control audit report
Type of audit opinion in the
Unqualified opinion.
internal control audit report
Is there any material
deficiencies in internal control
No.
not related to financial
reporting
Does the accounting firm issue non-standard audit opinion on internal control?
□ Yes √ No
Is the opinion issued by accounting firm consistent with the opinion in the self-assessment report by the Board?
√ Yes □ No
124
ADAMA Ltd Annual Report 2020
Section XI - Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of
this Report or were due but could not be redeemed in full?
□ Applicable √ Not applicable
125
ADAMA Ltd Annual Report 2020
Section XII - Financial Report
Type of auditor’s opinion Standard Unqualified Opinion
Audit opinion signoff date March 29, 2021
Name of the auditor Deloitte Touche Tohmatsu CPA LLP
Reference number of the audit report De Shi Bao (Shen) Zi (21) No P01902
Name of CPA Mou Zhengfei, Ma Renjie
126
AUDITOR'S REPORT
De Shi Bao (Shen) Zi (21) No. P01902
(Page 1 of 7)
To the shareholders of ADAMA Ltd.:
I. Opinion
We have audited the financial statements of ADAMA Ltd. (hereinafter referred to as the "Company"),
which comprise the consolidated and the Company's balance sheets as at 31 December 2020, and the
consolidated and the Company's income statements, the consolidated and the Company's statements of
changes in shareholders' equity and the consolidated and the Company's statements of cash flows for
the year then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the con-
solidated and the Company's financial position as of 31 December 2020, and the consolidated and the
Company's results of operations and cash flows for the year then ended in accordance with Accounting
Standards for Business Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities under
those standards are further described in the Auditor's Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the Code of
Ethics for Chinese Certified Public Accountants (the "Code"), and we have fulfilled our other ethical
responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements for the current year. These matters were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. The followings are key audit matters that we have deter-
mined to communicate in the auditor's report.
127
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (21) No. P01902
(Page 2 of 7)
III. Key Audit Matters - continued
(I) Cut-off of revenue recognition
Description
ADAMA's sale revenue is mainly contributed by the sales of goods in about 100 countries all over the
world. As stated in Note (V), 42 operating income, ADAMA's consolidated principal activities revenue
for 2020 was RMB 28,385,744,000, which was significant to the financial statements. As stated in Note
(III), 24, ADAMA recognizes revenue when the customer obtains control over relevant commodities,
and the Company has a risk of overstating the revenue by late cutoffs. Therefore, we considered the
appropriateness of cutoffs and correctness of accounting periods for principal activities revenue recog-
nition as a key audit matter.
Audit response
Our procedures in relation to this matter mainly include:
1、 Testing and assessing the design, implementation and operating effectiveness of internal con-
trols relating to the cut-off of principal activities revenue recognition;
2、 Reviewing the contracts with key customers for the terms and conditions relating to the transfer
of controls of goods and services, and assessing whether the timing of principal activities revenue
recognition complies with the Accounting Standards for Business Enterprises;
3、 Performing cut-off test by selecting samples from sales of goods recorded in the current year,
checking the supporting documents such as sales invoices and inventory transfer documents, and
checking whether the income is recorded in the correct accounting period;
4、 Performing analytic procedures and comparing whether there is abnormal fluctuation in the sales
of the major sales regions in the current period and the previous period, and analyzing whether there
is any abnormality in the sales return of the products.
128
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (21) No. P01902
(Page 3 of 7)
III. Key Audit Matters - continued
(II) Provision for decline in value of inventories
Description
As stated in Note (V), 9, the carrying amount of ADAMA's inventories net of provisions for decline in
value was RMB10,338,273,000 as of 31 December 2020, which was significant to the consolidated
financial statements. As disclosed in Note (III), 12.3 and 30.2, ADAMA measures inventories at the
lower of cost and net realizable value. Provisions for decline in value of inventories are made when the
net realizable values are lower than the carrying amounts. The determination of the net realizable value
of inventories requires the application of significant accounting estimates, including estimated selling
price of inventories, estimated costs of completion, the estimated costs necessary to make the sale and
relevant taxes etc. and the effect is significant. Therefore, we considered the provision for decline in
value of inventories as a key audit matter.
Audit response
Our procedures in relation to this matter mainly include:
1、 Testing and assessing the design, implementation and operating effectiveness of internal controls
relating to the provision for decline in value of inventories;
2、 Reviewing and assessing the reasonableness and consistency of the methodology used by the man-
agement to make provision for decline in value of inventories;
3、 Reviewing the inventory age and turnover conditions, and checking the management's identi-
fication of the damaged and slow moving inventories with the inventory monitoring procedures;
4、 Assessing the reasonableness of key assumptions involved in management's determination of the
net realizable value of inventories, including
sampling check whether the estimated selling price of inventories upon the management's deter-
mining the net realizable value of inventories significantly deviated from the actual selling price
of inventories subsequent to balance sheet date.
for work in progress, sampling to assess the reasonableness of estimated cost of completion on
the basis of stage of completion of the work in progress and actual cost of the finished goods;
assessing the reasonableness of the estimated costs necessary to make the sale and the related
taxes used in the calculation of net realizable value on the basis of historical data.
5、 Testing the accuracy of the calculation of provisions for decline in value of inventories.
129
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (21) No. P01902
(Page 4 of 7)
III. Key Audit Matters - continued
(III) Provision for Impairment of Goodwill on Crop Protection Units
Description
As stated in Note (V), 18, the carrying amount of goodwill was RMB4,584,226,000 as of 31 December
2020, which was mainly allocated to Crop Protection unit. As disclosed in Note III, 19 and 20,
ADAMA’s goodwill arising from business combination is measured at the cost less the accumulated
impairment loss after initial recognition, and should be entitled to impairment test at least at the end of
each year. When performing impairment test of Crop Protection unit with goodwill allocated, the man-
agement determined the recoverable amount of relevant assets group of units based on the model of
present value determined on future cash flows, which depend on the judgement of the management, it
requires the management to estimate the cash flows from relevant assets group of units and select an
appropriate discount rate that reflects the time value of money in the current market and the specific
risk of the assets. As significant accounting estimates and judgments are involved and the goodwill
allocated to Crop Protection unit is significant in amount, we considered the provision for impairment
of goodwill on Crop Protection unit as a key audit matter.
Audit response
Our procedures in relation to this matter mainly include:
1. Testing and assessing the design, implementation and operating effectiveness of internal controls
relating to the provision for impairment of goodwill on Crop Protection unit;
2. Checking the basis on which the management allocated goodwill to Crop Protection unit and as-
sessing the reasonableness;
3. Reviewing and assessing the reasonableness of the management's adoption of discount cash flow
model for the Crop Protection unit containing goodwill.
4. Analyzing and reviewing the significant accounting estimates and judgements used in estimation of
future cash flows, including the key parameters such as discount rate and growth rate, etc. We will
also involve internal valuation specialist for assistance;
5. Checking the expected future cash flows to historical data and other supporting evidence, and assess
the reasonableness;
6. Performing sensitivity analysis on possible changes in relevant key assumptions in impairment test
models.
130
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (21) No. P01902
(Page 5 of 7)
IV. Other Information
Management of the Company is responsible for the other information. The other information comprises
the information included in the 2020 annual report, but does not include the financial statements and
our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other infor-
mation and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or otherwise appears to be materially mis-
stated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information; we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of Management and Those Charged with Governance for the Financial State-
ments
The management of the Company is responsible for the preparation and fair presentation of the financial
statements in accordance with Accounting Standards for Business Enterprises, and designing, imple-
menting and maintaining internal control that is necessary to enable the financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Company or to
ceases operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting pro-
cess.
VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with China Standards on Auditing will always detect a material mis-
statement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
131
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (21) No. P01902
(Page 6 of 7)
VI. Auditor's Responsibilities for the Audit of the Financial Statements - continued
As part of an audit in accordance with China Standards on Auditing, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evi-
dence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control;
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances;
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting es-
timates and related disclosures made by the management;
(4) Conclude on the appropriateness of the management' use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company's ability to continue as a going con-
cern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor's report to the related disclosures in the financial statements or, if such disclosures are inad-
equate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor's report. However, future events or conditions may cause the Company to cease
to continue as a going concern;
(5) Evaluate the overall presentation (including the disclosures), structure and content of the financial
statements, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation;
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
132
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (21) No. P01902
(Page 7 of 7)
VI. Auditor's Responsibilities for the Audit of the Financial Statements - continued
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current year and are therefore
the key audit matters. We describe these matters in our auditor's report unless law or regulation pre-
cludes public disclosure about the matter or when, in extremely rare circumstances, we determine that
a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant
Shanghai China Mou Zhengfei
(Engagement Partner)
Chinese Certified Public Accountant
Ma Renjie
29 March 2021
This independent auditor's report of the financial statements and the accompanying financial statements are
English translations of the independent auditor's report and the financial statements prepared under accounting
principles and practices generally accepted in the People's Republic of China. These financial statements are
not intended to present the balance sheet and results of operations and cash flows in accordance with accounting
principles and practices generally accepted in other countries and jurisdictions. In case the English version does
not conform to the Chinese version, the Chinese version prevails.
133
ADAMA Ltd Annual Report 2020
(Expressed in RMB '000)
Consolidated Balance Sheet
December 31 December 31
Notes 2020 2019
Current assets
Cash at bank and on hand V.1 3,863,886 4,348,588
Financial assets held for trading V.2 1,253 29,510
Derivative financial assets V.3 1,560,788 490,113
Bills receivable V.4 102,082 26,000
Accounts receivable V.5 8,766,869 8,004,157
Receivables financing V.6 109,483 78,948
Prepayments V.7 406,008 377,808
Other receivables V.8 1,310,029 1,195,253
Inventories V.9 10,338,273 9,932,654
Other current assets V.10 769,641 659,195
Total current assets 27,228,312 25,142,226
Non-current assets
Long-term receivables V.11 95,329 170,896
Long-term equity investments V.12 14,081 133,098
Other equity investments V.13 152,200 155,062
Investment properties 4,364 3,771
Fixed assets V.14 6,576,116 6,939,610
Construction in progress V.15 1,405,328 788,386
Right-of-use assets V.16 483,618 536,034
Intangible assets V.17 5,226,455 5,835,785
Goodwill V.18 4,584,226 4,511,193
Deferred tax assets V.19 773,673 826,696
Other non-current assets V.20 257,332 246,183
Total non-current assets 19,572,722 20,146,714
Total assets 46,801,034 45,288,940
134
ADAMA Ltd Annual Report 2020
(Expressed in RMB '000)
Consolidated Balance Sheet (continued)
December 31 December 31
Notes 2020 2019
Current liabilities
Short-term loans V.21 1,205,498 2,009,882
Derivative financial liabilities V.22 1,463,614 691,475
Bills payable V.23 369,791 321,674
Accounts payable V.24 4,557,006 4,205,901
Contract liabilities V.25 1,092,253 664,228
Employee benefits payable V.26 1,208,834 1,211,713
Taxes payable V.27 358,988 369,038
Other payables V.28 1,075,721 1,049,594
Non-current liabilities due within one year V.29 1,272,581 1,066,243
Other current liabilities V.30 315,597 355,243
Total current liabilities 12,919,883 11,944,991
Non-current liabilities
Long-term loans V.31 2,387,628 927,159
Debentures payable V.32 8,078,113 7,965,942
Lease liabilities V.33 379,190 406,358
Long-term payables 27,327 29,021
Long-term employee benefits payable V.34 645,755 738,854
Provisions V.35 163,251 176,822
Deferred tax liabilities V.19 331,942 323,304
Other non-current liabilities V.36 434,030 404,824
Total non-current liabilities 12,447,236 10,972,284
Total liabilities 25,367,119 22,917,275
Shareholders' equity
Share capital V.37 2,344,121 2,446,554
Capital reserve V.38 13,023,219 12,903,168
Less: Treasury shares 60,357 -
Other comprehensive income V.39 (72,055) 1,192,681
Special reserves 15,960 14,927
Surplus reserve V.40 240,162 240,162
Retained earnings V.41 5,862,702 5,574,173
Total equity attributed to the shareholders
of the company 21,353,752 22,371,665
Non-controlling interests 80,163 -
Total Equity 21,433,915 22,371,665
Total liabilities and equity 46,801,034 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 March 29, 2021.
The notes form part of these financial statements.
135
ADAMA Ltd Annual Report 2020
(Expressed in RMB '000)
Balance Sheet
December 31 December 31
Notes 2020 2019
Current assets
Cash at bank and on hand XV.1 1,034,812 1,423,051
Accounts receivable XV.2 387,117 349,109
Receivables financing XV.3 25,060 11,722
Prepayments 5,973 6,055
Other receivables XV.4 27,138 14,051
Inventories 141,235 97,861
Other current assets 42,243 19,117
Total current assets 1,663,578 1,920,966
Non-current assets
Long-term equity investments XV.5 16,663,212 16,371,411
Other equity investments 85,495 85,495
Investment properties 4,364 3,771
Fixed assets 784,218 777,476
Construction in progress 992,863 504,936
Right-of-use assets 37 486
Intangible assets 220,963 170,053
Deferred tax assets 66,036 84,950
Other non-current assets 238,750 73,668
Total non-current assets 19,055,938 18,072,246
Total assets 20,719,516 19,993,212
Current liabilities
Short-term loans 100,000 150,000
Bills payables 19,600 90,190
Accounts payables 324,047 124,228
Contract liabilities 17,480 6,748
Employee benefits payable 99,808 204,238
Taxes payable 3,143 3,614
Other payables 240,939 237,266
Non-current liabilities due within one year 39,302 454
Total current liabilities 844,319 816,738
Non-current liabilities
Long-term loans 941,430 141,960
Lease Liabilities - 21
Long-term employee benefits payable 89,658 96,826
Provisions 44,743 43,238
Other non-current liabilities 143,770 171,770
Total non-current liabilities 1,219,601 453,815
Total liabilities 2,063,920 1,270,553
Shareholders’ equity
Share capital V.37 2,344,121 2,446,554
Capital reserve 15,569,929 15,449,878
Less: Treasury shares 60,357 -
Other comprehensive income 47,390 41,308
Special reserves 16,651 12,973
Surplus reserve 240,162 240,162
Retained earnings V.41 497,700 531,784
Total shareholders’ equity 18,655,596 18,722,659
Total liabilities and shareholders’ equity 20,719,516 19,993,212
136
ADAMA Ltd. Annual Report 2020
(Expressed in RMB '000)
Consolidated Income Statement
Year ended December 31
Notes 2020 2019
I. Operating income V.42 28,444,833 27,563,239
Less: Cost of sales V.42 20,071,035 18,679,512
Taxes and surcharges V.43 88,591 84,403
Selling and Distribution expenses V.44 4,945,345 4,873,256
General and administrative expenses V.45 1,043,708 1,562,317
Research and Development expenses V.46 478,778 436,325
Financial expenses V.47 1,847,189 1,665,885
Including: Interest expense 679,225 694,350
Interest income 64,022 81,190
Add: Investment income (loss), net V.48 206,502 (231,205)
Including: Income from investment
in associates and joint ventures 15,584 19,861
Gain (loss) from changes in fair value V.49 540,698 825,512
Credit impairment reversal (losses) V.50 (25,949) (39,405)
Asset impairment reversal (losses) V.51 (164,154) (413,816)
Gain from disposal of assets V.52 10,750 127,073
II. Operating profit 538,034 529,700
Add: Non-operating income 77,025 25,726
Less: Non-operating expenses 39,847 103,854
III. Total profit 575,212 451,572
Less: Income tax expenses V.53 222,459 174,531
IV. Net profit 352,753 277,041
(1). Classified by nature of operations
(1.1). Continuing operations 352,753 277,041
(2). Classified by ownership
(2.1). Shareholders of the Company 352,753 277,041
V. Other comprehensive income, net of tax V. 39 (1,264,736) 106,365
Other comprehensive income (net of tax)
attributable to shareholders of the Company (1,264,736) 106,365
(1) Items that will not be reclassified to profit or loss: 36,109 (48,181)
(1.1) Re-measurement of defined benefit plan liability 29,618 (50,771)
(1.2) Fair Value changes in other equity investment 6,491 2,590
(2) Items that were or will be reclassified to profit or loss (1,300,845) 154,546
(2.1) Effective portion of gains or loss of cash flow hedge (175,187) (138,917)
(2.2) Translation differences of foreign financial statements (1,125,658) 293,463
VI. Total comprehensive income for the period attributable to
Shareholders of the Company (911,983) 383,406
VII. Earnings per share XIV.2
(1) Basic earnings per share (Yuan/share) 0.15 0.11
(2) Diluted earnings per share (Yuan/share) N/A N/A
137
ADAMA Ltd. Annual Report 2020
(Expressed in RMB '000)
Income Statement
Year ended December 31
Notes 2020 2019
I. Operating income XV.6 1,516,459 1,405,709
Less: Operating costs XV.6 1,177,550 1,024,665
Taxes and surcharges 6,033 11,992
Selling and Distribution expenses 46,036 58,172
General and administrative expenses 179,481 632,515
Research and Development expenses 49,219 53,447
Financial expenses (income) 23,671 (13,211)
Including: Interest expense 9,757 3,941
Interest income 18,382 26,114
Add: Investment income (loss), net (16,173) 2,583
Credit impairment reversal (losses) 4,071 (2,018)
Asset Impairment reversal (losses) (17,655) (147,421)
Gain from disposal of assets 4,174 -
II. Operating Profit 8,886 (508,727)
Add: Non-operating income 13,730 6,726
Less: Non-operating expenses 1,934 28,739
III. Total profit 20,682 (530,740)
Less: Income tax expense (income) 25,407 (42,767)
IV. Loss (Continuing operations) (4,725) (487,973)
V. Other comprehensive income, net of tax 6,082 (1,859)
(1) Items that will not be reclassified to profit or loss 6,082 (1,859)
(1.1) Re-measurement of defined benefit plan liability (411) 62
(1.2) FV changes in other equity investment 6,493 (1,921)
VI. Total comprehensive income (loss) for the period 1,357 (489,832)
138
ADAMA Ltd. Annual Report 2020
(Expressed in RMB '000)
Consolidated Cash Flow Statement
Year ended December 31
Notes 2020 2019
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 26,822,969 24,860,829
Refund of taxes and surcharges 213,704 88,042
Cash received relating to other operating activities V.55(1) 693,212 664,837
Sub-total of cash inflows from operating activities 27,729,885 25,613,708
Cash paid for goods and services 18,671,558 17,877,786
Cash paid to and on behalf of employees 3,605,027 3,408,818
Payments of taxes and surcharges 385,056 683,477
Cash paid relating to other operating activities V.55(2) 3,045,229 2,800,140
Sub-total of cash outflows from operating activities 25,706,870 24,770,221
Net cash flows from (used in) operating activities V.56(1)a 2,023,015 843,487
II. Cash flows from investing activities:
Cash received from disposal of investments 29,808 63,685
Cash received from returns of investments 55,078 8,424
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 22,678 186,607
Cash received relating to other investing activities V.55(3) 3,223 5,208
Sub-total of cash inflows from investing activities 110,787 263,924
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 1,969,793 1,760,000
Cash paid for acquisition of investments 53,422 60,500
Net cash paid to acquire subsidiaries or other business units 371,192 1,121,947
Cash paid relating to other investing activities V.55(4) 48,348 -
Sub-total of cash outflows from investing activities 2,442,755 2,942,447
Net cash flows used in investing activities (2,331,968) (2,678,523)
III. Cash flows from financing activities:
Cash received from borrowings 3,772,193 3,032,134
Cash received from issuance of debentures 692,893 -
Cash received from other financing activities V.55(5) 220,738 179,911
Sub-total of cash inflows from financing activities 4,685,824 3,212,045
Cash repayments of borrowings 3,405,046 1,486,586
Cash payment for dividends, profit distributions and interest 728,369 1,000,773
Including: Dividends paid to non-controlling interest 34,865 43,043
Cash paid relating to other financing activities V.55(6) 409,358 936,712
Sub-total of cash outflows from financing activities 4,542,773 3,424,071
Net cash from financing activities 143,051 (212,026)
IV. Effects of foreign exchange rate changes on cash and cash equiva-
lents (318,934) 20,773
V. Net decrease in cash and cash equivalents V.56(1)b (484,836) (2,026,289)
Add: Cash and cash equivalents at the beginning of the year 4,319,907 6,346,196
I. VI. Cash and cash equivalents at the end of the period V.56(2) 3,835,071 4,319,907
139
ADAMA Ltd. Annual Report 2020
(Expressed in RMB '000)
Cash Flow Statement
Year ended December 31
Notes 2020 2019
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 1,275,007 1,634,256
Refund of taxes and surcharges 91,565 54,483
Cash received relating to other operating activities XV.7(1) 31,031 33,582
Sub-total of cash inflows from operating activities 1,397,603 1,722,321
Cash paid for goods and services 1,032,657 1,043,318
Cash paid to and on behalf of employees 208,933 213,846
Payments of taxes and surcharges 9,234 78,567
Cash paid relating to other operating activities XV.7(2) 242,563 164,778
Sub-total of cash outflows from operating activities 1,493,387 1,500,509
Net cash flows from (used in) operating activities XV.8 (95,784) 221,812
II. Cash flows from investing activities:
Cash received from returns of investments 2,583 4,391
Net cash received from disposal of fixed assets, intangible assets and
other long-term assets 4,357 -
Sub-total of cash inflows from investing activities 6,940 4,391
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 519,363 400,366
Cash paid for acquisition of investments 276,000 415,000
Cash paid for other investing activities XV.7.(3) 150,000 -
Sub-total of cash outflows from investing activities 945,363 815,366
Net cash flows used in investing activities (938,423) (810,975)
III. Cash flows from financing activities:
Cash received from borrowings 1,094,232 292,000
XV.7.(4)
Cash received relating to other financing activities 21,177 39,886
Sub-total of cash inflows from financing activities 1,115,409 331,886
Cash repayments of borrowings 333,500 92,000
Cash payment for dividends, profit distributions or interest 34,407 243,733
Cash paid relating to other financing activities XV.7.(5) 66,971 14,469
Sub-total of cash outflows from financing activities 434,878 350,202
Net cash flow provided by (used in) financing activities 680,531 (18,316)
IV. Effects of foreign exchange rate changes on cash and cash equivalents (19,560) (1,840)
V. Net decrease in cash and cash equivalents (373,236) (609,319)
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) 1,022,758 1,395,994
140
ADAMA Ltd. Annual Report 2020
(Expressed in RMB '000)
Consolidated Statement of Changes in Shareholders’ Equity
For the year ended December 31, 2020
Attributable to shareholders of the Company
Other compre-
Share capi- Capital re- Less: Treasury hensive in- Special Surplus re- Retained earn- Non-controlling
tal * serve * shares * come reserves serve ings Total interests Total equity
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 - 22,371,665
II. Changes in equity for the period (102,433) 120,051 60,357 (1,264,736) 1,033 - 288,529 (1,017,913) 80,163 (937,750)
1. Total comprehensive income - - - (1,264,736) - - 352,753 (911,983) - (911,983)
2. Owner’s contributions and reduction (102,433) 120,051 60,357 - - - - (42,739) 80,163 37,424
2.1 Repurchase of shares (102,433) 102,433 60,357 - - - - (60,357) - (60,357)
2.2 Non-controlling interests in - - - - - - - - 80,163 80,163
respect of business combination
2.3 Other - 17,618 - - - - - 17,618 - 17,618
3. Appropriation of profits - - - - - - (64,224) (64,224) - (64,224)
3.1 Distribution to owners - - - - - - (29,359) (29,359) - (29,359)
3.2 Distribution to non-controlling - - - - - - (34,865) (34,865) - (34,865)
interest
4. Special reserve - - - - 1,033 - - 1,033 - 1,033
4.1 Transfer to special reserve - - - - 7,511 - - 7,511 - 7,511
4.2 Amount utilized - - - - (6,478) - - (6,478) - (6,478)
III. Balance at December 31, 2020 2,344,121 13,023,219 60,357 (72,055) 15,960 240,162 5,862,702 21,353,752 80,163 21,433,915
* For further information of the changes during the year see Note XI.2 – Commitments and Contingent Liabilities
141
ADAMA Ltd. Annual Report 2020
(Expressed in RMB '000)
Statement of Changes in Shareholders’ Equity
For the year ended December 31, 2019
Attributable to shareholders of the Company
Other com-
Share Capital re- prehen-sive in- Special re- Surplus re- Retained
capital serve come serves serve 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) 101,854 1,391 - (55,119) (373,197)
1. Total comprehensive income - - 106,365 - - 277,041 383,406
2. Owner’s contributions and reduction - (421,323) - - - - (421,323)
2.1 Consideration for Business
combination under common control - (415,000) - - - - (415,000)
2.2 Other - (6,323) - - - - (6,323)
3. Appropriation of profits - - - - - (336,671) (336,671)
3.1 Distribution to owners - - - - - (293,628) (293,628)
3.2 Distribution to non-controlling -
interest - - - - (43,043) (43,043)
4. Transfers within owners’ equity - - (4,511) - - 4,511 -
4.1 Others - - (4,511) - - 4,511 -
5. Special reserve - - - 1,391 - - 1,391
5.1 Transfer to special reserve - - - 19,675 - - 19,675
5.2 Amount utilized - - - (18,284) - - (18,824)
IV. Balance at December 31, 2019 2,446,554 12,903,168 1,192,681 14,927 240,162 5,574,173 22,371,665
142
ADAMA Ltd. Annual Report 2020
(Expressed in RMB '000)
Statement of Changes in Shareholders’ Equity
For the year ended December 31, 2020
Attributable to shareholders of the Company
Less:
Share Capital re- treasury Other compre- Special Surplus Retained
capital serve share hensive 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 (102,433) 120,051 60,357 6,082 3,678 - (34,084) (67,063)
1. Total comprehensive income - - - 6,082 - - (4,725) 1,357
2. Owner’s contributions and reduction (102,433) 120,051 60,357 (42,739)
2.1 Repurchase of shares (102,433) 102,433 60,357 - - - - (60,357)
2.2 Other - 17,618 - - - - - 17,618
3. Appropriation of profits - - - - - - (29,359) (29,359)
3.1 Transfer to Distribution to shareholders - - - - - - (29,359) (29,359)
4. Special reserve - - - - 3,678 - - 3,678
4.1 Transfer to special reserve - - - - 7,511 - - 7,511
4.2 Amount utilized - - - - (3,833) - - (3,833)
Ⅲ. Balance at December 31, 2020 2,344,121 15,569,929 60,357 47,390 16,651 240,162 497,700 18,655,596
For the year ended December 31, 2019
Attributable to shareholders of the Company
Share Capital re- Other compre- Special Surplus Retained
capital serve hensive 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 - 35,449 (1,859) 1,409 - (725,289) (690,290)
1. Total comprehensive income - - (1,859) - - (487,973) (489,832)
2. Owner’s contributions and reduction - 35,449 - - - - 35,449
2.1 Other - 35,449 - - - - 35,449
3. Appropriation of profits - - - - - (237,316) (237,316)
3.1 Transfer to Distribution to shareholders - - - - - (237,316) (237,316)
4. Special reserve - - - 1,409 - - 1,409
4.1 Transfer to special reserve - - - 10,924 - - 10,924
4.2 Amount utilized - - - (9,515) - - (9,515)
Ⅲ. Balance at December 31, 2019 2,446,554 15,449,878 41,308 12,973 240,162 531,784 18,722,659
143
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
I BASIC CORPORATE INFORMATION
ADAMA Ltd. (hereinafter the “Company” or the “Group”) is a company limited by shares established in
China with its head office located in Hubei Jingzhou.
In June 2020, the controlling shareholder of the Company changed from China National Agrochemical Co,.
Ltd. (hereinafter – “CNAC") to Syngenta Group Co., Ltd. (hereinafter “Syngenta Group”). The ultimate
controlling shareholder remains 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 subsid-
iaries of the Company, refer to Note VII.
The Company’s consolidated financial statements had been approved by the Board of Directors of the Com-
pany on March 29, 2021.
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 Com-
mission (hereinafter "CSRC”) in 2014).
144
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 equiva-
lents 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 December 31, 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 December 31, 2020 and the Com-
pany's consolidated operating results, changes in shareholders' equity and cash flows for the twelve months
then ended.
145
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 cur-
rency. 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 state-
ments 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 dif-
ference 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 man-
agement 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.
146
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 ac-
quiree’s identifiable net assets, the remaining difference is recognized immediately in profit or loss for the
current year.
The goodwill raised because of the business combination should be separately disclosed in the consolidated
financial statement and measured by the initial amount less any accumulative impairment provision.
In a business combination achieved in stages, the Group remeasure its previously held equity interest in the
acquiree at its acquisition-date fair value and recognise the resulting gain or loss, if any, in profit or loss.
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 inter-
ests 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 con-
solidated income statement below the total comprehensive income line item.
147
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 ex-
ceeds 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 finan-
cial 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 invest-
ment 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.
148
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 capital-
ized 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 re-
classified to profit or loss upon disposal of the foreign operations.
Foreign currency non-monetary items measured at historical cost are translated to the amounts in functional
currency at the spot exchange rates on the dates of the transactions and the amounts in functional currency
remain unchanged.
9.2 Translation of financial statements denominated in foreign currency
For the purpose of preparing consolidated financial statements, financial statements of a foreign operation
are translated from the foreign currency into RMB using the following method: assets and liabilities on the
balance sheet are translated at spot exchange rate prevailing at the balance sheet date; shareholders' equity
items, except for retained earnings, are translated at the spot exchange rates at the dates on which such items
arose; all items in the income statement as well as items reflecting the distribution of profits are translated at
average rate or at spot exchange rates on the dates of the transactions; the retained earnings opening balance
is previous year's translated retained earnings closing balance; the closing balance of retained earnings is
calculated and presented on the basis of each translated income statement and profit distribution item. The
difference between the translated assets and the aggregate of liabilities and shareholders' equity items is
recorded as other comprehensive income. Cash Flows arising from transaction in foreign currency and the
cash flows of a foreign subsidiary are translated at the spot exchange rate on the date of the cash flow, the
effect of exchange rate changes on the cash and cash equivalents is regarded as a reconciling item and present
separately in the statement “effect of foreign exchange rate changes on the cash and cash equivalents".
The opening balances and the comparative figures of prior year are presented at the translated amounts in
the prior year's financial statements.
On disposal of the Group's entire equity interest in a foreign operation, or upon a loss of control over a
foreign operation due to disposal of certain equity interest in it or other reasons, the Group transfers the
accumulated translation differences, which are attributable to the owners' equity of the Company and pre-
sented under other comprehensive income to profit or loss in the period in which the disposal occurs.
149
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 reclas-
sified 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.
150
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 finan-
cial 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 reclas-
sified. 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 pe-
riod 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.
151
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 in-
creased 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 envi-
ronment 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.
152
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 finan-
cial 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 rela-
tive 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 be-
tween: (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.
153
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 contin-
uing 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 liabil-
ities 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.
154
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 derecog-
nized 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.
155
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 ex-
pected 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 spe-
cific 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 atten-
tion 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 con-
version 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 in-
ventories
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.
156
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 state-
ments. 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 combi-
nation. The difference between initial investment cost and cash paid, non-cash assets transferred and book
value of liabilities assumed, is adjusted in capital reserve. If the balance of capital reserve is not sufficient to
absorb the difference, any excess is adjusted to retained earnings.
For a long-term equity investment acquired through business combination not involving enterprises under
common control, the investment cost of the long-term equity investment is the cost of acquisition. For a
business combination not involving enterprises under common control achieved in stages that involves mul-
tiple 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 instru-
ments, the historical cost is determined based on the fair value of the equity instruments issued.
157
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 ad-
justments to be confirmed with the Group's accounting policies and accounting period. The Group discon-
tinues 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 con-
sidered.
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).
158
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 con-
structions, 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 ve-
hicles, 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 expend-
itures can be measured reliably. Other subsequent expenditures are recognized in profit or loss in the period
in which they are incurred.
159
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 ac-
counting estimate.
The estimated useful life, estimated net residual value and annual depreciation rate of each category of fixed
assets are as follows:
Residual
Useful life value Annual deprecia-
Category Depreciation (years) (%) tion rate (%)
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, instal-
lation 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).
160
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 sus-
pension 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 rela-
tions. 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
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).
161
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 de-
velopment 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 meas-
ured.
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 expend-
itures 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, con-
struction 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.
162
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 contri-
butions 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 ben-
efit 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 re-
spective 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.
163
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
21. Employee benefits - (cont’d)
21.3 Termination benefits
When the Group terminates the employment with employees or provides compensation under an offer to
encourage employees to accept voluntary redundancy, a provision is recognized with a corresponding ex-
pense 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 de-
bentures denominated in the same currency, that have maturity dates approximating the terms of the Group’s
obligation.
21.4 Other long-term employee benefits
The Group’s net obligation for long-term employee benefits, which are not attributable to post-employment
benefit plans, is for the amount of the future benefit to which employees are entitled for services that were
provided during the current and prior periods.
The amount of these benefits is discounted to its present value and the fair value of the assets related to these
obligations is deducted therefrom. The discount rate used is the yield on the reporting date on highly-rated
corporate debentures denominated in the same currency, that have maturity dates approximating the terms
of the Group’s obligation.
22. Share-based payment
Share-based payment refers to the transaction in order to acquire the service offered by the employees or
other parties that grants equity instruments or liabilities on the basis of the equity instruments. Share-based
payment classified into equity-settled share-based payment and cash-settled share-based payment.
22.1 Cash-settled share-based payment
The cash-settled share-based payment should be measured according to the fair value of the liabilities rec-
ognized 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 bal-
ance 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 Com-
pany should re-measure the fair value of the liabilities and the changes should be included in the current
period profit and loss.
164
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 recog-
nized 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 amor-
tized in the contract period using effective interest rate. The Group does not adjust the amount of consider-
ation 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 ex-
pected costs to recover those products.
165
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 rec-
ognized 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 gov-
ernment 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 ex-
penses. Government grants related that are irrelevant with the Groups’s normal course of business are in-
cluded 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 meas-
ured 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.
166
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 recog-
nition 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 sub-
sidiaries 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 in-
come or shareholders’ equity, and deferred tax recognized on business combinations, all other current in-
come 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 liabil-
ities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a
net basis.
167
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 (ex-
clude 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.
168
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 relation-
ship;
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.
169
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 rec-
ognized 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 deriv-
atives 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.
170
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 seg-
ment reporting. Segment accounting policies are consistent with those for the consolidated financial state-
ments.
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
"Accounting Standards for Business Enterprises Interpretation No. 13"
Interpretation No. 13 revised the three elements that constitute a business and elaborated the criteria for a
business. "The concentration test" is introduced as an option, for the acquirer in business combinations in-
volving enterprises not under common control, when determining whether the acquired operation or set of
assets constitute a business. At the same time, Interpretation No. 13 further clarifies the definition of related
parties.
In addition, Interpretation No. 13 further clarifies that related parties of an enterprise also include joint ven-
tures or associates of other members (including parent company and subsidiaries) of the group to which the
enterprise belongs, and other joint ventures and associates of investors who exercise joint control over the
enterprise etc.
Interpretation No. 13 was effective from January 1, 2020. Adoption of the interpretation has no significant
impact on the Company’s financial statements.
"Regulations on Accounting Treatment of Rent Concessions Related to the New Coronary Pneumonia
Epidemic" (Caikuai [2020] No. 10)
In June 2020, the Ministry of Finance issued the "Notice on Issuing the "Regulations on Accounting Treat-
ment of Rental Concessions Related to the New COVID-19 Epidemic" (Financial Accounting Policy [2020]
No. 10), which can be used in accordance with the accounting treatment regulations for rental concessions
related to the COVID-19 in order to apply a simplified approach. The notice did not have a significant impact
on the Company’s financial statements.
171
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
29. Changes in significant accounting policies and accounting estimates – (cont’d)
29.1 Changes in significant accounting estimates
There are no significant changes in accounting estimates in the reporting period.
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 ex-
penses. Actual results may differ from these estimates. Estimates as well as underlying assumptions and
uncertainties involved are reviewed on an ongoing basis. Revisions to accounting estimates are recognized
in the period in which the estimate is revised and in any future periods affected.
Notes V.34, Note VIII, Note IX and Note XIII contain information about the assumptions and their risk
factors relating to post-employment benefits – defined benefit plans, fair value of financial instruments and
share-based payments. Other key sources of estimation uncertainty are as follows:
30.1 Expected credit loss of trade receivables
As described in Note III.11, trade receivables are reviewed at each balance sheet date to determine whether
credit risk on a receivable has increased significantly since initial recognition, lifetime expected losses is
accrued for impairment provision. Evidence of impairment includes observable data that comes to the atten-
tion of the Group about loss events such as a significant decline in the solvency of an individual debtor or
the portfolio of debtors, and significant changes in the financial condition that have an adverse effect on the
debtor. If there is objective evidence of a recovery in the value of receivables which can be related objectively
to an event occurring after the impairment was recognized, the previously recognized impairment loss is
reversed.
30.2 Provision for impairment of inventories
As described in Note III.12, the net realisable value of inventories is under management’s regular review,
and as a result, provision for impairment of inventories is recognized for the excess of inventories’ carrying
amounts over their net realisable value. When making estimates of net realisable value, the Group takes into
consideration the use of inventories held on hand and other information available to form the underlying
assumptions, including the inventories’ market prices and the Group’s historical operating costs. The actual
selling price, the costs of completion and the costs necessary to make the sale and relevant taxes may vary
based on the changes in market conditions and product saleability, manufacturing technology and the actual
use of the inventories, resulting in the changes in provision for impairment of inventories. The net profit or
loss may then be affected in the period when the impairment of inventories is adjusted.
172
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 de-
preciation 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 pro-
vision 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.
173
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.
174
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. Nether- 25.0%
lands
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%.
175
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(1) Benefits from High-Tech Certificate
The Company, was jointly approved as new and high-tech enterprise, by the Hubei Provincial Department
of Science and Technology, Department of Finance of Hubei Province, Hubei Provincial Office of the State
Administration of Taxation and Hubei Local Taxation Bureau. The applicable income tax rate from 2020 to
2022 is 15%.
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 En-
terprise” 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 Amend-
ment”). The Amendment is effective from January 1, 2011 and its provisions apply to preferred income
derived or accrued in 2011 and thereafter by a preferred company, per the definition of these terms in the
Amendment.
The Amendment provides that only companies in Development Area A will be entitled to the grants track
and that they will be entitled to receive benefits under this track and under the tax benefits track at the same
time. The tax benefit tracks under the law constitute a preferred enterprise and a special preferred enterprise,
which mainly provide a uniform and reduced tax rate for all the company’s income entitled to benefits. Tax
rates on preferred income as from 2017 tax year are as follows: 7.5% for Development Area A and 6% for
the rest of the country.
The amendment further determined that no tax shall apply to dividend distributed out of preferred income to
Israel resident company shareholder.
As of the date of the report, all subsidiaries in Israel adopted the amendment and the deferred taxes were
calculated accordingly.
176
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(2) Benefits under the Law for the Encouragement of Capital Investments - (cont’d)
On December 21, 2016 the Knesset plenum passed the second and third reading of the Economic Efficiency
Law (Legislative Amendments for Achieving Budget Objectives in the Years 2017 and 2018) – 2016 in
which the Encouragement Law was also amended (hereinafter: “the Amendment”). The Amendment is ef-
fective as from January 1, 2017 and added new tax benefit tracks for a “preferred technological enterprise”
and a “special preferred technological enterprise” which award reduced tax rates to a technological industrial
enterprise for the purpose of encouraging activity relating to the development of qualifying intangible assets.
The benefits will be awarded to a “preferred company” that has a “preferred technological enterprise” or a
“special preferred technological enterprise” with respect to taxable “preferred technological income” per its
definition in the Encouragement Law.
Preferred technological income that meets the conditions required in the law, will be subject to a reduced
corporate tax rate of 12%, and if the preferred technological enterprise is located in Development Area A to
a tax rate of 7.5%. Special preferred technological enterprise will be subject to a reduced corporate tax rate
of 6% regardless of the development area in which the enterprise is located.
In addition, as part of the amendment, a temporary provision was enacted, valid until June 30, 2021, which
settles tax benefits continuation on income that is eligible to the Preferred Enterprise tax benefits as at June
30, 2016. ADAMA Agricultural Solutions Ltd. (hereinafter: “Solutions”) implement and act in accordance
with the temporary provision.
On May 16, 2017 the Knesset Finance Committee approved Encouragement of Capital Investment Regula-
tions (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 mecha-
nism for allocating the technological income eligible for the benefits.
Solutions, through a subsidiary, filed an application to the Israeli Tax Authority for settling its eligibility to
the tax benefits in accordance with the amendment to the Encouragement Law.
(3) Benefits under the Law for the Encouragement of Industry (Taxes), 1969
Under the Israeli Law for the Encouragement of Industry (Taxes) 1969, Solutions is an Industrial Holding
Company and some of the subsidiaries in Israel are “Industrial Companies”. The main benefit under this law
is the filing of consolidated income tax returns (Solutions files a consolidated income tax return with Adama
Makhteshim and submission of a consolidated report together with Adama Agan as of 2017) and amortiza-
tion of know-how over 8 years, higher rates of depreciation.
177
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
December 31 December 31
2020 2019
Cash on hand 4,590 6,265
Deposits in banks 3,830,481 4,313,642
Other cash and bank 28,815 28,681
3,863,886 4,348,588
Including cash and bank placed outside China 2,064,876 2,443,065
As at December 31, 2020, restricted cash and bank balances was 28,815 thousand RMB (as at December 31,
2019- 28,681 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Financial assets held for trading
December 31 December 31
2020 2019
Debt instruments - 15,788
Other 1,253 13,722
1,253 29,510
3. Derivative financial assets
December 31 December 31
2020 2019
Economic hedge 1,545,481 436,201
Accounting hedge derivatives 15,307 53,912
1,560,788 490,113
4. Bills Receivable
December 31 December 31
2020 2019
Post-dated checks receivable 91,975 13,757
Bank acceptance draft 10,107 12,243
102,082 26,000
All bills receivables are due within 1 year.
178
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
December 31, 2020
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 467,325 5 262,933 56 204,392
Account receivables assessed
collectively for impairment 8,661,818 95 99,341 1 8,562,477
9,129,143 100 362,274 4 8,766,869
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
December 31, 2020
Within 1 year (inclusive) 8,610,726
Over 1 year but within 2 years 226,709
Over 2 years but within 3 years 66,495
Over 3 years but within 4 years 58,907
Over 4 years but within 5 years 27,887
Over 5 years 138,419
9,129,143
179
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 loca-
tion:
Geographical location A:
Account receivables in geographical location A are grouped based on similar credit risk:
December 31, 2020
Provision for expected
Book value credit loss Percentage (%)
Credit group A 1,740,928 8,109 0.03-0.75
Credit group B 981,811 12,069 1.23
Credit group C 325,064 17,078 5.25
Credit group D 36,933 1,151 3.12
3,084,736 38,407 1.25
Geographical location B:
Account receivables in geographical location B are grouped based on aging analysis:
December 31, 2020
Provision for expected
Book value credit loss Percentage (%)
Accounts receivable that are not overdue 257,117 2,284 0.9
Debts overdue less than 60 days 124,725 3,742 3.0
Debts overdue less than 180 days but
more than 60 days 31,502 3,150 10.0
Debts overdue above 180 days 17,759 7,104 40.0
Legal Debtors 33,450 33,450 100.0
464,553 49,730 10.7
Other geographical locations:
December 31, 2020
Provision for expected
Book value credit loss Percentage (%)
Other account receivables assessed
collectively for impairment 5,112,529 11,204 0.0-4.26
180
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 11,910 38,627 50,537
Write back during the period - (26,102) (26,102)
Write-off during the period - (5,703) (5,703)
First time consolidation - 13,468 13,468
Exchange rate effect (7,923) (60,455) (68,378)
Balance as of December 31, 2020 51,895 310,379 362,274
d. Five largest accounts receivable at December 31, 2020:
Allowance of expected
Proportion of Accounts credit losses (credit losses
Name Closing balance receivable (%) has occurred)
Customer 1 155,050 2 -
Customer 2 108,933 1 -
Customer 3 97,462 1 5,416
Customer 4 95,290 1 -
Customer 5 72,563 1 -
Total 529,298 6 5,416
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 dif-
ferent 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 Com-
pany is financed by Cooperative Rabobank U.A..
The trade receivables included as part of the Securitization Transaction are trade receivables that meet the
criteria provided in the agreement.
Every year the credit facility is re approved in accordance with the Securitization Program. As at the report
date, the Securitization agreement was approved up to October 31, 2021.
181
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 December 31, 2020 - 2,284 million RMB), during the months July through September
the maximum scope of the securitization is $300 million (as of December 31, 2020 – 1,957 million RMB)
and during the months October through February the maximum scope of the securitization is $250 million
(as of December 31, 2020 - 1,631 million RMB). In addition the company has uncommitted facility of $50
million (as of December 31, 2020 - 326 million RMB) which will be applicable each period. The proceeds
received from those customers whose debts were sold are used for acquisition of new trade receivables.
The price at which the trade receivables debts are sold is the amount of the debt sold less a discount calculated
based on, among other things, the expected length of the period between the date of sale of the trade receiv-
able and its anticipated repayment date. In the month following acquisition of the debt, the Acquiring Com-
pany 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 antici-
pated 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 agree-
ment covering the product, such as: a failure to supply the correct product, a defect in the product, delin-
quency 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 re-
ceivables 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 December 31, 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 consoli-
dated 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 receiv-
ables” line item.
182
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The loss from sale of the trade receivables is recorded at the time of sale in the statement of income in the
“financing expenses”.
The Company’s subsidiary in Brazil (hereinafter - “the subsidiary”) entered into a securitization agreement
with Rabobank Brazil for sale of trade receivables. Under the agreement, the subsidiary will sell its trade
receivables to a securitization structure (hereinafter - “the entity”) that was formed for this purpose where
the subsidiary has subordinate rights of 5% of the entity's capital.
As at the report date, the subsidiary agreement was approved up to September 1, 2022. The maximum secu-
ritization scope as of December 31, 2020 is BRL 364 million (457 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 con-
tinuing 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 to profit and loss under financing
expenses.
December 31 December 31
2020 2019
Accounts receivables derecognized 2,850,745 2,994,917
Continuing involvement 125,578 134,243
Subordinated note in respect of trade receivables 762,598 808,807
Liability in respect of trade receivables 22,002 26,370
Year ended December 31
2020 2019
Loss in respect of sale of trade receivables 73,673 91,006
183
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
6. Receivables financing
December 31 December 31
2020 2019
Bank acceptance draft 109,483 78,948
109,483 78,948
As at December 31, 2020, bank acceptance endorsed but not yet due amounts to 339,793 thousands RMB.
7. Prepayments
(1) The aging analysis of prepayments is as follows:
December 31 December 31
2020 2019
Amount Percentage (%) Amount Percentage (%)
Within 1 year (inclusive) 400,549 99 370,607 98
Over 1 year but within 2 years (inclusive) 3,037 1 3,691 1
Over 2 years but within 3 years (inclusive) 640 - 621 -
Over 3 years 1,782 - 2,889 1
406,008 100 377,808 100
(2) Total of five largest prepayments by debtor at the end of the period:
Amount Percentage of prepayments (%)
December 31, 2020 175,395 43
184
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
December 31 December 31
2020 2019
Dividends receivable - -
Others 1,310,029 1,195,253
1,310,029 1,195,253
a. Others breakdown by categories
December 31 December 31
2020 2019
Trade receivables as part of securitization transactions
not yet eliminated 125,578 134,243
Subordinated note in respect of trade receivables 762,598 808,807
Financial institutions 231,183 5,107
Receivables in respect of disposal of fixed assets 23,949 28,762
Other 182,867 233,238
Sub total 1,326,175 1,210,157
Provision for expected credit losses - other receivables (16,146) (14,904)
1,310,029 1,195,253
b. Other receivables by aging
December 31
2020
Within 1 year (inclusive) 1,272,058
Over 1 year but within 2 years 10,020
Over 2 years but within 3 years 16,286
Over 3 years but within 4 years 674
Over 4 years but within 5 years 2,826
Over 5 years 24,311
1,326,175
185
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:
Year ended
December 31, 2020
Balance as of January 1 2020, 14,904
Addition during the period 1,514
Written back during the period -
Write-off during the period -
Exchange rate effect (272)
Balance as of December 31, 2020 16,146
(3) Five largest other receivables at December 31, 2020:
Allowance of ex-
Proportion of other re- pected credit
Name Closing balance ceivables (%) losses
Party 1 762,598 58 -
Party 2 231,184 18 -
Party 3 13,324 1 -
Party 4 10,627 1 -
Party 5 7,921 1 -
Total 1,025,654 79 -
9. Inventories
(1) Inventories by category:
December 31, 2020
Provision for impair-
Book value ment Carrying amount
Raw materials 3,060,965 42,945 3,018,020
Work in progress 704,391 - 704,391
Finished goods 6,488,658 153,577 6,335,081
Others 288,218 7,437 280,781
10,542,232 203,959 10,338,273
December 31, 2019
Provision for impair-
Book value ment 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
186
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 year ended December 31, 2020
Reversal or
January 1, 2020 Provision write-off Other December 31, 2020
Raw material 22,344 33,540 )10,436( )2,503( 42,945
Work in progress 5,351 - )5,339( )12( -
Finished goods 184,900 85,296 )105,951( )10,668( 153,577
Others 8,689 2,195 )2,898( )549( 7,437
221,284 121,031 )124,624( )13,732( 203,959
10. Other Current Assets
December 31 December 31
2020 2019
Deductible VAT 499,136 459,209
Current tax assets 232,051 170,505
Others 38,454 29,481
769,641 659,195
11. Long-Term Receivables
December 31 December 31
2020 2019
Long term account receivables from sale of goods 95,329 170,896
95,329 170,896
187
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:
December 31 December 31
2020 2019
Investments in joint ventures 14,081 92,695
Investments in associates - 40,403
14,081 133,098
(2) Movements of long-term equity investments for the period are as follows:
Declared dis- Change in
January Investment Other Compre- tribution of Capital consolidation December
1, 2020 income hensive income cash dividend investment scope Impairment 31, 2020
Joint ven-
tures
Investee A 75,924 10,841 2,485 (62,600) 51,435 (78,085) - -
Investee B 5,441 91 (168) (2,480) - - - 2,884
Investee C 1,046 - (113) - - - - 933
Investee D 10,284 4,652 (3,862) (810) - - - 10,264
Sub-total 92,695 15,584 (1,658) (65,890) 51,435 (78,085) - 14,081
Associates
Investee E 40,403 - (326) - - - (40,077) -
Sub-total 40,403 - (326) - - - (40,077) -
133,098 15,584 (1,984) (65,890) 51,435 (78,085) (40,077) 14,081
13. Other equity investments
December 31 December 31
Dividend received during
2020 2019 December 31, 2020
Investment A 85,495 85,495 2,583
Investment B 65,034 67,781 4,040
Investment C 1,671 1,786 -
152,200 155,062 6,623
Other equity investments are non-core businesses that are intended to be held in the foreseeable future.
188
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
First time consolidation 1,777 - 7,701 3,477 12,955
Purchases 62,847 250,808 23,408 29,896 366,959
Transfer from construction in progress 71,804 367,046 1,539 1,387 441,776
Disposals (78,095) (315,504) (22,475) (5,899) (421,973)
Currency translation adjustment (136,297) (703,716) (7,858) (23,086) (870,957)
Balance as at December 31, 2020 3,299,569 13,982,376 122,215 371,573 17,775,733
Accumulated depreciation
Balance as at January 1, 2020 (1,667,208) (8,690,076) (60,679) (276,110) (10,694,073)
First time consolidation (1,005) - (6,594) (2,848) (10,447)
Charge for the period (105,642) (605,857) (17,388) (38,839) (767,726)
Disposals 34,336 227,207 18,867 5,727 286,137
Currency translation adjustment 66,475 421,485 3,570 18,547 510,077
Balance as at December 31, 2020 (1,673,044) (8,647,241) (62,224) (293,523) (10,676,032)
Provision for impairment
Balance as at January 1, 2020 (196,295) (416,011) (733) (251) (613,290)
Charge for the period (5,392) (34,202) - - (39,594)
Transfer from construction in progress - (3,512) - - (3,512)
Disposals 41,397 86,216 82 - 127,695
Currency translation adjustment 599 4,501 - 16 5,116
Balance as at December 31, 2020 (159,691) (363,008) (651) (235) (523,585)
Carrying amounts
As at December 31, 2020 1,466,834 4,972,127 59,340 77,815 6,576,116
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.
189
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
December 31 December 31
2020 2019
Provision for im- Provision for im-
Book value pairment Carrying amount Book value pairment Carrying amount
1,431,068 (25,740) 1,405,328 814,126 (25,740) 788,386
(2) Details and Movements of major construction projects in progress during year ended December
31, 2020
Actual
Currency Transfer cost to Project
January 1, translation to fixed December budget progress
Budget 2020 Additions differences assets 31, 2020 (%) (%) Source of funds
Project A 1,509,420 358,952 364,469 - (90,765) 632,656 49% 49% Bank loan
Project B * 722,302 13,064 12,377 - - 25,441 5% 5% Bank loan
Project C 226,740 5,246 54,514 (3,300) - 56,460 25% 25% Internal finance
Project D 172,055 18,434 42,815 - (9,847) 51,402 53% 53% Internal finance
Project E 138,000 8,256 31,530 - - 39,786 29% 29% Internal finance
Project F 113,481 - 57,019 (3,097) - 53,922 48% 48% Internal finance
Project G 75,689 45,073 18,549 (3,923) - 59,699 79% 79% Internal finance
* Project B as of December 31, 2020 include impairment of RMB 14 million which was subsequently disposed.
190
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 & Build- Machinery & Office & other
ings equipment Motor vehicles equipment Total
Cost
Balance as at January 1, 2020 456,983 46,714 178,402 3,187 685,286
First time consolidation 4,368 29 3,122 - 7,519
Additions 43,413 2,884 96,051 931 143,279
Disposals (9,747) (1,470) (39,331) (600) (51,148)
Currency translation adjustment (26,496) (2,828) (14,330) (73) (43,727)
Balance as at December 31, 2020 468,521 45,329 223,914 3,445 741,209
Accumulated depreciation
Balance as at January 1, 2020 (77,196) (7,820) (63,238) (998) (149,252)
Charge for the period (81,554) (6,934) (74,393) (906) (163,787)
Disposals 7,142 1,456 34,008 283 42,889
Currency translation adjustment 6,382 745 5,390 42 12,559
Balance as at December 31, 2020 (145,226) (12,553) (98,233) (1,579) (257,591)
Provision for impairment
Balance as at January 1, 2020 - - - - -
Balance as at December 31, 2020 - - - - -
Carrying amounts
As at December 31, 2020 323,295 32,776 125,681 1,866 483,618
As at January 1, 2020 379,787 38,894 115,164 2,189 536,034
191
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, trade-
Product registra- on Purchase of name and trade- Customers rela-
tion Products Software marks tions Land use rights (1) Others(2) Total
Costs
Balance as at January 1, 2020 10,769,146 4,189,417 761,236 743,734 399,193 344,917 326,115 17,533,758
First time consolidation (3) 114,988 - - 51,034 82,222 - 11,668 259,912
Purchases 571,077 - 153,125 290 - 53,868 13,330 791,690
Currency translation adjustment )711,343( )271,010( )56,447( )50,832( )30,407( 28 )21,327( )1,141,338(
Disposal )50,837( - )1,173( )166( - )5,937( )9,039( )67,152(
Balance as at December 31, 2020 10,693,031 3,918,407 856,741 744,060 451,008 392,876 320,747 17,376,870
Accumulated amortization
Balance as at January 1, 2020 )7,873,186( )2,278,371( )513,028( )441,587( )196,458( )65,271( )164,844( )11,532,745(
Charge for the period )806,855( )344,334( )62,058( )32,108( )37,964( )7,524( )34,552( )1,325,395(
Currency translation adjustment 544,555 166,093 35,658 30,070 14,120 )3( 11,843 802,336
Disposal 29,303 - 1,173 - - 1,330 4,318 36,124
Balance as at December 31, 2020 )8,106,183( )2,456,612( )538,255( )443,625( )220,302( )71,468( )183,235( )12,019,680(
Provision for impairment
Balance as at January 1, 2020 )108,075( )52,182( - - - - )4,971( )165,228(
Charge for the period )173( - - - - - - )173(
Disposal 21,088 - - - - - 4,721 25,809
Currency translation adjustment 5,481 3,376 - - - - - 8,857
Balance as at December 31, 2020 )81,679( )48,806( - - - - )250( )130,735(
Carrying amount
As at December 31, 2020 2,505,169 1,412,989 318,486 300,435 230,706 321,408 137,262 5,226,455
As at January 1, 2020 2,787,885 1,858,864 248,208 302,147 202,735 279,646 156,300 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.
(3) First time consolidation includes conclusion of purchase price allocation related to 2019 acquisitions and a provisional purchase price allocation for 2020 Dibai acquisition.
192
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
18. Goodwill
Changes in goodwill
The Group allocates goodwill to two cash generating units ("CGU"), Crop Protection (Agro) and a non-core ac-
tivity included in the Intermediates and ingredients segment. At the end of the year, or more frequently whether
indicators for impairment exists, the Group estimates the recoverable amount of each CGU for which goodwill
has been allocated to using th DCF model.
The carrying amount of goodwill is mainly allocated to Agro units, which includes RMB 227 million from the
acquisition of Shanghai Dibai Plant Protection Co., Ltd. The goodwill allocated to non-core CGU is not signif-
icant.
As of December 31, 2020 the fair value of the cash generating units to which goodwill has been allocated to
exceeds its carrying amount.
Currency Balance at De-
January 1, translation cember 31,
2020 Additions adjustment 2020
Book value 4,511,193 376,006 (302,973) 4,584,226
Impairment provision - - - -
Carrying amount 4,511,193 376,006 (302,973) 4,584,226
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
December 31 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 785,259 142,312 611,496 136,594
Deferred tax assets in respect of inven-
tories 1,555,528 422,995 1,552,766 413,713
Deferred tax assets in respect of em-
ployee benefits 910,081 128,676 973,434 135,422
Other deferred tax asset 1,569,188 366,652 1,606,933 387,109
4,820,056 1,060,635 4,744,629 1,072,838
193
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
December 31 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 3,512,629 618,904 3,551,402 569,446
3,512,629 618,904 3,551,402 569,446
(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting
December 31 December 31
2020 2019
The offset The offset
amount of Deferred tax amount of de-
deferred tax assets or lia- ferred tax as- Deferred tax
assets and li- bilities after sets and liabili- assets or liabili-
abilities offset ties ties after offset
Presented as:
Deferred tax assets 286,962 773,673 246,142 826,696
Deferred tax liabilities 286,962 331,942 246,142 323,304
(4) Details of unrecognized deferred tax assets
December 31 December 31
2020 2019
Deductible temporary differences 523,951 515,589
Deductible losses carry forward 103,402 142,042
627,353 657,631
(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets
December 31 December 31
2020 2019
2020 - 16,171
2021 2,388 13,031
2022 1,626 1,402
2023 2,105 27,767
2024 1,785 7,599
After 2024 95,498 76,072
103,402 142,042
194
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
December 31 December 31
2020 2019
Judicial deposits 93,182 56,347
Assets related to securitization 31,979 38,648
Advances in respect of non-current assets 40,857 58,689
Call option in respect of business combination 18,733 9,216
Others 72,581 83,283
257,332 246,183
21. Short-Term Loans
Short-term loans by category:
December 31 December 31
2020 2019
Guaranteed loans - 414,000
Unsecured loans 1,205,498 1,595,882
1,205,498 2,009,882
* All guaranteed loans were fully paid during the period. Details of the guarantees are set out in note X.5(2)
Related parties and related party transactions.
22. Derivative financial liabilities
December 31 December 31
2020 2019
Economic hedge 1,197,274 603,009
Accounting hedge derivatives 266,340 88,466
1,463,614 691,475
195
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
23. Bills Payables
December 31 December 31
2020 2019
Post-dated checks payables 264,402 224,878
Note payables draft 105,389 96,796
369,791 321,674
As at December 31, 2020, none of the bills payable are overdue.
24. Accounts payable
December 31 December 31
2020 2019
Within 1 year (including 1 year) 4,523,845 4,172,996
1-2 years (including 2 years) 7,454 10,458
2-3 years (including 3 years) 4,349 2,881
Over 3 years 21,358 19,566
4,557,006 4,205,901
There are no significant accounts payables aging over one year.
25. Contract liabilities
December 31 December 31
2020 2019
Discount for customers 633,882 522,614
Advances from customers 458,371 141,614
1,092,253 664,228
26. Employee Benefits Payable
December 31 December 31
2020 2019
Short-term employee benefits 660,144 656,272
Post-employment benefits* 122,216 224,035
Share based payment (See note XIII) 85,900 -
Other benefits within one year 306,506 304,366
1,174,766 1,184,673
Current maturities 34,068 27,040
1,208,834 1,211,713
* For further information regarding the termination benefits to employees during the periods see note XI.2 – Com-
mitments and contingent liabilities.
196
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
27. Taxes Payable
December 31 December 31
2020 2019
Corporate income tax 168,033 157,548
VAT 166,073 180,818
Others 24,882 30,672
358,988 369,038
28. Other Payables
December 31 December 31
2020 2019
Dividends payables 3,780 750
Other payables 1,071,941 1,048,844
1,075,721 1,049,594
(1) Other payables
December 31 December 31
2020 2019
Accrued expenses 541,250 613,183
Payables in respect of intangible assets 135,176 130,329
Financial institutions 111,863 1,137
Liability in respect of securitization transactions 22,002 26,370
Other payables 261,650 277,825
1,071,941 1,048,844
As at December 31, 2020, the Group did not have any significant other payables overdue.
29. Non-Current Liabilities Due Within One Year
Non-current liabilities due within one year by category are as follows:
December 31 December 31
2020 2019
Long-term loans due within one year 587,864 420,086
Lease liabilities due within one year 146,178 148,287
Debentures payable due within one year 538,539 497,870
1,272,581 1,066,243
197
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
30. Other Current Liabilities
December 31 December 31
2020 2019
Put options to holders of non-controlling interests 87,388 148,886
Provision in respect of returns 194,775 191,065
Provision in respect of claims 33,036 14,901
Others 398 391
315,597 355,243
31. Long-Term Loans
Long-term loans by category
December 31 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 2,947,492 1.4%-4.7% 1,344,385 1.5%-6.2%
Total Long term loans 2,947,492 1,347,245
Less: Long term loans from banks due within 1
year (559,864) (420,086)
Long term loans, net 2,387,628 927,159
For the maturity analysis, see note VIII.C - Liquidity risk.
There are no long-term loans mortgaged by fixed assets as at Decemer 31, 2020 (31.12.19: 900 thousand RMB).
Details of the guarantees are set out in note X(5) Related parties and related party transactions.
32. Debentures Payable
December 31 December 31
2020 2019
Debentures Series B 8,616,652 8,463,812
Current maturities (538,539) (497,870)
8,078,113 7,965,942
December 31
2020
First year (current maturities) 538,539
Second year 538,539
Third year 538,539
Fourth year 538,539
Fifth year and thereafter 6,462,496
8,616,652
198
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
32. Debentures Payable - (cont'd)
Movements of debentures payable:
For the year ended December 31, 2020
Issuance
Balance at during Amortization CPI and Repayment Currency Balance at
Maturity Face value Face value Issuance Maturity Issuance January 1, the pe- of discounts exchange during the translation December
period in RMB NIS date period amount 2020 riod or premium rate effect period adjustment 31, 2020
Debentures November
Series B 2,673,640 1,650,000 4.12.2006 2020-2036 3,043,742 3,839,289 - 220 244,212 )221,067( )251,265( 3,611,389
Debentures November
Series B 843,846 513,527 16.1.2012 2020-2036 842,579 1,137,246 - 11,424 72,624 )72,334( )74,622( 1,074,338
Debentures November
Series B 995,516 600,000 7.1.2013 2020-2036 1,120,339 1,417,383 - 5,005 90,284 )84,517( )92,828( 1,335,327
Debentures November
Series B 832,778 533,330 1.2.2015 2020-2036 1,047,439 1,335,461 - )3,150( 85,215 )75,123( )87,339( 1,255,064
Debentures November
Series B 418,172 266,665 1-6.2015 2020-2036 556,941 734,433 - )8,608( 46,955 )37,562( )47,911( 687,307
Debentures November
Series B 497,989 246,499 5.5.2020 2020-2036 692,896 - 692,896 )6,606( 55,628 )34,720( )53,971( 653,227
8,463,812 692,896 )1,715( 594,918 )525,323( )607,936( 8,616,652
On May 5, 2020, Solutions issued debentures through an expansion of Series B totaling RMB 498 million, in consideration for 115.6% of the par value. The total proceeds,
net of issuance cost, amounted to RMB 693 million.
Series B debentures amounts to NIS 3,810 million par value (3,510 million par value, net of self-purchased) linked to the CPI, bearing basic annual interest of 5.15%. The
principal is repaid in 17 equal payments in the years 2020 to 2036.
On November 30, 2020 the Company made the first principal repayment of its Series B debentures, for a total of NIS 219.4 million par value (approximately RMB 525
million).
199
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
33. Lease liabilities
December 31 December 31
2020 Interest range 2019 Interest range
Lease liabilities 525,368 1.3%-6.1% 554,645 1.9% - 6.1%
Less: Lease liabilities due within one year (146,178) (148,287)
Long term lease liabilities, net 379,190 406,358
34. Long-Term Employee Benefits Payable
Post-employment benefit plans – defined benefit plan and early retirement
December 31 December 31
2020 2019
Total present value of obligation 594,165 651,803
Less: fair value of plan's assets )92,634( (104,448)
Net liability related to Post-employment benefits 501,531 547,355
Termination benefits 99,466 70,128
Total recognized liability for defined benefit plan, net (1) 600,997 617,483
Share based payment (See note XIII) 21,088 94,104
Other long-term employee benefits 57,738 54,307
Total long-term employee benefits, net 679,823 765,894
Including: Long-term employee benefits payable due within one year 34,068 27,040
645,755 738,854
(1) Movement in the net liability and assets in respect of defined benefit plans, early retirement and
their components
Defined benefit obli-
gation and early re- Fair value of plan's
tirement assets Total
2020 2019 2020 2019 2020 2019
Balance as at January 1, 2020 721,931 638,355 104,448 87,492 617,483 550,863
Expense/income recognized
in profit and loss:
Current service cost 34,181 24,910 - - 34,181 24,910
Interest costs 22,932 22,608 3,270 3,614 19,662 18,994
Losses (gains) on curtailments and settlements 54,959 - - - 54,959 -
Changes in exchange rates 41,922 38,499 7,409 7,110 34,513 31,389
Actuarial gain (losses) due to early retirement )4,670( (4,125) - - (4,670) (4,125)
Included in other comprehensive income:
Actuarial gain (losses) as a result of changes in actu-
arial assumptions )43,604( 65,239 (7,941) 7,945 (35,663) 57,294
Foreign currency translation differences in respect of
foreign operations )42,276( 9,348 (6,584) 1,493 (35,692) 7,855
Additional movements:
Benefits paid (95,546) (72,903) (13,212) (9,372) (82,334) (63,531)
Contributions paid by the Group - - 5,244 6,166 (5,244) (6,166)
New consolidation 3,802 - - - 3,802 -
Balance as at December 31, 2020 693,631 721,931 92,634 104,448 600,997 617,483
200
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
December 31 December 31
2020 2019
Discount rate (%)* 0.6%-3.3% 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 December 31, 2020
Increase of 1% Decrease of 1%
Change in defined benefit obligation )48,969( 61,084
35. Provisions
December 31 December 31
2020 2019
Liabilities in respect of contingencies* 77,138 90,051
Provision in respect of site restoration 79,706 84,211
Long-term liability in respect of business combinations 3,954 -
Other 2,453 2,560
163,251 176,822
* Liabilities in respect of contingencies includes obligations of pending litigations, where an outflow of re-
sources had been reliably estimated.
201
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
December 31 December 31
2020 2019
Put options to holders of non- controlling interests 290,260 207,472
Long term transactions in derivatives - 25,582
Long term loans - others 171,770 171,770
462,030 404,824
Current maturities (28,000) -
434,030 404,824
37. Share Capital
Balance at
Balance at Janu- Issuance of new December 31,
ary 1, 2020 shares Buyback of shares 2020
Share capital 2,446,554 - (102,433) 2,344,121
* For further information of the changes see note XI.2 – Commitments and contingent liabilities.
38. Capital Reserve
Balance at
Balance at Janu- Additions during Reductions during December 31,
ary 1, 2020 the period the period 2020
Share premiums 12,550,177 102,433 - 12,652,610
Other capital reserve 352,991 17,618 - 370,609
12,903,168 120,051 - 13,023,219
* For further information of the changes see note XI.2 – Commitments and contingent liabilities.
39. Other Comprehensive Income, net of tax
Attributable to shareholders of the company
Less: Less: trans-
Balance at transfer Less: In- fer to re- Balance at
January 1, Before tax to profit come tax Net-of-tax tained December
2020 amount or loss expenses amount earnings 31, 2020
Items that will not be re-
classified to profit or loss 13,824 35,663 - (446) 36,109 - 49,933
Re-measurement of changes
in liabilities under defined
benefit plans (34,876) 35,663 6,045 29,618 - (5,258)
Changes in fair value of
other equity investment 48,700 - - (6,491) 6,491 - 55,191
Items that may be reclassi-
fied to profit or loss 1,178,857 (1,319,595) 7,937 (26,687) (1,300,845) - (121,988)
Effective portion of gain or
loss of cash flow hedge (45,532) (189,918) 11,956 (26,687) (175,187) - (220,719)
Translation difference of for-
eign financial statements 1,224,389 (1,129,677) (4,019) - (1,125,658) - 98,731
1,192,681 (1,283,932) 7,937 (27,133) (1,264,736) - (72,055)
202
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
Balance at during the during the December 31,
January 1, 2020 period period 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 352,753 277,041
Dividends to non-controlling Interest (34,865) (43,043)
Dividend to the shareholders of the company (Note 2) (29,359) (293,628)
Transfer from other comprehensive income - 4,511
Retained earnings as at December 31 5,862,702 5,574,173
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 combina-
tion 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 and was fully paid during the third quarter of 2020.
Note 3:
On March 29, 2021, after obtaining the approval of the 31st meeting of the Company's 8th Board of Directors,
the Company declared RMB 0.16 (before tax) per 10 shares as cash dividend to all shareholders, resulting in a
total cash dividend of 37,277 thousands RMB (before tax). No shares were distributed as share dividend and no
reserve was transferred to equity capital.
203
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
Year ended December 31 Year ended December 31
2020 2019
Income Cost of sales Income Cost of sales
Principal activities 28,385,744 20,033,482 27,486,019 18,609,841
Other businesses 59,089 37,553 77,220 69,671
28,444,833 20,071,035 27,563,239 18,679,512
43. Taxes and Surcharges
Year ended December 31
2020 2019
Tax on turnover 24,690 21,166
Others 63,901 63,237
88,591 84,403
44. Selling and Distribution Expenses
Year ended December 31
2020 2019
Salaries and related expense 1,638,087 1,557,483
Depreciation and amortization 1,404,220 1,405,411
Transportation and Commissions 771,765 708,217
Advertising and sales promotion 302,921 331,763
Travel expenses 70,999 153,501
Warehouse expenses 154,425 147,524
Registration 150,921 121,406
Professional services 88,307 87,048
Insurance 83,293 83,307
Others 280,407 277,596
4,945,345 4,873,256
204
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
Year ended December 31
2020 2019
Salaries and related expenses 518,889 752,816
Idleness expenses 134,164 342,044
Professional services 105,270 131,593
Depreciation and amortization 86,730 96,137
IT systems 95,734 87,635
Office rent, maintenance and expenses 37,522 54,903
Other 65,399 97,189
1,043,708 1,562,317
46. Research and development expenses
Year ended December 31
2020 2019
Salaries and related expenses 218,596 185,356
Field trial 45,828 60,787
Professional services 61,927 67,779
Depreciation and amortization 44,112 37,727
Materials 53,596 27,244
Office rent, maintenance and expenses 7,833 8,108
Other 46,886 49,324
478,778 436,325
47. Financial expenses, net
Year ended December 31
2020 2019
Interest expenses on debentures and loans 700,658 707,098
CPI expense (income) in respect of debentures (57,101) 23,418
Loss in respect of sale of trade receivables 73,673 91,006
Interest expense in respect of post-employment benefits and early retire-
ment, net 19,473 38,681
Revaluation of put option, net 10,525 (7,605)
Interest income from customers, banks and others (64,022) (81,190)
Exchange rate differences, net 1,111,631 859,403
Interest expense on lease liabilities 24,251 25,904
Other expenses 28,101 9,170
1,847,189 1,665,885
205
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
48. Investment income, net
Year ended December 31
2020 2019
Investment income (expenses) from disposal of derivatives 125,300 (253,799)
Income from long-term equity investments accounted for using
the equity method 15,584 19,861
Gain from change in consolidation scope 58,995 -
Other 6,623 2,733
206,502 (231,205)
49. Gain (loss) from Changes in Fair Value
Year ended December 31
2020 2019
Gain from changes in fair value of derivative financial instruments 555,223 828,527
Others (14,525) (3,015)
540,698 825,512
50. Credit impairment reversal (losses)
Year ended December 31
2020 2019
Bills receivable and accounts receivable (24,435) (39,323)
Other receivables (1,514) (82)
(25,949) (39,405)
51. Asset impairment reversal (losses)
Year ended December 31
2020 2019
Inventories (66,351) (76,375)
Fixed assets (39,594) (285,695)
Construction in progress (17,265) (19,763)
Intangible asset (173) (22,852)
Long-term equity investment (40,077) -
Other (694) (9,131)
(164,154) (413,816)
52. Gain from Disposal of Assets
Year ended December 31 Included in
non-recurring
2020 2019 items
Gain from disposal of fixed assets 4,134 127,443 4,134
Gain (loss) from disposal of intangible assets 6,616 (370) 6,616
10,750 127,073 10,750
V. Notes to the consolidated financial statements - (cont'd)
206
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
53. Income Tax Expenses
Year ended December 31
2020 2019
Current year 327,341 363,279
Deferred tax expenses (income) (39,919) (138,294)
Adjustments for previous years, net (64,963) (50,454)
222,459 174,531
(1) Reconciliation between income tax expense and accounting profit is as follows:
Year ended December 31
2020 2019
Profit before taxes 575,212 451,572
Statutory tax in china 25% 25%
Tax calculated according to statutory tax in china 143,803 112,893
Tax benefits from Approved Enterprises (26,140) )6,928(
Difference between measurement basis of income for financial 104,890 37,323
statement and for tax purposes
Taxable income and temporary differences at other tax rate (20,873) 16,820
Taxes in respect of prior years (64,963) (50,454)
Utilization of tax losses prior years for which deferred taxes were (2,968) (6,720)
not created
Temporary differences and losses in the report year for which de- 23,293 116,370
ferred taxes were not created
Non-deductible expenses and other differences 34,704 (6,795)
Neutralization of tax calculated in respect of the Company’s share (5,246) (6,023)
in results of equity accounted investees
Effect of change in tax rate in respect of deferred taxes 38,775 (33,631)
Creation and reversal of deferred taxes for tax losses and temporary (2,816) 1,676
differences from previous years
Income tax expenses 222,459 174,531
54. Other comprehensive income
Details of the Other comprehensive income are set out in Note V.39
207
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
Year ended December 31
2020 2019
Derivatives transactions 404,824 260,557
Financial institutions 126,770 74,615
Interest income 53,895 61,207
Government subsidies 12,759 5,899
Others 94,964 262,559
693,212 664,837
(2) Cash paid relating to other operating activities
Year ended December 31
2020 2019
Transportation, Commissions and Warehouse 847,272 753,643
Advertising and sales promotion 297,623 295,944
Professional services 246,200 264,241
Financial institutions 369,655 118,269
IT and Communication 184,149 179,730
Registration and Field trials 166,551 186,694
Derivatives transactions 183,065 54,030
Travel 93,357 180,303
Insurance 103,038 99,543
Others 554,319 667,743
Net cash flow from operating activities 3,045,229 2,800,140
(3) Cash received relating to other investing activities
Year ended December 31
2020 2019
Investment grant 3,223 5,208
3,223 5,208
(4) Cash paid relating to other investing activities
Year ended December 31
2020 2019
Increase in securitization facility 31,483 -
Other 16,865 -
48,348 -
208
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
Year ended December 31
2020 2019
Cash received in respect of hedging transactions on debentures 186,727 140,025
Deposit for issuing bills payables 34,011 39,886
220,738 179,911
(6) Cash paid relating to other financing activities
Year ended December 31
2020 2019
Repayment of lease liability 160,522 146,610
Payment in respect of hedging transactions on debentures 154,335 325,474
Deposit for issuing bills payable 34,144 14,003
Payment for business combinations under common control - 415,000
Repurchase of treasury shares 60,357 -
Realization of call option - 35,625
409,358 936,712
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:
Year ended December 31
2020 2019
Net profit 352,753 277,041
Add: Impairment provisions for assets 164,154 413,816
Credit impairment loss 25,949 39,405
Depreciation of fixed assets and investment property 768,076 841,041
Depreciation of right-of-use asset 163,787 160,389
Amortization of intangible asset 1,325,395 1,334,711
Gains on disposal of fixed assets, intangible assets, and other long-
term assets, net (10,750) (127,073)
Gains from changes in fair value (540,698) (825,512)
Financial expenses 1,398,807 1,325,875
Investment loss (income), net (286,930) (51,370)
Decrease (increase) in deferred tax assets (38,515) (130,959)
Increase (decrease) in deferred tax liabilities (1,404) (7,335)
Decrease (increase) in inventories, net (939,779) (236,687)
(Increase) in operating receivables (1,173,437) (1,080,276)
Increase (decrease) in operating payables 796,618 (1,119,479)
Others 18,989 29,900
Net cash flow from operating activities 2,023,015 843,487
V. Notes to the consolidated financial statements - (cont'd)
209
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
56. Supplementary Information on Cash Flow Statement - (cont'd)
b. Net increase (decrease) in cash and cash equivalents
Year ended December 31
2020 2019
Closing balance of cash 3,835,071 4,319,907
Less: Opening balance of cash 4,319,907 6,346,196
Decrease in cash and cash equivalents (484,836) (2,026,289)
(2) Information on acquisition or disposal of subsidiaries and other business units
Year ended December 31
2020 2019
Cash paid for business combination not under common control 440,495 1,126,557
Less: cash and cash equivalents of the acquirees at the date of acqui-
sition 69,303 4,610
Net cash paid to acquire subsidiaries 371,192 1,121,947
(3) Details of cash and cash equivalents
Year ended December 31
2020 2019
Cash on hand 4,590 6,265
Bank deposits available on demand without restrictions 3,830,481 4,313,642
3,835,071 4,319,907
57. Assets with Restricted Ownership or Right of Use
December 31
2020 Reason
Cash 28,815 Pledged
Other non-current assets 101,619 Guarantees
130,434
210
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 December 31, 2020
Foreign currency at
the end of the pe- RMB at the end of
riod Exchange rate the period
Cash and bank balances
USD 114,714 6.5249 748,499
EUR 31,654 8.0046 253,375
ARS 1,143,009 0.0775 88,628
PLN 44,240 1.7361 76,805
ILS 31,600 2.0295 64,133
CAD 11,959 5.1178 61,204
ZAR 99,708 0.4463 44,500
GBP 4,033 8.9134 35,952
BRL 26,384 1.2556 33,127
Other 277,641
Total 1,683,864
Bills and Accounts receivable
BRL 1,880,787 1.2556 2,361,489
EUR 84,774 8.0046 678,580
USD 37,506 6.5249 244,723
TRY 208,940 0.8889 185,725
RON 111,417 1.6452 183,304
ZAR 400,804 0.4463 178,880
RUB 1,600,369 0.0883 141,349
CAD 17,396 5.1178 89,032
AUD 14,187 5.0401 71,506
GBP 4,995 8.9134 44,520
HUF 1,378,561 0.0219 30,249
ILS 2,328 2.0295 4,725
Other 379,970
Total 4,594,052
Other receivables
EUR 77,517 8.0046 620,491
ILS 47,070 2.0295 95,530
BRL 20,558 1.2556 25,812
Other 33,688
Total 775,521
Other current assets
ILS 67,833 2.0295 137,668
BRL 71,948 1.2556 90,337
EUR 5,221 8.0046 41,792
USD 2,727 6.5249 17,793
UAH 64,155 0.2308 14,805
ARS 131,106 0.0775 10,166
Other 62,470
Total 375,031
211
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 December 31, 2020
Foreign currency at
the end of the pe- RMB at the end of
riod Exchange rate the period
Long-term receivables
BRL 75,924 1.2556 95,329
Total 95,329
Other non-current assets
BRL 63,628 1.2556 79,891
Other 3,523
Total 83,414
Short-term loans
TRY 205,431 0.8889 182,606
UAH 378,003 0.2308 87,231
EUR 8,206 8.0046 65,686
Other 23,392
Total 358,915
Bills and Accounts payable
ILS 424,631 2.0295 861,796
EUR 58,488 8.0046 468,175
BRL 123,432 1.2556 154,979
USD 9,242 6.5249 60,303
RON 6,798 1.6452 11,184
Other 87,172
Total 1,643,609
Other payables
ILS 60,307 2.0295 122,394
EUR 10,061 8.0046 80,536
BRL 64,117 1.2556 80,504
ILS CPI 18,497 2.0295 37,540
OTHER 97,529
TOTAL 418,503
Contract liabilities
EUR 25,441 8.0046 203,642
BRL 59,996 1.2556 75,330
CAD 5,677 5.1178 29,055
TRY 31,116 0.8889 27,659
USD 471 6.5249 3,073
Other 30,367
Total 369,126
212
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 December 31, 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 285,550 2.0295 579,529
EUR 24,592 8.0046 196,850
USD 1,249 6.5249 8,150
Other 30,504
Total 815,033
Other current liabilities
EUR 3,204 8.0046 25,649
UAH 102,863 0.2308 23,738
Other 5,559
Total 54,946
Long-term loan
EUR 44,542 8.0046 356,540
Total 356,540
Debentures payable
ILS CPI 3,980,311 2.0295 8,078,113
Total 8,078,113
Provision and Long-term payables
BRL 45,087 1.2556 56,610
EUR 377 8.0046 3,015
Total 59,625
Other non-current liabilities
EUR 8,729 8.0046 69,876
ILS CPI 20,444 2.0295 41,492
USD 3,566 6.5249 23,268
GBP 1,111 8.9134 9,905
Other 25,766
Total 170,307
213
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; Regis- USD
tration
ADAMA Deutschland GmbH Germany Distribution; Registration USD
ADAMA India Private Ltd. India Manufacturing INR
Distribution; Registration
Makhteshim Agan of North United States Manufacturing; Distribution; Regis- USD
America Inc. tration
Control Solutions Inc. United States Manufacturing; Distribution; Regis- USD
tration
ADAMA Agan Ltd. Israel Manufacturing; Distribution; Regis- USD
tration
ADAMA Makhteshim Ltd. Israel Manufacturing; Distribution; Regis- USD
tration
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 eco-
nomic environment.
214
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VI. Change in consolidation Scope
1. Business combinations involving enterprises not under common control
(1) Business combinations involving enterprises not under common control during current period
Name of Proportion Basis of acqui- From acquisition date till pe-
the Com- Acquisition Cost of equity of equity Acquisition sition date de- riod end
pany date investment investment method termination Revenue Net profit
Alfa Agri- 01.07.2020 298,783 100% Stock pur- Obtained con- 129,563 (89)
cultural chase trol
Supplies,
S.A.
FNV S.A. 01.10.2020 29,286 51% Stock pur- Obtained con- 39,354 993
chase trol
Shanghai 31.12.2020 310,557 51% Stock pur- Obtained con- - -
Dibai Plant chase trol
Protection
Co., Ltd.
(2) Acquisition cost and goodwill
Shanghai Dibai
Alfa Agricultural Plant Protection
Acquisition costs Supplies, S.A. FNV S.A. Co., Ltd.
Total acquisition cost in cash 152,407 12,088 276,000
Contingent consideration - 3,011 -
Other - 14,187 34,557
Equity investments held before acquisition date 146,376 - -
Less: share of the fair value of the identifiable
net assets acquired 213,369 15,155 83,435
Goodwill 85,414 14,131 227,122
215
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VI. Change in consolidation Scope - (cont'd)
1. Business combinations involving enterprises not under common control - (cont'd)
(3) Identifiable assets and liabilities of the acquiree, at acquisition date
Alfa Agricultural
Supplies, S.A.
Fair value at Book value at
acquisition date acquisition date
Assets:
Cash and bank balances 53,974 53,974
Bills and Accounts receivable 192,378 192,378
Prepayments 177 177
Other receivables 5,954 5,954
Inventories 97,732 97,732
Fixed assets 906 906
Right-of-use assets 7,519 7,519
Intangible assets 54,236 28
Deferred tax assets 2,280 2,280
Other non-current assets 538 538
Liabilities:
Short-term loans 46,073 46,073
Bills and Accounts payable 86,228 86,228
Employee benefits payable 2,754 2,754
Taxes payable 11,901 11,901
Other payables 30,477 30,477
Lease liabilities 7,519 7,518
Long-term employee benefits payable 3,802 3,802
Deferred tax liabilities 13,571 559
Net assets 213,369 172,174
Less: Non-controlling interests - -
Net assets acquired 213,369 172,174
FNV S.A.
Fair value at Book value at
acquisition date acquisition date
Assets:
Cash and bank balances 3,364 3,364
Bills and Accounts receivable 43,455 43,455
Prepayments 54 54
Inventories 48,570 48,570
Fixed assets 797 797
Intangible assets 10,597 -
Other assets 8,138 8,138
Liabilities:
Bills and Accounts payable 78,452 78,452
Other payables 3,759 3,759
Deferred tax liabilities 1,060 -
Other liabilities 16,549 16,549
Net assets 15,155 5,618
Less: Non-controlling interests - -
Net assets acquired 15,155 5,618
216
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VI. Change in consolidation Scope - (cont'd)
1. Business combinations involving enterprises not under common control - (cont'd)
(3) Identifiable assets and liabilities of the acquiree, at acquisition date - (cont'd)
Shanghai Dibai Plant Protection Co.,
Ltd.
Fair value at Book value at
acquisition date acquisition date
Assets:
Cash and bank balances 11,965 11,965
Bills and Accounts receivable 6,256 6,256
Prepayments 78,857 78,857
Inventories 235 235
Fixed assets 805 805
Intangible assets 200,000 -
Other assets 191 191
Liabilities:
Bills and Accounts payable - -
Other payables 17,953 17,953
Deferred tax liabilities 50,557 557
Advances from customers 66,201 66,201
Net assets 163,598 13,598
Less: Non-controlling interests 80,163 6,663
Net assets acquired 83,435 6,935
Until the date of approval of the financial statements, the Group has not yet completed the initial accounting
treatmentfor the acquisition of Shanghai Dibai Plant Protection Co., Ltd., including the estimation of the
fair value of the acquired assets and the goodwill. Therefore, the fair value of the assets and liabilities is
provisional and may be subject to changes.
217
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 ob-
Principal place of taining the sub-
Name of the Subsidiary business Business nature Direct Indirect sidiary
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
December 31
2020 2019
Joint ventures 14,081 92,695
Associates - 40,403
14,081 133,098
3. Summarized financial information of joint ventures and associates
December 31, 2020 and December 31, 2019 and
twelve months then twelve months then
ended ended
Joint ventures:
Total carrying amount 14,081 92,695
The Group's share of the following items:
Net profit 15,584 19,877
Other comprehensive income 1,658 (697)
Total comprehensive income 17,242 19,180
Associates:
Total carrying amount - 40,403
The Group's share of the following items:
Net profit - (16)
Other comprehensive income (326) 653
Total comprehensive income (326) 637
218
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 (here-
inafter - “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 dis-
closure 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 disci-
plined 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, agricul-
turists, agents and agrochemical manufacturers who purchase the products either as finished goods or as in-
termediate 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 indus-
try and geographic region in which the customer operates. No single customer accounted for greater than 5%
of total accounts receivable.
219
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 exami-
nation 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 equip-
ment) against execution of the sales, the value of which is examined on a current ongoing basis by the Com-
pany. 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 ac-
count 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:
December 31, 2020
Past due by less than 90 days 538,084
Past due by more than 90 days 530,116
1,068,200
220
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 observ-
able 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 8,454,382 thousand relate to
category of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 674,761
thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has credit
risk exposures for other receivables amounted to RMB 16,146 thousand related to category of "Lifetime ex-
pected 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 op-
erations, is invested in short-term interest-bearing investment channels.
221
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 December 31, 2020
Third- Fifth year Contractual Carrying
First year Second year Fourth year and above Cash flow amount
Non-derivative financial lia-
bilities
Short-term loans 1,224,376 - - - 1,224,376 1,205,498
Bills payables 369,791 - - - 369,791 369,791
Accounts payables 4,557,006 - - - 4,557,006 4,557,006
Other payables 1,075,721 - - - 1,075,721 1,075,721
Other current liabilities 87,388 - - - 87,388 87,388
Debentures payable 941,705 951,594 1,820,243 8,598,976 12,312,518 8,616,652
Long-term loans 634,180 1,209,917 1,139,132 182,263 3,165,492 2,947,492
Long-term payables 1,965 2,063 4,062 29,064 37,154 27,327
Lease Liabilities 167,586 124,045 134,615 212,111 638,357 525,368
Other non-current liabilities 30,061 72,155 273,854 93,280 469,350 462,030
Derivative financial liabilities
Foreign currency derivatives 1,460,228 - - - 1,460,228 1,460,228
CPI/shekel forward transactions 3,386 - - - 3,386 3,386
10,553,393 2,359,774 3,371,906 9,115,694 25,400,767 21,337,887
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 in-
struments. 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 lia-
bilities 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 pur-
chases, which may be affected by exchange rate fluctuations.
222
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 subse-
quent 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:
December 31, 2020
Total assets Total liabilities
In US Dollar 1,613,916 874,986
In Euro 1,670,266 1,510,756
In Brazilian real 2,684,354 311,701
CPI-linked NIS 14,635 8,725,602
In New Israeli Shekel 302,056 1,007,144
Denominated in or linked to other foreign currency 3,321,777 777,569
9,607,004 13,207,758
(B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows:
December 31, 2020
Cur- Cur-
rency/link rency/link Average USD thou- RMB
age receiv- age paya- expiration sands Par thousands
able ble date value Par value Fair value
Forward foreign currency USD EUR 21/04/2021 397,183 2,591,580 (400,155)
Contracts and call options USD PLN 13/04/2021 26,474 172,741 (14,744)
USD BRL 28/04/2021 364,202 2,376,382 (103,266)
USD GBP 18/03/2021 26,081 170,179 (9,911)
USD ZAR 09/02/2021 32,518 212,179 (17,480)
ILS USD 20/03/2021 1,461,320 9,534,964 722,001
USD OTHER 485,329 3,166,722 (105,249)
CPI forward contracts CPI ILS 27/05/2021 699,844 4,566,415 25,973
223
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
(C) Sensitivity analysis
The appreciation or depreciation of the Dollar against the following currencies as of December 31, 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.
December 31, 2020
Decrease of 5% Increase of 5%
Equity Profit (loss) Equity Profit (loss)
New Israeli shekel 52,295 41,167 (2,410) 7,657
British pound (2,397) 1,012 2,397 (1,012)
Euro (141,835) (2,898) 133,160 4,090
Brazilian real (7,570) 897 (3,723) (10,893)
Polish zloty (5,651) (2,434) 5,052 2,141
South African Rand (1,862) 2,958 723 (3,641)
Chinese Yuan Renminbi (39,531) (39,531) 39,531 39,531
CPI-linked NIS 406,466 406,466 (406,466) (406,466)
(2) Interest rate risks
The Group has exposure to changes in the variable interest rate. The Group has different assets and liabil-
ities 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.
224
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:
December 31,
2020
Fixed-rate instruments – unlinked to the CPI
Financial assets
Cash at banks 620,625
Other non-current assets 46,849
Financial liabilities
Long-term loans 1,366,883
Long-term payables 21,839
Other non-current liabilities (1) 171,770
(893,018)
Fixed-rate instruments – linked to the CPI
Financial liabilities
Debentures payable (1) 8,616,652
Variable-rate instruments
Financial assets
Cash at banks 123,901
Financial assets at fair value through profit or loss 1,253
Other non-current assets 24,162
Financial liabilities
Short-term loans and credit from banks 1,205,498
Long-term loans (1) 1,580,609
(2,636,791)
(1) Including current maturities.
(B) Sensitivity analysis of cash flows regarding variable-interest instruments
A change of 5% in the interest rates on the reporting date would increase or reduce equity and profit or loss
by the amounts presented below. This analysis assumes that all the remaining variables, among others ex-
change rates, remained fixed.
Profit or loss Equity
Increase in Decrease in Increase in Decrease in
interest interest interest interest
As at December 31, 2020 1,879 (1,887) 1,879 (1,887)
225
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:
December 31, 2020
Carrying amount Fair value
Financial assets
Other non-current assets (a – Level 2) 65,797 64,094
Financial liabilities
Long-term loans and others (b – Level 2) 3,677,384 3,792,500
Debentures (c – Level 1) 8,616,652 11,488,256
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:
December 31, 2020
%
U.S. dollar interest (0.43) – 1.55
Euro (0.06) – 0.62
226
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 instru-
ments 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.
December 31
2020
Forward contracts and options used for hedging the cash flow (Level 2) (251,039)
Forward contracts and options used for economic hedging (Level 2) 348,208
Other equity investment (Level 2) 152,200
Other non-current assets (Level 2) 39,038
Receivables financing (Level 2) 109,483
Call option in respect of business combination (Level 2) 25,715
Other (Level 2) 1,253
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.
227
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions
1. Information on parent Company
Company Registered Registered capital Shareholding Percentage
name place Business nature (Thousand RMB) percentage of voting rights
Production and sales
of agrochemicals,
Syngenta Shanghai, fertilizers and GM
Group China seeds 11,144,545 72.88% 72.88%
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 ChemChina.
2. Information on the largest subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
3. Information on largest joint ventures and associates of the Company
For information about the joint ventures and associates of the Company, refer to Note V.12.
Other joint ventures and associates that have related party transactions with the Group during this period or the
previous periods are as follows:
Name of entity Relationship with the Company
Innovaroma SA Joint venture of the Group
228
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
Bluestar (Beijing) Chemical Machinery Co.,Ltd Common control
Bluestar Engineering Co.,Ltd. Common control
Chem China Information Center Co., Ltd. Common control
ChemChina Asset Management co.,Ltd. Common control
ChemChina Finance Corporation Common control
China Bluestar Chengrand Research Institute co.,Ltd Common control
Elkem Silicones Brasil LtdA Common control
Hangzhou (Torch)Xidoumen Membrane Industry co.,Ltd Common control
Jiangsu Huaihe Chemical co.,Ltd. Common control
Jingzhou Sanonda Holdings Co.,Ltd. Common control
Nidera Seeds ArgentinaSAU Common control
PT Syngenta Indonesia Common control
Shandong Dacheng BIO-CHEM Common control
Shandong Huaxing Petrochemical Group co.,Ltd. Common control
Sinochem (Hainan) Crop Technology Co. Ltd Common control
Sinochem Agricultural Ecological Technology (Hubei) Co. Ltd Common control
Sinochem Agriculture (Xinjiang) Biotechnology Co. Ltd Common control
Sinochem Agro CO.Ltd Common control
Sinochem Chongqing Fuling Chemical Co. Ltd Common control
Sinochem Fertilizer Co., Ltd Common control
Sinochem Fertilizer Co., Ltd Fujian Branch Common control
Sinochem Fertilizer Co., Ltd Guangxi Branch Common control
Sinochem Fertilizer Co., Ltd Hebei Branch Common control
Sinochem Fertilizer Co., Ltd Jiangsu Branch Common control
Sinochem Fertilizer Co., Ltd Jiangxi Branch Common control
Sinochem Fertilizer Co., Ltd Jilin Branch Common control
Sinochem Fertilizer Co., Ltd Nothwest Branch Common control
Sinochem Fertilizer Co., Ltd Shandong Branch Common control
Sinochem Fertilizer Co., Ltd Southwest Branch Common control
Sinochem Modern Agriculture Co. Ltd. Anhui Branch Common control
Sinochem Modern Agriculture Co. Ltd. Guangdong Branch Common control
Sinochem Modern Agriculture Co. Ltd. Jiangxi Branch Common control
Sinochem Modern Agriculture Sichuan Co. Ltd Common control
Sinochem Modern Agriculture Xinjiang Co. Ltd Common control
Sinochem Modern Agriculture (Jiangsu) Co.Ltd Common control
Sinochem Modern Agriculture (Shandong) Co.Ltd Common control
Sinochem ModernAgriculture co.Ltd Common control
Sinochem (Hainan) CropTechnologyCo.,Ltd Common control
Southwest Researche & Design Institute of Chemical Industry Common control
Syngenta Agro,S.A.de C.V. Common control
229
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties - (cont’d)
Name of other related parties Related party relationship
Syngenta Agro AG Common control
Syngenta Australia Pty Limited Common control
Syngenta Canada Inc. Common control
Syngents Coml Agr LtdA Common control
Syngenta Crop Protection ,LLC Common control
Syngenta Crop Protection Limited Common control
Syngenta Crop Protection AG Common control
Syngenta Crop Protection B.V. Common control
Syngenta Crop Protection N.V. Common control
Syngenta Crop Protection S.A. Common control
Syngenta Espana S.A Common control
Syngenta France S.A.S. Common control
Syngenta Hellas AEBE Common control
Syngenta India Limited Common control
Syngenta Korea Ltd . Common control
Syngenta Nordics A/S Common control
Syngenta Polska Sp .z.o.o. Common control
Syngenta Protecao Cultivos LtdA Common control
Syngenta S.A (Chile) Common control
Syngenta Slovakia s.r.o Common control
Syngenta South Africa (Pty) Ltd . Common control
Syngenta(China) Investment Co.Ltd Common control
Syngenta Agro GmbH Common control
Syngenta Agro S.A. Common control
Syngenta Crop Protection, LLC Common control
Syngenta Czech s.r.o. Common control
Syngenta Hungary Kft. Common control
Syngenta Italia S.p.A Common control
Syngenta S.A. (Colombia) Common control
Syngenta Tarim Sanayive Ticaret A.S. Common control
Syngenta Vietnam Ltd. Common control
Zhonglan International Chemical co.,Ltd Common control
Zhonglan Lianhai (Shanghai) Chemical Engineering Technology Co.,Ltd. Common control
Zhonglan Lianhai Design Institute Co.,Ltd. Common control
Jiangsu Ruixiang Chemical co., Ltd . Associate of the Group
Jiangsu Yangnong Chemical Group co., Ltd . Associate of the Group
Jiangsu Youjia Plant Protection co., Ltd. Associate of the Group
Jiangsu Youshi Chemical co., Ltd . Associate of the Group
230
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
(1) Transactions with related parties
Year ended December 31
Type of purchase Related Party Relationship 2020 2019
Summary of purchase of goods/services:
Purchase of goods/services received Common control under 1,273,820 1,449,486
ChemChina
Joint venture 1,661 3,938
Associates 260,570 -
Purchase of fixed assets and other assets Common control under 325,700 201,462
ChemChina
Summary of Sales of goods:
Sale of goods/ Service rendered Common control under 953,257 752,984
ChemChina
Joint venture 133,356 153,310
Associates 43,317 -
231
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 com-
Guarantee provider guaranteed loan of guaranty of guaranty pleted (Y / N)
Common control under ChemChina 300,000 20/11/2017 20/11/2022 Y
30,000 01/08/2019 30/07/2020 Y
2,000 11/02/2020 11/08/2020 Y
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 December 31
2020 2019
Remuneration of key management personnel and directors 56,833 48,952
(4) Receivables from and payables to related parties (including loans)
Receivable Items
December 31 December 31
2020 2019
Expected Expected
Book credit Book credit
Items Related Party Relationship Balance losses Balance losses
Trade receivables Common control under Chem- 155,050 - 153,197 -
China
Joint venture 21,630 - 24,026 -
Associates 327 - - -
Other receivables Common control under Chem- 681 - 25,346 -
China
Prepayments Common control under Chem- 17,065 - 69,610 -
China
Associates 350 - - -
Other assets Joint venture - - 314 -
232
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
December 31 December 31
Items Related Party Relationship 2020 2019
Trade payables Common control under Chem- 357,148 239,360
China
Joint venture - 258
Associates 15,907 -
Other payables Common control under Chem- 19,354 23,195
China
Contract liability Common control under Chem- 2,355 -
China
Associates 340 -
Other non-current li- Common control under Chem-
abilities due within China 28,000 -
one year
Other non-current li- Common control under Chem- 143,770 171,770
abilities* China
* The liability is a loan from a related party, the interest expense for the twelve months ended December
31, 2020 is 2,096 thousand RMB (twelve months ended December 31, 2019: 2,090 thousand RMB).
(5) Acquisition of a subsidiary
December 31 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 370,141 thousand RMB
(31.12.19: 396,355 thousand RMB) Interest income of bank deposit for the current period was 1,422 thou-
sand RMB (amount for twelve months ended December 31, 2019 is 4,628 thousand RMB).
The closing balance of a loan received from ChemChina Finance corporation was 0 thousand RMB
(31.12.19: 100,000 thousand RMB). Interest expenses in the current period was 665 thousand RMB (amount
for twelve months ended December 31, 2019 is 1,610 thousand RMB).
233
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies
1. Significant commitments
December 31 December 31
2020 2019
Investment in Fixed assets 571,367 588,243
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 of-
ficers of the Company (“D&O Liability Insurance) as originally approved by the 22nd meeting of the 7th session
of Board of Directors and the 4th Interim Shareholders Meeting in 2017, and authorized the management to
annually deal with all matters relating to renewal/extension of the customary D&O Liability Insurance policies,
with up to 20% flexibility in the relevant terms of the original policy. On December 26, 2018 the 3rd Interim
Shareholders Meeting approved the above resolution. The current D&O Liability Insurance was renewed for an
additional one-year term commencing November 15, 2020.
Environmental protection
The manufacturing processes of the Company and the products it produces and market, entail environmental
risks that impact the environment. The Company invests substantial resources in order to comply with the ap-
plicable environmental laws and attempts to prevent or minimize the environmental risks that could occur as a
result of its activities. To the best of the Company’s knowledge, at the balance sheet date, there are no material
environmental issues relating to the Company, there are no material administrative penalties or investigations
related to environment, health and safety imposed or initiated by regulatory authorities, and none of the material
permits and licenses regarding environmental issues required for the Company’s day to day operations have
been revoked.
Other
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 Company and its subsidiary, Anpon, began to execute a reduction plan to reduce the
number of employees. The fourth quarter of 2019 includes expenses of RMB 243 million recorded in the Com-
pany and its subsidiary Anpon.
Claims against subsidiaries
In the ordinary course of business, legal claims are filed against subsidiaries, including claims for patent in-
fringement. The Company, inter alia like other companies operating in the crop protection market, is exposed
to class actions for large amounts, which it must defend against while incurring considerable costs, even if these
claims have no basis. In the opinion of the Company’s management, which is based, inter alia, on opinions of
its legal advisors regarding the prospects of the proceedings, the financial statements include adequate provi-
sions where necessary to cover the exposure resulting from the claims.
On October 20, 2020, a claim and a motion for its approval as a class action (the “Motion”) was filed against
Monsanto Company and Bayer AG (the “Manufacturers”) as well as against ADAMA Agan Ltd., a wholly-
owned subsidiary of the Company, with respect to an herbicide bearing the brand name Roundup, which is
produced by the Manufacturers and distributed in Israel in small quantities by the subsidiary. The applicants
argue that the product allegedly poses a risk to users or those who have been exposed to it. The Company and
the subsidiary reject the allegations against the subsidiary in the Motion and in the statement of claim. As the
Company is an authorized distributor of the Manufactures, which undertook to fully indemnify, defend and hold
harmless ADAMA Agan Ltd., for any monetary compensation or any other remedy it will have to make in
connection with the Motion, the Motion and claim are not expected to have any non-negligible effect on the
Company’s financial results.
234
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies - (cont’d)
2. Commitments and Contingent Liabilities - (cont’d)
Claims against subsidiaries (cont’d)
Various immaterial claims have been filed against Group companies in courts throughout the world, in imma-
terial 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 against
the Company for product liability damages, for which the Company has adequate insurance coverage, such that
the Company’s exposure in respect thereof is limited to the deductible amount or the amount thereof does not
exceed the deductible amount.
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 for-
mula.
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 compen-
sation 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%.
Repurchase of the Company’s B-shares
The 3rd Interim Shareholders Meeting held on September 7, 2020 approved a repurchase plan for part of the
Company’s domestically listed foreign shares (B share) (the “Repurchase Plan”).
According to the Repurchase Plan, during the period beginning at September 16, 2020 (the date on which the
Company commenced repurchasing of the B-shares) and ending on December 6, 2020 (the end date of the
Repurchase Plan), the Company repurchased 14,309,536 B-Shares, which account for 0.61% of the Company’s
total share capital. The amount paid for the repurchased shares amounted to RMB 60,399,296 (HKD
69,747,209), including transaction fees.
Within three years following the disclosure of the announcement on the results of the B-shares repurchase, the
B-Shares that have been repurchased will be cancelled and the registered capital will be reduced accordingly
following approval of the shareholders.
235
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies - (cont’d)
COVID-19 pandemic
In 2020, the global agrochemical market saw resilient growth, with robust demand for crop protection products
despite the ongoing COVID-19 pandemic, demonstrating the industry’s importance in the global food produc-
tion chain.
During the first half of 2020, the global agrochemical market, amongst many others, was impacted by the un-
precedented COVID-19 pandemic, and as a result thereof, farmers’ incomes have been 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. However, crop prices im-
proved significantly in the second half of the year as crop demand recovered, fueled by pandemic-related food
security concerns, the recovery of oil prices (benefiting corn and sugar prices) and the recovery in textile demand
(benefiting cotton prices).
One of the most widespread economic consequences of the pandemic is the significant volatility in global cur-
rency markets, with the rapid depreciation of many currencies against the US dollar in the first half of the year,
most notably the Brazilian Real, Australian dollar, Turkish Lira and Indian Rupee, as well as volatility in the
Euro. These trends, although stabilizing to some extent in the second half of the year, impacted the financial
performance of the Company. It should be noted that developed market currencies have strengthened more than
those in developing markets where the Company is experiencing its strongest growth. Furthermore, the rela-
tively strong currencies of the Company’s main production hubs in Israel have brought, and are expected to
continue to bring, upward pressure on manufacturing costs in USD terms.
236
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments
1. In February 2019, the remuneration committee and Solutions Board of Directors (as well as the General Meet-
ing with respect to theformer CEO and Vice President who also serves as a director) approved the allocation
of 77,864,910 phantom warrants to officers and employees in accordance with the long-term phantom com-
pensation plan (hereinafter - "the 2019 Plan"), out of which 75,814,897 phantom warrants were granted at the
grant date of February 21, 2019. During 2019, 1,206,081 additional Phantom warrants were granted.
The warrants will vest in four equal portions, where the first and second quarters are exercisable after two
years, the third quarter after three years and the fourth quarter after four years from January 1, 2019. The
warrants will be exercisable, in whole or in part, in accordance with the terms of the 2019 plan, and subject to
achieving financial targets as determined in the plan. The warrants will be exercisable until the end of 2025.
Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the difference
between the base price as determined at the time of the grant and the closing price of one share of the Company
on the Shenzhen Stock Exchange, as it will be on the exercise date up, to the ceiling that was determined under
the plan.
The fair value of the granted warrants as aforesaid was estimated using the binomial pricing model.
The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at the
grant date, amounted to a total of approximately 186 million RMB. The liability at the end of the reporting
period was recorded according to the vesting period as determined in the plan, taking into account the extent
of the service that the employees provided until that date and the Company’s share price at the end of the
reporting period.
Statement of share based payments in the period Phantom warrants
Total number of Phantom warrants at the beginning of the period 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 (8,792,697)
Total number of Phantom warrants at the end of the period 60,047,067
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 years
The parameters used in implementing the model at the grant date are as follows:
Stock price (RMB) 10.85
Exercise increment (RMB) 10.03/10.85
Expected volatility 43.97%
Risk-free interest rate 3.06%
Economic value as of February 21, 2019 (in thousands RMB) 186,206
The methods for the determination of the fair value of liabilities arising from
cash-settled share-based payments The binomial pricing model
Accumulated amount of liabilities arising from cash-settled share-based pay-
ments (in thousands RMB) 79,862
Expenses arising from cash-settled share-based payments in current period
(in thousands RMB) 19,431
237
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments - (cont’d)
2. In September 2019, the remuneration committee and Solutions Board of Directors (and the General Meeting
with respect to the CEO and Vice President who also serves as a director) approved the cancellation of 2017
Plan against the allocation of 28,258,248 warrants in accordance with the long-term phantom compensation
plan (hereinafter - "The Alternative Warrants" and "The Alternative Plan"). The cancellation and allocation
date is September 26, 2019. During 2019, an additional 90,130 Alternative Phantom Warrants were granted.
The alternative warrants will vest in four equal portions, where the first quarter is exercisable after one year,
the second quarter after two years, the third quarter after three years and the fourth quarter after four years
from October 1, 2019. The warrants will be exercisable, in whole or in part, in accordance with the terms of
the Alternative Plan, and subject to achieving financial targets as determined in the plan. The warrants will be
exercisable until October 1, 2026.
Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the difference
between the base price as determined at the time of the grant and the closing price of one share of the parent
company on the Shenzhen Stock Exchange, as it will be on the exercise date up to the ceiling that was deter-
mined 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 bino-
mial 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 (3,527,734)
Total number of Phantom warrants at the end of the period 20,739,142
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 5.75 years
238
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments - (cont’d)
The parameters used in implementing the model at the grant date are as follows:
Stock price (RMB) 9.23
Exercise increment (RMB) 9.43
Expected volatility 40.29%
Risk-free interest rate 3.14%
Economic value as of September 26, 2019 (in thousands RMB) 68,836
The methods for the determination of the fair value of liabilities arising from
cash-settled share-based payments related to the alternative plan The binomial pricing model
Accumulated amount of liabilities arising from cash-settled share-based pay-
ments related to the alternative plan (in thousands RMB) 27,126
Expenses (income) arising from cash-settled share-based payments in cur-
rent period related to the alternative plan (in thousands RMB) (443)
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 conven-
tional agrochemical products.
Intermediates and ingredients
This field of activity includes a large number of sub-fields, including: Lycopan (an oxidization retardant),
aromatic products, and other chemicals. It combines all the Company’s activities not included in the Crop
Protection products segment.
Segment results reported to the chief operating decision maker include items directly attributable to a segment
as well as items that can be allocated on a reasonable basis. Unallocated items comprise mainly financing
expenses, net, gains from changes in fair value, investment income and tax expenses.
All assets and liabilities that can be attributed to a specific segment were allocated accordingly. Attributed
assets include: accounts and bills receivables, receivables financing, inventory, fixed assets, right-of-use assets,
construction in progress, intangible assets, goodwill, non-current trade receivables and long-term equity in-
vestments. 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.
239
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
Year ended Year ended Year ended Year ended
December 31 December 31 December 31 December 31
2020 2019 2020 2019 2020 2019 2020 2019
Operating income from external
customers 25,757,783 24,905,674 2,687,050 2,657,565 - - 28,444,833 27,563,239
Inter-segment operating income - - 1,519 1,428 (1,519) (1,428) - -
Interest in the profit or loss of
associates and joint ventures 10,841 8,423 4,743 11,438 - - 15,584 19,861
Segment's results 1,599,829 1,670,516 149,950 (127,505) - - 1,749,779 1,543,011
Financial expenses, net (1,847,189) (1,665,885)
Gain (loss) from changes in fair
value 540,698 825,512
Investment income 131,924 (251,066)
Profit before tax 575,212 451,572
Income tax expense 222,459 174,531
Net profit 352,753 277,041
Crop Protection Intermediates and ingredients Unallocated assets and liabilities Total
December 31 December 31 December 31 December 31
2020 2019 2020 2019 2020 2019 2020 2019
Total assets 36,454,726 35,506,894 2,135,310 2,392,909 8,210,998 7,389,137 46,801,034 45,288,940
Total liabilities 5,037,016 4,682,416 268,972 286,109 20,061,131 17,948,750 25,367,119 22,917,275
240
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 custom-
ers
Year ended December 31
2020 2019
Europe 7,155,152 7,078,409
North America 5,333,514 5,418,509
Latin America 7,460,282 7,085,817
Asia Pacific 4,533,778 4,351,929
Africa, Middle East and India 3,962,107 3,628,575
28,444,833 27,563,239
Specified non-current assets
December 31 December 31
2020 2019
Europe 1,039,248 1,047,505
Latin America 2,122,291 2,298,654
North America 1,169,812 1,282,267
Asia Pacific 3,550,785 2,709,786
Africa, Middle East and India 10,489,849 11,512,105
18,371,985 18,850,317
The dependency on major customers
No single customer's proportion of the total amount of sales is over 10%.
241
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 the Amount for the
current period prior period
Net profit from continuing operations attributable to ordinary
shareholders 352,753 277,041
Amount for the Amount for the
Shares current period prior period
Number of ordinary shares outstanding at the beginning of the
year 2,446,553,582 2,446,553,582
Add: weighted average number of ordinary shares issued during
the year - -
Less: weighted average number of ordinary shares repurchased
during the year (1) (45,076,938) -
Weighted average number of ordinary shares outstanding at the
end of the year 2,401,476,644 2,446,553,582
(1) Reduction of the shares during the year relates to the Performance Compensation Agreement and the repur-
chase of Company's B-shares. For further information see note XI.2 – Commitments and contingent liabil-
ities.
Amount for Amount for
the current the prior pe-
period riod
Calculated based on net profit attributable to ordinary shareholders
Basic earnings per share 0.15 0.11
Diluted earnings per share N/A N/A
Calculated based on net profit from continuing operations attributa-
ble to ordinary shareholders:
Basic earnings per share 0.15 0.11
Diluted earnings per share N/A N/A
Calculated based on net profit from discontinued operations attribut-
able to ordinary shareholders:
Basic earnings per share N/A N/A
Diluted earnings per share N/A N/A
242
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
December 31 December 31
2020 2019
Deposits in banks 1,022,758 1,395,994
Other cash and bank 12,054 27,057
1,034,812 1,423,051
As at December 31, 2020, restricted cash and bank balances was 12,054 thousand RMB (as at December 31,
2019: 27,057 thousand RMB).
2. Accounts receivable
a. By category
December 31, 2020
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 13,879 3 13,879 100 -
Account receivables assessed
collectively for impairment 387,132 97 15 - 387,117
401,011 100 13,894 3 387,117
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
December 31, 2020
Within 1 year (inclusive) 387,133
Over 1 year but within 2 years 1
Over 2 years but within 3 years 1
Over 3 years but within 4 years 1,699
Over 4 years but within 5 years 2,634
Over 5 years 9,543
401,011
243
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
Year ended December 31, 2020
Balance as of January 1 131,423
Addition during the year, net 10
Write back during the year (4,094)
Write-off during the year (113,445)
Exchange rate effect -
Balance as of December 31 13,894
d. Five largest accounts receivable at December 31, 2020:
Proportion of Allowance of
Accounts re- expected
Name Closing balance ceivable (%) credit losses
Party 1 (1) 331,931 83 -
Party 2 24,891 6 7
Party 3 12,505 3 -
Party 4 6,705 2 2
Party 5 3,140 1 1
379,172 95 10
(1) The amount include intergroup balances with Solutions and it’s subsidiaries.
3. Receivable financing
December 31 December 31
2020 2019
Bank acceptance draft 25,060 11,722
25,060 11,722
As at December 31, 2020, bank acceptance endorsed but not yet due amounts to 175,926 thousand RMB.
244
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
December 31 December 31
2020 2019
Interest receivable - 64
Other receivables 27,138 13,987
27,138 14,051
(1) Other receivables
a. Other receivables by categories
December 31 December 31
2020 2019
Other 32,819 19,655
Provision for expected credit losses (5,681) (5,668)
27,138 13,987
b. Other receivables by aging
December 31, 2020
Within 1 year (inclusive) 14,176
Over 1 year but within 2 years -
Over 2 years but within 3 years 13,679
Over 3 years but within 4 years -
Over 4 years but within 5 years 10
Over 5 years 4,954
32,819
245
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:
Year ended December 31, 2020
Balance as of January 1, 2020 5,668
Addition during the period 333
Written back during the period (320)
Write-off during the period -
Balance as of December 31, 2020 5,681
d. Five largest other receivables at December 31 2020:
Proportion of other re-
Name Closing balance ceivables (%) Credit loss provision
Party 1 13,322 41 -
Party 2 11,744 36 -
Party 3 3,125 9 3,125
Party 4 1,753 5 -
Party 5 548 2 548
30,492 93 3,673
246
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
December 31, 2020 December 31, 2019
Impairment Impairment
Amount balance loss Book value Amount balance loss Book value
Invest in sub-
sidiaries. 16,663,212 - 16,663,212 16,390,275 18,864 16,371,411
16,663,212 - 16,663,212 16,390,275 18,864 16,371,411
Investments in subsidiaries
Current pro- Balance pro-
Opening Closing bal- vision Im- vision Im-
Invested unit balance Increase Decrease ance pairment loss pairment loss
ADAMA Agricultural Solutions Ltd. 15,890,213 - - 15,890,213 - -
Adama Anpon (Jiangsu) Ltd. 450,449 - - 450,449 - -
Jingzhou Hongxiang Chemical Co.
Ltd. 18,756 - 18,756 - - -
Hubei Sanonda Foreign Trade Co. Ltd. 11,993 - - 11,993 - -
Shanghai Dibai Plant Protection Co., Ltd - 310,557 - 310,557 - -
16,371,411 310,557 18,756 16,663,212 - -
6. Operating Income and operating costs
Year ended December 31, 2020 Year ended December 31, 2019
Operating Operating
Revenue costs Revenue costs
Main operations 1,463,475 1,149,768 1,338,579 969,902
Other operations 52,984 27,782 67,130 54,763
1,516,459 1,177,550 1,405,709 1,024,665
247
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
Year ended December Year ended Decem-
31, 2020 ber 31, 2019
Interest income 18,382 26,114
Government subsidies 5,923 4,414
Other 6,726 3,054
31,031 33,582
(2) Other cash paid relevant to operating activities
Year ended Decem- Year ended Decem-
ber 31, 2020 ber 31, 2019
Professional services 114,444 86,915
Transportation and Commissions 46,601 51,660
Other 81,518 26,203
242,563 164,778
(3) Cash paid for other investing activities
Year ended Year ended Decem-
December 31, 2020 ber 31, 2019
Special borrowing 150,000 -
The amount include intergroup balances with Anpon.
(4) Other cash received relevant to financing activities
Year ended Decem- Year ended Decem-
ber 31, 2020 ber 31, 2019
Deposit for issuing bills payables 21,177 39,886
(5) Other cash paid relevant to financing activities:
Year ended Decem- Year ended Decem-
ber 31, 2020 ber 31, 2019
Repurchase of treasury shares 60,357 -
Deposit for issuing bills payables 6,174 14,003
Other 440 466
66,971 14,469
248
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:
Year ended December 31
2020 2019
Net profit (4,725) (487,973)
Add: Assets impairment loss 17,655 147,421
Credit impairment loss (4,071) 2,018
Depreciation of fixed assets 144,061 198,193
Depreciation of-right-of use assets 449 430
Amortization of intangible assets 5,018 4,694
Loss (gain) on disposal of fixed assets, intangible assets and
other long-term assets (3,644) 572
Financial expenses 41,827 12,113
Investment loss (income) 16,173 (2,583)
Decrease (increase) in deferred income tax assets 25,407 (44,146)
Decrease (increase) in inventory (49,395) 43,479
Increase in accounts receivable from operating activities (146,241) 336,662
Increase in payables from operating activities (138,298) 10,932
Net cash flows generated from operating activities (95,784) 221,812
(2) Net increase in cash and cash equivalents
Closing balance of cash 1,022,758 1,395,994
Less: Opening balance of cash 1,395,994 2,005,313
Net increase in cash and cash equivalents )373,236( (609,319)
249
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
Company Registered capital (Thou- Shareholding Percentage
name place Business nature sand RMB) percentage of voting rights
Production and sales
Syngenta Shanghai, of agrochemicals, fer-
Group China tilizers and GM seeds 11,144,545 72.88% 72.88%
The ultimate controlling shareholder is ChemChina.
(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
Year ended December 31
2020 2019
Summary of Purchase of goods/services Related Party Relationship
received:
Purchase of goods/services received Common control un-
der ChemChina 8,536 12,210
Subsidiary 92,475 125,800
Purchase of fixed assets and other assets Common control un-
der ChemChina 310,976 192,489
Subsidiary 4,752 -
Summary of Sales of goods:
Sale of goods Associated enterprises
under ChemChina 32,809 -
Subsidiary 923,077 514,469
Sale of raw materials Subsidiary 8,791 2,633
250
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 Y
40,000 10/10/2019 09/10/2020 Y
50,000 30/12/2019 25/12/2020 Y
50,000 12/12/2019 09/12/2020 Y
50,000 21/11/2019 18/11/2020 Y
50,000 19/11/2019 18/11/2020 Y
30,000 21/07/2020 21/01/2021 N
18,000 19/08/2020 19/02/2021 N
30,000 01/09/2020 17/08/2021 N
50,000 20/07/2020 14/07/2021 N
30,000 19/05/2020 18/05/2021 N
20,000 22/12/2020 16/12/2021 N
50,000 16/12/2020 15/12/2021 N
50,000 14/12/2020 13/12/2021 N
50,000 29/06/2020 27/06/2021 N
20,438 30/10/2020 30/04/2021 N
14,004 17/12/2020 17/06/2021 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)
Common control under
ChemChina 300,000 20/11/2017 20/11/2022 Y
251
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
December 31 December 31
2020 2019
Expected Expected
Related Party Rela- Book credit Book credit
Items tionship Balance losses Balance losses
Trade receivables Subsidiary 344,436 - 424,182 117,491
Other non-current
assets Subsidiary 212,771 - - -
Other receivables Subsidiary 11,744 - - -
Payable Items
December 31 December 31
Items Related Party Relationship 2020 2019
Trade payables Common control under ChemChina 127,082 9,195
Other payables Subsidiary 143,840 163,877
Common control under ChemChina 108 97
Contract liability Associated enterprises under ChemChina 340 -
Other non-current liabilities
due within one year * Common control under ChemChina 28,000 -
Other non-current liabili-
ties* Common control under ChemChina 143,770 171,770
* loans from related party, the interest expense for the 12 months ended December 31, 2020 was
2,096 thousand RMB (2,090 thoussand RMB in 2019).
d. Acquisition of a subsidiary
Year ended December 31
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 170,210 thousand RMB
(31.12.19: 163,630 thousand RMB). Interest income of bank deposit for the current period was 776
thousand RMB (amount for 12 months ended December, 2019 is 2,883 thousand RMB).
The closing balance of a loan received from ChemChina Finance corporation was 0 thousand RMB
(31.12.19: 100,000 thousand RMB). Interest expense in the current period was 370 thousand RMB
(amount for 12 months ended December 31, 2019 is 1,610 thousand RMB).
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ADAMA Ltd Annual Report 2020
Supplementary information
(Expressed in RMB '000)
1. Extraordinary Gain and Loss
Year ended
December 31, 2020
Disposal of non-current assets 69,710
Government grants recognized through profit or loss 41,871
Recovery or reversal of expected credit losses which is assessed individually during 26,102
the years
Other non-operating income or expenses other than the above 19,989
Other profit or loss that meets the definition of non-recurring profit or loss (62,855)
Tax effect (29,788)
65,029
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 Infor-
mation 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 1.61 0.15 N/A
Net profit after deduction of extraordinary
gains/losses attributable to ordinary
shareholders of the Company 1.32 0.12 N/A
253
ADAMA Ltd Annual Report 2020
Section XIII - Documents Available for Reference
(I) Financial Statements carried with signatures and seals of Legal Representative and Accounting Principal, as well as
Head of the Accounting Organ;
(II) Original of the Auditor’s Report with the seals of accounting firm and the signatures and seals of certified public
accountants;
(III) In the reporting period, originals of all documents of the Company ever disclosed publicly in media designated by China
Securities Regulatory Commission as well as the originals of all the public notices were deposited in the office of the
Company.
ADAMA Ltd.
Legal Representative：Ignacio Dominguez
March 29, 2021
254
