ADAMA Reports First Quarter 2021 Results
Robust business growth yields increased profits in the first quarter
Sales grew by 14% to a Q1 record-high of $1,109 million, driven by continued robust 15%
volume growth
Adjusted EBITDA higher by 2%, reaching $157 million
Reported net income of $23 million (Q1 2020: loss of $2 million)
Adjusted net income up 25% to $52 million
BEIJING, CHINA and TEL AVIV, ISRAEL, April 28, 2021 – ADAMA Ltd. (the “Company”) (SZSE
000553), today reported its financial results for the first quarter ended March 31, 2021.
Ignacio Dominguez, President and CEO of ADAMA, said, “In the first quarter, we continued our
strong growth to achieve another Q1 record high sales performance, with robust demand for our
crop protection products supported by generally higher crop prices. Although our growth was
somewhat mitigated by a softer pricing environment in many regions, and further offset by higher
procurement costs and a growth-driven increase in operating expenses, we nevertheless were able
to deliver a pleasing improvement in our bottom line. Our strong Q1 performance reflects our
continued ability to weather the ongoing pandemic-related challenges, and to provide much needed
crop protection solutions to growers around the world.”
Financial Performance Summary
As Reported Adjustments Adjusted
USD (m) Q1 Q1 Q1 Q1 Q1 Q1
% Change % Change
2021 2020 2021 2020 2021 2020
Revenues 1,109 973 +14% - - 1,109 973 +14%
Gross profit 305 277 +10% 17 19 322 296 +9%
% of sales 27.5% 28.5% 29.0% 30.5%
Operating income (EBIT) 65 51 +29% 33 47 98 97 +1%
% of sales 5.9% 5.2% 8.9% 10.0%
Income before taxes 29 20 +47% 33 47 62 66 -7%
% of sales 2.6% 2.0% 5.6% 6.8%
Net income attributable to the
23 -2 29 44 52 42 +25%
shareholders of the company
% of sales 2.1% -0.2% 4.7% 4.3%
EPS
- USD 0.0098 -0.0010 0.0223 0.0170 +31%
- RMB 0.0639 -0.0068 0.1447 0.1182 +22%
EBITDA 138 133 +3% 19 20 157 153 +2%
% of sales 12.4% 13.7% 14.2% 15.8%
Notes:
“As Reported” denotes the Company’s financial statements according to the Accounting Standards for Business Enterprises and the
implementation guidance, interpretations and other relevant provisions issued or revised subsequently by the Chinese Ministry of Finance
(the “MoF) (collectively referred to as “ASBE”). Please see the appendix to this release for further information.
Relevant income statement items contained in this release are also presented on an “Adjusted” basis, which exclude items that are of a
one-time or non-cash/non-operational nature that do not impact the ongoing performance of the business, and reflect the way the
Company’s management and the Board of Directors view the performance of the Company internally. The Company believes that
excluding the effects of these items from its operating results allows management and investors to effectively compare the true underlying
financial performance of its business from period to period and against its global peers. A detailed summary of these adjustments appears
in the appendix below.
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The Q1 2020 Adjusted Income Statement has been amended from that presented at the time to include additional adjustments in order to
consistently reflect largely the treatment of China Relocation & Upgrade Program-related costs amongst other adjustments that the
Company has deemed non-operational and one-time in nature, as well as to reflect a change in allocation of certain costs between those
impacting Operating Expenses and those impacting Gross Profit.
The number of shares used to calculate both basic and diluted earnings per share in 2020 is 2,446.6 million shares. The number of shares
used to calculate both basic and diluted earnings per share in 2021 is 2,329.8 million shares, reflecting the buyback and cancellation of
102.4 million shares from CNAC in July 2020 and repurchase of 14.3 million B shares during the second half of 2020.
The general crop protection market environment
In the first quarter of 2021, commodity crop prices continued to increase as global demand remained
strong, fueled by pandemic-related food security concerns, a recovery in biofuel demand and higher
feed demand, especially from China. Weather-related agricultural supply challenges also contributed
to the high crop prices, which are expected to remain elevated throughout the rest of the year. The
positive crop price environment, along with associated expectations of higher planted areas, are
combining to drive global demand for crop protection products.
During the quarter, prices of intermediates and active ingredients sourced from China increased
compared to the same period last year, due in part to the recovery of oil prices alongside higher raw
material costs and stronger demand.
As global economies start to reopen following pandemic-related shutdowns over the past year,
global trade markets are experiencing scarcity of transportation resources leading to higher freight
costs, a situation that has been exacerbated by the recent Suez Canal incident and other port
congestions all over the globe.
The Company actively manages its procurement and supply chain activities in order to mitigate
these higher procurement and logistics costs, and endeavors to adjust its pricing wherever possible
to compensate.
Financial Highlights
Revenues grew 14% (+6% in RMB terms) to hit a first quarter record-high of $1,109 million,
driven by a robust 15% increase in volumes. This strong volume-driven growth was somewhat
mitigated by a softer pricing environment in a number of key regions.
ADAMA delivered particularly strong performances in the Asia Pacific and India, Middle-East &
Africa regions, benefiting from strong demand and favorable seasonal conditions. The Company
also grew strongly in North America, driven by its Consumer and Professional business, as well as
in Latin America. Sales in Europe were somewhat lower due to a slow start to the season in the
northern and eastern parts of the region.
Gross Profit in the first quarter was $305 million (27.5% of sales), up 10% compared to $277
million (28.5% of sales) reported in the corresponding period last year.
The Company recorded certain extraordinary charges within its reported cost of goods
sold, totaling approximately $17 million in the first quarter (Q1 2020: $19 million). These
charges were largely related to its Relocation & Upgrade program, and include mainly (i)
excess 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) elevated idleness charges
largely related to suspensions at the facilities being relocated as well as to the temporary
suspension of the Jingzhou site in Q1 2020 at the outbreak of COVID-19 in Hubei
Province. For further details on these extraordinary charges, please see the appendix to
this release.
Excluding the impact of the abovementioned extraordinary items, adjusted gross profit in the quarter
was $322 million (29.0% of sales), up 9% compared to $296 million (30.5% of sales) in the
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corresponding period last year. The higher gross profit was driven by the strong volume growth
alongside positive seasonal changes in product offering, more than offsetting the impacts of the
generally softer prices and higher procurement and logistics costs.
Operating expenses in the first quarter were $239 million (21.6% of sales), compared to $226
million (23.3% of sales) reported in the corresponding period last year.
The Company recorded certain non-operational, mostly non-cash, charges within its
reported operating expenses, totaling approximately $16 million in the first quarter (Q1
2020: $27 million). These charges include mainly (i) $8 million in Q1 2021 (Q1 2020: $8
million) in non-cash amortization charges in respect of Transfer assets received from
Syngenta related to the 2017 ChemChina-Syngenta acquisition, (ii) $4 million in Q1
2021 (Q1 2020: $1 million) in non-cash charges related to incentive plans, and (iii) $4
million in Q1 2021 (Q1 2020: $3 million) in charges related mainly to the non-cash
amortization of intangible assets created as part of the Purchase Price Allocation (PPA)
on acquisitions, with no impact on the ongoing performance of the companies acquired,
as well as other M&A-related costs. The higher aggregate amount of non-operational
charges in Q1 2020 also included $11 million in non-cash amortization charges related
to the legacy PPA of the 2011 acquisition of Adama Agricultural Solutions, which have
now largely finished, and $9 million in respect of early retirement expenses. For further
details on these non-operational charges, please see the appendix to this release.
Excluding the impact of the abovementioned non-operational charges, adjusted operating expenses
in the quarter were $223 million (20.1% of sales), compared to $199 million (20.5% of sales) in the
corresponding period last year.
The higher operating expenses reflect primarily an increase in sales and marketing teams in growing
geographies to drive and support the strong sales growth, higher transportation and logistics costs
driven by both an increase in freight costs and the increased volumes being moved, as well as the
inclusion of recent acquisitions in Greece, Paraguay and China. Despite the higher operating
expenses in absolute terms, the Company continued to improve its expense-to-sales ratio.
Operating income in the first quarter was $65 million (5.9% of sales), compared to $51 million (5.2%
of sales) reported in the corresponding period last year. Excluding the impact of the
abovementioned extraordinary and non-operational charges, adjusted operating income in the
quarter was $98 million (8.9% of sales), compared to $97 million (10.0% of sales) in the
corresponding period last year. The slightly higher operating income in the quarter was driven by the
higher gross profit, but reflects also the growth-driven increase in operating expenses.
EBITDA in the first quarter was $138 million (12.4% of sales), up 3.5% compared to $133 million
(13.7% of sales) reported in the corresponding period last year. Excluding the impact of the
abovementioned extraordinary and non-operational charges, adjusted EBITDA in the quarter was
$157 million (14.2% of sales), up 2.4% compared to $153 million (15.8% of sales) in the first quarter
of 2020.
Financial expenses and investment income in the first quarter were $36 million, compared to $31
million in the corresponding period last year. The higher financial expenses were mainly due to an
increase in financing costs on the NIS-denominated, CPI-linked bonds due to a higher CPI in Israel.
Taxes on income reported in the first quarter were $6 million, compared to $22 million reported in
the corresponding period last year. The first quarter is generally characterized by a low effective tax
rate compared to the effective tax rate of the Company over the full year. This is mainly due to the
generation of profits by subsidiary companies within ADAMA whose tax rates are lower relative to
the Company’s aggregate effective tax rate, as well as to the method of calculation of tax assets
related to unrealized profits. However, in Q1 2020, the Company recorded higher tax expenses
largely due to the impact of the significant weakening of currencies in that quarter against the US
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dollar, most notably that of the Brazilian Real, driving higher non-cash tax expenses due to
differences between the functional (US dollar) and tax (local) currencies regarding the value of non-
monetary assets.
Net income attributable to the shareholders of the company in the first quarter was $23 million
(2.1% of sales), compared to a loss of $2 million reported in the corresponding period last year.
Excluding the impact of the abovementioned extraordinary and non-operational charges, adjusted
net income in the quarter was $52 million (4.7% of sales), up 25% compared to $42 million (4.3% of
sales) achieved in the corresponding period last year.
The improvement in net income in the quarter was driven by the slightly higher operating income
and lower taxes, which were partially offset by the higher financial expenses.
Trade working capital at March 31, 2021 was $2,604 million compared to $2,178 million at the
same point last year. The Company is holding higher inventory levels due mainly to a shift in
geographic and portfolio sales mix, as well as due to the anticipation of further volume growth in
coming quarters. The Company also saw an increase in trade receivables, driven largely by its
strong growth over recent quarters in emerging markets, most notably in Latin America and Brazil,
where customer credit terms are generally longer, as well as the stretching of credit terms in certain
countries most impacted by COVID-19 related challenges. These increases were partially offset by
higher trade payables.
Cash Flow: Operating cash flow of $129 million was consumed in the quarter, compared to $55
million consumed in the corresponding period last year. The negative operating cash flow, which is
seasonally typical for ADAMA in the first quarter, also reflects the higher build-up of working capital
in the first quarter compared to the parallel quarter last year.
Net cash used in investing activities was $109 million in the quarter, compared to $54 million in the
corresponding period last year. The higher level of cash used in investing activities in the quarter
largely reflects an increase in investments in fixed assets, mainly driven by the upgrading and
relocation of manufacturing facilities in China and Israel, the acquisition of a majority stake in
Jiangsu Huifeng’s domestic commercial crop protection business, as well as investments in the
advancement of the Company’s differentiated product portfolio.
Free cash flow of $248 million was consumed in the first quarter compared to $116 million
consumed in the corresponding period last year, reflecting the aforementioned operating and
investing cash flow dynamics.
Portfolio Development Update
In the first quarter, ADAMA continued to advance the development of its differentiated product
portfolio. The Company obtained multiple new product registrations in the quarter, including
VERITAS, a unique broad-spectrum fungicide for control of foliar disease in Australia, as well as
HEYDAY, a herbicide for control of broadleaf and grass weeds in Thailand.
New product launches in the quarter included BARROZ, a uniquely convenient granular solution for
rice growers to gain effective control of stemborer in India, as well as EMPHASIS, an innovative
herbicide co-pack that provides a versatile and effective pre-seed burn-off solution in Canada.
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Regional Sales Performance Review
Q1 2021 Q1 2020 Change Change
$m $m USD CER
Europe 344 357 -3.5% -4.1%
North America 189 168 +12.4% +11.8%
Latin America 177 159 +11.3% +22.1%
Asia Pacific 241 158 +52.7% +39.3%
Of which, China 124 68 +81.6% +71.0%
India, Middle East & Africa 158 131 +20.4% +23.0%
Total 1,109 973 +14.0% +13.6%
CER: Constant Exchange Rates
Europe: Sales were lower by 4.1% in the first quarter, in CER terms, compared with the
corresponding period last year.
Growth in the southern part of the region, where favorable market conditions drove good demand,
was outweighed by a slow start to the season in the northern and eastern parts of the region,
especially when compared to Q1 2020 which then saw strong orders from distribution in anticipation
of the COVID-related shutdowns that soon followed.
In US dollar terms, sales in Europe were lower by 3.5% in the quarter, compared to the
corresponding period last year.
North America: Sales grew by 11.8% in the quarter, in CER terms, compared with the
corresponding period last year.
Growth in the region was driven by a strong performance from the Company’s Consumer and
Professional business, benefiting from the reopening of the economy after COVID-19 related
restrictions in 2020. This more than offset a somewhat softer performance in the US crop protection
business.
In US dollar terms, sales in North America grew by 12.4% in the quarter, compared to the
corresponding period last year, reflecting a moderate strengthening of the Canadian Dollar in the
quarter.
Latin America: Sales grew by a robust 22.1% in the quarter, in CER terms, compared to the
corresponding period last year.
The Company continues its growth trajectory in Latin America, driven by solid volume growth and
good performance from recent product launches in the region.
In US dollar terms, sales in Latin America grew by 11.3% in the quarter, compared to the
corresponding period last year, as the robust business growth was partially offset by weaker
currencies in the region, in particular the Brazilian Real.
Asia-Pacific: Sales grew by 39.3% in the quarter, in CER terms, compared to the corresponding
period last year.
The strong growth in the Asia-Pacific region was seen both in China and beyond. In China, ADAMA
saw significant growth in the quarter both from its branded, formulated portfolio, which was driven by
higher cereal demand due to an increase in field crop planted areas and an early start to the Q2
season, as well as from its sales of raw materials and intermediates. Sales in the country were
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further bolstered by the inclusion of the Company’s recent acquisition of Jiangsu Huifeng’s domestic
commercial crop protection business.
In the rest of Asia-Pacific, the Company benefited from favorable seasonal conditions and delivered
strong growth, despite a slower recovery from COVID-19 challenges in Asia.
In US dollar terms, sales in Asia-Pacific grew by 52.7% in the quarter, compared to the
corresponding period last year, reflecting mainly the strengthening of the Chinese Renminbi and the
Australian dollar against the US dollar.
India, Middle East & Africa: Sales grew by 23.0% in the quarter, in CER terms, compared to the
corresponding period last year, driven by strong volume growth alongside price increases amid
continued positive weather conditions.
During the quarter, ADAMA launched a new pilot formulation R&D facility in India, complementing
the Company’s leading formulation development capabilities in its main R&D hubs in Israel, China
and India. The new facility, equipped with state-of-the-art technologies, will bridge the path from the
R&D lab to commercial stage production, developing processes for the scale-up of liquid and solid
formulation.
In US dollar terms, sales in the India, Middle East & Africa region grew by 20.4% in the quarter,
compared to the corresponding period last year, reflecting mainly the weaker level of the Turkish
Lira, partially offset by a stronger Israeli Shekel.
Table 3. Revenues by operating segment
First quarter sales by segment
Q1 2021 Q1 2020
% %
USD (m) USD (m)
Crop Protection 1,007 90.8% 885 91.0%
Intermediates and Ingredients 102 9.2% 88 9.0%
Total 1,109 100.0% 973 100.0%
First quarter sales by product category
Q1 2021 Q1 2020
% %
USD (m) USD (m)
Herbicides 477 43.0% 441 45.3%
Insecticides 314 28.3% 217 22.3%
Fungicides 216 19.5% 227 23.3%
Intermediates and Ingredients 102 9.2% 88 9.0%
Total 1,109 100.0% 973 100.0%
Note: the sales split by product category is provided for convenience purposes only and is not representative of the way the Company is
managed or in which it makes its operational decisions.
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Further Information
All filings of the Company, together with a presentation of the key financial highlights of the period,
can be accessed through the Company website at www.adama.com.
##
About ADAMA
ADAMA Ltd. is a global leader in crop protection, providing solutions to farmers across the world to
combat weeds, insects and disease. ADAMA has one of the widest and most diverse portfolios of
active ingredients in the world, state-of-the art R&D, manufacturing and formulation facilities,
together with a culture that empowers our people in markets around the world to listen to farmers
and ideate from the field. This uniquely positions ADAMA to offer a vast array of distinctive
mixtures, formulations and high-quality differentiated products, delivering solutions that meet local
farmer and customer needs in over 100 countries globally. For more information, visit us at
www.ADAMA.com and follow us on Twitter at @ADAMAAgri.
Contact
Ben Cohen Zhujun Wang
Global Investor Relations China Investor Relations
Email: ir@adama.com Email: irchina@adama.com
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Abridged Adjusted Consolidated Financial Statements
The following abridged consolidated financial statements and notes have been prepared as described in Note 1 in this
appendix. While prepared based on the principles of Chinese Accounting Standards (ASBE), they do not contain all of the
information which either ASBE or IFRS would require for a complete set of financial statements, and should be read in
conjunction with the consolidated financial statements of both ADAMA Ltd. and Adama Agricultural Solutions Ltd. as filed
with the Shenzhen and Tel Aviv Stock Exchanges, respectively.
Relevant income statement items contained in this release are also presented on an “Adjusted” basis, which exclude items
that are of a one-time or non-cash/non-operational nature that do not impact the ongoing performance of the business, and
reflect the way the Company’s management and the Board of Directors view the performance of the Company internally.
The Company believes that excluding the effects of these items from its operating results allows management and
investors to effectively compare the true underlying financial performance of its business from period to period and against
its global peers.
Abridged Consolidated Income Statement for the First Quarter
Q1 2021 Q1 2020 Q1 2021 Q1 2020
Adjusted1
USD (m) USD (m) RMB (m) RMB (m)
Revenues 1,109 973 7,187 6,782
Cost of Sales 782 673 5,069 4,696
Other costs 5 3 34 20
Gross profit 322 296 2,085 2,066
% of revenue 29.0% 30.5% 29.0% 30.5%
Selling & Distribution expenses 178 159 1,156 1,106
General & Administrative expenses 32 27 208 188
Research & Development expenses 17 17 110 116
Other operating expenses -4 -3 -26 -23
Total operating expenses 223 199 1,448 1,387
% of revenue 20.1% 20.5% 20.1% 20.5%
Operating income (EBIT) 98 97 637 679
% of revenue 8.9% 10.0% 8.9% 10.0%
Financial expenses and investment income 36 31 236 217
Income before taxes 62 66 401 462
Taxes on Income 9 25 58 173
Net Income 53 42 342 289
Attributable to:
Non-controlling interest 1 - 5 -
Shareholders of the Company 52 42 337 289
% of revenue 4.7% 4.3% 4.7% 4.3%
Adjustments -29 -44 -188 -306
Reported Net income attributable to the
23 -2 162 -17
shareholders of the Company
% of revenue 2.1% - 2.1% -
Adjusted EBITDA 157 153 1,018 1,069
% of revenue 14.2% 15.8% 14.2% 15.8%
2
Adjusted EPS – Basic 0.0223 0.0170 0.1447 0.1182
– Diluted 0.0223 0.0170 0.1447 0.1182
2
Reported EPS – Basic 0.0098 -0.0010 0.0639 -0.0068
1
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the
financial statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
2
The number of shares used to calculate both basic and diluted earnings per share in 2021 is 2,329.8 million shares, reflecting the
buyback and cancellation of 102.4 million shares from CNAC in July 2020 and repurchase of 14.3 million B shares during the second
half of 2020. The number of shares used to calculate both basic and diluted earnings per share in 2020 is 2,446.6 million shares.
8
– Diluted 0.0098 -0.0010 0.0639 -0.0068
Abridged Consolidated Balance Sheet
March 31 March 31 March 31 March 31
2021 2020 2021 2020
USD (m) USD (m) RMB (m) RMB (m)
Assets
Current assets:
Cash at bank and on hand 596 602 3,915 4,264
Bills and accounts receivable 1,707 1,414 11,220 10,019
Inventories 1,663 1,424 10,931 10,091
Other current assets, receivables and
383 461 2,516 3,264
prepaid expenses
Total current assets 4,349 3,901 28,582 27,639
Non-current assets:
Fixed assets, net 1,235 1,099 8,115 7,786
Rights of use assets 80 75 528 534
Intangible assets, net 1,490 1,455 9,790 10,308
Deferred tax assets 133 118 874 833
Other non-current assets 83 96 542 681
Total non-current assets 3,021 2,843 19,849 20,142
Total assets 7,370 6,743 48,431 47,780
Liabilities
Current liabilities:
Loans and credit from banks and
618 507 4,063 3,595
other lenders
Bills and accounts payable 781 680 5,131 4,814
Other current liabilities 760 813 4,995 5,760
Total current liabilities 2,157 2,000 14,189 14,169
Long-term liabilities:
Loans and credit from banks and
368 167 2,416 1,181
other lenders
Debentures 1,195 1,101 7,851 7,804
Deferred tax liabilities 59 63 387 448
Employee benefits 100 97 657 687
Other long-term liabilities 170 140 1,120 991
Total long-term liabilities 1,892 1,568 12,431 11,111
Total liabilities 4,051 3,568 26,620 25,280
Equity
Total equity 3,319 3,175 21,811 22,500
Total liabilities and equity 7,370 6,743 48,431 47,780
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Abridged Consolidated Cash Flow Statement for the First Quarter
Q1 2021 Q1 2020 Q1 2021 Q1 2020
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities -129 -55 -838 -385
Cash flow from operating activities -129 -55 -838 -385
Investing activities:
Acquisitions of fixed and intangible assets -91 -51 -588 -357
Proceeds from disposal of fixed and intangible assets 1 1 9 9
Acquisition of subsidiaries -8 - -55 -
Other investing activities -11 -3 -71 -25
Cash flow used for investing activities -109 -53 -704 -373
Financing activities:
Receipt of loans from banks and other lenders 287 171 1,862 1,194
Repayment of loans from banks and other lenders -38 -61 -244 -429
Interest payment and other -10 -7 -63 -46
Other financing activities 5 -13 26 -90
Cash flow from (used for) financing activities 244 90 1,581 629
Effects of exchange rate movement on cash and cash -2 -3 18 47
equivalents
Net change in cash and cash equivalents 4 -21 57 -82
Cash and cash equivalents at the beginning of the period 588 619 3,835 4,320
Cash and cash equivalents at the end of the period 592 598 3,892 4,238
Free Cash Flow -248 -116 -1,605 -805
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Notes to Abridged Consolidated Financial Statements
Note 1: Basis of preparation
Basis of presentation and accounting policies: The abridged consolidated financial statements for the
quarters ended March 31, 2021 and 2020 incorporate the financial statements of ADAMA Ltd. and of all of its
subsidiaries (the “Company”), including Adama Agricultural Solutions Ltd. (“Solutions”) and its subsidiaries.
The Company has adopted the Accounting Standards for Business Enterprises (ASBE) issued by the Ministry
of Finance (the "MoF") and the implementation guidance, interpretations and other relevant provisions issued
or revised subsequently by the MoF (collectively referred to as “ASBE”).
The abridged consolidated financial statements contained in this release are presented in both Chinese
Renminbi (RMB), as the Company’s shares are traded on the Shenzhen Stock Exchange, as well as in United
States dollars ($) as this is the major currency in which the Company’s business is conducted. For the
purposes of this release, a customary convenience translation has been used for the translation from RMB to
US dollars, with Income Statement and Cash Flow items being translated using the quarterly average
exchange rate, and Balance Sheet items being translated using the exchange rate at the end of the period.
The preparation of financial statements requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimated.
Note 2: Abridged Financial Statements
For ease of use, the financial statements shown in this release have been abridged as follows:
Abridged Consolidated Income Statement:
“Gross profit” in this release is revenue less costs of goods sold, taxes and surcharges, inventory
impairment and other idleness charges (in addition to those already included in costs of goods sold);
part of the idleness charges is removed in the Adjusted financial statements
“Other operating expenses” includes impairment losses (not including inventory impairment); gain
(loss) from disposal of assets and non-operating income and expenses
“Operating expenses” in this release differ from those in the formally reported financial statements in
that in this release certain idleness charges have been reclassified to impact gross profit, in line with
the approach taken by the Company with respect to idleness charges generally
“Financial expenses and investment income” includes net financing expenses; gains from changes in
fair value; and investment income (including share of income of equity accounted investees)
Abridged Consolidated Balance Sheet:
“Other current assets, receivables and prepaid expenses” includes financial assets held for trading;
financial assets in respect of derivatives; prepayments; other receivables; and other current assets
“Fixed assets, net” includes fixed assets and construction in progress
“Intangible assets, net” includes intangible assets and goodwill
“Other non-current assets” includes other equity investments; long-term equity investments; long-term
receivables; investment property; and other non-current assets
“Loans and credit from banks and other lenders” includes short-term loans and non-current liabilities
due within one year
“Other current liabilities” includes financial liabilities in respect of derivatives; payables for employee
benefits, taxes, interest, dividends and others; advances from customers and other current liabilities
“Other long-term liabilities” includes long-term payables, provisions, deferred income and other non-
current liabilities
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Income Statement Adjustments
Q1 2021 Q1 2020 Q1 2021 Q1 2020
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 23.3 -2.4 150.8 -16.7
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash) 0.3 11.5 1.6 79.9
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
7.8 7.9 50.8 54.9
Syngenta transaction (non-cash)
3. Upgrade & Relocation related costs 15.4 15.4 99.8 107.6
4. Incentive plans (non-cash) 4.1 0.7 26.8 5.1
5. Amortization of acquisition-related PPA (non-cash) and other acquisition-related
3.7 2.6 24.3 17.8
costs
6. Employee early retirement expenses - 8.6 - 59.8
7. Provisions in tax expenses related to prior years’ activities 1.6 - 10.3 -
Total Adjustments to Operating Income (EBIT) 33.0 46.6 213.6 325.1
Total Adjustments to EBITDA 19.4 20.2 125.6 140.9
Adjustments to Taxes
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions 0.0 1.9 0.3 13.6
3. Taxes related to restructuring costs 2.4 0.5 15.6 3.5
5. Deferred tax due to amortization of acquisition-related PPA and other acquisition-
0.6 0.3 3.9 2.2
related costs
7. Provisions in tax expenses related to prior years’ activities 0.4 - 2.5 -
Total adjustments to Net Income 29.5 43.9 191.5 305.8
Net Income (Adjusted) 52.8 41.5 342.3 289.2
Total adjustments to Net Income attributable to the shareholders of the Company 29.1 43.9 188.4 305.8
Notes:
1. Amortization of Legacy 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 charge that ChemChina previously was incurring in respect of its acquisition of
Solutions in 2011. This amortization is done in a linear manner on a quarterly basis, most of which will have been completed by the end of 2020.
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash): The proceeds from
the Divestment of crop protection products in connection with the approval by the EU Commission of the acquisition of Syngenta by
ChemChina, net of taxes and transaction expenses, were paid to Syngenta in return for the transfer of a portfolio of products in Europe of
similar nature and economic value. Since the products acquired from Syngenta are of the same nature and with the same net economic value
as those divested, and since in 2018 the Company adjusted for the one-time gain that it made on the divested products, the additional
amortization charge incurred due to the written-up value of the acquired assets is also adjusted to present a consistent view of Divestment and
Transfer transactions, which had no net impact on the underlying economic performance of the Company. These additional amortization
charges will continue until 2032 but at a reducing rate, yet will still be at a meaningful level until 2028.
3. Upgrade & Relocation-related costs: These charges all relate to the multi-year Upgrade & Relocation program in China. As part of this
program, 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. Since some of the older production assets may not be able to be relocated, some of these assets which are no longer
operational are being written off (or impaired), while for others, their economic life has been shortened and therefore will be depreciated over a
shorter period. Since these are older assets that were built many years ago and will be replaced by newer production facilities at the new sites,
and since the ongoing operations of the business will not be impacted thereby, the Company adjusts for the impact of all charges related to the
China Upgrade & Relocated program, which include mainly: (i) excess 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 (ii)
elevated idleness charges largely related to suspensions at the facilities being relocated as well as to the temporary suspensions of the
Jingzhou site in Q1 2020 (at the outbreak of COVID-19 in Hubei Province).
4. Incentive plans (non-cash): The Company granted its employees, who are mainly non-Chinese residents, a long-term incentive (LTI) in the
form of 'phantom' options, due to the complexity of granting Chinese-listed, equity-settled options to non-Chinese employees. As such, the
Company records an expense, or recognizes income, depending on the fluctuation in the Company’s share price, even though the Company
will not incur any cash impact prior to exercise of the phantom options. To neutralize the impact of such share price movements on the
measurement of the Company’s performance and expected employee compensation and to reflect the existing phantom options, in the
Company’s adjusted financial performance, the LTI is presented on an equity-settled basis in accordance with the value of the existing plan at
the grant date.
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5. Amortization of acquisition-related PPA (non-cash) and other acquisition-related costs: Related mainly to the non-cash amortization of
intangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions, with no impact on the ongoing performance of the
companies acquired, as well as other M&A-related costs.
6. Employee early retirement expenses: Provision for early retirement plan of employees at the Company’s Israeli manufacturing sites.
7. Provisions in tax expenses related to prior years’ activities: Provisions in respect of tax expenses related to activities of prior years.
Exchange Rates of the Company's Principal Functional Currencies
March 31 Q1 Average
2021 2020 Change 2021 2020 Change
EUR/USD 1.174 1.094 7.3% 1.206 1.102 9.4%
USD/BRL 5.697 5.199 (9.6%) 5.473 4.458 (22.8%)
USD/PLN 3.968 4.147 4.3% 3.772 3.920 3.8%
USD/ZAR 14.93 17.89 16.6% 14.970 15.351 2.5%
AUD/USD 0.761 0.609 25.0% 0.773 0.658 17.6%
GBP/USD 1.376 1.234 11.5% 1.380 1.234 11.8%
USD/ILS 3.334 3.565 6.5% 3.270 3.565 8.3%
USD LIBOR 3M 0.20% 1.45% (86.2%) 0.20% 1.53% (86.9%)
March 31 Q1 Average
2021 2020 Change 2021 2020 Change
USD/RMB 6.571 7.085 (7.3%) 6.481 6.974 (7.1%)
EUR/RMB 7.712 7.751 (0.5%) 6.481 7.687 (15.7%)
RMB/BRL 0.867 0.734 (18.2%) 0.844 0.639 (32.1%)
RMB/PLN 0.604 0.585 (3.2%) 0.604 0.562 (7.4%)
RMB/ZAR 2.271 2.525 10.0% 2.271 2.201 (3.2%)
AUD/RMB 5.003 4.317 15.9% 5.012 4.586 9.3%
GBP/RMB 9.041 8.742 3.4% 9.041 8.926 1.3%
RMB/ILS 0.507 0.503 (0.8%) 0.507 0.501 (1.2%)
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