ADAMA Reports Second Quarter and First Half 2021 Results
Strong Q2 sales growth driven by continued robust volume growth, boosts H1 sales
to a record-high
Second Quarter 2021 Highlights
Sales up 18% to a Q2 record-high of $1,220 million (RMB: +7%), driven by robust 15% volume
growth
Adjusted EBITDA up 9%, reaching $186 million (RMB: -0.5%)
Reported net income up 8% to $34 million (RMB: -1.4%)
Adjusted net income up 18% to $63 million (RMB: +8%)
First Half 2021 Highlights
Sales up 16%, pushing H1 sales to a record-high of $2,329 million (RMB: +7%)
Adjusted EBITDA up 6%, reaching $343 million (RMB: -2.5%)
Reported net income up 97% to $57 million (RMB: +79%)
Adjusted net income up 21% to $115 million (RMB: +11%)
BEIJING, CHINA and TEL AVIV, ISRAEL, August 25, 2021 – ADAMA Ltd. (the “Company”) (SZSE
000553), today reported its financial results for the second quarter and six-month period ended June
30, 2021.
Ignacio Dominguez, President and CEO of ADAMA, said, “Today, with crop prices at levels we
have not seen in a number of years, and the resulting increase in planted areas, global demand for
crop protection products is strong. This brings great opportunity, and places immense responsibility,
on ADAMA and our industry to support the world’s growers with safe, effective and sustainable
solutions to ensure they can nourish the planet, especially in a time of global pandemic-related
uncertainty and disruption. I am extremely pleased that we continue to deliver on our business
performance goals, reporting another quarter of business and profit growth. This has been achieved
despite the extraordinary times we are in, which continue to pose numerous challenges to global
logistics and supply lines, and is a testament to the commitment and dedication of our people to
continue bringing our crop protection solutions to farmers across the globe."
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Table 1. Financial Performance Summary
As Reported Adjustments Adjusted
USD (m ) Q2 Q2 Q2 Q2 Q2 Q2
% Change % Change
2021 2020 2021 2020 2021 2020
Revenues 1,220 1,036 +18% - - 1,220 1,036 +18%
Gross profit 340 300 +13% 25 11 365 311 +17%
% of sales 27.9% 29.0% 29.9% 30.0%
Operating income (EB IT) 90 88 +3% 35 25 125 112 +12%
% of sales 7.4% 8.5% 10.3% 10.8%
Income before taxes 36 44 -18% 35 25 71 69 +2%
% of sales 3.0% 4.3% 5.8% 6.7%
Net income 34 31 +8% 30 23 63 54 +18%
% of sales 2.8% 3.0% 5.2% 5.2%
EPS
- USD 0.0145 0.0128 +14% 0.0272 0.0220 +24%
- RMB 0.0937 0.0905 +4% 0.1759 0.1559 +13%
EBITDA 164 168 -2% 21 2 186 170 +9%
% of sales 13.5% 16.2% 15.2% 16.4%
As Reported Adjustments Adjusted
USD (m ) H1 H1 H1 H1 H1 H1
% Change % Change
2021 2020 2021 2020 2021 2020
Revenues 2,329 2,008 +16% - - 2,329 2,008 +16%
Gross profit 645 577 +12% 42 30 687 607 +13%
% of sales 27.7% 28.7% 29.5% 30.2%
Operating income (EB IT) 156 138 +12% 68 71 223 209 +7%
% of sales 6.7% 6.9% 9.6% 10.4%
Income before taxes 65 64 +2% 68 72 133 136 -2%
% of sales 2.8% 3.2% 5.7% 6.8%
Net income 57 29 +97% 59 66 115 95 +21%
% of sales 2.4% 1.4% 5.0% 4.7%
EPS
- USD 0.0244 0.0118 +107% 0.0496 0.0389 +27%
- RMB 0.1575 0.0836 +88% 0.3207 0.2741 +17%
EBITDA 302 301 0% 41 22 343 323 +6%
% of sales 13.0% 15.0% 14.7% 16.1%
Notes:
“As Reported” denotes the Company’s financial statements according to the Accounting Standards for B usiness Enterprises and the
implementation guidance, interpret ations 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
transitory or non-c ash/non-operational nature that do not impact the ongoing perf ormance of the business, and reflect the way the
Company’s management and the B oard of Directors view the perf ormance of the Company internally. The Company believes that
excluding the effects of these items from its operating res ults allows management and investors to effectively compare the t rue underlying
financial performanc e of its business from period to period and against its global peers . A detailed summary of these adjustments appears
in the appendix below.
The Q2 2020 and H1 2020 Adjusted Income Statements have 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 thos e impacting Operating E xpenses and those impacting Gross Profit .
The number of shares used to calculate both basic and diluted earnings per share in Q2 and H1 2020 is 2,446.6 million shares. The
number of shares used to calculate both basic and diluted earnings per share in Q2 and H1 2021 is 2,329.8 million shares, reflecting the
repurchase and cancellation of 102.4 million s hares from CNA C in July 2020 and repurchase and cancellation of 14.3 million B shares
during the second half of 2020.
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The general crop protection market environment
During the second quarter of 2021, crop prices of most of the major commodity crops remained
elevated, driving an increase in planted areas and strong crop protection demand in most regions.
Demand was also supported by positive weather conditions in various regions, although drought
conditions in the Americas, most notably in Brazil and the western United States, posed challenges
for farmers in those regions.
During the quarter, prices of intermediates and active ingredients sourced from China continued to
rise compared to the same period last year, driven by high raw material prices, and the higher global
demand. Oil prices have been rising considerably, following the alleviation of pandemic control
measures in a number of countries.
Global freight and logistics costs continued to rise during the second quarter of 2021, as COVID-19
continues to disrupt port activity, resulting in container shortage s, while demand for container
shipping remains high. Similarly, in-land logistics remain challenged as pandemic-related restrictions
continue to create frictions in domestic supply lines. Taken together, these constraints have
impacted both availability of shipping and transportation resources, as well as significantly increased
their costs, a dynamic widely observed across all international trade-related industries.
The Company continues to actively manage its procurement and supply chain activities in order to
mitigate these higher procurement and logistics costs. It also endeavors to adjust its pricing
wherever possible to compensate for these increased costs, but intense competition in certain key
markets has restrained the Company's ability to do so in an effective and timely manner.
Jingzhou Production Resumption Update
Following the completion of the Relocation & Upgrade program for Sanonda, production has
recently resumed at the Company's new, state-of-the-art Jingzhou site. While production is initially
starting at relatively low levels, the Company expects output levels to gradually ramp up over the
remainder of the year. This return to production at Sanonda will progressively reduce the need for
incurring additional procurement costs which the Company has endured while the plant has been
suspended, and is expected to reduce idleness charges as production and utilization levels rise over
the coming months.
Financial Highlights
Revenues in the second quarter grew by 18% (+7% in RMB terms) to $1,220 million, driven by
continued robust 15% volume growth.
In the quarter, ADAMA delivered significant growth in Asia Pacific, led by a strong performance in
China and the Pacific region. In North America, the Company recorded continued growth from its
Consumer and Professional business, alongside a solid performance in the crop protection arm,
recovering from first-quarter headwinds seen there. Pleasing growth was seen in Latin America
despite ongoing drought conditions across the region, as well as strong growth in the India, Middle-
East & Africa region, which enjoyed favorable weather including the start of the monsoon season in
India. In Europe sales grew, aided by a recent heatwave in the region, which caused higher disease
and insect pressure in most countries.
The accelerated growth in the quarter brought half-year sales to a record-high of $2,329 million, an
increase of 16% (+7% in RMB terms).
Gross Profit reported in the second quarter was up 13% to $340 million (gross margin of 27.9%),
and up 12% to $645 million (gross margin of 27.7%) in the half-year period, compared to $300
million (gross margin of 29.0%) and $577 million (gross margin of 28.7%) in the corresponding
periods last year, respectively.
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The Company recorded certain extraordinary charges within its reported cost of goods
sold, totaling approximately $25 million in the second quarter (Q2 2020: $11 million) and
$42 million in the half-year period (H1 2020: $30 million). These charges were largely
related to its continuing Relocation & Upgrade program, and include mainly (i) excess
procurement costs, both in quantity and cost terms, 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 second
quarter was up 17% to $365 million (29.9% of sales), and up 13% to $687 million (gross margin of
29.5%) in the half-year period, compared to $311 million (gross margin of 30.0%) and $607 million
(gross margin of 30.2%) in the corresponding periods last year, respectively.
In the quarter, the higher gross profit was driven by the strong volume growth and the strengthening
of local currencies against the US dollar, which more than offset the impacts of somewhat softer
local currency prices and higher procurement and logistics costs.
During the half-year period, the higher gross profit was driven by the strong volume growth
alongside positive seasonal changes in product offering, as well as the stronger currencies against
the US dollar, all of which outweighed the impacts of the softer local currency prices and higher
procurement and logistics costs.
Despite the exceptionally strong sales growth, the Company continues to see pressure on gross
margins, reflecting the higher logistics and procurement costs, as well as the impact on production
costs of the strengthening of the Chinese Renminbi and the Israeli Shekel.
Operating expenses reported in the second quarter were $250 million (20.5% of sales) and $489
million (21.0% of sales) in the half-year period, compared to $213 million (20.5% of sales) and $439
million (21.9% of sales) in the corresponding periods last year, respectively.
The Company recorded certain non-operational, mostly non-cash, charges within its
reported operating expenses, totaling approximately $10 million in the second quarter
(Q2 2020: $14 million) and $26 million in the half-year period (H1 2020: $41 million).
These charges include mainly (i) $7 million in Q2 2021 (Q2 2020: $8 million) and $15
million in H1 2021 (H1 2020: $15 million) in non-cash amortization charges in respect of
Transfer assets received from Syngenta related to the 2017 ChemChina-Syngenta
acquisition, (ii) $1 million benefit in Q2 2021 (Q2 2020: $6 million) and $4 million charge
in H1 2021 (H1 2020: benefit of $5 million) in non-cash impacts related to incentive plans,
and (iii) $4 million in Q2 2021 (Q2 2020: $2 million) and $8 million in H1 2021 (H1 2020:
$5 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 Q2 and H1 2020 then also
included $11 million and $23 million, respectively, in non-cash amortization charges
related to the legacy PPA of the 2011 acquisition of Adama Agricultural Solutions, which
have now largely finished, and $1 million and $9 million, respectively, in 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 and half-year period were $240 million (19.7% of sales) and $463 million (19.9% of
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sales), compared to $199 million (19.2% of sales) and $398 million (19.8% of sales) in the
corresponding periods last year, respectively.
The higher operating expenses in the quarter and half-year period 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 transported, as well as the inclusion of recent acquisitions.
In addition to these factors, operating expenses in the quarter were impacted by the strengthening of
local currencies against the US dollar.
Operating income reported in the second quarter was up 3% to $90 million (7.4% of sales), and up
12% to $156 million (6.7% of sales) in the half-year period, compared to $88 million (8.5% of sales)
and $138 million (6.9% of sales) in the corresponding periods last year, respectively.
Excluding the impact of the abovementioned non-operational, mostly non-cash items, adjusted
operating income in the second quarter was up 12% to $125 million (10.3% of sales) and up 7% to
$223 million (9.6% of sales) in the half-year period, compared to $112 million (10.8% of sales) and
$209 million (10.4% of sales) in the corresponding periods last year, respectively.
The higher operating income in the quarter and half-year period was driven by the increased gross
profit, partially offset by the impact of the higher operating expenses.
EBITDA reported in the second quarter was $164 million (13.5% of sales) and $302 million (13.0%
of sales) in the half-year period, compared to $168 million (16.2% of sales) and $301 million (15.0%
of sales) recorded in the corresponding periods last year, respectively.
Excluding the impact of the abovementioned non-operational, mostly non-cash items, adjusted
EBITDA in the second quarter was up 9% to $186 million (15.2% of sales) and up 6% to $343
million (14.7% of sales) in the half-year period, compared to $170 million (16.4% of sales) and $323
million (16.1% of sales) in the corresponding periods last year, respectively.
Financial expenses and investment income were $54 million in the second quarter and $91
million in the half-year period, compared to $43 million and $74 million in the corresponding periods
last year, respectively. The higher financial expenses in the quarter and half-year period were mainly
driven by the net effect of an increase in the Israeli CPI on the ILS-denominated, CPI-linked bonds.
The increase in the CPI was most marked in the second quarter of 2021, compared to its decline in
the parallel quarter last year, and appears to be similar to the increase in inflation rates that has
been observed in many countries across the world this year as the global economy continues to
reopen following pandemic-related shutdowns.
Taxes on income reported in the second quarter were $7 million and $16 million in the half-year
period, compared to $16 million and $40 million in the corresponding periods last year, respectively.
The lower tax expenses recorded in the second quarter and first half of 2021 were mainly due to
non-cash tax income from the impact of the stronger Brazilian Real on the value of non-monetary
tax assets, caused due to differences between the functional (US dollar) and tax (local) currencies '
value of these non-monetary assets. The higher tax expenses recorded in 2020 were largely due to
the opposite impact, which was then caused by the significant weakening of the BRL in those
periods in 2020.
Net income attributable to the shareholders of the company reported in the second quarter was
$34 million (2.8% of sales) and $57 million (2.5% of sales) in the half-year period, compared to $31
million (3.0% of sales) and $29 million (1.4% of sales) in the corresponding periods last year,
respectively.
Excluding the impact of the abovementioned extraordinary and non-operational charges, adjusted
net income in the second quarter was $63 million (5.2% of sales) and $115 million (5.0% of sales) in
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the half-year, compared to $54 million (5.2% of sales) and $95 million (4.7% of sales) in the
corresponding periods last year, respectively.
The marked improvement in adjusted net income in the quarter and half-year period was driven by
the higher operating income and lower taxes, which were partially offset by the higher financial
expenses.
Trade working capital at June 30, 2021 was $2,498 million compared to $2,173 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, the anticipation of further volume growth in coming quarters, the increase in
procurement and production costs, as well as the inclusion of recent acquisitions. The Company
also saw an increase in trade receivables, driven largely by its strong growth over the half-year
period in emerging markets, most notably in Latin America and Brazil, where customer credit terms
are generally longer. These increases were partially offset by higher trade payables.
Cash Flow: Operating cash flow of $361 million was generated in the quarter and $231 million in the
half-year period, compared to $229 million and $173 generated in the corresponding periods last
year, respectively. The stronger operating cash flow generated in the second quarter and half-year
period reflects the stronger operating income generated this year, alongside improved collections
during the second quarter.
Net cash used in investing activities was $184 million in the quarter and $292 million in the half-year
period, compared to $62 million and $116 million in the corresponding periods last year, respectively.
The higher levels of cash used in investing activities in the periods largely reflect an increase in
investments in fixed assets, mainly driven by the payments for the relocation of manufacturing
facilities in China and upgrading of facilities in Israel, as well as a total of $101 million paid for the
acquisitions of majority stakes in Jiangsu Huifeng’s domestic commercial crop protection business
and its manufacturing assets.
Free cash flow of $132 million was generated in the second quarter and $116 million consumed in
the half-year period compared to $127 million and $12 million generated in the corresponding
periods last year, respectively, reflecting the aforementioned operating and investing cash flow
dynamics.
Portfolio Development Update
In the second quarter, ADAMA continued to advance the development of its differentiated product
portfolio. The Company obtained multiple new product registrations in the quarter, including
TIMELINE FX, a three-way mixture herbicide for cereals in Sweden, MAXENTIS, a unique co-
formulation fungicide that protects against key foliar diseases in cereals and canola in Australia, and
TAPUZ, a unique combination product with two different modes of action to control various rice
pests in Indonesia.
ADAMA continued its global roll-out of one of its self-produced prothioconazole-based products,
SORATEL, with launches in the UK and Canada. This is ADAMA’s first product featuring its novel
Asorbital formulation technology, a proprietary formulation technology that delivers improved
penetration efficiency and excellent systemic movement in plants, resulting in higher efficacy of
ADAMA’s prothioconazole-based products.
In Italy, the Company launched EXELGROW, a unique seaweed-based biostimulant promoting
plant growth, further penetrating this segment.
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Table 2. Regional Sales Performance
Q2 2021 Q2 2020 Change Change H1 2021 H1 2020 Change Change
$m $m USD CER $m $m USD CER
Europe 261 252 +3.4% +0.2% 605 609 -0.6% -2.3%
North America 256 205 +25.2% +24.0% 445 373 +19.4% +18.5%
Latin America 271 220 +22.9% +21.5% 448 379 +18.1% +21.7%
Asia Pacific 242 191 +26.4% +14.4% 483 349 +38.3% +25.7%
Of which China 135 99 +36.0% +26.3% 259 168 +54.6% +44.5%
India, Middle East & Africa 190 167 +13.5% +9.7% 347 298 +16.6% +15.5%
Total 1,220 1,036 +17.7% +13.6% 2,329 2,008 +15.9% +13.6%
CER: Constant Exchange Rates
Europe: Sales in the second quarter were in line with those of the same quarter last year, in CER
terms, but were lower by 2.3% in the first half of the year compared with the corresponding period
last year.
In the quarter, sales were aided by a recent region-wide heatwave, causing higher disease and
insect pressure in most countries, following a prolonged cold spell. Noteworthy performances were
seen across eastern Europe, supported by favorable conditions in key crops, as well as in Italy and
in Greece, bolstered by the Company’s recent acquisition in the latter country. These more than
compensated for softer performances in certain countries in the western part of the continent, but
were largely offset by a generally softer pricing environment across the region.
In US dollar terms, sales were higher by 3.4% in the quarter but were lower by 0.6% in the half-year
period, compared to the corresponding periods last year, reflecting the net impact of the
strengthening of regional currencies compared to their weakening in the 2020 periods at the
outbreak of COVID-19 then.
North America: Sales were up by 24.0% in the second quarter and by 18.5% in the first half of the
year, in CER terms, compared with the corresponding periods last year.
In the quarter, ADAMA recorded continued robust growth and market share gain in key segments of
its Consumer and Professional business, alongside a solid performance in the crop protection arm,
recovering from first-quarter headwinds seen there.
In US dollar terms, sales were higher by 25.2% in the quarter and by 19.4% in the first half,
compared to the corresponding periods last year, reflecting the strengthening of the Canadian Dollar.
Latin America: Sales grew by 21.5% in the second quarter and by 21.7% in the first half of the year,
in CER terms, compared to the corresponding periods last year.
The Company delivered pleasing growth in the quarter, driven by business growth in Brazil
supported by the strong crop prices, and despite ongoing drought conditions which affected the corn
planting season in the country, as well as growth seen in other countries across the region.
In US dollar terms, sales in the region grew by 22.9% in the quarter, reflecting a strengthening in
regional currencies during the quarter compared to the parallel quarter in 2020. In the half year,
sales in the region grew by 18.1% in US dollar terms, compared to the corresponding period last
year, reflecting the somewhat weaker average currency levels that prevailed during the first quarter
of 2021 compared to the parallel quarter in 2020, which saw currency weakness against the USD
only late in the quarter at the outbreak of COVID-19.
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Asia-Pacific: Sales grew by 14.4% in the quarter and by 25.7% in the first half of the year, in CER
terms, compared to the corresponding periods last year.
In the second quarter, the Company delivered robust growth in the region, led by a strong
performance in China and the Pacific. In China, ADAMA is seeing strong growth, both from sales of
its branded, formulated portfolio, further aided by the acquisition of Huifeng’s domestic commercial
arm at the end of 2020, as well as from sales of its raw materials and intermediates which saw
strong demand and higher prices. The Company also started to benefit from its recent acquisition of
Huifeng's manufacturing assets at the end of May 2021. In the Pacific region, the Company grew
strongly in the quarter, driven by continued favorable seasonal conditions.
In the rest of APAC, the Company recorded continued growth in the quarter, with noteworthy
performances delivered in Indonesia, Korea and Australia, more than offsetting the challenging
seasonal conditions in other parts of South-East Asia, and the lingering effects of COVID-19 which
continues to challenge local farmers throughout the region.
In US dollar terms, sales in the region grew by 26.4% in the second quarter and by 38.3% in the first
half of the year, compared to the corresponding periods last year, reflecting the impact of the
strengthening of regional currencies, most notably the Australian Dollar and Chinese Renminbi.
India, Middle East & Africa: Sales grew by 9.7% in the quarter and by 15.5% in the first half of the
year, in CER terms, compared to the corresponding periods last year.
In the quarter, the strong growth was led by India, which enjoyed favorable weather with a strong
start to the monsoon season, enabling good cropping conditions.
In US dollar terms, sales in the region grew by 13.5% in the quarter and by 16.6% in the first half of
the year, compared to the corresponding periods last year, reflecting the impact of the strengthening
of regional currencies compared to the USD, most notably the Israeli Shekel.
Table 3. Revenues by operating segment
Second quarter sales by segment
Q2 2021 Q2 2020
% %
USD (m) USD (m)
Crop Protection 1,104 90.5% 941 90.8%
Intermediates and Ingredients 116 9.5% 95 9.2%
Total 1,220 100% 1,036 100%
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Second quarter sales by product category
Q2 2021 Q2 2020
% %
USD (m) USD (m)
Herbicides 473 38.7% 446 43.0%
Insecticides 393 32.3% 312 30.2%
Fungicides 239 19.6% 183 17.7%
Intermediates and Ingredients 116 9.5% 95 9.2%
Total 1,220 100% 1,036 100%
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.
Half-year sales by segment
H1 2021 H1 2020
% %
USD (m) USD (m)
Crop Protection 2,111 90.7% 1,826 90.9%
Intermediates and Ingredients 218 9.3% 183 9.1%
Total 2,329 100% 2,008 100%
Half-year sales by product category
H1 2021 H1 2020
% %
USD (m) USD (m)
Herbicides 950 40.8% 886 44.1%
Insecticides 706 30.3% 530 26.4%
Fungicides 455 19.5% 410 20.4%
Intermediates and Ingredients 218 9.3% 183 9.1%
Total 2,329 100% 2,008 100%
Note: the sales split by product category is provided for convenience purposes only and is not representative of the way the Company is
managed or in which it makes its operational decisions.
Further Information
All filings of the Company, together with a presentation of the key financial highlights of the period,
can be accessed through the Company website at www.adama.com.
About ADAMA
ADAMA Ltd. is a global leader in crop protection, providing solutions to farmers across the world to
combat weeds, insects and disease. ADAMA has one of the widest and most diverse portfolios of
active ingredients in the world, state-of-the art R&D, manufacturing and formulation facilities,
together with a culture that empowers our people in markets around the world to listen to farmers
and ideate from the field. This uniquely positions ADAMA to offer a vast array of distinctive
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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 Second Quarter
Q2 2021 Q2 2020 Q2 2021 Q2 2020
Adjusted 1
USD (m) USD (m) RMB (m) RMB (m)
Revenues 1,220 1,036 7,877 7,339
Cost of Sales 848 718 5,474 5,084
Other costs 7 7 45 51
Gross profit 365 311 2,358 2,204
% of revenue 29.9% 30.0% 29.9% 30.0%
Selling & Distribution expenses 186 152 1,198 1,076
General & Administrative expens es 39 32 251 228
Research & Development expenses 18 17 117 121
Other operating expenses -3 -2 -17 -15
Total operating expenses 240 199 1,549 1,410
% of revenue 19.7% 19.2% 19.7% 19.2%
Operating income (EBIT) 125 112 809 794
% of revenue 10.3% 10.8% 10.3% 10.8%
Financial expenses and investment income 54 43 350 302
Income before taxes 71 69 459 492
Taxes on Income 7 16 47 111
Net Income 64 54 412 381
Attributable to:
Non-controlling interest 1 0 2 0
Shareholders of the Company 63 54 410 381
% of revenue 5.2% 5.2% 5.2% 5.2%
Adjustments -30 -23 -192 -160
Reported Net income attributable to the
34 31 218 221
shareholders of the Company
% of revenue 2.8% 3.0% 2.8% 3.0%
Adjusted EBITDA 186 170 1,199 1,205
% of revenue 15.2% 16.4% 15.2% 16.4%
2
Adjusted EPS – Basic 0.0272 0.0220 0.1759 0.1559
– Diluted 0.0272 0.0220 0.1759 0.1559
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 “A nalysis of Gaps bet ween Adjusted Income Statement and Income Statement in Financial Stateme nts”.
2
The number of shares used to calc ulate 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 CNA C in July 2020 and repurchase and cancellation of 14. 3 million B shares
during the second half of 2020. The number of shares used to calculate bot h basic and diluted earnings per share in 20 20 is 2,446.6
million shares.
11
2
Reported EPS – Basic 0.0145 0.0128 0.0937 0.0905
– Diluted 0.0145 0.0128 0.0937 0.0905
Abridged Consolidated Income Statement for the First Half
H1 2021 H1 2020 H1 2021 H1 2020
Adjusted 3
USD (m) USD (m) RMB (m) RMB (m)
Revenues 2,329 2,008 15,064 14,121
Cost of Sales 1,630 1,391 10,543 9,780
Other costs 12 10 78 71
Gross profit 687 607 4,443 4,270
% of revenue 29.5% 30.2% 29.5% 30.2%
Selling & Distribution expenses 364 310 2,354 2,181
General & Administrative expens es 71 59 459 416
Research & Development expenses 35 34 227 238
Other operating expenses -7 -5 -42 -38
Total operating expenses 463 398 2,998 2,797
% of revenue 19.9% 19.8% 19.9% 19.8%
Operating income (EBIT) 223 209 1,445 1,473
% of revenue 9.6% 10.4% 9.6% 10.4%
Financial expenses and investment income 91 74 586 520
Income before taxes 133 136 859 954
Taxes on Income 16 40 105 283
Net Income 117 95 754 671
Attributable to:
Non-controlling interest 2 0 7 0
Shareholders of the Company 115 95 747 671
% of revenue 5.0% 4.7% 5.0% 4.7%
Adjustments -59 -66 -380 -466
Reported Net income attributable to the
57 29 367 205
shareholders of the Company
% of revenue 2.4% 1.4% 2.4% 1.4%
Adjusted EBITDA 343 323 2,216 2,273
% of revenue 14.7% 16.1% 14.7% 16.1%
4
Adjusted EPS – Basic 0.0496 0.0389 0.3207 0.2741
– Diluted 0.0496 0.0389 0.3207 0.2741
4
Reported EPS – Basic 0.0244 0.0118 0.1575 0.0836
– Diluted 0.0244 0.0118 0.1575 0.0836
3
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 “A nalysis of Gaps bet ween Adjusted Income Statement and Income Statement in Financial Stateme nts”.
4
The number of shares used to calc ulate 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 CNA C in July 2020 and repurchase and cancellation of 14. 3 million B shares
during the second half of 2020. The number of shares used to calculate bot h basic and diluted earnings per share in 20 20 is 2,446.6
million shares.
12
Abridged Consolidated Balance Sheet
June 30 June 30 June 30 June 30
2021 2020 2021 2020
USD (m) USD (m) RMB (m) RMB (m)
Assets
Current assets:
Cash at bank and on hand 717 889 4,633 6,293
Bills and accounts receivable 1,570 1,367 10,144 9,679
Inventories 1,746 1,500 11,281 10,619
Other current assets, receivables and
323 326 2,088 2,310
prepaid expenses
Total current assets 4,357 4,082 28,146 28,901
Non-current assets:
Fixed assets, net 1,472 1,122 9,508 7,941
Rights of use assets 78 73 506 516
Intangible assets, net 1,509 1,437 9,751 10,171
Deferred tax assets 145 121 940 857
Other non-current assets 93 100 600 711
Total non-current assets 3,298 2,853 21,304 20,195
Total assets 7,655 6,935 49,450 49,096
Liabilities
Current liabilities:
Loans and credit from banks and
457 456 2,954 3,230
other lenders
Bills and accounts payable 833 710 5,383 5,029
Other current liabilities 823 736 5,314 5,213
Total current liabilities 2,113 1,903 13,651 13,472
Long-term liabilities:
Loans and credit from banks and
506 314 3,272 2,225
other lenders
Debentures 1,238 1,224 7,996 8,664
Deferred tax liabilities 56 59 363 416
Employee benefits 116 96 748 677
Other long-term liabilities 308 137 1,989 973
Total long-term liabilities 2,224 1,830 14,367 12,954
Total liabilities 4,337 3,733 28,018 26,426
Equity
Total equity 3,318 3,202 21,432 22,670
Total liabilities and equity 7,655 6,935 49,450 49,096
13
Abridged Consolidated Cash Flow Statement for the Second Quarter
Q2 2021 Q2 2020 Q2 2021 Q2 2020
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 361 229 2,329 1,619
Cash flow from operating activities 361 229 2,329 1,619
Investing activities:
Acquisitions of fixed and intangible assets -91 -63 -591 -446
Proceeds from disposal of fixed and intangible assets 2 7 10 51
Acquisition of subsidiaries -93 - -600 -
Other investing activities -1 -6 -7 -47
Cash flow used for investing activities -184 -62 -1,188 -442
Financing activities:
Receipt of loans from banks and other lenders 296 230 1,915 1,628
Repayment of loans from banks and other lenders -323 -45 -2,085 -317
Interest payment and other -50 -44 -325 -311
Other financing activities 19 -22 123 -154
Cash flow from (used for) financing activities -58 119 -372 846
Effects of exchange rate movement on cash and cash 3 - -47 -5
equivalents
Net change in cash and cash equivalents 122 286 723 2,018
Cash and cash equivalents at the beginning of the period 592 598 3,892 4,238
Cash and cash equivalents at the end of the period 714 884 4,615 6,256
Free Cash Flow 132 127 854 900
14
Abridged Consolidated Cash Flow Statement for the First Half
H1 2021 H1 2020 H1 2021 H1 2020
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 231 173 1,491 1,234
Cash flow from operating activities 231 173 1,491 1,234
Investing activities:
Acquisitions of fixed and intangible assets -182 -114 -1,179 -803
Proceeds from disposal of fixed and intangible assets 3 2 20 16
Acquisition of subsidiaries -101 - -655 -
Other investing activities -12 -4 -77 -28
Cash flow used for investing activities -292 -116 -1,892 -815
Financing activities:
Receipt of loans from banks and other lenders 584 401 3,776 2,823
Repayment of loans from banks and other lenders -360 -106 -2,329 -746
Interest payment and other -60 -50 -388 -357
Other financing activities 22 -35 150 -245
Cash flow from (used for) financing activities 186 210 1,209 1,475
Effects of exchange rate movement on cash and cash 2 -3 -28 42
equivalents
Net change in cash and cash equivalents 127 264 780 1,936
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 714 883 4,615 6,256
Free Cash Flow -116 12 -752 95
15
Notes to Abridged Consolidated Financial Statements
Note 1: Basis of preparation
Basis of presentation and accounting policies: The abridged consolidated financial statements for the
quarters ended June 30, 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
16
Income Statement Adjustments
Q2 2021 Q2 2020 Q2 2021 Q2 2020
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 33.8 31.2 218.4 221.4
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash) 0.3 11.5 1.6 81.1
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
6.7 7.5 43.2 53.3
Syngenta transaction (non-cash)
3. Upgrade & Relocation related costs 24.8 8.1 160.3 57.1
4. Incentive plans (non-cash) -0.6 -5.9 -3.9 -41.9
5. Amortization of acquisition-related PPA (non-cash), other acquisition-related costs 3.8 2.6 24.4 18.1
6. Employee early retirement expenses - 0.9 - 6.4
Total Adjustments to Operating Income (EBIT) 34.9 24.6 225.6 174.1
Total Adjustments to EBITDA 21.4 1.8 138.4 12.4
Adjustments to Financing Expenses
7. Revaluation of non-cash adjustment related to non-controlling interest - 0.8 - 5.6
Adjustments to Taxes
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions 0.0 1.9 0.3 13.8
3. Taxes related to restructuring costs 4.3 0.5 27.8 3.7
5. Deferred tax due to amortization of acquisition-related PPA, other acquisition-related
0.6 0.3 3.9 2.2
costs
Total adjustments to Net Income 30.0 22.6 193.7 160.0
Net Income (Adjusted) 63.8 53.8 412.1 381.4
Total adjustments to Net Income attributable to the shareholders of the Company 29.7 22.6 191.6 160.0
H1 2021 H1 2020 H1 2021 H1 2020
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 57.1 28.8 369.2 204.6
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash) 0.5 22.9 3.2 159.7
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
14.5 15.4 93.9 107.4
Syngenta transaction (non-cash)
3. Upgrade & Relocation related costs 40.2 23.5 260.1 164.6
4. Incentive plans (non-cash) 3.5 -5.2 22.9 -36.8
5. Amortization of acquisition-related PPA (non-cash), other acquisition-related costs 7.5 5.1 48.7 38.0
6. Employee early retirement expenses - 9.5 - 66.2
7. Provisions in tax expenses related to prior years’ activities 1.6 - 10.3 -
Total Adjustments to Operating Income (EBIT) 67.9 71.2 439.2 499.1
Total Adjustments to EBITDA 40.8 22.0 263.9 154.1
Adjustments to Financing Expenses
8. Revaluation of non-cash adjustment related to non-controlling interest - 0.8 - 5.6
Adjustments to Taxes
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions 0.1 3.9 0.5 27.2
3. Taxes related to restructuring costs 6.7 1.0 43.3 7.2
5. Deferred tax due to amortization of acquisition-related PPA, other acquisition-related
1.2 0.6 7.7 4.6
costs
7. Provisions in tax expenses related to prior years’ activities 0.4 - 2.5 -
Total adjustments to Net Income 59.5 66.4 385.2 465.8
Net Income (Adjusted) 116.6 95.3 754.4 670.5
Total adjustments to Net Income attributable to the shareholders of the Company 58.7 66.4 380.1 465.8
17
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 a cquisition 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 Com mission 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 amorti zation
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 a re 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 movemen ts on the
measurement of the Company’s performance and expected employee compensation and to reflect the existing phantom options, in the
Company’s adjusted financial performance, the LTI is presented on an equity-settled basis in accordance with the value of the existing plan at
the grant date.
5. Amortization of acquisition-related PPA (non-cash) 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.
8. Revaluation of non-cash adjustment related to non-controlling interest: Relates to put options issued to non-controlling interests as part
of historical business combinations which took place before January 1, 2010. The put options are presented as a liability at the present value of
the future exercise price. The revaluation of these put options in Solutions is recognized under IFRS to Goodwill, but due to the acquisition of
Solutions by the Company in 2017, which is treated from an accounting perspective as a “Business Combination Under Common Con trol”,
such revaluation is recorded as a profit or loss item in the financial reports of the Company. The revaluations of su ch put options have no
bearing on the ongoing performance of the Company and are therefore removed from the Adjusted performance figures.
18
Exchange Rate Data for the Company's Principal Functional Currencies
June 30 Q2 Average H1 Average
2021 2020 Change 2021 2020 Change 2021 2020 Change
EUR/US D 1.189 1.120 6.1% 1.204 1.10 9.5% 1.205 1.101 9.5%
USD/BRL 5.002 5.476 8.7% 5.295 5.39 1.7% 5.384 4.923 (9.4%)
USD/PLN 3.804 3.981 4.4% 3.763 4.10 8.1% 3.768 4.008 6.0%
USD/ ZAR 14.347 17.241 16.8% 14.121 17.98 21.4% 14.545 16.664 12.7%
AUD/US D 0.750 0.684 9.6% 0.769 0.65 17.5% 0.771 0.656 17.5%
GBP/USD 1.386 1.227 12.9% 1.397 1.24 12.6% 1.388 1.260 10.2%
USD/ ILS 3.260 3.466 5.9% 3.266 3.52 7.1% 3.268 3.507 6.8%
USD LIBOR 3M 0.15% 0.30% (51.8% ) 0.16% 0.60% (74.0% ) 0.18% 1.08% (83.5% )
June 30 Q2 Average H1 Average
2021 2020 Change 2021 2020 Change 2021 2020 Change
USD/RMB 6.460 7.080 (8.7%) 6.458 7.085 (8.8%) 6.470 7.029 (8.0%)
EUR/RMB 7.678 7.931 (3.2%) 7.776 7.791 (0.2%) 7.797 7.739 0.7%
RMB/BRL 0.774 0.774 (0.1%) 0.820 0.761 (7.8%) 0.832 0.700 (18.8% )
RMB/PLN 0.589 0.562 (4.7%) 0.583 0.559 (4.2%) 0.582 0.570 (2.1%)
RMB/ZA R 0.450 0.411 (9.7%) 0.457 0.394 (16.0% ) 0.445 0.422 (5.4%)
AUD/RMB 4.845 4.846 0.0% 4.967 4.638 7.1% 4.989 4.612 8.2%
GBP/RMB 8.952 8.689 3.0% 9.022 8.790 2.6% 8.982 8.857 1.4%
RMB/ILS 0.505 0.490 (3.1%) 0.506 0.496 (1.9%) 0.505 0.499 (1.2%)
19
