ADAMA Ltd.
ENGLISH TRANSLATION OF FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
ADAMA Ltd.
(Expressed in RMB '000)
AUDITOR'S REPORT AND FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
CONTENTS PAGES
THE CONSOLIDATED AND COMPANY'S BALANCE SHEETS 1-3
THE CONSOLIDATED AND COMPANY'S INCOME STATEMENTS 4-5
THE CONSOLIDATED AND COMPANY'S CASH FLOW STATEMENTS 6-7
THE CONSOLIDATED AND COMPANY'S STATEMENTS
OF CHANGES IN SHAREHOLDERS' EQUITY 8 - 10
NOTES TO THE FINANCIAL STATEMENTS 11 - 117
ADAMA Ltd. Semmi-Annual Report 2021
(Expressed in RMB '000)
Consolidated Balance Sheet
June 30 December 31
Notes 2021 2020
Current assets
Cash at bank and on hand V.1 4,633,440 3,863,886
Financial assets held for trading V.2 2,494 1,253
Derivative financial assets V.3 376,746 1,560,788
Bills receivable V.4 108,078 102,082
Accounts receivable V.5 9,295,611 8,766,869
Receivables financing V.6 99,066 109,483
Prepayments V.7 363,364 406,008
Other receivables V.8 1,045,685 1,310,029
Inventories V.9 11,280,638 10,338,273
Other current assets V.10 940,835 769,641
Total current assets 28,145,957 27,228,312
Non-current assets
Long-term receivables V.11 98,400 95,329
Long-term equity investments V.12 15,847 14,081
Other equity investments V.13 151,537 152,200
Investment properties 3,186 4,364
Fixed assets V.14 7,695,471 6,576,116
Construction in progress V.15 1,812,323 1,405,328
Right-of-use assets V.16 505,895 483,618
Intangible assets V.17 5,150,421 5,226,455
Goodwill V.18 4,600,258 4,584,226
Deferred tax assets V.19 939,867 773,673
Other non-current assets V.20 330,844 257,332
Total non-current assets 21,304,049 19,572,722
Total assets 49,450,006 46,801,034
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ADAMA Ltd. Semmi-Annual Report 2021
(Expressed in RMB '000)
Consolidated Balance Sheet (continued)
June 30 December 31
Notes 2021 2020
Current liabilities
Short-term loans V.21 1,209,421 1,205,498
Derivative financial liabilities V.22 799,715 1,463,614
Bills payable V.23 198,428 369,791
Accounts payable V.24 5,184,480 4,557,006
Contract liabilities V.25 1,260,942 1,092,253
Employee benefits payable V.26 916,236 1,208,834
Taxes payable V.27 426,631 358,988
Other payables V.28 1,562,623 1,075,721
Non-current liabilities due within one year V.29 1,744,770 1,272,581
Other current liabilities V.30 347,366 315,597
Total current liabilities 13,650,612 12,919,883
Non-current liabilities
Long-term loans V.31 3,271,544 2,387,628
Debentures payable V.32 7,995,724 8,078,113
Lease liabilities V.33 394,531 379,190
Long-term payables 99,815 27,327
Long-term employee benefits payable V.34 748,266 645,755
Provisions V.35 178,699 163,251
Deferred tax liabilities V.19 362,973 331,942
Other non-current liabilities V.36 1,315,490 434,030
Total non-current liabilities 14,367,042 12,447,236
Total liabilities 28,017,654 25,367,119
Shareholders' equity
Share capital V.37 2,329,812 2,344,121
Capital reserve V.38 12,882,324 13,023,219
Less: Treasury shares - 60,357
Other comprehensive income V.39 (194,961) (72,055)
Special reserves 18,458 15,960
Surplus reserve V.40 240,162 240,162
Retained earnings V.41 6,156,557 5,862,702
Total equity attributed to the shareholders
of the company 21,432,352 21,353,752
Non-controlling interests - 80,163
Total Equity 21,432,352 21,433,915
Total liabilities and equity 49,450,006 46,801,034
Ignacio Dominguez Aviram Lahav
Legal representative Chief of accounting work & Chief of accounting organ
These financial statements were approved by the Board of Directors of the Company on August 24, 2021.
The notes form part of these financial statements.
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ADAMA Ltd. Semmi-Annual Report 2021
(Expressed in RMB '000)
Balance Sheet
June 30 December 31
Notes 2021 2020
Current assets
Cash at bank and on hand XV.1 443,269 1,034,812
Accounts receivable XV.2 121,301 387,117
Receivables financing XV.3 22,031 25,060
Prepayments 49,582 5,973
Other receivables XV.4 26,995 27,138
Inventories 51,746 141,235
Other current assets 39,956 42,243
Total current assets 754,880 1,663,578
Non-current assets
Long-term equity investments XV.5 17,511,352 16,663,212
Other equity investments 85,495 85,495
Investment properties 3,186 4,364
Fixed assets 731,493 784,218
Construction in progress 1,163,591 992,863
Right-of-use assets 9 37
Intangible assets 261,282 220,963
Deferred tax assets 66,264 66,036
Other non-current assets 588,302 238,750
Total non-current assets 20,410,974 19,055,938
Total assets 21,165,854 20,719,516
Current liabilities
Short-term loans - 100,000
Bills payables 970 19,600
Accounts payables 182,619 324,047
Contract liabilities 3,701 17,480
Employee benefits payable 40,929 99,808
Taxes payable 2,029 3,143
Other payables 573,086 240,939
Non-current liabilities due within one year 564,000 39,302
Total current liabilities 1,367,334 844,319
Non-current liabilities
Long-term loans 810,200 941,430
Long-term employee benefits payable 84,178 89,658
Provisions 51,900 44,743
Other non-current liabilities 260,000 143,770
Total non-current liabilities 1,206,278 1,219,601
Total liabilities 2,573,612 2,063,920
Shareholders’ equity
Share capital V.37 2,329,812 2,344,121
Capital reserve 15,523,881 15,569,929
Less: Treasury shares - 60,357
Other comprehensive income 47,020 47,390
Special reserves 19,149 16,651
Surplus reserve 240,162 240,162
Retained earnings V.41 432,218 497,700
Total shareholders’ equity 18,592,242 18,655,596
Total liabilities and shareholders’ equity 21,165,854 20,719,516
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ADAMA Ltd. Semmi-Annual Report 2021
(Expressed in RMB '000)
Consolidated Income Statement
Six months ended June 30
Notes 2021 2020
I. Operating income V.42 15,063,780 14,121,040
Less: Cost of sales V.42 10,706,710 9,904,470
Taxes and surcharges V.43 59,007 46,117
Selling and Distribution expenses V.44 2,506,436 2,468,568
General and administrative expenses V.45 571,807 553,186
Research and Development expenses V.46 226,940 188,185
Financial expenses V.47 448,790 842,792
Including: Interest expense 322,765 350,041
Interest income 31,363 29,625
Add: Investment income (loss), net V.48 527,756 52,129
Including: Income from investment
in associates and joint ventures 3,243 14,392
Gain (loss) from changes in fair value V.49 (664,582) 265,510
Credit impairment reversal (losses) V.50 10,051 5,589
Asset impairment reversal (losses) V.51 (29,403) (25,376)
Gain from disposal of assets V.52 14,799 7,694
II. Operating profit 402,711 423,268
Add: Non-operating income 33,032 39,020
Less: Non-operating expenses 15,429 13,441
III. Total profit 420,314 448,847
Less: Income tax expenses V.53 51,081 244,198
IV. Net profit 369,233 204,649
(1). Classified by nature of operations
(1.1). Continuing operations 369,233 204,649
(2). Classified by ownership
(2.1). Shareholders of the Company 367,036 204,649
(2.2). Non-controlling interests 2,197 -
V. Other comprehensive income, net of tax V. 39 (122,906) 147,373
Other comprehensive income (net of tax)
attributable to shareholders of the Company (122,906) 147,373
(1) Items that will not be reclassified to profit or loss: (6,971) 39,373
(1.1) Re-measurement of defined benefit plan liability (6,971) 39,373
(2) Items that were or will be reclassified to profit or loss (115,935) 108,000
(2.1) Effective portion of gains or loss of cash flow hedge 144,297 (78,285)
(2.2) Translation differences of foreign financial statements (260,232) 186,285
VI. Total comprehensive income for the period attributable to
Shareholders of the Company 246,327 352,022
Total comprehensive income for the period
attributable to shareholders of the Company 244,130 352,022
Total comprehensive income for the period
attributable to Non-controlling interests 2,197 -
VII. Earnings per share XIV.2
(1) Basic earnings per share (Yuan/share) 0.16 0.08
(2) Diluted earnings per share (Yuan/share) N/A N/A
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ADAMA Ltd. Semmi-Annual Report 2021
(Expressed in RMB '000)
Income Statement
Six months ended June 30
Notes 2021 2020
I. Operating income XV.6 617,097 673,646
Less: Operating costs XV.6 482,937 537,314
Taxes and surcharges 3,982 2,821
Selling and Distribution expenses 19,304 17,072
General and administrative expenses 140,326 133,338
Research and Development expenses 19,709 4,559
Financial expenses (income) 3,523 (4,826)
Including: Interest expense 10,176 3,143
Interest income 9,971 8,507
Add: Credit impairment reversal (losses) 107 (674)
Asset Impairment reversal (losses) (1,068) (2,864)
Gain from disposal of assets 16,081 101
II. Operating Profit (37,564) (20,069)
Add: Non-operating income 10,143 5,597
Less: Non-operating expenses 1,012 420
III. Total profit (28,433) (14,892)
Less: Income tax expense (income) (228) 27,872
IV. Net profit (loss) (28,205) (42,764)
V. Other comprehensive income, net of tax (370) (4,041)
(1) Items that will not be reclassified to profit or loss (370) (4,041)
(1.1) Re-measurement of defined benefit plan liability (370) (4,041)
VI. Total comprehensive income (loss) for the period (28,575) (46,805)
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ADAMA Ltd. Semmi-Annual Report 2021
(Expressed in RMB '000)
Consolidated Cash Flow Statement
Six months ended June 30
Notes 2021 2020
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 14,644,075 13,378,983
Refund of taxes and surcharges 82,190 67,336
Cash received relating to other operating activities V.55(1) 363,408 630,515
Sub-total of cash inflows from operating activities 15,089,673 14,076,834
Cash paid for goods and services 9,737,778 9,247,435
Cash paid to and on behalf of employees 1,988,051 1,967,484
Payments of taxes and surcharges 208,458 168,816
Cash paid relating to other operating activities V.55(2) 1,664,093 1,458,568
Sub-total of cash outflows from operating activities 13,598,380 12,842,303
Net cash flows from (used in) operating activities V.56(1)a 1,491,293 1,234,531
II. Cash flows from investing activities :
Cash received from disposal of investments 856 16,224
Cash received from returns of investments - 54,304
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets 19,507 15,677
Cash received relating to other investing activities V.55(3) 6,754 -
Sub-total of cash inflows from investing activities 27,117 86,205
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 1,179,017 803,315
Cash paid for acquisition of investments - 51,435
Net cash paid to acquire subsidiaries or other business units 655,039 -
Cash paid relating to other investing activities V.55(4) 85,108 46,840
Sub-total of cash outflows from investing activities 1,919,164 901,590
Net cash flows used in investing activities (1,892,047) (815,385)
III. Cash flows from financing activities :
Cash received from borrowings 3,776,407 2,822,626
Cash received from other financing activities V.55(5) 412,308 4,449
Sub-total of cash inflows from financing activities 4,188,715 2,827,075
Cash repayments of borrowings 2,328,962 745,547
Cash payment for dividends, profit distributions and interest 387,611 356,793
Including: Dividends paid to non-controlling interest 35,904 26,828
Cash paid relating to other financing activities V.55(6) 263,351 249,286
Sub-total of cash outflows from financing activities 2,979,924 1,351,626
Net cash from financing activities 1,208,791 1,475,449
IV. Effects of foreign exchange rate changes on cash and cash
equivalents (27,900) 41,605
V. Net increase in cash and cash equivalents V.56(1)b 780,137 1,936,200
Add: Cash and cash equivalents at the beginning of the year 3,835,071 719,313,4
I. VI. Cash and cash equivalents at the end of the period V.56(2) 4,615,208 611,61,,4
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ADAMA Ltd. Semmi-Annual Report 2021
(Expressed in RMB '000)
Cash Flow Statement
Six months ended June 30
Notes 2021 2020
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 838,428 581,672
Refund of taxes and surcharges 22,166 27,022
Cash received relating to other operating activities XV.7(1) 21,203 15,063
Sub-total of cash inflows from operating activities 881,797 623,757
Cash paid for goods and services 440,234 467,607
Cash paid to and on behalf of employees 122,202 122,633
Payments of taxes and surcharges 6,834 4,959
Cash paid relating to other operating activities XV.7(2) 67,311 90,807
Sub-total of cash outflows from operating activities 636,581 686,006
Net cash flows from (used in) operating activities XV.8 245,216 (62,249)
II. Cash flows from investing activities :
Net cash received from disposal of fixed assets, intangible assets and
other long-term assets 17,630 114
Sub-total of cash inflows from investing activities 17,630 114
Cash paid to acquire fixed assets, intangible assets and
other long-term assets 280,865 154,378
Cash paid for acquisition of investments 697,909 -
Sub-total of cash outflows from investing activities 978,774 154,378
Net cash flows used in investing activities (961,144) (154,264)
III. Cash flows from financing activities :
Cash received from borrowings 615,200 441,500
Cash received relating to other financing activities XV.7.(3) 5,880 4,449
Sub-total of cash inflows from financing activities 621,080 445,949
Cash repayments of borrowings 293,732 190,500
Cash payment for dividends, profit distributions or interest 24,027 14,606
Cash paid relating to other financing activities XV.7.(4) 172,061 200
Sub-total of cash outflows from financing activities 489,820 205,306
Net cash flow provided by (used in) financing activities 131,260 240,643
IV. Effects of foreign exchange rate changes on cash and cash equivalents (1,286) 3,172
V. Net decrease in cash and cash equivalents (585,954) 27,302
Add: Cash and cash equivalents at the beginning of the year XV.8(2) 1,022,758 1,395,994
VI. Cash and cash equivalents at the end of the period XV.8(2) 436,804 1,423,296
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ADAMA Ltd. Semmi-Annual Report 2021
(Expressed in RMB '000)
Consolidated Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2021
Attributable to shareholders of the Company
Other
Share Capital Less: Treasury comprehensive Special Surplus Retained Non-controlling
capital * reserve * shares * income reserves reserve earnings Total interests Total equity
I. 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
II. Changes in equity for the period (14,309) (140,895) (60,357) (122,906) 2,498 - 293,855 78,600 (80,163) (1,563)
1. Total comprehensive income - - - (122,906) - - 367,036 244,130 2,197 246,327
2. Owner’s contributions and reduction (14,309) (140,895) (60,357) - - - - (94,847) (82,360) (177,207)
2.1 Repurchase of shares (14,309) (46,048) (60,357) - - - - - - -
2.2 Non-controlling interests in
respect of business combination - (94,847) - - - - - (94,847) (82,360) (177,207)
3. Appropriation of profits - - - - - - (73,181) (73,181) - (73,181)
3.1 Distribution to owners - - - - - - (37,277) (37,277) - (37,277)
3.2 Distribution to non-controlling - - - - - - -
interest (35,904) (35,904) (35,904)
4. Special reserve - - - - 2,498 - - 2,498 - 2,498
4.1 Transfer to special reserve - - - - 3,866 - - 3,866 - 3,866
4.2 Amount utilized - - - - (1,368) - - (1,368) - (1,368)
III. Balance at June 30, 2021 2,329,812 12,882,324 - (194,961) 18,458 240,162 6,156,557 21,432,352 - 21,432,352
* For further information of the changes during the period see Note XI.2 – Commitments and Contingent Liabilities
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ADAMA Ltd. Semmi-Annual Report 2021
(Expressed in RMB '000)
Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2020
Attributable to shareholders of the Company
Other
Share Capital comprehen-si Special Surplus Retained
capital reserve ve income reserves reserve earnings Total
I. Balance at December 31, 2019 2,446,554 12,903,168 1,192,681 14,927 240,162 5,574,173 22,371,665
II. Changes in equity for the period - - 147,373 2,278 - 148,462 298,113
1. Total comprehensive income - - 147,373 - - 204,649 352,022
2. Owner’s contributions and reduction - - - - - - -
3. Appropriation of profits - - - - - (56,187) (56,187)
3.1 Distribution to owners - - - - - (29,359) (29,359)
3.2 Distribution to - -
non-controlling interest - - - (26,828) (26,828)
4. Transfers within owners’ equity - - - - - - -
5. Special reserve - - - 2,278 - - 2,278
5.1 Transfer to special reserve - - - 3,756 - - 3,756
5.2 Amount utilized - - - (1,478) - - (1,478)
III. Balance at June 30, 2020 2,446,554 12,903,168 1,340,054 17,205 240,162 5,722,635 22,669,778
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ADAMA Ltd. Semmi-Annual Report 2021
(Expressed in RMB '000)
Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2021
Attributable to shareholders of the Company
Less: Other
Share Capital treasury comprehensive Special Surplus Retained
capital reserve share income reserves reserve earnings Total
I. Balance at December 31, 2020 2,344,121 15,569,929 60,357 47,390 16,651 240,162 497,700 18,655,596
II. Changes in equity for the period (14,309) (46,048) (60,357) (370) 2,498 - (65,482) (63,354)
1. Total comprehensive income - - - (370) - - (28,205) (28,575)
2. Owner’s contributions and reduction (14,309) (46,048) (60,357) - - - - -
2.1 Repurchase of shares (14,309) (46,048) (60,357) - - - - -
2.2 Other - - - - - - - -
3. Appropriation of profits - - - - - - (37,277) (37,277)
3.1 Transfer to Distribution to shareholders - - - - - - (37,277) (37,277)
4. Special reserve - - - - 2,498 - - 2,498
4.1 Transfer to special reserve - - - - 3,866 - - 3,866
4.2 Amount utilized - - - - (1,368) - - (1,368)
Ⅲ. Balance at June 30, 2021 2,329,812 15,523,881 - 47,020 19,149 240,162 432,218 18,592,242
For the six months ended June 30, 2020
Attributable to shareholders of the Company
Other
Share Capital comprehensive Special Surplus Retained
capital reserve income reserves reserve earnings Total
I. Balance at December 31, 2019 2,446,554 15,449,878 41,308 12,973 240,162 531,784 18,722,659
II. Changes in equity for the period - - (4,041) 2,278 - (72,123) (73,886)
1. Total comprehensive income - - (4,041) - - (42,764) (46,805)
2. Owner’s contributions and reduction - - - - - - -
3. Appropriation of profits - - - - - (29,359) (29,359)
3.1 Transfer to Distribution to shareholders - - - - - (29,359) (29,359)
4. Special reserve - - - 2,278 - - 2,278
4.1 Transfer to special reserve - - - 3,756 - - 3,756
4.2 Amount utilized - - - (1,478) - - (1,478)
Ⅲ. Balance at June 30, 2020 2,446,554 15,449,878 37,267 15,251 240,162 459,661 18,648,773
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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 subsidiaries of the Company, refer to Note VII.
The Company’s consolidated financial statements had been approved by the Board of Directors of the
Company on August 24, 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 Commission (hereinafter "CSRC”) in 2014).
2. Accrual basis and measurement principle
The Group has adopted the accrual basis of accounting. Except for certain financial instruments which are
measured at fair value, deferred tax assets and liabilities, assets and liabilities relating to employee benefits,
provisions, and investments in associated companies and joint ventures, the Group adopts the historical
cost as the principle of measurement in the financial statements. Where assets are impaired, provisions for
asset impairment are made in accordance with relevant requirements.
In the historical cost measurement, assets obtained shall be measured at the amount of cash or cash
equivalents or fair value of the consideration paid. Liabilities shall be measured at the actual amount of
cash or assets received, or the contractual amount in a present obligation, or the prospective amount of
cash or cash equivalents paid to discharge the liabilities.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing market participants in an arm’s length transaction at the measurement date. Fair
value measured and disclosed in the financial statements are determined on this basis whether it is
observable or estimated by valuation techniques.
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ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
II BASIS OF PREPARATION - (cont’d)
2. Accrual basis and measurement principle - (cont’d)
The following table provides an analysis, grouped into Levels 1 to 3 based on the degree to which the fair
value input is observable and significant to the fair value measurement as a whole:
Level 1 - based on quoted prices (unadjusted) in active markets;
Level 2 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is observable (other than quoted prices included within Level 1), either directly or
indirectly;
Level 3 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
3. Going concern
The financial statements have been prepared on the going concern basis.
The Group has performed going concern assessment for the following 12 months from June 30, 2021 and
have not identified any significant doubtful matter or event on the going concern, as such the financial
statement have been prepared on the going concern basis.
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
1. Statement of compliance
These financial statements are in compliance with the Accounting Standards for Business Enterprises to
truly and completely reflect the Company's consolidated financial position as at June 30, 2021 and the
Company's consolidated operating results, changes in shareholders' equity and cash flows for the six
months then ended.
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 the ir realisation in cash or
cash equivalents as a normal operating cycle. The operating cycle for the company is 12 months.
4. Reporting currency
The Company and its domestic subsidiaries choose Renminbi (hereinafter "RMB") as their functional
currency. Functional currencies of overseas subsidiaries are determined on the basis of the principal
economic environment in which the overseas subsidiaries operate. The functional currency of the overseas
subsidiaries is mainly the United States Dollar (hereinafter "USD"). The presentation currency of these
financial statements is Renminbi.
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ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
5. Business combinations
5.1 Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which
all of the combining enterprises are ultimately controlled by the same party or parties both before and after
the combination, and that control is not transitory. Assets and liabilities obtained shall be measured at their
respective carrying amounts as recorded by the combining entities at the date of the combination. The
difference between the carrying amount of the net assets obtained and the carrying amount of the
consideration paid for the combination is adjusted to the share premium in capital reserve. If the share
premium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
Costs that are directly attributable to the combination are charged to profit or loss in the period in which
they are incurred.
5.2 Business combinations not involving enterprises under common control and goodwill.
A business combination not involving enterprises under common control is a business combination in
which all of the combining enterprises are not ultimately controlled by the same party or parties before and
after the combination.
The costs of business combination are the fair value of the assets paid, liabilities incurred or assumed and
equity instruments issued by the acquirer for the purpose of achieving the control rights over the acquiree.
The intermediary costs such as audit, legal services and assessment consulting costs and other related
management costs that are directly attributable to the combination by the acquirer are charged to profit or
loss in the period in which they are incurred. Direct capital issuance costs incurred in respect of equity
instruments or liabilities issued pursuant to the business combination should be charged to the respect
equity instruments or liabilities upon initial recognition of the underlying equity instruments or liabilities.
The acquiree’s identifiable assets, liabilities and contingent liabilities acquired by the acquirer in a business
combination, that meet the recognition criteria shall be measured at fair value at the acquisition date.
Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable
net assets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on
initial recognition. Where the cost of combination is less than the acquirer’s interest in the fair value of the
acquiree’s identifiable net assets, the remaining difference is recognized immediately in profit or loss for
the current year.
The goodwill raised because of the business combination should be separately disclosed in the
consolidated financial statement and measured by the initial amount less any accumulative impairment
provision.
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.
- 13 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
6. Basis for preparation of consolidated financial statements
The scope of consolidation in consolidated financial statements is determined on the basis of control.
Control is achieved when the Company has power over the investee; is exposed, or has rights, to variable
returns from its involvement with the investee; and has the ability to use its power to affect its returns.
For a subsidiary disposed of by the Group, the operating results and cash flows before the date of disposal
(the date when control is lost) are included in consolidated income statement and consolidated statement of
cash flows.
For a subsidiary acquired through a business combination not involving enterprises under common control,
the operating results and cash flows from the acquisition date (the date when control is obtained) are
included in consolidated income statement and consolidated statement of cash flows.
For a subsidiary acquired through a business combination involving enterprises under common control, it
will be fully consolidated into consolidated financial statements from the date on which the subsidiary was
ultimately under common control by the same party or parties.
The significant accounting policies and accounting years adopted by the subsidiaries are determined based
on the uniform accounting policies and accounting years set out by the Company.
All significant intra-group balances, transactions and unrealized profits are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as non-controlling
interests and presented as "non-controlling interests" in the shareholders’ equity in consolidated balance
sheet. The portion of net profits or losses of subsidiaries for the period attributable to non -controlling
interests is presented as "non-controlling interests" in consolidated income statement below the "net profit"
line item. Total comprehensive income attributable to non-controlling shareholders is presented separately
in the consolidated income statement below the total comprehensive income line item.
When the amount of loss for the period attributable to the non-controlling shareholders of a subsidiary
exceeds the non-controlling shareholders' portion of the opening balance of owners' equity of the
subsidiary, the excess amount is still allocated against non-controlling interests.
Acquisition of non-controlling interests or disposal of equity interest in a subsidiary that does not result in
the loss of control over the subsidiary is accounted for as equity transactions. The carrying amounts of the
Company's interests and non-controlling interests are adjusted to reflect the changes in their relative
interests in the subsidiary. The difference between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received is adjusted to capital reserve under owners'
equity. If the capital reserve is not sufficient to absorb the difference, the excess is adjusted against
retained earnings. Other comprehensive income attributed to the non-controlling interest is reattributed to
the shareholders of the company.
- 14 -
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)
A put option issued by the Group to holders of non-controlling interests that is settled in cash or other
financial instrument is recognized as a liability at the present value of the exercise price (according to the
"anticipated acquisition method"). 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.
In cases which the Group has a Call option in addition to the Put option above, due to the anticipated
acquisition method implementation no value is given to the Call option in the consolidated financial
statements.
When the Group loses control over a subsidiary due to disposal of certain equity interest or other reasons,
any retained interest is re-measured at its fair value at the date when control is lost. The difference between
(i) the aggregate of the consideration received on disposal and the fair value of any retained interest and (ii)
the share of the former subsidiary's net assets cumulatively calculated from the acquisition date according
to the original proportion of ownership interest is recognized as investment income in the period in which
control is lost. Other comprehensive income associated with the disposed subsidiary is reclassified to
investment income in the period in which control is lost.
7. Classification and accounting methods of joint arrangement
Joint arrangement involves by two or more parties jointly control. Joint control is the contractually agreed
sharing of control over an economic activity, and exists only when the strategic financial and operating
decisions relating to the activity require the unanimous consent of the parties sharing control (the
ventures).
The Group makes the classification of the joint arrangements according to the rights and obligations in the
joint arrangements to either joint operations or joint ventures.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the joint arrangement. Joint ventures are accounted for using the equity method.
8. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are
the Group's short-term, highly liquid investments that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
- 15 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
9. Translation of transactions and financial statements denominated in foreign currencies
9.1 Transactions denominated in foreign currencies
On initial recognition, foreign currency transactions are translated into functional currency using the spot
exchange rate prevailing at the date of transaction.
At the balance sheet date, foreign currency monetary items are translated into functional currency using the
spot exchange rates at the balance sheet date. Exchange differences arising from the differences between
the spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the
previous balance sheet date are recognized in profit or loss for the period, except that (i) exchange
differences related to a specific-purpose borrowing denominated in foreign currency that qualify for
capitalization are capitalized as part of the cost of the qualifying asset during the capitalization period. (ii)
exchange differences related to hedging instruments for the purpose of hedging against foreign currency
risks are accounted for using hedge accounting.
When preparing financial statements involving foreign operations, if there is any foreign currency
monetary items, which in substance forms part of the net investment in the foreign operations, exchange
differences arising from the changes of foreign currency are recorded as other comprehensive income, and
will be reclassified to profit or loss upon disposal of the foreign operations.
Foreign currency non-monetary items measured at historical cost are translated to the amounts in
functional currency at the spot exchange rates on the dates of the transactions and the amounts in
functional currency remain unchanged.
9.2 Translation of financial statements denominated in foreign currency
For the purpose of preparing consolidated financial statements, financial statements of a foreign operation
are translated from the foreign currency into RMB using the following method: assets and liabilities on the
balance sheet are translated at spot exchange rate prevailing at the balance sheet date; shareholders' equity
items, except for retained earnings, are translated at the spot exchange rates at the dates on which such
items arose; all items in the income statement as well as items reflecting the distribution of profits are
translated at average rate or at spot exchange rates on the dates of the transactions; the retained earnings
opening balance is previous year's translated retained earnings closing balance; the closing balance of
retained earnings is calculated and presented on the basis of each translated income statement and profit
distribution item. The difference between the translated assets and the aggregate of liabilities and
shareholders' equity items is recorded as other comprehensive income. Cash Flows arising from transaction
in foreign currency and the cash flows of a foreign subsidiary are translated at the spot exchange rate on
the date of the cash flow, the effect of exchange rate changes on the cash and cash equivalents is regarded
as a reconciling item and present separately in the statement “effect of foreign exchange rate changes on
the cash and cash equivalents".
The opening balances and the comparative figures of prior year are presented at the translated amounts in
the prior year's financial statements.
On disposal of the Group's entire equity interest in a foreign operation, or upon a loss of control over a
foreign operation due to disposal of certain equity interest in it or other reasons, the Group transfers the
- 16 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
accumulated translation differences, which are attributable to the owners' equity of the Company and
presented under other comprehensive income to profit or loss in the period in which the disposal occurs.
- 17 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
9. Translation of transactions and financial statements denominated in foreign currencies - (cont’d)
9.2 Translation of financial statements denominated in foreign currency - (cont’d)
In case of a disposal or other reason that does not result in the Group losing control over a foreign
operation, the proportionate share of accumulated translation differences are re-attributed to
non-controlling interests and are not recognized in profit and loss. For partial disposals of equity interest in
foreign operations, which are associates or joint ventures, the proportionate share of the accumulated
translation differences are reclassified to profit or loss.
10. Financial instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual
provisions of the instrument. At initial recognition, the Group measures a financial asset or financial
liability at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value
through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the
financial asset or financial liability. Initial recognition in trade receivables which do not contain a
significant financing component, shall be made according to their transaction price.
10.1 Classification and measurement of financial assets
After initial recognition, an entity shall measure a financial asset at: (a) amortised cost; (b) fair value
through other comprehensive income (“FVTOCI”); or (c) fair value through profit or loss (“FVTPL”).
10.1.1 Financial assets at amortised cost
A financial asset is measured at amortised cost if both of the following conditions are me t: (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 va lue 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.
- 18 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.1 Classification and measurement of financial assets - (cont’d)
10.1.2 Financial assets at FVTOCI
A financial asset is measured at fair value through other comprehensive income if both of the following
conditions are met: (a) the financial asset is held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets and (b) the contractual terms of the
financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
A gain or loss on a financial asset measured at fair value through other comprehensive income is
recognized in other comprehensive income, except for impairment gains or losses, foreign exchange gains
and losses and interest calculated using the effective interest method, until the financial asset is
derecognized or reclassified. When the financial asset is derecognized the cumulative gain or loss
previously recognized in other comprehensive income is reclassified from equity to profit or loss as a
reclassification adjustment.
10.1.3 Financial assets at FVTPL
Financial assets at FVTPL are either those that are classified as financial assets at FVTPL or designated as
financial assets at FVTPL.
A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVTOCI.
The Group may, at initial recognition, irrevocably designate a financial asset as measured at FVTPL if
doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes
referred to as an ‘accounting mismatch’) that would otherwise arise from measur ing assets or liabilities or
recognizing the gains and losses on them on different bases.
A gain or loss on a financial asset that is measured at FVTPL is recognized in profit or loss unless it is part
of a hedging relationship. Dividends are recognized in profit or loss.
10.1.4 Designated financial assets at FVTOCI
At initial recognition, the Group makes an irrevocable election to designate to FVTOCI an investment in
an equity instrument that is not held for trading.
When a non-trading equity instrument investment is designated as a financial asset that is measured at fair
value through other comprehensive income, the changes in the fair value of the financial asset are
recognised in other comprehensive income. Upon realization the accumulated gains or losses from other
comprehensive income are transferred from other comprehensive income and included in retained earnings.
During the period in which the Group holds these non-trading investment instruments, the right to receive
dividends in the Group has been established, and the economic benefits related to dividends are likely to
flow into the Group, and when the amount of dividends can be reliably measured, the dividend income is
recognized in the current profit and loss.
- 19 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses on financial assets that are classified to
amortised cost and FVTOCI.
The Group always measures the loss allowance at an amount equal to lifetime expected credit losses for
trade receivables.
For financial assets other than trade receivables, the Group initially measure the loss allowance for that
financial instrument at an amount equal to 12-month expected credit losses. At each balance sheet date, if
the credit risk on that financial instrument has increased significantly since initial recognition, the Group
measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit
losses. The Group recognizes in profit or loss, as an impairment gain or loss, the amount of expected credit
losses (or reversal) that is required to adjust the loss allowance to the amount that is required to be
recognized.
10.2.1 Significant increases in credit risk
At each balance sheet date, the Group assesses whether the credit risk on a financial instrument has
increased significantly since initial recognition.
The Group mainly considers the following list of information in assessing changes in credit risk:
(a) significant changes in internal price indicators of credit risk as a result of a change in credit risk
since inception.
(b) significant changes in external market indicators of credit risk for a particular f inancial instrument
or similar financial instruments with the same expected life.
(c) a significant change in the debtors’ ability to meet its debt obligations.
(d) an actual or expected significant change in the operating results of the debtor.
(e) significant increases in credit risk on other financial instruments of the same debtor.
(f) an actual or expected significant adverse change in the regulatory, economic, or technological
environment of the debtor.
(g) significant changes in the value of the collateral supporting the obligation or in the quality of
third-party guarantees or credit enhancements, which are expected to reduce the debtor’s economic
incentive to make scheduled contractual payments or to otherwise have an effect on the probability
of a default occurring.
(h) significant changes that are expected to reduce the receivable’s economic incentive to make
scheduled contractual payments.
(i) significant changes in the expected performance and behaviour of the debtor.
(j) past due information.
The Group assumes that the credit risk on a financial instrument has not increased significantly since
initial recognition if the financial instrument is determined to have low credit risk at the reporting date.
- 20 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets - (cont’d)
10.2.2 Credit-impaired financial asset
A financial asset is credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is
credit-impaired include observable data about the following events:
(a) significant financial difficulty of the issuer or the receivable;
(b) a breach of contract, such as a default or past due event;
(c) the lender(s) of the receivable, for economic or contractual reasons relating to the receivable’s
financial difficulty, having granted to the receivable a concession(s) that the lender(s) would not
otherwise consider;
(d) it is becoming probable that the receivable will enter bankruptcy or other financial reorganization;
10.2.3 Recognition of expected credit losses
For the purpose of determining significant increases in credit risk and recognizing a loss allowance on a
collective basis, financial instruments are grouped on the basis of shared credit risk. Examples of shared
credit risk characteristics may include, but are not limited to, the:(a) instrument type; (b) credit risk
ratings; (c) collateral type; (d) industry; (e) geographical location of the debtor; and (f) the value of
collateral relative to the financial asset if it has an impact on the probability of a default occurring.
Expected credit losses of financial instruments are determined as the present value of the difference
between: (a) the contractual cash flows that are due to an entity under the contract; and (b) the cash flows
that the entity expects to receive.
For a financial asset that is credit-impaired at the reporting date, an entity shall measure the expected
credit losses as the difference between the asset’s gross carrying amount and the present value of
estimated future cash flows discounted at the financial asset’s original effective interest rate. Any
adjustment is recognized in profit or loss as an impairment gain or loss.
The Group measures expected credit losses of a financial instrument in a way that reflects:
(a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible
outcomes;
(b) the time value of money; and
(c) reasonable and supportable information that is available without undue cost or effort at the
reporting date about past events, current conditions and forecasts of future economic conditions.
- 21 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets - (cont’d)
10.2.4 Written-off of financial assets
The Group directly reduces the gross carrying amount of a financial asset when the entity has no
reasonable expectations of recovering a financial asset in its entirety or a portion thereof. A write -off
constitutes a derecognition event.
10.3 Transfer of financial asset
The Group derecognizes a financial asset if one of the following conditions is satisfied: (i) the contractual
rights to the cash flows from the financial asset expire; or (ii) the financial asset has been transferred and
substantially all the risks and rewards of ownership of the financial asset is transferred to the transferee; or
(iii) although the financial asset has been transferred, the Group neither transfers nor retains substantially
all the risks and rewards of ownership of the financial asset but has not retained control of the financial
asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial
asset, and it retains control of the financial asset, it recognizes the financial asset to the extent of its
continuing involvement in the transferred financial asset and recognizes an associated liability. The extent
of the Group’s continuing involvement in the transferred asset is the extent to which it is exposed to
changes in the value of the transferred asset.
When the company is derecognizing a financial asset in its entirety, except for equity instrument
designated to FVTOCI, the difference between (i) the carrying amount of the financial asset transferred;
and (ii) the sum of the consideration received from the transfer is recognized in profit or loss.
10.4 Classification and measurement of financial liabilities
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a financial liability and an equity
instrument.
All financial liabilities are subsequently measured at FVTPL or other financial liabilities.
Financial liabilities are classified as at FVTPL when the financial liability is (i) held for trading or (ii) it is
designated as at FVTPL. The financial liability other than derivative financial liabilities are stated as
liabilities held for trading.
Other financial liabilities are subsequently measured at amortized cost by using effective interest method.
Gain or loss arising from derecognition or amortization is recognized in current profit or loss.
- 22 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.5 Derecognition of financial liabilities
Financial liabilities are derecognized in full or in part only when the present obligation is discharged in full
or in part. An agreement entered into force between the Group (debtor) and a creditor to replace the
original financial liabilities with new financial liabilities with substantially different terms, derecognize the
original financial liabilities as well as recognize the new financial liabilities. When financial liabilities is
derecognized in full or in part, the difference between the carrying amount of the financial liabilities
derecognized and the consideration paid (including transferred non-cash assets or new financial liability) is
recognized in profit or loss for the current period.
10.6 Derivatives
Derivative financial instruments include forward exchange contracts, currency swaps and foreign exchange
options, etc. Derivatives are initially measured at fair value at the date when the derivative contracts are
entered into and are subsequently re-measured at fair value. The resulting gain or loss is recognized in
profit or loss unless the derivative is designated and highly effective as a hedging instrument, in which case
the timing of the recognition in profit or loss depends on the nature of the hedge relationship (Note III
28.1).
10.7 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be
offset, except for circumstances where the Group has a legal right that is currently enforceable to offset the
recognized financial assets and financial liabilities, and intends either to settle on a net basis, or to realize
the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability
shall be offset and the net amount is presented in the balance sheet.
10.8 Equity instruments
The consideration received from the issuance of equity instruments net of transaction costs is recognized in
shareholders’ equity. Consideration and transaction costs paid by the Company for repurchasing
self-issued equity instruments are deducted from shareholders’ equity.
When the Company repurchases its own shares, those shares are treated as treasury shares. All
expenditures relating to the repurchase are recorded in the cost of the treasury shares, with the transaction
entering into the share capital. Treasury shares are excluded from profit distributions and are stated as a
deduction under shareholders’ equity in the balance sheet.
- 23 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Receivables
Receivables are assessed for impairment on a collective group and/or on an individual basis as follows:
Expected credit losses in respect of a receivables is measured at an amount equal to lifetime expected
credit losses. The assessment is made collectively for account receivables, where receivables share similar
credit risk characteristics based on geographical location, using the expected credit losses model including
inter-alia aging analysis, historical loss experiences adjusted by the observable factors reflecting current
and expected future economic conditions. The ratio of the collective provision for non-overdue account
receivables is between 0%-1.7%.
When credit risk on a receivable has increased significantly since initial recognition, the group records
specific provision or collective provision, which is determined for groups of similar assets in countries in
which there are large number of customers with immaterial balances.
In assessing whether the credit risk on a receivable has increased significantly since initial recognition, the
Group compares the risk of a default occurring on the receivable at the reporting date with the risk of a
default occurring on the receivable at the date of initial recognition and considers both quantitative and
qualitative information that is reasonable and supportable, including observable data that comes to the
attention of the Group about loss events such as a significant decline in the solvency of an individual
debtor or the portfolio of debtors, and significant changes in the financial condition that have an adverse
effect on the debtor.
12. Inventories
12.1 Categories of inventories and initial measurement
The Group's inventories mainly include raw materials, work in progress, semi-finished goods, finished
goods and reusable materials. Reusable materials include low-value consumables, packaging materials and
other materials, which can be used repeatedly but do not meet the definition of f ixed assets.
Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of
conversion and other expenditures incurred in bringing the inventories to their present location and
condition including direct labor costs and an appropriate allocation of production overheads.
12.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
12.3 Basis for determining net realizable value of inventories and provision methods for decline in value of
inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the net
realizable value is below the cost of inventories, a provision for decline in value of inventories is made.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs
of completion, the estimated costs necessary to make the sale and relevant taxes.
- 24 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
12. Inventories - (cont’d)
After the provision for decline in value of inventories is made, if the circumstances that previously caused
inventories to be written down below cost no longer exist so that the net realizable value of inventories is
higher than their carrying amount, the original provision for decline in value is reversed and the reversal is
included in profit or loss for the period.
12.4 The perpetual inventory system is maintained for stock system.
13. Long-term equity investments
Long-term equity investments include investments in subsidiaries, joint ventures and associates.
Subsidiaries are the companies that are controlled by the Company. Associates are the companies over
which the Group has significant influence. Joint ventures are joint arrangements over which the Group has
joint control along with other investors and has rights to the net assets of the joint arrangement.
The Company accounts for the investment in subsidiaries at historical cost in the Company's financial
statements. Investments in associates and joint ventures are accounted for under equity method.
13.1 Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprises under
common control, the investment cost of the long-term equity investment is the share of the carrying
amount of the shareholders' equity of the acquiree attributable to the ultimate controlling party at the date
of combination. 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
multiple exchange transactions, the initial investment cost is carried at the aggregate of the carrying
amount of the acquirer’s previously held equity interest in the acquiree and the new investment cost
incurred on the acquisition date.
Regarding the long-term equity investment acquired otherwise than through a business combination, if the
long-term equity investment is acquired by cash, the historical cost is determined based on the amount of
cash paid and payable; if the long-term equity investment is acquired through the issuance of equity
instruments, the historical cost is determined based on the fair value of the equity instruments issued.
- 25 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
13. Long-term equity investments - (cont’d)
13.2 Subsequent measurement and recognition of profit or loss
If the long-term equity investment is accounted for at cost, it should be measured at historical cost less
accumulated impairment losses. Dividend declared by the investee should be accounted for as investment
income.
Under the equity method, where the long-term equity investment initial investment cost exceeds the
Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, no
adjustment is made to the initial investment cost. Where the initial investment cost is less than the Group’s
share of the fair value of the investee’s identifiable net assets at the time of acquisition, the difference is
recognized in profit or loss for the period, and the cost of the long-term equity investment is adjusted
accordingly.
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive
income of the investee for the period as investment income or loss and other comprehensive income for the
period. The Group recognizes its share of the investee’s net profit or loss based on the fair value of the
investee’s individual separately identifiable assets, etc. at the acquisition date after making appropriate
adjustments to be confirmed with the Group's accounting policies and accounting period. The Group
discontinues recognizing its share of net losses of the investee after the carrying amount of the long-term
equity investment together with any long-term interests that in substance form part of its net investment in
the investee is reduced to zero. If the Group has incurred obligations to assume additional losses of the
investee, a provision is recognized according to the expected obligation, and recorded as investment loss
for the period.
13.3 Basis for determining control, joint control and significant influence over investee
Control is achieved when the Company has power over the investee; is exposed, or has rights, to variable
returns from its involvement with the investee; and has the ability to use its power to affect its returns.
Joint control is the contractually agreed sharing of control over an economic activity, and exists only when
the strategic financial and operating policy decisions relating to the activity require the unanimous consent
of the parties sharing control.
Significant influence is the power to participate in the financial and operating policy decisions of the
investee but is not control or joint control over those policies.
When determining whether an investing enterprise is able to exercise control or significant influence over
an investee, the effect of potential voting rights of the investee (for example, warrants and convertible
debts) held by the investing enterprises or other parties that are currently exercisable or convertible shall be
considered.
13.4 Methods of impairment assessment and determining the provision for impairment loss
If the recoverable amounts of the investments to subsidiaries, joint ventures and associates are less than
their carrying amounts, an impairment loss should be recognized to reduce the carrying amounts to the
recoverable amounts (Note III 20).
- 26 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
13. Long-term equity investments - (cont’d)
13.5 The disposal of long-term equity investment
On disposal of a long term equity investment, the difference between the proceeds actually received and
receivable and the carrying amount is recognized in profit or loss for the period.
14. Investment properties
Investment property refers to real estate held to earn rentals or for capital appreciation, or both, including
leased land use rights, land use rights held and provided for transferring after appreciation and leased
constructions, etc.
Investment property is initially measured at cost. Subsequent expenditures related to an investment
property shall be included in cost of investment property only when the economic benefits associated with
the asset will likely flow to the Group and its cost can be measured reliably. All other subsequent
expenditures on investment property shall be included in profit or loss for the current period when
incurred.
The Group adopts cost method for subsequent measurement of investment property, which is depreciated
or amortized using the same policy as that for buildings and land use rights.
When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal
of the property net of the carrying amount and related taxes and surcharges is recognized in profit or loss
for the current period.
15. Fixed assets
15.1 Recognition criteria for fixed assets
Fixed assets include land owned by the Group and buildings, machinery and equipment, transportation
vehicles, office equipment and others.
Fixed assets are tangible assets that are held for use in the production or supply of goods or for
administrative purposes, and have useful lives of more than one accounting year. A fixed asset is
recognized only when it is probable that economic benefits associated with the asset will flow to the Group
and the cost of the asset can be reliably measured. Purchased or constructed fixed assets are initially
measured at cost when acquired.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is
probable that economic benefits associated with the asset will flow to the Group and the subsequent
expenditures can be measured reliably. Other subsequent expenditures are recognized in profit or loss in
the period in which they are incurred.
- 27 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
15. Fixed assets - (cont’d)
15.2 Depreciation of each category of fixed assets
Fixed asset is depreciated based on the cost of fixed asset recognized less expected net residual value over
its useful life using the straight-line method since the month subsequent to the one in which it is ready for
intended use. Depreciation is calculated based on the carrying amount of the fixed asset after impairment
over the estimated remaining useful life of the asset.
The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation
method applied at least once at each financial year-end, and account for any change as a change in an
accounting estimate.
The estimated useful life, estimated net residual value and annual depreciation rate of each category of
fixed assets are as follows:
Residual Annual
Useful life value depreciation rate
Category Depreciation (years) (%) (%)
Buildings the straight-line method 15-50 0-4 1.9-6.7
Machinery and equipment the straight-line method 3-22 0-4 4.4-33.3
Office and other equipment the straight-line method 3-17 0-4 5.6-33.3
Motor vehicles the straight-line method 5-9 0-2 10.9-20.0
Land owned by the Group is not depreciated.
15.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or
disposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, the
amount of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognized
in profit or loss for the period.
The difference between recoverable amounts of the fixed assets under the carrying amount is referred to as
impairment loss (Note III 20).
16. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various construction,
installation costs, borrowing costs capitalized and other expenditures incurred until such time as the
relevant assets are completed and ready for its intended use. When the asset concerned is ready for its
intended use, the cost of the asset is transferred to fixed assets and depreciated starting from the following
month.
The difference between recoverable amounts of the construction in progress under the carrying amount is
referred to as impairment loss (Note III 20).
- 28 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
17. Borro wing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are
capitalized when expenditures for such asset and borrowing costs are incurred and activities relating to the
acquisition, construction or production of the asset that are necessary to prepare the asset for its intended
use or sale have commenced. Capitalization of borrowing costs ceases when the qualifying asset being
acquired, constructed or produced becomes ready for its intended use or sale. Borrowing costs incurred
subsequently should be charged to profit or loss. Capitalization of borrowing costs is suspended during
periods in which the acquisition, construction or production of a qualifying asset is suspended abnormally
and when the suspension is for a continuous period of more than 3 months. Capitalization is suspended
until the acquisition, construction or production of the asset is resumed.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is
the actual interest expenses incurred on that borrowing for the period less any bank interest earned from
depositing the borrowed funds before being used on the asset or any investment income on the temporary
investment of those funds.
Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interest
to be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excess
of cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The
capitalization rate is the weighted average of the interest rates applicable to the general-purpose
borrowings.
During the capitalization period, exchange differences on foreign currency specific-purpose borrowing are
fully capitalized whereas exchange differences on foreign currency general-purpose borrowing, charged to
profit or loss.
18. Intangible assets
18.1 Valuation methods, useful life, impairment test
The Group’s intangible assets include product registration assets, intangible assets upon purchase of
products, marketing rights and rights to use tradenames and trademarks, land use rights, software and
customer relations. Intangible assets are stated at cost less accumulated amortization and impairment
losses.
When an intangible asset with a finite useful life is available for use, its original cost less any accumulated
impairment losses is amortized over its estimated useful life using the straight-line method. An intangible
asset with an indefinite useful life is not amortized.
For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method
at the end of the year, and makes adjustments when necessary.
The respective amortization periods for such intangible assets are as follows:
Item Amortization period (years)
Land use rights 49-50 years
Product registration 8 years
Intangible assets on purchase of products 7-11, 20 years
Marketing rights, tradename and trademarks 4-10, 30 years
Software 3-5 years
Customer relations 5-10 years
- 29 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
The difference between recoverable amounts of the intangible assets under the carrying amount is referred
to as impairment loss (see Note III 20 – Impairment of long-term assets).
- 30 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
18. Intangible assets - (cont’d)
18.2 Research and development expenditure
Internal research and development project expenditures were classified into research expenditures and
development expenditures depending on its nature and the greater uncertainty whether the research
activities becoming to intangible assets.
Expenditure during the research phase is recognized as an expense in the period in which it is incurred.
Expenditure during the development phase that meets all of the following conditions at the same time is
recognized as intangible asset:
- It is technically feasible to complete the intangible asset so that it will be available for use or sale;
- The Group has the intention to complete the intangible asset and use or sell it;
- The Group can demonstrate the ways in which the intangible asset will generate economic benefits;
- The availability of adequate technical, financial and other resources to complete the development and the
ability to use or sell the intangible asset;
- The expenditure attributable to the intangible asset during its development phase can be reliably
measured.
Expenditures that do not meet all of the above conditions at the same time are recognized in profit or loss
when incurred. If the expenditures cannot be distinguished between the research phase and development
phase, the Group recognizes all of them in profit or loss for the period. Expenditures that have previously
been recognized in the profit or loss would not be recognized as an asset in subsequent years. Those
expenditures capitalized during the development stage are recognized as development costs incurred and
will be transferred to intangible asset when the underlying project is ready for an intended use.
19. Goodwill
The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’s interest in the
fair value of the identifiable net assets of the acquiree under a business combination not involving
enterprises under common control.
Goodwill is not amortized and is stated in the balance sheet at cost less accumulated impairment losses
(see Note III 20 – Impairment of long-term assets). On disposal of an asset group or a set of asset groups,
any attributable goodwill is written off and included in the calculation of the profit or loss on disposal.
20. Impairment of long-term assets
The Company assesses at each balance sheet date whether there is any indication that the fixed assets,
construction in progress, right of use assets, intangible assets with finite useful lives, investment properties
measured at historical cost, investments in subsidiaries, joint ventures and associates may be impaired. If
there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets.
The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value of
the future cash flow estimated to be derived from the asset. The Group estimates the recoverable amount
on an individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the
Group determines the recoverable amount of the asset group to which the asset belongs. Identification of
an asset group is based on whether major cash inflows generated by the asset group are largely
independent of the cash inflows from other assets or asset groups.
- 31 -
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 a mount, the
amount of the impairment loss first reduced by the carrying amount of the goodwill allocated to the asset
group or set of asset groups, and then the carrying amount of other assets (other than the goodwill) within
the asset group or set of asset groups, pro rata based on the carrying amount of each asset.
Once the impairment loss of such assets is recognized, it will not be reversed in any subsequent period.
21. Employee benefits
21.1 Short-term employee benefits
Employee wages or salaries, bonuses, social security contributions, measured on a non-discounted basis,
and the expense is recorded when the related service is provided. A provision for short-term employee
benefits in respect of cash bonuses is recognized in the amount expected to be paid where the Group has a
current legal or constructive obligation to pay the said amount for services provided by the employee in the
past and the amount can be estimated reliably.
21.2 Post-employment benefits
Post-employment benefits are classified into defined contribution plans and defined benefit plans.
A defined contribution plan is a post-employment benefit plan under which the Group pays contributions
to a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution plans are recognized as an expense in profit or loss in the periods
during which related services are rendered by employees.
Defined benefit plans of the Group are post-employment benefit plans other than defined contribution
plans. In accordance with the projected unit credit method, the Group measures the obligations under
defined benefit plans using unbiased and mutually compatible actuarial assumptions to estimate related
demographic variables and financial variables, and discount obligations under the defined benefit plans to
determine the present value of the defined benefit liability. The discount rate used is the yield on the
reporting date on highly-rated corporate debentures denominated in the same currency, that have maturity
dates approximating the terms of the Group’s obligation.
The Group attributes benefit obligations under a defined benefit plan to periods of service provided by
respective employees. Service cost and interest expense on the defined benefit liability are charged to
profit or loss and remeasurements of the defined benefit liability are recognized in other comprehensive
income.
- 32 -
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)
2112 Termination benefits
When the Group terminates the employment with employees or provides compensation under an offer to
encourage employees to accept voluntary redundancy, a provision is recognized with a corresponding
expense in profit or loss at the earlier of the following dates:
- When the Group cannot unilaterally withdraw the offer of termination benefits because of an employee
termination plan or a curtailment proposal.
- When the Group has a formal detailed restructuring plan involving the payment of termination benefits
and has raised a valid expectation in those affected that it will carry out the restructuring by starting to
implement that plan or announcing its main features to those affected by it.
If the benefits are payable more than 12 months after the end of the reporting period, they are discounted to
their present value. The discount rate used is the yield on the reporting date on highly-rated corporate
debentures denominated in the same currency, that have maturity dates approximating the terms of the
Group’s obligation.
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
recognized based on the shares or other equity instrument undertaken by the Company. For cash-settled
share-based payment made in return for the rendering of employee services that cannot be exercised until
the services are fully provided during the vesting period or specified performance targets are met, on each
balance sheet date within the vesting period, the services acquired in the current period shall, based on the
best estimate of the number of exercisable instruments, be recognized in relevant expenses and the
corresponding liabilities at the fair value of the liability incurred by the Company.
On each balance sheet date and the settlement date before the settlement of the relevant liabilities, the
Company should re-measure the fair value of the liabilities and the changes should be included in the
current period profit and loss.
- 33 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
23. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency, it is probable
that an outflow of economic benefits will be required to settle the obligation, and the amount of the
obligation can be measured reliably.
The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation at the settlement date, taking into account factors pertaining to a contingency such as the risks,
uncertainties and time value of money. Where the effect of the time value of money is material, the amount
of the provision is determined by discounting the related future cash outflows. The increase in the
provision due to passage of time is recognized as interest expense.
If all or part of the provision settlements is reimbursed by third parties, when the realization of income is
virtually certain, then the related asset should be recognized. However, the amount of related asset
recognized should not be exceeding the respective provision amount.
At the balance sheet date, the amount of provision should be re-assessed to reflect the best estimation then.
24. Revenue
Revenue of the Group is mainly from sale of goods.
The Group recognizes revenue when transferring goods to a customer, at the amount of the transaction
price. Goods are considered transferred when the customer obtains control of the goods. Transaction price
is the amount of consideration to which an entity expects to be entitled in exchange for transferring goods
to a customer, excluding amounts collected on behalf of third parties.
Significant financing component
For a contract with a significant financing component, the Group recognize revenue at an amount that
reflects the price that a customer would have paid for the goods if the customer had paid cash for those
goods at receipt. The difference between the amount of consideration and the cash selling price of the
goods, is amortized in the contract period using effective interest rate. The Group does not adjust the
amount of consideration for the effects of a significant financing component if the Group expects, at
contract inception, that the period between when the entity transfers a good to a customer and when the
customer pays for that good will be one year or less.
Sale with a right of return
For sale with a right of return, the Group recognizes revenue at the amount of consideration to which the
Group expects to be entitled (ie excluding the products expected to be returned). For any amounts received
(or receivable) for which an entity does not expect to be entitled, the entity shall not recognize revenue
when it transfers products to customers but shall recognize those amounts received (or receivable) as a
refund liability. An asset recognized for the Group’s right to recover products from a customer on settling a
refund liability shall initially be measured by reference to the former carrying amount of the product less
any expected costs to recover those products.
- 34 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
25. Government grants
Government grants are transfer of monetary assets and non-monetary assets from the government to the
Group at no consideration, including tax returns, financial subsidies and so on. A government grant is
recognized only when the Group can comply with the conditions attached to the grant and the Group will
receive the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received
or receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If
the fair value cannot be reliably determined, it is measured at a nominal amount.
Government grants are either related to assets or income.
(1) The basis of judgment and accounting method of the government grants related to assets
Government grants obtained for acquiring long-term assets are government grants related to assets. A
government grant related to an asset is offset with the cost of the relevant asset.
(2) The basis of judgment and accounting method of the government grants related to income
For a government grant related to income, if the grant is a compensation for related expenses or losses to
be incurred in subsequent periods, the grant is recognized as deferred income, and recognized in profit or
loss over the periods in which the related costs are recognized. If the grant is a compensation for related
expenses or losses already incurred, the grant is recognized immediately in profit or loss for the period.
Government grants related to the Group’s normal course of business are offset with related costs and
expenses. Government grants related that are irrelevant with the Groups’s normal course of business are
included in non-operating gains.
26. Current and deferred tax
The income tax expenses include current income tax and deferred income tax.
26.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are
measured at the amount expected to be paid (or recovered) according to the requirements of tax laws.
26.2 Deferred tax assets and deferred tax liabilities
Temporary differences are differences between the carrying amounts of certain assets or liabilities and
their tax base.
All taxable temporary differences are recognized as related deferred tax liabilities. Deferred tax assets are
recognized to the extent that it is probable that future taxable profits will be available against which the
deductible losses and tax credits can be utilized.
- 35 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
26. Current and deferred tax - (cont’d)
26.2 Deferred tax assets and deferred tax liabilities - (cont’d)
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the
extent that it is probable that future taxable profits will be available against which the deductible losses and
tax credits can be utilized. However, for deductible temporary differences associated with the initial
recognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a
business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at
the time of transaction, no deferred tax asset or liability is recognized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to tax
laws, that are expected to apply in the period in which the asset is realized or the liability is settled.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the
timing of the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The Group may be required to pay additional tax in case of distribution of dividends by the Group
companies. This additional tax was not included in the financial statements, since the policy of the Group
is not to distribute in the foreseeable future a dividend which creates a significant additional tax liability.
Except for those current income tax and deferred tax charged to comprehensive income or shareholders’
equity in respect of transactions or events which have been directly recognized in other comprehensive
income or shareholders’ equity, and deferred tax recognized on business combinations, all other current
income tax and deferred tax items are charged to profit or loss in the current period.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no
longer probable that sufficient taxable profits will be available in the future to allow the benefit of deferred
tax assets to be utilized. Such reduction is reversed when it becomes probable that sufficient taxable profits
will be available.
26.3 Offset of income tax
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and tax assets and
tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity
or different taxable entities which intend to realize the assets and liabilities simultaneously, current tax
assets and liabilities are offset and presented on a net basis.
When the Group has a legal right to settle deferred tax assets and liabilities on a net basis which relates to
income taxes levied by the same taxation authority, on either the same taxable entity or different taxable
entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets
and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or
liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and
presented on a net basis.
- 36 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
27. Leases
Lease is a contract, that conveys the right to use an asset for a period of time in exchange for consideration.
27.1 Determining whether an arrangement contains a lease
On the inception date of the lease, the Group determines whether the arrangement is a lease or contains a
lease, while assessing if it conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. In its assessment of whether an arrangement conveys the right to control the
use of an identified asset, the Group assesses whether it has the following two rights throughout the lease
term:
(a) The right to obtain substantially all the economic benefits from use of the identified asset; and
(b) The right to direct the identified asset’s use.
An arrangement does not contain a lease if an asset is leased for a period of less than 12 months, or to lease of
asset with low economic value.
27.2 Initial recognition of leased assets and lease liabilities
Upon initial recognition, the Group recognizes a liability at the present value of future lease payments
(exclude certain variable lease payments, as detailed in note III 27.4), and concurrently the Group
recognizes a right-of-use asset at the same amount, adjusted for any prepaid lease payments paid at the
lease date or before, plus initial direct costs incurred in respect of the lease.
When the interest rate implicit in the lease is not readily determinable, the incremental borrowing rate of
the lessee is used.
The Group presents right-of-use assets separately from other assets in the balance sheet.
27.3 The lease term
The lease term is the non-cancellable period of the lease plus periods covered by an extension or
termination option, if it is reasonably certain that the lessee will exercise or not exercise the option,
respectively.
If there is a change in the lease term, or in the assessment of an option to purchase the underlying asset, the
Group remeasures the lease liability, on the basis of the revised lease term and the revised discount rate and
adjust the right-of-use assets accordingly.
27.4 Variable lease payments
Variable lease payments that depend on an index or a rate, are initially measured using the index or rate
existing at the commencement of the lease. When the cash flows of future lease payments change as the
result of a change in an index or a rate, the balance of the liability is adjusted with a correspondence
change in the right-of-use asset.
Other variable lease payments that are not included in the measurement of the lease liability are recognized
in profit or loss in the period in which the condition that triggers payment occurs.
- 37 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
27. Leases (cont’d)
27.5 Subsequent measurement
After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation
and accumulated impairment losses and is adjusted for re-measurements of the lease liability. The asset is
depreciated on a straight-line basis over the useful life or contractual lease period, whichever earlier.
The Group applies ASBE8 Impairment of Assets, to determine whether the right-of-use asset is impaired
and to account for any impairment loss identified.
A lease liability is measured after the lease commencement date at amortized cost using the effective
interest method.
28. Other significant accounting policies and accounting estimates
28.1 Hedging
The Group uses derivative financial instruments to hedge its risks related to foreign currency and inflation
risks and derivatives that are not used for hedging.
Hedge accounting
The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing
basis, whether the hedge is expected to be effective in offsetting the changes in the fair value of cash flows
that can be attributed to the hedged risk during the period for which the hedge is designated.
An effective hedge exists when all of the below conditions are met:
There is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not dominate the value changes that result from that economic
relationship;
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the
hedged item that the entity actually hedges and the quantity of the hedging instrument that the
entity actually uses to hedge that quantity of hedged item.
On the commencement date of the accounting hedge, the Group formally documents the relationship
between the hedging instrument and hedged item, including the Group’s risk management objectives and
strategy in executing the hedge transaction, together with the methods that will be used by the Group to
assess the effectiveness of the hedging relationship.
With respect to a cash-flow hedge, a forecasted transaction that constitutes a hedged item must be highly
probable and must give rise to exposure to changes in cash flows that could ultimately affect profit or loss.
- 38 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.1 Hedging (cont’d)
Measurement of derivative financial instruments
Derivative financial instruments are recognized initially at fair value; attributable transaction costs are
recognized in profit or loss as incurred.
Cash-flow hedges
Subsequent to the initial recognition, changes in the fair value of derivatives used to hedge cash flows are
recognized through other comprehensive income directly in a hedging reserve, with respect to the part of
the hedge that is effective. Regarding the portion of the hedge that is not effective, the chan ges in fair value
are recognized in profit and loss. The amount accumulated in the hedging reserve is reclassified to profit
and loss in the period in which the hedged cash flows impact profit or loss and is presented in the same line
item in the statement of income as the hedged item.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated
or exercised, the hedge accounting is discontinued. The cumulative gain or loss previously recognized in a
hedging reserve through other comprehensive income remains in the reserve until the forecasted
transaction occurs or is no longer expected to occur. If the forecasted transaction is no longer expected to
occur, the cumulative gain or loss in respect of the hedging instrument in the hedging reserve is reclassified
to profit or loss.
Economic hedge
Hedge accounting is not applied with respect to derivative instruments used to economically hedge
financial assets and liabilities denominated in foreign currency or CPI linked. Changes in the fair value of
such derivatives are recognized in profit or loss as gain (loss) from changes in fair value or investment
income.
Derivatives that are not used for hedging
Changes in the fair value of derivatives that are not used for hedging are recognized in profit or loss as gain
(loss) from changes in fair value or investment income.
28.2 Securitization of assets
Details of the securitization of asset agreements and accounting policy are set out in Note V.5 - Account
receivables.
28.3 Segment reporting
Reportable segments are identified based on operating segments which are determined based on the
structure of the Group’s internal organization, management requirements and internal reporting system.
- 39 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.3 Segment reporting - (cont’d)
Two or more operating segments may be aggregated into a single operating segment if the segments have
similar economic characteristics and are same or similar in respect of the nature of each product and
service, the nature of production processes, the type or class of customers for the products and services, the
methods used to distribute the products or provide the services, and the nature of the regulatory
environment.
Inter-segment revenues are measured on the basis of actual transaction price for such transactions for
segment reporting. Segment accounting policies are consistent with those for the consolidated financial
statements.
28.4 Profit distributions to shareholders
Dividends which are approved after the balance sheet date are not recognized as a liability at the balance
sheet date but are disclosed in the notes separately.
29. Changes in significant accounting policies and accounting estimates
29.1 Changes in significant accounting policies
There are no significant changes in accounting policies in the reporting period.
29.2 Changes in significant accounting estimates
There are no significant changes in accounting estimates in the reporting period.
- 40 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
30. Significant accounting estimates and judgments
The preparation of the financial statements requires management to make estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates. Estimates as well as underlying assumptions and
uncertainties involved are reviewed on an ongoing basis. Revisions to accounting estimates are recognized
in the period in which the estimate is revised and in any future periods affected.
Notes V.34, Note VIII, Note IX and Note XIII contain information about the assumptions and their risk
factors relating to post-employment benefits – defined benefit plans, fair value of financial instruments and
share-based payments. Other key sources of estimation uncertainty are as follows:
30.1 Expected credit loss of trade receivables
As described in Note III.11, trade receivables are reviewed at each balance sheet date to determine whether
credit risk on a receivable has increased significantly since initial recognition, lifetime expected losses is
accrued for impairment provision1 Evidence of impairment includes observable data that comes to the
attention of the Group about loss events such as a significant decline in the solvency of an individual
debtor or the portfolio of debtors, and significant changes in the financial condition that have an adverse
effect on the debtor. If there is objective evidence of a recovery in the value of receivables which can be
related objectively to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reversed1
30.2 Provision for impairment of inventories
As described in Note III.12, the net realisable value of inventories is under management’s regular review,
and as a result, provision for impairment of inventories is recognized for the excess of inventories’
carrying amounts over their net realisable value. When making estimates of net realisable value, the Group
takes into consideration the use of inventories held on hand and other information available to form the
underlying assumptions, including the inventories’ market prices and the Group’s historical operating costs.
The actual selling price, the costs of completion and the costs necessary to make the sale and relevant taxes
may vary based on the changes in market conditions and product saleability, manufacturing technology
and the actual use of the inventories, resulting in the changes in provision for impairment of inventories.
The net profit or loss may then be affected in the period when the impairment of inventories is adjusted.
- 41 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments - (cont’d)
30.3 Impairment of assets other than inventories and financial assets
As described in Note III.20, if impairment indication exists, assets other than inventories and financial
assets are assessed at balance sheet date to determine whether the carrying amount exceeds the recoverable
amount of the assets. If any such case exists, an impairment loss is recognized.
The recoverable amount of an asset (or an asset group) is the greater of its fair value less costs to sell and
its present value of expected future cash flows. Since a market price of the asset (or the asset group) cannot
be obtained reliably, the fair value of the asset cannot be estimated reliably, the recoverable amount is
calculated based on the present value of estimated future cash flows. In assessing the present value of
estimated future cash flows, significant judgements are exercised over the asset’s production, selling price,
related operating expenses and discount rate to calculate the present value. All relevant materials which
can be obtained are used for estimation of the recoverable amount, including the estimation of the
production, selling price and related operating expenses based on reasonable and supportable assumptions.
30.4 Depreciation and amortisation of assets such as fixed assets and intangible assets
As described in Note III.15 and III.18, assets such as fixed assets and intangible assets are depreciated and
amortised over their useful lives after taking into account residual value. The estimated useful lives of the
assets are regularly reviewed to determine the depreciation and amortisation costs charged in each
reporting period. The useful lives of the assets are determined based on historical experience of similar
assets and the estimated technical changes. If there have been significant changes in the factors used to
determine the depreciation or amortisation, the rate of depreciation or amortisation is revised
prospectively.
30.5 Income taxes and deferred income tax
The Company and Group companies are assessed for income tax purposes in a large number of
jurisdictions and, therefore, Company management is required to use considerable judgment in
determining the total provision for taxes and attribution of income.
When assessing whether there will be sufficient future taxable profits available against which the
deductible temporary differences can be utilised, the Group recognizes deferred tax assets to the extent that
it is probable that future taxable profits will be available against which the deductible temporary
differences can be utilised, using tax rates that would apply in the period when the asset would be utilised.
In determining the amount of deferred tax assets, the Group makes reasonable judgements and estimates
about the timing and amount of taxable profits to be utilised in the following periods, and of the tax rates
applicable in the future according to the existing tax policies and other relevant regulations. If the actual
timing and amount of future taxable profits or the actual applicable tax rates differ from the estimates made
by management, the differences affect the amount of tax expenses.
- 42 -
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 ins trument 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.
- 43 -
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% (2020: 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 202 1
ADAMA agriculture solutions Ltd. Israel 23.0%
ADAMA Makhteshim Ltd. Israel 7.5%
ADAMA Agan Ltd. Israel 7.5%
ADAMA Brasil S/A Brazil 34.0%
Makhteshim Agan of North America Inc. U.S. 24.7%
ADAMA India Private Ltd India 25.2%
ADAMA Deutschland GmbH Germany 32.5%
Control Solutions Inc. U.S. 24.0%
Adama Australia Pty Ltd Australia 30.0%
ADAMA France S.A.S France 28.0%
ADAMA Northern Europe B.V. Netherlands 25.0%
ADAMA Italia S.R.L. Italy 27.9%
Alligare Inc. U.S. 27.5%
The VAT rate of the Group's subsidiaries is in the range between 2.5% to 27%.
- 44 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(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, hereinafter -
“Anpon"), a subsidiary of the Company, was jointly approved as new and high-tech enterprise, by the
Jiangsu Provincial Department of Science and Technology, Department of Finance of Jiangsu Province,
Jiangsu Provincial Office of the State Administration of Taxation. The applicable income tax rate from
2018 to 2020 is 15%.
(2) Benefits under the Law for the Encouragement of Capital Investments
Industrial enterprises of subsidiaries in Israel were granted “Approved Enterprise” or “Beneficiary
Enterprise” status under the Israeli Law for the Encouragement of Capital Investments, 1959. Should a
dividend be distributed from the retained earning produced in which the company was considered as an
“Approved Enterprise” or “Beneficiary Enterprise”, the company may be liable for tax at the time of
distribution.
On December 29, 2010 the Knesset approved the Economic Policy Law for 2011-2012, which includes an
amendment to the Law for the Encouragement of Capital Investments - 1959 (hereinafter - “the
Amendment”). The Amendment is effective from January 1, 2011 and its provisions apply to preferred
income derived or accrued in 2011 and thereafter by a preferred company, per the definition of these terms
in the Amendment.
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 16% 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.
- 45 -
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 effective 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
Regulations (Preferred Technological Income and Capital Gain of Technological Enterprise) – 2017
(hereinafter: “the Regulations”), which provides rules for applying the “preferred technological enterprise”
and “special preferred technological enterprise” tax benefit tracks including the Nexus formula that
provides the mechanism for allocating the technological income eligible for the benefits.
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),
amortization of know-how over 8 years and higher rates of depreciation.
- 46 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements
1. Cash at Bank and On Hand
June 30 December 31
2021 2020
Cash on hand 3,504 4,590
Deposits in banks 4,611,704 3,830,481
Other cash and bank 18,232 28,815
4,633,440 3,863,886
Including cash and bank placed outside China 3,379,563 2,064,876
As at June 30, 2021 restricted cash and bank balances was 18,232 thousand RMB (as at December 21, 2022
28,515 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Financial assets held for trading
June 30 December 31
2021 2020
Debt instruments - -
Other 2,494 1,253
2,494 1,253
3. Derivative financial assets
June 30 December 31
2021 2020
Economic hedge 359,401 1,545,481
Accounting hedge derivatives 17,345 15,307
376,746 1,560,788
4. Bills Receivable
June 30 December 31
2021 2020
Post-dated checks receivable 87,302 91,975
Bank acceptance draft 20,776 10,107
108,078 102,082
All bills receivables are due within 1 year.
- 47 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable
a. By category
June 30, 2021
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 422,926 4 253,510 60 169,416
Account receivables assessed
collectively for impairment 9,211,527 96 85,332 1 9,126,195
9,634,453 100 338,842 4 9,295,611
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
b. Aging analysis
June 30, 2021
Within 1 year (inclusive) 9,150,914
Over 1 year but within 2 years 167,433
Over 2 years but within 3 years 78,705
Over 3 years but within 4 years 74,239
Over 4 years but within 5 years 35,808
Over 5 years 127,354
9,634,453
- 48 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
Main groups of account receivables assessed collectively for impairment based on geographical location:
Geographical location A:
Account receivables in geographical location A are grouped based on similar credit risk:
June 30, 2021
Provision for expected
Book value credit loss Percentage (%)
Credit group A 1,250,702 4,270 0.07-0.62
Credit group B 746,847 6,463 0.87
Credit group C 226,381 9,876 4.36
Credit group D 43,419 906 2.09
2,267,349 21,515 0.95
Geographical location B:
Account receivables in geographical location B are grouped based on aging analysis:
June 30, 2021
Provision for expected
Book value credit loss Percentage (%)
Accounts receivable that are not overdue 463,544 4,118 0.9
Debts overdue less than 60 days 29,029 871 3.0
Debts overdue less than 180 days but
more than 60 days 29,812 2,981 10.0
Debts overdue above 180 days 19,002 7,601 40.0
Legal Debtors 35,648 35,648 100.0
577,035 51,219 8.9
Other geographical locations:
June 30, 2021
Provision for expected
Book value credit loss Percentage (%)
Other account receivables assessed
collectively for impairment 6,367,143 12,598 0.0-2.03%
- 49 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
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, 2021 51,895 310,379 362,274
First time consolidation - 246 246
Addition during the period, net (12,761) 18,294 5,533
Write back during the period - (15,470) (15,470)
Write-off during the period - (14,343) (14,343)
Exchange rate effect (903) 1,505 602
Balance as of June 30, 2021 38,231 300,611 338,842
d. Five largest accounts receivable at June 30, 2021:
Allowance of expected
Proportion of Accounts credit losses (credit losses
Name Closing balance receivable (%) has occurred)
Customer 1 151,580 2 -
Customer 2 140,391 2 -
Customer 3 128,525 1 -
Customer 4 108,497 1 -
Customer 5 95,325 1 13,095
Total 622,631 7 13,095
e. Derecognition of accounts receivable due to transfer of financial assets
Certain subsidiaries of the group entered into a securitization transaction with Rabobank International for
sale of trade receivables (hereinafter – “the Securitization Program” and/or “the Securitization
Transaction”).
Pursuant to the Securitization Program, the companies will sell their trade receivables debts, in various
different currencies, to a foreign company that was set up for this purpose and that is not owned by the
Adama Ltd. (hereinafter – “the Acquiring Company”). Acquisition of the trade receivables by the
Acquiring Company is financed by 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.
- 50 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The maximum scope of the securitization is adjusted for the seasonal changes in the scope of the
Company’s activities, as follows: during the months March through June the maximum scope of the
securitization is $350 million (as of June 30, 2021 – 2,261 million RMB), during the months July through
September the maximum scope of the securitization is $300 million (as of June 30, 2021 – 1,938 million
RMB) and during the months October through February the maximum scope of the securitization is $250
million (as of June 30, 2021 - 1,615 million RMB). In addition the company has uncommitted facility of
$50 million (as of June 30, 2021 - 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 receivable and its anticipated repayment date. In the month following acquisition of the debt, the
Acquiring Company pays in cash most of the debt while the remainder is recorded as a subordinated note
and as continuing involvement that is paid after collection of the debt sold. If the customer does not pay its
debt on the anticipated repayment date, the Company bears interest up to the earlier of the date on which
the debt is actually repaid or the date on which debt collection is transferred to the insurance company (the
actual costs are not significant and are not expected to be significant).
The Acquiring Company bears 95% of the credit risk in respect of the customers whose debts were sold
and will not have a right of recourse to the Company in respect of the amounts paid in cash, except
regarding debts with respect to which a commercial dispute arises between the companies and their
customers, that is, a dispute the source of which is a claim of non-fulfillment of an obligation of the seller
in the supply agreement covering the product, such as: a failure to supply the correct product, a defect in
the product, delinquency in the supply date, and the like.
The Acquiring Company appointed a policy manager who will manage for it the credit risk involved with
the trade receivables sold, including an undertaking with an insurance company.
Pursuant to the Receivables Servicing Agreement, the Group subsidiaries handle collection of the trade
receivables as part of the Securitization Transaction for the benefit of the Acquiring Company.
As part of the agreement, Solutions is committed to comply with certain financial covenants, mainly the
ratio of the liabilities to equity and profit ratios. As of June 30, 2021, Solutions was in compliance with the
financial covenants.
The accounting treatment of sale of the trade receivables included as part of the Securitization Program is:
The Company is not controlling the Acquiring Company, therefore the Acquiring Company is not
consolidated in the financial statements.
The Company continues to recognize the trade receivables included in the Securitization Program based on
the extent of its continuing involvement therein.
In respect of the part of the trade receivables included in the securitization Program with respect to which
cash proceeds were not yet received, however regarding which the Company has transferred the credit risk,
a subordinated note is recorded.
The continuing involvement and subordinated note recorded in the balance sheet as part of the “other
receivables” line item.
- 51 -
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
securitization scope as of June 30, 2021 is BRL 364 million (470 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 secur itization for the entity.
The subsidiary does not control the entity and therefore the entity is not consolidated in the group's
financial statements.
The subsidiary continues to recognize the trade receivables sold to the entity based on the extent of its
continuing involvement therein (5% right of recourse) and also recognizes an associated liability in the
same amount.
The loss from the sale of the trade receivables is recorded at the time of sale to profit and loss under
financing expenses.
June 30 December 31
2021 2020
Accounts receivables derecognized 2,899,468 2,552,045
Continuing involvement 127,981 125,578
Subordinated note in respect of trade receivables 512,938 762,598
Liability in respect of trade receivables 303,121 22,002
Six months ended June 30
2021 2020
Loss in respect of sale of trade receivables 15,403 36,790
- 52 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
6. Receivables financing
June 30 December 31
2021 2020
Bank acceptance draft 99,066 109,483
99,066 109,483
As at June 30, 2021, bank acceptance endorsed but not yet due amounts to 531,091 thousands RMB.
7. Prepayments
(1) The aging analysis of prepayments is as follows:
June 30 December 31
2021 2020
Amount Percentage (%) Amount Percentage (%)
Within 1 year (inclusive) 354,921 98 400,549 99
Over 1 year but within 2 years (inclusive) 5,595 1 3,037 1
Over 2 years but within 3 years (inclusive) 687 - 842 -
Over 3 years 2,161 1 1,052 -
363,364 100 406,008 100
(2) Total of five largest prepayments by debtor at the end of the period:
Amount Percentage of prepayments (%)
June 30, 2021 115,867 32
- 53 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables
(1) Other receivables by nature
June 30 December 31
2021 2020
Dividends receivable 903 -
Others 1,044,782 1,310,029
1,045,685 1,310,029
a. Others breakdown by categories
June 30 December 31
2021 2020
Trade receivables as part of securitization transactions
not yet eliminated 127,981 125,578
Subordinated note in respect of trade receivables 512,938 762,598
Financial institutions 175,747 231,183
Receivables in respect of disposal of fixed assets 23,949 23,949
Other 220,188 182,867
Sub total 1,060,803 1,326,175
Provision for expected credit losses - other receivables (16,021) (16,146)
1,044,782 1,310,029
b. Other receivables by aging
June 30
2021
Within 1 year (inclusive) 1,001,463
Over 1 year but within 2 years 17,151
Over 2 years but within 3 years 13,730
Over 3 years but within 4 years 2,218
Over 4 years but within 5 years 2,843
Over 5 years 23,398
1,060,803
- 54 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables - (cont'd)
(2) Additions, recovery or reversal and written-off of provision for expected credit losses during the
period:
Six months ended
June 30, 2021
Balance as of January 1 2021, 16,146
Addition during the period -
Written back during the period (114)
Write-off during the period -
Exchange rate effect (11)
Balance as of June 30, 2021 16,021
(3) Five largest other receivables at June 30, 2021:
Allowance of
Proportion of other expected credit
Name Closing balance receivables (%) losses
Party 1 512,938 49 -
Party 2 175,747 17 -
Party 3 13,321 1 -
Party 4 12,921 1 -
Party 5 10,627 1 -
Total 725,554 69 -
9. Inventories
(1) Inventories by category:
June 30, 2021
Provision for
Book value impairment Carrying amount
Raw materials 2,052,521 21,452 2,049,251
Work in progress 822,821 1,228 821,295
Finished goods 8,892,106 150,118 8,525,258
Others 202,022 0,928 284,524
11,405,285 190,020 11,252,825
December 31, 2020
Provision for
Book value impairment Carrying amount
Raw materials 2,282,985 42,945 2,215,222
Work in progress 024,291 - 024,291
Finished goods 8,455,855 152,500 8,225,251
Others 255,215 0,420 252,051
12,542,222 222,959 12,225,202
- 55 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
9. Inventories - (cont'd)
(2) Provision for impairment of inventories:
For the six months ended June 30, 2021
January 1, First time Reversal or
2021 consolidation Provision write-off Other June 30, 2021
Raw material 42,945 956 7,356 )19,225( )452( 21,452
Work in 1,134
progress - 50 )55( 120 1,228
Finished goods 152,500 3,355 42,380 (40,449) (1,745) 150,115
Others 0,420 - 509 ) 285( ) 125( 0,928
222,959 5,445 50,665 (60,094) (2,245) 190,022
10. Other Current Assets
June 30 December 31
2021 2020
Deductible VAT 564,790 499,136
Current tax assets 262,515 232,051
Short term investments 80,267 -
Others 33,263 38,454
940,835 769,841
11. Long-Term Receivables
June 30 December 31
2021 2020
Long term account receivables from sale of goods 98,400 95,329
98,400 95,329
- 56 -
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 catego ry:
June 30 December 31
2021 2020
Investments in joint ventures 15,847 14,081
15,847 14,081
(2) Movements of long-term equity investments for the period are as follows:
Balance
Other Declared Change in at the end
January Investment Comprehensive distribution of Capital consolidation of the
1, 2021 income income cash dividend investment scope Impairment period
Joint
ventures
Investee A 2,884 566 (26) - - - - 3,424
Investee B 933 - (84) - - (849) - -
Investee C 10,264 2,678 349 (868) - - - 12,423
Sub-total 14,081 3,244 239 (868) - (849) - 15,847
13. Other equity investments
June 30 December 31
2021 2020
Investment A 85,495 85,495
Investment B 64,388 65,034
Investment C 1,654 1,671
151,537 152,200
Other equity investments are non-core businesses that are intended to be held in the foreseeable future. For the
six months period ended at June 30, 2021 the company did not recognize dividend income from other equity
investments.
- 57 -
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, 2021 3,299,569 13,982,376 122,215 371,573 17,775,733
First time consolidation 327,898 909,326 1,830 7,490 1,246,544
Purchases 22,474 132,069 7,031 10,848 172,422
Transfer from construction in progress 12,714 180,102 1,210 1,229 195,255
Disposals (13,613) (28,950) (5,745) (14,493) (62,801)
Currency translation adjustment (28,689) (113,265) (2,449) (5,170) (149,573)
Balance as at June 30, 2021 3,620,353 15,061,658 124,092 371,477 19,177,580
Accumulated depreciation
Balance as at January 1, 2021 (1,673,044) (8,647,241) (62,224) (293,523) (10,676,032)
First time consolidation (11,075) (49,997) (256) (1,406) (62,734)
Charge for the period (46,557) (292,582) (8,245) (17,877) (365,261)
Disposals 13,344 27,498 4,432 15,236 60,510
Currency translation adjustment 11,311 72,722 1,293 4,514 89,838
Balance as at June 30, 2021 (1,706,021) (8,889,602) (65,000) (293,056) (10,953,679)
Provision for impairment
Balance as at January 1, 2021 (159,691) (363,008) (651) (235) (523,585)
First time consolidation - (5,915) (8) - (5,923)
Charge for the period - - - - -
Disposals - 245 7 - 252
Currency translation adjustment 100 725 (1) 2 826
Balance as at June 30, 2021 (159,591) (367,953) (653) (233) (528,430)
Carrying amounts
As at June 30, 2021 1,754,741 5,804,103 58,439 78,188 7,695,471
As at January 1, 2021 1,466,834 4,972,127 59,340 77,815 6,576,116
The lands reported as fixed assets are owned by the group subsidiaries and are located outside of China.
- 58 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
15. Construction in Progress
(1) Construction in progress
June 30 December 31
2021 2020
Provision for Provision for
Book value impairment Carrying amount Book value impairment Carrying amount
1,838,063 (25,740) 1,812,323 1,431,068 (25,740) 1,405,328
(2) Details and Movements of major construction projects in progress during year ended June 30, 2021
Actual
Currency Transfer cost to Project
January 1, translati on to fixed June 30, budget progress
Budget 2021 Addi tions di fferences assets 2021 (% ) (% ) Source of funds
Project A 1,509,420 632,656 87,045 - - 719,701 55% 55% Bank loan
Project B 722,302 25,441 13,820 - - 39,261 5% 5% Bank loan
Project C 333,373 15,803 22,955 (191) - 38,567 12% 12% Internal finance
Project D 279,367 56,460 84,942 (688) - 140,714 50% 50% Internal finance
Project E * 172,055 51,402 10,855 - (14,920) 47,337 50% 50% Internal finance
Project F 138,000 39,786 33,627 - - 73,413 53% 53% Internal finance
Project G 140,649 53,922 71,956 (455) (125,423) - 100% 100% Internal finance
Project H 135,662 59,699 17,611 (620) - 76,690 57% 57% Internal finance
Project I 70,101 32,300 33,177 - - 65,477 93% 93% Internal finance
Project J 70,035 54,618 6,171 - - 60,789 87% 87% Internal finance
* As of June 30, 2021 Project E include impairment of RMB 26 million.
- 59 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
16. Right-of-use assets
Land & Machinery & Office & other
Buildings equipment Motor vehicles equipment Total
Cost
Balance as at January 1, 2021 468,521 45,329 223,914 3,445 741,203
Additions 62,899 757 53,038 1,837 118,531
Disposals (12,105) (408) (30,110) (970) (43,593)
Currency translation adjustment (10,077) (451) (2,747) (67) (13,342)
Balance as at June 30, 2021 509,238 45,227 244,095 4,245 802,805
Accumulated depreciation
Balance as at January 1, 2021 (145,226) (12,553) (98,233) (1,579) (257,59,)
Charge for the period (40,323) (705) (38,249) (408) (79,685)
Disposals 10,630 401 25,167 660 36,858
Currency translation adjustment 2,081 137 1,268 22 3,508
Balance as at June 30, 2021 (172,838) (12,720) (110,047) (1,305) (296,910)
Provision for impairment
Balance as at January 1, 2021 - - - - -
Balance as at June 30, 2021 - - - - -
Carrying amounts
As at June 30, 2021 336,400 32,507 134,048 2,940 505,895
As at January 1, 2021 323,295 32,776 125,681 1,866 483,615
- 60 -
ADAMA LTD.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
17. Intangible Assets
Marketing
Intangi ble assets rights,
Product on Purchase of tradename and Customers
(1)
registration Products Software trademarks relations Land use rights Others (2) Total
Costs
Balance as at January 1, 2021 12,892,221 2,915,420 558,041 044,282 451,225 292,508 222,040 10,208,502
First time consolidation (3) 82,642 - 2,833 - - 65,397 2,809 134,681
Purchases 215,551 757 71,146 757 - - 0,647 295,555
Currency translation adjustment (107,518) (38,924) (9,747) (7,582) (4,822) (361) (3,226) (172,180)
Transfer fro m construction in progress - - 45,418 - - - - 45,418
Disposal (212,688) - (1,048) (841) - - - (214,577)
Balance as at June 30, 2021 12,655,018 2,880,240 965,343 736,394 446,186 450,912 220,977 10,469,070
Accumul ated amortizati on
Balance as at January 1, 2021 ) 5,128,152( ) 2,458,812( ) 525,255( ) 442,825( ) 222,222( ) 01,485 ( ) 152,225( ) 12,219,852 (
First time consolidation (3) (1,879) - (141) - - (886) (609) (3,515)
Charge for the period (271,853) (143,888) (36,558) (15,075) (16,026) (4,455) (14,890) (502,745)
Currency translation adjustment 83,275 24,613 5,825 4,542 2,555 (3) 2,136 122,943
Disposal 212,688 - 545 252 - - - 212,788
Balance as at June 30, 2021 (8,083,952) (2,575,887) (568,281) (453,906) (233,773) (76,812) (196,598) (12,189,209)
Provision for i mpairment
Balance as at January 1, 2021 ) 51,809 ( ) 45,528 ( - - - - ) 252 ( ) 122,025(
Charge for the period - - - - - - - -
Disposal - - - - - - - -
Currency translation adjustment 511 454 - - - - - 1,295
Balance as at June 30, 2021 (80,868) (48,322) - - - - (250) (129,440)
Carrying amount
As at June 30, 2021 2,490,198 1,256,031 397,062 282,488 212,413 381,100 131,129 5,150,421
As at January 1, 2021 2,525,189 1,412,959 215,458 222,425 222,028 221,425 120,282 5,228,455
(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) Product registration includes provisional purchase price allocation related to Adama Huifeng (shanghai) Agricultural Technology Co. Ltd acquired in December 31, 2020.
- 61 -
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
activity 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 261 million from the
acquisitions of Adama Huifeng (shanghai) Agricultural Technology Co., Ltd and Adama Huifeng (Jiangsu)
Co. Ltd.. The goodwill allocated to non-core CGU is not significant.
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
January 1, translation Balance at June
2021 Additions adjustment 30, 2021
Book value 4,584,226 59,305 (43,273) 4,600,258
Impairment provision - - - -
Carrying amount 4,584,226 59,305 (43,273) 4,600,258
19. Deferred Tax Assets and Deferred Tax Liabilities
(1) Deferred tax assets without taking into consideration of the offsetting of balances within the same
tax jurisdiction
June 30 December 31
2021 2020
Deductible Deductible
temporary Deferred tax temporary Deferred tax
differences assets differences assets
Deferred tax assets
Deferred tax assets in respect of carry
forward losses 978,130 173,245 055,259 142,212
Deferred tax assets in respect of
inventories 1,688,325 472,415 1,555,525 422,995
Deferred tax assets in respect of
employee benefits 900,207 130,032 912,251 125,808
Other deferred tax asset 1,586,051 391,185 1,589,155 288,852
5,152,713 1,166,877 4,522,258 1,282,825
- 62 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont’d)
(2) Deferred tax liabilities without taking into consideration of the offsetting of balances within the
same tax jurisdiction
June 30 December 31
2021 2020
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 3,321,928 589,983 2,512,829 815,924
3,321,928 589,983 2,512,829 815,924
(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting
June 30 December 31
2021 2020
The offset The offset
amount of Deferred tax amount of Deferred tax
deferred tax assets or deferred tax assets or
assets and liabilities assets and liabilities after
liabilities after offset liabilities offset
Presented as:
Deferred tax assets 227,010 939,867 258,982 002,873
Deferred tax liabilities 227,010 362,973 258,982 221,942
(4) Details of unrecognized deferred tax assets
June 30 December 31
2021 2020
Deductible temporary differences 450,995 522,951
Deductible losses carry forward 211,553 103,402
882,545 627,353
(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets
June 30 December 31
2021 2020
2021 2,364 2,255
2022 1,612 1,828
2023 2,089 2,125
2224 1,764 1,055
2025 5,827 5,885
After 2025 197,897 89,613
211,553 103,402
- 63 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont'd)
(6) Unrecognized deferred tax liabilities
When calculating the deferred taxes, taxes that would have applied in the event of realizing investments
in subsidiaries were not taken into account since it is the Company’s intention to hold these investments
and not realize them.
20. Other Non-Current Assets
June 30 December 31
2021 2020
Judicial deposits 99,854 93,182
Assets related to securitization 28,566 31,979
Advances in respect of non-current assets 122,431 40,857
Call option in respect of business combination - 18,733
Others 79,993 72,581
330,844 257,332
21. Short-Term Loans
Short-term loans by category:
June 30 December 31
2021 2020
Unsecured loans 1,209,421 1,205,498
1,209,421 1,205,498
22. Derivative financial liabilities
June 30 December 31
2021 2020
Economic hedge 675,597 1,197,274
Accounting hedge derivatives 124,118 266,340
799,715 1,463,614
- 64 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
23. Bills Payables
June 30 December 31
2021 2020
Post-dated checks payables 179,610 264,402
Note payables draft 18,818 105,389
198,428 369,791
As at June 30, 2021, none of the bills payable are overdue.
24. Accounts payable
June 30 December 31
2021 2020
Within 1 year (including 1 year) 5,143,044 4,523,845
1-2 years (including 2 years) 14,492 7,454
2-3 years (including 3 years) 3,659 4,349
Over 3 years 23,285 21,358
5,184,480 4,557,006
There are no significant accounts payables aging over one year.
25. Contract liabilities
June 30 December 31
2021 2020
Discount for customers 1,015,799 633,882
Advances from customers 245,143 458,371
1,260,942 1,092,253
26. Employee Benefits Payable
June 30 December 31
2021 2020
Short-term employee benefits 488,340 882,144
Post-employment benefits* 63,467 122,218
Share based payment (See note XIII) 116,348 55,922
Other benefits within one year 219,150 228,528
887,305 1,104,088
Current maturities 28,931 24,285
916,236 1,225,524
* For further information regarding the termination benefits to employees during the periods see note XI.2 –
Commitments and contingent liabilities.
- 65 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
27. Taxes Payable
June 30 December 31
2021 2020
Corporate income tax 206,365 168,033
VAT 195,635 166,073
Others 24,631 24,882
426,631 358,988
28. Other Payables
June 30 December 31
2021 2020
Dividends payables 38,027 3,780
Other payables 1,524,596 1,071,941
1,562,623 1,075,721
(1) Other payables
June 30 December 31
2021 2020
Accrued expenses 613,152 541,250
Payables in respect of intangible assets 109,447 135,176
Financial institutions 13,870 111,863
Liability in respect of securitization transactions 303,121 22,002
Others 485,006 261,650
1,524,596 1,071,941
As at June 30, 2021, 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:
June 30 December 31
2021 2020
Long-term loans due within one year 1,064,974 587,864
Lease liabilities due within one year 146,747 146,178
Debentures payable due within one year 533,049 538,539
1,744,770 1,272,581
- 66 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
30. Other Current Liabilities
June 30 December 31
2021 2020
Put options to holders of non-controlling interests 85,700 87,388
Provision in respect of returns 195,373 194,775
Provision in respect of claims 65,912 33,036
Others 381 398
347,366 315,597
31. Long-Term Loans
Long-term loans by category
June 30 December 31
2021 Interest range 2020 Interest range
Long term loans
Guaranteed loans 373,200 3.9%-4.1% - -
Unsecured loans 3,963,318 1.4%-4.1% 2,947,492 1.4%-4.7%
Total Long term loans 4,336,518 2,947,492
Less: Long term loans from banks due within 1
year (1,064,974) (559,864)
Long term loans, net 3,271,544 2,387,628
For the maturity analysis, see note VIII.C - Liquidity risk.
32. Debentures Payable
June 30 December 31
2021 2020
Debentures Series B 8,528,773 8,616,652
Current maturities (533,049) (538,539)
7,995,724 8,078,113
June 30
2021
First year (current maturities) 533,049
Second year 533,049
Third year 533,049
Fourth year 533,049
Fifth year and thereafter 6,396,577
8,528,773
- 67 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
32. Debentures Payable - (cont'd)
Movements of debentures payable:
For the six months ended June 30, 2021:
Issuance
Balance at during Amortization CPI and Repayment Currency Balance at
Maturity Face value Face value Issuance Maturity Issuance January 1, the of discounts exchange during the translation June 30,
period in RMB NIS date period amount 2021 period or premium rate effect period adjustment 2021
Debentures November
Series B 2,673,640 1,650,000 4.12.2006 2020-2036 3,043,742 3,611,389 - 104 (6) - (35,825) 3,575,659
Debentures November
Series B 843,846 513,527 16.1.2012 2020-2036 842,579 1,074,338 - 5,318 - - (10,677) 1,068,979
Debentures November
Series B 995,516 600,000 7.1.2013 2020-2036 1,120,339 1,335,327 - 2,329 19 - (13,264) 1,324,411
Debentures November
Series B 832,778 533,330 1.2.2015 2020-2036 1,047,439 1,255,064 - (1,456) 19 - (12,467) 1,241,160
Debentures November
Series B 418,172 266,665 1-6.2015 2020-2036 556,941 687,307 - (3,979) 6 - (6,813) 676,521
Debentures November
Series B 497,989 246,499 5.5.2020 2020-2036 892,598 653,227 - (4,710) 6 - (6,480) 642,043
8,616,652 - (2,394) 44 - (85,529) 8,528,773
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).
- 68 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
33. Lease liabilities
June 30 December 31
2021 Interest range 2020 Interest range
Lease liabilities 541,278 1.1%-6.3% 525,368 1.2%-6.1%
Less: Lease liabilities due within one year (146,747) (146,178)
Long term lease liabilities, net 394,531 379,190
34. Long-Term Employee Benefits Payable
Post-employment benefit plans – defined benefit plan and early retirement
June 30 December 31
2021 2020
Total present value of obligation 672,093 594,185
Less: fair value of plan's assets (88,161) )92,824 (
Net liability related to Post-employment benefits 583,932 521,521
Termination benefits 83,325 99,488
Total recognized liability for defined benefit plan, net (1) 667,257 822,990
Share based payment (See note XIII) 33,589 21,255
Other long-term employee benefits 76,351 50,025
Total long-term employee benefits, net 777,197 809,522
Including: Long-term employee benefits payable due within one year 28,931 24,285
748,266 845,055
(1) Movement in the net liability and assets in respect of defined benefit plans, early retirement and
their components
Defined benefit
obligation and early Fair value of plan's
retirement assets Total
2021 2020 2021 2020 2021 2020
Balance as at January 1, 2020 892,821 021,921 92,634 104,448 600,997 617,483
Expense/income recognized
in profit and loss:
Current service cost 7,595 7,975 - - 7,595 7,975
Interest costs 9,495 9,522 1,113 1,299 8,382 5,122
Losses (gains) on curtailments and settlements 9,369 57,120 - - 9,369 57,120
Changes in exchange rates (9,436) ) 2,229( (1,204) ) 282( (8,232) ) 1,949(
Actuarial gain (losses) due to early retirement (10,298) ) 1,522( - - (10,298) ) 1,522(
Included in other comprehensive income:
Actuarial gain (losses) as a result of changes in
actuarial assumptions 9,121 ) 55,552( 1,540 ) 5,449( 7,581 ) 40,422(
Foreign currency translation differences in respect of
foreign operations (6,859) 5,928 (967) 1,215 (5,892) 0,855
Additional movements:
Benefits paid (47,174) ) 52,158( (6,825) ) 5,152( (40,349) ) 42,222(
Contributions paid by the Group - - 1,870 2,282 (1,870) ) 2,282(
Cllasification 99,974 - - - 99,974 -
Balance as at June 30, 2021 755,418 695,395 88,161 92,585 667,257 602,830
- 69 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
34. Long-Term Employee Benefits Payable - (cont'd)
Post-employment benefit plans – defined benefit plan and early retirement - (cont'd)
(2) Actuarial assumptions and sensitivity analysis
The principal actuarial assumptions at the reporting date for defined benefit plan
June 30 December 31
2021 2020
Discount rate (%)* 0.4%-3.3% 0.6%-3.3%
*According to the demographic and the benefit components.
The assumptions regarding the future mortality rate are based on published statistical data and acceptable
mortality rates.
Possible reasonable changes as of the date of the report in the discount rate, assuming the other
assumptions remain unchanged, would have affected the defined benefit obligation as follows:
As of June 30, 2021
Increase of 1% Decrease of 1%
Change in defined benefit obligation ) 55,214( 85,128
35. Provisions
June 30 December 31
2021 2020
Liabilities in respect of contingencies* 85,122 77,138
Provision in respect of site restoration 73,733 79,706
Long-term liability in respect of business combinations 17,434 3,954
Other 2,410 2,453
178,699 163,251
* Liabilities in respect of contingencies includes obligations of pending litigations, where an outflow of
resources had been reliably estimated.
- 70 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
36. Other Non-Current Liabilities
June 30 December 31
2021 2020
Put options to holders of non- controlling interests (1) 1,315,490 290,260
Long term loans – others - 171,770
1,315,490 462,030
Current maturities - (28,000)
1,315,490 434,030
(1) For further information see note VI.1 – Change in consolidation Scope.
37. Share Capital
Balance at Issuance of new Balance at
January 1, 2021 shares Buyback of shares June 30, 2021
Share capital 2,344,121 - (14,309) 2,329,812
* For further information of the changes see note XI.2 – Commitments and contingent liabilities.
38. Capital Reserve
Balance at Additions during Reductions during Balance at
January 1, 2021 the period the period June 30, 2021
Share premiums 12,652,610 - (46,048) 12,606,562
Other capital reserve 370,609 - (94,847) 275,762
13,022,219 - (140,895) 12,882,324
* 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: Less:
Balance at transfer Income transfer to Balance at
January 1, Before tax to profit tax Net-of-tax retained June 30,
2021 amount or loss expenses amount earnings 2021
Items that will not be
reclassified to profit or loss 49,933 (7,581) - (610) (6,971) - 42,962
Re-measurement of changes
in liabilities under defined
benefit plans (5,258) (7,581) - (610) (6,971) - (12,229)
Changes in fair value of
other equity investment 55,191 - - - - - 55,191
Items that may be
reclassified to profit or loss (121,988) (296,048) (179,892) (221) (115,935) - (237,923)
Effective portion of gain or
loss of cash flow hedge (220,719) (35,816) (179,892) (221) 144,297 - (76,422)
Translation difference of
foreign financial statements 98,731 (260,232) - - (260,232) - (161,501)
(72,055) (303,629) (179,892) (831) (122,906) - (194,961)
- 71 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
40. Surplus reserve
Additions Reductions
Balance at during the during the Balance at
January 1, 2021 period period June 30, 2021
Statutory surplus reserve 236,348 - - 236,348
Discretional surplus reserve 3,814 - - 3,814
240,162 - - 240,162
41. Retained Earnings
2021 2020
Retained earnings as at January 1 5,862,702 5,574,173
Net profits for the period attributable to shareholders of the Company 367,038 204,649
Dividends to non-controlling Interest (35,904) (26,828)
Dividend to the shareholders of the company (Note 1 & 2) (37,277) (29,359)
Retained earnings as at June 30 6,156,557 5,722,635
Note 1:
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 2:
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. The proposal was approved by the 2020 Annual General Meeting of
the Company held on May 21, 2021 and was fully paid during the third quarter of 2021.
- 72 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
42. Operating Income and Cost of Sales
Six months ended June 30 Six months ended June 30
2021 2020
Income Cost of sales Income Cost of sales
Principal activities 15,037,841 10,694,295 14,100,337 9,594,415
Other businesses 25,939 12,415 20,703 10,055
15,063,780 10,706,710 14,121,040 9,904,470
43. Taxes and Surcharges
Six months ended June 30
2021 2020
Tax on turnover 12,693 11,087
Others 46,314 35,030
59,007 46,117
44. Selling and Distribution Expenses
Six months ended June 30
2021 2020
Salaries and related expense 885,153 804,371
Depreciation and amortization 536,516 712,432
Transportation and Commissions 481,263 384,906
Advertising and sales promotion 154,157 161,027
Travel expenses 38,180 42,169
Warehouse expenses 83,456 77,121
Registration 62,030 81,676
Professional services 51,735 45,113
Insurance 48,945 36,863
Others 165,001 122,890
2,506,436 2,468,568
- 73 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
45. General and Administrative Expenses
Six months ended June 30
2021 2020
Salaries and related expenses 265,783 263,523
Idleness expenses 96,638 87,755
Professional services 47,805 56,030
Depreciation and amortization 41,558 44,550
IT systems 49,294 46,259
Office rent, maintenance and expenses 19,315 17,759
Other 51,414 37,310
571,807 553,186
46. Research and development expenses
Six months ended June 30
2021 2020
Salaries and related expenses 109,731 91,566
Field trial 18,063 17,652
Professional services 22,169 31,068
Depreciation and amortization 22,194 13,942
Materials 27,714 3,251
Office rent, maintenance and expenses 4,946 3,631
Other 22,123 27,075
226,940 188,185
47. Financial expenses, net
Six months ended June 30
2021 2020
Interest expenses on debentures and loans 333,733 352,342
CPI expense (income) in respect of debentures 118,106 (63,213)
Loss in respect of sale of trade receivables 15,403 36,790
Interest expense in respect of post-employment benefits and early
retirement, net 12,967 8,133
Revaluation of put option, net 24,449 8,566
Interest income from customers, banks and others (31,363) (29,625)
Exchange rate differences, net (45,084) 507,673
Interest expense on lease liabilities 12,364 11,955
Other expenses 8,215 10,171
448,790 842,792
- 74 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
48. Investment income, net
Six months ended June 30
2021 2020
Investment income (expenses) from disposal of derivatives 524,513 37,737
Income from long-term equity investments accounted for using
the equity method 3,243 14,392
527,756 52,129
49. Gain (loss) from Changes in Fair Value
Six months ended June 30
2021 2020
Gain (loss) from changes in fair value of derivative financial (660,975) 267,775
instruments
Others (3,607) (2,265)
(664,582) 265,510
50. Credit impairment reversal (losses)
Six months ended June 30
2021 2020
Bills receivable and accounts receivable 9,937 5,780
Other receivables 114 (191)
10,051 5,589
51. Asset impairment reversal (losses)
Six months ended June 30
2021 2020
Inventories (29,403) (24,724)
Intangible asset - (21)
Other - (631)
(29,403) (25,376)
52. Gain from Disposal of Assets
Six months ended June 30 Included in
non-recurring
2021 2020 items
Gain from disposal of fixed assets 15,654 720 15,654
Gain (loss) from disposal of intangible assets (855) 6,974 (855)
14,799 7,694 14,799
- 75 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
53. Income Tax Expenses
Six months ended June 30
2021 2020
Current year 204,125 211,779
Deferred tax expenses (income) (120,112) 17,038
Adjustments for previous years, net (32,931) 15,383
51,081 244,198
(1) Reconciliation between income tax expense and accounting profit is as follows:
Six months ended June 30
2021 2020
Profit before taxes 420,314 445,547
Statutory tax in china 25% 25%
Tax calculated according to statutory tax in china 105,079 112,212
Tax benefits from Approved Enterprises (48,293) ) 22,109(
Difference between measurement basis of income for financial
statement and for tax purposes (5,629) 125,291
Taxable income and temporary differences at other tax rate (32,963) ) 41,514(
Taxes in respect of prior years (32,931) 15,252
Utilization of tax losses prior years for which deferred taxes were
not created - ) 001(
Temporary differences and losses in the report year for which
deferred taxes were not created 9,293 22,294
Non-deductible expenses and other differences 22,144 12,994
Neutralization of tax calculated in respect of the Company’s share
in results of equity accounted investees (1,051) )2,559(
Effect of change in tax rate in respect of deferred taxes 15,399 15,425
Creation and reversal of deferred taxes for tax losses and temporary
differences from previous years 20,033 )8,555(
Income tax expenses 51,081 244,198
54. Other comprehensive income
Details of the Other comprehensive income are set out in Note V.39
- 76 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
55. Notes to items in the cash flow statements
(1) Cash received relating to other operating activities
Six months ended June 30
2021 2020
Derivatives transactions 19,943 404,824
Financial institutions 265,280 126,770
Interest income 24,203 26,314
Government subsidies 10,922 6,236
Others 43,060 66,371
363,408 630,515
(2) Cash paid relating to other operating activities
Six months ended June 30
2021 2020
Transportation, Commissions and Warehouse 507,772 389,972
Advertising and sales promotion 146,744 145,267
Professional services 117,566 134,480
Financial institutions 211,211 136,897
IT and Communication 87,785 94,321
Registration and Field trials 79,988 81,576
Derivatives transactions 168,475 90,297
Travel 35,094 51,360
Insurance 41,736 36,663
Others 267,722 297,735
Net cash flow from operating activities 1,664,093 1,458,568
(3) Cash received relating to other investing activities
Six months ended June 30
2021 2020
Investment grant 6,754 -
6,754 -
(4) Cash paid relating to other investing activities
Six months ended June 30
2021 2020
Increase in securitization facility - 31,483
Incraese in short and long term investments 85,108 15,357
85,108 46,840
- 77 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
55. Notes to items in the cash flow statements - (cont'd)
(5) Cash received from other financing activities
Six months ended June 30
2021 2020
Cash received in respect of hedging transactions on debentures 396,096 -
Deposit for issuing bills payables 16,212 4,449
412,308 4,449
(6) Cash paid relating to other financing activities
Six months ended June 30
2021 2020
Repayment of lease liability 85,595 81,915
Payment in respect of hedging transactions on debentures - 154,335
Repayment of loan from others 171,770 -
Deposit for issuing bills payable 5,986 13,036
263,351 249,286
56. Supplementary Information on Cash Flow Statement
(1) Supplementary information on Cash Flow Statement
a. Reconciliation of net profit to cash flows from operating activities:
Six months ended June 30
2021 2020
Net profit 369,233 204,649
Add: Impairment provisions for assets 29,403 25,376
Credit impairment gain (10,051) (5,589)
Depreciation of fixed assets and investment property 365,261 391,110
Depreciation of right-of-use asset 79,685 78,568
Amortization of intangible asset 502,745 673,105
Gains on disposal of fixed assets, intangible assets, and other
long-term assets, net (14,799) (7,694)
Losses (gains) from changes in fair value 664,582 (265,510)
Financial expenses 340,716 245,591
Investment income, net (34,729) (245,248)
Increase in deferred tax assets (159,673) (43,845)
Increase in deferred tax liabilities 39,560 60,881
Increase in inventories, net (748,037) (717,127)
Increase in operating receivables (1,049,194) (701,359)
Increase in operating payables 1,069,229 1,525,228
Others 47,362 16,395
Net cash flow from operating activities 1,491,293 1,234,531
- 78 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
56. Supplementary Information on Cash Flow Statement - (cont'd)
b. Net increase (decrease) in cash and cash equivalents
Six months ended June 30
2021 2020
Closing balance of cash 4,615,208 6,256,107
Less: Opening balance of cash 3,835,071 4,319,907
Increase in cash and cash equivalents 780,137 1,936,200
(2) Information on acquisition or disposal of subsidiaries and other business units
Six months ended
June 30
2021
Cash paid for business combination not under common control 697,909
Less: cash and cash equivalents of the acquirees at the date of acquisition (42,870)
Net cash paid to acquire subsidiaries 655,039
(3) Details of cash and cash equivalents
June 30 January 1
2021 2021
Cash on hand 1,598 4,590
Bank deposits available on demand without restrictions 4,613,610 3,830,481
4,615,208 3,835,071
57. Assets with Restricted Ownership or Right of Use
June 30
2021 Reason
Cash 18,232 Pledged
Other non-current assets 108,660 Guarantees
126,892
- 79 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items
(1) Foreign currencies denominated items
As at June 30, 2021
Foreign currency at
the end of the RMB at the end of
period Exchange rate the period
Cash and bank balances
BRL 350,009 1.2915 452,020
USD 46,718 6.4601 301,801
EUR 28,881 7.6784 221,762
PLN 128,520 1.6985 218,287
ILS 80,724 1.9816 159,965
ZAR 133,888 0.4503 60,286
GBP 6,548 8.9524 58,619
ARS 371,489 0.0675 25,072
Other 254,007
Total 1,751,819
Bills and Accounts receivable
BRL 1,253,654 1.2915 1,619,034
EUR 125,571 7.6784 964,183
RON 220,340 1.5595 343,613
TRY 386,911 0.7421 287,126
USD 44,018 6.4601 284,361
HUF 8,064,722 0.0218 175,986
CAD 22,167 5.2101 115,494
ILS 75,368 1.9816 149,351
RUB 1,278,240 0.0893 114,098
ZAR 193,615 0.4503 87,179
GBP 7,576 8.9524 67,825
Other 436,021
Total 4,644,271
Other receivables
EUR 46,041 7.6784 353,525
ILS 98,628 1.9816 195,444
GBP 11,406 8.9524 102,108
Other 125,983
Total 777,060
Other current assets
ILS 96,153 1.9816 190,541
BRL 85,017 1.2915 109,796
ARS 404,991 0.0675 27,333
EUR 3,174 7.6784 24,374
USD 2,963 6.4601 19,141
Other 70,452
Total 441,637
- 80 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at June 30, 2021
Foreign currency at
the end of the RMB at the end of
period Exchange rate the period
Long-term receivables
BRL 76,193 1.2915 98,400
Total 98,400
Other non-current assets
BRL 67,795 1.2915 87,554
Other 3,728
Total 91,282
Short-term loans
TRY 203,536 0.7421 151,044
UAH 391,013 0.2377 92,948
EUR 653 7.6784 5,013
Other 17,842
Total 266,847
Bills and Accounts payable
ILS 322,602 1.9816 639,279
EUR 23,718 7.6784 182,120
BRL 114,950 1.2915 148,453
USD 9,668 6.4601 62,457
Other 138,100
Total 1,170,409
Other payables
ILS 102,637 1.9816 203,390
BRL 42,153 1.2915 54,439
PLN 24,152 1.6985 41,022
ILS CPI 18,149 1.9816 35,965
OTHER 42,354
TOTAL 377,170
Contract liabilities
EUR 49,527 7.6784 380,287
CAD 20,448 5.2101 106,534
BRL 60,142 1.2915 77,670
TRY 50,891 0.7421 37,766
Other 82,850
Total 685,107
- 81 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at June 30, 2021
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 288,883 1.9816 572,461
EUR 24,429 7.6784 187,575
Other 21,313
Total 781,349
Other current liabilities
EUR 3,198 7.6784 24,555
ILS 4,169 1.9816 8,262
Other 730
Total 33,547
Long-term loan
EUR 33,659 7.6784 258,449
Total 258,449
Debentures payable
ILS CPI 4,034,911 1.9816 7,995,724
Total 7,995,724
Provision and Long-term payables
BRL 50,017 1.2915 64,595
EUR 374 7.6784 2,874
Total 67,469
Other non-current liabilities
USD 11,784 6.4601 76,126
EUR 7,599 7.6784 58,349
ILS CPI 18,840 1.9816 37,334
GBP 1,055 8.9524 9,445
Other 38,178
Total 219,432
- 82 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items - (cont'd)
(2) Major foreign operations
Registration &
Principal place of Functional
Name of the Subsidiary business Business nature currency
ADAMA France S.A.S France Distribution USD
ADAMA Brasil S/A Brazil Manufacturing; Distribution; USD
Registration
ADAMA Deutschland GmbH Germany Distribution; Registration USD
ADAMA India Private Ltd. India Manufacturing INR
Distribution; Registration
Makhteshim Agan of North United States Manufacturing; Distribution; USD
America Inc. Registration
Control Solutions Inc. United States Manufacturing; Distribution; USD
Registration
ADAMA Agan Ltd. Israel Manufacturing; Distribution; USD
Registration
ADAMA Makhteshim Ltd. Israel Manufacturing; Distribution; USD
Registration
ADAMA Australia Pty Australia Distribution AUD
Limited
ADAMA Italia SRL Italy Distribution USD
ADAMA Northern Netherlands Distribution USD
Europe B.V.
Alligare LLC United States Manufacturing; Distribution; USD
Registration
The functional currency of the subsidiaries above is the main currency that represent the principal
economic environment.
- 83 -
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
Cost of equity From acquisition date
Name of investment – Proportion Basis of till period end
the Acquisition cash of equity Acquisition acquisition date Net
Revenue
Company date consideration investment method determination profit
Adama 1.6.2021 664,000 51% Stock Obtained control 108,691 364
Huifeng purchase
(Jiangsu)
Co. Ltd.
(2) Acquisition cost and goodwill
Adama Huifeng
(Jiangsu) Co.
Acquisition costs Ltd.
Total acquisition cost in cash 664,000
Contingent consideration 13,140
Put option 826,730
Other 254,000
Less: share of the fair value of the identifiable
net assets acquired 1,723,861
Goodwill 34,009
In June 2021, the Company acquired a 51% stake in ADAMA Huifeng (Jiangsu) Co., Ltd (hereinafter –
"ADAMA Huifeng"), a wholly owned subsidiary of Jiangsu Huifeng Bio Agriculture Co., Ltd
(hereinafter – "Jiangsu Huifeng"). ADAMA Huifeng was established to incorporate Jiangsu Huifeng's
key crop protection synthesis and formulation facilities. This acquisition follows the acquisition of a 51%
stake in Adama Huifeng (Shanghai) Agricultural Technology Co. Ltd, a wholly owned subsidiary of
Jiangsu Huifeng focused on the sale and distribution of key formulated crop protection products in China,
which took place on December 31st , 2020.
ADAMA Huifeng was purchased for a total cash consideration of approximately RMB 918 million RMB
(including RMB 254 million RMB held back to secure the post-Cacquisition closing obligations of
Jiangsu Huifeng). As of June 1st, 2021 (hereinafter: “date of the business combination”), cControl has
been achieved acquired over ADAMA Huifeng as of June 1st, 2021 (hereinafter: “date of the business
combination”), and from this date forward, the Group consolidates ADAMA Huifeng's results in its
consolidated financial statements.
The initial accounting treatment for the acquisition of the operations, as presented in these financial
statements, is accounted for using "provisional amounts" (as this term is defined in ASBE 20 Business
combination). Until the date of approval of the financial statements, the Group has not yet completed the
initial treatment of Huifeng and Adama Huifeng (Shanghai) Agricultural Technology Co. Ltd business
combination, including the estimation of the fair value of the acquired assets and the goodwill. Therefore,
the fair value data is still provisional, based on the information available to the company's management at
the time of the acquisition, and may be subject to changes affecting the data as included in these financial
statements.
- 84 -
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
Adama Huifeng (Jiangsu) Co. Ltd.
Fair value at Book value at
acquisition date acquisition date
Assets:
Cash and bank balances 42,870 42,870
Bills and Accounts receivable 102,679 102,679
Prepayments 10,221 10,221
Inventories 332,473 332,473
Fixed assets 1,177,886 1,177,886
Intangible assets 131,192 131,192
Deferred tax assets 18,929 18,929
Other assets 101,229 101,229
Liabilities:
Bills and Accounts payable 179,461 179,461
Employee benefits payable 11,198 11,198
Deferred tax liabilities - -
Other Liabilities 2,959 2,959
Net assets 1,723,861 1,723,861
Less: Non-controlling interests - -
Net assets acquired 1,723,861 1,723,861
- 85 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VII. Interest in Other Entities
1. Interests in subsidiaries
Composition of the largest subsidiaries of the Group in respect of assets and operating income
Registration & Method of
Principal place of obtaining the
Name of the Subsidiary business Business nature Direct Indirect subsidiary
ADAMA France S.A.S FRA NCE Distribution 100% Established
ADAMA Brasil S/A BRAZIL Manufacturing; Distribution; 100% Purchased
Registration
ADAMA Deutschland Gmb H GERMANY Distribution; Reg istration; 100% Established
ADAMA India Private Ltd. INDIA Manufacturing; 100% Established
Distribution; Reg istration
Makhteshim Agan of North A merica UNITED STATES Manufacturing; Distribution; 100% Established
Inc. Registration
Control So lutions Inc. UNITED STATES Manufacturing; Distribution; 67% Purchased
Registration
ADAMA Agan Ltd. ISRA EL Manufacturing; Distribution; 100% Restructure
Registration
ADAMA Makhteshim Ltd. ISRA EL Manufacturing; Distribution; 100% Restructure
Registration
ADAMA Australia Pty Limited AUSTRALIA Distribution 100% Purchased
ADAM Italia SRL ITALY Distribution 100% Established
ADAMA Northern Europe B.V. NETHERLANDS Distribution 55% Purchased
Manufacturing; Distribution;
Alligare LLC UNITED STATES 100% Purchased
Registration
Adama Anpon (Jiangsu) Ltd. CHINA Manufacturing; Distribution 100% Purchased
2. Interests in joint ventures or associates
June 30 December 31
2021 2020
Joint ventures 15,847 14,081
Associates - -
15,847 14,081
3. Summarized financial information of joint ventures and associates
June 30, 2021 and six June 30, 2020 and six
months then ended months then ended
Joint ventures:
Total carrying amount 15,847 93,419
The Group's share of the following items:
Net profit 3,244 14,392
Other comprehensive income 239 (2,427)
Total comprehensive income 3,483 11,965
Associates:
Total carrying amount - 41,001
The Group's share of the following items:
Net profit - -
Other comprehensive income - 595
Total comprehensive income
- 595
- 86 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments
A. General
The Group has extensive international operations, and, therefore, it is exposed to credit risks, liquidity risks
and market risks (including currency risk, interest risk and other price risk). In order to reduce the exposure
to these risks, the Group uses financial derivatives instruments, including forward transactions and options
(hereinafter - “derivatives”).
Transactions in derivatives are undertaken with major financial institutions, and therefore, in the opinion of
Group Management the credit risk in respect thereof is low.
This note provides information on the Group’s exposure to each of the above risks, the Group’s objectives,
policies and processes regarding the measurement and management of the risk. Additional quantitative
disclosure is included throughout the consolidated financial statements.
The Board of Directors has overall responsibility for establishing and monitoring the framework of the
Group's risk management policy. The Finance Committee is responsible for establishing and monitoring the
Group's actual risk management policy. The Chief Financial Officer reports to the Finance Committee on a
regular basis regarding these risks.
The Group’s risk management policy, established to identify and analyze the risks facing the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. The policy and methods for
managing the risks are reviewed regularly, in order to reflect changes in market conditions and the Group's
activities. The Group, through training, and management standards and procedures, aims to develop a
disciplined and constructive control environment in which all the employees understand their roles and
obligations.
B. Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations, and derives mainly from trade receivables and other receivables as
well as from cash and deposits in financial institutions.
Accounts and other receivables
The Group’s revenues are derived from a large number of widely dispersed customers in many countries.
Customers include multi-national companies and manufacturing companies, as well as distributors,
agriculturists, agents and agrochemical manufacturers who purchase the products either as finished goods or
as intermediate products for their own requirements.
The Company entered into an agreement for the sale of trade receivables in a securitization transaction, for
details see note V.5.e.
In April 2021, a two-years agreement with an international insurance company was renewed. The amount of
the insurance coverage was fixed at $150 million cumulative per year. The indemnification is limited to
about 90% of the debt.
The Group’s exposure to credit risk is influenced mainly by the personal characterization of each customer,
and by the demographic characterization of the customer’s base, including the risk of insolvency of the
industry and geographic region in which the customer operates. No single customer accounted for greater
than 5% of total accounts receivable.
- 87 -
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 ongoin g
credit evaluations of existing and new customers, and every new customer is examined thoroughly regardin g
the quality of his credit, before offering him the Group’s customary shipping and payment terms. The
examination made by the Group includes an outside credit rating, if any, and in many cases, receipt of
documents from an insurance company. A credit limit is prescribed for each customer, outstanding amount
of the accounts receivable balance. These limits are examined annually. Customers that do not meet the
Group’s criteria for credit quality may do business with the Group on the basis of a prepayment or against
furnishing of appropriate collateral.
Most of the Group’s customers have been doing business with it for many years. In monitoring customer
credit risk, the customers were grouped according to a characterization of their credit, based on geographica l
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 agricultura l
lands and equipment) against execution of the sales, the value of which is examined on a current ongoin g
basis by the Company. In these countries, in a case of expected credit risk, the Company records a provision
for the amount of the debt less the value of the collaterals provided and acts to realize the collaterals.
The Group closely monitors the economic situation in Eastern Europe and South America on an ongoin g
basis. As a result of the Covid-19 pandemic, the Group also closely monitors the economic situation
worldwide. Where necessary, the Group operates to limit its exposure to customers.
The Group recognizes an impairment provision, which reflects its assessment regarding the credit risk of
account receivables, Other receivables and investments on a lifetime expected credit loss basis. See also
notes Ⅲ.10 – Financial instruments and Ⅲ.11 – Receivables.
Cash and deposits in banks
The Company holds cash and deposits in banks with a high credit rating. These banks are also required to
comply with capital adequacy or maintain a level of security based on different situations.
Guarantees
The Company’s policy is to provide financial guarantees only to investee companies.
Aging of receivables and expected credit risk
Presented below is the aging of the past due trade receivables:
June 30, 2021
Past due by less than 90 days 527,612
Past due by more than 90 days 672,583
1,200,195
- 88 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
B. Credit risk - (cont’d)
The company measure the provision for credit losses on a collective group basis, where receivables share
similar credit risk characteristics based on geographical locations. The examination for expected credit
losses is performed using model including aging analysis and historical loss experiences, and adjusted by the
observable factors reflecting current and expected future economic conditions.
When credit risk on a receivable has increased significantly since initial recognition, the group records
specific provision or general provision which is determined for groups of similar assets in countries in which
there are large number of customers with immaterial balances.
The Group has credit risk exposures for accounts receivables amounted to RMB 9,098,035 thousand relate to
category of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 536,418
thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has
credit risk exposures for other receivables amounted to RMB 16,021 thousand related to category of
"Lifetime expected credit losses (credit losses occurred)". The credit risk exposures for all remaining balance
of financial assets at amortised cost and financial assets at FVTOCI are related to "12-month expected credit
losses".
C. Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligation when
they come due. The Group's approach to managing its liquidity risk is to assure, to the extent possible, an
adequate degree of liquidity for meeting its obligations timely, under ordinary conditions and under pressure
conditions, without sustaining unwanted losses or hurting its reputation.
The cash-flow forecast is determined both at the level of the various entities as well as of the consolidated
level. The Company examines the current forecasts of its liquidity requirements in order to ascertain that
there is sufficient cash for the operating needs, including the amounts required in order to comply with the
financial liabilities, while taking strict care that at all times there will be unused credit frameworks so that
the Company will not exceed the credit frameworks granted to it and the financial covenants with which it is
required to comply with. These forecasts take into consideration matters such as the Company’s plans to use
debt for financing its activities, compliance with required financial covenants, compliance with certain
liquidity ratios and compliance with external requirements such as laws or regulation.
The surplus cash held by the Group subsidiaries, which is not required for financing the current ongoin g
operations, is invested in short-term interest-bearing investment channels.
- 89 -
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 belo w are the contractual maturities of the financial liabilities at undiscounted amounts,
including estimated interest payments:
As at June 30, 2021
Third- Fifth year Contractual Carrying
First year Second year Fourth year and above Cash flow amount
Non-derivative financial
liabilities
Short-term loans 1,228,852 - - - 1,228,852 1,209,421
Bills payables 198,428 - - - 198,428 198,428
Accounts payables 5,184,480 - - - 5,184,480 5,184,480
Other payables 1,562,623 - - - 1,562,623 1,562,623
Other current liabilities 85,700 - - - 85,700 85,700
Debentures payable 919,886 928,471 1,774,822 8,349,492 11,972,671 8,528,773
Long-term loans 1,182,370 825,806 1,533,310 1,181,959 4,723,445 4,336,518
Long-term payables 3,170 8,616 16,967 86,383 115,136 99,815
Lease Liabilities 161,457 112,354 127,245 235,865 636,921 541,275
Long-term liability in respect of
business combinations - 969 2,471 34,133 37,573 10,424
Other non-current liabilities - 40,285 252,585 1,049,525 2,251,285 1,215,492
Derivative financial liabilities
Foreign currency derivatives 798,931 - - - 798,931 798,931
CPI/shekel forward transactions 784 - - - 784 784
11,326,681 1,923,584 3,738,680 11,820,880 25,828,812 22,509,805
D. Market risks
Market risk is the risk that changes in market prices, such as foreign exchange rates, CPI, interest rates and
prices of capital instruments, will affect the Group’s revenues or the value of its holdings in its financial
instruments. The objective of market risk management is to manage and monitor the exposure to market
risks within acceptable parameters, while optimizing the return.
During the ordinary course of business, the Group purchases and sells derivatives and assumes financial
liabilities for the purpose of managing market risks.
(1) CPI and foreign currency risks
Currency risk
The Group is exposed to currency risk from its sales, purchases, expenses and loans denominated in
currencies that differ from the Group’s functional currency. The main exposure is in Euro, Brazilian real,
USD and in NIS. In addition, there are smaller exposures to various currencies such as the British pound,
Polish zloty, Australian dollar, Indian rupee, Argentine peso, Canadian dollar, South African Rand, Ukraine
Hryunia, the Turkish lira and Chinese Yuan Renminbi.
The Group uses foreign currency derivatives – forward transactions and currency options – in order to hedge
the cash flows risk, which derive from existing monetary assets and liabilities and anticipated sales and
purchases, which may be affected by exchange rate fluctuations.
- 90 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
The Group hedged a part of the estimated currency exposure to anticipate sales and purchases for the
subsequent year. Likewise, the Group hedges most of its monetary assets and liabilities denominated in a
non- U.S. dollar currency. The Group uses foreign currency derivatives to hedge its currency risk, mostly
with maturity dates of less than one year from the reporting date.
Solutions debentures are linked to the NIS-CPI and, therefore, an increase in the NIS-CPI, as well as
changes in the NIS exchange rate, could cause significant exposure with respect to the subsidiary functiona l
currency – the U.S. dollar. As of the approval date of the financial statements, the subsidiary had hedged
most of its exposure deriving from issuance of the debentures, in options and forward contracts.
(A) The Group’s exposure to NIS-CPI and foreign currency risk, except in respect of derivative financial
instruments is as follows:
June 30, 2021
Total assets Total liabilities
In US Dollar 1,220,285 558,489
In Euro 1,010,024 1,292,291
In Brazilian real 2,258,022 251,220
CPI-linked NIS 1,195 5,822,212
In New Israeli Shekel 895,221 501,850
Denominated in or linked to other foreign currency 4,490,920 980,550
12,528,225 12,021,504
(B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows:
June 30, 2021
Currency/ Currency/ Average USD RMB
linkage linkage expiration thousands thousands
receivable payable date Par value Par value Fair value
Forward foreign currency USD EUR 2211112221 229,814 1,484,622 )185,762(
Contracts and call options USD PLN 2112512221 17,950 115,960 )2,632(
USD BRL 1012912221 440,092 2,843,037 )304,481(
USD GBP 2112012221 39,154 252,936 197
USD ZAR 1012512221 30,422 196,528 )7,830(
ILS USD 1912012221 1,595,647 10,308,039 )21,344(
USD OTHER 1,495,697 9,662,350 40,621
CPI forward contracts CPI ILS 2012112222 774,540 5,003,605 58,256
- 91 -
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.
June 30, 2021
Decrease of 5% Increase of 5%
Equity Profit (loss) Equity Profit (loss)
New Israeli shekel 96,283 69,176 (41,178) (16,956)
British pound (1,059) 1,729 1,112 (1,464)
Euro (29,229) 16,828 32,953 (15,950)
Brazilian real (54,973) 3,880 39,582 (13,504)
Polish zloty (1,557) 199 1,530 (60)
South African Rand (3,785) (553) 2,786 (141)
Chinese Yuan Renminbi 19,859 (814) (10,975) 2,426
CPI-linked NIS 316,824 316,824 (316,824) (316,824)
(2) Interest rate risks
The Group has exposure to changes in the variable interest rate. The Group has different assets and
liabilities in different countries which bear interest according to the economic environment in each
country. Most of the loans, other than the debentures, bear Dollar and Euro Libor interest. As a result,
most of the variable interest exposure of those loans is to the Libor interest. Due to market conditions,
the variable interest rates on cash are relatively low.
The Company prepares a quarterly summary of exposure to a change in the Libor interest rate. As at the
approval date of the financial statements, the Company had not hedged this exposure.
- 92 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(2) Interest rate risks - (cont’d)
(A) Type of interest
The interest rate profile of the Group’s interest-bearing financial instruments was as follows:
June 30, 2021
Fixed-rate instruments – unlinked to the CPI
Financial assets
Cash at banks 591
Other non-current assets 45,025
Financial liabilities
Long-term loans 2,851,814
Long-term payables 21,990
(2,626,982)
Fixed-rate instruments – linked to the CPI
Financial liabilities
Debentures payable (1) 8,528,773
Variable-rate instruments
Financial assets
Cash at banks 1,033,900
Financial assets at fair value through profit or loss 2,494
Other current assets 52,280
Other non-current assets 24,006
Financial liabilities
Short-term loans and credit from banks 1,209,421
Long-term loans (1) 1,684,904
Long-term payables 72,579
(1,826,237)
(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
exchange rates, remained fixed.
Profit or loss Equity
Increase in Decrease in Increase in Decrease in
interest interest interest interest
As at June 30, 2021 1,915 (1,931) 1,915 (1,931)
93
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IX. Fair Value
The fair value of forward contracts on foreign currency is based on their listed market price, if available. In
the absence of market prices, the fair value is estimated based on the discounted difference between the stated
forward price in the contract and the current forward price for the residual period until redemption, using an
appropriate interest rate.
The fair value of foreign currency options is based on bank quotes. The reasonableness of the quotes is
evaluated through discounting future cash flow estimates, based on the conditions and duration to maturity of
each contract, using the market interest rates of a similar instrument at the measurement date and in
accordance with the Black & Scholes model.
1. Financial instruments measured at fair value for disclosure purposes only
The carrying amount of certain financial assets and liabilities, including cash at bank and on hand, bills and
accounts receivable, receivables financing, other receivables, derivatives financial assets, short-term loans,
bills and accounts payable and other payable, are the same or proximate to their fair value.
The following table details the carrying amount in the books and the fair value of groups of non -current
financial instruments presented in the financial statements not in accordance with their fair values:
June 30, 2021
Carrying amount Fair value
Financial assets
Other non-current assets (a – Level 2) 66,642 63,341
Financial liabilities
Long-term loans and others (b – Level 2) 4,982,221 5,055,222
Debentures (c – Level 1) 8,528,773 11,395,230
a) The fair value of the other non-current assets is based on a discounted future cash flows, using the acceptable
interest rate for similar investment having similar characteristics (Level 2).
b) The fair value of the long-term loans and others is based on a discounted future cash flows, using the acceptable
interest rate for similar loans having similar characteristics (Level 2).
c) The fair value of the debentures is based on stock exchange quotes (Level 1).
2. The interest rates used in determining fair value
The interest rates used to discount the estimate of anticipated cash flows are:
June 30, 2021
%
U.S. dollar interest (1.16) – 1.82
Chinese Yuan Renminbi 2.06 – 3.07
Euro (0.65) – (0.07)
94
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
IX. Fair Value - (cont’d)
3. Fair value hierarchy of financial instruments measured at fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The table below presents an analysis of
financial instruments measured at fair value. The various levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active market for identical instrument.
Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.
Level 3: inputs that are not based on observable market data (unobservable inputs).
The Company’s forward contracts and options are carried at fair value and are evaluated by observable inputs
and therefore are concurrent with the definition of level 2.
June 30
2021
Forward contracts and options used for hedging the cash flow (Level 2) (106,779)
Forward contracts and options used for economic hedging (Level 2) (316,196)
Other equity investment (Level 2) 151,537
Receivables financing (Level 2) 99,066
Other non-current assets (Level 2) 38,186
Other (Level 2) 2,494
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.
- 95 -
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 73.33% 73.33%
The Company’s ultimate controlling shareholder is 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
- 96 -
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 Engineering co.,Ltd . Common control
Bluestar (Beijing) Chemical Machinery Co.,Ltd Common control
Changsha Huaxing Construction Supervision Co., Ltd. Common control
ChemChina Asset Management co.,Ltd .(Headquarter) Common control
ChemChina Information Center co.,Ltd . Common control
China Bluestar Chengrand Research Institute Chemical Industry Common control
Elkem Silicones Brasil Ltda Common control
Hangzhou (Torch) Xidoumen Membrane Industry co.,Ltd Common control
Jiangsu Ruixiang Chemical co., Ltd . Common control
Jiangsu Youjia Plant Protection Co., Ltd. Common control
Jiangsu Youshi Chemical co., Ltd . Common control
Jiangsu Huaihe Chemical co.,Ltd .(H&H) Common control
Jingzhou Sanonda Holdings Co.,Ltd. Common control
Jiangsu Yangnong Chemical Co.,Ltd. Common control
OOO Syngenta Common control
PT Syngenta Indonesia Common control
PT Syngenta Seed Indonesia Common control
Shandong Dacheng Biochemical 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 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 International Crop Care (Overseas) Pte. Ltd. Common control
Sinochem Modern Agriculture Anhui Co. Ltd Common control
Sinochem Modern Agriculture Sichuan Co. Ltd Common control
- 97 -
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
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 Modern Agriculture(Shanxi) Co. Ltd Common control
Syngenta AG Common control
Syngenta Agro AG Common control
Syngenta Agro GmbH Common control
Syngenta Agro S.A. Common control
Syngenta Agro SRL Common control
Syngenta Agro,S.A.deC.V. Common control
Syngenta AustraliaPty Limited Common control
Syngenta Canada Inc. Common control
Syngenta Coml Agr Ltda Common control
Syngenta Crop Protection AG Common control
Syngenta Crop Protection B.V. Common control
Syngenta Crop Protection Limited Common control
Syngenta Crop Protection S.A. Common control
Syngenta Crop Protection, LLC Common control
Syngenta Czech s.r.o. Common control
Syngenta France S.A.S. Common control
Syngenta Hellas AEBE Common control
Syngenta Hungary Kft. Common control
Syngenta India Limited Common control
Syngenta Italia S.p.A Common control
Syngenta Korea Ltd. Common control
Syngenta Limited Liability Company Common control
Syngenta Polska Sp.z.o.o. Common control
Syngenta Protecao Cultivos Ltda Common control
Syngenta S.A.(Colombia) Common control
Syngenta Slovakia s.r.o Common control
Syngenta South Africa (Pty) Ltd. Common control
Syngenta (China) Investment Co.Ltd Common control
Syngenta Espana S.A Common control
Syngenta Tarim Sanayive Ticaret A.S. Common control
Zhonglan International Chemical co.,Ltd Common control
Zhonglan Lianhai Design Institute co.,Ltd. Common control
Zhonglan Lianhai (Shanghai) Chemical Engineering Technology Co.,Ltd. Common control
Zhonglan Chenguang Chemical Co., Ltd Common control
- 98 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
5. Transactions and balances with related parties
(1) Transactions with related parties
Six months ended June 30
Type of purchase Related Party Relationship 2021 2020
Summary of purchase of goods/services:
Purchase of goods/services received Common control under
ChemChina 875,206 618,225
Joint venture - 1,891
Purchase of fixed assets and other assets Common control under 42,917 163,931
ChemChina
Summary of Sales of goods:
Sale of goods/ Service rendered Common control under 550,260
ChemChina 408,470
Joint venture 45,515 96,378
(2) Guarantee
The Group as the guarantee receiver
Amount of Inception date Maturity date Guaranty
Guarantee provider guaranteed loan of guaranty of guaranty completed (Y / N)
Parent company 300,000 21/04/2021 20/04/2028 N
73,200 01/06/2021 31/05/2028 N
(3) Remuneration of key management personnel and directors
Periods ended June 30
2021 2020
Remuneration of key management personnel and directors 34,203 22,043
(4) Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
2021 2020
Expected Expected
Book credit Book credit
Items Related Party Relationship Balance losses Balance losses
Trade receivables Common control under 144,295 - 155,252 -
ChemChina
Joint venture 29,484 - 21,630 -
Associates - - 327 -
Other receivables Common control under 501 - 681 -
ChemChina
Prepayments Common control under 17,879 - 17,065 -
ChemChina
Associates - - 350 -
- 99 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties - (cont'd)
(4) Receivables from and payables to related parties (including loans) - (cont'd)
Payable Items
June 30 December 31
Items Related Party Relationship 2021 2020
Trade payables Common control under 490,713 357,148
ChemChina
Associates - 15,907
Other payables Common control under 36,520 19,354
ChemChina
Contract liability Common control under - 2,355
ChemChina
Associates - 340
Other non-current Common control under
liabilities due within ChemChina - 28,000
one year
Other non-current Common control under - 143,770
liabilities* ChemChina
* The liability is a loan from a related party, the interest expense for the six months ended June 30, 2021
is 2,865 thousand RMB (six months ended June 30, 2020: 1,048 thousand RMB).
(5) Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 397,910 thousand RMB
(21112.20: 370,141 thousand RMB) Interest income of bank deposit for the current period was 810
thousand RMB (amount for six months ended June 30, 2020 is 670 thousand RMB).
The closing balance of a loan received from ChemChina Finance corporation was 100,000 thousand RMB
(21112122: 2 thousand RMB). Interest expenses in the current period was 1,471 thousand RMB (amount for
six months ended June 30, 2021 is 370 thousand RMB).
- 100 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies
1. Significant commitments
June 30 December 31
2021 2020
Investment in Fixed assets 590,714 571,367
2. Commitments and Contingent Liabilities
On December 10, 2018 the 9th meeting of the 8th session of the Board of Directors of the Company approved
the extension of the engagement in annual liability insurance policies for directors, supervisors and senior
officers of the Company (“D&O Liability Insurance) as originally approved by the 22nd meeting of the 7th
session of Board of Directors and the 4th Interim Shareholders Meeting 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
applicable environmental laws and attempts to prevent or minimize the environmental risks that could occur
as a result of its activities. To the best of the Company’s knowledge, at the balance sheet date, 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.
Claims against subsidiaries
In the ordinary course of business, legal claims are filed against subsidiaries, including claims for patent
infringement. 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 provisions where necessary to cover the exposure resulting from the claims.
- 101 -
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
immaterial amounts, for causes of action involving mainly employee-employer relations and various civil
claims, for which the Company did not record a provision in the financial statements. Furthermore, claims
were filed 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.
In June 2021, a lawsuit was filed against a subsidiary of the Company, alleging a patent owned by a large
competitor of the Company, has been infringed by such subsidiary. Among the claims, the plaintiff seeks a
preliminary and permanent injunction to prevent the subsidiary from manufacturing, using or commercializin g
any product that infringed the plaintiff’s patent, and seeks actual damages and profits loss. The preliminary
injunction motion as well as an ex-parte appeal, were rejected by the court at this time. Prior to such claims,
the subsidiary filed lawsuits against the said plaintiff and the local Patent and Trademark Office seeking to
declare the said patent is invalid and the subsidiary does not infringe it. All these lawsuits are pending as of
the Company’s financial results. At this preliminary stage, the claim filed by the plaintiff is not expected to
have a material effect on the Company.
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.
During the 2020 Annual General Meeting of the Company, held on May 21 2021, the cancellation of the
repurchased shares and subsequent the decrease of the Company's registered capital was approved and on June
17, 2021, the Company completed the cancellation at the Shenzhen Branch of China Securities Depository
and Clearing Co., Ltd,.
- 102 -
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
Meeting 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 compensation 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 60,047,067
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 (785,438)
Total number of Phantom warrants at the end of the period 59,261,629
The exercise prices and the remainder of the contractual period for Phantom RMB 9.91 – 10.85
warrants outstanding at the end of period 4.5 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
payments (in thousands RMB) 111,396
- 103 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
Expenses arising from cash-settled share-based payments in current period
(in thousands RMB) 32,418
XIII. Share-based Payments - (cont’d)
2. In September 2019, the remuneration committee and Solutions Board of Directors (and the General Meetin g
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
determined under the plan.
The fair value of the total granted alternative Warrants at the allocated date is equal to the fair value of the
total warrants canceled from the 2017 plan.
The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at
the cancellation and allocation date, amounted to a total of approximately 69 million RMB. The liability in
the financial statements at the end of the reporting period was recorded at the fair value estimated using the
binomial option pricing model and by the vesting period from the original grant date of the 2017 plan to the
end of the service period determined by the alternative plan, taking into account the extent of the service that
the employees provided until that date and the stock price at the reporting date.
Statement of share based payments in the period
Phantom warrants
Changes in the number of 2017 Plan:
Total number of Phantom warrants at the beginning of the period 20,739,142
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 (398,150)
Total number of Phantom warrants at the end of the period 20,340,992
The range of the exercise prices and the remainder of the contractual period RMB 9.40 – 9.43
for Phantom warrants outstanding at the end of period 5.25 years
- 104 -
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
payments related to the alternative plan (in thousands RMB) 38,541
Expenses (income) arising from cash-settled share-based payments in
current period related to the alternative plan (in thousands RMB) 11,713
XIV. Other significant items
1. Segment reporting
The Company presents its segment reporting based on a format that is based on a breakdown by business
segments:
Crop Protection (Agro)
This is the main area of the Company’s operations and includes the manufacture and marketing of
conventional agrochemical products.
Intermediates and ingredients
This field of activity includes a large number of sub-fields, including: Lycopan (an oxidization retardant),
aromatic products, and other chemicals. It combines all the Company’s activities not included in the Crop
Protection products segment.
Segment results reported to the chief operating decision maker include items directly attributable to a
segment as well as items that can be allocated on a reasonable basis. Unallocated items comprise mainly
financing expenses, net, gains from changes in fair value, investment income and tax expenses.
All assets and liabilities that can be attributed to a specific segment were allocated accordingly. Attributed
assets include: accounts and bills receivables, receivables financing, inventory, fixed assets, right-of-use
assets, construction in progress, intangible assets, goodwill, non-current trade receivables and long-term
equity investments. Attributed liabilities include account payables, bill payablesand lease liabilities. All
other assets and liabilities which are not attributable to a specific segment are presented as unallocated assets
and liabilities.
- 105 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Information regarding the results and assets and liabilities of each reportable segment is included below:
Crop Protection Intermediates and ingredients Elimination among segments Total
Six months ended Six months ended Six months ended Six months ended
June 30 June 30 June 30 June 30
2021 2020 2021 2020 2021 2020 2021 2020
Operating income from external
customers 13,653,666 12,834,364 1,410,114 1,286,676 - - 15,063,780 14,121,042
Inter-segment operating income - - 977 665 (977) (665) - -
Interest in the profit or loss of
associates and joint ventures - 11,118 3,243 3,274 - - 3,243 14,392
Segment's results 840,793 927,549 168,380 60,843 - - 1,009,173 988,392
Financial expenses, net 448,790 842,792
Gain (loss) from changes in fair
value (664,582) 265,510
Investment income 524,513 37,737
Profit before tax 420,314 448,847
Income tax expense (51,081) (244,198)
Net profit 369,233 204,649
Crop Protection Intermediates and ingredients Unallocated assets and liabilities Total
June 30 December 31 June 30 December 31 June 30 December 31 June 30 December 31
2021 2020 2021 2020 2021 2020 2021 2020
Total assets 39,158,700 36,454,726 2,144,227 2,135,310 8,147,079 8,210,998 49,450,006 46,801,034
Total liabilities 5,537,583 5,037,016 239,856 268,972 22,240,215 20,061,131 28,017,654 25,367,119
- 106 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Geographic information
The following tables sets out information about the geographical segments of the Group’s operating income
based on the location of customers (sales target) and the Group's non-current assets (including fixed assets,
right-of-use assets, construction in progress, investment properties intangible assets and goodwill). In the
case of investment property, fixed assets, right of used assets and construction in progress, the geographical
location of the assets is based on its physical location. In case of intangible assets and goodwill, the
geographical location of the company which owns the assets.
Operating income from external
customers
Six months ended June 30
2021 2020
Europe 3,915,671 4,275,020
North America 2,880,327 2,622,636
Latin America 2,895,965 2,669,490
Asia Pacific 3,124,576 2,456,818
Africa, Middle East and India 2,247,241 2,097,076
15,063,780 14,121,040
Specified non-current assets
June 30 December 31
2021 2020
Europe 992,265 1,229,245
Latin America 2,165,484 2,122,291
North America 1,148,709 1,189,512
Asia Pacific 5,117,155 3,550,785
Africa, Middle East and India 10,523,975 10,489,849
19,947,588 18,371,985
The dependency on major customers
No single customer's proportion of the total amount of sales is over 10%.
- 107 -
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 367,036 204,649
Amount for the Amount for the
Shares current period prior period
Number of ordinary shares outstanding at the beginning of the
year 2,329,811,766 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 - -
Weighted average number of ordinary shares outstanding at the
end of the year 2,329,811,766 2,446,553,582
Amount for Amount for
the current the prior
period period
Calculated based on net profit attributable to ordinary shareholders
Basic earnings per share 0.16 0.08
Diluted earnings per share N/A N/A
Calculated based on net profit from continuing operations
attributable to ordinary shareholders:
Basic earnings per share 0.16 0.08
Diluted earnings per share N/A N/A
Calculated based on net profit from discontinued operations
attributable to ordinary shareholders:
Basic earnings per share N/A N/A
Diluted earnings per share N/A N/A
- 108 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements
1. Cash at bank and on hand
June 30 December 31
2021 2020
Deposits in banks 436,804 1,022,758
Other cash and bank 6,465 12,054
443,269 1,034,812
As at June 30, 2021, restricted cash and bank balances was 6,465 thousand RMB (as at December 21, 2020:
12,054 thousand RMB).
2. Accounts receivable
a. By category
June 30, 2021
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 13,879 10 13,879 100 -
Account receivables assessed
collectively for impairment 121,324 90 23 - 121,301
135,203 100 13,902 10 121,301
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
b. Aging analysis
June 30, 2021
Within 1 year (inclusive) 121,310
Over 1 year but within 2 years 15
Over 2 years but within 3 years 1
Over 3 years but within 4 years 1
Over 4 years but within 5 years 1,699
Over 5 years 12,177
135,203
- 109 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
2. Accounts receivable - (cont'd)
c. Addition, written-back and written-off of provision for expected credit losses during the period
Six months ended June 30, 2021
Balance as of January 1 13,894
Addition during the year, net 23
Write back during the year (15)
Write-off during the year -
Exchange rate effect -
Balance as of June 30 13,902
d. Five largest accounts receivable at June 30, 2021:
Proportion of Allowance of
Accounts expected
Name Closing balance receivable (%) credit losses
Party 1 (1) 56,971 42 -
Party 2 (1) 25,048 18 -
Party 3 7,764 6 2
Party 4 6,868 5 -
Party 5 5,098 4 1
101,749 75 3
(1) The amounts are intergroup balances with Solutions' subsidiaries.
3. Receivable financing
June 30 December 31
2021 2020
Bank acceptance draft 22,221 25,282
22,221 25,282
As at June 30, 2021, bank acceptance endorsed but not yet due amounts to 153,514 thousand RMB.
- 110 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables
June 30 December 31
2021 2020
Other receivables 26,995 27,138
26,995 27,138
(1) Other receivables
a. Other receivables by categories
June 30 December 31
2021 2020
Other 32,561 32,819
Provision for expected credit losses (5,566) (5,681)
26,995 27,138
b. Other receivables by aging
June 30, 2021
Within 1 year (inclusive) 720
Over 1 year but within 2 years 13,283
Over 2 years but within 3 years 13,329
Over 3 years but within 4 years 265
Over 4 years but within 5 years -
Over 5 years 4,964
32,561
- 111 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
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 June 30, 2021
Balance as of January 1, 2021 5,681
Addition during the period -
Written back during the period (115)
Write-off during the period -
Balance as of June 30, 2021 5,566
d. Five largest other receivables at June 30 2021:
Proportion of other
Name Closing balance receivables (%) Credit loss provision
Party 1 13,322 41 -
Party 2 * 11,611 36 -
Party 3 3,125 9 3,125
Party 4 1,753 5 -
Party 5 548 2 548
30,359 93 3,673
* The amount are intergroup balances with Anpon.
- 112 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
5. Long-term equity investments
June 30, 2021 December 31, 2020
Impairment Impairment
Amount balance loss Book value Amount balance loss Book value
Invest in
subsidiaries 17,511,352 - 17,511,352 16,663,212 - 16,663,212
17,511,352 - 17,511,352 16,663,212 - 16,663,212
Investments in subsidiaries
Current Balance
provision provision
Opening Closing Impairment Impairment
Invested unit balance Increase Decrease balance loss loss
ADAMA Agricultural Solutions Ltd. 15,890,213 - - 15,890,213 - -
Adama Anpon (Jiangsu) Ltd. 450,449 - - 450,449 - -
ADAMA Hiufeng (Jiangsu) Co. Ltd. - 848,140 - 848,140 - -
Hubei Sanonda Foreign Trade Co. -
Ltd. 11,993 - 11,993 - -
Adama Huifeng (shanghai)
Agricultural Technology Co., Ltd 310,557 - - 310,557 - -
16,663,212 848,140 - 17,511,352 - -
6. Operating Income and operating costs
Six months ended June 30, 2021 Six months ended June 30, 2020
Operating Operating
Revenue costs Revenue costs
Main operations ,3,1131 76414,4 653,055 526,904
Other operations 1,18,, ,,111, 20,591 10,410
6,41,34 7811394 673,646 537,314
- 113 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
7. Notes to items in the cash flow statements
(1) Other cash received relevant to operating activities
Six months ended Six months ended
June 30, 2021 June 30, 2020
Interest income 9,901 8,507
Government subsidies 9,908 4,992
Other 1,258 1,564
21,222 15,063
(2) Other cash paid relevant to operating activities
Six months ended Six months ended
June 30, 2021 June 30, 2020
Professional services 45,220 56,487
Transportation and Commissions 11,122 13,067
Other 5,182 21,253
80,211 90,807
(3) Other cash received relevant to financing activities
Six months ended Six months ended
June 30, 2021 June 30, 2020
Deposit for issuing bills payables 5,552 4,449
(4) Other cash paid relevant to financing activities:
Six months ended Six months ended
June 30, 2021 June 30, 2020
Other 291 222
291 222
- 114 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
8. Supplementary information to cash flow statement
(1) Reconciliation of net profit to net cash flows generated from operating activities:
Six months ended June 30
2021 2020
Net profit )25,225( (42,764)
Add: Assets impairment loss 1,285 2,864
Credit impairment loss )120( 674
Depreciation of fixed assets 52,221 76,057
Depreciation of-right-of use assets 25 233
Amortization of intangible assets 5,299 2,222
Loss (gain) on disposal of fixed assets, intangible assets and
other long-term assets )15,229( (101)
Financial expenses ,91798 3,518
Decrease (increase) in deferred income tax assets )118( 27,873
Decrease (increase) in inventory 88171, 11,596
Increase in accounts receivable from operating activities 220,002 (102,463)
Increase in payables from operating activities )99,552( (41,958)
Net cash flows generated from operating activities 245,218 (62,249)
(2) Net increase in cash and cash equivalents
Six months ended June 30
2021 2020
Closing balance of cash 79618,7 1,423,296
Less: Opening balance of cash ,1,1114,8 1,395,994
Net increase in cash and cash equivalents ),8,13,7( 27,302
- 115 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Related parties and related parties transactions
(1) Information on parent Company
Registered
capital
Company Registered (Thousand Shareholding Percentage
name place Business nature RMB) percentage of voting rights
Production and sales
of agrochemicals,
Syngenta Shanghai, fertilizers and GM
Group China seeds 11,144,545 73.33% 73.33%
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
Six months ended June 30
2021 2020
Summary of Purchase of goods/services Related Party Relationship
received:
Purchase of goods/services received Common control
under ChemChina 40 2,063
Subsidiary 58,038 45,630
Purchase of fixed assets and other assets Common control
under ChemChina 39,580 155,616
Subsidiary - 136
Summary of Sales of goods:
Sale of goods Associated enterprises
under ChemChina 1,082 -
Subsidiary 328,762 450,283
Sale of raw materials Subsidiary 3,396 -
- 116 -
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 30,000 21/07/2020 21/01/2021 Y
18,000 19/08/2020 19/02/2021 Y
30,000 01/09/2020 17/08/2021 Y
50,000 20/07/2020 14/07/2021 N
30,000 19/05/2020 18/05/2021 Y
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 Y
20,438 30/10/2020 30/04/2021 Y
14,004 17/12/2020 17/06/2021 Y
40,500 15/01/2021 14/01/2022 N
59,500 27/04/2021 26/04/2022 N
40,000 01/02/2021 03/01/2022 N
30,000 26/02/2021 24/02/2022 N
30,000 25/06/2021 24/06/2022 N
60,000 21/05/2021 18/05/2022 N
40,000 18/03/2021 17/03/2022 N
30,000 20/01/2021 20/01/2022 N
70,000 27/01/2021 27/01/2022 N
14,534 29/01/2021 29/07/2021 N
The Company as the guarantee receiver
Amount of Inception date Maturity date Guaranty
Guarantee provider guaranteed loan of guaranty of guaranty completed (Y / N)
Parent company 300,000 21/04/2021 20/04/2028 N
73,200 01/06/2021 31/05/2028 N
- 117 -
ADAMA Ltd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
c. Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
2021 2020
Expected Expected
Related Party Book credit Book credit
Items Relationship Balance losses Balance losses
Trade receivables Subsidiary 85,769 344,436 -
Other non-current
assets Subsidiary 212,716 212,771 -
Other receivables Subsidiary 11,611 11,744 -
Payable Items
June 30 December 31
Items Related Party Relationship 2021 2020
Trade payables Common control under ChemChina 50,409 127,082
Other payables Subsidiary 219,931 143,840
Common control under ChemChina 108 108
Associated enterprises under
Contract liability ChemChina 340
Other non-current
liabilities due within one
year * Common control under ChemChina - 28,000
Other non-current
liabilities* Common control under ChemChina - 143,770
* loans from related party, the interest expense for the 6 months ended June 30, 2021 was 2,865
thousand RMB (1,048 thoussand RMB in 2020).
d. Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 200,467 thousand
RMB (21112122: 102,210 thousand RMB). Interest income of bank deposit for the current period
was 598 thousand RMB (amount for six months ended June, 2020 is 219 thousand RMB).
The closing balance of a loan received from ChemChina Finance corporation was 0 thousand RMB
(21112122: 2 thousand RMB). Interest expense in the current period was 0 thousand RMB (amount
for six months ended June 30, 2020 is 370 thousand RMB).
- 118 -
ADAMA Ltd. Semi-Annual Report 2019
Supplementary information
(Expressed in RMB '000)
1. Extraordinary Gain and Loss
Six months ended
June 30, 2021
Disposal of non-current assets 14,864
Government grants recognized through profit or loss 20,630
Recovery or reversal of expected credit losses which is assessed individually during
the years 12,474
Other non-operating income or expenses other than the above 6,792
Other profit or loss that meets the definition of non-recurring profit or loss (44)
Tax effect (9,803)
44,913
Note 1: Extraordinary gain and loss items listed above are presented in the amount before taxation
2. Return on net assets and earnings per share (“EPS”)
The information of Return on net assets and EPS is in accordance with the Preparation Rules for
Information Disclosure by Companies Offering Securities to the Public No. 9 – Calculation and
Disclosure of Return on net assets and Earnings per share (2010 Amendment) issued by China
Securities Regulatory Commission.
Weighted average
rate of return on net Basic EPS Diluted EPS
Profit during the repo rting period assets (RMB/share) (RMB/share)
Net profit attributable to ordinary
shareholders of the Company 1.71 0.16 N/A
Net profit after deduction of extraordinary
gains/losses attributable to ordinary
shareholders of the Company 1.50 0.14 N/A
- 119 -
