ADAMA Ltd. Annual Report 2021 c ADAMA LTD. ANNUAL REPORT 2021 ADAMA Ltd. is a global leader in crop protection, providing solutions to farmers across the world to combat weeds, insects and disease. ADAMA has one of the widest and most diverse portfolios of active ingredients in the world, state-of-the art R&D, manufacturing and formulation facilities, together with a culture that empowers our people in markets around the world to listen to farmers and ideate from the field. This uniquely positions ADAMA to offer a vast array of distinctive mixtures, formulations and high-quality differentiated products, delivering solutions that meet local farmer and customer needs in over 100 countries globally. For further important additional information and details, please refer to the Annex. March 2022 1 ADAMA Ltd. Annual Report 2021 Section I - Important Notice, Table of Contents and Definitions The Company’s Board of Directors, Board of Supervisors, directors, supervisors and senior managers confirm that the content of the Report is true, accurate and complete and contains no false statements, misleading presentations or material omissions, and assume joint and several legal liability arising therefrom. Ignacio Dominguez, the person leading the Company (President and Chief Executive Officer) as well as its legal representative and the person leading the accounting function (acting Chief Financial Officer), hereby assert and confirm the truthfulness, accuracy and completeness of the Financial Report. All of the Company’s directors attended the board meeting for the review of this Report. The forward looking information described in the Report, such as future plans, development strategy etc., does not constitute, in any manner whatsoever, a substantial commitment of the Company to investors. Investors and other relevant people are cautioned to be sufficiently mindful of investment risks as well as the difference between plans, forecasts and commitments. The Company has described its future development strategies, work plan for 2022 and possible risks in “VIII. Outlook of the Company’s future development” in Section III. The major risks of the Company include, among others, exchange rate fluctuations; exposure to interest rate, Israel CPI and NIS exchange rate fluctuations; fluctuations in raw material inputs and prices, and in sales. Investors and other relevant people are cautioned to be sufficiently mindful of investment risks. For the complete “Risk factors and countermeasures” of the Company, please see the relevant section below. The pre-plan of the dividend distribution approved by the meeting of the Board of Directors on March 29, 2022 refers to the total outstanding 2,329,811,766 shares of the Company on February 28, 2022 as the basis for the distribution as cash dividend of RMB 0.08 (before tax) per 10 shares, to all the shareholders of the Company. No shares will be distributed as share dividend, and no reserve will be transferred to equity capital. This Report and its abstract have been prepared in both Chinese and English. Should there be any discrepancies between the two versions, the Chinese version shall prevail. 2 ADAMA Ltd. Annual Report 2021 Table of Contents Section I - Important Notice, Table of Contents and Definitions.................................... 2 Section II - Corporate Profile and Financial Results ....................................................... 6 Section III - Performance Discussion and Analysis ...................................................... 12 Section IV - Corporate Governance................................................................................ 64 Section V - Environment and Social Responsibilities .................................................. 89 Section VI - Significant Events ....................................................................................... 96 Section VII - Change in Shares & Shareholders .......................................................... 136 Section VIII - Preferred stock ........................................................................................ 149 Section IX - Corporate Bonds ....................................................................................... 150 Section X - Financial Report ......................................................................................... 151 3 ADAMA Ltd. Annual Report 2021 Contents of Documents Available for Reference (I) Duly signed Financial Statements by the Legal Representative and Accounting Principal as well as Head of the Accounting Organ. (II) Duly signed Auditor’s Report and seals the certified public accountants. (II) Originals of all Company’s documents previously disclosed in media designated by the CSRC as well as the originals of all the public notices, were deposited in the Company’s office. 4 ADAMA Ltd. Annual Report 2021 Definitions In this Report, the following terms have the meaning appearing alongside them, unless otherwise specified: General Terms Definition Company, the Company ADAMA Ltd. Adama Agricultural Solutions Ltd., a wholly-owned subsidiary of the Company, Adama Solutions incorporated in Israel according to its laws Anpon, ADAMA Anpon ADAMA Anpon (Jiangsu) Ltd., a wholly-owned subsidiary of the Company Board of Directors/Board The Board of Directors of the Company Board of Supervisors The Board of Supervisors of the Company Articles of Association / AOA The Articles of Association of the Company Group, the Group, ADAMA The Company, including all its subsidiaries, unless expressly stated otherwise ChemChina China National Chemical Co., Ltd. ChemChina-Syngenta The acquisition of Syngenta AG by ChemChina in 2017 Transaction CNAC China National Agrochemical Co., Ltd. CSRC China Securities Regulatory Commission SZSE Shenzhen Stock Exchange SASAC State Assets Supervision and Administration Commission of China Syngenta Group Co., Ltd., the controlling shareholder of the Company as of June Syngenta Group 15, 2020, a wholly-owned subsidiary of CNAC Sinochem Holdings Sinochem Holdings Corporation Ltd. Sinochem Holdings including all its subsidiaries unless otherwise indicated or the Sinochem Group context otherwise requires Report This 2021 Annual Report Financial Report The Financial Reports for the year 2021, as contained in this Report Reporting Period, this Period, Year 2021 Current Year Company Law Company Law of the People’s Republic of China Securities Law Securities Law of the People’s Republic of China Listing Rules Listing Rules of the SZSE 5 ADAMA Ltd. Annual Report 2021 Section II - Corporate Profile and Financial Results I. Corporate information Stock name ADAMA A, ADAMA B Stock code 000553, 200553 Stock exchange Shenzhen Stock Exchange Company name in Chinese 安道麦股份有限公司 Abbr. 安道麦 Company name in English (if any) ADAMA Ltd. Abbr. (if any) ADAMA Legal representative Ignacio Dominguez Registered address No. 93, East Beijing Road, Jingzhou, Hubei Zip code 434001 Office address No. 93, East Beijing Road, Jingzhou, Hubei Zip code 434001 Company website www.adama.com Email irchina@adama.com II. Contact information Securities Affairs Representative Board Secretary Investor Relations Manager Name Guo Zhi Wang Zhujun Address 6/F, No.7 Office Building, No.10 Courtyard, Chaoyang Park South Road, Chaoyang District, Beijing Tel. 010-56718110 010-56718110 Fax 010-59246173 010-59246173 E-mail irchina@adama.com irchina@adama.com 6 ADAMA Ltd. Annual Report 2021 III. Information disclosure China Securities Journal Website of the Stock Exchange on which the Company Discloses Securities Times its Annual Report Ta Kung Pao Media and Website on which the Company Discloses its Annual http://www.cninfo.com.cn Report Location on which this Report is kept Securities office of the Company IV. Company registration and alteration Credibility code 91420000706962287Q Changes in main business activities of None in the reporting period. the Company after going public (if any) The Company was reorganized as Hubei Sanonda Co., Ltd. in 1992 after being approved by departments of Commission for Reorganization of Hubei Province. The largest shareholder of the Company was Shashi State-Owned Assets Administration Bureau. In 1994, the original Shashi State-Owned Assets Administration Bureau and Jiangling State- owned Assets Administration Bureau were classified as Jingsha State-Owned Assets Administration Bureau. Therefore, the shares of the Company held by Shashi State-Owned Assets Administration Bureau and Jiangling State-Owned Assets Administration Bureau were all held by Jingsha State-Owned Assets Administration Bureau, and Jingsha State-Owned Assets Administration Bureau became the controlling shareholder of the Company. In 1996, according to the Reply of Hubei Provincial People's Government on Authorization of Sanonda Group Co., Ltd. Operating the State-Owned Assets (EZBH[1995] No.92), Jingsha State-Owned Assets Administration Bureau set up Sanonda Group Co., Ltd. (renamed Changes of controlling “Jingzhou Sanonda Holdings Co., Ltd.”). On March 20, 2005, Jingzhou State-Owned Assets shareholder (if any) Administration Bureau and China Mingda Chemical and Mining Corporation (later renamed "China National Agrochemical Co., Ltd.,CNAC") signed the Asset Transfer Agreement of Sanonda Group Co., Ltd, and CNAC received 100% equity of Sanonda Group Co., Ltd, from Jingzhou State-Owned Assets Administration Bureau. After the completion of the above transfer, the actual controller of the Company was changed from Jingzhou State-Owned Assets Administration Bureau to SASAC. In July, 2017, the Company received the Approval on Issuing Shares by Hubei Sanonda Co., Ltd. to China National Agrochemical Corporation for Acquiring Assets and Raising Supporting Funds (CSRC license No. [2017]1096). CSRC approved of the Company’s issuance of 1,810,883,039 shares to China National Agrochemical Corporation for the purchase of 100% equity of ADAMA Solutions held by it. After the completion of the major assets restructuring, 7 ADAMA Ltd. Annual Report 2021 the controlling shareholder of the Company was changed from Jingzhou Sanonda Holdings Co., Ltd. to CNAC. In June, 2020, CNAC transferred 1,810,883,039 shares of the Company held by it to Syngenta Group free of charge and completed the registration procedures for the above transferred shares. After the completion of the share transfer, Syngenta Group has become the direct controlling shareholder of the Company. During the reporting period, the controlling shareholder of the Company did not change. V. Other information The Accounting Firm Engaged by the Company Company’s Name Deloitte Touche Tohmatsu Certified Public Accountants LLP Auditors Office address 30/F, Bund Center, 222 Yan An Road East, Shanghai PRC Mou Zhengfei and Ji Yuting Signing Certified Public Accountant Sponsor engaged by the Company to continuously perform its supervisory function during the Reporting Period □ Applicable √ Not applicable Financial advisor engaged by the Company to continuously perform its supervisory function during the Reporting Period □ Applicable √ Not applicable 8 ADAMA Ltd. Annual Report 2021 VI. Main accounting and financial results Whether the Company performed any retroactive adjustments to or restatement of its accounting data □ Yes √ No 2021 2020 +/- (%) 2019 Operating revenue (RMB’000) 31,038,605 28,444,833 9.12% 27,563,239 Net profit attributable to the shareholders 157,397 352,753 -55.38% 277,041 (RMB’000) Net profit attributable to the shareholders, excluding 77,853 287,724 -72.94% 610,059 non-recurring profit and loss (RMB’000) Net cash flows from operating activities 4,561,875 2,023,015 125.50% 843,487 (RMB’000) Basic EPS (RMB/share) 0.0676 0.1505 -55.08% 0.1132 Diluted EPS (RMB/share) N/A N/A N/A N/A Weighted average return on equity 0.74% 1.61% -0.87% 1.23% 31.12.2021 31.12.2020 +/- (%) 31.12.2019 Total assets (RMB’000) 50,235,308 46,801,034 7.34% 45,288,940 Net assets attributable to the shareholders 21,075,083 21,353,752 -1.31% 22,371,665 (RMB’000) The net income before or after deduction of non-recurring profit or loss for the last three fiscal years is negative no matter which amount is less and the audit report for the most recent year shows that there is uncertainty about the company's ability to continue its operation. □ Yes √ No The less amount of the net income before and after extraordinary gain or loss is negative □ Yes √ No VII. Differences in accounting data under domestic and foreign accounting standards 1. Differences in the net profit and the net assets disclosed in the financial reports prepared under Chinese and international accounting standards □ Applicable √ Not applicable None during the Reporting Period. 2. Differences in the net profit and the net assets disclosed in the financial reports prepared under Chinese and foreign accounting standards □ Applicable √ Not applicable None during the Reporting Period. 9 ADAMA Ltd. Annual Report 2021 3. Explanation on the differences in accounting data □ Applicable √ Not applicable VIII. Main Financial results by quarter Unit: RMB’000 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Operating revenue 7,187,164 7,876,616 7,424,584 8,550,241 Net profit attributable to the shareholders 148,784 218,252 -370,952 161,313 Net profit attributable to the shareholders excluding non- 121,678 200,445 -384,112 139,842 recurring profit and loss Net cash flows from operating activities -837,773 2,329,066 690,694 2,379,888 Any material differences between the financial indicators above or their summations and those which have been disclosed in quarterly or semi-annual reports □ Yes √ No 10 ADAMA Ltd. Annual Report 2021 IX. Non-Recurring profit/loss √ Applicable □ Not applicable Unit: RMB’000 Item 2021 2020 2019 Note Gains/losses on the disposal of non-current assets (including the offset part of asset 846 69,710 127,073 impairment provisions) Government grants charged to the profit/loss for the Reporting Period (except for the government grants closely related to the regular operation of 38,543 41,871 27,410 the Company and continuously given at a fixed quota or amount in accordance with certain standards) Profit or loss of subsidiaries generated before combination date of a business combination - - 38,027 involving enterprises under common control Profit or loss arising from contingencies other - - (45,989) than those related to normal operating business Recovery or reversal of provision for bad debts 32,487 26,102 25,821 which is assessed individually during the years Other non-operating income and expenses other 12,503 19,989 (40,992) than the above Mainly provision for early Other profit or loss that meets the definition of retirement plan of employees 13,191 (62,855) (574,500) non-recurring profit or loss at the Company’s Israeli manufacturing facilities. Less: Income tax effects 18,026 29,788 (110,132) NCI (after tax) - - Total 79,544 65,029 (333,018) Details of other profit and loss items that meet the definition of non-recurring profit or loss. √ Applicable □ Not applicable Mainly provision for early retirement plan of employees at the Company’s Israeli manufacturing facilities as explained above in the note. Explanation of non-recurring items of profit or loss listed in "Explanatory Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public-Non-Recurring Profit and Loss" reclassified as recurring items of profit or loss □ Applicable √ Not applicable No such cases during the Reporting Period. 11 ADAMA Ltd. Annual Report 2021 Section III - Performance Discussion and Analysis I. Industry in which the Company operates during the reporting period General environment and the effect of external factors on the Company’s operations As a global leader in the crop protection industry, major trends, events and key developments in the Group's macro- economic environment may materially impact the Group’s business results and development. The impact of these factors may differ by geographic region and the different products of the Group. Since the Group offers one of the widest and most diverse product portfolios of crop protection products and since it operates in many geographic regions, the aggregate effect of these factors in any given year, and during the course thereof, is not uniform and may sometimes be mitigated by offsetting effects. The activities and results of the Group are further subject to, and affected by, certain global, localized and other factors, such as: demographic changes; economic growth and rising standards of living; agricultural commodity prices; significant fluctuations in raw material costs and global energy prices; development of new crop protection technologies; patent expiries and growth in volumes of off-patent products; the global agricultural markets and volatile weather conditions; regulatory changes; government policies; world ports, international monetary policies and the financial markets. II. Main business of the Company during the Reporting Period The Company is a corporation incorporated in the People's Republic of China. The Group is a global leader in crop protection, engaging in the development, manufacturing and commercialization of a wide range of crop protection products, that are largely off-patent. The Group provides solutions to farmers to combat weeds, insects and disease, and sells its products in over 100 countries, through approximately 60 subsidiaries worldwide. The Group's business model integrates end-customer access, regulatory expertise, state-of-the art global R&D, production and formulation facilities, thereby providing the Group a significant competitive edge and allowing it to launch new and differentiated products that meet local farmers and customer needs in key markets. The Group's primary operations are global, spanning activities in Europe, North America, Latin America, Asia-Pacific (including China) and India, the Middle-East and Africa. The Group also utilizes its expertise to adapt such products also for the development, manufacturing and commercialization of similar products for non-agricultural purposes (Consumer and Professional Solutions). In addition, the Group leverages its core capabilities in the agricultural and chemical fields and operates in several other non-agricultural areas, none of which, individually, is material for the Group. These activities, collectively reported as Intermediates and Ingredients, include primarily, (a) the manufacturing and marketing of dietary supplements, food colors, texture and flavor enhancers, and food fortification ingredients; (b) fragrance products for the perfume, cosmetics, body care and detergents industries; (c) the manufacturing of industrial products and (d) other non-material activities. Syngenta Group As of June 2020, the Group is a distinctive member of Syngenta Group, a world leader in agricultural inputs, spanning crop protection, seeds, fertilizers, additional agricultural and digital technologies, as well as an advanced distribution network in China. As of August 2021, following the combination between ChemChina and Sinochem Group, Syngenta Group, and subsequently the Group, are ultimately controlled by Sinochem Holdings - parent of both ChemChina and Sinochem Group, subordinated to SASAC. 12 ADAMA Ltd. Annual Report 2021 Performance in the context of general crop protection market environment During 2021, crop prices of most of the major commodity crops remained elevated, and even further increased, supporting strong crop protection demand in most regions. The positive crop price environment, along with associated higher planted areas, combined to drive global demand for crop protection products. On the whole, farmers continue to benefit from the high global crop prices. However, this benefit is somewhat dampened by broad inflationary pressures they are experiencing across most of their input costs, including seeds, fertilizers, crop protection, fuel and machinery. During the year, prices of intermediates and active ingredients sourced from China remained high due to rising oil prices and high raw material prices. In the third quarter, availability of intermediates and active ingredients sourced from China was more constrained, although improved somewhat in the fourth quarter as the “Dual Control” energy saving measures in the country were relaxed, and agrochemical production came back online. However, China agrochemical prices remained high and COVID-19 restrictions and lockdowns continued to negatively impact agrochemical production and logistics. Global energy prices recovered and remained high over the course of 2021. In addition, global freight and logistics costs rose considerably during the year, and even further increased in December as COVID-19 continued to disrupt port activity, coupled with high stay-at-home demand brought on by the Omicron wave. Similarly, in-land logistics remained challenged as pandemic-related restrictions continued to create frictions in domestic supply lines. Taken together, these constraints have impacted both availability of shipping and transportation resources, as well as significantly increased their costs, a dynamic widely observed across all international trade-related industries. The Company continues to actively manage its procurement and supply chain activities in order to mitigate these higher procurement and logistics costs. It also endeavors to adjust its pricing wherever market conditions allow, to compensate for these increased costs, the results of which were apparent in Q4, and are continuing to be seen into the beginning of this year. As the world continues to watch in horror the unfolding tragic and traumatic events in Ukraine, the Company is doing everything possible to ensure the safety and security of its people, and stands strongly in support of its employees, partners and customers. Although the Company is continuing to support farmers in Ukraine, its business in the country is being impacted to a certain extent. At this stage, the Company anticipates that its overall results for the first quarter of 2022 will not be materially impacted, due to promising performance in other geographies.. The Company is continuously reviewing the situation on the ground and assessing the potential risks involved, and will provide a further update in due course. At times like these, the Company is keenly aware of the important role it plays in helping farmers to continue to grow their crops, in order to ensure global food security. China Operations Update The Company's manufacturing site in Jingzhou, Hubei (ADAMA Sanonda) continues on its path of gradually ramping up production following the completion of the Relocation & Upgrade program at the site, progressively reducing the need for incurring additional procurement costs, and gradually reducing idleness charges as production and utilization levels steadily increase. As a result of the institution during 2021 of China's "Dual Control" energy restrictions as well as certain regulatory inspections conducted at some industrial parks, the Company's manufacturing facilities in Huai'An (ADAMA Anpon) and in Dafeng (ADAMA Huifeng), both in Jiangsu province, were suspended for a number of weeks in September and October 13 ADAMA Ltd. Annual Report 2021 2021. As the restrictions were loosened in the following weeks, operations at these sites resumed, albeit initially at a more limited capacity, reaching normal operations by December. This temporary suspension caused an increase in idleness costs during the quarter. The energy restrictions and resulting widespread production suspensions contributed to a significant increase in procurement costs of raw materials and intermediates, on top of the already high costs seen in prior months in the face of strong underlying demand and relatively constrained supply. Although these industry-wide supply shortages have started to alleviate somewhat in recent weeks, the Company is expecting the high procurement costs seen in H2 2021 to continue to pose challenges for its margins in the coming months as these inventories progress through the Company's inventory cycle. The Company endeavors, wherever possible and supported by market conditions, to increase prices in order to mitigate the impact of the higher costs. In China, the Company is benefiting to some extent from the generally higher pricing environment in the sales of its raw materials and intermediates, where it is seeing robust demand, driving the strong performance in China in the fourth quarter. Crop Protection Products The Group is focused on the development, manufacturing and commercialization of largely off-patent crop protection products, which are generally herbicides, insecticides and fungicides, which protect agricultural and other crops against weeds, insects and disease, respectively. Herbicides - During cultivation, crops are exposed to various weeds that grow in their environment and compete for water, light and nutrients. Herbicides are designed to prevent or stunt the development of such weeds to allow the cultivated crop to develop optimally throughout the different stages of its growth, and therefore to reach optimum yield. The herbicides sold by the Company are both selective (do not affect or harm the crop itself) and non-selective. The best-selling herbicides are those designed to protect soy, corn, cereals, rice and cotton. Insecticides - Insecticides are designed to control various types of insects and pests in a selective manner (without harming the crop itself). The best-selling insecticides are designed to protect fruits and vegetables, corn, cotton and soy. Fungicides - Fungicides are designed to combat various diseases and parasitical fungi. In general, when weather conditions in the agricultural season are dry, the prevalence of crop diseases is much smaller, reducing demand for such products. Crops in which fungicides are used most frequently are cereals, fruit, vegetables, soy, grapevines and rice. Main production processes, and upstream and downstream elements Production - The Group's manufacturing sites house two types of facilities: (1) dedicated facilities designed to produce a single product or product family; and (2) multi-purpose facilities - comprising the majority of the Group's facilities where several kinds of products may be manufactured. The latter provide the Group with manufacturing flexibility and enable it to prepare for the manufacturing of new products, subject to maintaining and ensuring quality standards. Value chain - Generally, the value chain between the Group and the end customer who ultimately purchases its products around the world may be characterized as follows: Importer / Formulator -> Distributor -> Retailer -> Farmer. Due to the expansion of the Company's activities and the acquisition and establishment of subsidiary companies in different regions of the world in recent years, in most cases companies owned by the Group carry out the role of the formulator and/or the importer, and occasionally also the role of the distributor and sometimes the retailer. In the past, farmers stored the inventory in their own warehouses, but this trend has changed and today most of inventories are stored either in the importers' or the distributors’ warehouses. 14 ADAMA Ltd. Annual Report 2021 Raw materials and suppliers - The Group procures and manufactures a large variety of raw materials, which may not be uniformly characterized, together with complementary raw materials or intermediates required to produce the finished products and/or their formulations. The most significant element of the Group's cost of sales is the cost of raw materials used in its production processes, which is primarily influenced by global changes in the supply of raw materials, and, to a certain extent, extreme fluctuations in international oil prices. Similarly, the cost of purchasing finished products for sale to third parties is also significant. The Group purchases its raw materials from various suppliers, primarily in China, Europe, the U.S.A., and South America. The Group's supplier network has not changed significantly over the past few years, while suppliers from China are still a main source for raw material, due to the wide range of products and competitive prices offered by them, together with the improved quality of the products that are examined by the Group through product quality testing. Customers - The Company’s customers are numerous and are distributed across many countries throughout the world, although in some countries, sales are made to a relatively small number of customers. Generally, the Group's products are primarily sold to regional and local distributors in the different countries, who in turn market them to end customers in that country, some of whom are large cooperatives. The Group also sells, inter alia, to multinational companies and to other producers that manufacture end-use products based on active ingredients sourced from the Group's. The vast majority of sales are made to returning customers, typically without long-term supply contracts, as is customary in the industry. In most countries, purchases are made without long-term advance orders, while in some areas they are made based on (non- binding) rolling sales forecasts and actual orders. The Group's actual production is based on these forecasts. Distribution and marketing - The Group's marketing operations are global and designed to consistently increase profits and market share. The Group markets its products directly through local representation in all of the largest agricultural markets worldwide by means of local salespeople and commercial activities directed at the distributors, agricultural consultants and farmers. For further important additional information and details, please refer to the Annex. Procurement model of major raw materials Significant change in Average price Average price Procurement Proportion out of total Main raw materials the in H1 in H2 model purchase amount settlement (RMB/Kg)* (RMB/Kg)* method AI Tech 40.0% No 51.95 63.17 Raw Materials 23.4% No 9.51 10.42 Co-Formulants Purchase through 5.7% No 9.83 14.28 Formulated Products multiple channels 21.9% No 28.73 32.87 Packaging 6.2% No 1.23 1.67 Other 2.8% No 0.32 0.71 * Prices in RMB are based on average exchange rates for the relevant period. Reasons for significant changes in raw material prices compared with the previous reporting period □ Applicable √ Not applicable Whether the Company spends more than 30% of its total production cost on energy supply □ Applicable √ Not applicable 15 ADAMA Ltd. Annual Report 2021 Reasons that there is material change to the main energy types during the reporting period □ Applicable √ Not applicable Production technologies of main products Main Products Stage of Key Technical Experts Patents R&D advantages Production Technologies of Main Products Herbicides Industrialized Employed by the Group Some are Off-patent AIs developed production patent into differentiated mixtures protected and formulations, in combination with new formulation and delivery technologies that provide more efficient ways to deliver the products into the plants Fungicides Industrialized Employed by the Group Some are Off-patent AIs developed production patent into differentiated mixtures protected and formulations, in combination with new formulation and delivery technologies that provide more efficient ways to deliver the products into the plants Insecticides Industrialized Employed by the Group Some are Off-patent AIs developed production patent into differentiated mixtures protected and formulations, in combination with new formulation and delivery technologies that provide more efficient ways to deliver the products into the plants Capacity of main products Main Products Normal Capacity Capacity Utilization (%) Capacity construction (tons/year) Under Investment in the Construction production of Main (tons/year) Products Herbicides 53,170 13,150 Ongoing 81% Fungicides 14,615 3,000 Ongoing 98% Insecticides 70,804 41,400 Ongoing 19% Capacity figures in the above table is the synthesis capacity of the Group. In addition, the Group has approximately 590,000 tons of formulation capacity globally. 16 ADAMA Ltd. Annual Report 2021 Products produced in major chemical industry parks Major Chemical Industry Parks Products Neot Hovav, Israel Plant for production of insecticides and fungicides active ingredients as well as formulations, R&D center and Non- Agro activity Ashdod, Israel Manufacturing of the herbicides’ active ingredients, formulations and Non-Agro activity as well Anpon, China Plant for the manufacturing of insecticides and herbicides active ingredients, formulations, Flame Retardants and Non-Agro activity Sanonda, China Plant for the manufacturing of insecticides active ingredients as well as number of formulations and Non- Agro activity ADAMA Huifeng, China Plant for production of Herbicides and Fungicides AIs, as well as number of formulations, alongside a packaging plant Taquari, Brazil Plant for the manufacturing of active ingredients as well as number of formulations used for the manufacturing of insecticides, fungicides and herbicides EIA approval status that is being applied or newly obtained during the reporting period √ Applicable □ Not applicable During the reporting period, the Company received the following EIA approvals: “Review Opinions on the Reconstruction and Expansion of Wastewater Discharge at the Estuary”. “Approval of Amendment to Environmental Impact Report of the Insecticide Relocation and Upgrading Project”. “Reply to the Environmental Impact Report of Salt Well Survey and Drilling Project” ADAMA Anpon, the subsidiary of the Company, received the following EIA approvals: “Reply to the Environmental Impact Report of Expansion of Utilities and Auxiliary Facilities” “Reply on the Environmental Impact Report of the Relocation and Upgrading of 1000 t/a Pymetrozine (converted into 100%)” ADAMA Huifeng, the subsidiary of the Company, received the following EIA approvals: Reply to the Environmental Impact Reports of Upgrading of Flutriafol AI, Epoxiconazole AI, Glufosinate AI and 2,4-D isooctyl ester AI. Abnormal production suspension during the reporting period □ Applicable √ Not applicable 17 ADAMA Ltd. Annual Report 2021 Relevant approvals, permits and qualifications √ Applicable □ Not applicable Entity in China Name of the Certificate Number Expiration Pesticide Production Permit (E) Pesticide Production Permit March 15th, 2023 0010 ( E ) WH [2020] extended No. Safety Production Permit March 1st, 2023 0011 Safety Production Permit (E)FM [2021] No.050781 August 13th , 2024 Business record certificate of (E)3J42100111328 non-pharmaceutical July 2nd , 2024 precursor chemicals Special Permit for the HW-D42I0001 Manufacturing of Monitored April 3rd, 2024 Chemicals National Industrial XK13-008-00019 of Hubei ADAMA Ltd. November 13th, 2023 Production Permit Business License for No. [2021] 980014 of Safety July 5th, 2024 Hazardous Chemicals Operation of Hubei D No.(0045)for Port Operation of Port Operation Permit January 20th, 2025 Jingzhou of Hubei No. 5, 2015 for Use of Port Port Shoreline Use Permit August 7th, 2061 Shoreline No. 3, 2020 for Water Extraction of Water Extraction Permit August 13th, 2025 Jingzhou of Hubei Registration Certificate of 421012001 December 9th, 2024 Hazardous Chemicals Pollutant Emission Permit 91420000706962287Q001P December 25th, 2025 WH No. [H00029] for Safety Safety Production Permit January 17th, 2025 Production of Jiangsu No. 00394 for Business of Business License for Hazardous Chemicals of Huai’an of October 11th, 2024 Hazardous Chemicals Jiangsu No. 32080020034 for Pesticide Pesticide Business License December 26th, 2024 Business of Jiangsu No. 0014 for Pesticide Production of ADAMA Anpon Pesticide Production Permit Jiangsu December 6th, 2022 (Jiangsu) Ltd. Pollutant Emission Permit 91320800139433337K001P May 31th,2025 National Industrial XK13-010-00189 of Jiangsu January 12th, 2024 Production Permit National Industrial XK13-008-00007 of Jiangsu September 23rd, 2023 Production Permit National Industrial XK13-014-00235 of Jiangsu July 11th, 2024 Production Permit Mining License C3200002009096120039192 September 30th, 2025 Safety Production Permit FM No. [2021]0818 of Jiangsu November 9th, 2024 Maidao, Branch Business License for No. 00641 for Business of December 30th, 2022 of ADAMA Anpon Hazardous Chemicals Hazardous Chemicals of Jiangsu 18 ADAMA Ltd. Annual Report 2021 Entity in China Name of the Certificate Number Expiration (Jiangsu) Ltd. WH No. [H00015] for Safety Safety Production Permit July 22nd, 2024 Production of Jiangsu Pollutant Emission Permit 91320800MA1NX3QW56001P December 19th, 2026 Hubei Sanonda No. 42000010083 for Pesticide Pesticide Business License September 3rd, 2023 Trading Co., Ltd. Business of Hubei ADAMA (Beijing) No. 11000010005 for Pesticide Agricultural Business of Beijing Technology Pesticide Business License April 11th, 2023 Company Limited ADAMA Huifeng No. 31011420006 for Pesticide Pesticide Business License September 3rd, 2023 (Shanghai) Business of Shanghai Agricultural No. [2020]203153 of Shanghai for Business License for Technology Co., Business of Hazardous Chemicals August 25th, 2023 Hazardous Chemicals Ltd. Safety Production Permit (Su)WH No. [J00138] February 10th, 2024 No. 32090420577 for Pesticide Pesticide Business License January 6th, 2026 Business of Jiangsu Pesticide Production Permit (Su) Pesticide Production Permit May 13th, 2026 0199 Registration Certificate of 320912188 ADAMA Huifeng March 8th, 2024 Hazardous Chemicals (Jiangsu) Ltd. Pollutant Emission Permit 91320982MA1WNXWQX6001P December 20th,2025 Business record certificate of (Su)3S32090000086 non-pharmaceutical February 9th, 2024 precursor chemicals Export Enterprise 04136730 -- Registration Form Company focused on oil processing and trade □ Applicable √ Not applicable Company focused on fertilizer □ Applicable √ Not applicable Company focused on agrochemicals √ Applicable □ Not applicable Market share - As mentioned herein, ADAMA is a leading company among the crop-protection companies that focus on off-patent crop protection solutions. The Group’s global crop protection market share was approximately 6.0% in 2021, based on AgBio Investor’s preliminary estimation of the global agrochemical industry in 2021, and 5.5% in 2020. Registration - The materials and products marketed by the Group require, at various stages of their development production and marketing, registration in every country where the Company intends to market them. The Company has development and registration centers, located in Europe, Israel, Latin America, Brazil, North America, India and Asia. Further, its global registration network, providing local registration capabilities in over 100 countries, enables the Group to efficiently introduce new products in all major markets and provide farmers with a comprehensive portfolio of crop protection solutions. In the last three years, the Group’s registration network of highly-skilled professionals has obtained approximately 1,300 new product registrations. These capabilities are increasingly important as regulatory requirements continue to increase globally. 19 ADAMA Ltd. Annual Report 2021 Tax policies - The Group develops, purchases, manufactures and markets its products through many companies worldwide, and as such operates through approximately 60 subsidiaries. To the best of the Group’s knowledge, it is in material compliance with applicable tax laws. Company focused on chlorine alkali and caustic soda business □ Applicable √ Not applicable Company focused on chemical fiber industry □ Applicable √ Not applicable Company focused on plastic and rubber making □Applicable √ Not applicable III. Core competitiveness analysis As a leading off-patent crop protection provider in the global crop protection market, the Group believes that the following strengths provide it with sustainable competitive advantages and the foundation to capitalize on favorable underlying agriculture and crop protection industry trends: Off-patent Industry Leader. The Group’s success as one of the world’s leading off-patent companies has given it a deep understanding of the industry and enabled it to build one of the most extensive off-patent product offerings, giving it the ability to provide efficient, value-added solutions to farmers of every major crop around the world. Moreover, the breadth of the Group’s product portfolio, with no single active ingredient constituting more than 5% of its sales in 2021, combined with its extensive geographic reach, provide effective diversification and enhanced stability. The Group strives to continue to gain market share, building on its leading role in the market, farmer-centric focus and broad product portfolio. Furthermore, the Group’s addressable market continues to expand as the crop protection market globally continues to shift towards off-patent products, the segment of the market on which the Group focuses. This shift is the result of significant increases in the costs and risks of discovering and developing novel and effective Active Ingredients (AIs), which over time has led to fewer introductions of new molecules each year by the Company’s Research-Based Company (RBC) competitors. The Group believes that its strength in the off-patent market provides it with a certain competitive advantage relative to RBCs, as it is able, with its research, technology and know-how, to access off-patent crop protection products developed by all of the various major RBCs. This allows the Group to enhance existing crop protection products and introduce unique mixtures and formulations. In parallel, the Group’s global scale, registration expertise and manufacturing footprint are competitive advantages in comparison to many of its off-patent peers. Global Reach and Strength in Emerging Markets. The Group has an industry leading global footprint with extensive market presence. The Group enjoys broad geographic diversification by selling in over 100 countries with a balanced regional split, as evidenced by its 2021 revenue breakdown of approximately 22% in Europe, 27% in Latin America, 19% in North America, 19% in Asia Pacific, and 14% in India, the Middle East and Africa. This regional balance enhances the Group’s growth profile and provides diversification across different countries, climates, crops and planting seasons. The Group has a particularly strong presence in emerging markets, where growth is expected to outpace developed markets, and from which it derived more than half of its 2021 sales. Unique Positioning and Access to China. The Group believes that the foundation provided by the integration of 20 ADAMA Ltd. Annual Report 2021 Adama Solutions with the operational and commercial infrastructure of the Company in China, together with its unique relationship with its ultimate controlling shareholder, Sinochem Holdings, provides it with a clear advantage in penetrating the Chinese market, one of the largest and fastest growing agricultural markets in the world. The Group is one of the only global crop protection providers with a significant integrated commercial and operational infrastructure within China. The Group intends to leverage this infrastructure to pursue a leading position in the Chinese crop protection market and capitalize on the growing importance of high-quality global brands in China. With its activities in China also forming part of Syngenta Group China, the Group believes it is uniquely positioned to capitalize on the trend toward consolidation within the high-growth, highly fragmented Chinese crop protection market. In addition to helping it become a leader in the Chinese crop protection market, the integration of the Company’s China-based manufacturing facilities into the Group’s global manufacturing operations provides it with the ability to more effectively develop and commercialize advanced, differentiated products, as well as benefit from improved cost positions in key molecules, enhance the optimization of its global supply chain over time, drive greater efficiency throughout the organization, and secure both revenue growth as well as increased profitability. Collaborations with members of the Syngenta Group. The Group is working together with the other companies within the Syngenta Group to create value for itself and the Syngenta Group through increasing the Group’s sales, reducing costs and improving processes. Such efforts include various collaboration initiatives for the sale and distribution of finished products, raw materials supply and procurement, logistics and supply chain, as well as in the R&D and products’ registration fields. Vertically Integrated Business with Global Scale. The Group is one of the few off-patent crop protection providers that is active across virtually the entire value chain, from worldwide marketing, sales and distribution, to registration, production and R&D. As a result, the Group is able to efficiently manage its product portfolio and operations in response to the dynamic needs of farmers, changing weather conditions, government policies and regulations, and capture value at each point in the value chain. Approximately 85% of the Group’s products are produced, formulated or both in its world-class, well-invested facilities across the globe. Having deep knowledge, expertise and experience in all aspects of the development process, integrated chemical synthesis and formulation production and control over the entire supply chain, provides the Group with cost and control advantages, and the agility to address market challenges and capture value. Further, its global registration network, providing local registration capabilities in over 100 countries, enables the Group to efficiently introduce new products in all major markets and provide farmers with a comprehensive portfolio of crop protection solutions. In the three years, the Group’s registration network of highly-skilled professionals has obtained approximately 1,300 new product registrations. These capabilities are increasingly important as regulatory requirements continue to increase globally. The Group’s sales and marketing infrastructure is characterized by its local sales forces in each of its strategic markets, who build strong relationships with local distributors and with the end users, the farmers, to better understand their needs. This drives demand at the wholesale, retail and farmer level and provides the Group with valuable market insight and understanding. Extensive, Differentiated Offering. The Group offers farmers a hybrid portfolio of increasingly differentiated products and solutions that are tailored to the specific needs of each geographic region and each type of crop. The Group utilizes an integrated, solutions-based approach to its entire offering in order to meet the unique demands of its global customer base. The Group strives to offer farmers a branded portfolio that is comprised of both high-value differentiated products as well as high-volume off-patent products, alongside an increasing number of unique mixtures and formulations and novel, innovative products and services, aimed to provide solutions to farmers in nearly every region, and for all major crops. The Group’s extensive portfolio is composed of over 200 centrally managed AIs and over 1,475 mixtures and formulations. 21 ADAMA Ltd. Annual Report 2021 Experienced and Empowered Management Team. With a deep understanding of the crop protection industry and firm focus on sustaining the Group’s leadership and financial strength, its management team is a cohesive and integrated team that has the knowledge, skills and experience required to guide the Group on its path to achieving its ambition of global leadership. The Group believes in empowering its teams and creating leaders from its strongest performers, with the result that its management team is composed of the people who have successfully managed its business, and developed and executed its strategy over the last few years, continuing its track record of consistent, profitable growth. 22 ADAMA Ltd. Annual Report 2021 IV. Main business analysis I. Overview For general crop protection market environment, please refer to I. Main business of the Company during the Reporting Period of Section III above. Same period of last year as Fourth Quarter Item previously reported +/-% (000’RMB) (000’RMB) Revenues 8,550,241 7,555,210 13.2% Pre-Tax Profits 299,252 109,653 172.9% Pre-tax profit margin 3.5% 1.5% - Net income 165,032 127,683 29.3% Net income margin 1.9% 1.7% - EBITDA 1,201,894 1,019,715 17.9% EBITDA margin 14.1% 13.5% - Same period of last year as Fourth Quarter Item previously reported +/-% (000’USD) (000’USD) Revenues 1,337,049 1,141,142 17.2% Pre-Tax Profits 46,767 16,546 182.6% Pre-tax profit margin 3.5% 1.4% - Net income 25,197 19,271 30.8% Net income margin 1.9% 1.7% - EBITDA 187,946 154,019 22.0% EBITDA margin 14.1% 13.5% - Same period of last year as Reporting Period Item previously reported +/-% (000’RMB) (000’RMB) Revenues 31,038,605 28,444,833 9.12% Pre-Tax Profits 543,802 575,212 -5.46% Pre-tax profit margin 1.8% 2.0% - Net income 163,313 352,753 -53.70% Net income margin 0.5% 1.2% - EBITDA 3,821,303 4,088,571 -6.54% EBITDA margin 12.3% 14.4% - Same period of last year as Reporting Period Item previously reported +/-% (000’USD) (000’USD) Revenues 4,813,041 4,127,751 16.60% Pre-Tax Profits 84,564 82,620 2.35% Pre-tax profit margin 1.8% 2.0% - Net income 25,518 51,068 -50.03% Net income margin 0.5% 1.2% - EBITDA 592,846 592,480 0.06% EBITDA margin 12.3% 14.4% - 23 ADAMA Ltd. Annual Report 2021 Note: Since the functional currency of main overseas subsidiaries is the USD, and the Company’s management review of the Company’s performance is based on the USD results, following explanations and analysis are based on USD- denominated numbers. 2. Revenues and costs Revenues Revenues in the fourth quarter grew by 17% (+13% in RMB terms) to $1,337 million, driven by a significant 14% increase in prices, a trend which started in the third quarter and accelerated into the fourth quarter. The markedly higher prices were complemented by continued volume growth (5%), including the contribution of newly acquired companies, and only slightly moderated by the adverse impact of exchange rate movements. In the quarter, the Company delivered significant growth in Latin America, both in Brazil and across much of the rest of the region. In Brazil, the Company benefited from the good soybean planting season, as well as the strong farmer demand which supported higher prices, factors which are also supporting growth throughout South and Central America. The Company continues to grow strongly in Asia Pacific, led by a significant increase in sales in the quarter in China, with sales of its raw materials and intermediates in the country benefiting from higher prices resulting from strong demand in a generally supply-constrained environment. In North America, the Company saw a pleasing performance in the fourth quarter, enjoying robust pre-season demand in both US and Canadian agricultural markets as farmers order early in light of continued industry-wide concerns around availability later in the season. Sales in the India, Middle-East & Africa region grew in the quarter, led by a strong performance in India driven by new product launches in the country, as well as South Africa, where the Company continues to benefit from favorable cropping conditions and new product launches. The fourth quarter saw sales in Europe only slightly higher than the same period last year, as growth across most of the region was largely offset by supply challenges, felt mainly in France and Germany. The continued robust growth in the quarter brought full year sales to a record-high of $4,813 million, an increase of 17% (+9% in RMB terms), driven by 12% volume growth alongside 4% higher prices, and further aided somewhat by stronger currencies. 24 ADAMA Ltd. Annual Report 2021 (1) Operating revenues Unit: RMB’000 2021 2020 Ratio of the Ratio of the YoY +/-% Amount operating Amount operating revenue revenue Total operating revenue 31,038,605 100% 28,444,833 100% 9.1% Classified by industries Manufacture of chemical raw materials 31,038,605 100% 28,444,833 100% 9.1% and chemical products Classified by products Herbicides 12,716,458 41.0% 11,763,783 41.4% 8.1% Fungicides 6,137,712 19.8% 5,898,321 20.7% 4.1% Insecticides 9,192,554 29.6% 8,095,679 28.5% 13.5% Ingredients and Intermediates (Formerly 2,991,881 9.6% 2,687,050 9.4% 11.3% referred to as Non-Agro) Classified by regions Europe 6,920,884 22.3% 7,155,152 25.2% -3.3% North America 5,907,944 19.0% 5,333,514 18.8% 10.8% Latin America 8,217,586 26.5% 7,460,282 26.2% 10.2% Asia-Pacific 5,793,987 18.7% 4,533,778 15.9% 27.8% India, Middle East and Africa 4,198,204 13.5% 3,962,107 13.9% 6.0% Classified by Sales Channel Direct Sales 1,300,368 4.1% 1,439,278 4.8% -5.8% Dealership 26,746,356 86.2% 24,318,505 85.8% 9.7% Others 2,991,881 9.6% 2,687,050 9.4% 11.3% 25 ADAMA Ltd. Annual Report 2021 Unit: USD’000 2021 2020 Ratio of the Ratio of the YoY +/-% Amount operating Amount operating revenue revenue Total operating revenue 4,813,041 100% 4,127,751 100% 16.6% Classified by industries Manufacture of chemical raw materials 4,813,041 100% 4,127,751 100% 16.6% and chemical products Classified by products Herbicides 1,971,982 41.0% 1,707,193 41.4% 15.5% Fungicides 951,654 19.8% 856,648 20.8% 11.1% Insecticides 1,425,106 29.6% 1,174,463 28.5% 21.3% Ingredients and Intermediates (Non-Agro) 464,299 9.6% 389,447 9.4% 19.2% Classified by regions Europe 1,072,415 22.3% 1,035,865 25.1% 3.5% North America 916,603 19.0% 775,744 18.8% 18.2% Latin America 1,275,558 26.5% 1,087,796 26.4% 17.3% Asia-Pacific 898,084 18.7% 656,276 15.9% 36.8% India, Middle East and Africa 650,381 13.5% 572,070 13.8% 13.7% Classified by Sales Channel Direct Sales 203,364 4.2% 209,059 5.1% -2.7% Dealership 4,145,906 86.1% 3,529,245 85.5% 17.5% Others 463,771 9.6% 389,447 9.4% 19.1% Note: the sales split per product category is provided for convenience purposes only, and is not representative of the way the Company is managed or in which it makes its operational decisions. Regional Performance Review Europe: Sales were up by 3.4% in the fourth quarter and by 3.0% in the full year, in constant exchange rates (CER) terms, compared with the corresponding periods last year. In the fourth quarter, the Company saw moderate growth in Europe, achieved despite the impact of the COVID-19 Omicron wave hampering regular commercial activities, with growth across most of the region being partially offset by supply challenges, mainly felt in France and Germany. In US dollar terms, sales were higher by 0.4% in the quarter and by 3.5% in the full year, compared to the corresponding periods last year, reflecting the net impact of the weaker currencies in the quarter, contrasted with the somewhat stronger currencies over the full year. North America: Sales were up by 11.1% in the fourth quarter and by 17.4% in the full year, in CER terms, compared with the corresponding periods last year. The pleasing performance in the fourth quarter reflects the robust pre-season demand seen in both US and Canadian agricultural markets as farmers order early in light of continued industry-wide concerns around availability later in the season. In US dollar terms, sales in the region grew by 11.7% in the quarter and by 18.2% in the full year, compared to the corresponding periods last year, reflecting the strengthening of the Canadian Dollar. Latin America: Sales grew by 25.8% in the fourth quarter and by 19.3% in the full year, in CER terms, compared to the 26 ADAMA Ltd. Annual Report 2021 corresponding periods last year. Strong growth was seen in Brazil and across much of the rest of the region. In Brazil, the Company benefited from the good soybean planting season, as well as the strong farmer demand which supported higher prices. The Company commenced local production and commercialization in Brazil of ARMERO, its new dual-mode fungicide containing the active ingredients Prothioconazole and Mancozeb, benefiting from its new in-house production of Prothioconazole, a leading broad-spectrum systemic fungicide. The Company also delivered pleasing growth in Paraguay following an acquisition in the country in the fourth quarter of 2020, as well as in Central America and many other countries in the wider region. In US dollar terms, sales in the region grew by 21.9% in the quarter, and by 17.3% in the full year, compared to the corresponding periods last year, reflecting the generally weaker average currency levels that prevailed over the periods, in particular the BRL. Asia-Pacific: Sales grew by 36.4% in the quarter and by 28.5% in the full year, in CER terms, compared to the corresponding periods last year. The Company continues to grow strongly in Asia Pacific, led by a significant increase in sales in the quarter in China. In China, the Company's sales of raw materials and intermediates, where it continues to see strong demand, also benefited from the higher pricing environment resulting from general supply constraints. In addition, ADAMA continues to grow sales of its branded, formulated portfolio, and was also bolstered by the acquisition of Huifeng during the year. In the wider APAC region, the Company saw moderate growth in the quarter, with increases in the Pacific region being balanced by somewhat softer performances in some east Asian markets, where commercial activities continued to be hampered by COVID-related restrictions and supply constraints. In US dollar terms, sales in the region grew by 38.6% in the fourth quarter and by 36.8% in the full year, compared to the corresponding periods last year, reflecting the impact of the strengthening of regional currencies, most notably the Australian Dollar and Chinese Renminbi. India, Middle East & Africa: Sales grew by 20.7% in the quarter and by 12.7% in the full year, in CER terms, compared to the corresponding periods last year. Growth in the quarter was led by a strong performance in India, driven by new product launches in the country, including BARROZ, a leading tool for the control of stem borer in rice, as well as South Africa, where the Company continues to benefit from favorable cropping conditions and new product launches. In US dollar terms, sales in the region grew by 20.4% in the quarter and by 13.7% in the full year, compared to the corresponding periods last year, reflecting the impact of the somewhat weaker currencies in the quarter contrasted with the strengthening of regional currencies over the full year period, most notably the Israeli Shekel. 27 ADAMA Ltd. Annual Report 2021 (2) List of the industries, products, regions and distribution models exceed 10% of the operating revenues or operating profits of the Company √ Applicable □ Not applicable Unit: RMB’000 YoY YoY Gross YoY Operating Cost of increase/decrease increase/decrease Margin increase/decrease revenues goods sold of the operating of the cost of (%) of the gross margin revenues goods sold Classified by industries Manufacturing chemical raw materials and chemical products 31,038,605 23,412,519 24.6% 9.1% 16.6% -8.9% Crop Protection 28,046,724 21,045,667 25.0% 8.9% 17.8% -11.3% Ingredients and 2,991,881 2,366,852 21.0% 11.5% 7.4% 29.9% Intermediates In the event that the statistical manner of the Company's main business data is adjusted during the reporting period, the Company's main business data for the most recent year adjusted to the manner at the end of the reporting period □ Applicable √ Not applicable Whether the Company generates more than 10% revenue or net profit from its overseas business against the audited annual revenue and net profit for the most recent accounting year √ Applicable □ Not applicable Overseas Business How it operates in foreign Whether the tax policy measures it takes during markets influences the business the reporting period overseas The Group develops, No material influence exists. The Group’s services or purchases, manufactures and products are priced based on markets its products through transfer pricing studies many companies worldwide. conducted to reflect the As such, the Group operates market price that would have through approximately 60 been determined for these subsidiaries, with each of the services or products were Adama Solutions Group companies being they to be provided to non- independent and fulfilling a group members. Such different role and making a transfer prices are reviewed different contribution to the on a quarterly basis. Group's operations, and being assessed according to the tax laws in their specific localities. 28 ADAMA Ltd. Annual Report 2021 (3) Whether the Company’s revenue from sale of goods exceed the revenue from services √ Yes □ No Industries Items Units 2021 2020 YoY +/-% Sales volume Ton 911,724 768,688 18.6% Crop Protection Production Ton 520,242 491,925 5.8% Inventory Ton 220,547 223,176 -1.2% Reasons for any over -30% YoY movement of the data above: □ Applicable √ Not applicable (4) Execution of the significant sales and procurement contracts signed by the Company up to the Reporting Period □ Applicable √ Not applicable (5) Composition of Operating Costs Category of the industries Unit: RMB’000 2021 2020 Industries Items Ratio of the Ratio of the YoY +/-% Amount Amount operating costs operating costs Industry of Cost of manufacturing chemical materials 17,995,565 76.9% 16,740,996 83.4% 7.5% raw materials and (procurement chemical products costs) Industry of manufacturing chemical Labor cost 1,201,040 5.1% 1,153,968 5.7% 4.1% raw materials and chemical products Industry of manufacturing chemical Depreciation 679,590 2.9% 669,414 3.3% 1.5% raw materials and expense chemical products Explanations: The Company recorded certain extraordinary charges within its reported cost of goods sold, totaling approximately RMB 652 million ($101 million) in the full year period compared with RMB 338 million ($ 50 million) in 2020. These charges were largely related to its Relocation & Upgrade program and include mainly (i) excess procurement costs, both in quantity and cost terms, incurred as the Company continued to fulfill demand for its products in order to protect its market position through replacement sourcing at significantly higher costs from third-party suppliers, and (ii) elevated idleness charges largely related to suspensions at the facilities being relocated and upgraded, as well as to the temporary suspension of the Jingzhou site in Q1 2020 at the outbreak of COVID-19 in Hubei Province. While Huai’An site (Jiangsu Province) is under relocation, Jingzhou site (Hubei Province) continues on its path of gradually ramping up production following the completion of the Relocation & Upgrade program at the site, progressively reducing the need for incurring additional procurement costs, and gradually reducing idleness charges as production and utilization levels steadily increase. 29 ADAMA Ltd. Annual Report 2021 Excluding the impact of the abovementioned, largely non-recurring and relocation-related costs, over the full-year period, the increased gross profit was driven by the higher prices, a trend which started in the third quarter and accelerated into the fourth quarter, alongside the strong volume increases seen in each of the four quarters of the year, as well as a net positive impact from portfolio mix, and generally favorable currency movements. These combined to more than offset higher logistics, procurement and production costs, which nevertheless resulted in a somewhat lower adjusted gross margin over the full year period. In addition, please note that as a result of recent changes in the ASBE guidelines, certain items in 2021 (specifically certain transportation costs and certain idleness charges) have been reclassified from Operating Expenses to COGS. (6) Has the consolidated scope changed during the Reporting Period √ Yes □ No During the reporting period, the Group acquired 51% of the outstanding shares of Adama Huifeng (Jiangsu) Co., Ltd - (7) List of significant changes or adjustment of the industries, products or services of the Company during the reporting period □ Applicable √ Not applicable (8) List of major trade debtors and major suppliers List of the major trade debtors of the Company Total sales to top 5 customers (RMB’000) 2,002,104 Ratio of total sales to top 5 customers to annual total sales 6.54% Ratio of total sales to related parties (within top 5 customers) to annual total sales 2.74% Information of the Top 5 Customers Customers Sales Amount Ratio of the sales to this customer to (RMB’000) the annual total sales 1 A 838,834 2.74% 2 B 332,415 1.09% 3 C 319,541 1.04% 4 D 258,038 0.84% 5 E 253,276 0.83% Aggregated 2,002,104 6.54% Notes of other situation of the major customers □ Applicable √ Not applicable 30 ADAMA Ltd. Annual Report 2021 List of the major suppliers of the Company Total purchase to top 5 suppliers (RMB’000) 2,729,650 Ratio of total purchase to top 5 suppliers to annual total purchase 15.5% Ratio of total purchase from related parties (within top 5 suppliers) to annual total purchase 5.43% Information of the Top 5 Suppliers Suppliers Purchase Amount Ratio to the annual total sales (RMB’000) 1 A 954,199 5.43% 2 B 537,499 3.06% 3 C 488,729 2.78% 4 D 399,112 2.27% 5 E 350,111 1.99% Aggregated 2,729,650 15.53% Notes of the other situation of the major suppliers □ Applicable √ Not applicable 3. Expenses In RMB ’000 In USD ’000 2021 2020 YoY +/-% 2021 2020 YoY +/-% Sales and Marketing expenses 4,019,257 4,945,345 -18.73% 623,076 717,453 -13.5% General and Administrative expenses 1,089,599 1,043,708 4.40% 168,937 151,517 11.50% R&D expenses 501,377 478,778 4.72% 77,787 70,058 11.03% Financial (income) / expenses 1,939,422 1,847,189 4.99% 301,307 269,341 11.87% Tax expenses 380,489 222,459 71.04% 59,044 31,552 87.13% Explanations for the change of above expenses: Note: As noted above and since functional currency of main overseas subsidiaries is the USD, and the Company’s management review of the Company’s performance is based on the USD results, following explanations and analysis are based on USD-denominated numbers. (1) Sales and Marketing Expenses Please also note that as a result of recent changes in the ASBE guidelines, most transportation costs have been reclassified from Operating Expenses to COGS, which offset the level of sales and marketing expenses. In recent years, the Company conducted various corporate development activities, including mergers and acquisitions, which resulted in the inclusion within its sales and marketing expenses of various non-operational, mostly non-cash charges affecting the Company’s reported numbers, mainly as follows: RMB 149 million ($23 million) in 2021 (2020: RMB 211 million ($31 million)) in non-cash amortization charges in respect of Transfer assets received and written-up related to the 2017 ChemChina-Syngenta acquisition. The proceeds from the Divestment of crop protection products in connection with the approval by the EU Commission of the acquisition of Syngenta by ChemChina, net of taxes and transaction expenses, were paid to Syngenta in 31 ADAMA Ltd. Annual Report 2021 return for the transfer of a portfolio of products in Europe of similar nature and economic value. Since the products acquired from Syngenta are of the same nature, and with the same net economic value as those divested, the Divestment and Transfer transactions had no net impact on the underlying economic performance of the Company. These additional amortization charges will continue until 2032 but at a reducing rate, yet will still be at a meaningful level until 2028; RMB 86 million ($13 million) in 2021 (2020: RMB 72 million ($11 million)) in charges related mainly to the non-cash amortization of intangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions, with no impact on the ongoing performance of the companies acquired, as well as other M&A-related costs. Excluding the abovementioned non-operational charges, the level of selling and marketing expenses reflected the strong growth of the business, the additional expenses of the newly acquired companies, generally stronger global currencies against the US dollar, and the generally inflationary environment being seen globally in recent quarters. Please also note that as a result of recent changes in the ASBE guidelines, most transportation costs have been reclassified from Operating Expenses to COGS, which partially offset the increase. (2) General and Administrative Expenses The Company continues to maintain strong operating cost discipline. Nevertheless, the higher general and administrative expenses are affected by the additional expenses of the newly acquired companies, generally stronger global currencies against the US dollar, and the generally inflationary environment being seen globally in recent quarters. In addition, in the full year, alongside the many benefits the Company enjoys from the collaboration with other companies in the Syngenta Group, most notably in commercial cross-sales as well as in the areas of procurement and operations, ADAMA recorded certain related expenses. (3) R&D Expenses In order to capitalize on future opportunities in the agrochemical market, the Group has intensified its efforts in recent years to develop a leading pipeline of crop protection products aimed at providing value-added solutions to farmers around the world and build significant positions in a number of strategic market segments, based on dozens of AIs that are expected to come off-patent in the coming years, under a strategic plan named “Core Leap” adopted by the Company. These newly off-patent AIs will be developed into new differentiated mixtures and formulations, in combination with new formulation and delivery technologies that provide more efficient ways to deliver the products into the plants, thereby creating truly unique and differentiated, value-added solutions to farmers. Since the strategy was launched, the Company has already added more than 100 product concepts to its pipeline, some of which have already been launched and are driving growth in key markets. In this way, the Group strives to achieve a double competitive advantage - to be the first to market launching new products after the expiry of the patent on the AI, and to capitalize on cost leadership through increased backward integration through the Group’s global operations capabilities. (4) Financial Expenses: “Financial Expenses” alone mainly reflect interest payments on corporate bonds and bank loans as well as foreign exchange gains/losses on the bonds and other monetary assets and liabilities before the Company carries out any hedging. The impact of Financial Expenses (before hedging) is RMB 1,939 million ($301 million) for 2021 compared with RMB 1,847 million ($269 million) for 2020. Given the global nature of its operational activities and the composition of its assets and liabilities, the Company, in the ordinary course of its business, uses foreign currency derivatives (forwards and options) to hedge the cash flow risks associated with existing monetary assets and liabilities that may be affected by exchange rate fluctuations. Net gains/losses from hedging of those positions, are recorded in “Gains/Losses from Changes in Fair Value”, and are then transferred 32 ADAMA Ltd. Annual Report 2021 to “Investment Income” upon realization. The combined impact of Gains/Losses from Changes in Fair Value and Investment Income is a net gain of RMB 602 million ($94 million) in 2021 compared with a net gain RMB 681 million ($100 million) in 2020. In addition, Investment Income also mainly includes an amount of RMB 6 million ($1 million) in respect of equity accounted investees in 2021 compared with RMB 16 million ($2 million) and RMB 59 million ($9 million) capital gain from gaining control over an equity investee in 2020, bringing the total Gains/Losses from Changes in Fair Value and Investment Income to RMB 608 million ($95 million) in 2021 compared with RMB 747 million ($110 million) in 2020. The aggregate of Financial Expenses, Gains/Losses from Changes in Fair Value and Investment Income (hereinafter as “Total Net Financial Expenses and Investment Income”), which more comprehensively reflects the financial expenses of the Company in supporting its main business and protecting its monetary assets/liabilities, amounts to RMB 1,337 million ($206 million) in 2021 compared with RMB 1,166 million ($169 million) in 2020. The higher Total Net Financial Expenses and Investment Income in the full year period were mainly driven by the net effect of the increase in the Israeli CPI on the ILS-denominated, CPI-linked bonds, and higher non-cash charges related to put options in respect of minority interests. It also reflect increased hedging costs on the BRL, which were somewhat mitigated by the benefit from hedges in respect of the RMB. (5) Income Tax expenses: The significantly higher tax expenses over the full year period reflects the incurring of higher taxes by the Company's high- growth selling entities in end-markets. They were partially mitigated by the relatively lower weakening of the BRL during 2021 as compared to its more significant weakening during 2020, which then resulted in relatively higher BRL-related tax expenses during 2020. 4. R&D Investment √ Applicable □ Not applicable Expected Impact on Name of Major Objectives the Future Purpose Progress R&D Projects to be Achieved Development of the Company AI Production to To increase the achieve pipeline Company’s pipeline Fungicide project A increase and In launch phase Process improvement and expand future resistance portfolio management AI Production of a To expand the fungicide for broad Advanced Company’s future Fungicide project B Tech Transfer spectrum disease development portfolio control AI Production of a To expand the Herbicide project C selective broad Pre-launch phase Process validation Company’s future spectrum herbicide portfolio AI Production of a To expand the Insecticide project D broad spectrum In launch phase Process improvement Company’s future insecticide portfolio Insecticide project E AI Production for cross Advanced Tech Transfer To expand the 33 ADAMA Ltd. Annual Report 2021 Expected Impact on Name of Major Objectives the Future Purpose Progress R&D Projects to be Achieved Development of the Company spectrum insect control development Company’s future portfolio R&D Personnel 2021 2020 Change (%) R&D Headcount 263 259 1.54% Ratio to the Total Headcount 2.86% 3.34% -0.48% Composition of Educational Background —— —— —— B.A. 11 5 120.00% M.A. 11 9 22.22% Doctor 3 6 -50.00% College 1 1 0.00% Composition of Age —— —— —— Under 30 Years Old 4 2 100.00% 30 to 40 Years Old 18 13 38.46% Over 40 Years Old 4 6 -33.33% Note: The figures under “Composition of Educational Background” and “Composition of Age” represent those of the Company and the domestic subsidiaries held by it and do not cover the Group’s overseas R&D employees. R&D Investment of the Company 2021 2020 Change (%) R&D Investment (RMB’000) 501,377 478,778 4.72% Ratio of R&D investment to operating income 1.62% 1.68% - Amount of capitalized R&D investment (RMB’000) - - - Ratio of capitalized R&D investment to total R&D investment - - - Reasons for and effects of significant changes to the composition of the Company's R&D personnel □ Applicable √ Not applicable Reason of notable changes over the last year in the ratio of total R&D investment amount to operating income □ Applicable√ Not applicable Reason of notable change in the ratio of R&D investment capitalization and its reasonable explanation □ Applicable √ Not applicable 34 ADAMA Ltd. Annual Report 2021 5. Cash flow Unit: RMB’000 Item 2021 2020 YoY +/-% Subtotal of cash inflows from operating activities 31,178,654 27,729,885 12.44% Subtotal of cash outflows from operating activities 26,616,779 25,706,870 3.54% Net cash flows from operating activities 4,561,875 2,023,015 125.50% Subtotal of cash inflows from investing activities 40,749 110,787 -63.22% Subtotal of cash outflows from investing activities 3,424,200 2,442,755 40.18% Net cash flows from investing activities -3,383,451 -2,331,968 45.09% Subtotal of cash inflows from financing activities 5,690,509 4,685,824 21.44% Subtotal of cash outflows from financing activities 4,853,346 4,542,773 6.84% Net cash flows from financing activities 837,163 143,051 485.22% Net increase in cash and cash equivalents 1,924,409 -484,836 -496.92% Notes of the major effects on the YoY significant changes occurred of the data above √ Applicable □ Not applicable Cash flow from Operating Activities: The markedly stronger operating cash flow generated in both the fourth quarter and full year periods reflects the higher reported operating income achieved in both periods this year, alongside the abovementioned reduction in working capital during 2021 compared to its expansion during the same periods in 2020. Cash flow from Investing Activities: The higher level of cash used in investing activities over the full year period largely reflects an increase in investments in fixed assets, mainly driven by the payments for the upgrading of facilities in Israel and globally, as well as the payments for acquisitions. Cash flow from Financing Activities: The higher level of financing cash flow in the full-year period is due to the fact that in 2020, as a result of the COVID-19 pandemic, the Company utilized its credit lines and expanded its Israeli bond series, in order to strengthen its liquidity. During 2021, due to the strong collections of receivables and utilization of securitization tool, the Company has been able to pay down a portion of its short-term loans and replaced it with long terms loans to benefit lower interest rate in the future. In addition, the Company has seen an inflow of funds in 2021 due to the realization of profit on hedging positions in respect of the Company's Israeli ILS-denominated bonds, as a result of the strengthening of the Shekel against the US dollar. Notes to the reason of the significant differences between the net cash flow from the operating activities and the net profits of 2021 of the Company during the Reporting Period √ Applicable □ Not applicable Please refer to the notes provided above under this item. 35 ADAMA Ltd. Annual Report 2021 II. Analysis of the non-core business √ Applicable □ Not applicable Unit: RMB’000 Amount % of total profit Explanation Recurrence 928,947 170.82% Mainly from realization of hedging Investment income derivatives (Refer to explanation No to Financial expenses above). -321,094 -59.05% Mainly foreign currency effect on financial assets and liabilities Gain/loss from change of FV No (refer to explanation to Financial expenses above). Impairment of asset 70,267 12.92% No Gain from disposal of assets -2,604 -0.48% No Non-operating income 65,240 12.00% No Non-operating loss 37,453 6.89% No III. List and Analysis of the assets and liabilities 1. List of significant changes of assets Unit: RMB’000 As at 31 Dec. 2021 As at 31 Dec. 2020 Explanation % Item % of total % of total for any major Amount Amount change assets assets change Cash at bank and on 5,818,835 11.58% 3,863,886 8.26% 3.32% hand Accounts receivable 8,362,493 16.65% 8,766,869 18.73% -2.08% Inventories 11,750,162 23.39% 10,338,273 22.09% 1.30% Investment property 3,716 0.01% 4,364 0.01% 0.00% Long term equity 15,335 0.03% 14,081 0.03% 0.00% investments Fixed assets 8,048,389 16.02% 6,576,116 14.05% 1.97% Construction in 2,143,400 4.27% 1,405,328 3.00% 1.27% progress Short-term loans 874,755 1.74% 1,205,498 2.58% -0.84% Contract Liabilities 1,381,311 2.75% 1,092,253 2.33% 0.42% Long-term loans 3,498,912 6.97% 2,387,628 5.10% 1.87% 2. Main overseas assets √ Applicable □ Not applicable 36 ADAMA Ltd. Annual Report 2021 Control Proportion Scale measures Net Profit of Specific (Amount) Operation Significant to of the overseas contents of the Reason of the Location /Management impairment guarantee assets assets out assets assets mode risk? safety of (RMB’000) of total net (RMB’000) the assets assets (%) Equity Acquired investment in through Israel and Corporate Corporate 18,366,036 190,917 87% No Adama Major Assets globally Governance Governance Solutions Restructuring Other explanations N/A 3. Assets and liabilities measured at fair value √ Applicable □ Not applicable Unit: RMB’000 Fair value Fair value Opening change change Other Item Purchase Sale Closing balance recognized in recognized in change balance P&L equity Financial assets 1. Financial assets measured at FVTPL 1,253 - - 226 - - 1,479 (excluding derivative financial assets) 2. Derivative financial 1,560,781 -874,236 287,390 347,874 -1,078,499 - 243,310 assets 3. Other equity 152,200 - -82 - - - 152,118 investments Total financial assets 1,714,234 -874,236 287,308 348,100 -1,078,499 - 396,907 Others 174,236 40,620 - 10,674 - -25,715 199,815 Total of above 1,888,470 -833,616 287,308 358,774 -1,078,499 -25,715 596,722 Financial liabilities 1,463,612 -1,287,406 - - - - 176,206 Significant changes in the measurement attributes of the main assets in the Reporting Period □ Applicable √ Not applicable 4. Restriction / limitation on asset rights At the end of the Reporting Period, restricted assets including Company’s bank balance of RMB 59,355,000 as cash deposit for bills receivable; and other non-current assets of RMB 122,849,000 as deposit for asset securitization and legal suits. IV. List and Analysis of the investment 1. Overall condition √ Applicable □ Not applicable Investment during the Reporting Investment during the Same +/-% YoY Period (RMB'000) Period Last Year (RMB'000) 18,088,184 52,081,331 -65% 37 ADAMA Ltd. Annual Report 2021 2. List of the significant equity investment during the Reporting Period √ Applicable □ Not applicable Profit or Name of Progress Loss on Date of Shareholdi Involved in Disclosure the Main Mode of Investment Source of Investment Investment Types of as of the Estimated Investment Disclosure ng Litigation Index (if Invested Business Investment Amount Funds Partner Term Products Balance Return s for the (if Proportion or Not applicable) Company Sheet Date Reporting applicable) Period Announce ment on the Closing of the Acquisitio n of 51% Co- Equity ADAMA financing Fungicide, Interests Huifeng Agrochemi raised insecticide June 1, in ADAMA (Jiangsu) Acquisition 663,352 51% None Long-term Completed -- (75,250) No cal funds and and 2021 Huifeng Co., Ltd. self-raised herbicide (Jiangsu) funds Co., Ltd. (Announc ement No. 2021-25) disclosed at www.cninf o.com Total -- -- 663,352 -- -- -- -- -- -- 0 (75,250) -- -- -- Note: The investment amount in the table is the amount actually paid for ADAMA Huifeng by the end of the reporting period. 38 ADAMA Ltd. Annual Report 2021 3. List of the significant non-equity investments executed during the Reporting Period □ Applicable √ Not applicable 4. Investment on the financial assets (1) List investments in securities □ Applicable √ Not applicable No such investments were executed during the Reporting Period. 39 ADAMA Ltd. Annual Report 2021 (2) Investment in derivative financial instruments √ Applicable □ Not applicable Unit: RMB’000 The party Relation Related Type Initial Starting Expiring Investment Amount Amount Impairment Investment Percentage Gain/loss that with the party investment date date amount at purchased sold accrued (if amount at of during the operates Company transaction amount beginning during the during the any) end of the investment Reporting the or not? of the Reporting Reporting period amount Period investment period Period Period divided by net asset at end of the period Banks No No Option 1,994,238 18/09/2021 06/03/2022 1,994,238 2,385,059 -1,817,903 No 2,561,394 12.15% 123,951 Banks No No Forward 20,796,924 22/11/2021 18/01/2022 20,796,924 15,703,125 -21,679,535 No 14,820,514 70.32% 289,219 Total 22,791,162 -- -- 22,791,162 18,088,184 -23,497,438 No 17,381,908 82.47% 413,170 Source of fund for the investment Internal. Litigation-related situations (if applicable) N/A Date of disclosure of Board approval (if December 30, 2017 any) Date of disclosure of Shareholders’ N/A approval (if any) The aforesaid refers to short term hedging currency transactions made with banks. Risk and control analysis for the Reporting The Group’s transactions are not traded in the market. The Transactions are between the applicable company in the Group Period (including but not limited to market and the applicable bank until the expiration date of the transaction, therefore no market risk is involved. risk, liquidity risk, credit risk, operational Regarding credit and liquidity risk, the Group is working with large and substantial banks only and with some of them the risk, legal risk, etc.) Group has ISDA agreements. 40 ADAMA Ltd. Annual Report 2021 As to operational risk, the Group is working with relevant software, which is its back office for all transactions. No legal risk is involved. The actions taken in order to further reduce risks are: The relevant subsidiaries have specific guidelines, under the Group’s policy, which were approved by the subsidiaries' financial statements committee of the board, which specifies, inter alia, the hedging policy, the persons that have the authorization to deal with hedging, the tools, ranges etc. The only subsidiary that has hedging positions in the Group in the period was Solutions and its subsidiaries. The relevant subsidiaries apply management designed procedures and controls, which among other things, monitor the working process and the controls of the hedging transactions and are quarterly reviewed and annually audited. The controllers of the relevant subsidiaries are involved in the process and are monitoring the hedging accounting treatment. Every 2-3 years the internal audit of the relevant subsidiaries’ department is auditing the entire procedure. The aforesaid refers to short time hedging currency transactions made by the relevant subsidiary with banks. Market price or fair value change of Segregation of duties as follows: investments during the Reporting Period. For the fair value evaluation, the relevant subsidiary is usually using external experts. The relevant subsidiary hedges Specific methodology and assumptions currencies only; the relevant transactions are simple (Options and forwards) for short terms. For fair value methodology see should be disclosed in the analysis of fair section X of this report, note IX. Fair Value. The exchange rates are provided by the accounting department of the relevant value of the investments subsidiary and all other parameters are provided by the experts. Explanation for any significant changes in accounting policies and principles, N/A compared with last reporting period The derivative investments carried by the Company are for hedging and narrowing down the risk of market fluctuations. The Independent Directors’ opinion on the investments respond to the Company’s routine business demands and are in accordance with the relevant laws and regulations. investment in derivative financial Additionally, the Company has adopted Currency Risk Hedging Policy to strengthen the risk management and control which instruments and related risk controls benefit the Company’s ability to protect against market risk. The derivative investments do not harm the interests of the Company and its shareholders. 41 ADAMA Ltd. Annual Report 2021 5. Use of raised funds √ Applicable □ Not applicable (1) Overall Situation of Use of the Funds Raised √ Applicable □ Not applicable RMB’0000 Proportion of Total Total Amount of Accumulated Amount Fund with Accumulated Usage and Amount of Fund Total Amount of Funds Year of Type of Total Amount Used during Accumulated Purpose Being Amount of Fund Destination of with Purpose Amount Not Being Idle for Raising Raising Raised the Amount Used Changed during with Purpose Funds Not Being Changed Used Yet over Two Years Reporting the Reporting Being Changed Used Yet against Total Period Period Amount Raised Non-public 2017 offering of 155,999.99 62,471 161,808 - 129,381 83% - - - shares Total -- 155,999.99 62,471 161,808 - 129,381 83% - - - General Summary of Use of Raised Funds The Company received the raised funds on December 27, 2017. More details of the usage of the raised funds can be founded in the annual Special Reports on the Deposit and Actual Usage of the Raised Funds disclosed by the Company on March 29, 2018, March 21, 2019, April 28, 2020, March 31 2021 and March 31, 2022; Special Reports on the Deposit and Actual Usage of the Raised Funds in the First-Half Year disclosed by the Company on August 28, 2018, August 22, 2019, August 21, 2020 and August 26, 2021. Note: On May 20, 2020, the Annual Shareholders Meeting approved a Proposal on the Termination of the Use of Raised Funds for Certain Designated Projects included in the Project of Share Issuance for Assets Purchase and Supporting Finance. The Company will no longer use of the raised funds for the following previously designated projects: Projects of product development and registration, and fixed-asset Investment of ADAMA Agricultural Solutions Ltd. (the “Solutions”). On October 28, 2020, the 27th meeting of the 8th session of the Board of Directors and the 14th meeting of the 8th session of the Board of Supervisors approved a Proposal on the Use of the Raised Funds for the Acquisition of the 51% Equity Stake in Jiangsu Kelinong Agrochemical Co., Ltd. as well as that in Shanghai Dibai Plant Protection Co., Ltd.. In order to efficiently use the raised funds, the Company plans to use the balance of the raised funds, in the amount of approximately RMB 893,731,302.67 (balance as at 30 September 2020, including interest income and the actual amount is subject to the bank settlement balance on the date of transfer ), and which are no longer designated for previously approved projects according to the resolutions of the Company’s Board and Shareholders meeting held on April 27, 2020 and May 20, 2020 respectively, for the payment for the acquisitions 42 ADAMA Ltd. Annual Report 2021 of 51% equity stake in Adama Huifeng (Shanghai) Agricultural Technology Co., Ltd (former name: Shanghai Dibai Plant Protection Co., LTD., hereinafter: “Adama Shanghai”) and 51% equity stake in Adama Huifeng (Jiangsu) Co., Ltd (former name: Jiangsu Kelinong Agrochemical Co. Ltd, hereinafter: “Adama Huifeng”) from Jiangsu Huifeng Agrochemical Co., Ltd. (“Jiangsu Huifeng”). This proposal had been approved by the 4th Interim Shareholders Meeting on 16 November, 2020. (2) The Status of Designated Projects of Raised Funds √ Applicable □ Not applicable RMB’0000 Any Accumulated Investment Date by Total Amount Benefits Any Project Invested Progress by which the Expected Total Investment Invested Realized Material Designated Projects and Investment of Change Amount by the the End of Project Can Benefits Investment after during the during the Change to Extra Funds Raised (Including End of the the Reporting be Put into Reached Committed Adjustment Reporting Reporting Project Partial Reporting Period Use as or Not (1) Period Period Feasibility Change) Period (2) (3)=(2)/(1) Planned Designated Projects Not Not Acquisition of Anpon No - 40,008 0 40,008 100% 2019 No applicable applicable Acquisition of 51% Adama Shanghai and Not Not Not No - 89,373 62,471 90,071 100% No 51% Adama Huifeng applicable applicable applicable Not Not Not Huai’an Pesticide Formulation Center Yes 24,980 - 0 0 0.00% Yes applicable applicable applicable Not Not Project development and registration Yes 93,507 13,103 0 13,103 100% Terminated Yes applicable applicable Not Not Fixed-asset Investment of ADAMA Yes 66,204 5,913 0 5,913 100% Terminated Yes applicable applicable Fees for the intermediary agencies and Not Not Not No 13,600 12,713 0 12,713 100% transaction taxes applicable applicable applicable 198,291 62,471 Sub-total of Designated Projects -- 161,110 161,808 -- -- -- -- (Note 1) (Note 2) Investment of Extra Funds Raised Not Applicable How and why the planned progress or 1 Construction of Huai’an Pesticide Formulation Center expected income is not met (per Since Adama Pesticide (Jiangsu) Co., Ltd., a subsidiary company of the third-tier subsidiary of Solutions, is the entity to implement the 43 ADAMA Ltd. Annual Report 2021 Any Accumulated Investment Date by Total Amount Benefits Any Project Invested Progress by which the Expected Total Investment Invested Realized Material Designated Projects and Investment of Change Amount by the the End of Project Can Benefits Investment after during the during the Change to Extra Funds Raised (Including End of the the Reporting be Put into Reached Committed Adjustment Reporting Reporting Project Partial Reporting Period Use as or Not (1) Period Period Feasibility Change) Period (2) (3)=(2)/(1) Planned Designated Projects project) construction project of Huai’an Pesticide Formulation Center, the Company needs to increase the capital of Solutions first, and then increase the capital of the subsidiaries by Solutions. The time and process required for the relevant approval process, such as funds entry and exist, is complicated. In order to avoid delays of the project, the Company invested its own capital on the project. Following approval of the 2018 Annual Shareholders Meeting, this project had been replaced by the Anpon acquisition. 2. Development and Registration Since ADAMA Makhteshim Ltd., ADAMA Agan Ltd., and ADAMA Brazil S/A, the subsidiaries of Solutions, are the entities to implement the projects of products development and registration, this project also involves approval procedures for cross boarder investments. In order to avoid delays of this project, the Company invested its own capital in the project. 3. ADAMA Fixed-Assets Investment (1) Capacity Expansion Project for Pesticide Product A Since Product A is the Company’s newly developed product, it takes time to develop the market. In view of this, the management made changes to the time schedule of original expansion plan and suspended the investment in the second phase after careful deliberation. While adjusting the capacity expansion of the first stage in accordance with the needs of the market, the process is optimized to further enhance the product’s market advantage. Based on the changes in the market environment and in order to reduce the investment risk of raised funds, the Company decided to complete its replacement of the raised funds in 2017 (RMB 6.84 million). The follow-up investment of this project will be carried out by the Company with its own capital. (2) Equipment Investment for Fungicide product B for Brazilian market & Project on Capacity Expansion Investment for New Fragrance Ingredient Product C The above two projects started in 2017. Both projects involve cross-border investment by the Company, while the local approval process for cross-border investment might take some time. In order to meet the increasing demand of the market for Fungicide product B and New Fragrance Ingredient Product C as soon as possible, the Company decided that its overseas subsidiaries shall be responsible for meeting project investment needs through their own funds and local financing. The fungicide project for Brazilian market was carried out in accordance with the original investment plan and officially delivered for use in January 2020, and the fragrance ingredient product project 44 ADAMA Ltd. Annual Report 2021 Any Accumulated Investment Date by Total Amount Benefits Any Project Invested Progress by which the Expected Total Investment Invested Realized Material Designated Projects and Investment of Change Amount by the the End of Project Can Benefits Investment after during the during the Change to Extra Funds Raised (Including End of the the Reporting be Put into Reached Committed Adjustment Reporting Reporting Project Partial Reporting Period Use as or Not (1) Period Period Feasibility Change) Period (2) (3)=(2)/(1) Planned Designated Projects has been completed and delivered for use in May 2020. (3) Investment of the Equipment of Liquid Product Packaging The project aims to increase liquid packaging capacity to cope with expected future incremental demand and make inventory management more flexible and effective. However, due to the continuous climate change in Europe and North America in the past two years, there has been some changes in the incremental demand of the market. Based on the principle of prudence, the Company postponed the investment progress of the project and terminated the use of raised funds on this project. (4) Investment for the Relocation of Be’er Sheva Plant and Its Integration with Neot-Hovav Plant in Israel The purpose of this project is to improve the overall production efficiency and product quality through the integration and optimization of the two plants in production and operation. Since the integration of the plants involves a wide range, it will take a long time to carry out master planning procedures in Israel. At present, the project is in the planning and design stage. The Company believes that there will be some differences in the implementation time of the project and the schedule of use of raised funds. Therefore, the Company terminated the use of raised funds on this project. The proposal on terminating the above projects has been approved by the shareholders of the Company, on May 20, 2020. The Company will no longer use the raised funds for the following previously designated projects: Projects of product development and registration and fixed-asset Investment of Solutions. Explanation on material change to Please see the above the reasons why planned progress is not met. project feasibility 45 ADAMA Ltd. Annual Report 2021 Any Accumulated Investment Date by Total Amount Benefits Any Project Invested Progress by which the Expected Total Investment Invested Realized Material Designated Projects and Investment of Change Amount by the the End of Project Can Benefits Investment after during the during the Change to Extra Funds Raised (Including End of the the Reporting be Put into Reached Committed Adjustment Reporting Reporting Project Partial Reporting Period Use as or Not (1) Period Period Feasibility Change) Period (2) (3)=(2)/(1) Planned Designated Projects Amount, purpose of use and progress Not applicable of extra funds raised Change of location of designated Not applicable projects Adjustment to way of execution of Not applicable designated projects Applicable; The fifth meeting of the 8th session of the Board of Directors approved the utilization of RMB 276,530,000 of the Raised Funds Advance investment in designated for replacing capital previously invested in the Designated Projects on June 25, 2018. The Company completed the replacement in 2018. projects and replacement of funds Please refer to the “Announcement on Utilization of Part of the Raised Funds for Replacing Capital Previously Invested in the Designated Projects” published on June 26, 2018 (announcement number 2018-32). Temporary supplement to working Not applicable capital with idle raised funds Amount of surplus funds out of Not applicable projects and causes On August 10,2021, the Company transferred the remaining balance of the raised funds of RMB 890,692.57 (including interest income) Usage and destination of funds that into the general bank account of the Company for the permanent supplement of working capital. The special account of the raised funds at have not been used Sanwan sub-branch Jingzhou Branch China Construction Bank Co. Ltd. was closed after the transfer. As of December 31,2021, all the raised funds has been used up. Problems or other issues in the use Not applicable raised funds and disclosure 46 ADAMA Ltd. Annual Report 2021 Note 1: The Company intends to raise funds of no more than 198,291 RMB’0000 in the supporting finance program, while the actual funds raised was 155,999.99 RMB’0000 on December 27, 2017. Note 2: The utilized amount during the year was 62,471 RMB’0000, including interest income of 681 RMB’0000. Therefore, the accumulated investment amount as at the end of the reporting period was slightly higher than the total investment amount. (3) Change to the Designated Projects of Raised Funds √ Applicable □ Not applicable Unit: RMB ’0000 Accumulated Date of Total investment Investment Realized Whether Whether the Investment projects Original committed progress as benefits of the feasibility of the amount for amount as at the reaching New Committed Project Committed investmen at the end of the expected project has the current end of the intended Projects t amount period (%) current benefits are changed period useable (1) current period (3) = (2)/ (1) period achieved significantly condition (2) Huai’an pesticide formulation center Acquisition of Anpon project 40,008 0 40,008 100% 2019 N/A N/A No ADAMA fixed asset investment project Acquisition of 51% Adama Product Shanghai and 51% Adama development and 89,373 62,471 90,071 100% N/A N/A N/A N/A Huifeng registration project Total - 129,381 62,471 130,079 - - - - - 1. Project of the Construction of Huai’an Pesticide Formulation Center Since Adama Pesticide (Jiangsu) Co., Ltd., a subsidiary company of the third-tier subsidiary of Solutions, is the entity to implement the construction project of Huai’an Pesticide Formulation Center, the Company needs to increase the capital of Solutions first, and then The reason for changes, increase the capital of the subsidiaries by Solutions. The time and process required for the relevant approval process, such as funds entry decision-making procedures, and exist, is complicated. In order to avoid delays of the project, the Company invested its own capital into the project. and disclosure of information 2. Fixed Assets Investment-Product A 600t/a The project also needs to be carried out through the Company's capital increase for its subsidiaries, involving the relevant approval process for cross-border investment, which takes a long time. Product A is an innovative product. The market needs to accept innovative 47 ADAMA Ltd. Annual Report 2021 Accumulated Date of Total investment Investment Realized Whether Whether the Investment projects Original committed progress as benefits of the feasibility of the amount for amount as at the reaching New Committed Project Committed investmen at the end of the expected project has the current end of the intended Projects t amount period (%) current benefits are changed period useable (1) current period (3) = (2)/ (1) period achieved significantly condition (2) products for a certain period. Additionally, due to the extreme weather in the European market, the project has been delayed. Therefore, the Company replaced this original designated project. Decision-making Procedures: The matter on change of fund use was approved by the 12 th Meeting of the 8th BOD and 2018 Annual Shareholder meeting. The Company’s independent directors, the Board of Supervisors and the agency for continuous supervision have provided clear consent on this matter. Information Disclosure: Please refer to the Announcement on the Change of Certain Designated Projects disclosed on March 21 st, 2019 at www.cninfo.com.cn Acquisition of 51% Adama Shanghai and 51% Adama Huifeng On May 20, 2020, the Company's Annual Shareholding Meeting approved a Proposal on Terminating the Use of Raised Funds on Certain Designated Projects Included in the Project of Share Issuance for Assets Purchase and Supporting Finance. The Company plans to stop using the raised funds on the projects of products development and registration, and fixed-asset Investment of ADAMA. After the termination of the use of the raised funds for the certain designated projects, the remaining unused raised funds (including the resulting interest) will continue to be deposited in the corresponding raised funds account. The Company will actively deliberate on new investment projects which the remaining raised funds can be used for. Under the premises of ensuring the good market prospects of new investment projects and being able to effectively manage investment risks, the Company will perform the corresponding approval procedures for use of the remaining raised funds in accordance with relevant laws and regulations. Decision-making procedure: On October 28, 2020, the 27th meeting of the 8th session of the Board of Directors and the 14th meeting of the 8th session of the Board of Supervisors approved a Proposal on the Use of the Raised Funds for the Acquisition of the 51% Equity Stake in Jiangsu Kelinong Agrochemical Co., Ltd. as well as that in Shanghai Dibai Plant Protection Co., Ltd.. In order to efficiently use the raised funds, the Company plans to use the balance of the raised funds, in the amount of approximately RMB 893,731,302.67 (balance as at 30 September 2020, including interest income and the actual amount is subject to the bank settlement balance on the date of transfer ), and which are no longer designated for previously approved projects according to the resolutions of the Company’s Shareholders meeting held on May 20, 2020, for the payment for the 48 ADAMA Ltd. Annual Report 2021 Accumulated Date of Total investment Investment Realized Whether Whether the Investment projects Original committed progress as benefits of the feasibility of the amount for amount as at the reaching New Committed Project Committed investmen at the end of the expected project has the current end of the intended Projects t amount period (%) current benefits are changed period useable (1) current period (3) = (2)/ (1) period achieved significantly condition (2) acquisitions of 51% equity stake in Adama Shanghai and 51% equity stake in Adama Huifeng from Jiangsu Huifeng. This proposal had been approved by the 4th Interim Shareholders Meeting on November 16, 2020. Information disclosure of the Company: The detailed information please refer to Announcement on the Use of the Raised Funds for the Acquisition of the 51% Equity Stake in Jiangsu Kelinong Agrochemical Co., Ltd. as well as that in Shanghai Dibai Plant Protection Co., Ltd., published on the Cninfo (http://www.cninfo.com.cn), 29, October, 2020. Situations failing to meet the planned schedule or achieve N/A expected benefits and the reasons Explanation of the new committed project whose N/A feasibility changed significantly 49 ADAMA Ltd. Annual Report 2021 V. Sale of significant assets and equities 1. Sale of significant assets □ Applicable √ Not applicable No selling of significant assets occurred during the reporting period. 2. Sale of significant equities □ Applicable √ Not applicable VI. Analysis of major controlling and stock-participating companies √ Applicable □ Not applicable List of stock-participating companies responsible for over 10% of the net profits of the Company: Unit: RMB’000 Name Type Registered Total Operating Operating Main services Net assets Net profit capital assets revenues profit Development, manufacturing and marketing of agrochemicals, Adama intermediate Subsidiary 720,085 40,452,146 15,815,370 28,300,476 558,359 196,243 Solutions materials for other industries, food additives and synthetic aromatic products, mainly for export. Subsidiaries acquired or disposed during the Reporting Period √ Applicable □ Not applicable Company Name Way of Acquirement or Impact on the Business Operation and Performance of Disposal the Company Adama Huifeng (Jiangsu) Purchase 51% of Share Upon and immediately after completion of the Co., Ltd Equity transaction, the Company currently owns and holds 51% equity interests in ADAMA Huifeng, and the latter has become a controlled subsidiary of the Company. Based on the Accounting Standards for Business Enterprises, ADAMA Huifeng has been included in the Company’s consolidated financial statements. For details, please refer to the Announcement on the Closing of the Acquisition of 51% Equity Interests in ADAMA Huifeng (Jiangsu) Co., Ltd. (Announcement No. 2021-25) Description of major holding and equity participating companies During the Reporting Period, total sales of Solutions, a wholly-owned subsidiary of the Company, amounted to USD 4,384 million, an increase of 13%, driven by 10% volume growth alongside 2% higher prices, and further aided 50 ADAMA Ltd. Annual Report 2021 somewhat by stronger currencies. Solutions’ full-year net income was USD 31 million in the full year period, lower than the corresponding period last year. For detailed explanation of the performance movement, see above explanation of the Section. VII. List of the structured main entities controlled by the Company □ Applicable √ Not applicable VIII. Outlook of the Company’s future development (I) Industry structure and trends 1. The competitive structure of crop protection industry (1) The competitive structure of the global crop protection industry The global crop protection market is dominated by seven multinational companies, including the Group, five of which are originator companies. In the past decade, a number of mergers and acquisitions were completed among the largest players in the crop protection industry. Nonetheless, the crop protection industry as a whole is relatively decentralized, with a number of local manufacturers competing in each country against the global multinational companies. The Group believes that entry barriers for the crop protection market are relatively high, although they vary from region to region. ADAMA is a leading company (in sales terms) among the crop-protection companies that focus on off-patent crop protection solutions. The Group’s global crop protection market share was approximately 6% in 2021, based on AgBio Investor’s preliminary estimation of the global agrochemical industry in 2020. The Group's competitors are multinational Originator Companies that continue producing and marketing their original products after their patent expiry (“Originator Companies”), as well as other crop protection companies. In the Group's experience, in most cases the Originator Company’s market share in a particular product fall to approximately 30% - 70% within a number of years following the expiry of the relevant patent, leaving the remaining market share open to competition among off-patent crop protection companies, in addition to their competition with the Originator Company (which continues manufacturing the product and even leads its market prices and sales terms). The Group competes with Originator Companies and other international off-patent crop protection companies in all the markets in which it operates, as these companies generally also have global marketing and distribution networks. In addition, there are several smaller Originator Companies that also compete with the Group. As a rule, other off-patent crop protection companies that do not have international marketing and distribution networks compete with the Group locally in those geographical markets in which they operate. (2) The competitive structure of the crop-protection industry in China The chemicals industry in China, which the Company understands to be the largest in the world, as well as the agrochemicals industry in the country, includes thousands of companies which have invested in manufacturing infrastructure, most of whose production capacity is currently aimed at exports, intended for sale through small and large companies across the world, including companies like the Group and its competitors. The growth in production capacity, on one hand, and the price levels and competitiveness of the products produced in China on the other, affect the structure of competition in the entire industry. However, price levels of the products manufactured in China have risen in recent years, mainly stemming from the increase of costs relating to environment protection and regulation in China, including by way of limited granting of production permits, shutting down of plants, fines, etc. Active Ingredient prices in China declined through 2020 as the cost of oil and related basic chemicals decreased sharply. However, towards the end of 2020 prices began to increase again due to the recovery of oil price together with reduced capacities of chemical manufactures caused by higher raw material costs - a dynamic that has continued throughout 2021. This together with stronger demand due to higher crop commodities price and a strong RMB has led to the increase in the price of Active Ingredients seen in recent 51 ADAMA Ltd. Annual Report 2021 years. The Company believes that prices for many Active Ingredients will remain generally elevated at least during the first half of 2022. 2. The development trends of the crop-protection industry In the last few years, some new emerging trends that may affect the nature of competition in this sector can be identified: (1) The market share of products whose patents have expired continues to rise relative to that of patented original products, primarily due to the fact that the rate of patent expiry exceeds that of the launching of new patent-protected products; (2) a trend of some off-patent companies expanding and becoming stronger (inter alia, as a result of corporate mergers and acquisitions as well as product acquisitions), which may lead to them competing with the Group in geographic markets in which they have not operated up to now; (3) smaller companies have begun operating, in limited scale, in certain markets with relatively low entry barriers; (4) improvement of the agrochemicals industry in China inter alia, increasing market entry barriers; (5) price competition in certain markets by multinational Originator Companies and/or increasing the credit days to its customers; and (6) large mergers and acquisitions among leading companies in the sector. The Group believes that in view of the industry's development trends, the following are critical success factors: (i) reputation, branding, expertise and accumulated knowledge in the sector in the various countries and among customers and suppliers; (ii) financial strength and resilience combined with consistent growth, allowing the Group to realize a corporate development strategy including the potential for mergers and acquisitions with other companies in the sphere, and being able to respond efficiently to attractive business opportunities in order to expand its product portfolio and the scale of its operations; and (iii) access to funding sources and reasonable funding terms allowing the Group to make investments that earn a positive return. (II) Development strategy of the Company The Group strives to be a global leader in the Crop Protection industry, and intends to achieve this aim by execution of the following strategies: Utilize the Group’s Differentiated Offering to Strengthen and Grow its Market Position. The Group intends to continue to drive the growth of its business through effective commercialization of differentiated, high quality products that meet farmers’ needs efficiently. To that end, the Group will leverage its extensive R&D and registration capabilities to continue to provide unique yet simple solutions to farmers. In addition, the Group adds value by enhancing the functionality and efficacy of the industry’s most successful and commercially proven molecules, by developing new and unique mixtures and advanced formulations. These innovative products are designed to provide farmers with better solutions to the challenges they face, including weeds, insects and disease, increasing resistance and insufficient pest control related to the use of genetically modified seeds. Aiming to provide distinct benefit to farmers and enhance the sustainability of the business, in addition to the ongoing efforts to expand existing product registrations to additional crops and regions, a key portion of the Group’s strategy involves the deliberate shift of its product offering towards more innovative and value-added solutions. Such solutions include higher-margin, higher-value complex off-patent products, unique mixtures and formulations as well as innovative, novel products that are protected by patents and other intellectual property rights. As evidence of this effort, the Group has significantly increased the proportion of unique mixtures and formulations in its R&D pipeline over the last several years. Over the coming years, as this shift in the pipeline towards more differentiated and innovative solutions starts to be reflected in the Group’s commercial offering, it is expected to be a significant driver of growth, both in revenues and in profitability. In this respect, and in order to capitalize on future opportunities in the agrochemical market, the Group has intensified its efforts to develop a leading pipeline of crop protection products aimed at providing value-added solutions to farmers around the world, based on AIs that are expected to come off-patent in the coming years. These newly off-patent AIs will be developed into new mixtures and formulations, in combination with new formulation and delivery technologies that provide more efficient ways to deliver the products into the plants, thereby creating truly unique and differentiated, value-added solutions to farmers. In this way, the Group strives to achieve a double competitive 52 ADAMA Ltd. Annual Report 2021 advantage – to be the first to market launching new products after the expiry of the patent on the AI, and to capitalize on cost leadership through increased backward integration through the Group’s global operations capabilities. Bridge China and the World. The Group is striving to become a leading global crop protection company in China, both commercially and operationally, and in so doing, to drive its global growth in the future. China is currently the third largest, and one of the fastest growing, agricultural markets in the world. Furthermore, the Group believes that, over the long term, China has the potential to grow into the world’s largest crop protection market. Also, as the Chinese domestic market is highly fragmented, with limited penetration by the global agrochemical companies, the Group believes that there is a unique opportunity for it to capitalize on the significant untapped potential of the Chinese market and to gain market share. Moreover, in recent decades, China has become the leading manufacturing center for the global crop protection industry - from the sourcing of raw materials and chemical intermediates to the synthesizing of active ingredients and the formulation of finished products. The Group intends to capitalize on its status in China and its relationship with ChemChina, as well as close collaboration Syngenta Group, to increase its commercial activity in the country, where it is already building additional infrastructure. The Group’s commercial teams are working closely together. Through the commercial collaborations, the Group has an operational infrastructure and commercial foundation upon which a leading Chinese domestic distribution network has been built, and which the Group believes will make it one of the only global crop protection providers with significant integrated commercial and operational infrastructures both within and outside of China. Through the combination with Solutions and the collaboration with the Syngenta Group Companies, the Group intends to achieve cost savings and improved margins and efficiencies through the vertical integration of manufacturing and formulation together with the Group’s global supply chain and logistics capabilities. In addition, the Group’s global R&D efforts are being complemented by a new R&D center in Nanjing to service the Group’s expanded product development needs and enable the introduction of advanced technologies into China and globally. The Group expects to drive significant demand for its products by launching new and advanced active ingredients and intermediates with higher R&D content. In addition, the advanced formulation center in Jiangsu Province will serve as a platform to introduce cost- advantaged crop protection solutions into China and globally. The Group expects that its unique positioning and profile in China, including the relationship with Syngenta group and Sinochem, should establish it as a partner of choice for companies outside China seeking to access its domestic market, as well as for Chinese companies looking to expand their global footprint. In addition to the combination and the commercial collaboration, the Group is assessing strategic joint ventures and selected acquisitions to further bolster its commercial and operational platform in China. Collaboration of the Company with Syngenta and Sinochem as members of the Syngenta Group. The Company engaged with Syngenta in collaboration agreements for sale and distribution of finished products, raw materials supply, joint ventures in the fields of procurement, logistics, production and supply chain as well as in the R&D and products’ registration fields, in order to reduce costs, to improve processes and to increase the Company’s sales. Such collaborations have and are expected to continue to generate additional revenues, accelerate growth and increase productivity, for the Group as well as Syngenta Group. Continue to Strengthen Position in Emerging Markets. In addition to developing its China platform, the Group enjoys strong and leading positions in key emerging agricultural markets such as Latin America, India, Asia and Eastern Europe, with around half of its global sales achieved in these emerging markets. Over the last several years, in order to establish direct market access and distribution capabilities in these markets, the Group has successfully integrated acquisitions in Colombia, Chile, Poland, Serbia, Romania, the Czech Republic, Slovakia, and South Korea. Similarly, the Group has a direct go-to-market strategy in many high-growth markets around the world, leveraging a direct sales force and driving demand at the retail and farmer level. The Group intends to continue to invest in its growth in the key emerging markets with high growth potential. The Group’s strong global platform and leading commercial infrastructure in such markets will 53 ADAMA Ltd. Annual Report 2021 allow it to capitalize on worldwide growth opportunities, and continue to drive its profitable growth. Grow Revenues and Increase Profitability. The Group believes that it has the capacity and operational leverage to increase profitability through focused execution of its strategy within the framework of prudent working capital management. The Group is aiming to increase its revenues and margins consistently over time as it shifts to a more differentiated, higher-margin product portfolio and continues to strengthen its product pipeline with significant number of higher-value products, based on AIs which patent protection has just expired, unique mixtures and formulations, as well as innovative and, in some cases, patent-protected products. Similarly, the Group intends to drive revenue growth through increased penetration of high-growth markets including China, Brazil and other key markets in Latin America, Asia-Pacific and eastern Europe. The Group believes that its investment in developing an operational footprint in China will lower costs and improve manufacturing efficiency and distribution logistics and reduce inventory requirements in many markets worldwide. In recent years, the Group has focused on growing and improving its business, infrastructure and brand. Other than investments in the further development of its China operations, the Group believes that its existing global infrastructure is largely of sufficient scale to support higher revenues, allowing it to enjoy economies of scale and continually improve profitability over time. Continue to Capitalize on the Global Portfolio Integration and Rebranding Initiative. In 2014 the ADAMA brand was launched, integrating dozens of legacy brands across the globe to form a single, streamlined sales and distribution entity under a unified brand name. In 2019, following extensive farmer and customer research in 13 major markets, the Company further evolved its brand, creating a unique and compelling brand story that elevates ADAMA’s distinct entrepreneurial and agile culture; increases its relevance to its customers (channel partners and growers); and further differentiates the Company from key competitors. The evolved brand positioning, known as “Listen, Learn, Deliver”, focuses on a process of listening to customer needs, bringing insights from the field and combining them with the extensive know-how and experience in the Company; and delivering solutions that meet local farmer and customer pain points. The Core Leap strategy discussed above provides the platform needed to create distinct mixtures and formulations based on farmer needs. With this new brand positioning the Company is investing in platforms to ensure ongoing and intimate farmer and customer interactions which will provide the source for future product and solution ideation. Strategically Pursue Acquisitions to Enhance Market Access and Strengthen the Product Portfolio. Throughout its history, the Group has successfully completed and integrated several add-on acquisitions across the globe. The Group intends to continue to pursue acquisitions, in-licensing agreements and joint ventures that offer attractive opportunities to enhance its market access and position, as well as strengthen and further differentiate its product portfolio. The Group plans to focus these efforts largely in high-growth geographies, particularly in emerging markets where it aims to gain market share, as well as access to selected sources of innovation. The Group continues with its track record of making and integrating selective. (III) 2022 Business plan In 2022, the Company is expecting moderate growth, supported by higher crop commodity prices, which in recent months have bolstered farmer profitability levels. Overall, the Group is expecting to see revenue growth driven by volume growth and the continued launch of new products. The overall pricing environment is expected to be positive, as relatively higher crop prices and strong farmer demand allow the passing on of some of the higher input costs. However, the extent to which this will materialize will be counterbalanced by intensive competitive dynamics in most key markets across the globe. Raw material and Active Ingredient (AI) procurement costs are expected to remain relatively high resulting from continued tight supply conditions that have driven ongoing elevated costs of raw materials and Ais. The Group will continue to exercise discipline in management of its operating expenses, while focusing on continued 54 ADAMA Ltd. Annual Report 2021 improvement in working capital efficiency and quality of business. In 2022, the Group will continue to pursue its comprehensive portfolio development strategy, driven by further momentum and investment in Innovation, Research and Development, and focusing on all aspects of development of its portfolio – product development, obtaining of registrations, development of advanced formulations and innovative delivery technologies, as well as differentiated mixtures, alongside further investments in chemical R&D. During 2022, the Group will remain focused on the ongoing optimization and implementation of its global AI synthesis layout transformation, a long-term initiative that seeks to align the Group’s AI synthesis layout with the Group’s identified pipeline opportunities. Furthermore, following the completion of the Relocation & Upgrade program in Jingzhou, in the coming year the Group will continue to focus on the upgrading and relocation of the production facilities in Huai’An, as well as the continued build-up of its commercial and operational presence in China. The Group is continuing to invest in the upgrading and expansion of its IT capabilities, including the implementation of its ERP project in the production facilities in Israel and China. Note: The business plan described above does not constitute a commitment to investors on the Company’s performance, and the Company suggests that investors should maintain adequate risk awareness therefor, and understand the difference between the Company’s business plan and a performance commitment. (IV) Company’s financing and credit The Group finances its business activities by means of its equity as well as credit from external sources. The primary external financing is by means of long-term bonds issued by Solutions. The Group has additional sources of external funding from: (1) long-term credit from banks and related parties; (2) short-term bank credit as well as non-tradable commercial securities; and (3) supplier credit. In addition, the Group has significant cash balances as well as unused set bank credit lines. (V) Risk factors and countermeasures The Group is exposed to several major risk factors, resulting from its economic environment, the industry and the Group's unique characteristics, as follows (the order below does not indicate priority): Exchange rate fluctuations Although the Company reports its consolidated financial statements in RMB, the Company’s material subsidiary Solutions reports its consolidated financial statements in US dollars, which is its functional currency, while its operations, sales and purchases of raw materials are carried out in various currencies. Therefore, fluctuations in the exchange rate of the selling currency against the purchasing currency impact the Company’s results. The Group's most significant exposures are to the Euro, the Israeli Shekel and the Brazilian Real. The Group has lesser exposures to other currencies. The strengthening of the US dollar against other currencies in which the Company operates reduces the dollar value of such sales and vice versa. On an annual basis, approximately 22% of the Group’s sales are to the European market and therefore the impact of long- term trends on the Euro may affect the Company's results and profitability. Concentration of currency exposure from foreign currency exchange rate fluctuations against assets, including inventory of finished products in countries of sale, liabilities and cash flow denominated in foreign currencies are done constantly. High volatility of the exchange rates of these currencies could increase the costs of transactions to hedge against currency exposure, thereby increasing the Company's financing costs. The Group uses commonly accepted financial instruments to hedge most of its substantial net balance sheet exposure to any particular currency. Nonetheless, since as part of these operations the Group hedges against most of its balance sheet exposure and only against part of its economic exposure, exchange rate volatility might impact the Group’s results and 55 ADAMA Ltd. Annual Report 2021 profitability. As of the date of publication of this Report, the Group has hedged most of its balance sheet exposure for 2021. In addition, as the Company’s product sales depend directly on the cyclical nature of the agricultural seasons, therefore the Company’s income and its exposure to the various currencies is not evenly distributed over the year. Countries in the northern hemisphere have similar agricultural seasons and therefore, in these countries, the highest sales are usually during the first half of the calendar year. During this period, the Company is most exposed to the Euro. In the southern hemisphere, the seasons are opposite and most of the local sales are carried out during the second half of the year. During these months, most of the Company's exposure pertains to the Brazilian Real. Exposure to Interest rate, Israel CPI and NIS exchange rate fluctuations The debentures issued by Solutions, the material subsidiary of the Company, are Israeli Shekel based and linked to the Israel Consumer Price Index “CPI” and therefore an increase in the CPI and an appreciation of the shekel rate against the dollar might lead to a significant increase in its financing expenses. As of the date of approval of the financial statements, Solutions hedged most of its exposure to these risks on an ongoing basis, through CPI hedging and USD-ILS exchange rate hedging transactions. Since on December 31, 2021 the Group have had dollar denominated liabilities bearing variable London Interbank Offered Rates (LIBOR) interest. As a result, the Group was exposed to changes in the US dollar LIBOR interest rate. The Group prepares a quarterly summary of its exposure to changes in the relevant interest rate benchmarks (which replaced the LIBOR interest rate) and periodically examines hedging the variable interest rate by converting it to a fixed rate. As part of the global reform in interest rate benchmarks, the phasing out of LIBOR (the so-called LIBOR fallback) fallback was scheduled for the end of 2021. As of January 1, 2022 three global interest rate benchmarks has transitioned to alternative risk-free rates while replacing the former benchmark LIBOR: SOFR (USD), ESTR (EUR) and SONIA (GBP). As of the date of publication of this Report, the Group has not carried out hedging for such exposure, since US dollar interest rates have been relatively stable. Business operations in emerging markets The Group conducts business - mainly product sales and raw material procurement – inter alia, in emerging markets such as Latin America (particularly in Brazil, the largest market, country wise, in which the Group operates), Eastern Europe, Southeast Asia and Africa. The Group's activity in emerging markets is exposed to risks typical of those markets, including: political and regulatory instability; volatile exchange rates; economic and fiscal instability and frequent revisions of economic legislation; relatively high inflation and interest rates; terrorism or war; restrictions on import and trade; differing business cultures; uncertainty as to the ability to enforce contractual and intellectual property rights; foreign currency controls; governmental price controls; restrictions on the withdrawal of money from the country; barter deals and potential entry of international competitors and accelerated consolidations by large-scale competitors in these markets. Developments in these regions may have a significant effect on the Group's operations. Distress to the economies of these markets could impair the ability of the Group's customers to purchase its products or the ability to market them at international market prices, as well as harm the Group's ability to collect customer debts, in a way that could have a significant adverse effect on the Group's operating results. The Group’s operations in multiple regions allows for the diversification of such risks and for the reduction of its dependency on particular economies. In addition, changes in registration requirements or customers' preferences in developed western countries, which may limit the use of raw materials purchased from emerging economies, may require redeployment of the Group's procurement organization, which might negatively affect its profitability for a certain period. Operating in a competitive market The crop protection products industry is highly competitive. Currently, seven multinational companies, including the Company, lead the global industry. Five of these, Bayer, Syngenta, Corteva, BASF and FMC, are Originator Companies, which develop, manufacture and market both patent-protected as well as off-patent products. The Group competes with 56 ADAMA Ltd. Annual Report 2021 the original products with the aim of maintaining and increasing its market share. The Originator Companies possess resources enabling them to compete aggressively, in the short-to-medium term, on price and profit margins, so as to protect their market share. Loss of market share or inability to acquire additional market share from the Originator Companies can affect the Group's position in the market and adversely affect its financial results. For details regarding the Group’s competitive advantages see section III - subsection III. Core competitiveness analysis above. Similarly, the Group also competes in the more decentralized off-patent segment of the market, against other off-patent companies and smaller-scale Originator Companies, which have significantly grown in number in recent years and are materially changing the face of the crop protection industry, the majority of whom have not yet deployed global distribution networks, and are only active locally. These companies often price their products aggressively and at times have lower profit margins than the Group, which may adversely impact the Group's sales and product prices. The Group's ability to maintain its revenues and profitability from a specific product in the long term is affected by the number of companies producing and selling comparable off-patent products and the timing of their entrance to the relevant market. Any delay in developing or obtaining registrations for products and/or delayed penetration into markets and/or growth of competitors that focus on off-patent active ingredients (whether by the expansion of their product portfolio, granting registrations to other manufacturers (including manufacturers in China and India) to operate in additional markets, transforming their distribution network to a global scale or increasing the competition for distribution access), and/or difficulty in purchasing low cost raw materials, may harm the Group’s sales, affect its global position and lead to price erosion. Decline in scope of agricultural activities; exceptional changes in weather conditions The scope of general agricultural activities worldwide may be negatively affected by many exogenous factors, such as extreme weather conditions, natural disasters, a decrease in agricultural commodity prices, government policies and the economic condition of farmers. A material decline in the scope of agricultural activities would by necessary implication cause a decline in the demand for the Group’s products, erosion of its prices and collection difficulties, which may have a significant adverse effect on the Group's results. Extreme weather conditions as well as other damages caused by nature may have an impact on the demand for the Group's products. The Group believes, that should a number of such bad seasons occur in succession, without favorable seasons in the interim, its results may sustain significant harm. Environmental, health and safety legislation, standards, regulation and exposure Many aspects of the Group's operations are strictly regulated, including in relation to production and trading, and particularly in relation to the storage, treatment, manufacturing, transport, usage and disposal of its products, their ingredients and byproducts, some of which are considered hazardous. The Group's activities involve hazardous materials. Defective storage or handling of hazardous materials may cause harm to human life or to the environment in which the Group operates. The regulatory requirements regarding the environment, health and safety could, inter alia, include soil and groundwater clean-up requirements; as well as restrictions on the volume and type of emissions the Group is permitted to release into the air, water and soil. The regulatory requirements applicable to the Group vary from product to product and from market to market, and tend to become stricter with time. In recent years, both government authorities and environmental protection organizations have been applying increasing pressure, including through investigations and indictments as well as increasingly stricter legislative proposals and class action suits related to companies and products that may potentially pollute the environment. Compliance with these legislative and regulatory requirements and protection against such legal actions requires the Group to commit considerable human and financial resources (both in terms of substantial ongoing costs and in terms of material one-time investments) to meet mandatory environmental standards. In some instances, this may result in delaying the introduction of products into new markets or in adverse effects on the Group’s profitability. In addition, the toughening, 57 ADAMA Ltd. Annual Report 2021 material alteration or revocation of environmental licenses or permits, or their stipulations, or the inability to obtain such licenses and permits, may significantly affect the Group's ability to operate its production facilities, which in turn may have a material adverse effect on the financial and business results of the Group. The Group may be required to bear significant civil liabilities (including due to class actions) or criminal liabilities (including high penalties and/or high compensation payments and/or costs of environmental monitoring and rehabilitation), resulting from violation of environmental, health and safety regulations, while some of the existing legislation may impose “strict liability” regime on the Group, i.e. the Group will be held liable, regardless of proof of negligence or malice. While the Group invests material sums in adapting its facilities and in constructing special facilities in accordance with environmental requirements, it is currently unable to assess with any certainty whether these investments (current and future) and their outcomes may satisfy current or future requirements, should these be significantly increased or changed. In addition, the Group is unable to predict with any certainty the extent of future costs and investments it may incur in order to meet the requirements of the environmental authorities in the relevant countries in which it operates since, inter alia, the Group is unable to estimate the extent of potential pollutions, their duration, the extent of the measures required to be taken by the Group in handling them, the division of responsibility among other parties and the amounts recoverable from third parties. Furthermore, the Group may be the target of bodily injury claims and property damage claims caused by exposure to hazardous materials, which are largely covered under the Group’s insurance policies. Legislative, standard and regulatory changes in product registration The majority of the substances and products marketed by the Group require registration at various stages of their development, production, import, utilization and marketing, and are also subject to strict regulatory supervision by the regulatory authorities in each country. Compliance with the regulatory requirements that vary from country to country and which are becoming more stringent with time, involves significant time and costs, and rigorous compliance with individual registration requirements for each product. Noncompliance with these regulatory requirements might materially adversely affect the Group’s expenses, cost structure and profit margins, as well as penetration of its products in the relevant market, and may even lead to suspension of sales of the relevant product, and recall of those products already sold, or to legal action. Moreover, to the extent new regulatory requirements are imposed on existing registered products (requiring additional investment or leading to the existing registration's revocation) and/or the Group is required to compensate another company for its use of the latter's product registration data, these might amount to significant sums, considerably increasing the Group's costs and adversely affecting its results and reputation. In recent years the industry has been suffering from revocation of registration for many products around the world. This trend is particularly evident in European countries as well as in many other countries worldwide. Nevertheless, the Group believes that, in countries where the Group maintains a competitive edge, any toughening of registration requirements may actually increase this edge, since this will make it difficult for its competitors to penetrate the same market, whereas in countries in which the Group possesses a small market share, if any, such toughening may make further penetration of the Group's products into that market more difficult. Product liability Product and producer liability are a risk for the Group. Regardless of their prospects or actual results, product liability lawsuits might involve considerable costs as well as tarnish the Group's reputation, thus potentially impacting its profits. The Group has a third-party and defective product liability insurance cover. However, there is no certainty that the scope of insurance cover is sufficient. Any future product liability lawsuit or series of lawsuits could materially affect the Group’s operations and results, should the Group lose the lawsuit or should its insurance cover not suffice or apply in a particular instance. In addition, while the Group has not currently encountered any difficulty renewing such insurance policy, it is possible that it will encounter future difficulties in renewing an insurance policy for third party liability and defective products on terms acceptable to the Group. 58 ADAMA Ltd. Annual Report 2021 Successful market penetration and product diversification The Group’s growth and profit margins are affected, inter alia, by the extent of its success in developing differentiated products and obtaining registrations for them, so as to enable it to gain market share at the expense of its competitors. Usually, being the first to launch a certain off-patent product affords the Group continuing advantage, even after other competitors penetrate the same market. As such, the Group's revenues and profit margins from a certain new off-patent product could be materially affected by its ability to launch such product ahead of the launch of a comparable product by its competitors. Should new products fail to meet registration requirements in the different countries or should it take a long period of time to obtain such registrations, the Group's ability to successfully introduce a new product to the relevant market in the future may be affected, since entry into the market prior to other competitors is important for successful market penetration. Furthermore, successful market penetration involves, inter alia, product diversification in order to suit each market's changing needs. Therefore, if the Group fails to adapt its product mix by developing new products and obtaining the required regulatory approvals, its future ability to penetrate that market and to maintain its existing market share could be affected. Failure to introduce new products to given markets and meet Group objectives (given the considerable time and resources invested in their development and registration) might affect the sales of the product in question in the relevant market, the Group’s results and margins. Intellectual property rights of the Group and of third parties The Group's ability to develop off-patent products is dependent, inter alia, on its ability to oppose patents or patent application of Originator Companies or other third parties, or to develop products that do not otherwise infringe intellectual property rights in a manner that may involve significant legal and other costs. Originator Companies tend to vigorously defend their products and may attempt to delay the launch of competing off-patent products by registering patents on slightly different versions of products for which the original patent protection is about to expire or has expired, with the aim of competing against the off-patent versions of the original product. The Originator Companies may also change the branding and marketing of their products. Such actions may increase the Group's costs and the risk it entails, and harm or even prevent its ability to launch new products. The Group is also exposed to legal claims that its products or production processes infringe on third-party intellectual property rights. Such claims may involve time, costs, substantial damages and management resources, impair the value of the Group's brands and its sales and adversely affect its results. Such lawsuits that were concluded involved non- material amounts. Furthermore, although the Group protects its brands and trade secrets with patents, trademarks and other methods of intellectual property protection, these protective means may not be sufficient for fully safeguarding its intellectual property. Any unlawful or other unauthorized use of the Group's intellectual property rights could adversely affect the value of its intellectual property and goodwill. In addition, the Group may be required to take legal actions involving financial costs and resources to safeguard its intellectual property rights. Fluctuations in raw material inputs and prices, and in sales costs Significant percentage of the Groups’ cost of sales derives from raw material costs. Hence, significant increases or decreases in raw material costs affect the cost of goods sold, and are, due to the length of the Company’s inventory cycle, generally reflected in the Company’s financials. Most of the Group's raw materials are distant derivatives of oil prices and therefore, extreme changes or decrease in oil prices may affect the costs of raw materials, although only partially. To reduce exposure to fluctuations in the prices of raw materials, the Group customarily engages in long-term purchase contracts for key raw materials, wherever possible. Similarly, the Group acts to adjust its sales prices, wherever possible, to reflect the changes in the costs of raw materials. As of the date of approval of the financial statements, the Group has not engaged in any hedging transactions against 59 ADAMA Ltd. Annual Report 2021 increases in oil and other raw material costs. Exposure due to recent developments in the genetically modified seeds market Any significant development in the market of genetically modified seeds for agricultural crops, including as a result of regulatory changes in certain countries currently prohibiting the use of genetically modified seeds, and/or any significant increase in the sales of genetically modified seeds and/or to the extent new crop protection products are developed for further crops that would be widely used (substituting traditional products), will affect demand for crop protection products, requiring the Group to respond by adapting its product portfolio to the new demand structure. Consequently, to the extent that the Group fails to adapt its product mix accordingly, this may reduce demand for its products, erode their sales price and by implication affect the Group’s results and market share. Nevertheless, the fact that the Group itself markets some of the products for which herbicide tolerance traits have been developed, acts to mitigate this exposure (albeit only in terms of marketing margins). In addition, natural and/or biological substances that attack weeds, pests and diseases are potential alternatives for the Company’s products, though as of the date of the report, their efficiency is relatively limited, and they are commercialized in a relatively small volumes. Operational risks The Group’s operations, including its manufacturing activities, rely, inter alia, on state-of-the-art computer systems. The Group continually invests in upgrading and protecting these systems from malfunctions and attack. Any unexpected failure of these systems, as well as the integration of new systems, could involve substantial costs and adversely affect the Group's operations until completion of the repair or integration. The potential occurrence of a substantial failure that cannot be repaired within a reasonable time frame may also affect the Group's operations and its results. Currently, the Group has a property and loss-of-profit insurance policy. Data protection and cyber security During its activity, the Group may be exposed to risks and threats, related to the stability of its information technologies systems, data protection and cyber security, which could appear in many different forms (such as service denial, misleading employees, malfunction, encryption or data erasing and other cyber-attacks via E-mail or malicious software). An attack on such computerized systems, mainly network based systems may cause the group material damages and expenses and even partial suspension and disruption of their proper functioning. In order to minimize the abovementioned risks, the group invests resources in its technological resilience and in proper protection of its systems. Raw material supply and/or shipping and port service disruptions Lack of raw materials or other inputs utilized in the manufacture of the Group’s products may prevent the Group from supplying its products or significantly increase production costs. Moreover, the Group imports raw materials to its production facilities worldwide, from where it then exports the technical or formulated products to its subsidiaries around the world for formulation and/or commercialization purposes. Disruptions in the supply of raw materials from regular suppliers may adversely affect operations until an alternative supplier is engaged. If any of the Group's suppliers are unable to supply raw materials for a prolonged period, including due to ongoing disruptions and/or prolonged strikes and/or infrastructure defects in the operating of a relevant port, and if the Group is unable to engage with an alternative supplier at similar terms and in accordance with the relevant product registration requirements, this may adversely affect the Group's results, significantly affect its ability to obtain raw materials in general, or obtain them at reasonable prices, as well as limit its ability to supply products and/or meet customer supply deadlines. These might negatively affect the Group, its finances and operating results. In order to reduce this risk, it is the Group's practice to occasionally adjust the volume of its product inventories and at times utilize air freight. Failed mergers and acquisitions; difficulties in integrating acquired operations The Group's strategy includes growth through mergers, acquisitions, investments and collaborations designed to expand 60 ADAMA Ltd. Annual Report 2021 its product portfolio and deepen its presence in certain geographical markets. Growth through mergers and acquisitions requires assimilation of acquired operations and their effective integration in the Group, including realization of certain forecasts, profitability, market conditions and competition. Failure to successfully implement the above and/or non-realization of the relevant forecasts may result in not achieving the incremental value forecasted, loss of customers, exposure to unexpected liabilities, reduced value of the intangible assets included in the merger or acquisition as well as the loss of professional and skilled human resources. Production concentration in limited plants A large portion of the Group’s production operations is concentrated in a relatively small number of locations. Natural disasters, hostilities, labor disputes, substantial operational malfunction or any other material damage might significantly affect Group operations, as a result of the difficulty, the time and investment required for relocating the production operation or any other activity. International taxation Most of the Group’s sales are global, through its consolidated subsidiaries worldwide. These individual companies are assessed in accordance with the tax laws effective in each respective location. The Group’s effective tax rate could be significantly affected by different classification or attribution of the profits arising from the proportional value of the components of each of the companies in the Group in the various countries, as is recognized in each tax jurisdiction; changes in the characteristics (including regarding the location of control and management) of these companies; changes in the breakdown of the Group's profits into regions where differing tax rates apply; changes in statutory tax rates and other legislative changes; changes in assessment of the Group's deferred tax assets or deferred tax liabilities; changes in determining the areas in which the Group is taxed; and potential changes in the Group's organizational structure. Changes in tax regulations and the manner of their implementation, including with regard to the implementation of BEPS, may lead to a substantial increase in the Group's applicable tax rates and have a material adverse effect on its financial position, results and cash flows. The Group’s Financial Statements do not include a material provision for exposure for international taxation, as stated above. Risks arising from the Group’s debt The Group finances its business operations by means of its own equity and loans from external sources (primarily traded debentures issued by Solutions and bank credit). The Group's main source for servicing the debt and its operating expenses is by means of the profits from the Group companies’ operations. Restrictions applying to the Group companies regarding distribution of dividends to the Group, or the tax rate applicable on these dividends, may affect the Group's ability to finance its operations and service its debt. In addition, the Group's Finance Documents, as contained in the bank credit agreements, require meeting certain Financial Covenants. Failure to meet these covenants due to an exogenous event or non-materialization of Group forecasts, and insofar as the financing parties refuse to extend or update these Financial Covenants as per the Group’s capabilities, may lead the financing parties to demand the immediate payment of these liabilities (or part thereof). Exposure to customer credit risks The Group’s sales to customers worldwide usually involve customer credit as is customary in each market. A portion of these credit lines is insured, while the remainder are exposed to risk, particularly during economic slowdowns in the relevant markets. The Group’s aggregate credit, however, is diversified among many customers in dozens of countries, mitigating this risk. In addition, in certain regions, particularly in South America, credit days are particularly long (compared to those extended to customers in regions such as Europe), and on occasion, inter alia, owing to agricultural seasons or economic downturns in those countries, the Group may encounter difficulty in timely collection of customer debts, with the collection period being extended over several years. 61 ADAMA Ltd. Annual Report 2021 Generally, such issues arise more often in developing countries where the Group may be less familiar with its customers, the collaterals might be in double until actual repayment and the insurance cover of these customers is likely to be limited. Credit default by any of the customers may negatively impact the Group's cash flow and financial results. The Group’s working capital and cash flow needs Similar to other companies operating in the crop protection industry, the Group has substantial cash flow and working capital requirements in the ordinary course of operations. In view of the Group's growth and considering its primary growth regions, the Group’s broad product portfolio and the Group’s investments in manufacturing infrastructures, the Group has significant financing and investment needs. The Group acts continually to improve the state and management of its working capital. While currently the Group is in compliance with all its financial covenants, significant deterioration of its operating results may in the future lead the Group to fail to comply with its financial covenants and fail to meet its financial needs. As a result, the Group's ability to meet its goals and growth plans, as well as its ability to meet its financial obligations, may be harmed. Contagious disease outbreak Outbreak of a contagious disease and pandemics, or other adverse public health developments, in territories where significant production activity is taking place or from which raw materials are supplied to a significant extent, may have a material adverse effect on the Company’s activity, such that the Company may encounter difficulties with procurement of raw materials and intermediates, experience a certain decrease of activity within its production facilities due to governmental instructions, and be constrained with respect to its logistics and supply lines. In addition, the Company sales could be potentially impacted by a temporary decrease in demand for its products, as well as by temporary disruption of the Company’s ability to sell and distribute products as mentioned above. IX. Information regarding communication with investors during the Reporting Period √ Applicable □ Not applicable Reception Type of Date Place Name of the visitor About Index mode visitor CICC, Industrial Securities, TF Record of the Securities, Haitong Securities, Introduction on Communications Dongxing Securities, BOC 2020 Q4 and FY between the International, Nanjing performance. Company and the Others March Not Securities, HSBC Qianhai Corresponding Investors (No. Phone call (Sell-side 30, 2021 applicable Securities, Guolian Securities, presentation was 2021-01) was analysts) SWHY Securities, CITIC published on the published by the Securities, Everbright website of the Company on April Securities, North East Company. 1, 2021 at Securities and Citi, etc. www.cninfo.com.cn. March Not Webcastin Institutional Not applicable Introduction on the Record of the 31, 2021 applicable g and 2020 Q4 and FY Communications individual performance. between the investors Corresponding Company and the presentation was Investors (No. published on the 2021-02) was website of the published by the Company. Company on April 2, 2021 at www.cninfo.com.cn. Others CICC, TF Securities, Haitong Introduction on Record of the April 28, Not Phone call (Sell-side Securities, Everbright 2021Q1 Communications 62 ADAMA Ltd. Annual Report 2021 Reception Type of Date Place Name of the visitor About Index mode visitor 2021 applicable analysts) Securities, BOC International, performance. between the Nanjing Securities, HSBC Corresponding Company and the Qianhai Securities, Guolian presentation was Investors (No. Securities, SWHY Securities, published on the 2021-03) was Anxin Securities, Zhongtai website of the published by the Securities, Guangfa Securities, Company. Company on April Fangzheng Securities, etc. 30, 2021 at www.cninfo.com.cn. CICC, TF Securities, Record of the Everbright Securities, China Introduction on Communications Securities, Industrial 2021 Q2 and Half- between the Securities, BOC International, year performance. Company and the Others Nanjing Securities, HSBC August Not Corresponding Investors (No. Phone call (Sell-side Qianhai Securities, Guolian 25, 2021 applicable presentation was 2021-04) was analysts) Securities, Haitong Securities, published on the published by the Anxin Securities, Zhongtai website of the Company on Securities, Northeast Company. August 27, 2021 at Securities, Orient Securities, www.cninfo.com.cn. Changjiang Securities, etc. August Not Webcastin Institutional Not applicable Introduction on the Record of the 26, 2021 applicable g and 2021 Q2 and Half- Communications individual year between the investors performance. Company and the Corresponding Investors (No. presentation was 2021-05) was published on the published by the website of the Company on Company. August 30, 2021 at www.cninfo.com.cn. Record of the CICC, TF Securities, Introduction on Communications Everbright Securities, Industrial 2021 Q3 and 9M between the Securities, CITIC, Guangfa performance. Company and the Others Securities, BOC International, October Not Corresponding Investors (No. Phone call (Sell-side Guolian Securities, Huatai 27, 2021 applicable presentation was 2021-06) was analysts) Securities, Zhongtai Securities, published on the published by the Northeast Securities, Dongxin website of the Company on Securities, Guohai Securities, Company. October 29, 2021 at etc. www.cninfo.com.cn. October Not Webcastin Institutional Not applicable Introduction on the Record of the 28, 2021 applicable g and 2021 Q3 and 9M Communications individual performance. between the investors Corresponding Company and the presentation was Investors (No. published on the 2021-07) was website of the published by the Company. Company on November 1, 2021 at www.cninfo.com.cn. 63 ADAMA Ltd. Annual Report 2021 Section IV - Corporate Governance I. Basic details of corporate governance During the Reporting Period, the Company continuously improved the awareness of corporate governance and corporate governance structure and perfected the corporate system as well as standardized the operation of the Company, promoted internal control activities, and constantly improve the Company's management levels stringently according to requirements of relevant laws and regulations, such as the Company Law, Securities Law, and Corporate Governance Principle of Listed Company, as well as Rules for Listing Shares in Shenzhen Stock Exchange. 1. About Shareholders and the Shareholders’ meeting During the Reporting Period, the Company has ensured that all shareholders, especially small and medium shareholders, are treated equal and able to fully exercise their rights. It held one annual general meeting of shareholders, during which 13 proposals in total were reviewed and approved. Lawyers were invited to attend all the meetings mentioned above for testimony and issuing legal opinions. Online voting has been applied during all above-mentioned meetings to ensure that all shareholders, especially small and medium shareholders, enjoy equal status and fully exercise their rights. Notices of shareholders' meeting, meeting proposals, discussion procedures, voting on proposals and information disclosure all meet the requirements. Every major decision of the Company has been decided by the shareholders' meeting according to laws and regulations with lawyers as the witness to ensure that the right to know, to participate and vote on major issues of all shareholders, especially the small and medium shareholders are properly protected. 2. About Directors and the Board of Directors During the Reporting Period, the number, composition and qualifications of the board of directors were in compliance with the laws and regulations as well as the Articles of Association of the Company. All board members are diligent and responsible for attending the board and shareholders’ meetings in accordance with the relevant provisions of the Company Law and the Articles of Association. During the Reporting Period, the Company held 10 board meetings during which 34 proposals were reviewed. The organizing, convening and formation of resolutions were carried out in accordance with relevant provisions of the Articles of Association and the Rules of Procedure for the Board of Directors. The Company has established an independent director system in accordance with relevant regulations. Each of the independent directors have expressed independent opinions on important business of the Company during the Reporting Period. The Company's board of directors consists of one strategy committee, one nomination committee, one audit committee and one remuneration and appraisal committee, all of which are functioning with respective implementation rules to ensure the scientific and compliant decision-making by the board of directors. 3. About Supervisors and the Board of Supervisors During the Reporting Period, the board of supervisors of the Company consisted of three supervisors. The number, composition and qualifications of the Board of Supervisors were in compliance with laws and regulations as well as the Articles of Association of the Company. During the Reporting Period, five meetings were held and 13 proposals were reviewed. All meetings were organized and convened in accordance with the procedures of the Articles of Association and the Rules of Procedure for the Board of Supervisors. All supervisors have earnestly performed their duties by reviewing the company's periodic reports and other matters and issuing verification opinions with a strong sense of responsibilities to the shareholders. All of them have effectively fulfilled their duties and safeguarded the legitimate rights and interests of the Company and its shareholders. 4. About Investors’ Relations The Company communicates with investors through public announcements, consultations by telephone, interactive 64 ADAMA Ltd. Annual Report 2021 platforms, e-mails and other multiple media to enhance opinion exchange. It has been making various efforts on deepening the understanding of investors about the Company's operation and development outlook and also maintaining good relations with them. Meanwhile, it has been serious to receive investors' opinions and suggestions and encouraged the interaction between investors and itself. During the Reporting Period, the Company has been patient to respond investors by answering calls and questions through all interactive platforms, which has guaranteed a sound and fair access for investors to obtain information. Whether there is any difference between the actual corporate governance situation of the Company and the provisions of the laws, administrative regulations and relevant rules of CSRC or not? □ Yes √ No There is no difference between the actual corporate governance situation of the Company and the provisions of the relevant rules of CSRC. II. Particulars about the Company’s independence from the controlling shareholder and the actual controller in ensuring the company’s assets, personnel, financials, institutions and business, etc. 1. In respect of assets: The assets relationship between the Company and the controlling shareholder is clear. The company has complete control over all its assets. There is no such thing as a free possession or usage by the controlling shareholder. 2. In respect of personnel: The Company and controlling shareholder are mutually independent in the labor, personnel and salary management, the Company CEO and other senior management personnel get the salary in the Company, and not perform administrative work in the controlling shareholder unit. 3. In respect of financing, the Company owned independent financial department, established independent accounting system and financial management system, opened independent bank account, paid tax in line with laws. 4. In respect of organization, the Company has set up the organization that was independent from the controlling shareholder completely, the Board of Directors, the Supervisory Committee and internal organization could operate independently. 5. In respect of business: the Company had a complete business system and independent operation, and conducts its independent and complete business with self-management ability. 65 ADAMA Ltd. Annual Report 2021 III. Horizontal competition √ Applicable □ Not applicable Type Type of Name of Nature of the Cause of the Solutions Work- Affiliation the Company problem schedule with the Company and follow- Company up plan Horizontal ultimate Sinochem Central The Sinochem Holdings In process/ competition controlling Holdings enterprise subsidiaries commits itself to take performance and related party of Corporation controlled by appropriate actions to . party the Ltd. Sinochem solve the horizontal transaction Company’ Holdings are competition and related s s in similar or party transactions controlling the same between its subsidiaries sharehold business as and the Company. For er the Company details, please refer to I or the Performance of supplier or commitments of Section the client of VI of the Annual Report. the Company. IV. Particulars regarding the annual shareholders’ general meeting and special shareholders’ general meetings held during the Reporting Period 1. Particulars regarding the shareholders’ general meeting during Reporting Period Proportion of Disclosure Session Type investors' Convening date Index to the disclosed date participation Announcement on the Resolutions of 2020 Annual 2020 Annual Annual General Meeting Shareholders Shareholders 75.21% May 21, 2021 May 22, 2021 (Announcement Number: Meeting Meeting 2021-22). Disclosed at the website CNINFO www.cninfo.com.cn 2. Special Shareholders’ General Meeting applied by the preferred stockholder with restitution of voting right □ Applicable √ Not applicable V. Directors, Members of the Supervisory Board, Senior Management Staff & Employees 1. Basic Information 66 ADAMA Ltd. Annual Report 2021 Amount of Shares held Shares shares Amount of Other Ending at the end of Reasons for Beginning held at the increased at shares changes Office date of the the Name Position Gender Age date of year- the decreased at increase/ Status office Reporting Shareholding office term begin Reporting the Reporting decrease term Period Changes (share) Period Period (share) (share) (share) (share) Chairman N/A Erik Fyrwald In Office Male 63 April 9, 2020 0 0 0 0 0 of the BOD Chen Sep 29, N/A Director In Office Male 54 0 0 0 0 0 Lichtenstein 2017 An Liru Director In Office Male 52 Apr 29, 2015 0 0 0 0 0 N/A Independent Dec 25, N/A Xi Zhen In Office Male 58 0 0 0 0 0 Director 2017 Independent Nov 16, N/A Ge Ming In Office Male 70 0 0 0 0 0 Director 2020 Ignacio President & March 1, N/A In Office Male 62 0 0 0 0 0 Dominguez CEO 2020 Michal General Legal Sep 29, N/A In Office Female 63 0 0 0 0 0 Arlosoroff Counsel 2017 Chairman of N/A Jiang the In Office Male 47 Jan 6, 2013 6,000 0 0 0 6,000 Chenggang Supervisory Board Member of the N/A May 21, Liu Jianhua Supervisory In Office Male 43 0 0 0 0 0 2021 Board Member of the May 21, N/A Yuan Yuan In Office Male 41 0 0 0 0 0 Supervisory 2021 67 ADAMA Ltd. Annual Report 2021 Amount of Shares held Shares shares Amount of Other Ending at the end of Reasons for Beginning held at the increased at shares changes Office date of the the Name Position Gender Age date of year- the decreased at increase/ Status office Reporting Shareholding office term begin Reporting the Reporting decrease term Period Changes (share) Period Period (share) (share) (share) (share) Board Secretary of Nov 27, N/A Guo Zhi In Office Male 44 0 0 0 0 0 the BOD 2020 Sep 29, N/A 2017 Chief Financial (Deputy Sep 30, Aviram Lahav Officer & Demission Male 62 0 0 0 0 0 CEO as of 2021 Deputy CEO March 1, 2020) Member of the N/A March 19, May 21, Li Dejun Supervisory Demission Male 64 0 0 0 0 0 2018 2021 Board Member of the N/A Nov 16, May 21, Clement Tung Supervisory Demission Male 53 0 0 0 0 0 2020 2021 Board Total -- -- -- -- -- 6,000 0 0 0 6,000 -- 68 ADAMA Ltd. Annual Report 2021 VI. Whether there was any departure of directors and supervisors and dismissal of senior management during the reporting period √ Yes □ No 1. On May 21, 2021, due to the expiration of office terms of the board of supervisors, Mr. Li Dejun and Mr. Clement Tung no longer served as supervisors of the Company. 2. On September 30, 2021, the Board received notice from Mr. Aviram Lahav informing the Company of his resignation as the Chief Financial Officer (“CFO”) and Deputy Chief Executive Officer due to personal reasons. Mr. Aviram Lahav’s resignation came into effect upon the receiving of the above notice by the Board. Following his resignation, Mr. Aviram Lahav ceased to hold any position in the Company and its wholly-owned subsidiary, ADAMA Solutions. For details, please refer to the Announcement on the Resignation of the Chief Financial Officer & Deputy Chief Executive Officer (Announcement No. 2021-41). VII. Particulars regarding changes of Directors, Supervisors and Senior Executives √ Applicable □ Not applicable Name Position Type Date Reason Chief Financial Officer Aviram Lahav and Deputy Chief Left the position Sep 30, 2021 Resignation for personal reasons Executive Officer Left the position due Member of the Li Dejun to the expiration of May 21, 2021 -- Supervisory Board office terms Left the position due Member of the Clement Tung to the expiration of May 21, 2021 -- Supervisory Board office terms Member of the Liu Jianhua Accepted the position May 21, 2021 Elected by the shareholders Supervisory Board Member of the Yuan Yuan Accepted the position May 21, 2021 Elected by the shareholders Supervisory Board 2. Resumes of important personnel Professional background, main working experience and main responsibilities of current directors, supervisors and senior management staff Mr. Erik Fyrwald, American, serves as the Chairman of the Board of Directors of the Company. He is currently the CEO of Syngenta Group, CEO and Executive Director of Syngenta A.G. and Chairman of Syngenta Foundation for Sustainable Agriculture. He currently also serves on the board of directors of CropLife International, the Swiss-American Chamber of Commerce and the listed entities Bunge Limited and Eli Lilly & Company. Previously served as President and CEO of 69 ADAMA Ltd. Annual Report 2021 Univar, a leading distributor of chemistry and related services, President of Ecolab, a cleaning and sanitation, water treatment, and oil and gas products and services provider, and Chairman, President and CEO of Nalco, a water treatment and oil and gas products and services company, and Group Vice President of the Agriculture and Nutrition Division of the DuPont Company. He graduated from the University of Delaware with a bachelor's degree in Chemical Engineering and completed the Advanced Management Program at Harvard Business School. Mr. Chen Lichtenstein, Israeli, serves as a Director of the Company and its wholly-owned subsidiary, Adama Solutions, CFO of the Syngenta Group (with responsibility also for Strategy, Integration and Productivity), and its wholly-owned subsidiary - Syngenta AG and a member of the Board of directors of the Israeli Democracy Institute, and Member of the Board of Trustees of Tel Aviv University.. He holds joint doctoral degrees from Stanford University's Graduate School of Business and School of Law, and B.Sc. (Physics) and LL.B. from the Hebrew University of Jerusalem. He previously served as the President & CEO of the Company and its wholly-owned subsidiary, Adama Solutions, after holding several executive positions in the Company (Deputy CEO, running global operations and heading corporate development and capital market activities) and serving as the President & CEO of China National Agrochemical Corporation (CNAC), Syngenta Group’s parent. Mr. An Liru, serves as a Director of the Company. He holds a master degree of chemical engineering and MBA, senior engineering, senior economist. He used to be the Assistant of General Manager, Vice General Manager, General Manager, Deputy Party Secretary of Jiangsu Anpon Electrochemical Co., Ltd., Chairman of Directors, Party Secretary of Jiangsu Huaihe Chemicals Co., Ltd., Executive Director and CEO of Jiangsu Maidao Agrochemical Co., Ltd., the Chairman of the Board of Directors of the Company, Executive Director of Jiangsu Anpon Electrochemical Co., Ltd., Chairman of Directors and Party Secretary of China National Agrochemical Co., Ltd. Currently, he serves also as a Director and the Senior Vice President of Solutions, Director and General Manager of Adama (China) Investment Co., Ltd., Chairman of Directors of Adama (Beijing) Agricultural Technology Co., Ltd., Chairman of Directors of Adama Agrochemical (Jiangsu) Co., Ltd. Mr. Ge Ming, serves as an independent director of the Company. He holds a master’s degree in western accounting, and he is a senior accountant, a certified Chinese public accountant as well as an Australian certified public accountant. He previously served as the chairman and chief accountant of Ernst & Young Hua Ming Certified Public Accountants Firm, and as the managing partner, chief accountant and senior advisor of Ernst & Young Hua Ming Certified Public Accountants (special general partnership). Mr. Ge currently serves as an independent director on the boards of AsiaInfo. He currently also serves on the supervisory boards of the Bank of Shanghai, Bank of Suzhou, Tencent Foundation, and serves as the executive director and general manager of Beijing Huaming Fulong Accounting Consulting Co., Ltd. Mr. Xi Zhen, serves as an independent director of the Company. He holds a professor degree and a doctor of Bioorganic Chemistry degree. Mr. Xi was Assistant Professor in Hubei Medical School which is currently the Wuhan University School of Medicine from 1983 to 1985, was Engineer in Beijing Institute of Chemical Reagents from 1988 to 1990, was a Research Associate in Department of Biological Chemistry and Molecular Pharmacology of Harvard Medical School from 1997 to 2001. Mr. Xi is currently Cheung Kong Scholar of Pesticide Science of the Ministry of Education of the PRC, Chairman of Department of Chemical Biology, Professor of Chemistry and Chemical Biology, Fellow of the University Committee of Nankai University in China, and Director of National Pesticide Engineering Research Center (Tianjin). Mr. Xi is also a Committee Member of Chinese Chemical Society and Deputy Director of its Division of Chemical Biology, Deputy Director of the Pesticide Science Division of Chinese Chemical Industry and Engineering Society. In addition, he is a director of Suzhou Ribo Life Science Co., Ltd. 70 ADAMA Ltd. Annual Report 2021 Mr. Ignacio Dominguez, Spanish, serves as the President & Chief Executive Officer of the Company. He was the CCO of Solutions and has been with Solutions for more than a decade. Prior to joining Solutions, Ignacio held various management positions in companies such as Syngenta and American Cyanamid, boasting more than 20 years of experience in the agrochemical industry. He holds a master's degree in physics from Complutense University of Madrid. Ms. Michal Arlosoroff, Israeli, serves as the Company’s General Legal Counsel. Ms. Arlosoroff also serves as Senior Vice President, General Legal Counsel, Company Secretary and CSR Officer of Solutions. Ms. Arlosoroff holds an LL.B. as well as a B.A. in Political Science and Labor Relations (cum laude) from Tel Aviv University, Israel. Ms. Arlosoroff also graduated from the Advanced Management Program at Harvard Business School. Prior to joining the Group, Ms. Arlosoroff served for 22 years as full Partner and General Manager of the Tel Aviv branch at E.S. Shimron, I. Molho, Persky & Co., one of the most prominent, respected and established law firms in Israel. Mr. Jiang Chenggang, serves as the Chairman of the Supervisory Board of the Company. He served as a Deputy Director of the Office and Deputy Secretaries of the Discipline Inspection Commission of the Company; acted as the Chairman of the Labor Union, Supervisor, Deputy Director of the Office and Deputy Secretaries of the Discipline Inspection Commission of the Company from Jun. 2012 to Dec. 2012; has been acting as the Deputy Party Committee Secretary of Jingzhou Sanonda Holdings Co., Ltd. and Secretary of the Discipline Inspection Commission of the company since January 2017; and he has been the Chairman of the Labor Union, Supervisor and Secretaries of the Discipline Inspection Commission of the Company since Jan. 2013. Mr. Liu Jianhua, Doctor of Engineering, serves as a member of the Supervisory Board of the Company and as the Non Ag Business Manager of ADAMA China. He previously served as the GM Assistant of Hubei Sanonda Co. Ltd., as the COO of Jiangsu Anpon Electrochemical Co., Ltd., and as the member of CPC Committee of China National Agrochemical Corporation. Ms. Yuan Yuan, serves as a member of the Supervisory Board of the Company and as Strategy & Business Manager of ADAMA China. She obtained a bachelor’s degree of international trade from Zhongnan University of Economics and Law and a master degree of business administration from University of International Business and Economics. Before joining ADAMA,she served as Deputy and Executing Director of Commerce Dept. in China National Agrochemical Corporation. Mr. Guo Zhi, serves as the secretary of the Board of Directors and the legal head of ADAMA China. Mr. Guo got his Master of Laws severally from Peking University and Melbourne University. From 2004 to 2017, he practiced law in Commerce & Finance Law Offices (“C&F”) and had been a partner of C&F for eight years. His practicing area covers IPO, M&A, and Foreign Investment. From March 19, 2018 to November 16, 2020, he was a member of the Supervisory Board of the Company. Positions in shareholder units √ Applicable □ Not applicable 71 ADAMA Ltd. Annual Report 2021 Name of the person Receives holding any Name of the Position in the Beginning date Ending date payment from post in any shareholder unit shareholder unit of office term of office term the shareholder shareholder unit? unit Syngenta Group CEO January 2020 -- No Erik CEO and Executive Fyrwald Syngenta AG June 2016 -- Yes Director Chen Syngenta Group CFO March, 2020 -- Yes Lichtenstein Syngenta AG CFO March, 2020 -- Yes Deputy Party No Secretary, Secretary Jiang Jingzhou Sanonda of the Discipline January 2017 -- Chenggang Holdings Co., Ltd. Inspection Commission Positions in other units √ Applicable □ Not applicable Name of the person Beginning Receives holding any Position in other Ending date Name of other unit date of office payment from post in any unit of office term term the other unit? shareholder unit Director of the No CropLife International - Board 2016 Swiss-American Chamber of Director of the 2016 No - Commerce Board Erik Fyrwald Director of the 2018 Yes Bunge Limited - Board Director of the 2005 Yes Eli Lilly & Co. - Board Chen Yes (as of Solutions Director October 2017 - Lichtenstein March 1, 2020) Chen Director of the The Israeli democracy institute - No Lichtenstein Board Chen Member of the Friends of Tel Aviv University - No Lichtenstein Board of Trustees An Liru Solutions Director February 2014 - Yes Head of China September An Liru Solutions - Yes Cluster 2017 Adama (China) Investment Co., Director and An Liru November 2018 - No Ltd. General Manager Adama (Beijing) Agricultural Chairman of An Liru November 2018 - No Technology Co., Ltd. Directors Adama Agrochemical (Jiangsu) Chairman of - An Liru June 2017 No Co., Ltd. Directors SVP, General - Michal Counsel, Company Solutions October 2017 Yes Arlosoroff Secretary & CSR Officer 72 ADAMA Ltd. Annual Report 2021 Name of the person Beginning Receives holding any Position in other Ending date Name of other unit date of office payment from post in any unit of office term term the other unit? shareholder unit Independent Ge Ming China Pingan Group June 2015 August 2021 Yes Director Independent November Ge Ming Focus Media January 2016 Yes Director 2021 Independent Ge Ming AsiaInfo December 2018 -- Yes Director Ge Ming Bank of Shanghai Supervisor June 2017 -- Yes Ge Ming Bank of Suzhou Supervisor July 2017 -- Yes Ge Ming Tencent Foundation Supervisor Jan 2019 -- No Executive Director Beijing Huaming Fulong Ge Ming and General December 2001 -- No Accounting Consulting Co., Ltd. Manager Professor, - Chairman of Department of Xi Zhen Nankai University Chemical Biology, August 2002 Yes Fellow of the University Committee National Agrochemical - Xi Zhen Engineering Research Center Director May 2014 No (Tianjin) Division of Chemical Biology of - Xi Zhen Deputy Director January 2015 No Chinese Chemical Society Agrochemical Science Division - Xi Zhen of Chinese Chemical Industry Deputy Director November 2014 No and Engineering Society Suzhou Ribo Life Science Co., - Xi Zhen Director January 2007 No Ltd. Hubei Sanonda Foreign Trade - Liu Jianhua Executive Director June 2021 No Co., Ltd. Jiangsu Anpon International - Liu Jianhua Executive Director April 2021 No Trading Co., Ltd. Particulars regarding the Company's current directors, supervisors and senior managers who received punishments, if any, from Securities Regulatory Institution during the recent three years (including the Reporting Period) □ Applicable √ Not applicable 73 ADAMA Ltd. Annual Report 2021 3.Remuneration of directors, supervisors and senior management Decision-making procedures, basis for determination and actual payment of the remuneration to directors, supervisors and senior executives Remuneration of office holders is decided by the authorized organs of the Company according to the Remuneration Policy. In addition, global professional benchmarks, implementations of performance at the Company level, and the actual performance of the respective person are also taken into account in the resolutions regarding remuneration. Independent directors are entitled to receive annual allowance and would not receive salary by the Company. The Company also adopted a remuneration plan of the non-independent directors. A non-independent director who holds a management position in the Company and/or any of its subsidiaries, shall receive the remuneration set for such position and will not be entitled to any additional remuneration for serving as a director; A non-independent director who doesn’t hold a management position in the Company or any of its subsidiaries, may receive a monthly remuneration. For details, please see the Announcement of the Resolutions of 25 th meeting of the 7th Session of the Board of Directors (Announcement no. 2018-5) and the Announcement of the Resolutions of 21 st meeting of the 8th Session of the Board of Directors (Announcement no. 2020-7). Internal supervisors, who are full-time employees of the Company (or any of its subsidiaries), will be entitled to receive a remuneration set for their posts and will not be entitled to any additional remuneration for serving as supervisors. External supervisors, who are not employees of the Company (or any of its subsidiaries), will be entitled to receive annual allowance and would not receive salary by the Company. For details, please see the Announcement of the Resolutions of 4 th meeting of the 8th Session of the Board of Supervisors (Announcement no. 2018-25). Total remuneration of the directors, supervisors and senior management of the Company during the Reporting Period is as follow: Unit RMB’0000 Total before- Whether gained tax remuneration Name Position Gender Age Current/Former remuneration from the related gained from parties of the the Company Company Erik Fyrwald Chairman of the BOD Male 63 Current Yes Chen Director Male 54 Current Yes Lichtenstein An Liru Director Male 52 Current No Ge Ming Independent Director Male 70 Current No Xi Zhen Independent Director Male 58 Current No Ignacio President & CEO Male 62 Current No Dominguez Michal General Legal Counsel Female 63 Current No Arlosoroff Jiang Chairman of the Male 47 Current No Chenggang Supervisory Board Member of the Liu Jianhua Male 43 Current No Supervisory Board Yuan Yuan Member of the Female 41 Current No 74 ADAMA Ltd. Annual Report 2021 Total before- Whether gained tax remuneration Name Position Gender Age Current/Former remuneration from the related gained from parties of the the Company Company Supervisory Board Guo Zhi Secretary of the BOD Male 44 Current No Chief Financial Officer Aviram Lahav Male 62 Former No and Deputy CEO Member of the Li Dejun Male 64 Former No Supervisory Board Member of the Clement Tung Male 53 Former No Supervisory Board Total 10,602 VIII. Performance of Directors of the Board during the Reporting Period 1. Particulars regarding the Board meeting during Reporting Period Session Convening date Disclosure date Resolutions of the Meeting The following resolutions were deliberated and adopted: 1. Proposal on the 2020 Annual Report and its Abstract; 2. Proposal on the 2020 Financial Statements; 3. Proposal on the Pre-Plan of the 2020 Dividend Distribution; 4. Proposal on the Self-Assessment report on the 2020 Internal Control of the Company; 5. Proposal on the 2020 Working Report of the Board of Directors; 6. Proposal on the 2020 Risk Appraisal Report of ChemChina Finance Co., Ltd; 7. Proposal on the Remuneration of Senior Executives; the 31st Meeting of 8. Proposal on the Engagement with an Audit Firm for the Audit the 8th Session of Mar 29, 2021 Mar 31, 2021 of the Financial Statements and Internal Control of the the Board of Company for 2021; Directors 9. Proposal on the Expected Related Party Transactions in the Ordinary Course of Business in 2021; 10. Proposal on the Special Report on the Deposit and Actual Use of the Raised Funds in 2020; 11. Proposal on the Cancellation of the Repurchased Shares and the Subsequent Decrease of the Registered Capital of the Company; 12. Proposal on Revisions to the Articles of Association of the Company; After the review of the above proposals, 2020 Working Reports of the Independent Directors were presented to the meeting. the 32nd Meeting The following resolution was deliberated and adopted: of the 8th Session Apr 16, 2021 -- 1. Proposal on the Disposal of Assets located at the Company’s of the Board of Jingzhou Site Directors the 33rd Meeting The following resolutions were deliberated and adopted: of the 8th Session Apr 28, 2021 Apr 29, 2021 1. Proposal on the Q1 2021 Report; of the Board of 2. Proposal on Bank Loans for the Working Capital of Jingzhou 75 ADAMA Ltd. Annual Report 2021 Session Convening date Disclosure date Resolutions of the Meeting Directors Site; 3. Proposal on Providing Guarantees in Favor of two Wholly- owned Subsidiaries; 4. Proposal on the Nomination of Non-Independent Directors to Compose the 9th Session of the BOD; 5. Proposal on the Nomination of Independent Directors to Compose the 9th Session of the BOD; 6. Proposal on the Election of the Chairman of the Board and Members of the Special Committees of the 9th Session of the Board of Directors; 7. Proposal on Calling for the 2020 Annual General Meeting the 1st Meeting of The following resolution was deliberated and adopted: the 9th Session of 1. Proposal on Providing Guarantees in Favor of a Controlled Jun 28, 2021 Jun 29, 2021 the Board of Subsidiary Directors the 2nd Meeting of the 9th Session of The Board discussed the 2021 semi-annual report and related Aug 17, 2021 - the Board of matters. No resolution was made. Directors The following resolutions were deliberated and adopted: the 3rd Meeting of 1. Proposal on the 2021 Semi-Annual Report and its Abstract; the 9th Session of 2. Proposal on the Special Report on the Deposit and Actual Aug 24, 2021 Aug 26, 2021 the Board of Usage of the Raised Funds in the First Half of 2021; Directors 3. Proposal on the Risk Appraisal Report of ChemChina Finance Co., Ltd. the 4th Meeting of The following resolution was deliberated and adopted: the 9th Session of Sep 30, 2021 - 1. Proposal on the Arrangement for the Resignation of the Chief the Board of Financial Officer & Deputy Chief Executive Officer Directors The following resolutions were deliberated and adopted: the 5th Meeting of 1. Proposal on the Q3 2021 Report; the 9th Session of 2. Proposal on Credit Facilities of $100m from the Related Oct 27, 2021 Oct 28, 2021 the Board of Party; Directors 3. Proposal on Providing Guarantees in Favor of two Wholly- owned Subsidiaries The following resolutions were deliberated and adopted: 1. Proposal on the 2022 Work Plan; 2. Proposal on the Signing of a Financial Service Agreement the 6th Meeting of with Sinochem Finance Co., Ltd; the 9th Session of 3. Proposal on the Risk Appraisal Report of Sinochem Finance Dec 22, 2021 Dec 24, 2021 the Board of Co., Ltd.; Directors 4. Proposal on the Contingency Plan for Deposits at Sinochem Finance Co., Ltd; 5. Proposal on Calling for the 1st Interim Shareholders Meeting in 2022 the 7th Meeting of The following resolution was deliberated and adopted: the 9th Session of Dec 31, 2021 Jan 4, 2022 1. Proposal on Signing of Entrusted Operation and the Board of Management Agreement on Anhui Petro & Chemical Directors 76 ADAMA Ltd. Annual Report 2021 2. Particulars regarding directors’ attendance to board sessions and shareholders’ general meetings Details of directors’ attendance to board sessions and shareholders’ meetings Sessions Non- Attendance to required to Attendance by Entrusted attendance in shareholder Name of the On-Site Absence attend during way of presence person for two meetings Directors Attendance rate the Reporting communication (times) consecutive Period times Erik Fyrwald 10 -- 10 -- -- No 1 Chen 10 -- -- No 1 10 -- Lichtenstein An Liru 10 -- 10 -- -- No 1 Ge Ming 10 -- 10 -- -- No 1 Xi Zhen 10 -- 10 -- -- No 1 Note: As two directors are abroad, the Company’s board meetings in 2021 were all conducted by means of communication, including video conference. 3. Particulars regarding directors’ objections Whether directors objected to various events □ Yes √ No During the Reporting Period, no directors proposed any objection on relevant events of the Company. 4. Other explanations regarding the directors’ duty performance Whether directors’ advice were adopted √ Yes □ No Explanation regarding advices of directors: According to the Company Law, the Listed Corporate Governance Standards, and "Articles of Association", the directors, in general, during the Reporting Period, focus actively over Company’s operation, and earnestly performs their duties, render professional suggestions to the Company's information disclosure and daily management decision-making, etc. The directors play a proper role in improving the supervision, and safeguard the legitimate rights and interests of the Company and its shareholders. The directors especially pay attention (and paid attention - during the Reporting Period) to the Company’s operation state, dynamic state of the industry, public opinion and dynamic state report of the Company. They actively and effectively perform the duties of directors and well maintained overall benefits of the Company and the legal interests of all shareholders, especially the middle and small shareholders. Their roll is required for positive, normal, stable and healthy development of the Company. 77 ADAMA Ltd. Annual Report 2021 IX. Performance of the Special Committees under the Board during the Reporting Period Important Specifics Number Comments Other of Name of the Member of of Convening Themes of Meetings and Performance Objection Committees Committees Meetings Date Proposals of Duties Matters (if Held Made any) Mar 18, 1. Proposal on the 2020 Approved -- -- 2021 Financial Report 2. Proposal on the Engagement with an Audit Firm for the Audit of the Financial Statements and Internal Control of the Company for 2021 3. Proposal on the Expected Related Party Transactions in the Ordinary Course of Business in 2021 4. Proposal on the Self- Assessment Report on the 2020 Internal Control of the Company 5. Proposal on the 2020 Risk Appraisal Report of ChemChina Finance Company Ge Ming 6. Proposal on the Special Audit (Chairperson), Report on Annual Fund- 6 Committee Xi Zhen, raising and Actual Use of An Liru Funds Apr 26, 1. Proposal on the Q1 2021 Approved -- -- 2021 Report Aug 16, 1. Proposal on the 2021 Approved -- -- 2021 Semi-Annual Report and its Abstract 2. Proposal on the Special Report on the Deposit and Actual Usage of the Raised Funds in the First Half of 2021 3. Proposal on the Risk Appraisal Report of ChemChina Finance Co., Ltd. Oct 25, 1. Proposal on the Q3 2021 Approved -- -- 2021 Report 2. Proposal on Credit Facilities of $100m from the Related Party Dec 22, 1. Proposal on the Signing Approved -- -- 78 ADAMA Ltd. Annual Report 2021 Important Specifics Number Comments Other of Name of the Member of of Convening Themes of Meetings and Performance Objection Committees Committees Meetings Date Proposals of Duties Matters (if Held Made any) 2021 of a Financial Service Agreement with Sinochem Finance Co., Ltd. 2. Proposal on the Risk Appraisal Report of Sinochem Finance Co., Ltd. 3. Proposal on the Contingency Plan for Deposits at Sinochem Finance Co., Ltd. Dec 31, 1. Proposal on Signing of Approved -- -- 2021 Entrusted Operation and Management Agreement on Anhui Petro & Chemical Mar 21, 1.Proposal on the Approved -- -- 2021 Remuneration of Senior Xi Zhen Executives Remuneration (Chairperson), Sep 30, 1. Proposal on the Approved -- -- and Appraisal 2 Ge Ming, An 2021 Arrangement for the Committee Liru Resignation of the Chief Financial Officer & Deputy Chief Executive Officer Mar 18, 1.Proposal on the Approved -- -- 2021 Nomination of Non- Independent Directors to Xi Zhen Compose the 9th Session Nomination (Chairperson), of the Board of Directors 1 Committee Ge Ming, 2. Proposal on the An Liru Nomination of Independent Directors to Compose the 9th Session of the Board of Directors Erik Fyrwald -- -- -- -- -- (Chairperson), Chen Strategy Lichtenstein, 0 Committee An Liru, Ge Ming Xi Zhen X. Performance of the Supervisory Committee Has the Supervisory Committee, during the Reporting Period, found a risk in the Company within its supervisory activity □ Yes √ No The Supervisory Committee had no objection on the supervised events during the Reporting Period. 79 ADAMA Ltd. Annual Report 2021 XI. Particulars regarding Group’s employees 1. Number of employees, professional composition and educational background The number of on-duty employees in ADAMA Ltd. (person) 751 The number of on-duty employees in main subsidiary 8,450 companies (person) The total number of on-duty employees of the Group (person) 9,201 The total number of employees of the Group who received 9,201 salaries in the period (person) The number of retired employees for whom ADAMA Ltd. and 3,085 main subsidiary companies need to pay retirement expense. Professional Composition Category Number Production personnel 2,505 Sales personnel 342 Technicians 294 Financial personnel 92 Administrative personnel 470 Total 3,703 Educational Background Category Number Doctor 8 Master 156 Bachelor 703 College 766 Others 2,070 Total* Note: The figures under “Professional Composition” represent those of the Company and the domestic subsidiaries held by it and do not cover the Group’s 5,498 overseas employees. 2. Employee’s remuneration policy The Company's remuneration policy in 2021 is the same as in 2020. It is still a salary structure that integrates post salary, quarterly performance bonus and annual performance bonus. 80 ADAMA Ltd. Annual Report 2021 The Company established an online and offline assessment model. Online assessment is carried out by SF system. Individual goals are set at the beginning of the year and are assessed at the end of the year. 3. Employee’s training plan The Group usually conducts seminars, trainings, exercises and refresh of procedures (including with respect to increasing safety awareness) to its various employees in its various entities, as needed and/or required under its applicable procedures. 4. Labor outsourcing √ Applicable □ Not applicable Details of ADAMA Ltd. on labor sourcing are as follows. Total number of hours of service outsourcing (hours) 745,798 Total remuneration paid for service outsourcing (RMB) 24,073,771.62 X. Situations for dividend distribution and turning capital reserve into share capital Dividend distribution policies, especially the formulation, execution or the adjustment of the cash dividend policies during the Reporting Period √ Applicable □ Not applicable The Company did not revise its dividend distribution policy over the Reporting Period. The 2020 Annual General Meeting which was held on May 21, 2021 approved the dividend distribution plan for the year 2020. The Company accordingly published an Announcement of Dividend Distribution for the Year 2020 on July 3, 2021 (announcement No.2021-30). Special explanation of the cash dividend policy Whether conformed with the regulations of the Articles of association or the requirements of the resolutions Yes of the shareholders’ meeting: Whether the dividend standard and the proportion Yes were definite and clear: Whether the relevant decision-making process and the Yes system were complete: Whether the independent director acted dutifully and Yes exerted the proper function: Whether the medium and small shareholders had the chances to fully express their suggestions and Yes appeals, of which their legal interest had gained fully protection: Whether the conditions and the process met the regulations and was transparent of the adjustment or Not Applicable altered of the cash dividend policy: List of the dividend distribution proposals (preplan) of the common shares, and the proposal (preplan) of turning capital reserve into share capital of the Company of the recent 3 years: 2019 profit distribution proposal: based on the total share capital on February 28, 2020, after obtaining the approval of Board of Directors, the Company declared a cash dividend of RMB 0.12 (before tax) for every 10 shares to the all 81 ADAMA Ltd. Annual Report 2021 shareholders. No share will be distributed as share dividend, as well as no reserve will be transferred to equity capital. 2020 profit distribution proposal: based on the total share capital of 2,329,811,766 which are entitled to the dividends as of the record day when this profit distribution proposal is implemented, after obtaining the approval of Board of Directors, the Company declared a cash dividend of RMB 0.16 (before tax) for every 10 shares to the all shareholders. No share will be distributed as share dividend, as well as no reserve will be transferred to equity capital. 2021 profit distribution proposal: based on the total share capital of 2,329,811,766 on February 28, 2022, after obtaining the approval of Board of Directors, the Company plans to declare a cash dividend of RMB 0.08 (before tax) for every 10 shares to the all shareholders. No share will be distributed as share dividend, as well as no reserve will be transferred to equity capital. Cash dividend distribution of the common shares of the Company in the last 3 years (including the Reporting Period): Unit: RMB Dividend Amount of Net profit The ratio of Amount of Ratio of the Total amount The ratio of year cash dividend belonging to the cash the cash cash of cash total amount of (before tax) shareholders dividends dividend dividend by dividend cash dividend of the listed accounting by other other (including (including other company in in net profit methods methods other ways) ways) consolidated which (such as accounting accounting in statement of belongs to share in net profit net profit which dividend year shareholders buyback) which belongs to of the listed belongs to shareholders of company in shareholders the listed consolidated of the listed company in statement company in consolidated consolidated statement statement 2021 18,638,494.13 163,313,000 11.4% 0.00 0.00% 18,638,494.13 11.4% 2020 37,276,988.26 352,753,000 10.57% 60,399,296 17.12% 97,676,284.26 27.69% 2019 29,358,642.98 277,041,000 10.6% 0.00 0.00% 29,358,642.98 10.6% The Company (including its subsidiaries) made profit in the reporting period and the profits distribution of the common shares held by the shareholders of the Company (without subsidiaries) was positive, but it did not put forward a preplan for cash dividend distribution of the common shares: □ Applicable √ Not applicable Situations for dividend distribution and turning capital reserve into share capital for the Reporting Period √ Applicable □ Not applicable The Company plans to distribute cash dividends for the year 2021, and does not intend to issue bonus shares or transfer capital reserve to share capital. Bonus shares for every 10-share (Share) Not Applicable. Dividends for every 10-share (RMB) (Tax included) 0.08 Every 10-share increased the shares’ number 0 Equity base of distribution plan (Share) On the basis of 2,329,811,766 shares on February 28, 2022 82 ADAMA Ltd. Annual Report 2021 Cash dividend (RMB) (Tax included) 18,638,494.13 Amount of the cash dividend by other methods (e.g. share buyback) 0 Total cash dividend (RMB) (Tax included) 18,638,494.13 Distributable profits (RMB) 163,313,000 Ratio of the Cash dividend (including the amount to be distributed in 100% other ways) accounting in the total amount of the distributed dividend Cash dividends of This Time If the development phase of the Company was the mature period with significant funds expenditures arrangement, the proportion of the cash dividend should at least reach 40% of the total profit distribution. Detailed Description on the Pre-Plan for Profit Allocation or Turning Capital Reserve into Share Capital As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, the net profit attributable to shareholders of the Company is RMB 163,313 thousand. As there is no transfer to statutory surplus reserve (10% of the net profit on a standalone basis of the Reporting Period is RMB 0), profit available for distribution for the year 2021 is RMB 163,313 thousand. The proposal for profit distribution for the year 2021 is a distribution of 10% of the total profit available for distribution, calculated as follows with no transfer of reserves into equity: On the basis of 2,329,811,766 shares on February 28, 2022, the Company plans to declare a cash dividend of RMB 0.08 (before tax) for every 10 shares to all shareholders, resulting in a total cash dividend of RMB 18,638,494.13 (before tax). No share will be distributed as share dividend, and no reserve shall be transferred to equity capital. XII. Stock incentive plans, ESOPs or other employee incentives □ Applicable √ Not applicable To the date of the report, the Company does not have stock incentive plans, ESOP or other staff incentives. It shall be noted, that Adama Solutions currently has several long-term incentive plans according to which it has granted long-term cash rewards to executive officers and employees. These long-term incentive plans are based either on the performance of the Company's shares (phantom cash incentives) and/or the Company's performance.. Adama Solutions has further adopted an incentive plan linked to the increase in the Syngenta Group EBITDA. XIII. System Establishment and Implementation for Internal Control during the Reporting Period 1. System Establishment and Implementation The Group's existing internal control system adapts to the management requirements. It also provides a reasonable basis for the preparation of true and fair financial statements, and ensures the healthy operation of the Group's various business activities, as well as the implementation and compliance of relevant laws and regulations and the Group's own internal rules. With the changes in the external environment and the development of the Group's business, the Company plans to take the following measures to further improve the internal control system: (1) Further improve the internal control system by strengthening the research and implementation of internal control management and risk management. Based on the risk assessment result and the needs of the Group, adjust and improve 83 ADAMA Ltd. Annual Report 2021 the relevant business processes in a timely manner to establish effective internal control system which would improve work efficiency. (2) Emphasizing on the importance and education of the internal control system within the Group. Providing training to managerial personnel on the related laws and regulations regarding internal controls. This would enhance the awareness and level of standardization of operation, which could further improve the corporate governance structure. (3) Regularly evaluating key controls in the business processes. Through the rectification of issues identified, the management and operation risks would be reduced which could lead to a better operation. (4) Continuously improving the execution of internal controls. Constructing the internal control systems including internal environment, risk assessment, control activities, information and communication, and internal supervision in accordance with the requirements by the "Basic Standards for Enterprise Internal Control", in order to improve the systematization and effectiveness of the internal control. (5) Strengthening the management and control of high-risk areas through effective integration with the internal control evaluation system to ensure that the Group's major risks are under control. At the same time, the existing internal control system is continuously reviewed and improved along with the optimization of management processes, which is to minimize business risks and ensure the Group's sustainable, stable and healthy development. For details, please refer to the "2021 Annual Internal Control Self-Assessment Report" published by the Company on www.cninfo.com.cn on March 31, 2022. 2. Details of the Material deficiencies in internal control identified during the reporting period □ Yes √ No XIV. Management control over subsidiaries during the reporting period Name of Problems Progress in Integration Solutions Follow-up the Integration Plan during the Solving the Progress Taken Solutions Company Integration Problems The Company plans The directors Procurement of Before the The information At present, to control and and general information information system integration work manage ADAMA manager system system is integration plan has been Huifeng after the nominated by hardware connected, data has been basically closing through the the Company lagged behind, will be imported adjusted completed. The shareholders' have taken affecting the into the according to the Company will meeting, meeting of office in time. system Company's time of hardware optimize the board of directors ADAMA Huifeng integration system on time procurement. At management of and the general convened schedule. and as required present, the ADAMA Huifeng ADAMA manager and legal meetings of the through offline alternative according to the Huifeng representative board of mode. offline data actual situation. (Jiangsu) appointed by the directors and transmission Co., Ltd Company. In shareholders as can basically addition, the needed deciding meet the Company plans to on relevant demand. carry out integration matters. The plan from financial corporate information governance uploading, sorting structure, out organizational management structure and team, reporting 84 ADAMA Ltd. Annual Report 2021 Name of Problems Progress in Integration Solutions Follow-up the Integration Plan during the Solving the Progress Taken Solutions Company Integration Problems authorization, and and authority strengthening safety division with the and environmental Company are protection., etc. completed. XV. Self-assessment Report or Audit Report on Internal Control 1. Self-assessment report on internal control Date of disclosure of self-assessment March 31, 2021 report on internal control Reference website of self-assessment www.cninfo.com.cn report on internal control Rate of total Assets of Units within the Assessment Scope Compared to Total 69.25% Assets in the Consolidated Statements of the Company Rate of total Operating Income of Units within the Assessment Scope Compared 68.54% to Total Operating Income in the Consolidated Statements of the Company Criteria of Deficiency Internal control not related to financial Categories Internal control over financial reporting reporting Material Deficiency: Resulting in an adverse Material Deficiency: opinion or disclaimer of opinion, by a CPA, on the 1) Fraud committed in the Company by any of its Company’s financial statements; or resulting in a directors, supervisors and senior management material correction of the Company’s publicly personnel; announced financial statements. 2) The Company materially violates material laws Significant Deficiency: Resulting in a qualified and regulations, resulting in a material effect on opinion, by a CPA, on the Company’s financial the Company's business; statements; or resulting in an adverse opinion or 3) Material design deficiencies in the Company's disclaimer of opinion, by a CPA, on the Company’s relevant management system; Qualitative material subsidiaries’ (i.e. Solutions) financial 4) The Company materially violates the decision- criteria statements; or resulting in a significant correction making process thereby causing a material of the Company’s material subsidiaries’ (i.e. negative impact on the Company's business Solutions) publicly announced financial (generally related to matters that need to be statements. In addition, where no internal control approved by the shareholders meeting or the or no relevant compensation control is established board of directors). or implemented for the accounting treatment for 5) Material impact to the Company’s reputation. unusual or special transactions. Significant Deficiency: General Deficiency: Resulting in an unqualified 1) Significant fraud committed by any department opinion, with an explanatory paragraph, by a CPA, head of the Company; 85 ADAMA Ltd. Annual Report 2021 on the Company’s financial statements; or 2) Significant fraud committed by a head of any of resulting in a qualified opinion, or unqualified the Company’s material subsidiaries; opinion with an explanatory paragraph, by a CPA, 3) The Company violates significant laws and on the Company’s subsidiaries’ financial regulations, resulting in significant fines as well as statements. a significant effect on the Company's business; 4) Significant design deficiencies found in the Company's relevant management system; Material design deficiencies are found in the relevant management systems of subsidiaries; 5) The Company violates material decision- making procedures, resulting in a significant effect on the Company's business (generally referred to matters subject to senior management's decision); 6) Material Subsidiaries violate decision-making process, thereby causing a material negative impact on the Company's business (generally referred to matters that need to be decided by the shareholders’ meeting or the board of directors). 7) Significant impact to the Company’s reputation. General Deficiency: 1) Fraud committed by any other personnel in the Company; 2) Fraud committed by any other personnel in material subsidiaries; 3) The Company materially violates material internal regulations or non-materially violates material laws and regulations, resulting in negative feedback from regulatory authorities; 4) There are other violations of laws and regulations or internal regulations found in material subsidiaries. 5) There are general design deficiencies in the relevant management system of the Company; other design deficiencies exist in the relevant management system of the material subsidiaries; 6) The Company violates the decision-making process, resulting in a negative impact on the Company's business; 7) Material Subsidiaries violate decision-making process, resulting in a negative impact on the Company's business. Material Deficiency: Material Deficiency: Asset Loss ≥ RMB 150 The misstatement in financial report relates to an million amount that is greater than or equal to RMB 100 Significant Deficiency: RMB 80 million ≤ Asset Quantitative million. Loss < 150 million RMB criteria Significant Deficiency: General Deficiency: Asset Loss < 80 million The misstatement in financial report relates to an RMB amount that is greater than or equal to RMB 50 86 ADAMA Ltd. Annual Report 2021 million, but less than RMB 100 million. General Deficiency: Resulting in other misstatement related amounts. Number of material deficiencies in 0 internal control over financial reporting Number of material deficiencies in internal control 0 not related to financial reporting Number of significant deficiencies in 1 internal control over financial reporting Number of significant deficiencies in internal control 0 not related to financial reporting 2. Audit report on internal control √ Applicable □ Not applicable Audit opinion paragraph in the internal control audit report Disclosure of internal control Disclose audit report Date of disclosure of internal March 31, 2021 control audit report Reference website of internal www.cninfo.com.cn control audit report Type of audit opinion in the Unqualified opinion. internal control audit report Is there any material deficiencies in internal control No. not related to financial reporting Does the accounting firm issue non-standard audit opinion on internal control? □ Yes √ No Is the opinion issued by accounting firm consistent with the opinion in the self-assessment report by the Board? √ Yes □ No 87 ADAMA Ltd. Annual Report 2021 XVI. Rectification of Problems Identified during the Self-examination Action Dedicated for Corporate Governance of Listed Companies In January 2021, Hubei Regulatory Bureau of CSRC issued the Notice on Special Actions of Corporate Governance of Listed Companies under its Jurisdiction. The Company attached great importance to this self-inspection and carried out relevant work. Through self-inspection, the Company identified following areas that it needs to further improve and strengthen the level of corporate governance: Update relevant policies and procedures of corporate governance and internal control according to latest laws, regulations and regulatory requirements and in combination with the actual situation of the Company; Further strengthen training of the Company's directors, supervisors and senior management of relevant laws and regulations, and further standardize their work and raise self-discipline awareness; New Board of Directors and Board of Supervisors were not elected when the 8 th Board of Directors and Board of Supervisors expired. The Company carried out the following rectification measures: On April 28, 2021, the Company held the 33rd meeting of the 8th Board of Directors approving the proposal on the election of the board of directors and the nomination of non-independent directors and independent directors, as well as the proposal on the Chairman of the 9th Board of Directors and members of the special committee of the Board. The 17th meeting of the 8th Board of Supervisors approved the proposal on the election of the Board of Supervisors and the nomination of non-employee representative supervisors. On May 21, 2021, the 2020 annual general meeting of shareholders was held approving the above proposals and elected the 9 th Board of Directors and Board of Supervisors of the company. The 9th meeting of the 9th Board of Directors was held on March 29, 2022, approving the update of the Management Policy of Related-Party Transactions, the Management Policy of Registration of Insiders Information and the Management Policy of Information Disclosure. The Company actively organized the directors, supervisors and senior management participate in the relevant trainings organized by the dispatched organs of CSRC and Shenzhen Stock Exchange. It regularly compiled training material and latest development of China's capital market laws, regulations and hot events into Chinese and English regulatory reports, which are sent to directors, supervisors and senior management, to enhance timely study and in-depth implementation of China's policies by foreign directors and senior managers. 88 ADAMA Ltd. Annual Report 2021 Section V - Environment and Social Responsibilities I. Major Environmental Protection Issues Is the Company listed as key polluting entities by environmental protection agencies? √ Yes □ No Main Number Total amount Layout of Total amount Company pollutants Way of of emitted/ Exceeding emission Concentration Pollution standards applied Approved name and special emission emission Discharged limit points (ton) pollutants points (ton) (1) for the old site: Comprehensive Standard on Old site: Discharge of Waste Water (GB8978-2002) , Centralized 30.57mg/L COD<100mg/L; COD Continuous 2 discharge 94.534 173.2104 No New site: (2) for the new site: Discharge Standards for point 18.99mg/L Pollutants from Urban Sewage Treatment Plant (GB 18918 – 2002), COD <50mg/L (1) for the old site: Comprehensive Standard on Old site: Discharge of Waste Water (GB8978-2002), Centralized Ammonia 0.97mg/L ammonia nitrogen<15mg/L; Continuous 2 discharge 9.941 17.321 No nitrogen New site: (2) for the new site: Discharge Standards for point 2.07mg/L Pollutants from Urban Sewage Treatment Plant (GB 18918 – 2002), ammonia nitrogen<8mg/L; ADAMA Old site: Ltd. Total Centralized for the old site & new site: Discharge Standards for 0.28mg/L Phosphorou Continuous 2 Discharge Pollutants from Urban Sewage Treatment Plant (GB 1.267 1.722 No New site: 0.59 s Point 18918 – 2002), total phosphorous <0.5mg/L mg/L (1) Power plant: Standard on Ultra-Low Pollutant Power plant: Emission, NOx <50mg/m3 Power 20.1mg/m3 (2) Incinerator of hazardous waste: Standard on plant, Incinerator of Pollution Control of Hazardous Waste incinerator hazardous NOx Continuous 3 Incineration (GB18484-2020), Table 3, NOx 32.856 260.27 No of waste: 51.40 <300 mg/m3 hazardous mg/m3 (3) RTO: Standard on Air Pollutants of Agro- waste, RTO RTO: 5.65 chemical Manufacturing Industry (GB 39727— mg/m3 2020), Table 1 and 2, NOx <200 mg/m3 89 ADAMA Ltd. Annual Report 2021 Main Number Total amount Layout of Total amount Company pollutants Way of of emitted/ Exceeding emission Concentration Pollution standards applied Approved name and special emission emission Discharged limit points (ton) pollutants points (ton) Power plant: (1) Power plant: Standard on Low Pollutant Power 2.9 mg/m3 Emission, SO2 <35mg/m3 plant, (2) Incinerator of hazardous waste: Standard on Incinerator of incinerator Pollution Control of Hazardous Waste Incineration SO2 Continuous 3 hazardous 5.365 116.48 No of (GB18484-2020), Table 3, SO2 <100 mg/m3 waste: 7.66 hazardous (3) RTO: Standard on Air Pollutants of Agro- mg/m3 waste, RTO chemical Manufacturing Industry (GB 39727— RTO: 5.06 2020), Table 1 and 2, SO2 <200 mg/m3 mg/m3 Power plant: (1) Power plant: Standard on Low Pollutant Power 0.6 mg/m3 Emission, fume and dust<10mg/m3 plant, (2) Incinerator of hazardous waste: Standard on Incinerator of Fume and incinerator Pollution Control of Hazardous Waste Incineration Continuous 3 hazardous 0.671 44.8824 No dust of (GB18484-2020), Table 3, fume and dust<30 mg/m3 waste: 2.38 hazardous (3) RTO: Standard on Air Pollutants of Agro- mg/m3 waste, RTO chemical Manufacturing Industry (GB 39727— RTO: 13.67 2020), Table 1 and 2, fume and dust<30 mg/m3 mg/m3 Standard on Air Pollutants of Agro-chemical RTO: 7.44 VOCs Continuous 1 RTO Manufacturing Industry (GB 39727—2020), Table 1 0.0636 6.941t/a No mg/m3 and 2, VOCs<100 mg/m3 Centralized Comprehensive Standard on Discharge of Waste COD Continuous 3 Discharge 79.67 mg/L 190.99 311.202 No Water (GB8978-1996),COD<500mg/L Point Centralized Water Quality Standard for Sewage Discharged into Ammonia Continuous 3 Discharge 2.32 mg/L Urban Sewerage(GBT 31962-2015), Ammonia 1.49 31.617 No Nitrogen Point Nitrogen <45mg/L Anpon For Anpon: Water Quality Standard for Sewage Total Centralized Discharged into Urban Sewerage (GBT 31962- Phosphorou Continuous 3 Discharge 0.99 mg/L 2015), total phosphorous <8mg/L; 1.032 20.442 No s Point For branch Maidao: Agreement on Waste Water Discharge, total phosphorous <3mg/L; Power Standard on Air Pollution of Power Plant No. Power NOx Continuous 1 / / 447.366 Plant (GB13223-2011)NOx <100mg/m3 plant was 90 ADAMA Ltd. Annual Report 2021 Main Number Total amount Layout of Total amount Company pollutants Way of of emitted/ Exceeding emission Concentration Pollution standards applied Approved name and special emission emission Discharged limit points (ton) pollutants points (ton) stopped. No. Power Power Standard on Air Pollution of Power Plant SO2 Continuous 1 / / 447.366 plant was Plant (GB13223-2011)SO2<50mg/m3 stopped. No. Power Fume and Power Standard on Air Pollution of Power Plant Continuous 1 / / 67.105 plant was Dust Plant (GB13223-2011)Fume and Dust<20mg/m3 stopped. Maidao: 3.86 Anpon:18, mg/m3 Standard on VOCs Emission of Chemical Industry VOCs Continuous 22 2.56 84.678 Maidao:4 Anpon: 26.23 (DB 32/3151-2016) mg/m3 Centralized COD Continuous 1 Discharge 176.1063mg/l Standard of Industry Park 115.165 247.6378 No Point Centralized Ammonia Continuous 1 Discharge 2.006mg/l Standard of Industry Park 1.3798 19.3783 No Nitrogen Point Total Centralized Phosphorou Continuous 1 Discharge 0.5997mg/l Standard of Industry Park 0.4169 0.9285 No s Point Centralized Huifeng Total Continuous 1 Discharge 26.9804mg/l Standard of Industry Park 17.0209 46.77204 No Nitrogen Point RTO, Standard on Air Pollutants of Agro-chemical NOx Continuous 10 16.8813mg/m 19.8814 147.7072 No plants Manufacturing Industry (GB 39727—2020) RTO, Standard on Air Pollutants of Agro-chemical SO2 Continuous 10 5.9869mg/m 6.4714 47.1958 No plants Manufacturing Industry (GB 39727—2020) Fume and RTO, Standard on Air Pollutants of Agro-chemical Continuous 10 9.7608mg/m 10.966 22.7146 No Dust plants Manufacturing Industry (GB 39727—2020) RTO, Standard on Air Pollutants of Agro-chemical NMHC Continuous 10 9.9983mg/m 13.3653 62.92994 No plants Manufacturing Industry (GB 39727—2020) 91 ADAMA Ltd Annual Report 2021 1. Development and Operation of Environmental Facilities (1) Development and Operation of Waste Water Facilities The Company has a 20,000 tons/ D wastewater treatment station, adopting the process of "two-layer A / O + MBR + ozone synergistic oxidation + MBBR + calcium removal of phosphorus". The wastewater treatment facilities are running normally. After treatment, the COD, ammonia nitrogen and total phosphorus in the discharged wastewater are within the limit. ADAMA Anpon, the subsidiary of the Company, has a 11,000 tons/ D wastewater treatment station. As all its facilities are operating well, COD, ammonia nitrogen, and total phosphorous discharged after the treatment are within the limit. ADAMA Hufieng, the subsidiary of the Company has a 5000 tons/D wastewater treatment station. As all its facilities are operating well, COD, ammonia nitrogen, total nitrogen and total phosphorous discharged after the treatment are within the limit. (2) Development and Operation of Waste Gas Facilities The Company's coal-fired thermal power plant was carried out ultra-low emission transformation. After the transformation, the environmental protection facilities of the power plant operate normally. Sulfur dioxide, nitrogen oxides and dust in flue gas all meet the ultra-low emission standards. The incinerator of hazardous waste of the Company adopt the process of "SNCR + semi dry (quench) deacidification + activated carbon injection + bag dust removal + SCR" for the tail gas. Sulfur dioxide, nitrogen oxides and fume and dust in tail gas all meet the standard. The RTO of the Company adopts treatment process of VOCs using "acid washing and absorption + alkali washing and absorption + three-chamber RTO incineration + quench tower + alkali absorption”. Sulfur dioxide, nitrogen oxide, fume and dust, and VOCs in the tail gas all meet the standard. ADAMA Anpon, the subsidiary of the Company, is equipped with RTO, TO, resin adsorption and other tail gas treatment facilities. Under the condition of meeting the emission standard, operation management is strengthened to further reduce the total VOCs emission. ADAMA Huifeng, the subsidiary of the Company, has RTO, alkali washing facilities and acid washing facilities, which are respectively used to treat process waste gas containing volatile organic compounds, acid washing waste gas and alkali washing waste gas. The main emission indicators of waste gas, such as sulfur dioxide, nitrogen oxides, fume and dust, and NMHC in tail gas all meet the standard. (3) The Company and its subsdiaries, ADAMA Anpon and ADAMA Huifeng disclose production and pollution information according the Interim Measures on Environmental Information Disclosure and transfer information of main wastewater and air pollutants to the information platform of the local environmental bureaus on a daily basis. 2. EIA of construction projects and other environmental administrative permits During the reporting period, the Company obtained “Review Opinions on the Reconstruction and Expansion of Waste Water Discharge at the Estuary ”, “Approval of Amendment to Environmental Impact Report of the Insecticide Relocation and Upgrading Project” and “Reply to the Environmental Impact Report of Salt Well Survey and Drilling Project”. It also renewed its waste discharge permit which is now valid. ADAMA Anpon, the subsidiary of the Company, received “Reply to the Environmental Impact Report of Expansion of Utilities and Auxiliary Facilities” and “Reply on the Environmental Impact Report of the Relocation and Upgrading of 1000 t/a Pymetrozine (converted into 100%)”. Its Maidao branch changed its waste discharge permit which is now valid. ADAMA Huifeng, the subsidiary of the Company, received approvals of Yancheng Ecological Environment Bureau on upgrading of Flutriafol AI, Epoxiconazole AI, Glufosinate AI and 2,4-D isooctyl ester AI. It also renewed its waste discharge permit. 92 ADAMA Ltd Annual Report 2021 3. Contingency Plan of Environmental Accidents The Company and its relevant subsidiaries have formulated the Contingency Plan for Environmental Emergencies according to their production facilities and industry features, and then submitted files to the local environmental protection authorities as record. 4. Environment self-monitoring plan ADAMA attributes great importance to protecting the environment, out of a sense of responsibility to society and the environment and strives to meet the relevant regulatory requirements and to even go beyond mere compliance, engaging in constant dialogue with stakeholders, including the authorities and the community. In order to improve the environmental management, track the discharge of various pollutants, evaluate the impact on the surrounding environment, strengthen the discharge management of pollutants in the production process, accept the supervision and inspection of environmental authorities and provide reference for pollution prevention and control, the company and its subsidiaries Anpon and Huifeng have formulated a self-monitoring plan, which conducts regular tests in strict accordance with the requirements. The major monitored indicators and frequency are as the following: 1. Monitored Indicators Waste water: COD, NH3-N, PH, SS, Petroleum, TP. Air Pollutant: SO2, Nitrogen oxide, Fume and Dust, Non Methane Hydrocarbon Noise: Noise at the Site Border 2. Frequency Fume and dust and NMHC in boiler emission, SO2, NOx, fume and dust of RTO, and wastewater discharged from the centralized point (COD, Ammonia Nitrogen and total phosphorous): continuous auto monitoring Manual sampling: particles from certain air emissions, suspended particles from wastewater and Petroleum once a month. Noise: once a quarter. ADAMA continually examines the implications of the environmental laws, taking actions to prevent or mitigate the environmental risks and to reduce the environmental effects that may result from its activities, and invests extensive resources to fulfill those legal provisions that are, and are anticipated to, affect it. ADAMA’s plants are subject to atmospheric emissions regulations, whether by virtue of the stipulations provided in the business licenses or under the applicable law. Hazardous materials are stored and utilized in the Company's plants, together with infrastructures and facilities containing fuels and hazardous materials. ADAMA takes actions to prevent soil and water pollution by these materials and treats them, if revealed. ADAMA’s plants conduct various soil surveys, risk surveys and tests with regard to treatment of the soil or ground water at the plants. ADAMA intends to continue investing in environmental protection, to the extent required and beyond this, whether on its own volition or in compliance with contractual commitments, regulatory or legal standards relating to environmental protection, so as to realize its best available policy and comply with any legal requirements. As part of its policy of ecological process improvement, ADAMA also invests in remediation, changes in production processes, establishment of sewage facilities, as well as in byproduct storage and recycling. 93 ADAMA Ltd Annual Report 2021 5. Administrative punishment for environmental problems during the reporting period Impact on the Name of the Reasons of Production and Rectification Company or Violations Penalty Results Punishment Business of the Measures Subsidiaries Listed Company ADAMA (Nanjing) Shall rectify No impact Changed activated Failed to change Activated carbon Agricultural immediately and carbon a activated carbon has been used Technology Co., pay a fine of 20,000 on time and in full over its service life Ltd. RMB 6. Other environmental information that should be disclosed None 7. Measures taken to reduce its carbon emissions during the reporting period and their effects √ Applicable □ Not applicable During the reporting period, the Company established the working group on energy conservation and carbon reduction, formulated the indicators of energy conservation and carbon reduction in the future, completed carbon emission verification and compliance, and carried out a number of energy conservation and emission reduction work, such as recovering the waste heat of hydrogen brine by adding heat exchangers, saving steam consumption, and reasonably allocating resources through the combined transformation of utilities (refrigeration station and compressed air station), reducing energy consumption and maintaining facilities, changing the model of water pumps and motors, adding frequency converter make water pump motors better match the actual demand, optimizing the design of chlor-alkali brine process pipeline to reduce energy consumption and CO2 emission, etc. 8. Other environmental related information None II. Social Responsibilities ADAMA is being engaged in more than 10-year journey of an ongoing commitment to accountability and transparency regarding its operations and business. During 2021, ADAMA published its first ESG report following 10 years of reporting CSR reports using a dedicated website, reflecting its activities and improvements that are the outcome of at least 10-year investment. The website and the ESG report provide meaningful insights into the challenges and opportunities it faces in becoming not only a global supplier of crop protection products, solutions, and services, but one that aims to bolster food security in a world where populations are rising, resources are dwindling, and energy demands are increasing. The website is also an opportunity for ADAMA group to engage with, and enter into, a dialogue with its employees and stakeholders. ADAMA is committed in its efforts to further increase transparency broadening its disclosures and continuing working closely with all relevant stakeholders on reporting ESG performance. With the aid of the designated website, the Company shares how it integrates sustainability into its business and operations to create long-term value for all the Company’s stakeholders: customers, people, communities, shareholders, and society at large. In this respect, the Company is periodically updating the Sustainability Report presented on its website. The Sustainability Reports issued are in accordance with the Global Reporting Initiative (GRI) SRS framework at the “Core” level. 94 ADAMA Ltd Annual Report 2021 The Company and its production subsidiaries have passed the review of safety standardization enterprises (hazardous chemicals). The Company integrates safety standardization with HSE system and operates effectively. It optimized the management structure, earnestly implemented the mechanism of one post with two responsibilities and revised the safe production accountability policy according to the structure and the functions of each department. It enhanced safe production management organization and network, designated full-time safety personnel, adjusted the composition of safety standardization working group according to its actual operation, and clarified the responsibilities and division of labor. During the reporting period, the Company improved safe production process from the perspectives of resources and budget, equipment and processes and safety management. In terms of the process, measures such as using low-risk chemicals to replace high-risk chemicals, continuous reaction to replace batch reaction, reducing process temperature and pressure, etc. are taken to improve intrinsic safety. In terms of engineering, the Company has continuously improved automation, and equipped production with effective safety measures such as automatic control, alarm, interlocking, safety instrument system and emergency pressure relief devices. In terms of management, the Company has continued to focus on core elements such as process hazard analysis, change management, safety inspection before start-up and mechanical integrity, significantly improving process safety. At the same time, the Company attaches importance to strengthening safety investment in safety facilities, equipment maintenance and testing, daily monitoring and evaluation, training, promotion and application of new technologies, etc. In terms of safe production education and training, the Company focuses on learning and implementing the safe production law, defines the requirements of "Safe Production Responsibilities for All", and organized nearly 900 safety education and training sessions. During the reporting period, production sites altogether received various inspections from governments and companies at higher levels for 81 times, and basically completed the rectification according to the inspection results. III. Enhancement of the results of poverty alleviation and rural revitalization In terms of consolidating and expanding the achievements of poverty alleviation and rural revitalization, in order to deeply implement the decisions and deployment of poverty alleviation by central, provincial and municipal governments, and vigorously implement targeted poverty alleviation, targeted poverty alleviation and "sunshine poverty alleviation", the Company’s Jingzhou site actively responded to the call of Hubei Federation of Trade Unions and Jingzhou Federation of Trade Unions and purchased 154,000 yuan of poverty alleviation materials from local agricultural produce points designated by Jingzhou City. Anpon, a wholly-owned subsidiary of the Company, established poverty alleviation leading team headed by the Secretary of the Party Committee and coordinated by the chairman of the trade union. The vice chairman of the trade union participated in the county and district assistance team of the municipal party committee. According to the work plan of the municipal party committee and the municipal government, Anpon was designated to help Shidang village, Boli Town of Huai'an, a village with weak economy in the province, and actively explored ways and methods of poverty alleviation to ensure that the poverty alleviation work is implemented. According to the characteristics of the subsidiary’s production, Anpon sent crop protection products to the village. According to its agreement with the assisted village and local crops, Anpon sent a batch of crop protection products to local farmers. Anpon provided 160,000 yuan of special poverty alleviation assistance fund for the village to build the villagers' service center and party member activity center. Anpon actively participated in the project review and fund allocation and use, so as to ensure the smooth implementation of the project. At the same time, Anpon also actively participated in activities organized by ChemChina to Gulang in Gansu province and Pingshan in Hebei province. 95 ADAMA Ltd Annual Report 2021 Section VI - Significant Events I. Performance of commitments 1. Commitments completed by the Company, the shareholders, the actual controllers, the purchasers, or the other related parties during the Reporting Period and those hadn’t been completed execution up to the period-end √ Applicable □ Not applicable Time of Commitment Commitment Period of Commitment Contents making Fulfillment maker type commitment commitment Commitment on - - - - - - share reform 1. The business of ChemChina’s subsidiaries - Regarding Regarding Jiangsu Anpon Electrochemical Co., Ltd., Anhui commitment 1, Commitment 1, Petroleum Chemical Group Co., Ltd., Shangdong September 6, completed. Dacheng Agrochemical Co., Ltd., Jiamusi Heilong 2020 The committed party Agrochemicals Co., Ltd., and Hunan Haohua (According to complies with the Chemical Co., Ltd. and its subsidiary are the same the commitments:(1) Commitment in or similar business as the main business of commitments ChemChina had the acquisition Commitments ADAMA. As for horizontal domestic competition, September 7, made by transferred its shares report or the on the horizontal ChemChina committed to gradually eliminate such 2013 ChemChina on in Anpon to ADAMA; report on equity ChemChina competition kind of horizontal competition in the future and to October 12, (2) ChemChina had changes fight for the internal assets reconstruction, to 2016, the date transferred its shares adjust the industrial plan and business structure, to eliminate the in Jiamusi Heilong to a to transform technology and to upgrade products, domestic third party, such that. to divide the market so as to make each horizontal Jiangmusi Heilong is corporation differ in the products and its ultimate competition no longer a subsidiary users according to the securities laws and between the of ChemChina; (3) 96 ADAMA Ltd Annual Report 2021 Time of Commitment Commitment Period of Commitment Contents making Fulfillment maker type commitment commitment regulations and industry policy within 7 years, thus Company and Shangdong Dacheng to eliminate the current domestic horizontal Jiangsu Anpon is not a subsidiary of competition between ChemChina’s controlled Electrochemical CNAC and doesn’t subsidiaries and ADAMA. Co., Ltd., Anhui carry out agrochemical 2. Other than the existing and potential horizontal Petroleum business; (4) competition stated in the acquisition report, Chemical ChemChina is not the ChemChina will take effective measures to avoid Group Co., actual controller of engagements by itself and its controlled Ltd., and Haohua; (5) CNAC, subsidiaries in new business that is in the same or Jiamusi Heilong the wholly-owned similar business to ADAMA, within the territory in Agrochemicals subsidiary of future. 3. If ChemChina or its controlled Co., Ltd., is ChemChina, signed an subsidiaries domestically conduct related business January 4, Entrusted Operation which form horizontal competition with ADAMA, 2022). and Management in the future, ChemChina will actively take steps, Regarding Agreement with the to gradually eliminate the competition, the commitments 2 Company, and concrete measures including but not limited to and 3, long entrusted the internal assets reorganization, (including putting term. operation and the business into ADAMA or operated through management of Anhui ADAMA) to adjust the industrial plan and business Petrochemical Co., structure, to modify technology and to upgrade Ltd.to the Company. products, to segment the market so as to distinguish each corporation in terms of products Regarding and its end users, thus to avoid and eliminate commitments 2 and 3, domestic horizontal competition between On-going. ChemChina’s controlled subsidiaries and ADAMA. The committed party complies with the commitments. Commitments ChemChina will comply with laws, regulations and September 7, On-going. ChemChina on the other regulatory documents to avoid and reduce 2013 and Long term The committed party independence of related-party transactions with ADAMA. However, January 7, 2020 complies with the 97 ADAMA Ltd Annual Report 2021 Time of Commitment Commitment Period of Commitment Contents making Fulfillment maker type commitment commitment ADAMA and for related-party transactions that are inevitable or commitments. related- party based on reasonable grounds, ChemChina will transactions follow the market principles of just, fairness and openness, and enter into agreement(s) legally and go through lawful procedures. ChemChina will honor its disclosure obligations and apply for relevant approvals according to the AoA of ADAMA, rules regarding related-party transactions and relevant regulations, not impairing the lawful rights and interest of ADAMA and its shareholders by related-party transactions. After completion of the acquisition transaction, ADAMA will continue to keep complete procurement, production and sales systems and to possess independent intellectual properties. ChemChina and its affiliated parties will be completely independent from ADAMA in terms of staff, assets, finance, business and organization. ADAMA will have full capacity of operation in Chinese agricultural chemical market. ChemChina will continue to follow the Company Law and Securities Law so as to avoid any action that may impair the operating independence of ADAMA. ChemChina will keep taking appropriate measures January 7, 2020 January 4, Completed. to resolve the same issue between ADAMA and 2022 The committed party Commitments Anhui Petrochemical Co., Ltd. within four years complies with the ChemChina on horizontal after ADAMA buys 100% shares of ADAMA commitments. CNAC, competition Solutions through the issuance of shares to CNAC the wholly-owned and finishes the raising of supporting finance in subsidiary of accordance with the original commitments as well ChemChina, signed an 98 ADAMA Ltd Annual Report 2021 Time of Commitment Commitment Period of Commitment Contents making Fulfillment maker type commitment commitment as various the requirements of securities laws and Entrusted Operation regulations and industry policies. and Management Agreement with the Company, and entrusted the operation and management of Anhui Petrochemical Co., Ltd. to the Company. Note: On January 4, 2018, ADAMA completed the purchase of the shares of ADAMA Agricultural Solutions Ltd. and the raising of supporting finance. Based on a preliminary review, ChemChina believes that Syngenta A.G. and ADAMA may have horizontal competition to some extent. It will further analyze, confirm and specify if the two On-going. companies share the same or similar businesses January 7, The committed party and products in terms of business content, January 7, 2020 2025 complies with the suppliers and customers, product substitution, commitments. processes and core technologies and distribution channels, etc. If the result will be positive, ChemChina will gradually solve the issue within 5 years after the issuance of this Letter by taking 99 ADAMA Ltd Annual Report 2021 Time of Commitment Commitment Period of Commitment Contents making Fulfillment maker type commitment commitment appropriate measures, including but not limited to internal asset restructuring, industrial planning and business structure adjustment, technology transformation and product upgrading, market segmentation or other feasible solutions in accordance with the requirements of securities laws and regulations and industry policies. Once Sinofert and Sinochem Agriculture are the subsidiaries of ChemChina, ChemChina will analyze if there are same or similar businesses among the three subsidiaries. If the result will be On-going. positive, ChemChina will then propose The committed party January 7, 2020 Long term corresponding solutions for any business or product complies with the that constitutes competition in accordance with the commitments. requirements of applicable laws, regulations and regulations to solve the issue of horizontal competition. Other than the foregoing, none of the main On-going. business of ChemChina and other controlled The committed party January 7, 2020 Long term subsidiaries is the same or similar to that of complies with the ADAMA. commitments. ChemChina will continue to take effective On-going. measures to prevent itself and its other The committed party subsidiaries from adding new businesses in the January 7, 2020 Long term complies with the future that are the same as or similar to those of commitments. ADAMA. 100 ADAMA Ltd Annual Report 2021 Time of Commitment Commitment Period of Commitment Contents making Fulfillment maker type commitment commitment If ChemChina or any of its other subsidiaries develops related businesses that constitutes horizontal competition against the domestic business of ADAMA in the future, it will actively take relevant measures, including but not limited to asset restructuring, adjustment of industrial planning and business structure, technological transformation and Product upgrades, market segmentation and other feasible solutions, so that each enterprise will be different in their portfolio and end users and avoid and eliminate the horizontal competition with ADAMA. From the effective date of the Commitment Letter, On-going. if ChemChina violates the above commitments, it Long term The committed party January 7, 2020 should compensate ADAMA for the losses or effective complies with the expenses suffered or incurred by the violation. commitments. This acquisition will not materially adversely affect the independence of ADAMA in terms of staff, assets, finance, business and organization. After completion of the acquisition transaction, continue to be ADAMA will continue to keep complete effective during Commitment to procurement, production and sales systems and to On-going. the period that Sinochem maintain the possess independent intellectual properties. September 16, The committed party Sinochem Holdings independence of Sinochem Holdings and its affiliated parties will 2021 complies with the Holdings ADAMA strictly abide by the relevant provisions on the commitments. controls independence of listed companies in relevant ADAMA laws, regulations and normative documents and be completely independent from ADAMA in terms of staff, assets, finance, business and organization, so as to ensure ADAMA will have full 101 ADAMA Ltd Annual Report 2021 Time of Commitment Commitment Period of Commitment Contents making Fulfillment maker type commitment commitment capacity of operation in Chinese agricultural chemical market. Sinochem Holdings will follow related regulations in Company Law and Securities Law, and avoid engagement in any action that impairs the operating independence of ADAMA. continue to be With regard to the present or future possible effective during competition between the subsidiaries of On-going. the period that ChemChina and ADAMA, Sinochem Holdings will September 16, The committed party Sinochem earnestly urge ChemChina to fulfill its 2021 complies with the Holdings commitments to ADAMA to avoid horizontal commitments. controls competition. ADAMA As for the horizontal competition between Sinochem Holdings’ subsidiaries and ADAMA arising from this equity transfer, Sinochem Holdings will, according to the requirements of Commitments Sinochem relevant securities regulatory authorities, within on the horizontal Holdings five years from the effective date of this letter of competition commitment, comprehensively use entrusted On-going. management, asset reorganization, equity September 16, September 16, The committed party replacement/transfer, business merger/adjustment 2021 2026 complies with the or other legal means to steadily promote the commitments. integration of related assets or businesses that meet the requirements of injection into ADAMA in line with the principle of benefiting the development of ADAMA and safeguarding shareholders' interests, especially those of minority shareholders. 102 ADAMA Ltd Annual Report 2021 Time of Commitment Commitment Period of Commitment Contents making Fulfillment maker type commitment commitment Sinochem Holdings will strictly abide by the relevant laws, regulations and normative documents, AOA and other internal management continue to be system of ADAMA, exercise the rights of effective during On-going. shareholders according to the law through the the period that September 16, The committed party equity relationship, in line with the principle of Sinochem 2021 complies with the state ownership and hierarchical management of Holdings commitments. state-owned assets, properly handle matters controls involving ADAMA's interests, and shall not use the ADAMA control position to seek improper interests or transfer interests. Sinochem Holdings and its controlled subsidiaries will, as required by law, regulation and other specifications, avoid and reduce related party transactions with ADAMA; however, for the related party transactions that are inevitable or based on continue to be reasonable grounds, Sinochem Holdings and its effective during Commitment to On-going. controlled subsidiaries will strictly abide by the the period that Sinochem standardize September 16, The committed party relevant laws, regulations and normative Sinochem Holdings related-party 2021 complies with the documents and relevant systems of ADAMA, Holdings transactions commitments. legally enter into agreement(s) by law, go through controls lawful procedures, ensure fair pricing and perform ADAMA its disclosure obligations. Sinochem Holdings and its controlled subsidiaries warrant that no related party transaction will be done to impair lawful rights and interest of ADAMA and its shareholders. Commitments The subsidiaries controlled by ChemChina, The commitments Commitments made at the namely Anpon, HH, Maidao, Anhui Petrochemical October 12, January 4, listed in the left column ChemChina on the horizontal time of assets and Heilong as well as their subsidiaries are in 2016 2022 have been completed. competition reorganization similar or the same business as ADAMA. For the The committed party 103 ADAMA Ltd Annual Report 2021 Time of Commitment Commitment Period of Commitment Contents making Fulfillment maker type commitment commitment horizontal competition in China, ChemChina complies with the commits to take appropriate actions to solve the commitments: (1) the horizontal competition between its subsidiaries reorganization, i.e. the and ADAMA step-by-step in an appropriate way issuance of shares to within 4 years after completion of the CNACA for purchasing reorganization, in accordance with securities laws, assets and regulations and sector/industrial policies. implementation of The means by which ChemChina addresses the private placement, horizontal competition include but are not limited completed on January to the following, 4, 2018; (2) Anpon ADAMA acquires crop protection-related assets merged with Maidao under ChemChina. ADAMA holds or controls other and ChemChina’s crop protection-related assets of ChemChina in shares in Anpon had line with national laws and by reasonable been transferred to commercial means such as entrusted operation. ADAMA; (3) ChemChina divests other crop protection-related ChemChina had assets or transfers the control power of such transferred its shares subsidiaries to external parties. ChemChina in Heilong to a third reorganizes internal assets, adjusts sector party. Heilong is no planning and business structure, upgrades longer a subsidiary of technologies and products and makes market ChemChina; (4) HH segmentation so that each company will withdrew from the differentiate its products and end users to agrochemical eliminate horizontal competition between the business;(5) CNAC, subsidiaries controlled by ChemChina and the wholly-owned ADAMA. subsidiary of ChemChina, signed an Entrusted Operation and Management Agreement with the 104 ADAMA Ltd Annual Report 2021 Time of Commitment Commitment Period of Commitment Contents making Fulfillment maker type commitment commitment Company, and entrusted the operation and management of Anhui Petrochemical Co., Ltd. to the Company. ChemChina will take effective actions to avoid that it or its controlled subsidiaries will add new business in China same or similar to ADAMA. If ChemChina or its controlled subsidiaries will in the future be engaged in business in China that constitutes horizontal competition with ADAMA, Commitments On-going. ChemChina will take active actions, including but on Potential October 12, The committed party ChemChina not limited to reorganizing internal assets, Long term Horizontal 2016 complies with the adjusting sector planning and business structure, Competition commitments. upgrading technologies and products and making market segmentation so that each company will differentiate its products and end users to avoid and eliminate horizontal competition between the subsidiaries controlled by ChemChina and ADAMA. ChemChina will, as required by law, regulation and other specifications, avoid and reduce related Commitment to party transactions with ADAMA; however, for the On-going. reduce and related party transactions that are inevitable or The committed party ChemChina standardize based on reasonable grounds, ChemChina will August 4, 2016 Long term complies with the related-party follow the just, fairness and open principles in commitments. transactions market, legally enter into agreement(s) by law, go through lawful procedures, and perform its disclosure obligations and approving procedures 105 ADAMA Ltd Annual Report 2021 Time of Commitment Commitment Period of Commitment Contents making Fulfillment maker type commitment commitment as required by related systems and regulations. ChemChina warrants that no related party transaction will be done to impair lawful rights and interest of ADAMA and its shareholders. After completion of the acquisition transaction, ADAMA will continue to keep complete procurement, production and sales systems and to possess independent intellectual properties, and ChemChina and its affiliated parties will be Commitment to On-going. completely independent from ADAMA in terms of maintain The committed party ChemChina staff, assets, finance, business and organization, August 4, 2016 Long term independence of complies with the and ADAMA will have full capacity of operation in the ADAMA commitments. Chinese agricultural chemical market. ChemChina will follow related regulations in Company Law and Securities Law, and avoid engagement in any action that impairs the operating independence of ADAMA. Commitments -- -- -- -- -- -- made at IPO or refinancing Share incentive -- -- -- -- -- -- commitments Other -- -- -- -- -- -- commitments to the company's minority shareholders Whether the Yes commitments 106 ADAMA Ltd Annual Report 2021 Time of Commitment Commitment Period of Commitment Contents making Fulfillment maker type commitment commitment are fulfilled on time If the commitment is overdue, the specific reasons for not completing the -- performance and the next work plan should be explained in detail. 107 ADAMA Ltd Annual Report 2021 2. Assets or projects with profit forecast, still relevant for forecast period □ Applicable √ Not applicable II. Inadequate use of Company’s capital by the controlling shareholder or by its related parties for non-operating purposes □ Applicable √ Not applicable No such situation occurred during the Reporting Period. III. Non-compliance with external guarantees □ Applicable √ Not applicable No such cases during the reporting period. IV. Explanation by the board of directors on the latest "non-standard audit report" □ Applicable √ Not applicable V. Explanation by the Board of Directors, the Supervisory Board and independent directors (if any) regarding “non-standard audit report” issued by Company’s auditor for the Reporting Period □ Applicable √ Not applicable VI. Changes in accounting standards, accounting estimates or corrections of significant accounting errors compared to last financial report √ Applicable □ Not applicable "Accounting Standards for Business Enterprises Interpretation No. 15" On 30 December 2021, the Ministry of Finance issued "Accounting Standards for Business Enterprises Interpretation No. 15” (hereinafter referred to as “Interpretation No. 15”) which clarified the following accounting treatments: (1) The accounting treatment of the sale of the products or by-products produced before the assets being capable of operating in a predetermined manner or produced during the research and development process; (2) Disclosure requirements for centralized management of funds; and (3) costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. According to the Interpretation No.15, the second clarification was effective from 30 December 2021. Adoption of the interpretation has no significant impact on the Group’s financial statements. 108 ADAMA Ltd Annual Report 2021 VII. Change of the consolidation scope as compared with the financial reporting of last year √ Applicable □ Not applicable During the reporting period, the Group acquired Adama Huifeng (Jiangsu) Co., Ltd through business combination not under common control. VIII. Engagement of Company’s Auditor Auditor engaged at present Name of domestic Auditor Deloitte Touche Tohmatsu Certified Public Accountants LLP Remuneration for domestic Auditor for the 324 Reporting Period (RMB Ten Thousand Yuan) Consecutive years of the audit services 5 provided by domestic Auditor Mou Zhengfei, and Ji Yuting Name of domestic accountants Consecutive years of the audit services 4 provided by the domestic accountants Name of overseas Auditor Not applicable Remuneration for overseas Auditor for the -- Reporting Period (RMB Ten Thousand Yuan) Consecutive years of the audit services -- provided by overseas Auditor Name of overseas accountants -- Consecutive years of the audit services -- provided by the overseas accountants Change of the Auditor at Reporting Period □ Yes √ No Engagement of the Auditor for internal control, financial adviser or sponsor √ Applicable □ Not applicable In the Reporting Period, the Company continued to engage Deloitte Touche Tohmatsu Certified Public Accountants LLP as the auditor of the Company for 2021 annual financial reports and 2021 annual internal control of the Company. Total remuneration for the Auditor was RMB 3.2 million. IX. Trading termination of Company’s securities that the Company will face after the disclosure of this annual report □ Applicable √ Not applicable X. Bankruptcy and reorganization □ Applicable √ Not applicable 109 ADAMA Ltd Annual Report 2021 No such cases in the Reporting Period. XI. Material Legal Claims/proceedings □ Applicable √ Not applicable No such cases in the Reporting Period. XII. Punishment and rectification □ Applicable √ Not applicable None during the Reporting Period. XIII. Credibility of the Company, its controlling shareholders and actual controller √ Applicable □ Not applicable The Company’s controlling shareholder and actual controller are in good credibility status. They are not in the situation that the effective judgment of the court was not executed and the large amount of debt was not repaid when due during the reporting period. 110 ADAMA Ltd Annual Report 2021 XIV. Significant related-party transactions 1. Related-party transactions in the ordinary course of business √ Applicable □Not applicable Market Pricing Percenta price of Type of principle ge Approved Whether similar related Content of of Value against transactio exceeds Date of Relationshi Settlement transacti Index of the Related party party related party related Price (RMB transacti n quota the announc p methods ons if disclosure transactio transaction party ‘0000) ons of (RMB approved ement the n transacti the same ‘0000) quota Compan on kind y knows Purchasing Announcement raw on Expected Under the materials Purchase of Related-Party Syngenta A.G. same control and raw Market Market Cash March Transactions in and its 90,985 4.96% 132,936 No N/A of products materials/pro price price Settlement 31, 2021 the Ordinary subsidiaries ChemChina from ducts Course of related Business in 2021 parties (No.2021-6) Purchasing Announcement raw on Expected Bluestar Under the materials Purchase of Related-Party (Beijing) same control and raw Market Market Cash March Transactions in Chemical 560 0.03% 940 No N/A of products materials/pro price price Settlement 31, 2021 the Ordinary Machinery Co., ChemChina from ducts Course of Ltd. related Business in 2021 parties (No.2021-6) Purchasing Announcement Jiangsu Under the raw Purchase of on Expected Huaihe same control materials raw Market Market Cash March Related-Party 16,492 0.90% 19,000 No N/A Chemicals of and materials/pro price price Settlement 31, 2021 Transactions in Co., Ltd. ChemChina products ducts the Ordinary from Course of 111 ADAMA Ltd Annual Report 2021 Market Pricing Percenta price of Type of principle ge Approved Whether similar related Content of of Value against transactio exceeds Date of Relationshi Settlement transacti Index of the Related party party related party related Price (RMB transacti n quota the announc p methods ons if disclosure transactio transaction party ‘0000) ons of (RMB approved ement the n transacti the same ‘0000) quota Compan on kind y knows related Business in 2021 parties (No.2021-6) Purchasing Announcement raw on Expected Under the materials Purchase of Related-Party same control and raw Market Market Cash March Transactions in Sinofert 688 0.04% 220 Yes N/A of products materials/pro price price Settlement 31, 2021 the Ordinary ChemChina from ducts Course of related Business in 2021 parties (No.2021-6) Purchasing Announcement raw on Expected Jiangsu Under the materials Purchase of Related-Party Yangnong same control and raw Market Market Cash March Transactions in 50,113 2.73% 52,010 No N/A Chemical Co., of products materials/pro price price Settlement 31, 2021 the Ordinary Ltd. ChemChina from ducts Course of related Business in 2021 parties (No.2021-6) Purchasing Announcement raw on Expected Under the materials Purchase of Related-Party Jiangsu Youshi same control and raw Market Market Cash March Transactions in Chemical Co., 4,106 0.22% 120 Yes N/A of products materials/pro price price Settlement 31, 2021 the Ordinary Ltd. ChemChina from ducts Course of related Business in 2021 parties (No.2021-6) Jiangsu Under the Purchasing Purchase of Market Market Cash March Announcement 43 0.00% 160 No N/A Ruixiang same control raw raw price price Settlement 31, 2021 on Expected 112 ADAMA Ltd Annual Report 2021 Market Pricing Percenta price of Type of principle ge Approved Whether similar related Content of of Value against transactio exceeds Date of Relationshi Settlement transacti Index of the Related party party related party related Price (RMB transacti n quota the announc p methods ons if disclosure transactio transaction party ‘0000) ons of (RMB approved ement the n transacti the same ‘0000) quota Compan on kind y knows Chemical Co., of Sinochem materials materials/pro Related-Party Ltd. Holdings and ducts Transactions in products the Ordinary from Course of related Business in 2021 parties (No.2021-6) Purchasing Announcement raw on Expected Jiangsu Youjia Under the materials Purchase of Related-Party Plant same control and raw Market Market Cash March Transactions in 5,794 0.32% 160 Yes N/A Protection Co., of products materials/pro price price Settlement 31, 2021 the Ordinary Ltd. ChemChina from ducts Course of related Business in 2021 parties (No.2021-6) Purchasing Announcement raw on Expected Hangzhou(Tor Under the materials Purchase of Related-Party ch)Xidoumen same control and raw Market Market Cash March Transactions in Membrane 13 0.00% 10 Yes N/A of products materials/pro price price Settlement 31, 2021 the Ordinary Industries ChemChina from ducts Course of Co.,Ltd. related Business in 2021 parties (No.2021-6) Purchasing Announcement Under the raw Purchase of on Expected Bluestar same control materials raw Market Market Cash March Related-Party Engineering 14 0.00% - - N/A of and materials/pro price price Settlement 31, 2021 Transactions in Co.,Ltd. ChemChina products ducts the Ordinary from Course of 113 ADAMA Ltd Annual Report 2021 Market Pricing Percenta price of Type of principle ge Approved Whether similar related Content of of Value against transactio exceeds Date of Relationshi Settlement transacti Index of the Related party party related party related Price (RMB transacti n quota the announc p methods ons if disclosure transactio transaction party ‘0000) ons of (RMB approved ement the n transacti the same ‘0000) quota Compan on kind y knows related Business in 2021 parties (No.2021-6) Purchasing Announcement raw on Expected Nantong Under the materials Purchase of Related-Party Xingchen same control and raw Market Market Cash March Transactions in Synthetic 14 0.00% - - N/A of products materials/pro price price Settlement 31, 2021 the Ordinary Material Co., ChemChina from ducts Course of Ltd. related Business in 2021 parties (No.2021-6) Purchasing Announcement raw on Expected Under the materials Purchase of Related-Party Sinochem same control and raw Market Market Cash March Transactions in 6,592 0.36% - - N/A Agro Co.,Ltd. of products materials/pro price price Settlement 31, 2021 the Ordinary ChemChina from ducts Course of related Business in 2021 parties (No.2021-6) Purchasing Announcement Shenyang raw on Expected Shenhua Under the materials Purchase of Related-Party Institute same control and raw Market Market Cash March Transactions in 2 0.00% - - N/A Testing of Sinochem products materials/pro price price Settlement 31, 2021 the Ordinary Technology Holdings from ducts Course of Co., Ltd. related Business in 2021 parties (No.2021-6) Shandong Under the Purchasing Purchase of Market Market Cash March Announcement 91 0.00% - - N/A Dacheng same control raw raw price price Settlement 31, 2021 on Expected 114 ADAMA Ltd Annual Report 2021 Market Pricing Percenta price of Type of principle ge Approved Whether similar related Content of of Value against transactio exceeds Date of Relationshi Settlement transacti Index of the Related party party related party related Price (RMB transacti n quota the announc p methods ons if disclosure transactio transaction party ‘0000) ons of (RMB approved ement the n transacti the same ‘0000) quota Compan on kind y knows Agrochemical of materials materials/pro Related-Party Company ChemChina and ducts Transactions in Limited products the Ordinary from Course of related Business in 2021 parties (No.2021-6) Purchasing Announcement raw on Expected Sinochem Under the materials Purchase of Related-Party International same control and raw Market Market Cash March Transactions in Crop Care 591 0.03% - - N/A of products materials/pro price price Settlement 31, 2021 the Ordinary (Overseas) ChemChina from ducts Course of Pte. Ltd. related Business in 2021 parties (No.2021-6) Purchasing Announcement China Bluestar raw on Expected Chengrand Under the materials Purchase of Related-Party Research same control and raw Market Market Cash March Transactions in 1,221 0.07% - - N/A Institute of products materials/pro price price Settlement 31, 2021 the Ordinary Chemical ChemChina from ducts Course of Industry related Business in 2021 parties (No.2021-6) Purchasing Announcement Under the raw Purchase of on Expected Shenyang same control materials raw Market Market Cash March Related-Party Chemical Co., 409 0.02% - - N/A of and materials/pro price price Settlement 31, 2021 Transactions in Ltd. ChemChina products ducts the Ordinary from Course of 115 ADAMA Ltd Annual Report 2021 Market Pricing Percenta price of Type of principle ge Approved Whether similar related Content of of Value against transactio exceeds Date of Relationshi Settlement transacti Index of the Related party party related party related Price (RMB transacti n quota the announc p methods ons if disclosure transactio transaction party ‘0000) ons of (RMB approved ement the n transacti the same ‘0000) quota Compan on kind y knows related Business in 2021 parties (No.2021-6) Purchasing Announcement raw on Expected Under the materials Purchase of Related-Party ELKEM same control and raw Market Market Cash March Transactions in SILICONES 192 0.01% - - N/A of products materials/pro price price Settlement 31, 2021 the Ordinary BRASIL LTDA ChemChina from ducts Course of related Business in 2021 parties (No.2021-6) Announcement Zhonglan Purchasing on Expected Lianhai Under the fixed Related-Party (Shanghai) same control assets Purchase of Market Market Cash March Transactions in Chemical 123 0.01% - - N/A of from fixed assets price price Settlement 31, 2021 the Ordinary Engineering ChemChina related Course of Technology parties Business in 2021 Co., Ltd. (No.2021-6) Announcement Purchasing on Expected Changsha Under the fixed Related-Party Huaxing same control assets Purchase of Market Market Cash March Transactions in Construction 175 0.01% - - N/A of from fixed assets price price Settlement 31, 2021 the Ordinary Supervision ChemChina related Course of Co., Ltd. parties Business in 2021 (No.2021-6) Under the Purchasing Purchase of Market Market Cash March Announcement Syngenta AG 4,677 0.25% - - N/A same control fixed fixed assets price price Settlement 31, 2021 on Expected 116 ADAMA Ltd Annual Report 2021 Market Pricing Percenta price of Type of principle ge Approved Whether similar related Content of of Value against transactio exceeds Date of Relationshi Settlement transacti Index of the Related party party related party related Price (RMB transacti n quota the announc p methods ons if disclosure transactio transaction party ‘0000) ons of (RMB approved ement the n transacti the same ‘0000) quota Compan on kind y knows of assets Related-Party ChemChina from Transactions in related the Ordinary parties Course of Business in 2021 (No.2021-6) Announcement Purchasing on Expected Under the fixed Related-Party Bluestar same control assets Purchase of Market Market Cash March Transactions in Engineering 137 0.01% - - N/A of from fixed assets price price Settlement 31, 2021 the Ordinary Co.,Ltd. ChemChina related Course of parties Business in 2021 (No.2021-6) Announcement Selling raw on Expected Under the materials Related-Party Syngenta AG same control and Selling Market Market Cash March Transactions in and its 90,625 2.93% 92,586 No N/A of products to products price price Settlement 31, 2021 the Ordinary subsidiaries ChemChina related Course of parties Business in 2021 (No.2021-6) Selling raw Announcement Jiangsu Under the materials on Expected Huaihe same control and Selling Market Market Cash March Related-Party 18,816 0.61% 21,000 No N/A Chemicals of products to products price price Settlement 31, 2021 Transactions in Co., Ltd. ChemChina related the Ordinary parties Course of 117 ADAMA Ltd Annual Report 2021 Market Pricing Percenta price of Type of principle ge Approved Whether similar related Content of of Value against transactio exceeds Date of Relationshi Settlement transacti Index of the Related party party related party related Price (RMB transacti n quota the announc p methods ons if disclosure transactio transaction party ‘0000) ons of (RMB approved ement the n transacti the same ‘0000) quota Compan on kind y knows Business in 2021 (No.2021-6) Announcement Selling raw on Expected Under the materials Related-Party same control and Selling Market Market Cash March Transactions in Sinofert 6,075 0.20% 8,030 No N/A of products to products price price Settlement 31, 2021 the Ordinary ChemChina related Course of parties Business in 2021 (No.2021-6) Announcement Selling raw on Expected Under the materials Related-Party same control and Selling Market Market Cash March Transactions in Sino MAP 523 0.02% 500 Yes N/A of products to products price price Settlement 31, 2021 the Ordinary ChemChina related Course of parties Business in 2021 (No.2021-6) Announcement Selling raw on Expected Jiangsu Under the materials Related-Party Yangnong same control and Selling Market Market Cash March Transactions in 146 0.00% 300 No N/A Chemical Co., of products to products price price Settlement 31, 2021 the Ordinary Ltd. ChemChina related Course of parties Business in 2021 (No.2021-6) Jiangsu Youshi Under the Selling raw Selling Market Market Cash March Announcement 13,343 0.43% 25,000 No N/A Chemical Co., same control materials products price price Settlement 31, 2021 on Expected 118 ADAMA Ltd Annual Report 2021 Market Pricing Percenta price of Type of principle ge Approved Whether similar related Content of of Value against transactio exceeds Date of Relationshi Settlement transacti Index of the Related party party related party related Price (RMB transacti n quota the announc p methods ons if disclosure transactio transaction party ‘0000) ons of (RMB approved ement the n transacti the same ‘0000) quota Compan on kind y knows Ltd. of and Related-Party ChemChina products to Transactions in related the Ordinary parties Course of Business in 2021 (No.2021-6) Announcement Selling raw on Expected Zhonglan Under the materials Related-Party International same control and Selling Market Market Cash March Transactions in 58 0.00% 360 No N/A Chemical Co., of products to products price price Settlement 31, 2021 the Ordinary Ltd. ChemChina related Course of parties Business in 2021 (No.2021-6) Announcement Selling raw on Expected Jiangsu Youjia Under the materials Related-Party Plant same control and Selling Market Market Cash March Transactions in 237 0.01% 280 No N/A Protection Co., of products to products price price Settlement 31, 2021 the Ordinary Ltd. ChemChina related Course of parties Business in 2021 (No.2021-6) Selling raw Announcement Sinochem Under the materials on Expected Chongqing same control and Selling March Related-Party Fuling - - 0 0.00% 50 No - N/A of products to products 31, 2021 Transactions in Chemical Co., ChemChina related the Ordinary Ltd. parties Course of 119 ADAMA Ltd Annual Report 2021 Market Pricing Percenta price of Type of principle ge Approved Whether similar related Content of of Value against transactio exceeds Date of Relationshi Settlement transacti Index of the Related party party related party related Price (RMB transacti n quota the announc p methods ons if disclosure transactio transaction party ‘0000) ons of (RMB approved ement the n transacti the same ‘0000) quota Compan on kind y knows Business in 2021 (No.2021-6) Announcement Selling raw on Expected Jiangsu Under the materials Related-Party Ruixiang same control and Selling Market Market Cash March Transactions in 4 0.00% - - N/A Chemical Co., of Sinochem products to products price price Settlement 31, 2021 the Ordinary Ltd. Holdings related Course of parties Business in 2021 (No.2021-6) Announcement Selling raw on Expected Under the materials Related-Party Sinochem same control and Selling Market Market Cash March Transactions in 42 0.00% - - N/A Agro Co.,Ltd. of products to products price price Settlement 31, 2021 the Ordinary ChemChina related Course of parties Business in 2021 (No.2021-6) Announcement Selling raw on Expected Shenyang Under the materials Related-Party Sinochem same control and Selling Market Market Cash March Transactions in 9 0.00% - - N/A Agrochemicals of products to products price price Settlement 31, 2021 the Ordinary R&D Co.,Ltd. ChemChina related Course of parties Business in 2021 (No.2021-6) China National Under the Selling raw Selling Market Market Cash March Announcement 126 0.00% - - N/A Chemical same control materials products price price Settlement 31, 2021 on Expected 120 ADAMA Ltd Annual Report 2021 Market Pricing Percenta price of Type of principle ge Approved Whether similar related Content of of Value against transactio exceeds Date of Relationshi Settlement transacti Index of the Related party party related party related Price (RMB transacti n quota the announc p methods ons if disclosure transactio transaction party ‘0000) ons of (RMB approved ement the n transacti the same ‘0000) quota Compan on kind y knows Information of and Related-Party Center ChemChina products to Transactions in related the Ordinary parties Course of Business in 2021 (No.2021-6) Announcement Shenyang Selling raw on Expected Chemical Under the materials Related-Party Institute same control and Selling Market Market Cash March Transactions in 3 0.00% - - N/A Testing of Sinochem products to products price price Settlement 31, 2021 the Ordinary Technology Holdings related Course of Co., Ltd. parties Business in 2021 (No.2021-6) Announcement on Expected Receiving China National Under the Related-Party services Value-added Chemical same control Market Market Cash March Transactions in from OA 46 0.00% 128 No N/A Information of price price Settlement 31, 2021 the Ordinary related services Center ChemChina Course of parties Business in 2021 (No.2021-6) Announcement Receiving Zhonglan Under the on Expected services Lianhai Design same control Design Market Market Cash March Related-Party from 247 0.01% 120 Yes N/A Institute Co., of services price price Settlement 31, 2021 Transactions in related Ltd. ChemChina the Ordinary parties Course of 121 ADAMA Ltd Annual Report 2021 Market Pricing Percenta price of Type of principle ge Approved Whether similar related Content of of Value against transactio exceeds Date of Relationshi Settlement transacti Index of the Related party party related party related Price (RMB transacti n quota the announc p methods ons if disclosure transactio transaction party ‘0000) ons of (RMB approved ement the n transacti the same ‘0000) quota Compan on kind y knows Business in 2021 (No.2021-6) Announcement on Expected Receiving Under the Related-Party Syngenta A.G. services same control Regular Market Market Cash March Transactions in and its from 39 0.00% - N/A of services price price Settlement 31, 2021 the Ordinary subsidiaries related ChemChina Course of parties Business in 2021 (No.2021-6) Announcement on Expected Shenyang Receiving Under the Related-Party Chemical services same control Market Market Cash March Transactions in Research from - 68 0.07% - - N/A of Sinochem price price Settlement 31, 2021 the Ordinary Institute Co., related Holdings Course of Ltd parties Business in 2021 (No.2021-6) Total -- -- 313,439 -- 353,910 -- -- -- -- -- Details of large sales return - According to the Company's daily business operation needs, the Company estimates that the total amount of daily Execution of related-party transactions in the related party transactions in 2021 will not exceed RMB 3,539.1 million. For details, please refer to Announcement on ordinary course of business whose value was Expected Related-Party Transactions in the Ordinary Course of Business in 2021 (No.: 2021-6). The Company’s actual expected by types during this reporting period (if amount of daily related party transactions defined in the listing rules incurred in 2021 is RMB 3,134.39 million, which any) does not exceed the expected amount. Reasons for large difference between transaction The Company’s related transactions with related party shall be carried out in accordance with the principle of price and market reference price (if applicable) voluntary, equality and mutual benefit, fair, and will not harm the interests of the Company. 122 ADAMA Ltd Annual Report 2021 2. Related-party transactions arising from asset acquisition or sale □ Applicable √ Not applicable There were no related-party transactions arising from asset acquisition or sale in the Reporting Period. 3. Related-party transitions with joint investments □ Applicable √ Not applicable The Company was not involved in any significant related-party transaction with joint investments during the Reporting Period. 4. Credits and liabilities with related parties √ Applicable □ Not applicable Whether there was non-operating credit and liability with related parties □ Yes √ No The Company was not involved in any non-operating credit and liability with related parties. 5. Transactions with finance companies with related relationships √ Applicable □ Not applicable Deposit business In RMB ’0000 Transactions during the Reporting Period Total Deposit Total Maximum Related Range of Opening Amount for Withdrawal Ending Relations Daily Deposit Parties Interest Rate Balance the Amount for Balance Limit Reporting the Period Reporting Period Under the ChemChina same control Finance 40,000 0.05%-1.3% 37,014 75,868 76,994 35,888 of Sinochem Corporation Holdings 123 ADAMA Ltd Annual Report 2021 Loans In RMB ’0000 Transactions during the Reporting Period Credit Total Amount Total Amount Related Range of Opening Ending Relations Amount of of Loans for of Payment Parties Interest Rate Balance Balance the Loan the for the Reporting Reporting Period Period Under the ChemChina same control 3.567%- Finance 40,000 - 10,000 10,000 - of Sinochem 3.85% Corporation Holdings Facilities and Other Financial Services In RMB ’0000 Total Amount Actual Amount Related Party Relations Type of the Services Incurred ChemChina Under the same control Finance Facilities 40,000 10,000 of Sinochem Holdings Corporation 6. Transactions between the finance company controlled by the Company and related parties □ Applicable √ Not applicable The company does not hold any equity interest in any finance company. 7. Other material related-party transactions √ Applicable □ Not applicable (1) The 2020 Annual General Meeting approved the expected related-party transactions in the ordinary business course of the Company in 2021. Please refer to Item 5 of Section X “in “Financial Report” for details of the related- party transactions in the ordinary business course. (2) The 5th Meeting of the 9th Session of the Board of Directors approved the Proposal on Credit Facilities of $100m from the Related Party. (3) The 1st Interim Shareholders Meeting in 2022 approved the proposal on the Signing of a Financial Service Agreement with Sinochem Finance Co., Ltd. (4) The 7th Meeting of the 9th Session of the Board of Directors approved the Proposal on Signing of Entrusted Operation and Management Agreement on Anhui Petro & Chemical. 124 ADAMA Ltd Annual Report 2021 The website to disclose the interim announcements on significant related-party transactions: Name of the interim Disclosure date of the interim Website to disclose the interim announcement announcement announcement Announcement on Expected Related-Party Transactions in the March 31, 2021 Juchao website www.cninfo.com.cn Ordinary Course of Business in 2021(Announcement No.2021-6) Announcement on Credit Facilities of $100m from the Related Party October 28, 2021 Juchao website www.cninfo.com.cn (Announcement No.2021-46) Announcement on the Signing of a Financial Service Agreement with Sinochem Finance Co., Ltd., December 24, 2021 Juchao website www.cninfo.com.cn constituting a related-party transaction (Announcement No.2021-50) Announcement on Signing of an Entrusted Operation and Management Agreement with a January 4, 2022 Juchao website www.cninfo.com.cn Related Party (Announcement No.2022-2) XV. Particulars regarding material contracts and execution thereof 1. Particulars about trusteeship, contract and lease (1) Trusteeship □ Applicable √ Not applicable There was no trusteeship of the Company in the reporting period. (2) Contract Operation □ Applicable √ Not applicable There was no contract operation of the Company in the reporting period. (3) Lease □ Applicable √Not applicable There is no major lease in the reporting period. 125 ADAMA Ltd Annual Report 2021 2. Significant guarantees √ Applicable □ Not applicable (1) Guarantees Unless otherwise specified, the unit hereunder is RMB ‘0000 Guarantees provided by the Company in favor of third parties (excluding subsidiaries) Guarantee Disclosure date Planned Actual Actual Counter- for a Guaranteed Type of Collateral Period of expired of the guarantee occurrence guarantee guarantee related party guarantee (if any) guarantee or not announcement amount date amount (if any) party or not -- -- -- -- -- -- -- -- -- -- -- Total amount of the Total guarantee line occurred guarantee approved in favor of third in favor of third parties (excluding -- parties (excluding -- subsidiaries) during the subsidiaries) during reporting period (A1) the reporting period (A2) Total guarantee Aggregated guarantee line balance in favor of in favor of third parties third parties (excluding subsidiaries) 5,000 (excluding -- that has been approved by subsidiaries) by the the end of the reporting end of the reporting period (A3) period (A4) Guarantees provided by the Company in favor of its subsidiaries Guarantee Disclosure Planned Actual Actual Counter- for a Guaranteed Type of Collateral Period of expired date of the guarantee occurrence guarantee guarantee related party guarantee (if any) guarantee or not announcement amount date amount (if any) party or not Joint -- -- Three May 19, liability and years after 3,000 Yes No 2020 several the loan ADAMA February liability matures Anpon 27,2020 and 147,000 Joint -- -- Three (Jiangsu) August 21, June 29, liability and years after Ltd. 2020 5,000 Yes No 2020 several the loan liability matures September 3,000 Joint -- -- Two years Yes No 126 ADAMA Ltd Annual Report 2021 1, 2020 liability and after the several loan liability matures Joint -- -- Three July 20, liability and years after 5,000 Yes No 2020 several the loan liability matures Joint -- -- Three December liability and years after 5,000 Yes No 14, 2020 several the loan liability matures Joint -- -- Three December liability and years after 5,000 Yes No 16, 2020 several the loan liability matures Joint -- -- Two years December liability and after the 2,000 Yes No 22, 2020 several loan liability matures Joint -- -- Two years January 15, liability and after the 4,050 Yes No 2021 several loan liability matures Joint -- -- Two years January 20, liability and after the 3,000 Yes No 2021 several loan liability matures Joint -- -- Two years December 22, January 27, liability and after the 2020; April 29, 7,000 Yes No 2021 several loan 2021 and 125,800 liability matures October 28, Joint -- -- Three 2021 February 1, liability and years after 4,000 Yes No 2021 several the loan liability matures Joint -- -- Three February liability and years after 3,000 No No 26, 2021 several the loan liability matures February 8, Joint -- -- Three 2,776 Yes No 2021 liability and years after 127 ADAMA Ltd Annual Report 2021 several the loan liability matures Joint -- -- Three March 18, liability and years after 4,000 No No 2021 several the loan liability matures Joint -- -- Two years April 27, liability and after the 5,950 No No 2021 several loan liability matures Joint -- -- Two years May 21, liability and after the 4,500 No No 2021 several loan liability matures Joint -- -- Two years May 21, liability and after the 1,500 Yes No 2021 several loan liability matures Joint -- -- Three June 25, liability and years after 3,000 No No 2021 several the loan liability matures Joint -- -- Three December liability and years after 3,300 No No 16, 2021 several the loan liability matures -- -- Three Joint years after December liability and 4,000 the project No No 1, 2021 several loan liability matures Joint Two years October 28, liability and after the Hubei 3,444 -- -- Yes No 2020 several loan Sanonda August 21, liability matures Foreign 20,000 2020 Joint Two years Trade Co., January 29, liability and after the Ltd. 1,453 -- -- Yes No 2021 several loan liability matures ADAMA July 27, Joint Three June 29, 2021 33,000 10,000 -- -- No No Huifeng 2021 liability and years after 128 ADAMA Ltd Annual Report 2021 (Jiangsu) several the project Ltd. liability loan matures Two years Joint after the November liability and 5,300 -- -- expiration No No 5, 2021 several of the debt liability period Total amount of the Total guarantee line occurred guarantee approved in favor of the in favor of the 33,600 66,829 subsidiaries during the subsidiaries during reporting period (B1) the reporting period (B2) Aggregated guarantee line Total guarantee that has been approved in balance in favor of favor of the subsidiaries by 325,800 the subsidiaries by 43,050 the end of the reporting the end of the period (B3) reporting period (B4) Guarantees provided by subsidiaries in favor of subsidiaries (USD ’0000) Guarantee Disclosure Planned Actual Actual Counter- for a Guaranteed Type of Collateral Period of expired date of the guarantee occurrence guarantee guarantee related party guarantee (if any) guarantee or not announcement amount date amount (if any) party or not Generally 7 years Control joint and October 31, October 30, (subject to Solutions, 1,300 0 several -- -- 2018 2018 the No No Inc. liability overseas laws) The loan term (5 years) and any Control joint and applicable January 10, January 9, Solutions, 4,000 2,250 several -- -- statute of 2019 2019 No No Inc. liability limitations period (generally 7 years). 129 ADAMA Ltd Annual Report 2021 Related guarantees existed before the company joint and ADAMA was Valid until Not applicable 23,688.29 3,544.08 several -- -- No No Brazil consolidated cancelled liability into the financial statements of the Company. joint and ADAMA January 22, December December 900 0 several -- -- No No Brazil 2022 29, 2021 31, 2025 liability Related guarantees existed before the company Adama joint and was Valid until India Private Not applicable 10,350.45 5,112.01 several -- -- No No consolidated cancelled Ltd. liability into the financial statements of the Company. The guarantee existed ADAMA before the (Beijing) company joint and Agricultural was Valid until Not applicable 2,500 0 several -- -- Yes No Technology consolidated cancellation liability Company into the Limited financial statements of the Company. ADAMA Related joint and Turkey guarantees Valid until Not applicable 7,150 978.67 several -- -- No No Tarm existed cancelled liability Sanayi ve before the 130 ADAMA Ltd Annual Report 2021 Ticaret company Limited was irketi consolidated into the financial statements of the Company. Adama Not applicable Related Makhteshim unlimited guarantees existed before the company joint and was Valid until 22,969.8 several -- -- No No consolidated cancelled liability into the financial statements of the Company. Adama Not applicable unlimited Related Agan guarantees existed before the company joint and was Valid until 22,587.7 several -- -- No No consolidated cancelled liability into the financial statements of the Company. Related guarantees existed ADAMA before the Agricultural company joint and Valid until Solutions Not applicable 365.64 was 0 several -- -- cancelled Yes No UK Ltd. consolidated liability into the financial statements of the 131 ADAMA Ltd Annual Report 2021 Company. Related ADAMA guarantees CELSIUS Not applicable existed BV, before the Curacao company joint and branch, & was Valid until 4,000 2,978.16 several -- -- ADAMA consolidated cancelled No No liability Fahrenheit into the BV, financial Curacao statements Branch of the Company. Not applicable 3,000 Related guarantees existed before the company ADAMA joint and was Valid until Ukraine LLC 311.6 several -- -- consolidated cancelled No No liability into the financial statements of the Company. Not applicable 2,500 Related guarantees existed before the Makhteshim company joint and Agan of was Valid until 0 several -- -- No North consolidated cancelled No liability Amercia Inc. into the financial statements of the Company. Total guarantee line Total amount of the guarantee in favor of the approved in favor of the 900 (approximately RMB 60,732.02 (approximately subsidiaries occurred during the reporting subsidiaries during the 57.38million) RMB 3,872.0914 million) period (C2) reporting period (C1) Aggregated guarantee line 59,754.38 Total guarantee balance in favor of the 60,732.02 (approximately that has been approved in (approximately RMB subsidiaries by the end of the reporting period RMB 3,872.0914) 132 ADAMA Ltd Annual Report 2021 favor of the subsidiaries by 3,809.76million) (C4) the end of the reporting (As for Adama period (C3) Makhteshim and Adama Agan, the planned guarantee amount is unlimited) Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees) Total guarantee line approved during the Total actual occurred amount of guarantee 39,338 454,038.14 reporting period during the reporting period (A2+B2+C2) (A1+B1+C1) Total guarantee line that has been approved at the Total actual guarantee balance at the end of the 711,776 430,259.14 end of the reporting period reporting period (A4+B4+C4) (A3+B3+C3) Proportion of total guarantee amount (A4+B4+C4) 20.42% to the net assets of the Company Of which: The balance of the guarantee provided in favor of 0 the controlling shareholder and related party. Amount of debt guarantee provided for the USD 278.0415 million guaranteed party whose asset-liability ratio is not (approximately RMB 1,772.7092 million) less than 70% directly or indirectly (E) The amount of the guarantee that exceeds 50% of 0 the net assets Total amount of the above three guarantees USD 278.0415 million (D+E+F) (approximately RMB 1,772.7092 million) As for undue guarantee, liability to guarantee has happened or there is evidence showing that joint -- liquidated liability may be undertaken during this Reporting Period (if existing) Regulated procedures are violated to offer -- guarantee (if existing) 133 ADAMA Ltd Annual Report 2021 3. Cash assets management entrustment (1) Wealth management entrustment □ Applicable √ Not applicable No such cases in the Reporting Period. (2) Entrustment loans □ Applicable √ Not applicable No such cases in the Reporting Period. 4. Other significant contracts □ Applicable √ Not applicable No such cases in the Reporting Period. 134 ADAMA Ltd Annual Report 2021 XVI. Other significant events □ Applicable √ Not applicable There were no other significant events during the Reporting Period. XVII. Significant events of subsidiaries □ Applicable √ Not applicable 135 ADAMA Ltd Annual Report 2021 Section VII - Change in Shares & Shareholders I. Changes in shares Unit: share Before the change Increase/decrease (+/-) After the change Newly issue Bonus Capitalization of Amount Proportion Other Subtotal Amount Proportion share shares public reserves XVIII. Restricted shares 4,500 0.0002% -- -- -- -- -- 4,500 0.0002% a) State-owned shares -- -- -- -- -- -- -- -- -- b) State-owned legal person’s -- -- 0 0.0000% -- -- -- 0 0.0000% shares c) Shares held by domestic 4,500 0.0002% -- -- -- -- -- 4,500 0.0002% investors i. Shares held by domestic legal -- -- -- -- -- 0 0.0000% 0 0.0000% person ii. Shares held by domestic 4,500 0.0002% -- -- -- -- -- 4,500 0.0002% natural person XIX. Shares not subject to - 2,344,116,802 99.9998% -- -- -- -14,309,536 2,329,807,266 99.9998% trading moratorium 14,309,536 a) RMB ordinary shares 2,177,067,461 92.8735% -- -- -- -- -- 2,177,067,461 93.4439% - b) Domestically listed foreign shares 167,049,341 7.1263% -- -- -- -14,309,536 152,739,805 6.5559% 14,309,536 - -14,309,536 XX. Total shares 2,344,121,302 100.0000% -- -- -- 2,329,811,766 100.0000% 14,309,536 136 ADAMA Ltd Annual Report 2021 Reason for the change in shares √ Applicable □ Not applicable From September 16, 2020, the first day the Company started repurchase, to December 6, 2020, when the repurchase period expired, the Company repurchased 14,309,536 shares of B-Shares by means of a centralized price bidding transaction. On June 17, 2021, the Company completed cancellation of above B shares at the Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. After the cancellation is completed, the total share capital of the Company decreased from 2,344,121,302 shares to 2,329,811,766 shares. Approval of the change in shares √ Applicable □ Not applicable The 26th Meeting of the 8th Session of the Board of Directors held on August 19, 2020 and the 3rd Interim Shareholders Meeting in 2020 held on September 7, 2020 of the Company approved the Repurchase Plan for Part of the Company’s Domestically Listed Foreign Shares (B share), approving the Company to repurchase part of its domestically listed foreign shares (B shares). After above repurchase is completed, the 31st Meeting of the 8th Session of the Board of Directors held on March 29, 2021 and the 2020 Annual General Meeting of the Company held on May 21st, 2021, approved the Proposal on the Cancellation of the Repurchased Shares and the Subsequent Decrease of the Registered Capital and Proposal on Revisions to the Articles of Association of the Company, approving cancellation of repurchased shares and subsequent decrease of the Company’s registered capital, as well as revision of the Articles of Association accordingly. 137 ADAMA Ltd Annual Report 2021 The registered status for the change in shares √ Applicable □ Not applicable From September 16, 2020, the first day the Company started repurchase, to December 6, 2020, when the repurchase period expired, the Company repurchased 14,309,536 shares of B-Shares. On June 17, 2021, the Company completed cancellation of above B shares at the Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. Please refer to Announcement on the Completion of Cancelling Repurchased Shares and Share Capital Change (Announcement No. 2021-26) for details. Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and other financial indexes over the last year and last period. □ Applicable √ Not applicable Other contents that the Company considered necessary or were required by the securities regulatory authorities to disclose □ Applicable √ Not applicable 138 ADAMA Ltd Annual Report 2021 2. Changes in restricted shares √ Applicable □ Not applicable Unit: share Shareholders Restricted shares at Shares released in the Restricted shares Ending shares Restricted reasons Date for the opening of the Reporting Period increased in the restricted released Reporting Period Reporting Period six months Shares held by a after the Jiang Chenggang 4,500 0 0 4,500 supervisor should be expiration of locked up. the term Total 4,500 0 0 4,500 -- -- 139 ADAMA Ltd Annual Report 2021 II. Issuance and listing of securities 1. Issuance of securities (excluding preferred stock) during the Reporting Period □ Applicable √ Not applicable 2. Explanation on changes in share capital & the structure of shareholders, the structure of assets and liabilities √ Applicable □ Not applicable From September 16, 2020, the first day the Company started repurchase, to December 6, 2020, when the repurchase period expired, the Company repurchased 14,309,536 shares of B-Shares by means of a centralized price bidding transaction. On June 17, 2021, the Company completed cancellation of above B shares at the Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. After the cancellation is completed, the total B-share capital of the Company decreased from 167,049,341 shares to 152,739,805 shares, the total share capital of the Company decreased from 2,344,121,302 shares to 2,329,811,766 shares and the registered capital of the Company decreased from 2,344,121,302 RMB to 2,329,811,766 RMB. The Company completed industrial and commercial registration procedures for the above change. 3. Shares held by internal staffs of the Company as a measure of the reform of State-Owned Enterprises □ Applicable √ Not applicable 140 ADAMA Ltd Annual Report 2021 III. Particulars about the shareholders and actual controller 1. Total number of shareholders and their shareholding Unit: share 44,886 (the number of Total number of ordinary A share preferred stockholder Total number of Total number of shareholders shareholders is Total number of preferred with vote right restored shareholders as of the on the 30th trading day 31,062; 43,735 stockholder with vote 0 on the 30th trading day 0 end of the Reporting before the disclosure date of the number of B right restored (if any) before the disclosure Period the annual report share date of the annual shareholders is report 13,824) Shareholding of shareholders holding more than 5% shares Increase and Number of Pledged or frozen shares Number of shares Number of shareholding decrease of shares held Nature of Holding held not subject to Status Name of shareholder at the end of the shares during subject to shareholder percentage (%) trading of Amount Reporting Period Reporting trading moratorium shares Period moratorium State-owned Syngenta Group Co., Ltd. 78.47% 1,828,137,961 119,687,202 -- 1,828,137,961 -- -- legal person China Cinda Asset State-owned 1.34% 31,115,916 -- -- 31,115,916 -- -- Management Co., Ltd. legal person Portfolio No.503 of National Others 0.64% 15,000,000 -8,000,052 -- 15,000,000 -- -- Social Security Fund Huarong Ruitong Equity State-owned Investment Management 0.55% 12,885,906 -- -- 12,885,906 -- -- legal person Co., Ltd. Hong Kong Securities Overseas legal Clearing Company Ltd. 0.32% 7,485,077 1,536,757 -- 7,485,077 -- -- person (HKSCC) Bosera Funds-China Merchants Bank- Bosera Others 0.28% 6,500,000 6,500,000 -- 6,500,000 -- -- Funds Xincheng No.2 141 ADAMA Ltd Annual Report 2021 Collective Asset Management Plan Bosera Funds-Postal Savings Bank- Bosera Funds Xincheng No.3 Others 0.26% 6,000,000 6,000,000 -- 6,000,000 -- -- Collective Asset Management Plan China Universal Fund- Industrial Bank-China Universal-Strategic Others 0.19% 4,400,000 4,400,000 -- 4,400,000 -- -- Enhancement No.3 Collective Asset Management Plan Qichun County State-owned State-owned 0.18% 4,169,266 -- -- 4,169,266 -- -- Assets Administration legal person Domestic Zhu Shenglan 0.18% 4,100,000 180,000 -- 4,100,000 -- -- Individual Strategic investors or the general legal person due to the placement of new Not applicable shares become the top 10 shareholders (if any) Syngenta Group Co., Ltd. is not related party or acting-in-concert party as prescribed in the Administrative Methods for Acquisition Explanation on associated relationship of Listed Companies to other shareholders. It is unknown to the Company whether shareholders above are related parties or or/and persons acting-in-concert parties as prescribed in the Administrative Methods for Acquisition of Listed Companies. Description of the above shareholders involved in proxy/trustee voting rights and Not applicable abstention from voting rights Special note on the existence of dedicated accounts for repurchase among the top 10 Not applicable shareholders (if any) Details of shares held by top 10 shareholders not subject to trading moratorium Number of shares held not Type of share Name of shareholder subject to trading moratorium Type of share Amount at the end of the period Syngenta Group Co., Ltd. 1,828,137,961 RMB ordinary share 1,828,137,961 China Cinda Asset Management Co., Ltd. 31,115,916 RMB ordinary share 31,115,916 Portfolio No.503 of National Social Security Fund 15,000,000 RMB ordinary share 15,000,000 Huarong Ruitong Equity Investment Management Co., Ltd. 12,885,906 RMB ordinary share 12,885,906 142 ADAMA Ltd Annual Report 2021 Hong Kong Securities Clearing Company Ltd. (HKSCC) 7,485,077 RMB ordinary share 7,485,077 Bosera Funds-China Merchants Bank- Bosera Funds Xincheng No.2 Collective Asset 6,500,000 RMB ordinary share 6,500,000 Management Plan Bosera Funds-Postal Savings Bank- Bosera Funds Xincheng No.3 Collective Asset 6,000,000 RMB ordinary share 6,000,000 Management Plan China Universal Fund-Industrial Bank-China Universal-Strategic Enhancement No.3 4,400,000 RMB ordinary share 4,400,000 Collective Asset Management Plan Qichun County State-owned Assets Administration 4,169,266 RMB ordinary share 4,169,266 Zhu Shenglan 4,100,000 RMB ordinary share 4,100,000 Explanation on associated relationship among the top ten shareholders of tradable Qichun County Administration of State-Owned Assets held shares of the share not subject to trading moratorium, as well as among the top ten shareholders of Company on behalf of the government. It is unknown whether the other tradable share not subject to trading moratorium and top ten shareholders, or shareholders are related parties or acting-in-concert parties as prescribed in the explanation on acting-in-concert Administrative Methods for Acquisition of Listed Companies. Particular about shareholder participate in the securities lending and borrowing Shareholder Zhu Shenglan held 4,100,000 shares of the Company through a business ( if any) credit collateral securities trading account. Did any top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company carry out an agreed buy-back in the Reporting Period? □ Yes √ No The top 10 common shareholders or the top 10 common shareholders of the Company were not subject to trading moratorium of the Company carry out an agreed buy-back in the reporting period 143 ADAMA Ltd Annual Report 2021 2. Particulars about the controlling shareholder Nature of controlling shareholder: The central state-owned Type of controlling shareholder: legal person By the end of the Reporting Period, the particulars of the Company’s controlling shareholder are as follows: Legal Name of representative / Date of controlling Organization code Business scope company establishment shareholder principal General projects: agricultural scientific research and experimental development; Engineering and technical research and experimental development; Natural science research and experimental development; Research and development of biopesticide technology; Technology, information, facility construction and operation and other services related to agricultural production and operation; Agricultural specialty and auxiliary activities; Information technology consulting services; Technical services, technical development, technical consultation, technical exchange, technology transfer and technology promotion; Research and development of biochemical product technology; Sales of chemical products (excluding licensed chemical products); Fertilizer sales; General cargo Syngenta Ning Gaoning June 27, 2019 91310000MA1FL6MN13 warehousing services (excluding hazardous chemicals and other items requiring license); Low Group Co., Ltd. temperature storage (excluding hazardous chemicals and other items requiring license); Socio economic advisory services; Import and export of goods; Technology import and export. (except for the projects that must be approved according to law, business activities shall be carried out independently and legally according to the business license). Licensed projects: seed production of main crops; Crop seed business; Genetically modified crop seed production. (for projects that must be approved according to law, business activities shall be carried out only with the approval of relevant departments. The specific business projects shall be subject to the approval documents or licenses of relevant departments). Shares held by the controlling shareholder in By the end of the Reporting Period, Syngenta Group directly holds 52.65% equity of SinoFert Holdings Limited and 36.17% other listed companies by holding or equity of Jiangsu Yangnong Chemical Co., Ltd., and indirectly holds 20.37% equity of Win-All High-tech Seed Co., Ltd. through shareholding during the Reporting Period China National Seed Group Co., Ltd. Change of the controlling shareholder during the Reporting Period 144 ADAMA Ltd Annual Report 2021 □ Applicable √ Not applicable The controlling shareholder did not change during the Reporting Period. Note: 1. On August 30, 2021, the Company received the Notice of Sinochem Holdings Corporation Ltd. on the Initiation of Joint Restructuring Procedure released by Sinochem Holdings stating that, Sinochem Holdings decided to initiate, starting from the date of the notice, the acquisition procedure for the listed companies associated with Sinochem Group and ChemChina in accordance with the relevant provisions. On September 16, 2021, the Company received a letter from Sinochem Holdings, stating that the industrial and commercial change registration on the transfer of equity in ChemChina to Sinochem Holdings has been completed. After the completion of such transfer, the controlling shareholder and the actual controller of the Company remain unchanged. Please refer to Announcement on Equity Transfer of China National Chemical Corporation Ltd. at Nil Consideration (Announcement No. 2021-38) and Announcement on Completion of Industrial and Commercial Registration of Changes on Equity Transfer of China National Chemical Corporation Ltd. at Nil Consideration (Announcement No. 2021-39) for details. On September 28, 2021, Syngenta Group forwarded to the Company the Shares Registration Confirmation Letter issued by China Securities Depository and Clearing Corporation Limited, stating that the registration procedures for the free transfer of the 5.14% shares of the Company’s total share capital held by Jingzhou Sanonda Holdings Co., Ltd. to Syngenta Group were completed on September 24 th, 2021. After the completion of the transfer, Syngenta Group holds 1,828,137,961 shares (accounting for 78.47% of the Company’s total share capital). The controlling shareholder and the actual controller of the Company remain unchanged. Please refer to Announcement on the Completion of the Registration of the Transfer of State-owned Shares held by the Controlling Shareholder (Announcement No. 2021-40) for details. 145 ADAMA Ltd Annual Report 2021 3. Particulars regarding actual controller and the persons acting in concert Nature of actual controller: State-owned Assets Supervision and Administration Commission Type of actual controller: Legal person Legal representative / Date of Organization Business Name of the actual controller company principal establishment code scope State-owned Assets Supervision and Administration Commission of the State Hao Peng March 16, 2003 - - Council Shares held by the actual controller in other listed companies by holding Not applicable or shareholding during the reporting period Change of the actual controller during the Reporting Period □ Applicable √ Not applicable The actual controller did not change during the Reporting Period. Block diagram of equity and control relationship between the Company and actual controller: The actual controller controls the Company via trust or other ways of asset management □ Applicable √ Not applicable 146 ADAMA Ltd Annual Report 2021 4. The controlling shareholder or the largest shareholder of the Company and its concert parties have pledged 80% of their shares in the Company □ Applicable √ Not applicable 5. Particulars regarding other corporate shareholders with over 10% holdings □ Applicable √ Not applicable 6. Particulars regarding restriction of reducing holding-shares of controlling shareholders, actual controller, restructuring parties and other commitment entities □ Applicable √ Not applicable IV. Specific implementation of share repurchases during the reporting period Progress of implementation of share repurchase √ Applicable □ Not applicable Ratio of Repurchased Shares to the Disclosure Number of Amount for Proposed Number of Target Ratio to the Repurchase Time of the Shares to be the Repurchase Repurchased Shares Total Equity Purpose Program Repurchased Repurchase Period Shares Involved in the Equity Incentive Plan (if any) 0.55%-1.1% No more than Within 3 To protect the against 132.56 million months since Company’s 2,344,121,30 RMB56.2 approval of value and 2 shares, total the plan by shareholders’ share capital the interests, the of the Company’s repurchased Company at shareholder shares will be August 21st, 13,000,000- Not that time meeting cancelled 14,309,536 2020 26,000,000 applicable resulting in a corresponding reduction of the Company’s registered capital. Note: The repurchase of the B shares by the Company expired on December 6 th, 2020. From September 16, 2020 to December 6, 2020, the Company repurchased 14,309,536 shares of B-Shares by means of a centralized price bidding transaction through a special securities repurchase account for B-Shares, which accounts for 0.61% of the Company’s total share capital. The highest transaction price is 5.22 HKD/share, the lowest transaction price is 4.27 HKD/share, and the total payment amount is HKD 69,747,209 (including transaction fees). Please refer to Announcement on the Expiry of the Repurchase Period and the Results of the B-Shares Repurchase (Announcement No. 2020-71) for details. 147 ADAMA Ltd Annual Report 2021 After above repurchase is completed, the 31st Meeting of the 8th Session of the Board of Directors held on March 29, 2021 and the 2020 Annual General Meeting of the Company held on May 21st, 2021, approved the Proposal on the Cancellation of the Repurchased Shares and the Subsequent Decrease of the Registered Capital and Proposal on Revisions to the Articles of Association of the Company, approving cancellation of repurchased shares and subsequent decrease of the Company’s registered capital, as well as revision of the Articles of Association accordingly. On June 17, 2021, the Company completed cancellation of above B shares at the Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. Please refer to Announcement on the Completion of Cancelling Repurchased Shares and Share Capital Change (Announcement No. 2021-26) for details. Status of reducing holding of repurchased shares in the way of centralized bidding □ Applicable √ Not applicable 148 ADAMA Ltd Annual Report 2021 Section VIII - Preferred stock □ Applicable √ Not applicable There was no preferred stock during Reporting Period. 149 ADAMA Ltd Annual Report 2021 Section IX - Corporate Bonds □ Applicable √ Not applicable 150 ADAMA Ltd Annual Report 2021 Section X - Financial Report Type of auditor’s opinion Standard Unqualified Opinion Audit opinion signoff date March 29, 2022 Name of the auditor Deloitte Touche Tohmatsu CPA LLP Reference number of the audit report De Shi Bao (Shen) Zi (22) No P02154 Name of CPA Mou Zhengfei, Ji Yuting 151 ADAMA Ltd Annual Report 2021 AUDITOR'S REPORT De Shi Bao (Shen) Zi (22) No. P02154 (Page 1 of 6) To the shareholders of ADAMA Ltd.: I. Opinion We have audited the financial statements of ADAMA Ltd. (hereinafter referred to as the "Company"), which comprise the consolidated and the Company's balance sheets as at 31 December 2021, and the consolidated and the Company's income statements, the consolidated and the Company's statements of changes in shareholders' equity and the consol- idated and the Company's statements of cash flows for the year then ended, and notes to the financial statements. In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and the Company's financial position as of 31 December 2021, and the consolidated and the Company's results of operations and cash flows for the year then ended in accordance with Accounting Standards for Business Enterprises. II. Basis for Opinion We conducted our audit in accordance with China Standards on Auditing. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics for Chinese Certified Public Accountants (the "Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. III. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The followings are key audit matters that we have determined to communicate in the auditor's report. 152 ADAMA Ltd Annual Report 2021 AUDITOR'S REPORT - continued De Shi Bao (Shen) Zi (22) No. P02154 (Page 2 of 6) III. Key Audit Matters - continued (I) Cut-off of revenue recognition Description ADAMA's sale revenue is mainly contributed by the sales of goods in about 100 countries all over the world. As stated in Note (V), 42 operating income, ADAMA's consolidated principal activities revenue for 2021 was RMB 30,971,009,000, which was significant to the financial statements. As stated in Note (III), 24, ADAMA recognizes revenue when the customer obtains control over relevant commodities, and the Company has a risk of overstating the revenue by late cutoffs. Therefore, we considered the appropriateness of cutoffs and correctness of accounting periods for principal activities revenue recognition as a key audit matter. Audit response Our procedures in relation to this matter mainly include: 1. Testing and assessing the design, implementation and operating effectiveness of internal controls relating to the cut-off of principal activities revenue recognition; 2. Reviewing the contracts with key customers for the terms and conditions relating to the transfer of controls of goods and services, and assessing whether the timing of principal activities revenue recognition complies with the Accounting Standards for Business Enterprises; 3. Performing cut-off test by selecting samples from sales of goods recorded in the current year, checking the sup- porting documents such as sales invoices and inventory transfer documents, and checking whether the income is recorded in the correct accounting period; 4. Performing analytic procedures and comparing whether there is abnormal fluctuation in the sales of the major sales regions in the current period and the previous period, and analyzing whether there is any abnormality in the sales return of the products. 153 ADAMA Ltd Annual Report 2021 AUDITOR'S REPORT - continued De Shi Bao (Shen) Zi (22) No. P02154 (Page 3 of 6) III. Key Audit Matters - continued (II) Provision for Impairment of Goodwill on Crop Protection Units Description As stated in Note (V), 18, the carrying amount of goodwill was RMB4,409,599,000 as of 31 December 2021, which was mainly allocated to Crop Protection unit. As disclosed in Note III, 19 and 20, ADAMA’s goodwill arising from business combination is measured at the cost less the accumulated impairment loss after initial recognition, and should be entitled to impairment test at least at the end of each year. When performing impairment test of Crop Protection unit with goodwill allocated, the management determined the recoverable amount of relevant assets group of units based on the model of present value determined on future cash flows, which depend on the judgement of the manage- ment, it requires the management to estimate the cash flows from relevant assets group of units and select an appro- priate discount rate that reflects the time value of money in the current market and the specific risk of the assets. As significant accounting estimates and judgments are involved and the goodwill allocated to Crop Protection unit is significant in amount, we considered the provision for impairment of goodwill on Crop Protection unit as a key audit matter. Audit response Our procedures in relation to this matter mainly include: 1. Testing and assessing the design, implementation and operating effectiveness of internal controls relating to the provision for impairment of goodwill on Crop Protection unit; 2. Checking the basis on which the management allocated goodwill to Crop Protection unit and assessing the rea- sonableness; 3. Reviewing and assessing the reasonableness of the management's adoption of discount cash flow model for the Crop Protection unit containing goodwill; 4. Analyzing and reviewing the significant accounting estimates and judgements used in estimation of future cash flows, including the key parameters such as discount rate and growth rate, etc., with assistance from internal valuation specialist; 5. Checking the expected future cash flows to historical data and other supporting evidence, and assess the reasona- bleness; 6. Performing sensitivity analysis on possible changes in relevant key assumptions in impairment test models. 154 ADAMA Ltd Annual Report 2021 AUDITOR'S REPORT - continued De Shi Bao (Shen) Zi (22) No. P02154 (Page 4 of 6) IV. Other Information Management of the Company is responsible for the other information. The other information comprises the infor- mation included in the 2021 annual report, but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard. V. Responsibilities of Management and Those Charged with Governance for the Financial Statements The management of the Company is responsible for the preparation and fair presentation of the financial statements in accordance with Accounting Standards for Business Enterprises, and designing, implementing and maintaining internal control that is necessary to enable the financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of ac- counting unless management either intends to liquidate the Company or to ceases operations, or has no realistic alter- native but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process. VI. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Rea- sonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with China Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 155 ADAMA Ltd Annual Report 2021 AUDITOR'S REPORT - continued De Shi Bao (Shen) Zi (22) No. P02154 (Page 5 of 6) VI. Auditor's Responsibilities for the Audit of the Financial Statements - continued As part of an audit in accordance with China Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: (1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; (2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are ap- propriate in the circumstances; (3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management; (4) Conclude on the appropriateness of the management' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncer- tainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern; (5) Evaluate the overall presentation (including the disclosures), structure and content of the financial statements, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation; (6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activi- ties within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 156 ADAMA Ltd Annual Report 2021 AUDITOR'S REPORT - continued De Shi Bao (Shen) Zi (22) No. P02154 (Page 6 of 6) VI. Auditor's Responsibilities for the Audit of the Financial Statements - continued We also provide those charged with governance with a statement that we have complied with relevant ethical require- ments regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant Shanghai China Mou Zhengfei (Engagement Partner) Chinese Certified Public Accountant Ji Yuting 29 March 2022 This independent auditor's report of the financial statements and the accompanying financial statements are English translations of the independent auditor's report and the financial statements prepared under accounting principles and practices generally accepted in the People's Republic of China. These financial statements are not intended to present the balance sheet and results of operations and cash flows in accordance with accounting principles and practices gen- erally accepted in other countries and jurisdictions. In case the English version does not conform to the Chinese version, the Chinese version prevails 157 ADAMA Ltd. Annual Report 2021 (Expressed in RMB '000) Consolidated Balance Sheet December 31 December 31 Notes 2021 2020 Current assets Cash at bank and on hand V.1 5,818,835 3,863,886 Financial assets held for trading V.2 1,479 1,253 Derivative financial assets V.3 243,316 1,560,788 Bills receivable V.4 81,992 102,082 Accounts receivable V.5 8,362,493 8,766,869 Receivables financing V.6 120,157 109,483 Prepayments V.7 379,788 406,008 Other receivables V.8 691,939 1,310,029 Inventories V.9 11,750,162 10,338,273 Other current assets V.10 938,453 769,641 Total current assets 28,388,614 27,228,312 Non-current assets Long-term receivables V.11 56,234 95,329 Long-term equity investments V.12 15,335 14,081 Other equity investments V.13 152,118 152,200 Investment properties 3,716 4,364 Fixed assets V.14 8,048,389 6,576,116 Construction in progress V.15 2,143,400 1,405,328 Right-of-use assets V.16 463,915 483,618 Intangible assets V.17 5,326,288 5,226,455 Goodwill V.18 4,409,599 4,584,226 Deferred tax assets V.19 723,075 773,673 Other non-current assets V.20 504,625 257,332 Total non-current assets 21,846,694 19,572,722 Total assets 50,235,308 46,801,034 158 ADAMA Ltd. Annual Report 2021 (Expressed in RMB '000) Consolidated Balance Sheet (continued) December 31 December 31 Notes 2021 2020 Current liabilities Short-term loans V.21 874,755 1,205,498 Derivative financial liabilities V.22 176,206 1,463,614 Bills payable V.23 493,376 369,791 Accounts payable V.24 6,294,163 4,557,006 Contract liabilities V.25 1,381,311 1,092,253 Employee benefits payable V.26 1,247,979 1,208,834 Taxes payable V.27 368,682 358,988 Other payables V.28 1,342,188 1,075,721 Non-current liabilities due within one year V.29 1,795,754 1,272,581 Other current liabilities V.30 412,909 315,597 Total current liabilities 14,387,323 12,919,883 Non-current liabilities Long-term loans V.31 3,498,912 2,387,628 Debentures payable V.32 7,797,131 8,078,113 Lease liabilities V.33 362,086 379,190 Long-term payables 95,699 27,327 Long-term employee benefits payable V.34 792,358 645,755 Provisions V.35 186,430 163,251 Deferred tax liabilities V.19 380,138 331,942 Other non-current liabilities V.36 1,660,148 434,030 Total non-current liabilities 14,772,902 12,447,236 Total liabilities 29,160,225 25,367,119 Shareholders' equity Share capital V.37 2,329,812 2,344,121 Capital reserve V.38 12,977,171 13,023,219 Less: Treasury shares - 60,357 Other comprehensive income V.39 (432,384) (72,055) Special reserves 19,857 15,960 Surplus reserve V.40 240,162 240,162 Retained earnings V.41 5,940,465 5,862,702 Total equity attributed to the shareholders of the company 21,075,083 21,353,752 Non-controlling interests - 80,163 Total Equity 21,075,083 21,433,915 Total liabilities and equity 50,235,308 46,801,034 Ignacio Dominguez Legal representative Chief of the accounting work Chief of the accounting organ These financial statements were approved by the Board of Directors of the Company on March 29, 2022. The notes form part of these financial statements. 159 ADAMA Ltd. Annual Report 2021 (Expressed in RMB '000) Balance Sheet December 31 December 31 Notes 2021 2020 Current assets Cash at bank and on hand XV.1 265,558 1,034,812 Accounts receivable XV.2 208,109 387,117 Receivables financing XV.3 11,752 25,060 Prepayments 29,364 5,973 Other receivables XV.4 21,496 27,138 Inventories 220,329 141,235 Other current assets 44,221 42,243 Total current assets 800,829 1,663,578 Non-current assets Long-term equity investments XV.5 17,511,352 16,663,212 Other equity investments 84,720 85,495 Investment properties 3,716 4,364 Fixed assets 1,264,210 784,218 Construction in progress 728,742 992,863 Right-of-use assets 5,453 37 Intangible assets 265,510 220,963 Deferred tax assets 60,668 66,036 Other non-current assets 560,982 238,750 Total non-current assets 20,485,353 19,055,938 Total assets 21,286,182 20,719,516 Current liabilities Short-term loans 100,000 Bills payables 20,415 19,600 Accounts payables 205,985 324,047 Contract liabilities 10,145 17,480 Employee benefits payable 28,880 99,808 Taxes payable 2,662 3,143 Other payables 560,098 240,939 Non-current liabilities due within one year 612,666 39,302 Total current liabilities 1,440,851 844,319 Non-current liabilities Long-term loans 905,840 941,430 Lease liabilities 2,925 - Long-term employee benefits payable 99,495 89,658 Provisions 44,385 44,743 Other non-current liabilities 312,130 143,770 Total non-current liabilities 1,364,775 1,219,601 Total liabilities 2,805,626 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 30,668 47,390 Special reserves 20,548 16,651 Surplus reserve 240,162 240,162 Retained earnings V.41 335,485 497,700 Total shareholders’ equity 18,480,556 18,655,596 Total liabilities and shareholders’ equity 21,286,182 20,719,516 160 ADAMA Ltd. Annual Report 2021 (Expressed in RMB '000) Consolidated Income Statement Year ended December 31 Notes 2021 2020 I. Operating income V.42 31,038,605 28,444,833 Less: Cost of sales V.42 23,412,519 20,071,035 Taxes and surcharges V.43 106,282 88,591 Selling and Distribution expenses V.44 4,019,257 4,945,345 General and administrative expenses V.45 1,089,599 1,043,708 Research and Development expenses V.46 501,377 478,778 Financial expenses V.47 1,939,422 1,847,189 Including: Interest expense 659,690 679,225 Interest income 65,059 64,022 Add: Investment income (loss), net V.48 928,947 206,502 Including: Income from investment in associates and joint ventures 5,923 15,584 Gain (loss) from changes in fair value V.49 (321,094) 540,698 Credit impairment reversal (losses) V.50 10,884 (25,949) Asset impairment reversal (losses) V.51 (70,267) (164,154) Gain from disposal of assets V.52 (2,604) 10,750 II. Operating profit 516,015 538,034 Add: Non-operating income 65,240 77,025 Less: Non-operating expenses 37,453 39,847 III. Total profit 543,802 575,212 Less: Income tax expenses V.53 380,489 222,459 IV. Net profit 163,313 352,753 (1). Classified by nature of operations (1.1). Continuing operations 163,313 352,753 (2). Classified by ownership (2.1). Shareholders of the Company 157,397 352,753 (2.2). Non-controlling interests 5,916 - V. Other comprehensive income, net of tax V. 39 (360,329) (1,264,736) Other comprehensive income (net of tax) attributable to shareholders of the Company (360,329) (1,264,736) (1) Items that will not be reclassified to profit or loss: (31,262) 36,109 (1.1) Re-measurement of defined benefit plan liability (30,603) 29,618 (1.2) Fair Value changes in other equity investment (659) 6,491 (2) Items that were or will be reclassified to profit or loss (329,067) (1,300,845) (2.1) Effective portion of gains or loss of cash flow hedge 252,674 (175,187) (2.2) Translation differences of foreign financial state- (581,741) ments (1,125,658) VI. Total comprehensive income for the period (197,016) (911,983) Total comprehensive income for the period attributable to shareholders of the Company (202,932) (911,983) Total comprehensive income for the period attributable to Non-controlling interests 5,916 - VII. Earnings per share XIV.2 (1) Basic earnings per share (Yuan/share) 0.07 0.15 (2) Diluted earnings per share (Yuan/share) N/A N/A 161 ADAMA Ltd. Annual Report 2021 (Expressed in RMB '000) Income Statement Year ended December 31 Notes 2021 2020 I. Operating income XV.6 1,157,419 1,516,459 Less: Operating costs XV.6 1,062,232 1,177,550 Taxes and surcharges 6,637 6,033 Selling and Distribution expenses 5,897 46,036 General and administrative expenses 156,141 179,481 Research and Development expenses 44,661 49,219 Financial expenses (income) 17,599 23,671 Including: Interest expense 26,101 9,757 Interest income 14,491 18,382 Add: Investment income (loss), net 1,808 (16,173) Gain from changes in fair value (“-” means loss) (6,070) - Credit impairment reversal (losses) (301) 4,071 Asset Impairment reversal (losses) (9,369) (17,655) Gain from disposal of assets 16,630 4,174 II. Operating Profit (133,050) 8,886 Add: Non-operating income 15,647 13,730 Less: Non-operating expenses 2,051 1,934 III. Total profit (119,454) 20,682 Less: Income tax expense (income) 5,484 25,407 IV. Net profit (loss) (124,938) (4,725) V. Other comprehensive income, net of tax (16,722) 6,082 (1) Items that will not be reclassified to profit or loss (16,722) 6,082 (1.1) Re-measurement of defined benefit plan liability (16,064) (411) (1.2) FV changes in other equity investment (658) 6,493 VI. Total comprehensive income (loss) for the period (141,660) 1,357 162 ADAMA Ltd. Annual Report 2021 (Expressed in RMB '000) Consolidated Cash Flow Statement Year ended December 31 Notes 2021 2020 I. Cash flows from operating activities: Cash received from sale of goods and rendering of services 30,128,925 26,822,969 Refund of taxes and surcharges 184,881 213,704 Cash received relating to other operating activities V.55(1) 864,848 693,212 Sub-total of cash inflows from operating activities 31,178,654 27,729,885 Cash paid for goods and services 20,020,798 18,671,558 Cash paid to and on behalf of employees 3,615,590 3,605,027 Payments of taxes and surcharges 449,010 385,056 Cash paid relating to other operating activities V.55(2) 2,531,381 3,045,229 Sub-total of cash outflows from operating activities 26,616,779 25,706,870 Net cash flows from operating activities V.56(1)a 4,561,875 2,023,015 II. Cash flows from investing activities: Cash received from disposal of investments 3,864 29,808 Cash received from returns of investments 867 55,078 Net cash received from disposal of fixed assets, intangible 27,456 22,678 assets and other long-term assets Cash received relating to other investing activities V.55(3) 8,562 3,223 Sub-total of cash inflows from investing activities 40,749 110,787 Cash paid to acquire fixed assets, intangible assets and other long-term assets 2,589,460 1,969,793 Cash paid for acquisition of investments 2,225 53,422 Net cash paid to acquire subsidiaries or other business units 655,039 371,192 Cash paid relating to other investing activities V.55(4) 177,476 48,348 Sub-total of cash outflows from investing activities 3,424,200 2,442,755 Net cash flows used in investing activities (3,383,451) (2,331,968) III. Cash flows from financing activities: Cash received from borrowings 4,565,565 3,772,193 Cash received from issuance of debentures - 692,893 Cash received from other financing activities V.55(5) 1,124,944 220,738 Sub-total of cash inflows from financing activities 5,690,509 4,685,824 Cash repayments of borrowings 3,670,409 3,405,046 Cash payment for dividends, profit distributions and interest 791,993 728,369 Including: Dividends paid to non-controlling interest 42,357 34,865 Cash paid relating to other financing activities V.55(6) 390,944 409,358 Sub-total of cash outflows from financing activities 4,853,346 4,542,773 Net cash flows from financing activities 837,163 143,051 IV. Effects of foreign exchange rate changes on cash and cash equiva- lents (91,178) (318,934) V. Net increase in cash and cash equivalents V.56(1)b 1,924,409 (484,836) Add: Cash and cash equivalents at the beginning of the year 3,835,071 4,319,907 I. VI. Cash and cash equivalents at the end of the period V.56(2) 5,759,480 3,835,071 163 ADAMA Ltd. Annual Report 2021 (Expressed in RMB '000) Cash Flow Statement Year ended December 31 Notes 2021 2020 I. Cash flows from operating activities: Cash received from sale of goods and rendering of services 1,122,545 1,275,007 Refund of taxes and surcharges 65,104 91,565 Cash received relating to other operating activities XV.7(1) 126,387 31,031 Sub-total of cash inflows from operating activities 1,314,036 1,397,603 Cash paid for goods and services 923,676 1,032,657 Cash paid to and on behalf of employees 185,037 208,933 Payments of taxes and surcharges 10,936 9,234 Cash paid relating to other operating activities XV.7(2) 108,015 242,563 Sub-total of cash outflows from operating activities 1,227,664 1,493,387 Net cash flows from (used in) operating activities XV.8 86,372 (95,784) II. Cash flows from investing activities: Cash received from returns of investments 1,808 2,583 Net cash received from disposal of fixed assets, intangible assets and other long-term assets 19,360 4,357 Sub-total of cash inflows from investing activities 21,168 6,940 Cash paid to acquire fixed assets, intangible assets and other long-term assets 380,744 519,363 Cash paid for acquisition of investments 697,909 276,000 Cash paid for other investing activities - 150,000 Sub-total of cash outflows from investing activities 1,078,653 945,363 Net cash flows used in investing activities (1,057,485) (938,423) III. Cash flows from financing activities: Cash received from borrowings 758,200 1,094,232 Cash received relating to other financing activities XV.7.(3) 12,345 21,177 Sub-total of cash inflows from financing activities 770,545 1,115,409 Cash repayments of borrowings 295,046 333,500 Cash payment for dividends, profit distributions or interest 86,524 34,407 Cash paid relating to other financing activities XV.7.(4) 178,186 66,971 Sub-total of cash outflows from financing activities 559,756 434,878 Net cash flow provided by (used in) financing activities 210,789 680,531 IV. Effects of foreign exchange rate changes on cash and cash equivalents (3,000) (19,560) V. Net decrease in cash and cash equivalents (763,324) (373,236) 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) 259,434 1,022,758 164 ADAMA Ltd. Annual Report 2021 (Expressed in RMB '000) Consolidated Statement of Changes in Shareholders’ Equity For the year ended December 31, 2021 Attributable to shareholders of the Company Other compre- Share capi- Capital re- Less: Treasury hensive in- Special Surplus re- Retained earn- Non-controlling tal * serve * shares * come reserves serve ings Total interests Total equity I. Balance at January 1, 2021 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) (46,048) (60,357) (360,329) 3,897 - 77,763 (278,669) (80,163) (358,832) 1. Total comprehensive income - - - (360,329) - - 157,397 (202,932) 5,916 (197,016) 2. Owner’s contributions and reduction (14,309) (46,048) (60,357) - - - - - (86,079) (86,079) 2.1 Cancellation of shares (14,309) (46,048) (60,357) - - - - - - - 2.2 Non-controlling interests in re- - - - - - - - - (86,079) (86,079) spect of business combination 3. Appropriation of profits - - - - - - (79,634) (79,634) - (79,634) 3.1 Distribution to owners - - - - - - (37,277) (37,277) - (37,277) 3.2 Distribution to non-controlling interest - - - - - - (42,357) (42,357) - (42,357) 4. Special reserve - - - - 3,897 - - 3,897 - 3,897 4.1 Transfer to special reserve - - - - 7,733 - - 7,733 - 7,733 4.2 Amount utilized - - - - (3,836) - - (3,836) - (3,836) III. Balance at December 31, 2021 2,329,812 12,977,171 - (432,384) 19,857 240,162 5,940,465 21,075,083 - 21,075,083 * For further information of the changes during the period see Note V.37 – Share capital. 165 ADAMA Ltd. Annual Report 2021 (Expressed in RMB '000) Statement of Changes in Shareholders’ Equity For the year ended December 31, 2020 Attributable to shareholders of the Company Other compre- Share capi- Capital re- Less: Treasury hensive in- Special Surplus re- Retained earn- Non-controlling tal * serve * shares * come reserves serve ings Total interests Total equity I. Balance at January 1, 2020 2,446,554 12,903,168 - 1,192,681 14,927 240,162 5,574,173 22,371,665 - 22,371,665 II. Changes in equity for the period (102,433) 120,051 60,357 (1,264,736) 1,033 - 288,529 (1,017,913) 80,163 (937,750) 1. Total comprehensive income - - - (1,264,736) - - 352,753 (911,983) - (911,983) 2. Owner’s contributions and reduction (102,433) 120,051 60,357 - - - - (42,739) 80,163 37,424 2.1 Repurchase of shares (102,433) 102,433 60,357 - - - - (60,357) - (60,357) 2.2 Non-controlling interests in - - - - - - - - 80,163 80,163 respect of business combination 2.3 Other - 17,618 - - - - - 17,618 - 17,618 3. Appropriation of profits - - - - - - (64,224) (64,224) - (64,224) 3.1 Distribution to owners - - - - - - (29,359) (29,359) - (29,359) 3.2 Distribution to non-controlling - - - - - - (34,865) (34,865) - (34,865) interest 4. Special reserve - - - - 1,033 - - 1,033 - 1,033 4.1 Transfer to special reserve - - - - 7,511 - - 7,511 - 7,511 4.2 Amount utilized - - - - (6,478) - - (6,478) - (6,478) III. Balance at December 31, 2020 2,344,121 13,023,219 60,357 (72,055) 15,960 240,162 5,862,702 21,353,752 80,163 21,433,915 * For further information of the changes during the year see Note V.37 – Share capital. 166 ADAMA Ltd. Annual Report 2021 (Expressed in RMB '000) Statement of Changes in Shareholders’ Equity For the year ended December 31, 2021 Attributable to shareholders of the Company Less: Share Capital re- treasury Other compre- Special Surplus Retained capital serve share hensive income reserves reserve earnings Total I. Balance at January 1, 2021 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) (16,722) 3,897 - (162,215) (175,040) 1. Total comprehensive income - - - (16,722) - - (124,938) (141,660) 2. Owner’s contributions and reduction (14,309) (46,048) (60,357) - - - - - 2.1 Cancellation of shares (14,309) (46,048) (60,357) - - - - - 3. Appropriation of profits - - - - - - (37,277) (37,277) 3.1 Transfer to Distribution to shareholders - - - - - - (37,277) (37,277) 4. Special reserve - - - - 3,897 - - 3,897 4.1 Transfer to special reserve - - - - 7,733 - - 7,733 4.2 Amount utilized - - - - (3,836) - - (3,836) Ⅲ. Balance at December 31, 2021 2,329,812 15,523,881 - 30,668 20,548 240,162 335,485 18,480,556 For the year ended December 31, 2020 Attributable to shareholders of the Company Other com- Less: prehen- Capital re- treasury sive in- Special re- Surplus re- Retained Share capital serve share come serves serve earnings Total I. Balance at January 1, 2020 2,446,554 15,449,878 - 41,308 12,973 240,162 531,784 18,722,659 II. Changes in equity for the period (102,433) 120,051 60,357 6,082 3,678 - (34,084) (67,063) 1. Total comprehensive income - - - 6,082 - - (4,725) 1,357 2. Owner’s contributions and reduction (102,433) 120,051 60,357 (42,739) 2.1 Repurchase of shares (102,433) 102,433 60,357 - - - - (60,357) 2.2 Other - 17,618 - - - - - 17,618 3. Appropriation of profits - - - - - - (29,359) (29,359) 3.1 Transfer to Distribution to shareholders - - - - - - (29,359) (29,359) 4. Special reserve - - - - 3,678 - - 3,678 4.1 Transfer to special reserve - - - - 7,511 - - 7,511 4.2 Amount utilized - - - - (3,833) - - (3,833) Ⅲ. Balance at December 31, 2020 2,344,121 15,569,929 60,357 47,390 16,651 240,162 497,700 18,655,596 167 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”). As of August 2021, following the combination between China National Chemical Co., Ltd. (hereinafter - “ChemChina”) and Sinochem Holdings Corporation Ltd. (hereinafter - “Sinochem Holdings”), Syngenta Group, and subse- quently the Company, are ultimately controlled by Sinochem Holdings - parent of both ChemChina and Sinochem Group Co., Ltd. (hereinafter “Sinochem Holdings”), subordinated to SASAC. The principal activities of the Company and its subsidiaries (together referred to as the “Group”) are engaged in development, manufacturing and marketing of agrochemicals, intermediate materials for other industries, food additives and synthetic aromatic products, mainly for export. For information about the largest subsid- iaries of the Company, refer to Note VII. The Company’s consolidated financial statements had been approved by the Board of Directors of the Com- pany on March 29, 2022. Details of the scope of consolidated financial statements are set out in Note VII "Interest in other entities", whereas the changes of the scope of consolidation are set out in Note VI "Changes in consolidation scope". II BASIS OF PREPARATION 1. Basis of preparation The Group has adopted the Accounting Standards for Business Enterprises issued by the Ministry of Finance (the "MoF"). In addition, the Group has disclosed relevant financial information in these financial statements in accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the Public No. 15-General Provisions on Financial Reporting (revised by China Securities Regulatory Com- mission (hereinafter "CSRC”) in 2014). 2. Accrual basis and measurement principle The Group has adopted the accrual basis of accounting. Except for certain financial instruments which are measured at fair value, deferred tax assets and liabilities, assets and liabilities relating to employee benefits, provisions, and investments in associated companies and joint ventures, the Group adopts the historical cost as the principle of measurement in the financial statements. Where assets are impaired, provisions for asset impairment are made in accordance with relevant requirements. In the historical cost measurement, assets obtained shall be measured at the amount of cash or cash equiva- lents or fair value of the consideration paid. Liabilities shall be measured at the actual amount of cash or assets received, or the contractual amount in a present obligation, or the prospective amount of cash or cash equivalents paid to discharge the liabilities. Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing market participants in an arm’s length transaction at the measurement date. Fair value measured and disclosed in the financial statements are determined on this basis whether it is observable or estimated by valuation techniques. 168 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 December 31, 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 December 31, 2021 and the Com- pany's consolidated operating results, changes in shareholders' equity and cash flows for the twelve 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 their realisation in cash or cash equivalents as a normal operating cycle. The operating cycle for the company is 12 months. 4. Reporting currency The Company and its domestic subsidiaries choose Renminbi (hereinafter "RMB") as their functional cur- rency. Functional currencies of overseas subsidiaries are determined on the basis of the principal economic environment in which the overseas subsidiaries operate. The functional currency of the overseas subsidiaries is mainly the United States Dollar (hereinafter "USD"). The presentation currency of these financial state- ments is Renminbi. 169 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 dif- ference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination is adjusted to the share premium in capital reserve. If the share premium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings. Costs that are directly attributable to the combination are charged to profit or loss in the period in which they are incurred. 5.2 Business combinations not involving enterprises under common control and goodwill. A business combination not involving enterprises under common control is a business combination in which all of the combining enterprises are not ultimately controlled by the same party or parties before and after the combination. The costs of business combination are the fair value of the assets paid, liabilities incurred or assumed and equity instruments issued by the acquirer for the purpose of achieving the control rights over the acquiree. The intermediary costs such as audit, legal services and assessment consulting costs and other related man- agement costs that are directly attributable to the combination by the acquirer are charged to profit or loss in the period in which they are incurred. Direct capital issuance costs incurred in respect of equity instruments or liabilities issued pursuant to the business combination should be charged to the respect equity instruments or liabilities upon initial recognition of the underlying equity instruments or liabilities. The acquiree’s identifiable assets, liabilities and contingent liabilities acquired by the acquirer in a business combination, that meet the recognition criteria shall be measured at fair value at the acquisition date. Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on initial recognition. Where the cost of combination is less than the acquirer’s interest in the fair value of the ac- quiree’s identifiable net assets, the remaining difference is recognized immediately in profit or loss for the current year. The goodwill raised because of the business combination should be separately disclosed in the consolidated financial statement and measured by the initial amount less any accumulative impairment provision. In a business combination achieved in stages, the Group remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognise the resulting gain or loss, if any, in profit or loss. 170 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 inter- ests and presented as "non-controlling interests" in the shareholders’ equity in consolidated balance sheet. The portion of net profits or losses of subsidiaries for the period attributable to non-controlling interests is presented as "non-controlling interests" in consolidated income statement below the "net profit" line item. Total comprehensive income attributable to non-controlling shareholders is presented separately in the con- solidated income statement below the total comprehensive income line item. When the amount of loss for the period attributable to the non-controlling shareholders of a subsidiary ex- ceeds the non-controlling shareholders' portion of the opening balance of owners' equity of the subsidiary, the excess amount is still allocated against non-controlling interests. Acquisition of non-controlling interests or disposal of equity interest in a subsidiary that does not result in the loss of control over the subsidiary is accounted for as equity transactions. The carrying amounts of the Company's interests and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. The difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is adjusted to capital reserve under owners' equity. If the capital reserve is not sufficient to absorb the difference, the excess is adjusted against retained earnings. Other comprehensive income attributed to the non-controlling interest is reattributed to the shareholders of the company. 171 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 finan- cial instrument is recognized as a liability at the present value of the exercise price (according to the "antic- ipated 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 acqui- sition 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 invest- ment income in the period in which control is lost. 7. Classification and accounting methods of joint arrangement Joint arrangement involves by two or more parties jointly control. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control (the ventures). The Group makes the classification of the joint arrangements according to the rights and obligations in the joint arrangements to either joint operations or joint ventures. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint ventures are accounted for using the equity method. 8. Cash and cash equivalents Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are the Group's short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 172 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 9. Translation of transactions and financial statements denominated in foreign currencies 9.1 Transactions denominated in foreign currencies On initial recognition, foreign currency transactions are translated into functional currency using the spot exchange rate prevailing at the date of transaction. At the balance sheet date, foreign currency monetary items are translated into functional currency using the spot exchange rates at the balance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the previous balance sheet date are recognized in profit or loss for the period, except that (i) exchange differences related to a specific-purpose borrowing denominated in foreign currency that qualify for capitalization are capital- ized as part of the cost of the qualifying asset during the capitalization period. (ii) exchange differences related to hedging instruments for the purpose of hedging against foreign currency risks are accounted for using hedge accounting. When preparing financial statements involving foreign operations, if there is any foreign currency monetary items, which in substance forms part of the net investment in the foreign operations, exchange differences arising from the changes of foreign currency are recorded as other comprehensive income, and will be re- classified to profit or loss upon disposal of the foreign operations. Foreign currency non-monetary items measured at historical cost are translated to the amounts in functional currency at the spot exchange rates on the dates of the transactions and the amounts in functional currency remain unchanged. 9.2 Translation of financial statements denominated in foreign currency For the purpose of preparing consolidated financial statements, financial statements of a foreign operation are translated from the foreign currency into RMB using the following method: assets and liabilities on the balance sheet are translated at spot exchange rate prevailing at the balance sheet date; shareholders' equity items, except for retained earnings, are translated at the spot exchange rates at the dates on which such items arose; all items in the income statement as well as items reflecting the distribution of profits are translated at average rate or at spot exchange rates on the dates of the transactions; the retained earnings opening balance is previous year's translated retained earnings closing balance; the closing balance of retained earnings is calculated and presented on the basis of each translated income statement and profit distribution item. The difference between the translated assets and the aggregate of liabilities and shareholders' equity items is recorded as other comprehensive income. Cash Flows arising from transaction in foreign currency and the cash flows of a foreign subsidiary are translated at the spot exchange rate on the date of the cash flow, the effect of exchange rate changes on the cash and cash equivalents is regarded as a reconciling item and present separately in the statement “effect of foreign exchange rate changes on the cash and cash equivalents". The opening balances and the comparative figures of prior year are presented at the translated amounts in the prior year's financial statements. On disposal of the Group's entire equity interest in a foreign operation, or upon a loss of control over a foreign operation due to disposal of certain equity interest in it or other reasons, the Group transfers the accumulated translation differences, which are attributable to the owners' equity of the Company and pre- sented under other comprehensive income to profit or loss in the period in which the disposal occurs. 173 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 9. Translation of transactions and financial statements denominated in foreign currencies - (cont’d) 9.2 Translation of financial statements denominated in foreign currency - (cont’d) In case of a disposal or other reason that does not result in the Group losing control over a foreign operation, the proportionate share of accumulated translation differences are re-attributed to non-controlling interests and are not recognized in profit and loss. For partial disposals of equity interest in foreign operations, which are associates or joint ventures, the proportionate share of the accumulated translation differences are reclas- sified to profit or loss. 10. Financial instruments The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual provisions of the instrument. At initial recognition, the Group measures a financial asset or financial liability at its fair value plus or minus (which is not measured 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 ac- cording to their transaction price. 10.1 Classification and measurement of financial assets After initial recognition, an entity shall measure a financial asset at: (a) amortised cost; (b) fair value through other comprehensive income (“FVTOCI”); or (c) fair value through profit or loss (“FVTPL”). 10.1.1 Financial assets at amortised cost A financial asset is measured at amortised cost if both of the following conditions are met: (a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Such financial assets are subsequently measured at amortised cost, using effective interest method. Gains or losses upon impairment and derecognition are recognized in profit or loss. 10.1.1.1 Effective interest method and amortised cost Effective interest method represents the method for calculating the amortized costs and interest income or expense of each period in accordance with the effective interest rate of financial assets or financial liabilities (inclusive of a set of financial assets or financial liabilities). Effective interest rate represents the rate that discounts the future cash flow over the expected subsisting period or shorter period, if appropriate, of the financial asset or financial liability to the current carrying value of such financial asset or financial liability. When calculating the effective interest rate, the Group will consider the anticipated future cash flow (not considering the future credit loss) on the basis of all contract clauses of financial assets or financial liabilities, as well as consider all kinds of charges which are an integral part of the effective interest rate, including transaction fees and discount or premium paid or received between both parties of financial asset or financial liability contract. 174 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 10. Financial instruments - (cont’d) 10.1 Classification and measurement of financial assets - (cont’d) 10.1.2 Financial assets at FVTOCI A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met: (a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and (b) the contractual terms of the finan- cial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. A gain or loss on a financial asset measured at fair value through other comprehensive income is recognized in other comprehensive income, except for impairment gains or losses, foreign exchange gains and losses and interest calculated using the effective interest method, until the financial asset is derecognized or reclas- sified. When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. 10.1.3 Financial assets at FVTPL Financial assets at FVTPL are either those that are classified as financial assets at FVTPL or designated as financial assets at FVTPL. A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVTOCI. The Group may, at initial recognition, irrevocably designate a financial asset as measured at FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. A gain or loss on a financial asset that is measured at FVTPL is recognized in profit or loss unless it is part of a hedging relationship. Dividends are recognized in profit or loss. 10.1.4 Designated financial assets at FVTOCI At initial recognition, the Group makes an irrevocable election to designate to FVTOCI an investment in an equity instrument that is not held for trading. When a non-trading equity instrument investment is designated as a financial asset that is measured at fair value through other comprehensive income, the changes in the fair value of the financial asset are recognised in other comprehensive income. Upon realization the accumulated gains or losses from other comprehensive income are transferred from other comprehensive income and included in retained earnings. During the pe- riod in which the Group holds these non-trading investment instruments, the right to receive dividends in the Group has been established, and the economic benefits related to dividends are likely to flow into the Group, and when the amount of dividends can be reliably measured, the dividend income is recognized in the current profit and loss. 175 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 10. Financial instruments - (cont’d) 10.2 Impairment of financial assets The Group recognizes a loss allowance for expected credit losses on financial assets that are classified to amortised cost and FVTOCI. The Group always measures the loss allowance at an amount equal to lifetime expected credit losses for trade receivables. For financial assets other than trade receivables, the Group initially measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. At each balance sheet date, if the credit risk on that financial instrument has increased significantly since initial recognition, the Group measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses. The Group recognizes in profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance to the amount that is required to be recognized. 10.2.1 Significant increases in credit risk At each balance sheet date, the Group assesses whether the credit risk on a financial instrument has in- creased significantly since initial recognition. The Group mainly considers the following list of information in assessing changes in credit risk: (a) significant changes in internal price indicators of credit risk as a result of a change in credit risk since inception. (b) significant changes in external market indicators of credit risk for a particular financial instrument or similar financial instruments with the same expected life. (c) a significant change in the debtors’ ability to meet its debt obligations. (d) an actual or expected significant change in the operating results of the debtor. (e) significant increases in credit risk on other financial instruments of the same debtor. (f) an actual or expected significant adverse change in the regulatory, economic, or technological envi- ronment of the debtor. (g) significant changes in the value of the collateral supporting the obligation or in the quality of third- party guarantees or credit enhancements, which are expected to reduce the debtor’s economic incentive to make scheduled contractual payments or to otherwise have an effect on the probability of a default occurring. (h) significant changes that are expected to reduce the receivable’s economic incentive to make scheduled contractual payments. (i) significant changes in the expected performance and behaviour of the debtor. (j) past due information. The Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. 176 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 10. Financial instruments - (cont’d) 10.2 Impairment of financial assets - (cont’d) 10.2.2 Credit-impaired financial asset A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired include observable data about the following events: (a) significant financial difficulty of the issuer or the receivable; (b) a breach of contract, such as a default or past due event; (c) the lender(s) of the receivable, for economic or contractual reasons relating to the receivable’s finan- cial difficulty, having granted to the receivable a concession(s) that the lender(s) would not otherwise consider; (d) it is becoming probable that the receivable will enter bankruptcy or other financial reorganization; 10.2.3 Recognition of expected credit losses For the purpose of determining significant increases in credit risk and recognizing a loss allowance on a collective basis, financial instruments are grouped on the basis of shared credit risk. Examples of shared credit risk characteristics may include, but are not limited to, the:(a) instrument type; (b) credit risk ratings; (c) collateral type; (d) industry; (e) geographical location of the debtor; and (f) the value of collateral rela- tive to the financial asset if it has an impact on the probability of a default occurring. Expected credit losses of financial instruments are determined as the present value of the difference be- tween: (a) the contractual cash flows that are due to an entity under the contract; and (b) the cash flows that the entity expects to receive. For a financial asset that is credit-impaired at the reporting date, an entity shall measure the expected credit losses as the difference between the asset’s gross carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. Any adjustment is recognized in profit or loss as an impairment gain or loss. The Group measures expected credit losses of a financial instrument in a way that reflects: (a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; (b) the time value of money; and (c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions. 177 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 transferred to the transferee; or (iii) although the financial asset has been transferred, the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retained control of the financial asset. If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, and it retains control of the financial asset, it recognizes the financial asset to the extent of its contin- uing involvement in the transferred financial asset and recognizes an associated liability. The extent of the Group’s continuing involvement in the transferred asset is the extent to which it is exposed to changes in the value of the transferred asset. When the company is derecognizing a financial asset in its entirety, except for equity instrument designated to FVTOCI, the difference between (i) the carrying amount of the financial asset transferred; and (ii) the sum of the consideration received from the transfer is recognized in profit or loss. 10.4 Classification and measurement of financial liabilities Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. All financial liabilities are subsequently measured at FVTPL or other financial liabilities. Financial liabilities are classified as at FVTPL when the financial liability is (i) held for trading or (ii) it is designated as at FVTPL. The financial liability other than derivative financial liabilities are stated as liabil- ities held for trading. Other financial liabilities are subsequently measured at amortized cost by using effective interest method. Gain or loss arising from derecognition or amortization is recognized in current profit or loss. 178 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 10. Financial instruments - (cont’d) 10.5 Derecognition of financial liabilities Financial liabilities are derecognized in full or in part only when the present obligation is discharged in full or in part. An agreement entered into force between the Group (debtor) and a creditor to replace the original financial liabilities with new financial liabilities with substantially different terms, derecognize the original financial liabilities as well as recognize the new financial liabilities. When financial liabilities is derecog- nized in full or in part, the difference between the carrying amount of the financial liabilities derecognized and the consideration paid (including transferred non-cash assets or new financial liability) is recognized in profit or loss for the current period. 10.6 Derivatives Derivative financial instruments include forward exchange contracts, currency swaps and foreign exchange options, etc. Derivatives are initially measured at fair value at the date when the derivative contracts are entered into and are subsequently re-measured at fair value. The resulting gain or loss is recognized in profit or loss unless the derivative is designated and highly effective as a hedging instrument, in which case the timing of the recognition in profit or loss depends on the nature of the hedge relationship (Note III 28.1). 10.7 Offsetting financial assets and financial liabilities Financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset, except for circumstances where the Group has a legal right that is currently enforceable to offset the recognized financial assets and financial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall be offset and the net amount is presented in the balance sheet. 10.8 Equity instruments The consideration received from the issuance of equity instruments net of transaction costs is recognized in shareholders’ equity. Consideration and transaction costs paid by the Company for repurchasing self-issued equity instruments are deducted from shareholders’ equity. When the Company repurchases its own shares, those shares are treated as treasury shares. All expenditures relating to the repurchase are recorded in the cost of the treasury shares, with the transaction entering into the share capital. Treasury shares are excluded from profit distributions and are stated as a deduction under shareholders’ equity in the balance sheet. 179 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 11. Receivables Receivables are assessed for impairment on a collective group and/or on an individual basis as follows: Expected credit losses in respect of a receivables is measured at an amount equal to lifetime expected credit losses. The assessment is made collectively for account receivables, where receivables share similar credit risk characteristics based on geographical location, using the expected credit losses model including inter- alia aging analysis, historical loss experiences adjusted by the observable factors reflecting current and ex- pected future economic conditions. The ratio of the account receivables collective provision for expected credit losses in which credit losses has not occurred is between 0%-4.36%. When credit risk on a receivable has increased significantly since initial recognition, the group records spe- cific provision or collective provision, which is determined for groups of similar assets in countries in which there are large number of customers with immaterial balances. In assessing whether the credit risk on a receivable has increased significantly since initial recognition, the Group compares the risk of a default occurring on the receivable at the reporting date with the risk of a default occurring on the receivable at the date of initial recognition and considers both quantitative and qualitative information that is reasonable and supportable, including observable data that comes to the atten- tion of the Group about loss events such as a significant decline in the solvency of an individual debtor or the portfolio of debtors, and significant changes in the financial condition that have an adverse effect on the debtor. 12. Inventories 12.1 Categories of inventories and initial measurement The Group's inventories mainly include raw materials, work in progress, semi-finished goods, finished goods and reusable materials. Reusable materials include low-value consumables, packaging materials and other materials, which can be used repeatedly but do not meet the definition of fixed assets. Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of con- version and other expenditures incurred in bringing the inventories to their present location and condition including direct labor costs and an appropriate allocation of production overheads. 12.2 Valuation method of inventories upon delivery The actual cost of inventories upon delivery is calculated using the weighted average method. 12.3 Basis for determining net realizable value of inventories and provision methods for decline in value of in- ventories At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the net realizable value is below the cost of inventories, a provision for decline in value of inventories is made. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes. 180 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 12. Inventories - (cont’d) After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that the net realizable value of inventories is higher than their carrying amount, the original provision for decline in value is reversed and the reversal is included in profit or loss for the period. 12.4 The perpetual inventory system is maintained for stock system. 13. Long-term equity investments Long-term equity investments include investments in subsidiaries, joint ventures and associates. Subsidiaries are the companies that are controlled by the Company. Associates are the companies over which the Group has significant influence. Joint ventures are joint arrangements over which the Group has joint control along with other investors and has rights to the net assets of the joint arrangement. The Company accounts for the investment in subsidiaries at historical cost in the Company's financial state- ments. Investments in associates and joint ventures are accounted for under equity method. 13.1 Determination of investment cost For a long-term equity investment acquired through a business combination involving enterprises under common control, the investment cost of the long-term equity investment is the share of the carrying amount of the shareholders' equity of the acquiree attributable to the ultimate controlling party at the date of combi- nation. The difference between initial investment cost and cash paid, non-cash assets transferred and book value of liabilities assumed, is adjusted in capital reserve. If the balance of capital reserve is not sufficient to absorb the difference, any excess is adjusted to retained earnings. For a long-term equity investment acquired through business combination not involving enterprises under common control, the investment cost of the long-term equity investment is the cost of acquisition. For a business combination not involving enterprises under common control achieved in stages that involves mul- tiple exchange transactions, the initial investment cost is carried at the aggregate of the carrying amount of the acquirer’s previously held equity interest in the acquiree and the new investment cost incurred on the acquisition date. Regarding the long-term equity investment acquired otherwise than through a business combination, if the long-term equity investment is acquired by cash, the historical cost is determined based on the amount of cash paid and payable; if the long-term equity investment is acquired through the issuance of equity instru- ments, the historical cost is determined based on the fair value of the equity instruments issued. 181 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 13. Long-term equity investments - (cont’d) 13.2 Subsequent measurement and recognition of profit or loss If the long-term equity investment is accounted for at cost, it should be measured at historical cost less accumulated impairment losses. Dividend declared by the investee should be accounted for as investment income. Under the equity method, where the long-term equity investment initial investment cost exceeds the Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, no adjustment is made to the initial investment cost. Where the initial investment cost is less than the Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, the difference is recognized in profit or loss for the period, and the cost of the long-term equity investment is adjusted accordingly. Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive income of the investee for the period as investment income or loss and other comprehensive income for the period. The Group recognizes its share of the investee’s net profit or loss based on the fair value of the investee’s individual separately identifiable assets, etc. at the acquisition date after making appropriate ad- justments to be confirmed with the Group's accounting policies and accounting period. The Group discon- tinues recognizing its share of net losses of the investee after the carrying amount of the long-term equity investment together with any long-term interests that in substance form part of its net investment in the investee is reduced to zero. If the Group has incurred obligations to assume additional losses of the investee, a provision is recognized according to the expected obligation, and recorded as investment loss for the period. 13.3 Basis for determining control, joint control and significant influence over investee Control is achieved when the Company has power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating policy decisions relating to the activity require the unanimous consent of the parties sharing control. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. When determining whether an investing enterprise is able to exercise control or significant influence over an investee, the effect of potential voting rights of the investee (for example, warrants and convertible debts) held by the investing enterprises or other parties that are currently exercisable or convertible shall be con- sidered. 13.4 Methods of impairment assessment and determining the provision for impairment loss If the recoverable amounts of the investments to subsidiaries, joint ventures and associates are less than their carrying amounts, an impairment loss should be recognized to reduce the carrying amounts to the recoverable amounts (Note III 20). 182 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 13. Long-term equity investments - (cont’d) 13.5 The disposal of long-term equity investment On disposal of a long term equity investment, the difference between the proceeds actually received and receivable and the carrying amount is recognized in profit or loss for the period. 14. Investment properties Investment property refers to real estate held to earn rentals or for capital appreciation, or both, including leased land use rights, land use rights held and provided for transferring after appreciation and leased con- structions, etc. Investment property is initially measured at cost. Subsequent expenditures related to an investment property shall be included in cost of investment property only when the economic benefits associated with the asset will likely flow to the Group and its cost can be measured reliably. All other subsequent expenditures on investment property shall be included in profit or loss for the current period when incurred. The Group adopts cost method for subsequent measurement of investment property, which is depreciated or amortized using the same policy as that for buildings and land use rights. When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal of the property net of the carrying amount and related taxes and surcharges is recognized in profit or loss for the current period. 15. Fixed assets 15.1 Recognition criteria for fixed assets Fixed assets include land owned by the Group and buildings, machinery and equipment, motor 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 expend- itures can be measured reliably. Other subsequent expenditures are recognized in profit or loss in the period in which they are incurred. 183 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 15. Fixed assets - (cont’d) 15.2 Depreciation of each category of fixed assets Fixed asset is depreciated based on the cost of fixed asset recognized less expected net residual value over its useful life using the straight-line method since the month subsequent to the one in which it is ready for intended use. Depreciation is calculated based on the carrying amount of the fixed asset after impairment over the estimated remaining useful life of the asset. The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied at least once at each financial year-end, and account for any change as a change in an ac- counting estimate. The estimated useful life, estimated net residual value and annual depreciation rate of each category of fixed assets are as follows: Residual Useful life value Annual deprecia- Category Depreciation (years) (%) tion rate (%) Buildings the straight-line method 15-50 0-4 1.9-6.7 Machinery and equipment the straight-line method 3-22 0-4 4.4-33.3 Office and other equipment the straight-line method 3-17 0-4 5.6-33.3 Motor vehicles the straight-line method 5-9 0-2 10.9-20.0 Overseas Land owned by the Group is not depreciated. 15.3 Other explanations If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or disposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, the amount of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognized in profit or loss for the period. The difference between recoverable amounts of the fixed assets under the carrying amount is referred to as impairment loss (Note III 20). 16. Construction in progress Construction in progress is measured at its actual costs. The actual costs include various construction, instal- lation costs, borrowing costs capitalized and other expenditures incurred until such time as the relevant assets are completed and ready for its intended use. When the asset concerned is ready for its intended use, the cost of the asset is transferred to fixed assets and depreciated starting from the following month. The difference between recoverable amounts of the construction in progress under the carrying amount is referred to as impairment loss (Note III 20). 184 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 17. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are capitalized when expenditures for such asset and borrowing costs are incurred and activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced. Capitalization of borrowing costs ceases when the qualifying asset being acquired, constructed or produced becomes ready for its intended use or sale. Borrowing costs incurred subsequently should be charged to profit or loss. Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is suspended abnormally and when the sus- pension is for a continuous period of more than 3 months. Capitalization is suspended until the acquisition, construction or production of the asset is resumed. Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is the actual interest expenses incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds. Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interest to be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excess of cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The capitalization rate is the weighted average of the interest rates applicable to the general-purpose borrowings. During the capitalization period, exchange differences on foreign currency specific-purpose borrowing are fully capitalized whereas exchange differences on foreign currency general-purpose borrowing, charged to profit or loss. 18. Intangible assets 18.1 Valuation methods, useful life, impairment test The Group’s intangible assets include product registration assets, intangible assets upon purchase of products, marketing rights and rights to use tradenames and trademarks, land use rights, software and customer rela- tions. Intangible assets are stated at cost less accumulated amortization and impairment losses. When an intangible asset with a finite useful life is available for use, its original cost less any accumulated impairment losses is amortized over its estimated useful life using the straight-line method. An intangible asset with an indefinite useful life is not amortized. For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method at the end of the year, and makes adjustments when necessary. The respective amortization periods for such intangible assets are as follows: Item Amortization period (years) Land use rights 49-50 years Product registration 8 years Intangible assets on purchase of products 7-11, 20 years Marketing rights, tradename and trademarks 4-10, 30 years Exclusivity agreement 21 years Software 3-5 years Customer relations 5-10 years The difference between recoverable amounts of the intangible assets under the carrying amount is referred to as impairment loss (see Note III 20 – Impairment of long-term assets). 185 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 18. Intangible assets - (cont’d) 18.2 Research and development expenditure Internal research and development project expenditures were classified into research expenditures and de- velopment expenditures depending on its nature and the greater uncertainty whether the research activities becoming to intangible assets. Expenditure during the research phase is recognized as an expense in the period in which it is incurred. Expenditure during the development phase that meets all of the following conditions at the same time is recognized as intangible asset: - It is technically feasible to complete the intangible asset so that it will be available for use or sale; - The Group has the intention to complete the intangible asset and use or sell it; - The Group can demonstrate the ways in which the intangible asset will generate economic benefits; - The availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; - The expenditure attributable to the intangible asset during its development phase can be reliably meas- ured. Expenditures that do not meet all of the above conditions at the same time are recognized in profit or loss when incurred. If the expenditures cannot be distinguished between the research phase and development phase, the Group recognizes all of them in profit or loss for the period. Expenditures that have previously been recognized in the profit or loss would not be recognized as an asset in subsequent years. Those expend- itures capitalized during the development stage are recognized as development costs incurred and will be transferred to intangible asset when the underlying project is ready for an intended use. 19. Goodwill The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’s interest in the fair value of the identifiable net assets of the acquiree under a business combination not involving enterprises under common control. Goodwill is not amortized and is stated in the balance sheet at cost less accumulated impairment losses (see Note III 20 – Impairment of long-term assets). On disposal of an asset group or a set of asset groups, any attributable goodwill is written off and included in the calculation of the profit or loss on disposal. 20. Impairment of long-term assets The Company assesses at each balance sheet date whether there is any indication that the fixed assets, con- struction in progress, right of use assets, intangible assets with finite useful lives, investment properties measured at historical cost, investments in subsidiaries, joint ventures and associates may be impaired. If there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets. The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value of the future cash flow estimated to be derived from the asset. The Group estimates the recoverable amount on an individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the asset group to which the asset belongs. Identification of an asset group is based on whether major cash inflows generated by the asset group are largely independent of the cash inflows from other assets or asset groups. 186 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 20. Impairment of long-term assets - (cont’d) Goodwill arising from a business combination is tested for impairment at least at each year end, irrespective of whether there is any indication that the asset may be impaired. For the purpose of impairment testing, the carrying amount of goodwill acquired in a business combination is allocated from the acquisition date on a reasonable basis to each of the related asset groups; if it is impossible to allocate to the related asset groups, it is allocated to each of the related set of asset groups. Each of the related asset groups or set of asset groups is an asset group or set of asset group that is able to benefit from the synergies of the business combination and shall not be larger than a reportable segment determined by the Group. If the carrying amount of the asset group or set of asset groups is higher than its recoverable amount, the amount of the impairment loss first reduced by the carrying amount of the goodwill allocated to the asset group or set of asset groups, and then the carrying amount of other assets (other than the goodwill) within the asset group or set of asset groups, pro rata based on the carrying amount of each asset. Once the impairment loss of such assets is recognized, it will not be reversed in any subsequent period. 21. Employee benefits 21.1 Short-term employee benefits Employee wages or salaries, bonuses, social security contributions, measured on a non-discounted basis, and the expense is recorded when the related service is provided. A provision for short-term employee benefits in respect of cash bonuses is recognized in the amount expected to be paid where the Group has a current legal or constructive obligation to pay the said amount for services provided by the employee in the past and the amount can be estimated reliably. 21.2 Post-employment benefits Post-employment benefits are classified into defined contribution plans and defined benefit plans. A defined contribution plan is a post-employment benefit plan under which the Group pays contributions to a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contri- butions to defined contribution plans are recognized as an expense in profit or loss in the periods during which related services are rendered by employees. Defined benefit plans of the Group are post-employment benefit plans other than defined contribution plans. In accordance with the projected unit credit method, the Group measures the obligations under defined ben- efit plans using unbiased and mutually compatible actuarial assumptions to estimate related demographic variables and financial variables, and discount obligations under the defined benefit plans to determine the present value of the defined benefit liability. The discount rate used is the yield on the reporting date on highly-rated corporate debentures denominated in the same currency, that have maturity dates approximating the terms of the Group’s obligation. The Group attributes benefit obligations under a defined benefit plan to periods of service provided by re- spective employees. Service cost and interest expense on the defined benefit liability are charged to profit or loss and remeasurements of the defined benefit liability are recognized in other comprehensive income. 187 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 21. Employee benefits - (cont’d) 21.3 Termination benefits When the Group terminates the employment with employees or provides compensation under an offer to encourage employees to accept voluntary redundancy, a provision is recognized with a corresponding ex- pense in profit or loss at the earlier of the following dates: - When the Group cannot unilaterally withdraw the offer of termination benefits because of an employee termination plan or a curtailment proposal. - When the Group has a formal detailed restructuring plan involving the payment of termination benefits and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it. If the benefits are payable more than 12 months after the end of the reporting period, they are discounted to their present value. The discount rate used is the yield on the reporting date on highly-rated corporate de- bentures denominated in the same currency, that have maturity dates approximating the terms of the Group’s obligation. 21.4 Other long-term employee benefits The Group’s net obligation for long-term employee benefits, which are not attributable to post-employment benefit plans, is for the amount of the future benefit to which employees are entitled for services that were provided during the current and prior periods. The amount of these benefits is discounted to its present value and the fair value of the assets related to these obligations is deducted therefrom. The discount rate used is the yield on the reporting date on highly-rated corporate debentures denominated in the same currency, that have maturity dates approximating the terms of the Group’s obligation. 22. Share-based payment Share-based payment refers to the transaction in order to acquire the service offered by the employees or other parties that grants equity instruments or liabilities on the basis of the equity instruments. Share-based payment classified into equity-settled share-based payment and cash-settled share-based payment. 22.1 Cash-settled share-based payment The cash-settled share-based payment should be measured according to the fair value of the liabilities rec- ognized based on the shares or other equity instrument undertaken by the Company. For cash-settled share- based payment made in return for the rendering of employee services that cannot be exercised until the services are fully provided during the vesting period or specified performance targets are met, on each bal- ance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the number of exercisable instruments, be recognized in relevant expenses and the corresponding liabilities at the fair value of the liability incurred by the Company. On each balance sheet date and the settlement date before the settlement of the relevant liabilities, the Com- pany should re-measure the fair value of the liabilities and the changes should be included in the current period profit and loss. 188 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 23. Provisions Provisions are recognized when the Group has a present obligation related to a contingency, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be measured reliably. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the settlement date, taking into account factors pertaining to a contingency such as the risks, uncertainties and time value of money. Where the effect of the time value of money is material, the amount of the provision is determined by discounting the related future cash outflows. The increase in the provision due to passage of time is recognized as interest expense. If all or part of the provision settlements is reimbursed by third parties, when the realization of income is virtually certain, then the related asset should be recognized. However, the amount of related asset recog- nized should not be exceeding the respective provision amount. At the balance sheet date, the amount of provision should be re-assessed to reflect the best estimation then. 24. Revenue Revenue of the Group is mainly from sale of goods. The Group recognizes revenue when transferring goods to a customer, at the amount of the transaction price. Goods are considered transferred when the customer obtains control of the goods. Transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring goods to a customer, excluding amounts collected on behalf of third parties. Significant financing component For a contract with a significant financing component, the Group recognize revenue at an amount that reflects the price that a customer would have paid for the goods if the customer had paid cash for those goods at receipt. The difference between the amount of consideration and the cash selling price of the goods, is amor- tized in the contract period using effective interest rate. The Group does not adjust the amount of consider- ation for the effects of a significant financing component if the Group expects, at contract inception, that the period between when the entity transfers a good to a customer and when the customer pays for that good will be one year or less. Sale with a right of return For sale with a right of return, the Group recognizes revenue at the amount of consideration to which the Group expects to be entitled (ie excluding the products expected to be returned). For any amounts received (or receivable) for which an entity does not expect to be entitled, the entity shall not recognize revenue when it transfers products to customers but shall recognize those amounts received (or receivable) as a refund liability. An asset recognized for the Group’s right to recover products from a customer on settling a refund liability shall initially be measured by reference to the former carrying amount of the product less any ex- pected costs to recover those products. 189 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 25. Government grants Government grants are transfer of monetary assets and non-monetary assets from the government to the Group at no consideration, including tax returns, financial subsidies and so on. A government grant is rec- ognized only when the Group can comply with the conditions attached to the grant and the Group will receive the grant. If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount. Government grants are either related to assets or income. (1) The basis of judgment and accounting method of the government grants related to assets Government grants obtained for acquiring long-term assets are government grants related to assets. A gov- ernment grant related to an asset is offset with the cost of the relevant asset. (2) The basis of judgment and accounting method of the government grants related to income For a government grant related to income, if the grant is a compensation for related expenses or losses to be incurred in subsequent periods, the grant is recognized as deferred income, and recognized in profit or loss over the periods in which the related costs are recognized. If the grant is a compensation for related expenses or losses already incurred, the grant is recognized immediately in profit or loss for the period. Government grants related to the Group’s normal course of business are offset with related costs and ex- penses. Government grants related that are irrelevant with the Groups’s normal course of business are in- cluded in non-operating gains. 26. Current and deferred tax The income tax expenses include current income tax and deferred income tax. 26.1 Current income tax At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are meas- ured at the amount expected to be paid (or recovered) according to the requirements of tax laws. 26.2 Deferred tax assets and deferred tax liabilities Temporary differences are differences between the carrying amounts of certain assets or liabilities and their tax base. All taxable temporary differences are recognized as related deferred tax liabilities. Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the deductible losses and tax credits can be utilized. 190 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 26. Current and deferred tax - (cont’d) 26.2 Deferred tax assets and deferred tax liabilities - (cont’d) For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the deductible losses and tax credits can be utilized. However, for deductible temporary differences associated with the initial recog- nition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognized. At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to tax laws, that are expected to apply in the period in which the asset is realized or the liability is settled. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in sub- sidiaries and associates, and interests in joint ventures, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The Group may be required to pay additional tax in case of distribution of dividends by the Group companies. This additional tax was not included in the financial statements, since the policy of the Group is not to distribute in the foreseeable future a dividend which creates a significant additional tax liability. Except for those current income tax and deferred tax charged to comprehensive income or shareholders’ equity in respect of transactions or events which have been directly recognized in other comprehensive in- come or shareholders’ equity, and deferred tax recognized on business combinations, all other current in- come tax and deferred tax items are charged to profit or loss in the current period. At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer probable that sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilized. Such reduction is reversed when it becomes probable that sufficient taxable profits will be available. 26.3 Offset of income tax When the Group has a legal right to settle current tax assets and liabilities on a net basis, and tax assets and tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend to realize the assets and liabilities simultaneously, current tax assets and liabilities are offset and presented on a net basis. When the Group has a legal right to settle deferred tax assets and liabilities on a net basis which relates to income taxes levied by the same taxation authority, on either the same taxable entity or different taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabil- ities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis. 191 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 27. Leases Lease is a contract, that conveys the right to use an asset for a period of time in exchange for consideration. 27.1 Determining whether an arrangement contains a lease On the inception date of the lease, the Group determines whether the arrangement is a lease or contains a lease, while assessing if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In its assessment of whether an arrangement conveys the right to control the use of an identified asset, the Group assesses whether it has the following two rights throughout the lease term: (a) The right to obtain substantially all the economic benefits from use of the identified asset; and (b) The right to direct the identified asset’s use. An arrangement does not contain a lease if an asset is leased for a period of less than 12 months, or to lease of asset with low economic value. 27.2 Initial recognition of leased assets and lease liabilities Upon initial recognition, the Group recognizes a liability at the present value of future lease payments (ex- clude certain variable lease payments, as detailed in note III 27.4), and concurrently the Group recognizes a right-of-use asset at the same amount, adjusted for any prepaid lease payments paid at the lease date or before, plus initial direct costs incurred in respect of the lease. When the interest rate implicit in the lease is not readily determinable, the incremental borrowing rate of the lessee is used. The Group presents right-of-use assets separately from other assets in the balance sheet. 27.3 The lease term The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option, if it is reasonably certain that the lessee will exercise or not exercise the option, respectively. If there is a change in the lease term, or in the assessment of an option to purchase the underlying asset, the Group remeasures the lease liability, on the basis of the revised lease term and the revised discount rate and adjust the right-of-use assets accordingly. 27.4 Variable lease payments Variable lease payments that depend on an index or a rate, are initially measured using the index or rate existing at the commencement of the lease. When the cash flows of future lease payments change as the result of a change in an index or a rate, the balance of the liability is adjusted with a correspondence change in the right-of-use asset. Other variable lease payments that are not included in the measurement of the lease liability are recognized in profit or loss in the period in which the condition that triggers payment occurs. 192 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 27. Leases (cont’d) 27.5 Subsequent measurement After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation and accumulated impairment losses and is adjusted for re-measurements of the lease liability. The asset is depreciated on a straight-line basis over the useful life or contractual lease period, whichever earlier. The Group applies ASBE8 Impairment of Assets, to determine whether the right-of-use asset is impaired and to account for any impairment loss identified. A lease liability is measured after the lease commencement date at amortized cost using the effective interest method. 28. Other significant accounting policies and accounting estimates 28.1 Hedging The Group uses derivative financial instruments to hedge its risks related to foreign currency and inflation risks and derivatives that are not used for hedging. Hedge accounting The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedge is expected to be effective in offsetting the changes in the fair value of cash flows that can be attributed to the hedged risk during the period for which the hedge is designated. An effective hedge exists when all of the below conditions are met: There is an economic relationship between the hedged item and the hedging instrument; the effect of credit risk does not dominate the value changes that result from that economic relation- ship; the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. On the commencement date of the accounting hedge, the Group formally documents the relationship between the hedging instrument and hedged item, including the Group’s risk management objectives and strategy in executing the hedge transaction, together with the methods that will be used by the Group to assess the effectiveness of the hedging relationship. With respect to a cash-flow hedge, a forecasted transaction that constitutes a hedged item must be highly probable and must give rise to exposure to changes in cash flows that could ultimately affect profit or loss. 193 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 28. Other significant accounting policies and accounting estimates - (cont’d) 28.1 Hedging (cont’d) Measurement of derivative financial instruments Derivative financial instruments are recognized initially at fair value; attributable transaction costs are rec- ognized in profit or loss as incurred. Cash-flow hedges Subsequent to the initial recognition, changes in the fair value of derivatives used to hedge cash flows are recognized through other comprehensive income directly in a hedging reserve, with respect to the part of the hedge that is effective. Regarding the portion of the hedge that is not effective, the changes in fair value are recognized in profit and loss. The amount accumulated in the hedging reserve is reclassified to profit and loss in the period in which the hedged cash flows impact profit or loss and is presented in the same line item in the statement of income as the hedged item. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, the hedge accounting is discontinued. The cumulative gain or loss previously recognized in a hedging reserve through other comprehensive income remains in the reserve until the forecasted transaction occurs or is no longer expected to occur. If the forecasted transaction is no longer expected to occur, the cumulative gain or loss in respect of the hedging instrument in the hedging reserve is reclassified to profit or loss. Economic hedge Hedge accounting is not applied with respect to derivative instruments used to economically hedge financial assets and liabilities denominated in foreign currency or CPI linked. Changes in the fair value of such deriv- atives are recognized in profit or loss as gain (loss) from changes in fair value or investment income. Derivatives that are not used for hedging Changes in the fair value of derivatives that are not used for hedging are recognized in profit or loss as gain (loss) from changes in fair value or investment income. 28.2 Securitization of assets Details of the securitization of asset agreements and accounting policy are set out in Note V.5 - Account receivables. 28.3 Segment reporting Reportable segments are identified based on operating segments which are determined based on the structure of the Group’s internal organization, management requirements and internal reporting system. 194 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 28. Other significant accounting policies and accounting estimates - (cont’d) 28.3 Segment reporting - (cont’d) Two or more operating segments may be aggregated into a single operating segment if the segments have similar economic characteristics and are same or similar in respect of the nature of each product and service, the nature of production processes, the type or class of customers for the products and services, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Inter-segment revenues are measured on the basis of actual transaction price for such transactions for seg- ment reporting. Segment accounting policies are consistent with those for the consolidated financial state- ments. 28.4 Profit distributions to shareholders Dividends which are approved after the balance sheet date are not recognized as a liability at the balance sheet date but are disclosed in the notes separately. 29. Changes in significant accounting policies and accounting estimates 29.1 Changes in significant accounting policies "Accounting Standards for Business Enterprises Interpretation No. 15" On 30 December 2021, the Ministry of Finance issued "Accounting Standards for Business Enterprises In- terpretation No. 15” (hereinafter referred to as “Interpretation No. 15”) which clarified the following ac- counting treatments: (4) The accounting treatment of the sale of the products or by-products produced before the assets being capable of operating in a predetermined manner or produced during the research and development pro- cess; (5) Disclosure requirements for centralized management of funds; and (6) costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. According to the Interpretation No.15, the second clarification was effective from 30 December 2021. Adop- tion of the interpretation has no significant impact on the Group’s financial statements. 29.2 Changes in significant accounting estimates There are no significant changes in accounting estimates in the reporting period. 195 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 ex- penses. Actual results may differ from these estimates. Estimates as well as underlying assumptions and uncertainties involved are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. Notes V.34, Note VIII, Note IX and Note XIII contain information about the assumptions and their risk factors relating to post-employment benefits – defined benefit plans, fair value of financial instruments and share-based payments. Other key sources of estimation uncertainty are as follows: 30.1 Expected credit loss of trade receivables As described in Note III.11, trade receivables are reviewed at each balance sheet date to determine whether credit risk on a receivable has increased significantly since initial recognition, lifetime expected losses is accrued for impairment provision. Evidence of impairment includes observable data that comes to the atten- tion of the Group about loss events such as a significant decline in the solvency of an individual debtor or the portfolio of debtors, and significant changes in the financial condition that have an adverse effect on the debtor. If there is objective evidence of a recovery in the value of receivables which can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed. 30.2 Provision for impairment of inventories As described in Note III.12, the net realisable value of inventories is under management’s regular review, and as a result, provision for impairment of inventories is recognized for the excess of inventories’ carrying amounts over their net realisable value. When making estimates of net realisable value, the Group takes into consideration the use of inventories held on hand and other information available to form the underlying assumptions, including the inventories’ market prices and the Group’s historical operating costs. The actual selling price, the costs of completion and the costs necessary to make the sale and relevant taxes may vary based on the changes in market conditions and product saleability, manufacturing technology and the actual use of the inventories, resulting in the changes in provision for impairment of inventories. The net profit or loss may then be affected in the period when the impairment of inventories is adjusted. 196 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 30. Significant accounting estimates and judgments - (cont’d) 30.3 Impairment of assets other than inventories and financial assets As described in Note III.20, if impairment indication exists, assets other than inventories and financial assets are assessed at balance sheet date to determine whether the carrying amount exceeds the recoverable amount of the assets. If any such case exists, an impairment loss is recognized. The recoverable amount of an asset (or an asset group) is the greater of its fair value less costs to sell and its present value of expected future cash flows. Since a market price of the asset (or the asset group) cannot be obtained reliably, the fair value of the asset cannot be estimated reliably, the recoverable amount is calculated based on the present value of estimated future cash flows. In assessing the present value of estimated future cash flows, significant judgements are exercised over the asset’s production, selling price, related operating expenses and discount rate to calculate the present value. All relevant materials which can be obtained are used for estimation of the recoverable amount, including the estimation of the production, selling price and related operating expenses based on reasonable and supportable assumptions. 30.4 Depreciation and amortisation of assets such as fixed assets and intangible assets As described in Note III.15 and III.18, assets such as fixed assets and intangible assets are depreciated and amortised over their useful lives after taking into account residual value. The estimated useful lives of the assets are regularly reviewed to determine the depreciation and amortisation costs charged in each reporting period. The useful lives of the assets are determined based on historical experience of similar assets and the estimated technical changes. If there have been significant changes in the factors used to determine the de- preciation or amortisation, the rate of depreciation or amortisation is revised prospectively. 30.5 Income taxes and deferred income tax The Company and Group companies are assessed for income tax purposes in a large number of jurisdictions and, therefore, Company management is required to use considerable judgment in determining the total pro- vision for taxes and attribution of income. When assessing whether there will be sufficient future taxable profits available against which the deductible temporary differences can be utilised, the Group recognizes deferred tax assets to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences can be utilised, using tax rates that would apply in the period when the asset would be utilised. In determining the amount of deferred tax assets, the Group makes reasonable judgements and estimates about the timing and amount of taxable profits to be utilised in the following periods, and of the tax rates applicable in the future according to the existing tax policies and other relevant regulations. If the actual timing and amount of future taxable profits or the actual applicable tax rates differ from the estimates made by management, the differences affect the amount of tax expenses. 197 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d) 30. Significant accounting estimates and judgments - (cont’d) 30.6 Contingent liabilities When assessing the possible outcomes of legal claims filed against the Company and its investee companies, the company positions are based on the opinions of their legal advisors. These assessments by the legal advisors are based on their professional judgment, considering the stage of the proceedings and the legal experience accumulated regarding the various matters. Since the results of the claims will be determined by the courts, the outcomes could be different from the assessments. In addition to the said claims, the Group is exposed to unasserted claims, inter alia, where there is doubt as to interpretation of the agreement and/or legal provision and/or the manner of their implementation. This exposure is brought to the Company’s attention in several ways, among others, by means of contacts made to Company personnel. In assessing the risk deriving from the unasserted claims, the Company relies on internal assessments by the parties dealing with these matters and by management, who weigh assessment of the prospects of a claim being filed, and the chances of its success, if filed. The assessment is based on experience gained with respect to the filing of claims and the analysis of the details of each claim. By their nature, in view of the preliminary stage of the clarification of the legal claim, the actual outcome could be different from the assessment made before the claim was filed. 30.7 Employee benefits The Group’s liabilities for long-term post-employment and other benefits are calculated according to the estimated future amount of the benefit to which the employee will be entitled in consideration for his services during the current period and prior periods. The benefit is stated at present value net of the fair value of the plan’s assets, based on actuarial assumptions. Changes in the actuarial assumptions could lead to material changes in the book value of the liabilities and in the operating results. 30.8 Derivative financial instruments The Group enters into transactions in derivative financial instruments for the purpose of hedging risks related to foreign currency and inflationary risks. The derivatives are recorded at their fair value. The fair value of derivative financial instruments is based on quotes from financial institutions. The reasonableness of the quotes is examined by discounting the future cash flows, based on the terms and length of the period to maturity of each contract, while using market interest rates of a similar instrument as of the measurement date. Changes in the assumptions and the calculation model could lead to material changes in the fair value of the assets and liabilities and in the results. 198 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 2021 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 27.5% ADAMA Northern Europe B.V. Nether- 25.0% lands ADAMA Italia S.R.L. Italy 27.9% Alligare Inc. U.S. 27.5% The VAT rate of the Group's subsidiaries is in the range between 2.5% to 27%. 199 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 and Hubei Provincial Office of the State Administration of Taxation. 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 and Jiangsu Provincial Office of the State Administration of Taxation. The applicable income tax rate from 2021 to 2023 is 15%. (2) Benefits under the Law for the Encouragement of Capital Investments Industrial enterprises of subsidiaries in Israel were granted “Approved Enterprise” or “Beneficiary Enterprise” status under the Israeli Law for the Encouragement of Capital Investments, 1959. Should a dividend be distributed from the retained earning produced in which the company was considered as an “Approved En- terprise” or “Beneficiary Enterprise”, the company may be liable for tax at the time of distribution. On December 29, 2010 the Knesset approved the Economic Policy Law for 2011-2012, which includes an amendment to the Law for the Encouragement of Capital Investments - 1959 (hereinafter - “the Amend- ment”). The Amendment is effective from January 1, 2011 and its provisions apply to preferred income derived or accrued in 2011 and thereafter by a preferred company, per the definition of these terms in the Amendment. The Amendment provides that only companies in Development Area A will be entitled to the grants track and that they will be entitled to receive benefits under this track and under the tax benefits track at the same time. The tax benefit tracks under the law constitute a preferred enterprise and a special preferred enterprise, which mainly provide a uniform and reduced tax rate for all the company’s income entitled to benefits. Tax rates on preferred income as from 2017 tax year are as follows: 7.5% for Development Area A and 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. 200 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements IV. Taxation - (cont’d) 1. Main types of taxes and corresponding tax rates - (cont’d) (2) Benefits under the Law for the Encouragement of Capital Investments - (cont’d) On December 21, 2016 the Knesset plenum passed the second and third reading of the Economic Efficiency Law (Legislative Amendments for Achieving Budget Objectives in the Years 2017 and 2018) – 2016 in which the Encouragement Law was also amended (hereinafter: “the Amendment”). The Amendment is ef- fective as from January 1, 2017 and added new tax benefit tracks for a “preferred technological enterprise” and a “special preferred technological enterprise” which award reduced tax rates to a technological industrial enterprise for the purpose of encouraging activity relating to the development of qualifying intangible assets. The benefits will be awarded to a “preferred company” that has a “preferred technological enterprise” or a “special preferred technological enterprise” with respect to taxable “preferred technological income” per its definition in the Encouragement Law. Preferred technological income that meets the conditions required in the law, will be subject to a reduced corporate tax rate of 12%, and if the preferred technological enterprise is located in Development Area A to a tax rate of 7.5%. Special preferred technological enterprise will be subject to a reduced corporate tax rate of 6% regardless of the development area in which the enterprise is located. In addition, as part of the amendment, a temporary provision was enacted, valid until June 30, 2021, which settles tax benefits continuation on income that is eligible to the Preferred Enterprise tax benefits as at June 30, 2016. ADAMA Agricultural Solutions Ltd. (hereinafter: “Solutions”) implement and act in accordance with the temporary provision. On May 16, 2017 the Knesset Finance Committee approved Encouragement of Capital Investment Regula- tions (Preferred Technological Income and Capital Gain of Technological Enterprise) – 2017 (hereinafter: “the Regulations”), which provides rules for applying the “preferred technological enterprise” and “special preferred technological enterprise” tax benefit tracks including the Nexus formula that provides the mecha- nism for allocating the technological income eligible for the benefits. Solutions, through a subsidiary, filed an application to the Israeli Tax Authority for settling its eligibility to the tax benefits in accordance with the amendment to the Encouragement Law. On November 15, 2021 the Economic Efficiency Law (Legislative Amendments for the 2021 and 2022 Budget Years) – 2021 was published as well as a Temporary Order to the Law for the Encouragement of Capital Investments – 1959 (hereinafter: “the temporary order”), which offers a reduced tax rate arrangement to companies that received an exemption from corporate tax under the aforesaid law. The temporary order provided that companies that choose to apply the temporary order, which is effective until November 14, 2022, will be entitled to a reduced tax rate on the “release” of exempt profits (hereinafter: “the beneficiary corporate tax rate”). The release of exempt profits makes it possible to distribute them at a reduced rate of corporate tax at the company level based on the rate of the profits being distributed pursuant to the condi- tions set forth in the Amendment. 201 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) The reduced corporate tax rate will be determined according to the rate of exempt profits the company chooses to release from its entire exempt profits, and will be between 40% and 70% of the corporate tax rate that would have applied to the revenue in the year it was produced if it had not been exempt, but in any event no less than 6%. Furthermore, a company that chooses to release its exempt profits and pay a beneficiary corporate tax rate will be required to invest in its enterprise, within a period of 5 years beginning from the tax year it elected, an amount calculated according to a formula provided in the temporary order (30% of the exempt income multiplied by the corporate tax rate and multiplied by the release rate). The investment will be made in productive assets (with the exclusion of buildings), research and development in Israel and sala- ries to new employees of the enterprise. Failure to comply with this condition will require the company to pay additional corporate tax. In addition, an amendment was made to Section 74 of the Law for the Encouragement of Capital Investments – 1959 with respect to identifying the sources of dividend distributions as from August 15, 2021. The amendment requires companies to allocate the sources of dividends between exempt profits and other profits, pro-rata, as well as the imposition of corporate tax and withholding tax on dividends accordingly. It is noted that the amendment to the section may contradict section 72a of the Law, which provides for stability in the benefits awarded to companies that chose this track. As of this date, Solutions is examining the effect of the amendment on its financial position and financial results. Solutions has not yet decided whether and how much accumulated profits will be “released”. Thus, in these financial statements the aforementioned amendment had no effect on Solutions current and deferred tax balances. (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. 202 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements 1. Cash at Bank and On Hand December 31 December 31 2021 2020 Cash on hand 1,196 4,590 Deposits in banks 5,758,284 3,830,481 Other cash and bank 59,355 28,815 5,818,835 3,863,886 Including cash and bank placed outside China 4,935,072 2,064,876 As at December 31, 2021 restricted cash and bank balances was 59,355 thousand RMB (as at December 31, 2020 28,815 thousand RMB) mainly including deposits that guarantee bank acceptance drafts. 2. Financial assets held for trading December 31 December 31 2021 2020 Bank deposits 1,479 1,253 1,479 1,253 3. Derivative financial assets December 31 December 31 2021 2020 Economic hedge 198,775 1,545,481 Accounting hedge derivatives 44,541 15,307 243,316 1,560,788 4. Bills Receivable December 31 December 31 2021 2020 Post-dated checks receivable 79,996 91,975 Bank acceptance draft 1,996 10,107 81,992 102,082 All bills receivables are due within 1 year. 203 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements – (cont'd) 5. Accounts Receivable a. By category December 31, 2021 Provision for expected Book value credit losses Carrying Amount Percentage (%) Amount Percentage (%) amount Account receivables assessed individually for impairment 290,224 3 143,827 50 146,397 Account receivables assessed collectively for impairment 8,300,941 97 84,845 1 8,216,096 8,591,165 100 228,672 3 8,362,493 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 December 31, 2021 Within 1 year (inclusive) 8,235,000 Over 1 year but within 2 years 122,949 Over 2 years but within 3 years 72,651 Over 3 years but within 4 years 31,553 Over 4 years but within 5 years 32,159 Over 5 years 96,853 8,591,165 204 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements – (cont'd) 5. Accounts Receivable – (cont'd) Main groups of account receivables assessed collectively for impairment based on geographical loca- tion: Geographical location A: Account receivables in geographical location A are grouped based on similar credit risk: December 31, 2021 Provision for expected Book value credit loss Percentage (%) Credit group A 1,449,790 5,602 0.08-0.62 Credit group B 793,486 6,867 0.87 Credit group C 204,873 8,938 4.36 Credit group D 36,139 754 2.09 2,484,288 22,161 0.89 Geographical location B: Account receivables in geographical location B are grouped based on aging analysis: December 31, 2021 Provision for expected Book value credit loss Percentage (%) Accounts receivable that are not overdue 304,566 2,706 0.9 Debts overdue less than 60 days 86,562 2,788 3.2 Debts overdue less than 180 days but more than 60 days 25,993 2,663 10.2 Debts overdue above 180 days 13,315 5,390 40.5 Legal Debtors 37,910 37,910 100.0 468,346 51,457 11.0 Other geographical locations: December 31, 2021 Provision for expected Book value credit loss Percentage (%) Other account receivables assessed collectively for impairment 5,348,307 11,227 0.0-3.6 205 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 loss (credit Lifetime expected losses has not oc- credit loss (credit curred) losses has occurred) Total January 1, 2021 51,896 310,378 362,274 Addition (write back) during the period, net (14,904) 9,291 (5,613) Write-off during the period - (102,995) (102,995) Exchange rate effect (898) (24,096) (24,994) Balance as of December 31, 2021 36,094 192,578 228,672 d. Five largest accounts receivable at December 31, 2021: Allowance of expected Proportion of Accounts credit losses (credit losses Name Closing balance receivable (%) has occurred) Customer 1 200,312 2 - Customer 2 116,717 1 - Customer 3 90,423 1 - Customer 4 86,303 1 12,492 Customer 5 70,498 1 - Total 564,253 6 12,492 e. Derecognition of accounts receivable due to transfer of financial assets Certain subsidiaries of the group entered into a securitization transaction with Rabobank International for sale of trade receivables (hereinafter – “the Securitization Program” and/or “the Securitization Transaction”). Pursuant to the Securitization Program, the companies will sell their trade receivables debts, in various dif- ferent currencies, to a foreign company that was set up for this purpose and that is not owned by the Adama Ltd. (hereinafter – “the Acquiring Company”). Acquisition of the trade receivables by the Acquiring Com- pany is financed by Cooperative Rabobank U.A.. The trade receivables included as part of the Securitization Transaction are trade receivables that meet the criteria provided in the agreement. Every year the credit facility is re approved in accordance with the Securitization Program. As at the report date, the Securitization agreement was approved up to October 31, 2022. 206 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements – (cont'd) 5. Accounts Receivable – (cont'd) e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd) The maximum scope of the securitization is adjusted for the seasonal changes in the scope of the Company’s activities, as follows: during the months March through June the maximum scope of the securitization is $350 million (as of December 31, 2021 – 2,225 million RMB), during the months July through September the maximum scope of the securitization is $300 million (as of December 31, 2021 – 1,913 million RMB) and during the months October through February the maximum scope of the securitization is $250 million (as of December 31, 2021 - 1,594 million RMB). In addition the company has uncommitted facility of $50 million (as of December 31, 2021 - 319 million RMB) which will be applicable each period. The proceeds received from those customers whose debts were sold are used for acquisition of new trade receivables. The price at which the trade receivables debts are sold is the amount of the debt sold less a discount calculated based on, among other things, the expected length of the period between the date of sale of the trade receiv- able and its anticipated repayment date. In the month following acquisition of the debt, the Acquiring Com- pany pays in cash most of the debt while the remainder is recorded as a subordinated note and as continuing involvement that is paid after collection of the debt sold. If the customer does not pay its debt on the antici- pated repayment date, the Company bears interest up to the earlier of the date on which the debt is actually repaid or the date on which debt collection is transferred to the insurance company (the actual costs are not significant and are not expected to be significant). The Acquiring Company bears 95% of the credit risk in respect of the customers whose debts were sold and will not have a right of recourse to the Company in respect of the amounts paid in cash, except regarding debts with respect to which a commercial dispute arises between the companies and their customers, that is, a dispute the source of which is a claim of non-fulfillment of an obligation of the seller in the supply agree- ment covering the product, such as: a failure to supply the correct product, a defect in the product, delin- quency in the supply date, and the like. The Acquiring Company appointed a policy manager who will manage for it the credit risk involved with the trade receivables sold, including an undertaking with an insurance company. Pursuant to the Receivables Servicing Agreement, the Group subsidiaries handle collection of the trade re- ceivables as part of the Securitization Transaction for the benefit of the Acquiring Company. As part of the agreement, Solutions is committed to comply with certain financial covenants, mainly the ratio of the liabilities to equity and profit ratios. As of December 31, 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 consoli- dated in the financial statements. The Company continues to recognize the trade receivables included in the Securitization Program based on the extent of its continuing involvement therein. In respect of the part of the trade receivables included in the securitization Program with respect to which cash proceeds were not yet received, however regarding which the Company has transferred the credit risk, a subordinated note is recorded. The continuing involvement and subordinated note recorded in the balance sheet as part of the “other receiv- ables” line item. - 207 - ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements – (cont'd) 5. Accounts Receivable – (cont'd) e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd) The loss from sale of the trade receivables is recorded at the time of sale in the statement of income in the “financing expenses”. The Company’s subsidiary in Brazil (hereinafter - “the subsidiary”) entered into a securitization agreement with Rabobank Brazil for sale of trade receivables. Under the agreement, the subsidiary will sell its trade receivables to a securitization structure (hereinafter - “the entity”) that was formed for this purpose where the subsidiary has subordinate rights of 5% of the entity's capital. As at the report date, the subsidiary agreement was approved up to September 1, 2022. The maximum secu- ritization scope as of December 31, 2021 is BRL 364 million (RMB 470 million). 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 has a pledged deposit with regards to the entity's right of recourse. The subsidiary continues to recognize the trade receivables sold to the entitiy based on the extent of its continuing involvement therein (5% right of recourse) and also recognizes an associated liability in the same amount. During the fourth quarter of 2021, the subsidiary has entered into an additional securitization agreement with Itau Bank and Farm investments, for sale of trade receivables to a securitization structure that was formed for this purpose where the subsidiary has mezzanine quotes of 10.5% of the entity's capital. As at the report date, the subsidiary agreement was approved up to November 10, 2025. The agreement has a maximum scope of BRL 306 million (RMB 342 million). The entity bears 100% of the credit risk in respect of the customers whose debts were sold (non-recourse), therefore the subsidiary has no continuing involvement in the those account receivables sold. In both agreements, the subsidiary handles the collection of receivables included in the securitization for the entities. The subsidiary does not control the entities and therefore the entities are not consolidated in the group's financial statements. The loss from the sale of the trade receivables is recorded at the time of sale to profit and loss under financing expenses. 208 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) f. Derecognition of accounts receivable due to transfer of financial assets - (cont'd) December 31 December 31 2021 2020 Accounts receivables derecognized 2,962,111 2,850,745 Continuing involvement 117,995 125,578 Subordinated note in respect of trade receivables 388,631 762,598 Liability in respect of trade receivables 98,836 22,002 Year ended December 31 2021 2020 Loss in respect of sale of trade receivables 93,307 73,673 6. Receivables financing December 31 December 31 2021 2020 Bank acceptance draft 120,157 109,483 120,157 109,483 As at December 31, 2021, bank acceptance endorsed but not yet due amounts to 670,411 thousands RMB. 7. Prepayments (1) The aging analysis of prepayments is as follows: December 31 December 31 2021 2020 Amount Percentage (%) Amount Percentage (%) Within 1 year (inclusive) 368,565 97 400,549 99 Over 1 year but within 2 years (inclusive) 8,850 2 3,037 1 Over 2 years but within 3 years (inclusive) 429 - 640 - Over 3 years 1,944 1 1,782 - 379,788 100 406,008 100 (2) Total of five largest prepayments by debtor at the end of the period: Percentage of prepayments Amount (%) December 31, 2021 90,265 24 209 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements – (cont'd) 8. Other Receivables (1) Other receivables by nature December 31 December 31 2021 2020 Dividends receivable 1,599 - Others 690,340 1,310,029 691,939 1,310,029 a. Others breakdown by categories December 31 December 31 2021 2020 Trade receivables as part of securitization transactions not yet eliminated 117,995 125,578 Subordinated note in respect of trade receivables 388,631 762,598 Financial institutions - 231,183 Receivables in respect of disposal of fixed assets 19,940 23,949 Other 174,624 182,867 Sub total 701,190 1,326,175 Provision for expected credit losses - other receivables (10,850) (16,146) 690,340 1,310,029 b. Other receivables by aging December 31 2021 Within 1 year (inclusive) 655,455 Over 1 year but within 2 years 10,548 Over 2 years but within 3 years 4,734 Over 3 years but within 4 years 11,543 Over 4 years but within 5 years 321 Over 5 years 18,589 701,190 210 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements – (cont'd) 8. Other Receivables - (cont'd) (2) Additions, recovery or reversal and written-off of provision for expected credit losses during the period: Year ended December 31, 2021 Balance as of January 1 2021, 16,146 Addition during the period 2,448 Written back during the period (7,719) Write-off during the period - Exchange rate effect (25) Balance as of December 31, 2021 10,850 (3) Five largest other receivables at December 31, 2021: Allowance of ex- Proportion of other re- pected credit Name Closing balance ceivables (%) losses Party 1 388,631 55 - Party 2 9,143 1 - Party 3 9,315 1 - Party 4 12,785 2 - Party 5 10,627 2 - Total 430,501 61 - 9. Inventories (1) Inventories by category: December 31, 2021 Provision for impair- Book value ment Carrying amount Raw materials 4,217,049 26,514 4,190,535 Work in progress 766,650 16,647 750,003 Finished goods 6,545,536 139,307 6,406,229 Others 415,047 11,652 403,395 11,944,282 194,120 11,750,162 December 31, 2020 Provision for impair- Book value ment Carrying amount Raw materials 3,060,965 42,945 3,018,020 Work in progress 704,391 - 704,391 Finished goods 6,488,658 153,577 6,335,081 Others 288,218 7,437 280,781 10,542,232 203,959 10,338,273 211 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements – (cont'd) 9. Inventories - (cont'd) (2) Provision for impairment of inventories: For the year ended December 31, 2021 January 1, First time Reversal or December 31, 2021 consolidation Provision write-off Other 2021 Raw material 42,945 2,341 13,960 )31,498( )1,234( 26,514 Work in progress - 5,608 11,762 )157( )566( 16,647 Finished goods 153,577 4,183 77,712 (93,379) (2,786) 139,307 Others 7,437 2,464 3,001 )1,064( )186( 11,652 203,959 14,596 106,435 (126,098) (4,772) 194,120 10. Other Current Assets December 31 December 31 2021 2020 Deductible VAT 615,406 499,136 Current tax assets 158,440 232,051 Short term investments 121,629 - Others 42,978 38,454 938,453 769,641 11. Long-Term Receivables December 31 December 31 2021 2020 Long term account receivables from sale of goods 56,234 95,329 56,234 95,329 212 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements – (cont'd) 12. Long-Term Equity Investments (1) Long-term equity investments by category: December 31 December 31 2021 2020 Investments in Joint ventures 15,335 14,081 Investments in Associate * - - 15,335 14,081 * The associate was liquidated in 2020. (2) Movements of long-term equity investments for the period are as follows: Declared dis- Change in January 1, Investment Other Compre- tribution of consolidation Balance at the 2021 income hensive income cash dividend scope end of the period Joint ven- tures Investee A 2,884 1,010 (68) (1,599) - 2,227 Investee B 933 - (84) - (849) - Investee C 10,264 4,913 (1201) (868) - 13,108 Sub-total 14,081 5,923 (1353) (2,467) (849) 15,335 13. Other equity investments December 31, December 31, Dividend received 2021 2020 during 2021 Investment A 84,720 85,495 1,808 Investment B 65,765 65,034 1,599 Investment C 1,633 1,671 - 152,118 152,200 3,407 Other equity investments are non-core businesses that are intended to be held in the foreseeable future. 213 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 347,361 900,321 2,050 6,795 1,256,527 Purchases 44,480 261,957 18,410 28,205 353,052 Transfer from construction in progress 226,360 688,823 1,232 3,417 919,832 Disposals (28,604) (157,214) (13,256) (21,463) (220,537) Currency translation adjustment (63,490) (265,512) (9,953) (13,085) (352,040) Balance as at December 31, 2021 3,825,676 15,410,751 120,698 375,442 19,732,567 Accumulated depreciation Balance as at January 1, 2021 (1,673,044) (8,647,241) (62,224) (293,523) (10,676,032) First time consolidation (12,402) (63,575) (349) (1,604) (77,930) Charge for the period (106,151) (668,171) (17,503) (36,298) (828,123) Disposals 22,527 135,606 11,069 21,444 190,646 Currency translation adjustment 34,220 164,297 2,405 10,386 211,308 Balance as at December 31, 2021 (1,734,850) (9,079,084) (66,602) (299,595) (11,180,131) Provision for impairment Balance as at January 1, 2021 (159,691) (363,008) (651) (235) (523,585) First time consolidation - (1,645) (8) - (1,653) Charge for the period - (384) - (548) (932) Disposals 3,948 16,274 8 8 20,238 Currency translation adjustment 180 1,695 5 5 1,885 Balance as at December 31, 2021 (155,563) (347,068) (646) (770) (504,047) Carrying amounts As at December 31, 2021 1,935,263 5,984,599 53,450 75,077 8,048,389 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. 214 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 15. Construction in Progress (1) Construction in progress December 31 December 31 2021 2020 Provision for im- Provision for im- Book value pairment Carrying amount Book value pairment Carrying amount 2,164,394 (20,994) 2,143,400 1,431,068 (25,740) 1,405,328 (2) Details and Movements of major construction projects in progress during year ended December 31, 2021 Actual Including: Currency Transfer cost to Project January 1, Interest translation to fixed December budget progress Budget 2021 Additions capitalized differences assets 31, 2021 (%) (%) Source of funds Project A 1,509,420 632,656 120,651 26,421 - (420,585) 332,722 57 57 Bank loan Project B 722,302 25,441 190,130 90 - - 215,571 30 30 Bank loan Project C 465,248 15,803 161,642 - (2,891) - 174,554 38 38 Internal finance Project D 338,008 56,460 190,427 7,574 (3,520) - 243,367 72 72 Internal finance Project E * 172,055 51,402 113,269 - - (40,012) 124,659 72 72 Internal finance Project G 138,812 53,922 71,751 2,968 (610) (125,063) - 100 100 Internal finance Project F 138,000 39,786 59,829 - - - 99,615 72 72 Internal finance Project H 133,890 59,699 42,419 - (1,862) - 100,256 75 75 Internal finance Project I 96,401 32,300 40,944 - - - 73,244 76 76 Internal finance Project J 82,247 54,618 26,513 - - - 81,131 99 99 Internal finance * As of December 31, 2021 Project E include impairment of RMB 21 million. 215 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 16. Right-of-use assets Land & Build- Machinery & Office & other ings equipment Motor vehicles equipment Total Cost Balance as at January 1, 2021 468,521 45,329 223,914 3,445 741,209 Additions 64,577 768 105,146 1,832 172,323 Disposals (19,051) (768) (63,933) (968) (84,720) Currency translation adjustment (21,015) (1,070) (7,016) (121) (29,222) Balance as at December 31, 2021 493,032 44,259 258,111 4,188 799,590 Accumulated depreciation Balance as at January 1, 2021 (145,226) (12,553) (98,233) (1,579) (257,591) Charge for the period (78,816) (5,948) (77,796) (813) (163,373) Disposals 17,596 742 57,467 658 76,463 Currency translation adjustment 5,296 366 3,107 57 8,826 Balance as at December 31, 2021 (201,150) (17,393) (115,455) (1,677) (335,675) Provision for impairment Balance as at January 1, 2021 - - - - - Balance as at December 31, 2021 - - - - - Carrying amounts As at December 31, 2021 291,882 26,866 142,656 2,511 463,915 As at January 1, 2021 323,295 32,776 125,681 1,866 483,618 216 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 17. Intangible Assets Marketing Intangible assets rights, trade- Product registra- on Purchase of name and trade- Customers rela- tion Products Software marks tions Land use rights (1) Others(2) Total Costs Balance as at January 1, 2021 10,693,031 3,918,407 856,741 744,060 451,008 392,876 320,747 17,376,870 First time consolidation (3) 14,638 - 2,833 - 98,711 85,500 190,338 392,020 Purchases 561,514 - 117,911 1,019 - 20,627 33,246 734,317 Currency translation adjustment (257,833) (89,602) (22,926) (17,622) (11,480) (826) (7,640) (407,929) Transfer from construction in progress - - 46,712 - - - - 46,712 Disposal (217,503) - (3,058) (510) - - - (221,071) Balance as at December 31, 2021 10,793,847 3,828,805 998,213 726,947 538,239 498,177 536,691 17,920,919 Accumulated amortization Balance as at January 1, 2021 (8,106,183) (2,456,612) (538,255) (443,625) (220,302) (71,468) (183,235) (12,019,680) First time consolidation (3) (1,879) - (141) - - (1,162) (609) (3,791) Charge for the period (516,925) (251,655) (75,220) (24,830) (35,582) (10,090) (36,274) (950,576) Currency translation adjustment 198,327 59,139 14,542 10,909 6,579 - 5,110 294,606 Disposal 212,084 - 2,877 67 - - - 215,028 Balance as at December 31, 2021 (8,214,576) (2,649,128) (596,197) (457,479) (249,305) (82,720) (215,008) (12,464,413) Provision for impairment Balance as at January 1, 2021 (81,679) (48,806) - - - - (250) (130,735) Charge for the period (2,497) - - - - - - (2,497) Disposal - - - - - - - - Currency translation adjustment 1,898 1,116 - - - - - 3,014 Balance as at December 31, 2021 (82,278) (47,690) - - - - (250) (130,218) Carrying amount As at December 31, 2021 2,496,993 1,131,987 402,016 269,468 288,934 415,457 321,433 5,326,288 As at January 1, 2021 2,505,169 1,412,989 318,486 300,435 230,706 321,408 137,262 5,226,455 (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 and exclusivity agreements. (3) For further information refer to note VI. – Changes in consolidation scope. 217 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 18. Goodwill Changes in goodwill The Group allocates goodwill to two cash generating units ("CGU"), Crop Protection (Agro) and a non-core ac- tivity included in the Intermediates and ingredients segment. At the end of the year, or more frequently whether indicators for impairment exists, the Group estimates the recoverable amount of each CGU for which goodwill has been allocated to using the DCF model based on the Group business plan. The discount rate used in the DCF model is determined based on the company's cost of equity and cost of debt, taking into account the comprehensive risk factors. The carrying amount of goodwill is mainly allocated to Agro units, which includes RMB 127 million from the acquisitions of Adama Huifeng (shanghai) Agricultural Technology Co., Ltd and Adama Huifeng (Jiangsu) Co. Ltd. Total amount of goodwill allocated to the Agro units amounts to RMB 4,346 thousand. The goodwill allo- cated to non-core CGU is not significant. As of December 31, 2021 the fair value of the cash generating units to which goodwill has been allocated to exceeds its carrying amount. Change dur- Currency Balance at De- January 1, ing the year translation cember 31, 2021 (*) adjustment 2021 Book value 4,584,226 (74,695) (99,932) 4,409,599 Impairment provision - - - - Carrying amount 4,584,226 (74,695) (99,932) 4,409,599 * For further information regarding the changes in goodwill during the period see note VI. – Changes in consoli- dation scope. 19. Deferred Tax Assets and Deferred Tax Liabilities (1) Deferred tax assets without taking into consideration of the offsetting of balances within the same tax jurisdiction December 31 December 31 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 1,378,984 197,354 785,259 142,312 Deferred tax assets in respect of inven- tories 1,117,094 294,043 1,555,528 422,995 Deferred tax assets in respect of em- ployee benefits 1,009,387 150,742 910,081 128,676 Other deferred tax asset 1,375,455 331,258 1,569,188 366,652 4,880,920 973,397 4,820,056 1,060,635 218 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 19. Deferred Tax Assets and Deferred Tax Liabilities - (cont’d) (2) Deferred tax liabilities without taking into consideration of the offsetting of balances within the same tax jurisdiction December 31 December 31 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 3,392,987 630,460 3,512,629 618,904 3,392,987 630,460 3,512,629 618,904 (3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting December 31 December 31 2021 2020 The offset The offset amount of Deferred tax amount of de- deferred tax assets or lia- ferred tax as- Deferred tax assets and li- bilities after sets and liabili- assets or liabili- abilities offset ties ties after offset Presented as: Deferred tax assets 250,322 723,075 286,962 773,673 Deferred tax liabilities 250,322 380,138 286,962 331,942 (4) Details of unrecognized deferred tax assets December 31 December 31 2021 2020 Deductible temporary differences 496,972 523,951 Deductible losses carry forward 308,812 103,402 805,784 627,353 (5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets December 31 December 31 2021 2020 2021 - 2,388 2022 1,596 1,626 2023 2,068 2,105 2024 19,063 1,785 2025 5,751 5,885 After 2025 280,334 89,613 308,812 103,402 219 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 19. Deferred Tax Assets and Deferred Tax Liabilities - (cont'd) (6) Unrecognized deferred tax liabilities When calculating the deferred taxes, taxes that would have applied in the event of realizing investments in subsidiaries were not taken into account since it is the Company’s intention to hold these investments and not realize them. 20. Other Non-Current Assets December 31 December 31 2021 2020 Judicial deposits 115,649 93,182 Assets related to securitization 74,169 31,979 Advances in respect of non-current assets 165,555 40,857 Others 149,252 91,314 504,625 257,332 21. Short-Term Loans Short-term loans by category: December 31 December 31 2021 2020 Unsecured loans 874,755 1,205,498 874,755 1,205,498 22. Derivative financial liabilities December 31 December 31 2021 2020 Economic hedge 167,987 1,197,274 Accounting hedge derivatives 8,219 266,340 176,206 1,463,614 220 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 23. Bills Payables December 31 December 31 2021 2020 Post-dated checks payables 371,467 264,402 Note payables draft 121,909 105,389 493,376 369,791 As at December 31, 2021, none of the bills payable are overdue. 24. Accounts payable December 31 December 31 2021 2020 Within 1 year (including 1 year) 6,238,230 4,523,845 1-2 years (including 2 years) 30,707 7,454 2-3 years (including 3 years) 3,181 4,349 Over 3 years 22,045 21,358 6,294,163 4,557,006 There are no significant accounts payables aging over one year. 25. Contract liabilities December 31 December 31 2021 2020 Discount for customers 763,964 633,882 Advances from customers 617,347 458,371 1,381,311 1,092,253 26. Employee Benefits Payable December 31 December 31 2021 2020 Short-term employee benefits 852,806 660,144 Post-employment benefits 44,260 122,216 Share based payment (See note XIII) 112,176 85,900 Other benefits within one year 205,562 306,506 1,214,804 1,174,766 Current maturities 33,175 34,068 1,247,979 1,208,834 221 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 27. Taxes Payable December 31 December 31 2021 2020 Corporate income tax 174,705 168,033 VAT 153,336 166,073 Others 40,641 24,882 368,682 358,988 28. Other Payables December 31 December 31 2021 2020 Dividends payables 750 3,780 Other payables 1,341,438 1,071,941 1,342,188 1,075,721 (1) Other payables December 31 December 31 2021 2020 Accrued expenses 621,024 541,250 Payables in respect of intangible assets 115,987 135,176 Financial institutions 6,127 111,863 Liability in respect of securitization transactions 98,836 22,002 Hold-back payment due to acquistions 254,000 - Others 245,464 261,650 1,341,438 1,071,941 As at December 31, 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: December 31 December 31 2021 2020 Long-term loans due within one year 1,099,643 587,864 Lease liabilities due within one year 139,162 146,178 Debentures payable due within one year 556,949 538,539 1,795,754 1,272,581 222 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 30. Other Current Liabilities December 31 December 31 2021 2020 Put options to holders of non-controlling interests 170,422 87,388 Provision in respect of returns 196,831 194,775 Provision in respect of claims 45,293 33,036 Others 363 398 412,909 315,597 31. Long-Term Loans Long-term loans by category December 31 December 31 2021 Interest range 2020 Interest range Long term loans Guaranteed loans 415,887 3.95% - 4.1% - - Unsecured loans 4,182,668 1.36% - 4.05% 2,947,492 1.4% - 4.7% Total Long term loans 4,598,555 2,947,492 Less: Long term loans from banks due within 1 year (1,099,643) (559,864) Long term loans, net 3,498,912 2,387,628 * For more detailes regarding the guaranteed loans – see note X. related parties and related parties transac- tions. For the maturity analysis, see note VIII.C - Liquidity risk. 32. Debentures Payable December 31 December 31 2021 2020 Debentures Series B 8,354,080 8,616,652 Current maturities (556,949) (538,539) 7,797,131 8,078,113 December 31 2021 First year (current maturities) 556,949 Second year 556,949 Third year 556,949 Fourth year 556,949 Fifth year and thereafter 6,126,284 8,354,080 223 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 32. Debentures Payable - (cont'd) Movements of debentures payable: For the year ended December 31, 2021: Balance at Amortization CPI and Repayment Currency Balance at Maturity Face value Face value Issuance Maturity Issuance January 1, of discounts exchange during the translation December period in RMB NIS date period amount 2021 or premium rate effect period adjustment 31, 2021 Debentures November Series B 2,673,640 1,650,000 4.12.2006 2020-2036 3,043,742 3,611,389 225 204,961 (235,836) (78,107) 3,502,632 Debentures November Series B 843,846 513,527 16.1.2012 2020-2036 842,579 1,074,338 11,279 61,081 (77,163) (23,200) 1,046,335 Debentures November Series B 995,516 600,000 7.1.2013 2020-2036 1,120,339 1,335,327 4,927 75,708 (90,155) (28,856) 1,296,951 Debentures November Series B 832,778 533,330 1.2.2015 2020-2036 1,047,439 1,255,064 (3,095) 71,232 (80,139) (27,152) 1,215,910 Debentures November Series B 418,172 266,665 1-6.2015 2020-2036 556,941 687,307 (8,416) 39,045 (40,069) (14,877) 662,990 Debentures November Series B 497,989 246,499 5.5.2020 2020-2036 692,896 653,227 (9,963) 37,175 (37,042) (14,135) 629,262 8,616,652 (5,043) 489,202 (560,404) (186,327) 8,354,080 Series B debentures, in amount of NIS 3,810 million par value (3,730 million par value, net of self-purchased), linked to the CPI and bear interest at the base annual rate of 5.15%. The debenture principal shall be repaid in 17 equal payments in the years 2020 through 2036. On May 5, 2020, the Company issued debentures through an expansion of Series B totaling NIS 246.5 million par value, in consideration for 115.6% of their par value. The total net proceeds amounted to $98 million. The issuance costs were $341 thousand. On November 30, 2020 through 2021, the Company repaid a total of NIS 438.8 million par value Series B debentures, which amounted to about $165.7 million, as payments of the debenture principal of Series B (approximately RMB 1,000 million). 224 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 33. Lease liabilities December 31 December 31 2021 Interest range 2020 Interest range Lease liabilities 501,248 1.3%-6.1% 525,368 1.3%-6.1% Less: Lease liabilities due within one year (139,162) (146,178) Long term lease liabilities, net 362,086 379,190 34. Long-Term Employee Benefits Payable Post-employment benefit plans – defined benefit plan and early retirement December 31 December 31 2021 2020 Total present value of obligation 687,759 594,165 Less: fair value of plan's assets (86,282) )92,634( Net liability related to Post-employment benefits 601,477 501,531 Termination benefits 91,912 99,466 Total recognized liability for defined benefit plan, net (1) 693,389 600,997 Share based payment (See note XIII) 5,674 21,088 Other long-term employee benefits 123,826 57,738 Total long-term employee benefits, net 822,889 679,823 Including: Long-term employee benefits payable due within one year 30,531 34,068 792,358 645,755 (1) Movement in the net liability and assets in respect of defined benefit plans, early retirement and their components Defined benefit obli- gation and early re- Fair value of plan's tirement assets Total 2021 2020 2021 2020 2021 2020 Balance as at January 1, 2021 693,631 721,931 92,634 104,448 600,997 617,483 Expense/income recognized in profit and loss: Current service cost 31,070 34,181 (1,310) - 32,380 34,181 Interest costs 17,836 22,932 2,077 3,270 15,759 19,662 Losses (gains) on curtailments and settlements 24,584 54,959 - - 24,584 54,959 Changes in exchange rates 17,662 41,922 3,283 7,409 14,379 34,513 Actuarial gain (losses) due to early retirement (11,391) )4,670( - - (11,391) (4,670) Included in other comprehensive income: Actuarial gain (losses) as a result of changes in actu- arial assumptions 39,638 )43,604( 6,077 (7,941) 33,561 (35,663) Foreign currency translation differences in respect of foreign operations (16,030) )42,276( (2,152) (6,584) (13,878) (35,692) Additional movements: Benefits paid (117,368) (95,546) (18,611) (13,212) (98,757) (82,334) Classification from short term 100,039 - - - 100,039 - Contributions paid by the Group - - 4,284 5,244 (4,284) (5,244) First time consolidation - 3,802 - - - 3,802 Balance as at December 31, 2021 779,671 693,631 86,282 92,634 693,389 600,997 225 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 34. Long-Term Employee Benefits Payable - (cont'd) Post-employment benefit plans – defined benefit plan and early retirement - (cont'd) (2) Actuarial assumptions and sensitivity analysis The principal actuarial assumptions at the reporting date for defined benefit plan December 31 December 31 2021 2020 Discount rate (%)* (0.8%)-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 December 31, 2021 Increase of 1% Decrease of 1% Change in defined benefit obligation (60,732) 74,560 35. Provisions December 31 December 31 2021 2020 Liabilities in respect of contingencies* 104,220 77,138 Provision in respect of site restoration 62,370 79,706 Long-term liability in respect of business combinations 17,411 3,954 Other 2,429 2,453 186,430 163,251 * Liabilities in respect of contingencies includes obligations of pending litigations, where an outflow of re- sources had been reliably estimated. 226 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 36. Other Non-Current Liabilities December 31 December 31 2021 2020 Put options to holders of non- controlling interests * 1,341,362 290,260 Long term loans – others 318,786 171,770 1,660,148 462,030 Current maturities - (28,000) 1,660,148 434,030 * For further information see note VI.1 – Change in consolidation Scope. 37. Share Capital Balance at Balance at Janu- Issuance of new December 31, ary 1, 2021 shares Buyback of shares 2021 Share capital 2,344,121 - (14,309) 2,329,812 * Following the approval and execution of the repurchase plan for part of the Company’s domestically listed foreign shares (B share) on 2020 and the repurchase of 14,309,536 B-Shares, the Company cancelled said amount of B-Shares at the Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. on June 17, 2021. 38. Capital Reserve Balance at Balance at Janu- Additions during Reductions during December 31, ary 1, 2021 the period the period 2021 Share premiums 12,652,610 - (46,048) 12,606,562 Other capital reserve 370,609 - - 370,609 13,023,219 - (46,048) 12,977,171 * See note 37 above. 227 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 39. Other Comprehensive Income, net of tax Attributable to shareholders of the company Less: Balance at transfer Less: In- January 1, Before tax to profit come tax ex- Net-of-tax Balance at Decem- 2021 amount or loss penses amount ber 31, 2021 Items that will not be re- classified to profit or loss 49,933 (34,220) - (2,958) (31,262) 18,671 Re-measurement of changes in liabilities under defined benefit plans (5,258) (33,561) - (2,958) (30,603) (35,861) Changes in fair value of other equity investment 55,191 (659) - - (659) 54,532 Items that may be reclassi- fied to profit or loss (121,988) (486,819) (192,468) 34,716 (329,067) (451,055) Effective portion of gain or loss of cash flow hedge (220,719) 94,922 (192,468) 34,716 252,674 31,955 Translation difference of for- eign financial statements 98,731 (581,741) - - (581,741) (483,010) (72,055) (521,039) (192,468) 31,758 (360,329) (432,384) 40. Surplus reserve Additions Reductions Balance at Balance at during the during the December 31, January 1, 2021 period period 2021 Statutory surplus reserve 236,348 - - 236,348 Discretional surplus reserve 3,814 - - 3,814 240,162 - - 240,162 228 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 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 157,397 352,753 Dividends to non-controlling Interest (42,357) (34,865) Dividend to the shareholders of the company (Note 1 & 2) (37,277) (29,359) Retained earnings as at December 31 5,940,465 5,862,702 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. Note 3: On March 29, 2022, after obtaining the approval of the 9th meeting of the Company's 9th Board of Directors, the Company declared RMB 0.08 (before tax) per 10 shares as cash dividend to all shareholders, resulting in a total cash dividend of 18,638 thousand RMB (before tax). No shares were distributed as share dividend and no reserve was transferred to equity capital. 229 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 42. Operating Income and Cost of Sales Year ended December 31 Year ended December 31 2021 2020 Income Cost of sales * Income Cost of sales Principal activities 30,971,009 23,375,892 28,385,744 20,033,482 Other businesses 67,596 36,627 59,089 37,553 31,038,605 23,412,519 28,444,833 20,071,035 * According to the Q&A issued by the Ministry of Finance during the year, the transportation expenses in- curred before the transfer of control over goods to customers in order to fulfil the contract does not consti- tute a separate performance obligation and shall be regarded as the cost to fulfil the contract. Therefore, starting from 2021, the transportation expenses are recorded as cost of sales. 43. Taxes and Surcharges Year ended December 31 2021 2020 Tax on turnover 26,123 24,690 Others 80,159 63,901 106,282 88,591 44. Selling and Distribution Expenses Year ended December 31 2021 2020 Salaries and related expense 1,772,447 1,638,087 Depreciation and amortization 1,012,691 1,404,220 Transportation and Commissions * 33,148 771,765 Advertising and sales promotion 306,292 302,921 Travel expenses 87,212 70,999 Warehouse expenses 155,557 154,425 Registration 123,587 150,921 Professional services 101,275 88,307 Insurance 100,689 83,293 Others 326,359 280,407 4,019,257 4,945,345 * See note 42 above. 230 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 45. General and Administrative Expenses Year ended December 31 2021 2020 Salaries and related expenses 657,074 518,889 Idleness expenses * - 134,164 Professional services 111,610 105,270 Depreciation and amortization 89,949 86,730 IT systems 107,641 95,734 Office rent, maintenance and expenses 43,525 37,522 Other 79,800 65,399 1,089,599 1,043,708 46. Research and development expenses Year ended December 31 2021 2020 Salaries and related expenses 227,261 218,596 Field trial 45,303 45,828 Professional services 43,894 61,927 Depreciation and amortization 55,086 44,112 Materials 65,950 53,596 Office rent, maintenance and expenses 10,739 7,833 Other 53,144 46,886 501,377 478,778 47. Financial expenses, net Year ended December 31 2021 2020 Interest expenses on debentures and loans 682,919 700,658 CPI expense (income) in respect of debentures 212,883 (57,101) Loss in respect of sale of trade receivables 93,307 73,673 Interest expense in respect of post-employment benefits and early retire- ment, net 18,833 19,473 Revaluation of put option, net 141,676 10,525 Interest income from customers, banks and others (65,059) (64,022) Exchange rate differences, net 813,567 1,111,631 Interest expense on lease liabilities 25,500 24,251 Others 15,796 28,101 1,939,422 1,847,189 231 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 48. Investment income, net Year ended December 31 2021 2020 Investment income (expenses) from disposal of derivatives 918,779 125,300 Income from long-term equity investments accounted for using the equity method 5,923 15,584 Gain from change in consolidation scope - 58,995 Other 4,245 6,623 928,947 206,502 49. Gain (loss) from Changes in Fair Value Year ended December 31 2021 2020 Gain (loss) from changes in fair value of derivative financial instru- ments (313,141) 555,223 Others (7,953) (14,525) (321,094) 540,698 50. Credit impairment reversal (losses) Year ended December 31 2021 2020 Bills receivable and accounts receivable 5,613 (24,435) Other receivables 5,271 (1,514) 10,884 (25,949) 51. Asset impairment reversal (losses) Year ended December 31 2021 2020 Inventories (66,838) (66,351) Fixed assets (932) (39,594) Construction in progress - (17,265) Intangible asset (2,497) (173) Long-term equity investment - (40,077) Other - (694) (70,267) (164,154) 232 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 52. Gain from Disposal of Assets Year ended December 31 Included in non-recurring 2021 2020 items Gain from disposal of fixed assets 5,698 4,134 5,698 Gain (loss) from disposal of intangible assets (8,302) 6,616 (8,302) (2,604) 10,750 (2,604) 53. Income Tax Expenses Year ended December 31 2021 2020 Current year 380,504 327,341 Deferred tax expenses (income) (66) (39,919) Adjustments for previous years, net 51 (64,963) 380,489 222,459 (1) Reconciliation between income tax expense and accounting profit is as follows: Year ended December 31 2021 2020 Profit before taxes 543,802 575,212 Statutory tax in china 25% 25% Tax calculated according to statutory tax in china 135,951 143,803 Tax benefits from Approved Enterprises (32,837) (26,140) Difference between measurement basis of income for financial statement and for tax purposes 34,715 104,890 Taxable income and temporary differences at other tax rate 91,431 (20,873) Taxes in respect of prior years 51 (64,963) Utilization of tax losses prior years for which deferred taxes were not created (52) (2,968) Temporary differences and losses in the report year for which de- ferred taxes were not created 38,527 23,293 Non-deductible expenses and other differences 48,139 34,704 Neutralization of tax calculated in respect of the Company’s share in results of equity accounted investees (1,913) (5,246) Effect of change in tax rate in respect of deferred taxes 71,033 38,775 Creation and reversal of deferred taxes for tax losses and temporary differences from previous years (4,556) (2,816) Income tax expenses 380,489 222,459 54. Other comprehensive income Details of the Other comprehensive income are set out in Note V.39 233 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 55. Government grants Amount recognized in the profit and loss statements during the year ended December 31 Category Presentation accounts 2021 2020 Government grants related to income Non-Operating income 19,377 17,272 Government grants related to assets Fixed assets, Intangible assets 19,166 21,452 56. Notes to items in the cash flow statements (1) Cash received relating to other operating activities Year ended December 31 2021 2020 Derivatives transactions 191,485 404,824 Financial institutions 441,306 126,770 Interest income 39,316 53,895 Government subsidies 19,856 12,759 Others 172,885 94,964 864,848 693,212 (2) Cash paid relating to other operating activities Year ended December 31 2021 2020 Transportation, Commissions and Warehouse 189,988 847,272 Advertising and sales promotion 286,520 297,623 Professional services 242,003 246,200 Financial institutions 211,211 369,655 IT and Communication 186,169 184,149 Registration and Field trials 162,585 166,551 Derivatives transactions 347,874 183,065 Travel 91,581 93,357 Insurance 120,444 103,038 Others 693,006 554,319 2,531,381 3,045,229 (3) Cash received relating to other investing activities Year ended December 31 2021 2020 Dividend received from other equity investment 1,808 2,583 Investment grant 6,754 640 8,562 3,223 234 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 56. Notes to items in the cash flow statements - (cont'd) (4) Cash paid relating to other investing activities Year ended December 31 2021 2020 Increase in securitization facility 51,121 31,483 Increase in short and long term investments 126,355 16,865 177,476 48,348 (5) Cash received from other financing activities Year ended December 31 2021 2020 Cash received in respect of hedging transactions on debentures 777,968 186,727 Deposit for issuing bills payables 27,234 34,011 Borrowing from related party * 319,742 - 1,124,944 220,738 * For more detailes regarding the borrowing from related party – see note X. related parties and related par- ties transactions. (6) Cash paid relating to other financing activities Year ended December 31 2021 2020 Repayment of lease liability 161,400 160,522 Payment in respect of hedging transactions on debentures - 154,335 Repurchase of treasury shares - 60,357 Repayment of loan from others 171,770 - Deposit for issuing bills payable 57,774 34,144 390,944 409,358 235 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 57. Supplementary Information on Cash Flow Statement (1) Supplementary information on Cash Flow Statement a. Reconciliation of net profit to cash flows from operating activities: Year ended December 31 2021 2020 Net profit 163,313 352,753 Add: Impairment provisions for assets 70,267 164,154 Credit impairment losses (gain) (10,884) 25,949 Depreciation of fixed assets and investment property 828,561 768,076 Depreciation of right-of-use asset 163,373 163,787 Amortization of intangible asset 950,576 1,325,395 Gains on disposal of fixed assets, intangible assets, and other long- term assets, net 2,604 (10,750) Losses (gains) from changes in fair value 321,094 (540,698) Financial expenses 1,193,967 1,398,807 Investment income, net (43,939) (286,930) Increase in deferred tax assets, net 37,957 (38,515) Increase in deferred tax liabilities, net (38,023) (1,404) Increase in inventories, net (1,456,207) (939,779) Increase in operating receivables, net (142,169) (1,173,437) Increase in operating payables, net 2,507,502 796,618 Others 13,883 18,989 Net cash flow from operating activities 4,561,875 2,023,015 b. Net increase (decrease) in cash and cash equivalents Year ended December 31 2021 2020 Closing balance of cash 5,759,480 3,835,071 Less: Opening balance of cash 3,835,071 4,319,907 Increase in cash and cash equivalents 1,924,409 (484,836) (2) Information on acquisition or disposal of subsidiaries and other business units Year ended De- cember 31 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 655,039 236 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 57. Supplementary Information on Cash Flow Statement - (cont'd) (3) Details of cash and cash equivalents Year ended December 31 2021 2020 Cash on hand 1,196 4,590 Bank deposits available on demand without restrictions 5,758,284 3,830,481 5,759,480 3,835,071 58. Assets with Restricted Ownership or Right of Use December 31 2021 Reason Cash 59,355 Pledged Other non-current assets 123,658 Guarantees 183,013 237 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 59. Foreign currencies denominated items (1) Foreign currencies denominated items As at December 31, 2021 Foreign currency at the end of the pe- RMB at the end of riod Exchange rate the period Cash and bank balances EUR 64,679 7.216 466,727 BRL 416,235 1.142 475,340 ILS 90,942 2.050 186,432 USD 17,671 6.376 112,669 PLN 53,345 1.570 83,751 ZAR 119,624 0.400 47,850 ARS 699,065 0.062 43,342 RON 24,288 1.459 35,436 RUB 406,933 0.086 34,996 GBP 3,136 8.617 27,020 CAD 3,674 5.007 18,394 HUF 737,668 0.020 14,753 Other 187,567 Total 1,734,277 Bills and Accounts receivable BRL 1,564,573 1.142 1,786,742 EUR 91,418 7.216 659,670 ZAR 493,304 0.400 197,322 RON 104,922 1.459 153,081 TRY 294,165 0.491 144,435 RUB 1,657,756 0.086 142,567 USD 46,361 6.376 295,600 PLN 35,289 1.570 55,403 ILS 22,426 2.050 45,973 CAD 7,419 5.007 37,145 HUF 1,505,940 0.020 30,119 GBP 3,238 8.617 27,901 Other 280,541 Total 3,856,499 Other receivables EUR 36,813 7.216 265,642 ILS 65,111 2.050 133,477 GBP 15,020 8.617 129,429 BRL 26,849 1.142 30,661 Other 30,248 Total 589,457 Other current assets ILS 95,147 2.050 195,052 BRL 135,861 1.142 155,153 EUR 6,735 7.216 48,602 CLP 1,654,950 0.007 11,585 ARS 157,644 0.062 9,774 Other 73,205 Total 493,371 238 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 59. Foreign currencies denominated items - (cont'd) (1) Foreign currencies denominated items - (cont'd) As at December 31, 2021 Foreign currency at RMB at the end of the end of the period Exchange rate the period Long-term receivables BRL 49,242 1.142 56,234 Total 56,234 Other non-current assets BRL 128,787 1.142 147,075 Other 3,902 Total 150,977 Short-term loans TRY 127,618 0.491 62,660 ARS 678,806 0.062 42,086 UAH 84,900 0.234 19,867 EUR 1,352 7.216 9,755 Other 325 Total 134,693 Bills and Accounts payable ILS 707,525 2.050 1,450,427 EUR 59,020 7.216 425,890 BRL 179,335 1.142 204,800 USD 10,557 6.376 67,310 VND 97,168,500 0.000 27,352 UAH 109,858 0.234 25,707 Other 188,007 Total 2,389,493 Other payables ILS 101,557 2.050 208,191 BRL 74,242 1.142 84,784 EUR 7,159 7.216 51,660 ILS CPI 17,760 2.050 36,407 PLN 19,981 1.570 31,370 UAH 89,832 0.234 21,021 ZAR 43,052 0.400 17,221 GBP 1,370 8.617 11,805 OTHER 58,877 TOTAL 521,336 Contract liabilities EUR 34,766 7.216 250,871 BRL 65,102 1.142 74,347 CAD 13,245 5.007 66,320 TRY 43,942 0.491 21,575 USD 2,346 6.376 14,957 Other 49,979 Total 478,049 239 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 59. Foreign currencies denominated items - (cont'd) (1) Foreign currencies denominated items - (cont'd) As at December 31, 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 294,253 2.050 603,218 EUR 24,534 7.216 177,034 Other 35,073 Total 815,325 Other current liabilities EUR 4,494 7.216 32,427 ILS 2,376 2.050 4,871 Other 6,172 Total 43,470 Long-term loan EUR 22,842 7.216 164,825 Total 164,825 Debentures payable ILS CPI 3,803,478 2.050 7,797,130 Total 7,797,130 Provision and Long-term payables BRL 73,504 1.142 83,942 EUR 372 7.216 2,684 Total 86,626 Other non-current liabilities USD 8,998 6.376 57,369 EUR 6,412 7.216 46,269 ILS CPI 17,118 2.050 35,092 ILS 6,142 2.050 12,592 GBP 1,002 8.617 8,633 Other 40,485 Total 200,440 240 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements V. Notes to the consolidated financial statements - (cont'd) 59. Foreign currencies denominated items - (cont'd) (2) Major foreign operations Registration & Principal place of Functional Name of the Subsidiary business Business nature currency ADAMA France S.A.S France Distribution USD ADAMA Brasil S/A Brazil Manufacturing; Distribution; Regis- USD tration ADAMA Deutschland GmbH Germany Distribution; Registration USD ADAMA India Private Ltd. India Manufacturing INR Distribution; Registration Makhteshim Agan of North United States Manufacturing; Distribution; Regis- USD America Inc. tration Control Solutions Inc. United States Manufacturing; Distribution; Regis- USD tration ADAMA Agan Ltd. Israel Manufacturing; Distribution; Regis- USD tration ADAMA Makhteshim Ltd. Israel Manufacturing; Distribution; Regis- USD tration ADAMA Australia Pty Australia Distribution AUD Limited ADAMA Italia SRL Italy Distribution USD ADAMA Northern Netherlands Distribution USD Europe B.V. Alligare LLC United States Manufacturing; Distribution; USD Registration The functional currency of the subsidiaries above is the main currency that represent the principal economic environment. 241 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 Total consid- From acquisition eration of eq- Proportion Basis of ac- date till period end Name of the Com- Acquisition uity invest- of equity Acquisition quisition date Net Revenue pany date ment investment method determination profit Adama Huifeng 28.5.2021 931,140 51% Stock pur- Obtained con- 704,445 (75,250) (Jiangsu) Co. Ltd. chase trol (2) Acquisition cost and goodwill In May 28th 2021, the Company acquired 51% stake in ADAMA Huifeng (Jiangsu) Co., Ltd (hereinafter – "ADAMA Huifeng"), a wholly owned subsidiary of Jiangsu Huifeng Bio Agriculture Co., Ltd (hereinaf- ter – "Jiangsu Huifeng"). ADAMA Huifeng was established to incorporate Jiangsu Huifeng's key crop protection synthesis and formulation facilities. This acquisition follows the acquisition of 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. The total cash consideration for both acquisition amounted to approximately RMB 1,229 million (including RMB 254 million held back to secure the post-acquisition closing obligations of Jiangsu Huifeng). The acquisition agreement also include potential earn-out payment to Jiangsu Huifeng depending on the per- formance of the acquired companies for the 5-year period starting from January 1st 2021 and an option was granted to the Company and Jiangsu Huifeng to buy (sell) the remaining 49% equity interests of the ac- quired companies within a certain period of time. In previous periods, the accounting treatment of the acquisitions was based on "provisional amounts" (as this term is defined in ASBE 20 Business combination). The financial reports of 2021 reflect the final results of the purchase price allocation. The Group consolidated ADAMA Shanghai and ADAMA Huifeng starting from the respective acquisition dates on which dates the Group obtained control over the companies. The contingent consideration which is linked to the performance of the acquired companies was measured at fair value on the date of acquisition. The put option issued to Jiangsu Huifeng, as the holder of non-controlling interests, was recognized as a liability at present value of the exercise price (according to the "anticipated acquisition method"). Total of ADAMA Shanghai Acquisition costs and ADAMA Huifeng Total acquisition cost in cash 974,557 Contingent consideration 13,140 Put option 998,022 Other 254,000 Less: share of the fair value of the identifiable net assets acquired 2,112,556 Goodwill 127,163 242 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) (2) Identifiable assets and liabilities of the acquiree, at acquisition date Adama Huifeng (Jiangsu) Co. Ltd. Fair value at Book value at ac- acquisition date quisition date 1.6.2021 1.6.2021 Assets: Cash and bank balances 42,870 42,870 Bills and Accounts receivable 106,454 106,454 Prepayments 10,222 10,222 Other receivables 1,223 1,223 Inventories 387,255 333,122 Other current assets 20,396 20,396 Fixed assets 1,176,943 1,176,943 Construction in progress 64,944 64,944 Intangible assets 400,701 151,019 Deferred tax assets 15,709 15,709 Other non-current assets 9,512 9,512 Liabilities: Bills and Accounts payable 187,825 187,825 Employee benefits payable 11,198 11,198 Taxes payable 602 602 Deferred tax liabilities 75,954 - Other payables 1,446 1,446 Contract liabilities 913 913 Net assets 1,958,291 1,730,430 Less: Non-controlling interests - - Net assets acquired 1,958,291 1,730,430 Adama Huifeng (Shanghai) Agricul- tural Technology Co. Ltd. Fair value at Book value at ac- acquisition date quisition date 31.12.2020 31.12.2020 Assets: Cash and bank balances 11,965 11,965 Bills and Accounts receivable 6,256 6,256 Prepayments 78,857 78,857 Inventories 263 235 Fixed assets 805 805 Intangible assets 187,529 - Other assets 191 191 Liabilities: Bills and Accounts payable - - Other payables 17,953 17,953 Deferred tax liabilities 47,447 557 Contract liabilities 66,201 66,201 Net assets acquired 154,265 13,598 Less: Non-controlling interests - - Net assets acquired 154,265 13,598 243 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements VII. Interest in Other Entities 1. Interests in subsidiaries Composition of the largest subsidiaries of the Group in respect of assets and operating income Registration & Method of ob- Principal place of taining the sub- Name of the Subsidiary business Business nature Direct Indirect sidiary ADAMA France S.A.S France Distribution 100% Established ADAMA Brasil S/A Brazil Manufacturing; Distribution; 100% Purchased Registration ADAMA Deutschland GmbH Germany Distribution; Registration; 100% Established ADAMA India Private Ltd. India Manufacturing; 100% Established Distribution; Registration Makhteshim Agan of North America United States Manufacturing; Distribution; 100% Established Inc. Registration Control Solutions Inc. United States Manufacturing; Distribution; 67% Purchased Registration ADAMA Agan Ltd. Israel Manufacturing; Distribution; 100% Restructure Registration ADAMA Makhteshim Ltd. Israel Manufacturing; Distribution; 100% Restructure Registration ADAMA Australia Pty Limited Australis Distribution 100% Purchased ADAM Italia SRL Italy Distribution 100% Established ADAMA Northern Europe B.V. Netherlands Distribution 55% Purchased Manufacturing; Distribution; Purchased Alligare LLC United States 100% Registration Adama Anpon (Jiangsu) Ltd. China Manufacturing; Distribution 100% Purchased Adama Huifeng (Jiangsu) Co. Ltd. China Manufacturing; Distribution 51% Purchased 2. Interests in joint ventures or associates December 31 December 31 2021 2020 Joint ventures 15,335 14,081 Associates - - 15,335 14,081 3. Summarized financial information of joint ventures and associates December 31, 2021 and December 31, 2020 and twelve months then twelve months then ended ended Joint ventures: Total carrying amount 15,335 14,081 The Group's share of the following items: Net profit 5,923 15,584 Other comprehensive income (1,353) 1,658 Total comprehensive income 4,570 17,242 Associates: Total carrying amount - - The Group's share of the following items: Net profit - - Other comprehensive income - (326) Total comprehensive income - (326) 244 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements VIII. Risk Related to Financial Instruments A. General The Group has extensive international operations, and, therefore, it is exposed to credit risks, liquidity risks and market risks (including currency risk, interest risk and other price risk). In order to reduce the exposure to these risks, the Group uses financial derivatives instruments, including forward transactions and options (here- inafter - “derivatives”). Transactions in derivatives are undertaken with major financial institutions, and therefore, in the opinion of Group Management the credit risk in respect thereof is low. This note provides information on the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes regarding the measurement and management of the risk. Additional quantitative dis- closure is included throughout the consolidated financial statements. The Board of Directors has overall responsibility for establishing and monitoring the framework of the Group's risk management policy. The Finance Committee is responsible for establishing and monitoring the Group's actual risk management policy. The Chief Financial Officer reports to the Finance Committee on a regular basis regarding these risks. The Group’s risk management policy, established to identify and analyze the risks facing the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The policy and methods for managing the risks are reviewed regularly, in order to reflect changes in market conditions and the Group's activities. The Group, through training, and management standards and procedures, aims to develop a disci- plined and constructive control environment in which all the employees understand their roles and obligations. B. Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and derives mainly from trade receivables and other receivables as well as from cash and deposits in financial institutions. Accounts and other receivables The Group’s revenues are derived from a large number of widely dispersed customers in many countries. Customers include multi-national companies and manufacturing companies, as well as distributors, agricul- turists, agents and agrochemical manufacturers who purchase the products either as finished goods or as in- termediate products for their own requirements. The Company entered into an agreement for the sale of trade receivables in a securitization transaction, for details see note V.5.e. In April 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 indus- try and geographic region in which the customer operates. No single customer accounted for greater than 5% of total accounts receivable. 245 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements VIII. Risk Related to Financial Instruments - (cont’d) B. Credit risk - (cont’d) The Company management has prescribed a credit policy, whereby the Company performs current ongoing credit evaluations of existing and new customers, and every new customer is examined thoroughly regarding the quality of his credit, before offering him the Group’s customary shipping and payment terms. The exami- nation made by the Group includes an outside credit rating, if any, and in many cases, receipt of documents from an insurance company. A credit limit is prescribed for each customer, outstanding amount of the accounts receivable balance. These limits are examined annually. Customers that do not meet the Group’s criteria for credit quality may do business with the Group on the basis of a prepayment or against furnishing of appropriate collateral. Most of the Group’s customers have been doing business with it for many years. In monitoring customer credit risk, the customers were grouped according to a characterization of their credit, based on geographical location, industry, aging of receivables, maturity, and existence of past financial difficulties. Customers defined as “high risk” are classified to the restricted customer list and are supervised by management. In certain countries, mainly, Brazil, customers are required to provide property collaterals (such as agricultural lands and equip- ment) against execution of the sales, the value of which is examined on a current ongoing basis by the Com- pany. In these countries, in a case of expected credit risk, the Company records a provision for the amount of the debt less the value of the collaterals provided and acts to realize the collaterals. The Group closely monitors the economic situation in Eastern Europe and South America on an ongoing basis. As a result of the Covid-19 pandemic, the Group also closely monitors the economic situation worldwide. Where necessary, the Group operates to limit its exposure to customers. The Group recognizes an impairment provision, which reflects its assessment regarding the credit risk of ac- count receivables, Other receivables and investments on a lifetime expected credit loss basis. See also notes Ⅲ.10 – Financial instruments and Ⅲ.11 – Receivables. Cash and deposits in banks The Company holds cash and deposits in banks with a high credit rating. These banks are also required to comply with capital adequacy or maintain a level of security based on different situations. Guarantees The Company’s policy is to provide financial guarantees only to investee companies. Aging of receivables and expected credit risk Presented below is the aging of the past due trade receivables: December 31, 2021 Past due by less than 90 days 575,485 Past due by more than 90 days 453,002 1,028,487 246 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements VIII. Risk Related to Financial Instruments - (cont’d) B. Credit risk - (cont’d) The company measure the provision for credit losses on a collective group basis, where receivables share similar credit risk characteristics based on geographical locations. The examination for expected credit losses is performed using model including aging analysis and historical loss experiences, and adjusted by the observ- able factors reflecting current and expected future economic conditions. When credit risk on a receivable has increased significantly since initial recognition, the group records specific provision or general provision which is determined for groups of similar assets in countries in which there are large number of customers with immaterial balances. The Group has credit risk exposures for accounts receivables amounted to RMB 8,137,161 thousand relate to category of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 454,004 thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has credit risk exposures for other receivables amounted to RMB 10,850 thousand related to category of "Lifetime ex- pected credit losses (credit losses occurred)". The credit risk exposures for all remaining balance of financial assets at amortised cost and financial assets at FVTOCI are related to "12-month expected credit losses". C. Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligation when they come due. The Group's approach to managing its liquidity risk is to assure, to the extent possible, an adequate degree of liquidity for meeting its obligations timely, under ordinary conditions and under pressure conditions, without sustaining unwanted losses or hurting its reputation. The cash-flow forecast is determined both at the level of the various entities as well as of the consolidated level. The Company examines the current forecasts of its liquidity requirements in order to ascertain that there is sufficient cash for the operating needs, including the amounts required in order to comply with the financial liabilities, while taking strict care that at all times there will be unused credit frameworks so that the Company will not exceed the credit frameworks granted to it and the financial covenants with which it is required to comply with. These forecasts take into consideration matters such as the Company’s plans to use debt for financing its activities, compliance with required financial covenants, compliance with certain liquidity ratios and compliance with external requirements such as laws or regulation. The surplus cash held by the Group subsidiaries, which is not required for financing the current ongoing op- erations, is invested in short-term interest-bearing investment channels. 247 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements VIII. Risk Related to Financial Instruments - (cont’d) C. Liquidity risk - (cont’d) (1) Presented below are the contractual maturities of the financial liabilities at undiscounted amounts, including estimated interest payments: As at December 31, 2021 Third- Fifth year Contractual Carrying First year Second year Fourth year and above Cash flow amount Non-derivative financial liabili- ties Short-term loans 888,941 - - - 888,941 874,755 Bills payables 493,376 - - - 493,376 493,376 Accounts payables 6,294,163 - - - 6,294,163 6,294,163 Other payables 1,342,188 - - - 1,342,188 1,342,188 Other current liabilities 170,422 - - - 170,422 170,422 Debentures payable 947,901 955,711 1,825,618 7,996,071 11,725,301 8,354,080 Long-term loans 1,224,099 945,539 1,421,032 1,418,839 5,009,509 4,598,555 Long-term payables 3,163 11,388 22,389 73,802 110,742 95,699 Lease Liabilities 161,388 117,740 126,067 253,262 658,457 501,248 Long-term liability in respect of business combinations - 956 34,101 2,439 37,496 17,411 Other non-current liabilities 8,607 286,032 1,704,891 394,261 2,393,791 1,660,148 Derivative financial liabilities Foreign currency derivatives 175,492 - - - 175,492 175,492 CPI/shekel forward transactions 714 - - - 714 714 11,710,454 2,317,366 5,134,098 10,138,674 29,300,592 24,578,251 D. Market risks Market risk is the risk that changes in market prices, such as foreign exchange rates, CPI, interest rates and prices of capital instruments, will affect the Group’s revenues or the value of its holdings in its financial in- struments. The objective of market risk management is to manage and monitor the exposure to market risks within acceptable parameters, while optimizing the return. During the ordinary course of business, the Group purchases and sells derivatives and assumes financial lia- bilities for the purpose of managing market risks. (1) CPI and foreign currency risks Currency risk The Group is exposed to currency risk from its sales, purchases, expenses and loans denominated in currencies that differ from the Group’s functional currency. The main exposure is in Euro, Brazilian real, USD and in NIS. In addition, there are smaller exposures to various currencies such as the British pound, Polish zloty, Australian dollar, Indian rupee, Argentine peso, Canadian dollar, South African Rand, Ukraine Hryunia, the Turkish lira and Chinese Yuan Renminbi. The Group uses foreign currency derivatives – forward transactions and currency options – in order to hedge the cash flows risk, which derive from existing monetary assets and liabilities and anticipated sales and pur- chases, which may be affected by exchange rate fluctuations. 248 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements VIII. Risk Related to Financial Instruments - (cont’d) D. Market risks - (cont’d) (1) CPI and foreign currency risks - (cont’d) The Group hedged a part of the estimated currency exposure to anticipate sales and purchases for the subse- quent year. Likewise, the Group hedges most of its monetary assets and liabilities denominated in a non- U.S. dollar currency. The Group uses foreign currency derivatives to hedge its currency risk, mostly with maturity dates of less than one year from the reporting date. Solutions debentures are linked to the NIS-CPI and, therefore, an increase in the NIS-CPI, as well as changes in the NIS exchange rate, could cause significant exposure with respect to the subsidiary functional currency – the U.S. dollar. As of the approval date of the financial statements, the subsidiary had hedged most of its exposure deriving from issuance of the debentures, in options and forward contracts. (A) The Group’s exposure to NIS-CPI and foreign currency risk, except in respect of derivative financial instruments is as follows: December 31, 2021 Total assets Total liabilities In US Dollar 1,311,873 1,815,556 In Euro 1,478,933 1,179,134 In Brazilian real 2,651,205 364,262 CPI-linked NIS - 8,452,994 In New Israeli Shekel 560,934 1,694,934 Denominated in or linked to other foreign currency 2,760,423 845,976 8,763,368 14,352,856 (B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows: December 31, 2021 Cur- Cur- rency/link rency/link Average USD thou- RMB age receiv- age paya- expiration sands Par thousands able ble date value Par value Fair value Forward foreign currency USD EUR 05/04/2022 192,512 1,227,396 (54,424) Contracts and call options USD PLN 29/01/2022 19,252 122,743 (924) USD BRL 09/02/2022 324,302 2,067,654 (10,870) USD GBP 12/01/2022 20,878 133,111 2,288 USD ZAR 20/01/2022 39,086 249,200 8,156 ILS USD 12/01/2022 1,640,964 10,462,297 19,831 USD OTHER 2,308,016 14,715,220 56,694 CPI forward contracts CPI ILS 09/04/2022 667,203 4,253,883 46,353 249 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, 2021 and the increase or decrease in the CPI would increase (decrease) the equity and profit or loss by the amounts presented below. This analysis assumes that all the remaining variables, among others interest rates, remains constant. December 31, 2021 Decrease of 5% Increase of 5% Equity Profit (loss) Equity Profit (loss) New Israeli shekel 54,874 34,943 (3,992) 14,038 British pound 727 727 (727) (727) Euro (4,765) (3,629) 8,162 7,026 Brazilian real (25) 6,177 (12,317) (16,383) Polish zloty 1,535 1,535 (925) (925) South African Rand (1,019) (1,019) (182) (182) Chinese Yuan Renminbi 19,138 6,056 (3,808) (2,827) CPI-linked NIS 480,591 480,591 (480,591) (480,591) (2) Interest rate risks The Group has exposure to changes in the variable interest rate. The Group has different assets and liabil- ities in different countries which bear interest according to the economic environment in each country. Most of the loans, other than the debentures, bear Dollar and Euro Libor interest. As a result, most of the variable interest exposure of those loans is to the Libor interest. Due to market conditions, the variable interest rates on cash are relatively low. The Company prepares a quarterly summary of exposure to a change in the Libor interest rate. As at the approval date of the financial statements, the Company had not hedged this exposure. 250 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements VIII. Risk Related to Financial Instruments - (cont’d) D. Market risks - (cont’d) (2) Interest rate risks - (cont’d) (A) Type of interest The interest rate profile of the Group’s interest-bearing financial instruments was as follows: December 31, 2021 Fixed-rate instruments – unlinked to the CPI Financial assets Other non-current assets 43,425 Financial liabilities Long-term loans (1) 3,050,021 Long-term payables 23,289 Other non-current liabilities 318,786 (3,348,671) Fixed-rate instruments – linked to the CPI Financial liabilities Debentures payable (1) 8,354,080 Variable-rate instruments Financial assets Cash at banks 2,309,425 Financial assets at fair value through profit or loss 1,479 Other current assets 121,629 Other non-current assets 22,474 Financial liabilities Short-term loans and credit from banks 874,755 Long-term loans (1) 1,548,534 Long-term payables 67,551 (35,833) (1) Including current maturities. (B) Sensitivity analysis of cash flows regarding variable-interest instruments A change of 5% in the interest rates on the reporting date would increase or reduce equity and profit or loss by the amounts presented below. This analysis assumes that all the remaining variables, among others ex- change rates, remained fixed. Profit or loss Equity Increase in Decrease in Increase in Decrease in interest interest interest interest As at December 31, 2021 1,606 (1,621) 1,606 (1,621) 251 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements IX. Fair Value The fair value of forward contracts on foreign currency is based on their listed market price, if available. In the absence of market prices, the fair value is estimated based on the discounted difference between the stated forward price in the contract and the current forward price for the residual period until redemption, using an appropriate interest rate. The fair value of foreign currency options is based on bank quotes. The reasonableness of the quotes is evaluated through discounting future cash flow estimates, based on the conditions and duration to maturity of each contract, using the market interest rates of a similar instrument at the measurement date and in accordance with the Black & Scholes model. 1. Financial instruments measured at fair value for disclosure purposes only The carrying amount of certain financial assets and liabilities, including cash at bank and on hand, bills and accounts receivable, receivables financing, other receivables, derivatives financial assets, short-term loans, bills and accounts payable and other payable, are the same or proximate to their fair value. The following table details the carrying amount in the books and the fair value of groups of non-current financial instruments presented in the financial statements not in accordance with their fair values: December 31, 2021 Carrying amount Fair value Financial assets Other non-current assets (a – Level 2) 62,826 58,673 Financial liabilities Long-term loans and others (b – Level 2) 5,516,724 5,600,573 Debentures (c – Level 1) 8,354,080 11,836,592 a) The fair value of the other non-current assets is based on a discounted future cash flows, using the acceptable interest rate for similar investment having similar characteristics (Level 2). b) The fair value of the long-term loans and others is based on a discounted future cash flows, using the acceptable interest rate for similar loans having similar characteristics (Level 2). c) The fair value of the debentures is based on stock exchange quotes (Level 1). 2. The interest rates used in determining fair value The interest rates used to discount the estimate of anticipated cash flows are: December 31, 2021 % U.S. dollar interest (0.83%) - 1.92% Chinese Yuan Renminbi 2.01% - 2.71% Euro (0.72%) - 0.06% 252 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements IX. Fair Value - (cont’d) 3. Fair value hierarchy of financial instruments measured at fair value Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The table below presents an analysis of financial instru- ments measured at fair value. The various levels have been defined as follows: Level 1: quoted prices (unadjusted) in active market for identical instrument. Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly. Level 3: inputs that are not based on observable market data (unobservable inputs). The Company’s forward contracts and options are carried at fair value and are evaluated by observable inputs and therefore are concurrent with the definition of level 2. December 31 2021 Forward contracts and options used for hedging the cash flow (Level 2) 36,316 Forward contracts and options used for economic hedging (Level 2) 30,788 Other equity investment (Level 2) 152,118 Receivables financing (Level 2) 120,157 Other non-current assets (Level 2) 79,658 Other (Level 2) 1,479 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. 253 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 agro- Syngenta Shanghai, chemicals, fertiliz- Group China ers and GM seeds 11,144,545 78.47% 78.47% The Company’s ultimate controlling shareholder is Sinochem Holdings . 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 254 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements X. Related parties and related party transactions - (cont’d) 4. Information on other related parties Name of other related parties Related party relationship Bluestar (Beijing) Chemical Machinery Co. Ltd. Common control Bluestar Engineering co.,LTD . Common control Changsha Huaxing Construction Supervision Co., Ltd. Common control ChemChina Asset Management co.,LTD . Common control ChemChina Information Center co.,LTD . Common control ChemChina Finance Corporation Common control China Bluestar Chengrand Research Institute Chemical Industry Common control China National Chemical Information Center Co. LTD Common control Elkem Silicones Brasil LTD Common control Hangzhou (Torch)XidoumenMembraneIndustry co.,LTD Common control Jiangsu Huaihe Chemical Co. Ltd. (H&H) Common control Jingzhou Sanonda Holdings Co.,Ltd. Common control MRI Seed Zambia Limited Common control Nantong Xingchen Synthetic Material Co. Ltd. Common control OOO Syngenta Common control PT Syngenta Indonesia Common control PT Syngenta Seed Indonesia Common control Shandong Dacheng Agrochemical Company Limited Common control Shandong Dacheng Biochemical Co., Ltd. Common control Shanghai focus supply chain Co., Ltd Common control Shanghai nengjianyuan Biological Agriculture Co., Ltd Common control Shenyang Chemical Co Ltd Common control Shenyang Chemical Research Institute Co. LTD Common control Shenyang Shenhua Institute Testing Technology Co. Ltd. Common control Shenyang Sinochem Agrochemicals R&D Co. Ltd. Common control Sinochem (Hainan) Crop Technology Co. LTD Common control Sinochem Agriculture (Xinjiang) Biotechnology Co. Ltd. Common control Sinochem Agriculture Co., Ltd Common control Sinochem Agriculture Eco-Tech (Hubei) Co. Ltd. Common control Sinochem Agro Co., Ltd. Common control Sinochem Chongqing Fuling Chemical 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 Fertilizer Co., Ltd Xinan Branch Common control Sinochem Fertilizer Company Limited Common control Jiangsu Huifeng Agrochemical Co. Ltd. Minority shareholder and its subsidiary Jiangsu Huifeng Biological Agriculture Co., Ltd Minority shareholder and its subsidiary Nongyi Net (Yangling) e-commerce Co., Ltd. Minority shareholder and its subsidiary Jiangsu Ruixiang Chemical co., LTD . Common control/Associate of Group Jiangsu Yangnong Chemical Group Co. Ltd. Common control/Associate of Group Jiangsu Youjia Plant Protection co., LTD . Common control/Associate of Group Jiangsu Youshi Chemical Co., Ltd. Common control/Associate of Group 255 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 International Crop Care (Overseas) Pte. Ltd. Common control Sinochem Modern Agriculture (Jiangsu) Co. LTD Common control Sinochem Modern Agriculture (Shaanxi) Co. LTD Common control Sinochem Modern Agriculture (Shandong) Co. LTD Common control Sinochem Modern Agriculture (Xinjiang) Co. LTD Common control Sinochem Modern Agriculture Anhui Co. LTD Common control Sinochem Modern Agriculture Sichuan Co. LTD Common control Sinochem Shandong Fertilizer Co., Ltd. Common control Syngenta (China) Investment Company Limited Common control Syngenta AG Common control Syngenta Agro AG Common control Syngenta Agro d.o.o. (Serbia) Common control Syngenta Agro GmbH Common control Syngenta Agro S.A. Common control Syngenta Agro S.R.L. Common control Syngenta Australia Pty Ltd Common control Syngenta Canada Inc. Common control Syngenta Coml Agro LTDA Common control Syngenta Crop Protection AG Common control Syngenta Crop Protection BV Common control Syngenta Crop Protection LLC Common control Syngenta Crop Protection Ltd Common control Syngenta Crop Protection NV Common control Syngenta Crop Protection SA Common control Syngenta Czech s.r.o. Common control Syngenta Espana S.A Common control Syngenta France SAS Common control Syngenta Group (NL) B.V. Common control Syngenta Hellas AEBE Common control Syngenta India Ltd Common control Syngenta Italia SpA – seeds Common control Syngenta Kft. Common control Syngenta Korea Ltd Common control Syngenta Polska Sp. z.o.o. Common control Syngenta Protecao Cultivos LTDA Common control Syngenta Seeds LTDA Common control Syngenta Slovakia s.r.o. Common control Syngenta South Africa (Pty) Ltd Common control Syngenta Vietnam Limited Common control SyngentaTarim 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 Zhonlan Chenguang Chemical Research and Design Institute Co., Ltd. Xin- Common control jin Branch ChemChina Finance Corporation Common control 256 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements X. Related parties and related party transactions - (cont’d) 5. Transactions and balances with related parties (1) Transactions with related parties Year ended December 31 Type of purchase Related Party Relationship 2021 2020 Summary of purchase of goods/services: Purchase of goods/services received Common control under Si- 1,798,000 1,273,820 nochem Holdings Joint venture - 1,661 Associates - 260,570 Minority shareholder and 68,349 - its subsidiary Purchase of fixed assets and other assets Common control under Si- 51,121 325,700 nochem Holdings Lease expenses Common control under Si- 489 - nochem Holdings Summary of Sales of goods: Sale of goods/ Service rendered Common control under Si- 1,300,066 953,257 nochem Holdings Joint venture 93,388 133,356 Associates - 43,317 Minority shareholder and 217,444 - its subsidiary (2) Guarantees The Group as the guarantee receiver Amount of Inception date Maturity date Guaranty com- Guarantee provider guaranteed loan of guaranty of guaranty pleted (Y / N) Parent company 343,000 21/04/2021 20/04/2028 N 72,886 01/06/2021 31/05/2028 N * During the year, the Company paid a guarantee fee amounting to 141 thousand RMB (2020: nil) to the parent company. (3) Remuneration of key management personnel and directors Periods ended December 31 2021 2020 Remuneration of key management personnel and directors 99,000 56,833 257 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) Receivable Items December 31 December 31 2021 2020 Expected Expected Related Party Relation- Book credit Book credit Items ship Balance losses Balance losses Trade receivables Common control under 200,954 - 155,050 - Sinochem Holdings Joint venture 23,150 - 21,630 - Associates - - 327 - Minority shareholder and 32,953 - - - its subsidiary Other receivables Common control under 83 - 681 - Sinochem Holdings Other Non-Current assets Common control under 84 - - - Sinochem Holdings Prepayments Common control under 33,069 - 17,065 - Sinochem Holdings Associates - - 350 - Payable Items December 31 December 31 Items Related Party Relationship 2021 2020 Trade payables Common control under Sinochem Hold- 489,859 357,148 ings Associates - 15,907 Minority shareholder and its subsidiary 355 - Other payables Common control under Sinochem Hold- 30,006 19,354 ings Contract liabilities Common control under Sinochem Hold- - 2,355 ings Associates - 340 Other non-current li- Common control under Sinochem Hold- - 28,000 abilities due within ings one year Other non-current li- Common control under Sinochem Hold- 318,786 143,770 abilities * ings * The liability is a loan from a related party, the interest expense for the year ended December 31, 2021 is 3,897 thousand RMB (twelve months ended December 31, 2020: 2,096 thousand RMB). The loan was fully repaid during 2021. See other related party transactions note below (5) regarding the new credit facility received during 2021 (RMB 319 million). 258 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements X. Related parties and related party transactions - (cont’d) 6. Transactions and balances with related parties - (cont'd) (5) Other related party transactions The closing balance of bank deposit in ChemChina Finance Corporation was 358,881 thousand RMB (31.12.20: 370,141 thousand RMB) Interest income of bank deposit for the current period was 2,725 thou- sand RMB (amount for twelve months ended December 31, 2020 is 1,422 thousand RMB). The closing balance of a loan received from ChemChina Finance corporation was 0 thousand RMB (31.12.20: 0 thousand RMB). Interest expenses in the current period was 1,571 thousand RMB (amount for twelve months ended December 31, 2020 is 665 thousand RMB). Following the approvals from Solutions Board of Directors and the Audit Committee dated October 25, 2021, on October 27, 2021, Solutions, through one of its subsidiaries, entered into a committed credit facil- ities agreements in the aggregate amount of USD 100 million (RMB 638 million) on market terms with Syngenta Group, or any of its subsidiaries. As of December 31, 2021 the amount utilized is USD 50 million (RMB 319 million). 259 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XI. Commitments and contingencies 1. Significant commitments December 31 December 31 2021 2020 Investment in Fixed assets 623,156 571,367 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 of- ficers of the Company (“D&O Liability Insurance) as originally approved by the 22nd meeting of the 7th session of Board of Directors and the 4th Interim Shareholders Meeting in 2017, and authorized the management to annually deal with all matters relating to renewal/extension of the customary D&O Liability Insurance policies, with up to 20% flexibility in the relevant terms of the original policy. On December 26, 2018 the 3rd Interim Shareholders Meeting approved the above resolution. The current D&O Liability Insurance was renewed for an additional one-year term commencing November 15, 2021. Environmental protection The manufacturing processes of the Company and the products it produces and market, entail environmental risks that impact the environment. The Company invests substantial resources in order to comply with the ap- plicable environmental laws and attempts to prevent or minimize the environmental risks that could occur as a result of its activities. To the best of the Company’s knowledge, at the balance sheet date, there are no material environmental issues relating to the Company, there are no material administrative penalties or investigations related to environment, health and safety imposed or initiated by regulatory authorities, and none of the material permits and licenses regarding environmental issues required for the Company’s day to day operations have been revoked. Other For two of the Company’s production sites in China that have been in the process of relocation, Jingzhou site in Jingzhou, Hubei Province completed its relocation and upgrade program and continues on its path of gradu- ally ramping up production and Anpon old site in Huai’An, Jiangsu Province is in the process of relocating to the new site. As part of the relocation process, the Company executed in previous years a reduction plan to reduce the number of employees during the relocation period. Claims against subsidiaries In the ordinary course of business, legal claims were filed against subsidiaries, including claims for patent in- fringement. The Company, inter alia, like other companies operating in the crop protection market, is exposed to class actions for large amounts, which it must defend against while incurring considerable costs, even if these claims have no basis in the first place. In the opinion of the Company’s management, which is based, inter alia, on the 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. 260 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) On October 20, 2020, a claim and a motion for its approval as a class action (the “Motion”) was filed against Monsanto Company and Bayer AG (the “Manufacturers”) as well as against ADAMA Agan Ltd., a wholly- owned subsidiary of the Company, with respect to an herbicide bearing the brand name Roundup, which is produced by the Manufacturers and distributed in Israel in small quantities by the subsidiary. The applicants argue that the product allegedly poses a risk to users or those who have been exposed to it. The Company and the subsidiary reject the allegations against the subsidiary in the Motion and in the statement of claim. As the Company is an authorized distributor of the Manufactures, which undertook to fully indemnify, defend and hold harmless ADAMA Agan Ltd., for any monetary compensation or any other remedy it will have to make in connection with the Motion, the Motion and claim are not expected to have any non-negligible effect on the Company’s financial results. In June 2021, a lawsuit was filed against a subsidiary of the Company, alleging two patents owned by a large competitor of the Company, have been infringed by such subsidiary. Among the claims, the plaintiff seeks preliminary and permanent injunctions to prevent the subsidiary from manufacturing, using or commercializing any product that infringes the plaintiff’s patents, and seeks actual damages and profits loss. The said preliminary injunctions were granted by the court in favor of the plaintiff. The subsidiary has filed appeals against such preliminary injunctions, which are still pending. Prior to such claims, and on-going, the subsidiary filed several lawsuits against the said plaintiff seeking to declare the said patents are invalid and the subsidiary does not infringe them. All these lawsuits are pending as of the approval date of the financial statements. At this stage, the claims filed by the plaintiff are not expected to have a material effect on the Company. Various immaterial claims have been filed against Group companies in courts throughout the world, in imma- terial amounts, for causes of action primarily involving employee-employer relations and various civil claims, for which the Company did not record a provision in the financial statements. The claims that in the estimation of Company’s management, based on its legal advisors’ opinion, have lower chances of succeeding than being rejected, amount to a negligible amount. Furthermore, claims were filed against the Company for product lia- bility 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. XII. Events subsequent to the balance sheet date With respect to the current events in Ukraine, at this stage, the Company cannot definitively estimate the poten- tial impact of these events on the financial performance of the Company. The Company is continuously review- ing the situation on the ground and assessing the potential risks involved, and will provide a further update in due course. 261 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XIII. Share-based Payments 1. In February 2019, the remuneration committee and Solutions Board of Directors (as well as the General Meet- ing with respect to theformer CEO and Vice President who also serves as a director) approved the allocation of 77,864,910 phantom warrants to officers and employees in accordance with the long-term phantom com- pensation plan (hereinafter - "the 2019 Plan"), out of which 75,814,897 phantom warrants were granted at the grant date of February 21, 2019. During 2019, 1,206,081 additional Phantom warrants were granted. The warrants will vest in four equal portions, where the first and second quarters are exercisable after two years, the third quarter after three years and the fourth quarter after four years from January 1, 2019. The warrants will be exercisable, in whole or in part, in accordance with the terms of the 2019 plan, and subject to achieving financial targets as determined in the plan. The warrants will be exercisable until the end of 2025. Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the difference between the base price as determined at the time of the grant and the closing price of one share of the Company on the Shenzhen Stock Exchange, as it will be on the exercise date up, to the ceiling that was determined under the plan. The fair value of the granted warrants as aforesaid was estimated using the binomial pricing model. The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at the grant date, amounted to a total of approximately 186 million RMB. The liability at the end of the reporting period was recorded according to the vesting period as determined in the plan, taking into account the extent of the service that the employees provided until that date and the Company’s share price at the end of the reporting period. Statement of share based payments in the period Phantom warrants Total number of Phantom warrants at the beginning of the period 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 (4,326,492) Total number of Phantom warrants at the end of the period 55,720,575 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 years The parameters used in implementing the model at the grant date are as follows: Stock price (RMB) 10.85 Exercise increment (RMB) 10.03/10.85 Expected volatility 43.97% Risk-free interest rate 3.06% Economic value as of February 21, 2019 (in thousands RMB) 186,206 The methods for the determination of the fair value of liabilities arising from cash-settled share-based payments The binomial pricing model Accumulated amount of liabilities arising from cash-settled share-based pay- ments (in thousands RMB) 86,416 Expenses arising from cash-settled share-based payments in current period (in thousands RMB) 8,776 262 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XIII. Share-based Payments - (cont’d) 2. In September 2019, the remuneration committee and Solutions Board of Directors (and the General Meeting with respect to the CEO and Vice President who also serves as a director) approved the cancellation of 2017 Plan against the allocation of 28,258,248 warrants in accordance with the long-term phantom compensation plan (hereinafter - "The Alternative Warrants" and "The Alternative Plan"). The cancellation and allocation date is September 26, 2019. During 2019, an additional 90,130 Alternative Phantom Warrants were granted. The alternative warrants will vest in four equal portions, where the first quarter is exercisable after one year, the second quarter after two years, the third quarter after three years and the fourth quarter after four years from October 1, 2019. The warrants will be exercisable, in whole or in part, in accordance with the terms of the Alternative Plan, and subject to achieving financial targets as determined in the plan. The warrants will be exercisable until October 1, 2026. Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the difference between the base price as determined at the time of the grant and the closing price of one share of the parent company on the Shenzhen Stock Exchange, as it will be on the exercise date up to the ceiling that was deter- mined under the plan. The fair value of the total granted alternative warrants at the allocated date is equal to the fair value of the total warrants canceled from the 2017 plan. The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at the cancellation and allocation date, amounted to a total of approximately 69 million RMB. The liability in the financial statements at the end of the reporting period was recorded at the fair value estimated using the bino- mial option pricing model and by the vesting period from the original grant date of the 2017 plan to the end of the service period determined by the alternative plan, taking into account the extent of the service that the employees provided until that date and the stock price at the reporting date. Statement of share based payments in the period Phantom warrants Changes in the number of 2017 Plan: Total number of Phantom warrants at the beginning of the period 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 (2,028,355) Total number of Phantom warrants at the end of the period 18,710,787 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 4.75 years 263 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XIII. Share-based Payments - (cont’d) The parameters used in implementing the model at the grant date are as follows: Stock price (RMB) 9.23 Exercise increment (RMB) 9.43 Expected volatility 40.29% Risk-free interest rate 3.14% Economic value as of September 26, 2019 (in thousands RMB) 68,836 The methods for the determination of the fair value of liabilities arising from cash-settled share-based payments related to the alternative plan The binomial pricing model Accumulated amount of liabilities arising from cash-settled share-based pay- ments related to the alternative plan (in thousands RMB) 31,434 Expenses (income) arising from cash-settled share-based payments in cur- rent period related to the alternative plan (in thousands RMB) 5,106 XIV. Other significant items 1. Segment reporting The Company presents its segment reporting based on a format that is based on a breakdown by business segments: Crop Protection (Agro) This is the main area of the Company’s operations and includes the manufacture and marketing of conven- tional agrochemical products. Intermediates and ingredients This field of activity includes a large number of sub-fields, including: Lycopan (an oxidization retardant), aromatic products, and other chemicals. It combines all the Company’s activities not included in the Crop Protection products segment. Segment results reported to the chief operating decision maker include items directly attributable to a segment as well as items that can be allocated on a reasonable basis. Unallocated items comprise mainly financing expenses, net, gains from changes in fair value, investment income and tax expenses. All assets and liabilities that can be attributed to a specific segment were allocated accordingly. Attributed assets include: accounts and bills receivables, receivables financing, inventory, fixed assets, right-of-use assets, construction in progress, intangible assets, goodwill, non-current trade receivables and long-term equity in- vestments. Attributed liabilities include account payables, bill payablesand lease liabilities. All other assets and liabilities which are not attributable to a specific segment are presented as unallocated assets and liabilities. 264 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XIV. Other significant items - (cont'd) 1. Segment reporting - (cont’d) Information regarding the results and assets and liabilities of each reportable segment is included below: Crop Protection Intermediates and ingredients Elimination among segments Total Year ended Year ended Year ended Year ended December 31 December 31 December 31 December 31 2021 2020 2021 2020 2021 2020 2021 2020 Operating income from external customers 28,046,724 25,757,783 2,991,881 2,687,050 - - 31,038,605 28,444,833 Inter-segment operating income - - 1,649 1,519 (1,649) (1,519) - - Interest in the profit or loss of associates and joint ventures - 10,841 5,923 4,743 - - 5,923 15,584 Segment's results 1,527,239 1,599,829 354,055 149,950 - - 1,881,294 1,749,779 Financial expenses, net (1,939,422) (1,847,189) Gain (loss) from changes in fair value (321,094) 540,698 Investment income 923,024 131,924 Profit before tax 543,802 575,212 Income tax expense 380,489 222,459 Net profit 163,313 352,753 Crop Protection Intermediates and ingredients Unallocated assets and liabilities Total December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 2021 2020 2021 2020 2021 2020 2021 2020 Total assets 39,213,516 36,454,726 2,071,074 2,135,310 8,950,718 8,210,998 50,235,308 46,801,034 Total liabilities 6,867,619 5,037,016 282,006 268,972 22,010,600 20,061,131 29,160,225 25,367,119 265 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XIV. Other significant items - (cont'd) 1. Segment reporting - (cont’d) Geographic information The following tables sets out information about the geographical segments of the Group’s operating income based on the location of customers (sales target) and the Group's non-current assets (including fixed assets, right-of-use assets, construction in progress, investment properties intangible assets and goodwill). In the case of investment property, fixed assets, right of used assets and construction in progress, the geographical location of the assets is based on its physical location. In case of intangible assets and goodwill, the geographical location of the company which owns the assets. Operating income from external custom- ers Year ended December 31 2021 2020 Europe 6,920,884 7,155,152 North America 5,907,944 5,333,514 Latin America 8,217,586 7,460,282 Asia Pacific 5,793,987 4,533,778 Africa, Middle East and India 4,198,204 3,962,107 31,038,605 28,444,833 Specified non-current assets December 31 December 31 2021 2020 Europe 962,601 1,039,248 Latin America 2,227,234 2,122,291 North America 1,116,510 1,169,812 Asia Pacific 5,609,749 3,550,785 Africa, Middle East and India 10,713,739 10,489,849 20,629,833 18,371,985 2. The dependency on major customers No single customer's proportion of the total amount of sales is over 10%. 266 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XIV. Other significant items - (cont'd) 3. 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 157,397 352,753 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 - (45,076,938) Weighted average number of ordinary shares outstanding at the end of the year 2,329,811,766 2,401,476,644 Amount for Amount for the current the prior pe- period riod Calculated based on net profit attributable to ordinary shareholders Basic earnings per share 0.07 0.15 Diluted earnings per share N/A N/A Calculated based on net profit from continuing operations attributa- ble to ordinary shareholders: Basic earnings per share 0.07 0.15 Diluted earnings per share N/A N/A Calculated based on net profit from discontinued operations attribut- able to ordinary shareholders: Basic earnings per share N/A N/A Diluted earnings per share N/A N/A 267 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XV. Notes to major items in the Company's financial statements 1. Cash at bank and on hand December 31 December 31 2021 2020 Deposits in banks 259,434 1,022,758 Other cash and bank 6,124 12,054 265,558 1,034,812 As at December 31, 2021, restricted cash and bank balances was 6,124 thousand RMB (as at December 31, 2020: 12,054 thousand RMB). 2. Accounts receivable a. By category December 31, 2021 Provision for expected Book value credit losses Carrying Amount Percentage (%) Amount Percentage (%) amount Account receivables assessed individually for impairment 13,879 6 13,879 100 - Account receivables assessed collectively for impairment 208,125 94 16 - 208,109 222,004 100 13,895 6 208,109 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 December 31, 2021 Within 1 year (inclusive) 208,111 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 12,177 222,004 268 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XV. Notes to major items in the Company's financial statements - (cont'd) 2. Accounts receivable - (cont'd) c. Addition, written-back and written-off of provision for expected credit losses during the period Year ended December 31, 2021 Balance as of January 1 13,894 Addition during the year, net 16 Write back during the year (15) Write-off during the year - Exchange rate effect - Balance as of December 31 13,895 d. Five largest accounts receivable at December 31, 2021: Proportion of Allowance of Accounts re- expected Name Closing balance ceivable (%) credit losses Party 1 * 152,633 69 - Party 2 22,851 10 - Party 3 11,142 5 - Party 4 * 7,556 3 - Party 5 4,075 2 - 198,257 89 - * The amounts are intergroup balances with Solutions' subsidiaries. 3. Receivable financing December 31 December 31 2021 2020 Bank acceptance draft 11,752 25,060 11,752 25,060 As at December 31, 2021, bank acceptance endorsed but not yet due amounts to 193,436 thousand RMB. 269 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XV. Notes to major items in the Company's financial statements - (cont'd) 4. Other Receivables December 31 December 31 2021 2020 Other receivables 21,496 27,138 21,496 27,138 (1) Other receivables a. Other receivables by categories December 31 December 31 2021 2020 Other 27,477 32,819 Provision for expected credit losses (5,981) (5,681) 21,496 27,138 b. Other receivables by aging December 31, 2021 Within 1 year (inclusive) 679 Over 1 year but within 2 years * 12,249 Over 2 years but within 3 years - Over 3 years but within 4 years 9,585 Over 4 years but within 5 years - Over 5 years 4,964 27,477 * Include intergroup balance with Anpon. 270 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XV. Notes to major items in the Company's financial statements - (cont'd) 4. Other Receivables - (cont'd) (2) Other receivables - (cont'd) c. Additions, recovery or reversal and written-off of provision for expected credit losses during the period: Year ended December 31, 2021 Balance as of January 1, 2021 5,681 Addition during the period 415 Written back during the period (115) Write-off during the period - Balance as of December 31, 2021 5,981 d. Five largest other receivables at December 31 2021: Proportion of other re- Name Closing balance ceivables (%) Credit loss provision Party 1 * 11,611 42 - Party 2 9,313 34 - Party 3 3,125 11 3,125 Party 4 548 2 548 Party 5 543 2 - 25,140 91 3,673 * Intergroup balance with Anpon. 271 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XV. Notes to major items in the Company's financial statements - (cont'd) 5. Long-term equity investments December 31, 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 pro- Balance pro- Opening Closing bal- vision Im- vision Im- Invested unit balance Increase Decrease ance pairment loss pairment loss ADAMA Agricultural Solutions Ltd. 15,890,213 - - 15,890,213 - - Adama Anpon (Jiangsu) Ltd. 450,449 - - 450,449 - - ADAMA Hiufeng (Jiangsu) Co. Ltd. - 848,140 - 848,140 - - Hubei Sanonda Foreign Trade Co. Ltd. 11,993 - - 11,993 - - Adama Huifeng (shanghai) Agricul- tural Technology Co., Ltd 310,557 - - 310,557 - - 16,663,212 848,140 - 17,511,352 - - 6. Operating Income and operating costs Year ended December 31, 2021 Year ended December 31, 2020 Operating Operating Revenue costs Revenue costs Main operations 1,113,595 888,638 1,463,475 1,149,768 Other operations 43,824 28,236 52,984 27,782 1,157,419 916,874 1,516,459 1,177,550 272 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XV. Notes to major items in the Company's financial statements - (cont'd) 7. Notes to items in the cash flow statements (1) Other cash received relevant to operating activities Year ended Decem- Year ended Decem- ber 31, 2021 ber 31, 2020 Interest income 14,491 18,382 Government subsidies 15,470 5,923 Other 96,426 6,726 126,387 31,031 (2) Other cash paid relevant to operating activities Year ended Decem- Year ended Decem- ber 31, 2021 ber 31, 2020 Professional services 68,104 114,444 Transportation and Commissions 24,804 46,601 Other 15,107 81,518 108,015 242,563 (3) Other cash received relevant to financing activities Year ended Decem- Year ended Decem- ber 31, 2021 ber 31, 2020 Deposit for issuing bills payables 12,345 21,177 (4) Other cash paid relevant to financing activities: Year ended Decem- Year ended Decem- ber 31, 2021 ber 31, 2020 Repurchase of treasury shares - 60,357 Deposit for issuing bills payables 6,416 6,174 Repayment of loan from others 171,770 - Other - 440 178,186 66,971 273 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XV. Notes to major items in the Company's financial statements - (cont'd) 8. Supplementary information to cash flow statement (1) Reconciliation of net profit to net cash flows generated from operating activities: Year ended December 31 2021 2020 Net profit )124,938( (4,725) Add: Assets impairment loss 9,369 17,655 Credit impairment loss 301 (4,071) Depreciation of fixed assets 120,046 144,061 Depreciation of-right-of use assets 754 449 Amortization of intangible assets 10,418 5,018 Loss (gain) on disposal of fixed assets, intangible assets and other long-term assets (14,965) (3,644) Losses (gains) from changes in fair value 6,070 - Financial expenses 31,974 41,827 Investment loss (income) (1,808) 16,173 Decrease (increase) in deferred income tax assets 5,484 25,407 Decrease (increase) in inventory (88,462) (49,395) Increase in accounts receivable from operating activities 164,507 (146,241) Increase in payables from operating activities (32,378) (138,298) Net cash flows generated from operating activities 86,372 (95,784) (2) Net increase in cash and cash equivalents Year ended December 31 2021 2020 Closing balance of cash 259,434 1,022,758 Less: Opening balance of cash 1,022,758 1,395,994 Net increase in cash and cash equivalents )763,324( )373,236( 274 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XV. Notes to major items in the Company's financial statements - (cont'd) 9. Related parties and related parties transactions (1) Information on parent Company Registered Company Registered capital (Thou- Shareholding Percentage name place Business nature sand RMB) percentage of voting rights Production and sales Syngenta Shanghai, of agrochemicals, fer- Group China tilizers and GM seeds 11,144,545 78.47% 78.47% The ultimate controlling shareholder is Sinochem Holdings . (2) Information on the subsidiaries of the Company For information about the subsidiaries of the Company, refer to Note VII.1. (3) Transactions with related parties a. Transactions of goods and services Year ended December 31 2021 2020 Summary of Purchase of goods/services Related Party Relationship received: Purchase of goods/services received Common control un- der Sinochem Hold- ings 1,469 8,536 Subsidiary 136,070 92,475 Purchase of fixed assets and other assets Common control un- der Sinochem Hold- ings 51,044 310,976 Subsidiary - 4,752 Summary of Sales of goods: Sale of goods Common control under Sinochem Holdings 1,082 32,809 Sale of goods Associated enterprises Sale of goods Subsidiary 552,023 923,077 Rendering of services Subsidiary 6,167 8,791 275 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 Y 30,000 19/05/2020 18/05/2021 Y 20,000 22/12/2020 16/12/2021 Y 50,000 16/12/2020 15/12/2021 Y 50,000 14/12/2020 13/12/2021 Y 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 40,000 01/12/2021 28/11/2024 N 59,500 27/04/2021 26/04/2022 N 33,000 16/12/2021 15/12/2022 N 30,000 26/02/2021 24/02/2022 N 30,000 25/06/2021 24/06/2022 N 45,000 21/05/2021 18/05/2022 N 40,000 18/03/2021 17/03/2022 N 100,000 19/07/2021 10/07/2022 N 20,000 05/11/2021 04/05/2022 N 33,000 05/11/2021 03/05/2022 N The Company as the guarantee receiver Amount of Inception date Maturity date Guaranty com- Guarantee provider guaranteed loan of guaranty of guaranty pleted (Y / N) Parent company 343,000 21/04/2021 20/04/2028 N 72,886 01/06/2021 31/05/2028 N * During the year, the Company paid a guarantee fee amounting to 141 thousand RMB (2020: nil) to the parent company 276 ADAMA Ltd. (Expressed in RMB '000) Notes to the Financial Statements XV. Notes to major items in the Company's financial statements - (cont'd) 9. Transactions and balances with related parties - (cont'd) (3) Transactions with related parties - (cont'd) c. Receivables from and payables to related parties (including loans) Receivable Items December 31 December 31 2021 2020 Expected Expected Related Party Relation- Book credit Book credit Items ship Balance losses Balance losses Trade receivables Subsidiary 160,190 - 344,436 - Other non-current assets Subsidiary 150,000 - 212,771 - Other receivables Subsidiary 11,611 - 11,744 - Common control under Prepayments Sinochem Holding 10,000 - - - Other non-current Common control under assets Sinochem Holding 84 - - - Payable Items December December 31 31 Items Related Party Relationship 2021 2020 Trade payables Subsidiary 71 Common control under Sinochem Trade payables Holdings 52,075 127,082 Other payables Subsidiary 241,049 143,840 Common control under Sinochem Holdings 249 108 Associated enterprises under Sinochem Contract liability Holdings - 340 Other non-current liabili- ties due within one year Common control under Sinochem * Holdings - 28,000 Other non-current liabili- Common control under Sinochem ties* Holdings - 143,770 * loans from related party, the interest expense for the year ended December 31, 2021 was 2,865 thousand RMB (2,096 thoussand RMB in 2020). The loan was fully repaid during 2021. d. Other related party transactions The closing balance of bank deposit in ChemChina Finance Corporation was 189,978 thousand RMB (31.12.20: 170,210 thousand RMB). Interest income of bank deposit for the current period was 1,019 thousand RMB (amount for the year ended December 31, 2020 is 776 thousand RMB). The closing balance of a loan received from ChemChina Finance corporation was 0 thousand RMB (31.12.20: 0 thousand RMB). Interest expense in the current period was 0 thousand RMB (amount for the year ended ended December 31, 2020 is 370 thousand RMB). 277 ADAMA Ltd Annual Report 2021 Supplementary information (Expressed in RMB '000) 1. Extraordinary Gain and Loss Year ended December 31, 2021 Disposal of non-current assets 846 Government grants recognized through profit or loss 38,543 Recovery or reversal of expected credit losses which is assessed individually during the years 32,487 Other non-operating income or expenses other than the above 12,503 Other profit or loss that meets the definition of non-recurring profit or loss 13,191 Tax effect (18,026) 79,544 Note 1: Extraordinary gain and loss items listed above are presented in the amount before taxation 2. Return on net assets and earnings per share (“EPS”) The information of Return on net assets and EPS is in accordance with the Preparation Rules for Infor- mation Disclosure by Companies Offering Securities to the Public No. 9 – Calculation and Disclosure of Return on net assets and Earnings per share (2010 Amendment) issued by China Securities Regulatory Commission. Weighted average rate of return on net Basic EPS Diluted EPS Profit during the reporting period assets (RMB/share) (RMB/share) Net profit attributable to ordinary shareholders of the Company 0.74 0.07 N/A Net profit after deduction of extraordinary gains/losses attributable to ordinary shareholders of the Company 0.37 0.03 N/A ADAMA Ltd. Legal Representative: Ignacio Dominguez March 29, 2022 278