ADAMA Reports Second Quarter and First Half Year 2023 Results
Sales & profit impacted by channel destocking while the Company is
exercising inventory management through selective procurement of high
margin products
Second Quarter 2023 Highlights:
Sales down 17% to $1,233 million (-12% in RMB terms; -15% in CER1 terms), mainly reflecting
10% decrease in volume and 5% decrease in prices
Adjusted EBITDA amounted to $112 million vs. $240 million in Q2 2022
Adjusted net loss of $41 million; Reported net loss of $46 million
First Half Year 2023 Highlights:
Sales down 14% to $2,492 million (-8% in RMB terms; -11% in CER terms), mainly reflecting 9%
decrease in volume and 2% decrease in prices
Adjusted EBITDA amounted to $277 million vs. $441 million in H1 2022
Adjusted net loss of $20 million; Reported net loss of $34 million
BEIJING, CHINA and TEL AVIV, ISRAEL, August 30, 2023 – ADAMA Ltd. (the “Company”) (SZSE
000553), today reported its financial results for the second quarter and six-month period ended June
30, 2023.
Steve Hawkins, President and CEO of ADAMA, said, "Agricultural markets are cyclical in nature
and the market we are seeing in 2023 is an adjustment to the market overstocking in 2022, leading
ADAMA's performance to be impacted in the quarter both by lower volumes as well as softer pricing.
In response the Company has implemented a cross-company turnaround plan to improve cashflow
and profit. In the second quarter the Company has already begun to clear out its high-cost inventory
while being selective regarding new procurement, focusing on high margin products, in line with the
Company's goal to improve the quality of business and its portfolio mix. Additional steps have also
been taken to ensure OPEX is well managed. While the consumption of high-cost inventory impacts
the results in the short term, we already see the positive impact of the reduction of procurement
reaching positive cashflow in the quarter. We believe these steps will support ADAMA, positioning it
better to capture opportunities in the current market cycle."
1 CER – Constant Exchange Rates
1
Table 1. Financial Performance Summary
As Reported Adjustments Adjusted
USD (m) Q2 Q2 Q2 Q2 Q2 Q2
% Change % Change
2023 2022 2023 2022 2023 2022
Revenues 1,233 1,479 (17%) - - 1,233 1,479 (17%)
Gross profit 253 399 (36%) 24 38 277 437 (37%)
% of sales 20.6% 27.0% 22.5% 29.6%
Operating income (EBIT) 40 143 (72%) 6 27 46 170 (73%)
% of sales 3.3% 9.6% 3.8% 11.5%
Income before taxes (56) 57 6 31 (50) 88
% of sales (4.5%) 3.9% (4.0%) 6.0%
Net income (46) 46 5 30 (41) 76
% of sales (3.8%) 3.1% (3.3%) 5.1%
EPS
- USD (0.0199) 0.0198 (0.0177) 0.0326
- RMB (0.1397) 0.1307 (0.1238) 0.2152
EBITDA 115 224 (49%) (3) 16 112 240 (53%)
% of sales 9.3% 15.1% 9.1% 16.2%
As Reported Adjustments Adjusted
USD (m) H1 H1 H1 H1 H1 H1
% Change % Change
2023 2022 2023 2022 2023 2022
Revenues 2,492 2,899 (14%) - - 2,492 2,899 (14%)
Gross profit 563 767 (27%) 54 85 617 852 (28%)
% of sales 22.6% 26.4% 24.8% 29.4%
Operating income (EBIT) 132 267 (51%) 16 36 148 303 (51%)
% of sales 5.3% 9.2% 5.9% 10.4%
Income before taxes (45) 129 16 40 (29) 168
% of sales (1.8%) 4.4% (1.2%) 5.8%
Net income (34) 113 15 37 (20) 151
% of sales (1.4%) 3.9% (0.8%) 5.2%
EPS
- USD (0.0147) 0.0487 (0.0084) 0.0648
- RMB (0.1039) 0.3142 (0.0604) 0.4197
EBITDA 281 427 (34%) (4) 14 277 441 (37%)
% of sales 11.3% 14.7% 11.1% 15.2%
Notes:
“As Reported” denotes the Company’s financial statements according to the Accounting Standards for Business Enterprises and t he
implementation guidance, interpretations and other relevant provisions issued or revised subsequently by the Chinese Ministry of
Finance (the “MoF) (collectively referred to as “ASBE”). Note that in the reported financial statements, according to the ASBE guidelines
[IAS 37], certain items (specifically certain transportation costs and certain idleness charges) are classified under COGS. Please see
the appendix to this release for further information.
Relevant income statement items contained in this release are also presented on an “Adjusted” basis, which exclude items that are of
a transitory or non-cash/non-operational nature that do not impact the ongoing performance of the business, and reflect the way the
Company’s management and the Board of Directors view the performance of the Company internally. The Company believes that
excluding the effects of these items from its operating results allows management and investors to effectively compare the true
underlying financial performance of its business from period to period and against its global peers . A detailed summary of these
adjustments appears in the appendix below.
The number of shares used to calculate both basic and diluted earnings per share in both Q2 & H1 2023 and 2022 is 2,329.8 million
shares.
In this table and all tables in this release numbers may not sum due to rounding.
2
The general crop protection market environment 2
Over Q2 2023 the price trend of crop commodities was mixed, with corn, wheat and soybean prices
continuing to decline while sugar and rice prices increased. Overall, crop commodity prices remain
above the 10-yr average and global planted area remains high compared to previous years, supporting
healthy input demand from farmers.
Despite relatively healthy farmer consumption, crop protection sales into the distribution channel have
slowed down significantly due to high channel inventory levels, following channel loading in 2022. In
addition, the distribution channel across all geographies is opting to buy crop inputs on a "just in time"
basis and striving to carry minimal inventory given wide high interest rate environment outside China
and abundant supply of CP products. This trend, coupled with the ongoing decline in Active
Ingredients prices coming out of China, is putting pressure on crop protection prices.
Portfolio Development Update
Product Launches, Registrations & Formulation Mastery Update:
During the second quarter of 2023 ADAMA continued to register and launch multiple new products in
markets across the globe, adding on to its differentiated product portfolio. New Product Introductions
(NPI) percentage out of the full year sales of 2022 reached 22%, referring to products launched over
the past 5 years. Differentiated products include products that are based on recently off-patented
active ingredients (AI's) that have been classified as high commercial potential - "Core Leap" AI's, and
products that are based on unique proprietary formulations, products with more than one mode of
action, and biologicals.
Select launches of differentiated products during the second quarter of 2023 in select countries include:
Launch in the USA of Fullscript, a dual mode herbicide for rice, part of the FullPage rice
cropping solution, in collaboration with Rice Tech.
Fullscript is the first product to be launched based on Sesgama ADAMA's proprietary
formulation technology platform for high-load and other challenging formulations, enabling less
use of co-formulants, transport and packaging materials per acre treated with a resulting
improved product sustainability profile.
Select registrations of differentiated products during second quarter of 2023 in select countries include:
Registration in Poland for Mastercop ACT, a natural copper-based fungicide, based on
ADAMA’s proprietary Formulation Mastery technology for low dose products minimizing
environmental load (enabling over 50% reduction in copper usage per hectare compared to
conventional copper fungicides) and while maintaining its efficacy through optimization of
delivery mechanisms Mastercop ACT is intended to control a range of fungal and bacterial
diseases on a wide range of crops including grapes, pome fruits, stone fruits, fruiting
vegetables and tuber crops. According to EU regulations, once a registration is achieved in
one of the countries in a regulatory zone, registration can be expediated in other countries
within the same regulatory zone. Poland is part of the Central Zone, which also includes
Germany.
2Sources: Rabobank, Agri Commodity Markets Research, March 2023; AgbioInvestor-Quarterly-Briefing-S ervice-PLUS_Q1-2023;
JPM: Agricultural Markets Weekly, March 2023
3
In Q2 2023, the Company continued with the roll out of products based on the active ingredient
Prothioconazole and ADAMA’s Asorbital formulation mastery technology platform, for
optimized penetration and enhanced long-lasting protection. These include the registration of
Avastel in Sweden and Turkey, Soratel in Lithuania and registration of Maganic in Sweden
and Turkey.
Registration in Greece of Timeline FX, a unique three-way spring foliar herbicide mixture
providing cross-spectrum protection for cereals against broadleaf and grass weeds.
Select patents granted during second quarter of 2023 in select countries include:
Patent granted in Australia for Sesgama.
First patent granted for Soratel in Morocco. Soratel is based on ADAMA’s proprietary
Formulation Mastery technology platform Asorbital
Patent granted for ADAMA’s proprietary T.O.V. formulation technology in China and Ukraine.
Financial Highlights
Revenues in the second quarter declined by approximately 17% (-12% in RMB terms; -15% in CER
terms) to $1,233 million, reflecting a decrease of 10% in volumes and a decrease of 5% in prices. The
lower sales reflect market dynamics of channel destocking in light of high interest rates and a "wait
and see" approach, given the market overstocking in 2022 and declining active ingredient and raw
material costs impacting the crop protection market pricing. Additionally, sales were also impacted by
negative weather conditions in certain geographies.
These results brought the revenues in the first half of 2023 to $2,492 million, a decline of approximately
14% (-8% in RMB terms; -11% in CER terms), reflecting a decrease of 9% in volumes and a decrease
of 2% in prices. This is in comparison to the record sales the Company achieved in 2022, which
reflected the high demand due to supply uncertainty in the market.
Table 2. Regional Sales Performance
H1
Q2 2023 Q2 2022 Change Change H1 2022 Change Change
2023
$m $m USD CER $m USD CER
$m
Europe, Africa & Middle East (EAME)* 334 365 (8.4%) (5.4%) 765 794 (3.7%) 2.5%
North America 225 278 (19.1%) (18.6%) 436 562 (22.4%) (21.9%)
Latin America 329 379 (13.1%) (14.7%) 562 613 (8.3%) (10.1%)
Asia Pacific* 345 458 (24.6%) (20.7%) 729 930 (21.6%) (16.3%)
Of which China 141 213 (33.6%) (30.8%) 323 449 (28.1%) (23.0%)
Total 1,233 1,479 (16.6%) (15.0%) 2,492 2,899 (14.0%) (10.9%)
CER: Constant Exchange Rates
* 2022 denote proforma sales. As of 2023, the India, Middle East & Africa (IMA) region has been
reorganized such that the countries formerly included in this region are now included in the Europe
region (renamed EAME) or in the Asia Pacific region.
Europe, Africa & Middle East (EAME): Sales in EAME in constant exchange rates were lower
in the quarter due to a decrease in volumes exacerbated by negative weather conditions and high
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inventory levels in the market, and higher in the half year period, reflecting generally higher prices
in comparison to the same periods in 2022. While prices were higher on a year-to-year basis,
market prices are currently presenting a downward trend. The fungicide Soratel based on
ADAMA’s Asorbital formulation mastery technology, continues to be well received in the UK.
North America: Consumer & Professional Solutions – Sales were impacted by lower demand
following inflationary pressures and high channel inventories.
In the US Ag market the channel is lowering inventory levels due to high interest rates with
demand focusing on "just-in-time" supply from producers. Sales were also impacted by drought
in the Mid-West and pressure on prices following channel destocking.
Sales in Canada increased as the Company expanded its product portfolio during 2022, while
pricing in the market was more insulated with overall market inventories better controlled.
Latin America: Brazil – strong competition and channel destocking put pressure on prices led
to a decline in sales, while the Company is successfully consuming the high-cost inventory
accumulated.
In LATAM, sales are supported by the strong performance of the biologicals portfolio. Looking
forward, El Nio is expected to have a positive effect on rainfall in the South of LATAM.
Asia-Pacific (APAC):
In China, the market is experiencing oversupply and pricing pressure impacting both the branded
and industrial sales, while the branded portfolio was significantly supported by the sales of
differentiated products.
Sales in the wider APAC & Pacific region were negatively impacted by strong competition from
China and by the commencement and negative impact of El Nio.
In India sales were impacted by the delayed Monsoon season.
Gross Profit reported in the second quarter reached $253 million (gross margin of 20.6%) compared
to $399 million (gross margin of 27.0%) in the same quarter last year and reached $563 million (gross
margin of 22.6%) in the half year period compared to $767 million (gross margin of 26.4%) last year.
Adjustments to reported results: The adjusted gross profit includes reclassification of all
inventory impairment, taxes and surcharge and excludes certain transportation costs
(classified under operating expenses).
Excluding the impact of the abovementioned adjusted items, adjusted gross profit in the second
quarter reached $277 million (gross margin of 22.5%) compared to $437 million (gross margin of
29.6%) in the same quarter last year and reached $617 million (gross margin of 24.8%) in the half
year period compared to $852 million (gross margin of 29.4%) last year.
The decline in gross profit in the second quarter and half year period was due to the decline in sales,
as described above, high-cost inventory and exchange rates. These impacts were slightly moderated
by the improvement in the Company's sales mix of higher margin products.
Operating expenses reported in the second quarter and half year period of 2023 were $213 million
(17.3% of sales) and $431 million (17.3% of sales), compared to $256 million (17.3% of sales) and
$500 million (17.2% of sales) in the corresponding periods last year, respectively.
Adjustments to reported results: please refer to the explanation regarding adjustments to the gross
profit in respect to certain transportation costs, taxes and surcharges and inventory impairment.
Additionally, the Company recorded certain non-operational items within its reported
operating expenses amounting to $6 million in Q2 2023 in comparison to $22 million in Q2
2022 and $15 in H1 2023 in comparison to $28 in H1 2022. These include mainly (i) non-
5
cash amortization charges in respect of Transfer Assets received from Syngenta related
to the 2017 ChemChina-Syngenta acquisition, (ii) charges related 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,
and (iii) incentive plans - share-based compensation. For further details on these non-
operational items, please see the appendix to this release.
Excluding the impact of the abovementioned non-operational items, adjusted operating expenses
in the second quarter and half year period were $231 million (18.7% of sales) and $469 million (18.8%
of sales), compared to $268 million (18.1% of sales) and $549 million (18.9% of sales) in the
corresponding periods last year, respectively.
The operating expenses were lower in the second quarter and half year period of 2023 mainly due to
Company OPEX management measures, lower transportation and logistics costs, an adjustment of a
provision for success-based compensation, and the positive impact of exchange rates. Additionally,
in the first half year of 2023 the company did not increase the doubtful debt provision that was recorded
for trade receivables in Ukraine during the first half year of 2022.
Operating income reported in the second quarter amounted to $40 million (3.3% of sales) compared
to $143 million (9.6% of sales) in the same quarter last year and amounted to $132 million (5.3% of
sales) in the half year period compared to $267 million (9.2% of sales) last year.
Excluding the impact of the abovementioned non-operational items, adjusted operating income in
the second quarter amounted to $46 million (3.8% of sales) compared to $170 million (11.5% of sales)
in the same quarter last year and amounted to $148 million (5.9% of sales) in the half year period
compared to $303 million (10.4% of sales) in the same period last year.
EBITDA reported in the second quarter amounted to $115 million (9.3% of sales) compared to $224
million (15.1% of sales) in the same quarter last year and amounted to $281 million (11.3% of sales)
in the half year period compared to $427 million (14.7% of sales) last year.
Excluding the impact of the abovementioned non-operational items, adjusted EBITDA in the second
quarter amounted to $112 million (9.1% of sales) compared to $240 million (16.2% of sales) in the
same quarter last year and amounted to $277 million (11.1% of sales) in the half year period compared
to $441 million (15.2% of sales) last year.
Adjusted Financial expenses amounted to $96 million in the second quarter and $177 million in the
half year period, compared to $82 million and $134 million in the corresponding periods last year,
respectively. The higher financial expenses were mainly driven by higher bank interest expenses due
to the sharp increase in interest rates and an increase in short-term loans as well as higher hedging
costs on exchange rates. These financial expenses were moderated by the net effect of lower Israeli
CPI on the ILS-denominated, CPI-linked bonds.
Adjusted taxes on income in the second quarter amounted to an income of $8 million and an income
of $10 million in the half year period, compared to tax expenses of $12 million and $18 million in the
corresponding periods last year. The tax income in the second quarter and half year period of 2023
was mainly due to losses before tax, in addition to a tax income due to the non-cash impact of the
stronger BRL on the value of non-monetary tax assets and the method of calculation of tax assets
related to unrealized profits.
Net loss attributable to the shareholders of the Company reported in the second quarter was $46
million and $34 million in the half-year period, compared to net income of $46 million (3.1% of sales)
and $113 million (3.9% of sales) in the corresponding periods last year, respectively.
Excluding the impact of the abovementioned extraordinary and non-operational charges, adjusted
net loss in the second quarter was $41 million, and $20 million in the half-year period, compared to
6
net income of $76 million (5.1% of sales), and $151 million (5.2% of sales) in the corresponding
periods last year, respectively.
Trade working capital as of June 30, 2023, was $2,844 million compared to $2,664 million as of June
2022, and compared to $2,634 million as of December 31, 2022. Following the Company's
implementation of strict procurement practices, inventory held by the Company reached $2,307 million
as of June 30, 2023, in comparison to $2,430 million as of December 31, 2022. The increase in working
capital compared to the end of 2022 was following the Company's implementation of strict
procurement practices, as mentioned, which led to lower trade payables and a decrease in the level
of inventory held by the company.
Cash Flow: Operating cash flow of $405 million was generated in the second quarter and $19 million
consumed in the half year period in 2023, compared to $71 million generated in the second quarter
and $215 million consumed in the half year period in 2022. The higher cash flow generated in the
quarter was primarily due to a decrease in the procurement of goods.
Net cash used in investing activities was $69 million in the second quarter and $162 million in the first
half period in 2023, compared to $107 million and $197 million in the corresponding periods last year,
respectively. The cash used in investing activities in the second quarter and first half period of 2023
included investments in new production facilities in ADAMA Anpon, investments in manufacturing
capabilities in Israel and investments in intangible assets relating to ADAMA's global registrations as
well as the acquisition of AgriNova New Zealand in Q1 2023.
Free cash flow of $288 million was generated in the second quarter and $254 million consumed in the
half-year period compared to $83 million consumed in the second quarter and $469 million consumed
in the corresponding periods last year, respectively, reflecting the aforementioned operating and
investing cash flow dynamics as well as the prioritization of investments.
7
Table 3. Revenues by operating segment
Sales by segment
Q2 2023 Q2 2022 H1 2023 H1 2022
% % % %
USD (m) USD (m) USD (m) USD (m)
Crop Protection 1,145 93% 1,327 90% 2,291 92% 2,598 90%
Intermediates and
89 7% 152 10% 201 8% 301 10%
Ingredients
Total 1,233 100% 1,479 100% 2,492 100% 2,899 100%
Sales by product category
Q2 2023 Q2 2022 H1 2023 H1 2022
% % % %
USD (m) USD (m) USD (m) USD (m)
Herbicides 528 43% 702 47% 1,104 44% 1,361 47%
Insecticides 352 29% 393 27% 686 28% 744 26%
Fungicides 264 21% 232 16% 502 20% 493 17%
Intermediates and
89 7% 152 10% 201 8% 301 10%
Ingredients
Total 1,233 100% 1,479 100% 2,492 100% 2,899 100%
Note: the sales split by product category is provided for convenience purposes only and is not representative of the way the Company is
managed or in which it makes its operational decisions. Numbers may not sum due to rounding.
Further Information
All filings of the Company, together with a presentation of the key financial highlights of the period,
can be accessed through the Company website at www.adama.com.
About ADAMA
ADAMA Ltd. is a global leader in crop protection, providing solutions to farmers across the world to
combat weeds, insects and disease. ADAMA has one of the widest and most diverse portfolios of
active ingredients in the world, state-of-the art R&D, manufacturing and formulation facilities,
together with a culture that empowers our people in markets around the world to listen to farmers
and ideate from the field. This uniquely positions ADAMA to offer a vast array of distinctive mixtures,
formulations and high-quality differentiated products, delivering solutions that meet local farmer and
customer needs in over 100 countries globally. For more information, visit us at www.ADAMA. co m
and follow us on Twitter at @ADAMAAgri.
Contact
Rivka Neufeld Zhujun Wang
Global Investor Relations China Investor Relations
Email: ir@adama.com Email: irchina@adama.com
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Abridged Adjusted Consolidated Financial Statements
The following abridged consolidated financial statements and notes have been prepared as described in Note 1 in this
appendix. While prepared based on the principles of Chinese Accounting Standards (ASBE), they do not contain all of the
information which either ASBE or IFRS would require for a complete set of financial statements, and should be read in
conjunction with the consolidated financial statements of both ADAMA Ltd. and Adama Agricultural Solutions Ltd. as filed
with the Shenzhen and Tel Aviv Stock Exchanges, respectively.
Relevant income statement items contained in this release are also presented on an “Adjusted” basis, which exclude items
that are of a one-time or non-cash/non-operational nature that do not impact the ongoing performance of the business, and
reflect the way the Company’s management and the Board of Directors view the performance of the Company internally.
The Company believes that excluding the effects of these items from its operating results allows management and investors
to effectively compare the true underlying financial performance of its business from period to period and against its global
peers.
Abridged Consolidated Income Statement for the Second Quarter
Q2 2023 Q2 2022 Q2 2023 Q2 2022
Adjusted3
USD (m) USD (m) RMB (m) RMB (m)
Revenues 1,233 1,479 8,643 9,780
Cost of Sales 943 1,029 6,609 6,800
Other costs 13 13 89 87
Gross profit 277 437 1,945 2,893
% of revenue 22.5% 29.6% 22.5% 29.6%
Selling & Distribution expenses 185 209 1,297 1,383
General & Administrative expenses 30 47 208 309
Research & Development expenses 18 22 128 143
Other operating expenses (2) (10) (13) (66)
Total operating expenses 231 268 1,620 1,770
% of revenue 18.7% 18.1% 18.7% 18.1%
Operating income (EBIT) 46 170 325 1,123
% of revenue 3.8% 11.5% 3.8% 11.5%
Financial expenses 96 82 673 540
Income before taxes (50) 88 (348) 583
Taxes on Income )8( 12 (59) 82
Net Income (41) 76 (288) 501
% of revenue (3.3%) 5.1% (3.3%) 5.1%
Adjustments 5 30 37 197
Reported Net income (46) 46 (325) 304
% of revenue (3.8%) 3.1% (3.8%) 3.1%
Adjusted EBITDA 112 240 783 1,585
% of revenue 9.1% 16.2% 9.1% 16.2%
Adjusted EPS4 – Basic (0.0177) 0.0326 (0.1238) 0.2152
– Diluted (0.0177) 0.0326 (0.1238) 0.2152
Reported EPS2 – Basic (0.0199) 0.0198 (0.1397) 0.1307
– Diluted (0.0199) 0.0198 (0.1397) 0.1307
3
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the financial
statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
4
The number of shares used to calculate both basic and diluted earnings per share in both Q2 2023 and 2022 is 2,329.8 million shares.
9
Abridged Consolidated Income Statement for the First Half
H1 2023 H1 2022 H1 2023 H1 2022
Adjusted5
USD (m) USD (m) RMB (m) RMB (m)
Revenues 2,492 2,899 17,253 18,796
Cost of Sales 1,852 2,027 12,827 13,138
Other costs 22 21 157 135
Gross profit 617 852 4,270 5,522
% of revenue 24.8% 29.4% 24.7% 29.4%
Selling & Distribution expenses 371 408 2,568 2,646
General & Administrative expenses 69 93 475 606
Research & Development expenses 38 42 263 274
Other operating expenses (8) 5 (56) 29
Total operating expenses 469 549 3,249 3,555
% of revenue 18.8% 18.9% 18.8% 18.9%
Operating income (EBIT) 148 303 1,021 1,967
% of revenue 5.9% 10.4% 5.9% 10.5%
Financial expenses 177 134 1,228 875
Income before taxes (29) 168 (207) 1,092
Taxes on Income (10) 18 (67) 115
Net Income (20) 151 (141) 978
% of revenue (0.8%) 5.2% (0.8%) 5.2%
Adjustments 15 37 101 246
Reported Net income (34) 113 (242) 732
% of revenue (1.4%) 3.9% (1.4%) 3.9%
Adjusted EBITDA 277 441 1,914 2,862
% of revenue 11.1% 15.2% 11.1% 15.2%
Adjusted EPS6 – Basic (0.0084) 0.0648 (0.0604) 0.4197
– Diluted (0.0084) 0.0648 (0.0604) 0.4197
Reported EPS2 – Basic (0.0147) 0.0487 (0.1039) 0.3142
– Diluted (0.0147) 0.0487 (0.1039) 0.3142
5
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the financial
statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
6
The number of shares used to calculate both basic and diluted earnings per share in H1 2023 and 2022 is 2,329.8 million shares.
10
Abridged Consolidated Balance Sheet
June 30 June 30 June 30 June 30
2023 2022 2023 2022
USD (m) USD (m) RMB (m) RMB (m)
Assets
Current assets:
Cash at bank and on hand 637 491 4,605 3,297
Bills and accounts receivable 1,421 1,606 10,264 10,780
Inventories 2,307 2,320 16,668 15,569
Other current assets, receivables and
269 351 1,941 2,358
prepaid expenses
Total current assets 4,633 4,768 33,478 32,003
Non-current assets:
Fixed assets, net 1,747 1,674 12,624 11,234
Rights of use assets 89 72 641 486
Intangible assets, net 1,472 1,488 10,634 9,984
Deferred tax assets 244 160 1,760 1,073
Other non-current assets 106 109 766 730
Total non-current assets 3,657 3,503 26,424 23,507
Total assets 8,290 8,271 59,902 55,510
Liabilities
Current liabilities:
Loans and credit from banks and other
1,236 488 8,934 3,273
lenders
Bills and accounts payable 892 1,271 6,442 8,528
Other current liabilities 948 855 6,853 5,739
Total current liabilities 3,076 2,614 22,228 17,540
Long-term liabilities:
Loans and credit from banks and other
453 640 3,276 4,292
lenders
Debentures 1,029 1,120 7,433 7,517
Deferred tax liabilities 46 58 333 392
Employee benefits 106 115 763 769
Other long-term liabilities 308 367 2,224 2,461
Total long-term liabilities 1,942 2,299 14,029 15,433
Total liabilities 5,018 4,913 36,257 32,973
Equity
Total equity 3,272 3,358 23,645 22,537
Total liabilities and equity 8,290 8,271 59,902 55,510
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Abridged Consolidated Cash Flow Statement for the Second Quarter
Q2 2023 Q2 2022 Q2 2023 Q2 2022
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 405 71 2,840 468
Cash flow from operating activities 405 71 2,840 468
Investing activities:
Acquisitions of fixed and intangible assets (85) (107) (598) (707)
Net cash received from disposal of fixed assets,
intangible assets and others 1 10 5 67
Acquisition of subsidiaries 0 0 - -
Other investing activities 16 (10) 112 (65)
Cash flow used for investing activities (69) (107) (482) (705)
Financing activities:
Receipt of loans from banks and other lenders 73 222 510 1,466
Repayment of loans from banks and other lenders (200) (150) (1,400) (992)
Interest payment and other (49) (53) (342) (353)
Dividends to shareholders (9) (3) (63) (19)
Other financing activities (22) (79) (155) (523)
Cash flow from (used for) financing activities (207) (64) (1,450) (421)
Effects of exchange rate movement on cash and cash
(3) (4) 183 174
equivalents
Net change in cash and cash equivalents 126 (103) 1,092 (484)
Cash and cash equivalents at the beginning of the period 506 579 3,479 3,674
Cash and cash equivalents at the end of the period 633 475 4,571 3,191
Free Cash Flow 288 (83) 2,021 (551)
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Abridged Consolidated Cash Flow Statement for the First Half
H1 2023 H1 2022 H1 2023 H1 2022
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities (19) (215) (65) (1,346)
Cash flow from operating activities (19) (215) (65) (1,346)
Investing activities:
Acquisitions of fixed and intangible assets (170) (199) (1,178) (1,292)
Net cash received from disposal of fixed assets,
4 11 31 70
intangible assets and others
Acquisition of subsidiaries (22) 0 (148) -
Other investing activities 25 (9) 175 (57)
Cash flow used for investing activities (162) (197) (1,121) (1,279)
Financing activities:
Receipt of loans from banks and other lenders 598 374 4,105 2,435
Repayment of loans from banks and other lenders (229) (177) (1,599) (1,164)
Interest payment and other (75) (63) (522) (413)
Dividends to shareholders (9) (3) (63) (19)
Other financing activities (75) (144) (520) (934)
Cash flow from (used for) financing activities 210 (12) 1,401 (94)
Effects of exchange rate movement on cash and cash
(2) (4) 130 150
equivalents
Net change in cash and cash equivalents 26 (428) 345 (2,569)
Cash and cash equivalents at the beginning of the period 607 903 4,255 5,759
Cash and cash equivalents at the end of the period 633 475 4,571 3,191
Free Cash Flow (254) (469) (1,689) (2,999)
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Notes to Abridged Consolidated Financial Statements
Note 1: Basis of preparation
Basis of presentation and accounting policies: The abridged consolidated financial statements for the
quarters ended June 30, 2023 and 2022 incorporate the financial statements of ADAMA Ltd. and of all of its
subsidiaries (the “Company”), including Adama Agricultural Solutions Ltd. (“Solutions”) and its subsidiaries.
The Company has adopted the Accounting Standards for Business Enterprises (ASBE) issued by the Ministry
of Finance (the "MoF") and the implementation guidance, interpretations and other relevant provisions issued
or revised subsequently by the MoF (collectively referred to as “ASBE”).
The abridged consolidated financial statements contained in this release are presented in both Chinese
Renminbi (RMB), as the Company’s shares are traded on the Shenzhen Stock Exchange, as well as in United
States dollars ($) as this is the major currency in which the Company’s business is conducted. For the purposes
of this release, a customary convenience translation has been used for the translation from RMB to US dollars,
with Income Statement and Cash Flow items being translated using the quarterly average exchange rate, and
Balance Sheet items being translated using the exchange rate at the end of the period.
The preparation of financial statements requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimated.
Note 2: Abridged Financial Statements
For ease of use, the financial statements shown in this release have been abridged as follows:
Abridged Consolidated Income Statement:
“Gross profit” in this release is revenue less costs of goods sold, taxes and surcharges, inventory
impairment and other idleness charges (in addition to those already included in costs of goods sold);
part of the idleness charges is removed in the Adjusted financial statements
“Other operating expenses” includes impairment losses (not including inventory impairment); gain (loss)
from disposal of assets and non-operating income and expenses
“Operating expenses” in this release differ from those in the formally reported financial statements in
that certain transportation costs have been reclassified from COGS to Operating Expenses.
“Financial expenses” includes net financing expenses and gains/losses from changes in fair value.
Abridged Consolidated Balance Sheet:
“Other current assets, receivables and prepaid expenses” includes financial assets held for trading;
financial assets in respect of derivatives; prepayments; other receivables; and other current assets
“Fixed assets, net” includes fixed assets and construction in progress
“Intangible assets, net” includes intangible assets and goodwill
“Other non-current assets” includes other equity investments; long-term equity investments; long-term
receivables; investment property; and other non-current assets
“Loans and credit from banks and other lenders” includes short-term loans and non-current liabilities
due within one year
“Other current liabilities” includes financial liabilities in respect of derivatives; payables for employee
benefits, taxes, interest, dividends and others; advances from customers and other current liabilities
“Other long-term liabilities” includes long-term payables, provisions, deferred income and other non-
current liabilities
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Income Statement Adjustments
Q2 2023 Q2 2022 Q2 2023 Q2 2022
USD (m) USD (m) RMB (m) RMB (m)
Net Income (loss) (Reported) (46) 46 (325) 304
Adjustments to COGS & Operating Expenses:
1. Amortization of acquisition-related PPA and other acquisition related costs 4 5 29 35
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
Syngenta transaction (non-cash) 5 6 33 38
3. Upgrade & Relocation related costs 1 2 5 13
4. Incentive plans (4) 14 (25) 94
5. ASBEs classifications COGS impact (24) (33) (165) (221)
6. ASBEs classifications OPEX impact 24 33 165 221
Total Adjustments to Operating Income (EBIT) 6 27 42 180
Total Adjustments to EBITDA (3) 16 (23) 105
Adjustments to Financing Expenses - 4 - 24
Adjustments to Taxes
1. Taxes impact 1 1 5 7
Total adjustments to Net Income 5 30 37 197
Net Income (Adjusted) (41) 76 (288) 501
H1 2023 H1 2022 H1 2023 H1 2022
USD (m) USD (m) RMB (m) RMB (m)
Net Income (loss) (Reported)) (34) 113 (242) 732
Adjustments to COGS & Operating Expenses:
1. Amortization of acquisition-related PPA and other acquisition related costs 8 11 58 69
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
Syngenta transaction (non-cash) 11 11 74 73
3. Upgrade & Relocation related costs 1 4 10 25
4. Incentive plans (4) 10 (31) 68
5. ASBEs classifications COGS impact (53) (77) (368) (496)
6. ASBEs classifications OPEX impact 53 77 368 496
Total Adjustments to Operating Income (EBIT) 16 36 111 235
Total Adjustments to EBITDA (4) 14 (27) 90
Adjustments to Financing Expenses - 4 - 24
Adjustments to Taxes
1. Taxes impact 1 2 10 13
Total adjustments to Net Income 15 37 101 246
Net Income (Adjusted) (20) 151 (141) 978
Notes:
1. Amortization of acquisition-related PPA and other acquisition related costs:
a. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash): Under ASBE, since the second combined reporting
for Q3 2017, the Company has inherited the historical “legacy” amortization charge that ChemChina previously was incurring in
respect of its acquisition of Solutions in 2011. This amortization is done in a linear manner on a quarterly basis, most of which will
have been completed by the end of 2020.
b. Amortization of acquisition-related PPA (non-cash) and other acquisition-related costs: Related mainly to the non-cash
amortization of intangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions, with no impact on th e
ongoing performance of the companies acquired, as well as other M&A-related costs.
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash): The proceeds from
the Divestment of crop protection products in connection with the approval by the EU Commission of the acquisition of Syngenta by ChemChina,
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net of taxes and transaction expenses, were paid to Syngenta in return for the transfer of a portfolio of products in Europe of similar nature and
economic value. Since the products acquired from Syngenta are of the same nature and with the same net economic value as thos e divested,
and since in 2018 the Company adjusted for the one-time gain that it made on the divested products, the additional amortization charge incurred
due to the written-up value of the acquired assets is also adjusted to present a consistent view of Divestment and T ransfer transactions, which
had no net impact on the underlying economic performance of the Company. These additional amortization charges will continue until 2032 but
at a reducing rate, yet will still be at a meaningful level until 2028.
3. Upgrade & manufacturing facilities relocation-related costs: These charges all relate to the multi-year Upgrade & Relocation program in
China. As part of this program, production assets located in the old production sites in Jingzhou and Huai’An were relocated to new sites in 2020,
2021 and in the coming years. Since some of the older production assets may not be able to be relocated, some of these assets which ar e no
longer operational are being written off (or impaired), while for others, their economic life has been shortened and therefore will be depreciated
over a shorter period. Since these are older assets that were built many years ago and will be replaced by newer production facilities at the new
sites, and since the ongoing operations of the business will not be impacted thereby, the Company adjusts for the impact of all charges related
to the China Upgrade & Relocated program, which include mainly: (i) excess procurement costs incurred as the Company continued to fulfill
demand for its products, in order to protect its market position, through replacement sourcing at significantly higher costs from third-party suppliers
(ii) elevated idleness charges largely related to suspensions at the facilities being relocated These charges have significantly declined since the
second quarter of 2022, as the relocation and upgrade of the manufacturing Jingzhou site in China has been completed and is now at a high
level of operation.
4. Incentive plans: ADAMA granted certain of its employees, a long-term incentive (LTI) in the form of 'phantom' awards linked to the Company’s
share price. As such, the Company records an expense, or recognizes income, depending on the fluctuation in the Company’s sha re price,
regardless of award exercises. To neutralize the impact of such share price movements on the measurement of the Company’s per formance
and expected employee compensation and to reflect the existing phantom awards, in the Company’s adjusted financial performance, the LTI is
presented on an equity-settled basis in accordance with the value of the existing plan at the grant date.
5. ASBEs classifications COGS impact – according to the ASBE guidelines [IAS 37], certain items (specifically certain transportation costs) are
classified under COGS.
6. ASBEs classifications OPEX impact – according to the ASBE guidelines [IAS 37], certain items (specifically certain transportation costs) are
classified under COGS.
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Exchange Rate Data for the Company's Principal Functional Currencies
June 30 Q2 Average H1 Average
2023 2022 Change 2023 2022 Change 2023 2022 Change
EUR/USD 1.086 1.040 4.48% 1.089 1.07 2.12% 1.081 1.094 (1.18%)
USD/BRL 4.819 5.238 8.00% 4.951 4.92 (0.62%) 5.073 5.077 0.08%
USD/PLN 4.107 4.483 8.39% 4.178 4.36 4.15% 4.285 4.239 (1.07%)
USD/ZAR 18.657 16.103 (15.86%) 18.649 15.57 (19.78%) 18.192 15.409 (18.06%)
AUD/USD 0.663 0.687 (3.59%) 0.669 0.72 (6.53%) 0.676 0.720 (6.01%)
GBP/USD 1.262 1.211 4.27% 1.262 1.21 4.27% 1.233 1.299 (5.06%)
USD/ILS 3.700 3.500 (5.71%) 3.700 3.50 (5.71%) 3.592 3.270 (9.84%)
USD L 3M 3.40% 2.29% 1.11 bp 3.08% 1.53% 1.55 bp 2.65% 1.03% 1.62 bp
June 30 Q2 Average H1 Average
2023 2022 Change 2023 2022 Change 2023 2022 Change
USD/RMB 7.226 6.711 7.66% 7.009 6.611 6.01% 6.925 6.481 6.85%
EUR/RMB 7.848 6.977 12.49% 7.633 7.051 8.25% 7.484 7.088 5.59%
RMB/BRL 0.667 0.780 14.55% 0.706 0.744 5.08% 0.733 0.783 6.49%
RMB/PLN 0.568 0.668 14.91% 0.596 0.659 9.58% 0.619 0.654 5.41%
RMB/ZAR 0.387 0.417 7.07% 0.376 0.425 11.50% 0.381 0.421 9.49%
AUD/RMB 4.788 4.613 3.80% 4.688 4.731 (0.91%) 4.683 4.663 0.43%
GBP/RMB 9.121 8.125 12.26% 8.776 8.318 5.50% 8.538 8.416 1.44%
RMB/ILS 0.512 0.522 1.81% 0.520 0.505 (2.90%) 0.519 0.505 (2.79%)
RMB Shibor 3M 2.168% 2.00% 0.168 bp 2.292% 2.139% 0.153 bp 2.352% 2.276% 0.076 bp
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