ADAMA Reports Second Quarter and First Half Year 2024 Results? Q2 2024 Adjusted EBITDA 7% above Q2 2023; Improvement in gross margin and adjustedEBITDA margin in Q2 & H1 2024 following strict inventory management allowing the Company tobenefit from market costs, positive product sales mix and continued OPEX management measures;
? Significant improvement in cash flow despite challenging market conditions; Positive operatingcash flow of $243 million achieved in H1 2024 in comparison to a negative cash flow of $19 millionin H1 2023; Positive free cash flow of $51m achieved in H1 2024 in comparison to a negative cashflow of $254m in H1 2023;? Implementation of transformation plan underway, showing initial benefits as challenging market
conditions continue.Second Quarter 2024 Highlights:
? Sales down 16% to $1,041 million (-14% in RMB terms; -14% in CER
terms), mainly reflecting a
10% decrease in prices and a 4% decrease in volumes
? Gross profit amounted to $269m (margin of 25.8%) vs $277m (margin of 22.5%) in Q2 2023? Adjusted EBITDA amounted to $120 million (margin of 11.5%) vs. $112 million (margin of 9.1%)
in Q2 2023? Adjusted net loss of $61 million; Reported net loss of $94 million? Operating cash flow of $347million in Q2 2024 vs $405 million in Q2 2023? Free cash flow of $245 million in Q2 2024 vs $288 million in Q2 2023
First Half Year 2024 Highlights:
? Sales down 16% to $2,098 million (-14% in RMB terms; -14% in CER
terms), mainly reflecting
a 10% decrease in prices and a 4% decrease in volumes
? Gross profit amounted to $557m (margin of 26.5%) vs $617m (margin of 24.8%) in H1 2023? Adjusted EBITDA amounted to $252 million (margin of 12.0%) vs. $277 million (margin of 11.1%)
in H1 2023? Adjusted net loss of $71 million; Reported net loss of $126 million? Improvement of $262 million in operating cash flow; $243 million in H1 2024 vs -$19 million in H1
2023
? Improvement of $305 million in free cash flow; $51 million in H1 2024 vs -$254 million in H1 2023
BEIJING, CHINA and TEL AVIV, ISRAEL, August 28, 2024 – ADAMA Ltd. (the “Company”) (SZSE000553), today reported its financial results for the second quarter and first half of 2024 that endedJune 30, 2024.Steve Hawkins, President and CEO of ADAMA, said, "While the crop protection market remainschallenging, we are focused on our transformation plan aimed at improving the quality of our businessand strengthening our position in the fast-growing Value Innovation customer segment. We continueto launch a wide array of advanced, differentiated products with strong ROI for farmers in our largestand most important markets. The agriculture industry is cyclical in nature and ADAMA is taking the
CER – Constant Exchange Rates
necessary steps to maximize our ability to capture opportunities when the market turns around. Webelieve that our value innovation portfolio is exactly the right fit for the large segment of growers whoare looking for innovation but will be pressured by declining commodity prices and seeking costeffective solutions."Our transformation plan is already showing initial positive results with higher EBITDA achieved in thesecond quarter, as well as an improvement in the gross and EBITDA margins in both the secondquarter and the first half of 2024. This improvement was driven by efficient inventory management,better product sales mix as well as a steady reduction in operating expenses. Steps taken in workingcapital and CAPEX management have brought a significant improvement in cashflow in the first halfof 2024."We are still in the first phase of our transformation in ADAMA and as the market eventually turnsaround, we expect to see significant acceleration of the plan's impact on our financial results."
Table 1. Financial Performance Summary
| USD (m) | As Reported | Adjustments | Adjusted | ||||||||
| Q2 2024 | Q2 2023 | % Change | Q2 2024 | Q2 2023 | Q2 2024 | Q2 2023 | % Change | ||||
Revenues
| Revenues | 1,041 | 1,233 | (16%) | - | - | 1,041 | 1,233 | (16%) | |||
| Gross profit | 227 | 253 | (10%) | 41 | 24 | 269 | 277 | (3%) | |||
| % of sales | 21.8% | 20.6% | 25.8% | 22.5% | |||||||
| Operating income (EBIT) | (16) | 40 | 69 | 6 | 52 | 46 | 13% | ||||
| % of sales | (1.6%) | 3.3% | 5.0% | 3.8% | |||||||
| Loss before taxes | (59) | (56) | %6 | 42 | 6 | (17) | (50) | (65%) | |||
| % of sales | (5.7%) | (4.5%) | (1.7%) | (4.0%) | |||||||
| Net loss | (94) | (46) | 102% | 33 | 5 | (61) | (41) | 48% | |||
| % of sales | (9.0%) | (3.8%) | (5.8%) | (3.3%) | |||||||
| EPS | |||||||||||
| - USD | (0.0403) | (0.0199) | (0.0261) | (0.0177) | |||||||
| - RMB | (0.2864) | (0.1397) | (0.1855) | (0.1238) | |||||||
| EBITDA | 76 | 115 | (34%) | 44 | (3) | 120 | 112 | 7% | |||
| % of sales | 7.3% | 9.3% | 11.5% | 9.1% |
| USD (m) | As Reported | Adjustments | Adjusted | ||||||||
| H1 2024 | H1 2023 | % Change | H1 2024 | H1 2023 | H1 2024 | H1 2023 | % Change | ||||
Revenues
| Revenues | 2,098 | 2,492 | (16%) | - | - | 2,098 | 2,492 | (16%) | |||
| Gross profit | 484 | 563 | (14%) | 73 | 54 | 557 | 617 | (10%) | |||
| % of sales | 23.0% | 22.6% | 26.5% | 24.8% | |||||||
| Operating income (EBIT) | 34 | 132 | (74%) | 89 | 16 | 124 | 148 | (16%) | |||
| % of sales | 1.6% | 5.3% | 5.9% | 5.9% | |||||||
| Loss before taxes | (80) | (45) | 78% | 65 | 16 | (16) | (29) | ||||
| % of sales | (3.8%) | (1.8%) | (0.7%) | (1.2%) | |||||||
| Net loss | (126) | (34) | 268% | 55 | 15 | (71) | (20) | ||||
| % of sales | (6%) | (1.4%) | (3.4%) | (0.8%) | |||||||
| EPS | |||||||||||
| - USD | (0.0541) | (0.0147) | (0.0303) | (0.0084) | |||||||
| - RMB | (0.3841) | (0.1039) | (0.2152) | (0.0604) | |||||||
| EBITDA | 196 | 281 | (30%) | 55 | (4) | 252 | 277 | (9%) | |||
| % of sales | 9.4% | 11.3% | 12.0% | 11.1% |
Notes:
? “As Reported” denotes the Company’s financial statements according to the Accounting Standards for Business Enterprises and the
implementation guidance, interpretations and other relevant provisions issued or revised subsequently by the Chinese Ministry ofFinance (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 seethe 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 ofa transitory or non-cash/non-operational nature that do not impact the ongoing performance of the business, and reflect the way theCompany’s management and the Board of Directors view the performance of the Company internally. The Company believes thatexcluding the effects of these items from its operating results allows management and investors to effectively compare the trueunderlying financial performance of its business from period to period and against its global peers. A detailed summary of theseadjustments appears in the appendix below.? The number of shares used to calculate both basic and diluted earnings per share in both Q2 and H1 4202 and 2023 is 2,329.8 millionshares.? In this table and all tables in this release numbers may not sum due to rounding.
The General Crop Protection (CP) Market Environment
Key commodity crop prices continued to decline through the second quarter of 2024, although remainabove average historical levels. Farmer income is pressured by the declining crop commodity prices,however, there has been some ease in the prices of inputs such as fertilizers.The channel inventory situation continues to ease but the high interest rate environment coupled withample product supply continue to drive a just-in-time purchasing approach by the channel. Activeingredient prices from China remained low during Q2 with some molecules even experiencing furtherprice declines. Container shipping costs climbed higher during Q2 due to the combination of the redsea disruptions coupled with higher global trade demand.Update on the War Situation in Israel
ADAMA is headquartered in Israel and has three manufacturing sites in the country. Following October
th, 2023, the Company continued the production in its global manufacturing sites and in Israel, withcertain non-significant restrictions (which have been lifted in February 2024). This situation did not
Sources: CCPIA (China Crop Protection Industry Association), BAIINFO, FocusEconomics, China Containerized Freight Index, internal
sources
have a material impact on the Company's ability to support its markets or on ADAMA’s consolidatedfinancial results.On the 14
thof April, Israel was under an attack from Iran, with no consequences to the Company'songoing activities.Update on Impact of Shipping ObstructionsIn January 2024 some major shipping lines announced that they will suspend shipping to Israelthrough Israeli ports and through the Suez Canal due to tensions in the Red Sea. This has led tolonger transportation times, with shipping lines being diverted around Africa.As of the date of publication of this report, shipping time and costs have increased significantly, mainlyin the China-Israel/Europe; China-America routes in comparison to before January 2024. Currently,the Company does not anticipate this to have a significant impact on its financial results or on theongoing supply of materials to its production facilities, due to the Company's strict inventorymanagement, although this situation might impact the company's ability to respond quickly to changingmarket demand.
"Fight Forward" Transformation Plan
As announced in the ADAMA's full year 2023 financial results report, it initiated a plan in the firstquarter of 2024 to revalue ADAMA through improving the quality of the business to turnaround theCompany. The Company-wide transformation plan is aimed at gradually delivering profit and cashtargets over a period of 3 years (2024-2026).
Portfolio Development Update
Product Launches, Registrations:
During the second quarter of 2024 ADAMA continued to register and launch multiple new products inmarkets across the globe, adding on to its differentiated product portfolio.Differentiated products address specific grower needs through innovative formulation technologyand/or novel mixing concepts of Active Ingredients.Select launches of differentiated products during the second quarter of 2024 include:
? Launch of Prothioconazole based products, part of ADAMA's comprehensive portfolio ofinnovative solutions for cereal fungicides
o Protadis
?
and Magan
? in Turkey, powered by ADAMA’s proprietary Asorbital
?
Formulation Technologyo Maxentis
?
in Australia
? Vinergy
?in Italy and France – a unique combination of folpet, a protectant fungicide withmulti-site contact activity and potassium phosphonate, a systemic fungicide rapidlydistributed in the whole plant. The combination of both active ingredients ensures longlasting plant protection against downy mildew.
Selected registrations of differentiated products during the second quarter of 2024 include:
Registration of Prothioconazole based products, part of ADAMA's comprehensive portfolio ofinnovative solutions for cereal fungicides in Europe, including:
o Soratel
?
in Spain, Hungary, Moldova, Slovenia and Slovakia & Morocco powered byADAMA’s proprietary Asorbital? Formulation Technologyo Avastel
?
in France, Poland and Latvia, powered by ADAMA’s proprietary Asorbital
?
Formulation Technologyo Maganic
?
in Italy and Slovakia, powered by ADAMA’s proprietary Asorbital
?
Formulation Technologyo Forapro
?
in Slovakia and Lithuania, powered by ADAMA’s proprietary Asorbital
?
Formulation Technologyo Maxentis
?
in Spain, Italy, Hungary, Romania and Greece & Moldova, a dual mode
broad spectrum fungicide? Registration of Edaptis
?
in Poland. EDAPTIS? is a ready-to-use solution that providesbroad-spectrum control of grassy weeds and improved efficacy in combating resistantpopulations.? Registration of Bazak
?
in India. BAZAK? is a new strong solution helping farmers controllingbrown plant hoppers in rice thanks to the combination of 2 systemic molecules (Pymetrozineand Dinotefuran) having different mode of actions.? Registration of Forpido
?
in India - FORPIDO
?is an innovative insecticide combiningChlorantraniliprole, Fipronil and Zinc that controls resistant rice stem borer and improvesearly crop establishment.? Folpet & Captan active ingredient renewal in Europe, supporting the ongoing marketing ofFolpan
? 500SC, Folpan
? 800WG and Merpan
?
800WGSelect patent granted during the second quarter of 2024 includes:
? Patent granted for Sesgama
?
in EU, a proprietary formulation technology platform for high-load and other challenging formulations, enabling less use of co-formulants, transport andpackaging materials per acre treated with a resulting improved product sustainability profile.First products expected to be launched in the coming years in EU.? Patent of Upturn
?in India
? Patent of Forabaz
?
in India
Financial HighlightsRevenues in the second quarter declined by approximately 16% (-14% in RMB terms; -14% in CERterms) to $1,041 million, presenting a decrease of 10% in prices and a decrease of 4% in volumes.The lower sales reflect lower market prices and de-focus from selected low profit products. Inventorylevels in some areas have improved, however, high competition from Chinese and Indiansmanufactures increased pricing pressure mainly in commoditized crop protection products, while thechannel is exercising more cautious buying patterns in light of previous price volatility and a higherinterest rate environment.These results brought the revenues in the first half of 2024 to $2,098 million, a decline of approximately16% (-14% in RMB terms; -14% in CER terms), reflecting a decrease of 10% in prices and a decreaseof 4% in volumes.
Table 2. Regional Sales Performance
Notes:
CER: Constant Exchange RatesNumbers may not sum due to rounding
Europe, Africa & Middle East (EAME):
Sales in EAME decreased in the second quarter and first half of 2024, despite demand recoveringin Europe at the farmer level in the second quarter supported by positive weather in Western andSouthern Europe, slowly improving inventory levels. Overall pricing was softer, particularly incommoditized products, with new competition coming into the market.North America: Consumer & Professional Solutions – Sales were higher in the second quarterfollowing normalized buying patterns supported by good weather, while the Company focused onhigher margin products. In the half year period sales were stable.In the US Ag market, sales declined in the second quarter and first half of 2024 reflecting overallgood weather, with the season progressing as usual, while new competition from China and Indiais putting pressure on pricing. Channel inventory levels have declined with purchasing patternson a just-in-time basis. Pricing is currently stabilizing, although still lower than during H1 2023.ADAMA's sales in Canada declined in the second quarter and first half of 2024 reflecting lowinsecticide sales as weather conditions were unfavorable for insect pressure. While inventorylevels are declining, mainly in herbicide and fungicides, purchasing patterns on a just-in-time basis.Additionally, the market experienced strong competition and softer pricing particularly incommoditized products.Latin America: Brazil – decline in sales in the second quarter and first half of 2024, reflectingthe softer pricing, competition from Chinese competitors, “wait and see” famers behaviorpostponing CP purchases, as well as de-focus from non-selective herbicides. Channel inventoryhas mostly normalized however demand is impacted by expectations for additional pricedecreases. The Company is focusing its sales on higher margin products, with new productintroductions of differentiated products continuing to do well.In the rest of LATAM lower sales reflected the overall contraction in the market in NorthernLATAM negatively impacted by El Ni?o weather. Inventory levels are back to normal levels inmost countries, while pricing was impacted by high competition, mostly in commoditized products.Asia-Pacific (APAC):
In China, the branded formulations sales in the second quarter and first half of 2024 wereimpacted by pressure on pricing and negative weather in southern China while focusing onimproving the quality of the business with differentiated products. High channel inventories
| Q2 2024 $m | Q2 2023 $m | Change USD | Change CER | H1 2024 $m | H1 2023 $m | Change USD | Change CER |
Europe, Africa & Middle East
| Europe, Africa & Middle East | 312 | 334 | (7%) | (6%) | 679 | 765 | (11%) | (8%) |
North America
| North America | 223 | 225 | (1%) | (1%) | 414 | 436 | (5%) | (5%) |
Latin America
| Latin America | 209 | 329 | (37%) | (33%) | 400 | 562 | (29%) | (28%) |
Asia Pacific
| Asia Pacific | 298 | 345 | (14%) | (12%) | 605 | 729 | (17%) | (15%) |
Of which China
| Of which China | 121 | 141 | (14%) | (12%) | 275 | 323 | (15%) | (13%) |
Total
| Total | 1,041 | 1,233 | (16%) | (14%) | 2,098 | 2,492 | (16%) | (14%) |
especially for cash crops. In the non-ag business, market pricing in has normalized while techsales were mainly impacted by a "wait and see" approach in the market.In the Pacific region, sales declined impacted by softer pricing following competition from Chinaand India. Despite this, better weather conditions than expected brought an increase in demand,mainly in Pacific countries in the second quarter of 2024. While channel inventories have declined,purchasing patterns are on a just-in-time basis.Sales in India were impacted by overall negative season with erratic weather and low pestpressure and softer pricing, particularly in commoditized products. Channel inventories haveincreased due to the weak season.Sales in the wider APAC region continued to experience pricing pressure following intensecompetition from China, particularly in commoditized products, while good weather conditionssupported demand.Gross Profit reported in the second quarter reached $227 million (gross margin of 21.8%) comparedto $253 million (gross margin of 20.6%) in the same quarter last year, and reached $484 million (grossmargin of 23.0%) in the half year period compared to $563 million (gross margin of 22.6%) last year.
Adjustments to reported results: The adjusted gross profit mainly includes reclassificationof all inventory impairment, taxes and surcharge and excludes certain transportation costs(classified under operating expenses), as well as a provision related to the soil cleanupand remediation regarding the Company's plant in Be'er Sheva.Adjusted gross profit in the second quarter reached $269 million (gross margin of 25.8%) comparedto $277 million (gross margin of 22.5%) in the same quarter last year, and reached $557 million (grossmargin of 26.5%) in the half year period compared to $617 million (gross margin of 24.8%) last year.Despite the decline in sales in the second quarter and first half of 2024, the Company improved thegross margin following the positive impact of new inventory sold, priced at market levels and followingmanagement's focus on the quality of business which led to an improvement in the sales mix of highermargin products. In the second quarter and first half of 2024, exchange rates had a negative impact.Operating expenses reported in the second quarter of 2024 were $244 million (23.4% of sales),compared to $213 million (17.3% of sales) in the same quarter last year and reached $449 million(21.4% of sales) in the half year period compared to $431 million (17.3% of sales) last year.Adjustments to reported results: please refer to the explanation regarding adjustments to the grossprofit in respect to certain transportation costs, taxes and surcharges and inventory impairment.Additionally, the Company recorded certain non-operational items within its reportedoperating expenses amounting to $56 million in Q2 2024 in comparison to $6 million in Q22023 and $76 in H1 2024 in comparison to $15 in H1 2023. These include mainly (i)provisions, such as legal claims, registration impairment and update of registrationdepreciation (ii) measures to improve efficiencies, (iii) non-cash amortization charges inrespect of Transfer Assets received from Syngenta related to the 2017 ChemChina-Syngenta acquisition, (iv) charges related to the non-cash amortization of intangibleassets created as part of the Purchase Price Allocation (PPA) on acquisitions, with noimpact on the ongoing performance of the companies acquired. For further details onthese non-operational items, please see the appendix to this release.Adjusted operating expenses in the second quarter were $216 million (20.8% of sales), comparedto $231 million (18.7% of sales) in the same quarter last year, and reached $433 million (20.6% ofsales) in the half year period compared to $469 million (18.8% of sales) last year.
The operating expenses were lower in the second quarter and first half of 2024, following undertakingtight OPEX management measures, including the impact of initiatives included in the Company'stransformation plan, lower transportation and logistics costs and the positive impact of exchange rates.Operating income reported in the second quarter amounted to a loss of $16 million)-1.6% of sales)compared to an income of $40 million (3.3% of sales) in the second quarter of 2023 and amounted to$34 million (1.6% of sales) in the half year period compared to $132 million (5.3% of sales) last year.Adjusted operating income in the second quarter reached $52 million (5.0% of sales) compared to$46 million (3.8% of sales) in the same quarter last year and amounted to $124 million (5.9% of sales)in the half year period compared to $148 million (5.9% of sales) last year.EBITDA reported in the second quarter amounted to $76 million (7.3% of sales) compared to $115million (9.3% of sales) in the same quarter last year and amounted to $196 million (9.4% of sales) inthe half year period compared to $281 million (11.3% of sales) last year.Adjusted EBITDA in the second quarter amounted to $120 million (11.5% of sales) compared to $112million (9.1% of sales) in the same quarter last year and amounted to $252 million (12.0% of sales) inthe half year period compared to $277 million (11.1% of sales) last year.Adjusted financial expenses amounted to $70 million in the second quarter, compared to $96 millionin the corresponding quarter last year and amounted to $139 million in the half year period comparedto $177 million last year.The lower financial expenses were mainly due to lower hedging costs on exchange rates, the neteffect of lower Israeli CPI on the ILS-denominated, CPI-linked bonds (in the half year period) andsteps taken by the Company's management to optimize the Company's financing structure. Thesesteps included taking advantage of the high interest rate environment to increase interest receivedfrom weekly bank deposits designated to support working capital, as well as improving financing termsand leveraged group funding possibilities by taking long-term RMB denominated loans at attractiverates, which minimized the increase in bank interest expenses paid.Adjusted taxes on income in the second quarter amounted to tax expenses of $43 million, comparedto a tax income of $8 million in the corresponding quarter last year and amounted to an expense of$55 million in the half year period compared to a tax income of $10 million last year.Despite reaching losses before tax, the Company recorded tax expenses mainly because the losseswere primarily incurred by subsidiaries with relatively lower tax rates, while some of them did notcreate deferred tax assets on the losses. On the other hand, the subsidiaries that generated profithave a higher tax rate.In the first half of 2024 the company recorded tax expenses due to the non-cash impact of theweakness of the BRL compared with tax income due to stronger BRL in the first half of 2023.Net loss reported in the second quarter was $94 million and $126 million in the half-year period,compared to a net loss of $46 million and $34 million in the corresponding periods last year,respectively.Adjusted net loss in the second quarter was $61 million and $71 million in the half-year period,compared to a net loss of $41 million and $20 million in the corresponding periods last year,respectively.Trade working capital as of June 30, 2024, was $2,289 million compared to $2,844 million as of June30, 2023. Inventory held by the Company continued to decline from the end of 2023, includinginventory of finished goods, and reached $1,728 million as of June 30, 2024, in comparison to $2,307million as of June 30, 2023. The decrease in working capital was following the Company'simplementation of selective procurement practices, which already began in 2023, and which led tolower trade payables and a decrease in the level of inventory held by the Company. Additionally,
implementation of initiatives, part of the Company's transformation plan, improved payable terms. Thedecrease in receivables reflected the intensive collections as well as the lower sales.Cash Flow: Operating cash flow of $347 million and $243 million was generated in the second quarterand first half year period in 2024 respectively, compared to $405 million generated in the secondquarter and $19 million consumed in the half year period in 2023. The operating cash flow wassignificantly improved in the first half year of 2024 due to the company maintaining strict procurementpractices, intensive collections and an improvement in supplier terms, reflecting initial implementationof initiatives taken as part of the company's transformation plan.In the second quarter we see a decrease in operating cash flow, reflecting the high benchmark in Q22023 following the significant decrease in procurement in that quarter.Net cash used in investing activities was $48 million in the second quarter and $115 million in the firsthalf period in 2024, compared to $69 million and $162 million in the corresponding periods last year,respectively. The lower cash used in investing activities in the second quarter and first half of 2024reflected the prioritization of fixed asset investments in its manufacturing facilities as well asoptimization of the company's portfolio, part of the implementation of the Company's transformationplan, reflected in prioritization of investments in intangible assets relating to ADAMA's globalregistrations. It should be noted that in the first quarter of 2023 the company completed the acquisitionof AgriNova New Zealand.Free cash flow of $245 million was generated in the second quarter and $51 million generated in thehalf-year period compared to $288 million generated in the second quarter and $254 million consumedin the corresponding periods last year, respectively, reflecting the aforementioned operating andinvesting cash flow dynamics.
Table 3. Revenues by operating segmentSales by segment
| Q2 2024 USD (m) | % | Q2 2023 USD (m) | % | H1 2024 USD (m) | % | H1 2023 USD (m) | % |
Crop Protection
| Crop Protection | 945 | 91% | 1,145 | 93% | 1,906 | 91% | 2,291 | 92% |
Intermediates andIngredients
| Intermediates and Ingredients | 96 | 9% | 89 | 7% | 192 | 9% | 201 | 8% |
Total
| Total | 1,041 | 100% | 1,233 | 100% | 2,098 | 100% | 2,492 | 100% |
Sales by product category
| Q2 2024 USD (m) | % | Q2 2023 USD (m) | % | H1 2024 USD (m) | % | H1 2023 USD (m) | % |
Herbicides
| Herbicides | 414 | 40% | 528 | 43% | 868 | 41% | 1,104 | 44% |
Insecticides
| Insecticides | 304 | 29% | 352 | 29% | 594 | 28% | 686 | 28% |
Fungicides
| Fungicides | 227 | 22% | 264 | 21% | 444 | 21% | 502 | 20% |
Intermediates andIngredients
| Intermediates and Ingredients | 96 | 9% | 89 | 7% | 192 | 9% | 201 | 8% |
Total
| Total | 1,041 | 100% | 1,233 | 100% | 2,098 | 100% | 2,492 | 100% |
Notes:
The sales split by product category is provided for convenience purposes only and is not representative of the way the Company ismanaged or in which it makes its operational decisions.Numbers may not sum due to rounding.
Further InformationAll 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 ADAMAADAMA Ltd. is a global leader in crop protection, providing practical solutions to farmers across theworld to combat weeds, insects and disease. Our culture empowers ADAMA's people to actively listento farmers and ideate from the field. ADAMA's diverse portfolio of existing active ingredients, coupledwith its leading formulation capabilities and proprietary formulation technology platforms, uniquelyposition the company to develop high-quality, innovative and sustainable products, to address themany challenges farmers and customers face today. ADAMA serves customers in over 100 countriesglobally. For more information, visit us at www.ADAMA.com and follow us on Twitter? at@ADAMAAgri.
ContactRivka Neufeld Zhujun WangGlobal Investor Relations China Investor RelationsEmail: ir@adama.com Email: irchina@adama.com
Abridged Adjusted Consolidated Financial StatementsThe following abridged consolidated financial statements and notes have been prepared as described in Note 1 in thisappendix. While prepared based on the principles of Chinese Accounting Standards (ASBE), they do not contain all of theinformation which either ASBE or IFRS would require for a complete set of financial statements, and should be read inconjunction with the consolidated financial statements of both ADAMA Ltd. and Adama Agricultural Solutions Ltd. as filedwith 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 itemsthat are of a one-time or non-cash/non-operational nature that do not impact the ongoing performance of the business, andreflect 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 investorsto effectively compare the true underlying financial performance of its business from period to period and against its globalpeers.Abridged Consolidated Income Statement for the Second Quarter of 2024
| Adjusted4 | Q2 2024 USD (m) | Q2 2023 USD (m) | Q2 2024 RMB (m) | Q2 2023 RMB (m) |
Revenues
| Revenues | 1,041 | 1,233 | 7,401 | 8,643 |
Cost of Sales
| Cost of Sales | 769 | 943 | 5,466 | 6,609 |
Other costs
| Other costs | 3 | 13 | 26 | 89 |
Gross profit
| Gross profit | 269 | 277 | 1,910 | 1,945 |
% of revenue
| % of revenue | 25.8% | 22.5% | 25.8% | 22.5% |
Selling & Distribution expenses
| Selling & Distribution expenses | 169 | 185 | 1,203 | 1,297 |
General & Administrative expenses
| General & Administrative expenses | 33 | 30 | 233 | 208 |
Research & Development expenses
| Research & Development expenses | 15 | 18 | 106 | 128 |
Other operating expenses (income)
| Other operating expenses (income) | (1) | (2) | (4) | (13) |
Total operating expenses
| Total operating expenses | 216 | 231 | 1,538 | 1,620 |
% of revenue
| % of revenue | 20.8% | 18.7% | 20.8% | 18.7% |
Operating income (EBIT)
| Operating income (EBIT) | 52 | 46 | 371 | 325 |
% of revenue
| % of revenue | 5.0% | 3.8% | 5.0% | 3.8% |
Financial expenses
| Financial expenses | 70 | 96 | 495 | 673 |
Loss before taxes
| Loss before taxes | (17) | (50) | (123) | (348) |
Taxes on Income
| Taxes on Income | 43 | )8( | 309 | (59) |
Net loss
| Net loss | (61) | (41) | (432) | (288) |
% of revenue
| % of revenue | (5.8%) | (3.3%) | (5.8%) | (3.3%) |
Adjustments
| Adjustments | 33 | 5 | 235 | 37 |
Reported Net loss
| Reported Net loss | (94) | (46) | (667) | (325) |
% of revenue
| % of revenue | (9%) | (3.8%) | (9%) | (3.8%) |
Adjusted EBITDA
| Adjusted EBITDA | 120 | 112 | 851 | 783 |
% of revenue
| % of revenue | 11.5% | 9.1% | 11.5% | 9.1% |
Adjusted EPS
– Basic
| Adjusted EPS5 – Basic | (0.0261) | (0.0177) | (0.1855) | (0.1238) |
– Diluted
| – Diluted | (0.0261) | (0.0177) | (0.1855) | (0.1238) |
Reported EPS
– Basic
| Reported EPS5 – Basic | (0.0403) | (0.0199) | (0.2864) | (0.1397) |
– Diluted
| – Diluted | (0.0403) | (0.0199) | (0.2864) | (0.1397) |
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”.
The number of shares used to calculate both basic and diluted earnings per share in both Q2 2024 and 2023 is 2,329.8 million shares.
Abridged Consolidated Income Statement for the First Half of 2024
| Adjusted6 | H1 2024 USD (m) | H1 2023 USD (m) | H1 2024 RMB (m) | H1 2023 RMB (m) |
Revenues
| Revenues | 2,098 | 2,492 | 14,910 | 17,253 |
Cost of Sales
| Cost of Sales | 1,536 | 1,852 | 10,915 | 12,827 |
Other costs
| Other costs | 6 | 22 | 39 | 157 |
Gross profit
| Gross profit | 557 | 617 | 3,956 | 4,270 |
% of revenue
| % of revenue | 26.5% | 24.8% | 26.5% | 24.7% |
Selling & Distribution expenses
| Selling & Distribution expenses | 338 | 371 | 2,401 | 2,568 |
General & Administrative expenses
| General & Administrative expenses | 69 | 69 | 487 | 475 |
Research & Development expenses
| Research & Development expenses | 31 | 38 | 218 | 263 |
Other operating expenses (income)
| Other operating expenses (income) | (4) | (8) | (30) | (56) |
Total operating expenses
| Total operating expenses | 433 | 469 | 3,076 | 3,249 |
% of revenue
| % of revenue | 20.6% | 18.8% | 20.6% | 18.8% |
Operating income (EBIT)
| Operating income (EBIT) | 124 | 148 | 880 | 1,021 |
% of revenue
| % of revenue | 5.9% | 5.9% | 5.9% | 5.9% |
Financial expenses
| Financial expenses | 139 | 177 | 990 | 1,228 |
Loss before taxes
| Loss before taxes | (16) | (29) | (110) | (207) |
Taxes on Income
| Taxes on Income | 55 | (10) | 391 | (67) |
Net loss
| Net loss | (71) | (20) | (501) | (141) |
% of revenue
| % of revenue | (3.4%) | (0.8%) | (3.4%) | (0.8%) |
Adjustments
| Adjustments | 55 | 15 | 393 | 101 |
Reported Net loss
| Reported Net loss | (126) | (34) | (895) | (242) |
% of revenue
| % of revenue | (6%) | (1.4%) | (6%) | (1.4%) |
Adjusted EBITDA
| Adjusted EBITDA | 252 | 277 | 1,789 | 1,914 |
% of revenue
| % of revenue | 12.0% | 11.1% | 12.0% | 11.1% |
Adjusted EPS
– Basic
| Adjusted EPS7 – Basic | (0.0303) | (0.0084) | (0.2152) | (0.0604) |
– Diluted
| – Diluted | (0.0303) | (0.0084) | (0.2152) | (0.0604) |
Reported EPS
– Basic
| Reported EPS5 – Basic | (0.0541) | (0.0147) | (0.3841) | (0.1039) |
– Diluted
| – Diluted | (0.0541) | (0.0147) | (0.3841) | (0.1039) |
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”.
The number of shares used to calculate both basic and diluted earnings per share in both H1 2024 and 2023 is 2,329.8 million shares.
Abridged Consolidated Balance Sheet
| June 30 2024 USD (m) | June 30 2023 USD (m) | June 30 2024 RMB (m) | June 30 2023 RMB (m) |
Assets
| Assets |
Current assets:
| Current assets: |
Cash at bank and on hand
| Cash at bank and on hand | 561 | 637 | 3,995 | 4,605 |
Bills and accounts receivable
| Bills and accounts receivable | 1,314 | 1,421 | 9,368 | 10,264 |
Inventories
| Inventories | 1,728 | 2,307 | 12,316 | 16,668 |
Other current assets, receivables andprepaid expenses
| Other current assets, receivables and prepaid expenses | 279 | 269 | 1,986 | 1,941 |
Total current assets
| Total current assets | 3,882 | 4,633 | 27,665 | 33,478 |
Non-current assets:
| Non-current assets: |
Fixed assets, net
| Fixed assets, net | 1,754 | 1,747 | 12,499 | 12,624 |
Rights of use assets
| Rights of use assets | 81 | 89 | 576 | 641 |
Intangible assets, net
| Intangible assets, net | 1,407 | 1,472 | 10,027 | 10,634 |
Deferred tax assets
| Deferred tax assets | 203 | 244 | 1,449 | 1,760 |
Other non-current assets
| Other non-current assets | 89 | 106 | 638 | 766 |
Total non-current assets
| Total non-current assets | 3,534 | 3,657 | 25,189 | 26,424 |
Total assets
| Total assets | 7,416 | 8,290 | 52,854 | 59,902 |
Liabilities
| Liabilities |
Current liabilities:
| Current liabilities: |
Loans and credit from banks and otherlenders
| Loans and credit from banks and other lenders | 928 | 1,236 | 6,611 | 8,934 |
Bills and accounts payable
| Bills and accounts payable | 761 | 892 | 5,424 | 6,442 |
Other current liabilities
| Other current liabilities | 794 | 948 | 5,659 | 6,853 |
Total current liabilities
| Total current liabilities | 2,483 | 3,076 | 17,695 | 22,228 |
Long-term liabilities:
| Long-term liabilities: |
Loans and credit from banks and otherlenders
| Loans and credit from banks and other lenders | 406 | 453 | 2,892 | 3,276 |
Debentures
| Debentures | 960 | 1,029 | 6,844 | 7,433 |
Deferred tax liabilities
| Deferred tax liabilities | 41 | 46 | 292 | 333 |
Employee benefits
| Employee benefits | 80 | 106 | 572 | 763 |
Other long-term liabilities
| Other long-term liabilities | 502 | 308 | 3,578 | 2,224 |
Total long-term liabilities
| Total long-term liabilities | 1,989 | 1,942 | 14,177 | 14,029 |
Total liabilities
| Total liabilities | 4,472 | 5,018 | 31,872 | 36,257 |
Equity
| Equity |
Total equity
| Total equity | 2,944 | 3,272 | 20,982 | 23,645 |
Total liabilities and equity
| Total liabilities and equity | 7,416 | 8,290 | 52,854 | 59,902 |
Numbers may not sum due to rounding
Abridged Consolidated Cash Flow Statement for the Second Quarter of 2024
| Q2 2024 USD (m) | Q2 2023 USD (m) | Q2 2024 RMB (m) | Q2 2023 RMB (m) | |
| Cash flow from operating activities: | ||||
| Cash flow from operating activities | 347 | 405 | 2,466 | 2,840 |
| Cash flow from operating activities | 347 | 405 | 2,466 | 2,840 |
| Investing activities: | ||||
| Acquisitions of fixed and intangible assets | (47) | (85) | (332) | (598) |
| Net cash received from disposal of fixed assets, intangible assets and others | 4 | 1 | 27 | 5 |
| Other investing activities | (5( | 16 | (37) | 112 |
| Cash flow used for investing activities | (48) | (69) | (342) | (482) |
| Financing activities: | ||||
| Receipt of loans from banks and other lenders | 21 | 73 | 151 | 510 |
| Repayment of loans from banks and other lenders | (198) | (200) | (1,410) | (1,400) |
| Interest payment and other | (59) | (49) | (419) | (342) |
| Dividend to shareholders | - | (9) | - | (63) |
| Other financing activities | (26) | (22) | (184) | (155) |
| Cash flow used for financing activities | (262) | (207) | (1,861) | (1,450) |
| Effects of exchange rate movement on cash and cash equivalents | 2 | (3) | 29 | 183 |
| Net change in cash and cash equivalents | 39 | 126 | 292 | 1,092 |
| Cash and cash equivalents at the beginning of the period | 519 | 506 | 3,679 | 3,479 |
| Cash and cash equivalents at the end of the period | 557 | 633 | 3,971 | 4,571 |
| Free Cash Flow | 245 | 288 | 1,740 | 2,021 |
Numbers may not sum due to rounding
Abridged Consolidated Cash Flow Statement for the First Half of 2024
| H1 2024 USD (m) | H1 2023 USD (m) | H1 2024 RMB (m) | H1 2023 RMB (m) | |
| Cash flow from operating activities: | ||||
| Cash flow used for operating activities | 243 | (19) | 1,731 | -65 |
| Cash flow from (used for) operating activities | 243 | (19) | 1,731 | -65 |
| Investing activities: | ||||
| Acquisitions of fixed and intangible assets | (113) | (170) | (800) | (1,178) |
| Net cash received from disposal of fixed assets, intangible assets and others | 4 | 4 | 30 | 31 |
| Acquisition of subsidiary | - | (22) | - | (148) |
| Other investing activities | (6) | 25 | (45) | 175 |
| Cash flow used for investing activities | (115) | (162) | (815) | (1,121) |
| Financing activities: | ||||
| Receipt of loans from banks and other lenders | 193 | 598 | 1,369 | 4,105 |
| Repayment of loans from banks and other lenders | (393) | (229) | (2,792) | (1,599) |
| Interest payments and other | (83) | (75) | (587) | (522) |
| Dividend to shareholders | - | (9) | - | (63) |
| Other financing activities | 23 | (75) | 165 | (520) |
| Cash flow from (used for) financing activities | (260) | 210 | (1,845) | 1,401 |
| Effects of exchange rate movement on cash and cash equivalents | 2 | (2) | 42 | 130 |
| Net change in cash and cash equivalents | (129) | 26 | (886) | 345 |
| Cash and cash equivalents at the beginning of the period | 686 | 607 | 4,857 | 4,225 |
| Cash and cash equivalents at the end of the period | 557 | 633 | 3,971 | 4,571 |
| Free Cash Flow | 51 | (254) | 364 | (1,689) |
Numbers may not sum due to rounding
Notes to Abridged Consolidated Financial StatementsNote 1: Basis of preparationBasis of presentation and accounting policies: The abridged consolidated financial statements for thequarters ended June 30, 2024 and 2023 incorporate the financial statements of ADAMA Ltd. and of all of itssubsidiaries (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 Ministryof Finance (the "MoF") and the implementation guidance, interpretations and other relevant provisions issuedor revised subsequently by the MoF (collectively referred to as “ASBE”).The abridged consolidated financial statements contained in this release are presented in both ChineseRenminbi (RMB), as the Company’s shares are traded on the Shenzhen Stock Exchange, as well as in UnitedStates dollars ($) as this is the major currency in which the Company’s business is conducted. For the purposesof 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, andBalance 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 affectthe reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements, and the reported amounts of revenues and expenses during the reporting period. Actualresults could differ from those estimated.Note 2: Abridged Financial StatementsFor 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, inventoryimpairment 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
Income Statement Adjustments
| Q2 2024 USD (m) | Q2 2023 USD (m) | Q2 2024 RMB (m) | Q2 2023 RMB (m) |
Reported Net Loss
| Reported Net Loss | (94) | (46) | (667) | (325) |
Adjustments to COGS & Operating Expenses:
| Adjustments to COGS & Operating Expenses: |
1. Amortization of acquisition-related PPA and other acquisition related costs
| 1. Amortization of acquisition-related PPA and other acquisition related costs | 4 | 4 | 28 | 29 |
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
Syngenta transaction (non-cash)
| 2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash) | 5 | 5 | 36 | 33 |
3. Accelerated depreciation
| 3. Accelerated depreciation | 1 | 1 | 6 | 5 |
4. Incentive plans
| 4. Incentive plans | - | (4) | - | (25) |
5. ASBEs classifications COGS impact
| 5. ASBEs classifications COGS impact | (29) | (24) | (208) | (165) |
6. ASBEs classifications OPEX impact
| 6. ASBEs classifications OPEX impact | 29 | 24 | 208 | 165 |
7. Measures to improve efficiencies
| 7. Measures to improve efficiencies | 4 | - | 26 | - |
8. Provisions such as legal claims, registration impairment and update of registration
depreciation
| 8. Provisions such as legal claims, registration impairment and update of registration depreciation | 44 | - | 312 | - |
9. Soil cleanup and remediation
| 9. Soil cleanup and remediation | 11 | - | 78 | - |
Total Adjustments to Operating Income (EBIT)
| Total Adjustments to Operating Income (EBIT) | 69 | 6 | 488 | 42 |
Total Adjustments to EBITDA
| Total Adjustments to EBITDA | 44 | (3) | 312 | (23) |
Adjustments to Financing Expenses:
| Adjustments to Financing Expenses: |
10. Non-cash adjustment related to put option revaluation
| 10. Non-cash adjustment related to put option revaluation | (34) | - | (239) | - |
Other financing expenses
| Other financing expenses | 7 | - | 48 | - |
Adjustments to Taxes:
| Adjustments to Taxes: |
Taxes impact
| Taxes impact | 9 | 1 | 62 | 5 |
Total adjustments to Net loss
| Total adjustments to Net loss | 33 | 5 | 235 | 37 |
Adjusted Net Loss
| Adjusted Net Loss | (61) | (41) | (432) | (288) |
| H1 2024 USD (m) | H1 2023 USD (m) | H1 2024 RMB (m) | H1 2023 RMB (m) |
Reported Net loss
| Reported Net loss | (126) | (34) | (895) | (242) |
Adjustments to COGS & Operating Expenses:
| Adjustments to COGS & Operating Expenses: |
1. Amortization of acquisition-related PPA and other acquisition related costs
| 1. Amortization of acquisition-related PPA and other acquisition related costs | 8 | 8 | 54 | 58 |
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
Syngenta transaction (non-cash)
| 2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash) | 10 | 11 | 72 | 74 |
3. Accelerated depreciation
| 3. Accelerated depreciation | 2 | 1 | 12 | 10 |
4. Incentive plans
| 4. Incentive plans | - | (4) | - | (31) |
5. ASBEs classifications COGS impact
| 5. ASBEs classifications COGS impact | (59) | (53) | (421) | (368) |
6. ASBEs classifications OPEX impact
| 6. ASBEs classifications OPEX impact | 59 | 53 | 421 | 368 |
7. Measures to improve efficiencies
| 7. Measures to improve efficiencies | 15 | - | 107 | - |
8. Provisions such as legal claims, registration impairment and update of registration
depreciation
| 8. Provisions such as legal claims, registration impairment and update of registration depreciation | 44 | - | 312 | - |
9. Soil cleanup and remediation
| 9. Soil cleanup and remediation | 11 | - | 78 | - |
Total Adjustments to Operating Income (EBIT)
| Total Adjustments to Operating Income (EBIT) | 89 | 16 | 635 | 111 |
Total Adjustments to EBITDA
| Total Adjustments to EBITDA | 55 | (4) | 394 | (27) |
Adjustments to Financing Expenses:
| Adjustments to Financing Expenses: |
10. Non-cash adjustment related to put option revaluation
| 10. Non-cash adjustment related to put option revaluation | (34) | - | (239) | - |
Other financing expenses
| Other financing expenses | 9 | - | 65 | - |
Adjustments to Taxes:
| Adjustments to Taxes: |
Taxes impact
| Taxes impact | 10 | 1 | 68 | 10 |
Total adjustments to Net loss
| Total adjustments to Net loss | 55 | 15 | 393 | 101 |
Adjusted Net loss
| Adjusted Net loss | (71) | (20) | (501) | (141) |
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 third combined reporting for Q3 2017,the Company has inherited the historical “legacy” amortization charge that ChemChina previously was incurring in respect of its acquisitionof Solutions in 2011. This amortization is done in a linear manner on a quarterly basis, most of which will have been completed by the endof 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 the ongoing performance ofthe 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 fromthe Divestment of crop protection products in connection with the approval by the EU Commission of the acquisition of Syngenta by ChemChina,net of taxes and transaction expenses, were paid to Syngenta in return for the transfer of a portfolio of products in Europe of similar nature andeconomic value. Since the products acquired from Syngenta are of the same nature and with the same net economic value as those divested,and since in 2018 the Company adjusted for the one-time gain that it made on the divested products, the additional amortization charge incurreddue to the written-up value of the acquired assets is also adjusted to present a consistent view of Divestment and Transfer transactions, whichhad no net impact on the underlying economic performance of the Company. These additional amortization charges will continue until 2032 butat a reducing rate, yet will still be at a meaningful level until 2028.
3. Accelerated depreciation: These charges relate to accelerated depreciation attributed to the upgrade & relocation programs in China and Israel,in which production assets located in the old production sites in Huai’An and Beer-Sheva are in relocation process to new sites. Since some olderproduction assets may not be able to be relocated, or are not operational, these are depreciated over a shorter period.
4. Incentive plans: ADAMA granted certain of its employees, a long-term incentive (LTI) in the form of 'phantom' awards linked to the Company’sshare price. As such, the Company records an expense, or recognizes income, depending on the fluctuation in the Company’s share price,regardless of award exercises. To neutralize the impact of such share price movements on the measurement of the Company’s performanceand expected employee compensation and to reflect the existing phantom awards, in the Company’s adjusted financial performance, the LTI ispresented 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) areclassified under COGS.
6. ASBEs classifications OPEX impact: according to the ASBE guidelines [IAS 37], certain items (specifically certain transportation costs) are
classified under COGS.
7. Measures to improve efficiencies: ADAMA recorded costs due to certain measures initiated to improve efficiencies mainly personnel changes
8. Provisions such as legal claims, registration impairment and update of registration depreciation.
9. Soil cleanup and remediation: a wholly-owned indirect subsidiary of the Company filed with Israel's Ministry of Environmental Protection aremediation plan regarding its plant in Be'er Sheva. Following additional discussions between the parties, a final approval to such plan, which isexpected to be gradually implemented during the coming years, was received from the Ministry after the date of the financial reports. As a resultof the submission of the plan, the Company has made a provision in its financial statements for June 30, 2024 according to its best estimation.
10. Non-cash, non-recurring income due to revaluation of put option attributed to minority stake in a subsidiary
Exchange Rate Data for the Company's Principal Functional Currencies
| June 30 | Q2 Average | H1 Average | |||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | 2024 | 2023 | Change | |||
| EUR/USD | 1.069 | 1.086 | -1.53% | 1.076 | 1.09 | -1.17% | 1.081 | 1.081 | 0.03% | ||
| USD/BRL | 5.559 | 4.819 | -15.35% | 5.217 | 5.56 | 6.15% | 5.085 | 5.073 | -0.24% | ||
| USD/PLN | 4.032 | 4.107 | 1.82% | 3.997 | 4.18 | 4.33% | 3.994 | 4.285 | 6.78% | ||
| USD/ZAR | 18.448 | 18.657 | 1.12% | 18.576 | 18.65 | 0.39% | 18.736 | 18.192 | -2.99% | ||
| AUD/USD | 0.663 | 0.663 | 0.09% | 0.659 | 0.67 | -1.50% | 0.658 | 0.676 | -2.65% | ||
| GBP/USD | 1.264 | 1.262 | 0.11% | 1.262 | 1.26 | -0.03% | 1.265 | 1.233 | 2.61% | ||
| USD/ILS | 3.759 | 3.700 | -1.59% | 3.732 | 3.70 | -0.86% | 3.696 | 3.592 | -2.90% | ||
| USD L 3M | 5.32% | 3.40% | 1.92 bp | 5.33% | 3.08% | 2.25 bp | 5.32% | 2.65% | 2.67 bp | ||
| June 30 | Q2 Average | H1 Average | |||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | 2024 | 2023 | Change | |||
| USD/RMB | 7.127 | 7.226 | -1.37% | 7.108 | 7.009 | 1.41% | 7.105 | 6.925 | 2.60% | ||
| EUR/RMB | 7.622 | 7.848 | -2.88% | 7.650 | 7.633 | 0.22% | 7.681 | 7.484 | 2.63% | ||
| RMB/BRL | 0.780 | 0.667 | -16.95% | 0.734 | 0.706 | -3.90% | 0.716 | 0.733 | 2.30% | ||
| RMB/PLN | 0.568 | 0.568 | 0.00% | 0.596 | 0.596 | 0.00% | 0.619 | 0.619 | 0.00% | ||
| RMB/ZAR | 0.386 | 0.387 | 0.26% | 0.383 | 0.376 | -1.81% | 0.381 | 0.381 | 0.00% | ||
| AUD/RMB | 4.727 | 4.788 | -1.28% | 4.683 | 4.688 | -0.10% | 4.678 | 4.683 | -0.12% | ||
| GBP/RMB | 9.007 | 9.121 | -1.26% | 8.969 | 8.776 | 2.20% | 8.989 | 8.538 | 5.28% | ||
| RMB/ILS | 0.527 | 0.512 | -3.01% | 0.525 | 0.520 | -0.96% | 0.520 | 0.519 | -0.30% | ||
| RMB Shibor 3M | 1.917% | 2.17% | -0.253 bp | 1.991% | 2.292% | -0.301 bp | 2.135% | 2.352% | -0.217 bp | ||