ADAMA Ltd. Semi-Annual Report 2021
ADAMA LTD.SEMI-ANNUAL REPORT 2021
ADAMA Ltd. is a global leader in crop protection, providing solutions to farmers across theworld to combat weeds, insects and disease. ADAMA has one of the widest and mostdiverse portfolios of active ingredients in the world, state-of-the art R&D, manufacturing andformulation facilities, together with a culture that empowers our people in markets aroundthe world to listen to farmers and ideate from the field. This uniquely positions ADAMA tooffer 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.Please see important additional information and further details included in the Annex.
August 2021
ADAMA Ltd. Semi-Annual Report 2021
Section I - Important Notice, Table of Contents and Definitions
? The Company’s Board of Directors, Board of Supervisors, directors, supervisors andsenior managers confirm that the content of the Report is true, accurate and completeand contains no false statement, misleading presentations or material omissions, andassume joint and several legal liability arising therefrom.? Ignacio Dominguez, the person in charge of the Company (President and Chief
Executive Officer) as well as its legal representative, and Aviram Lahav, the personleading the accounting function (Chief Financial Officer & Deputy Chief ExecutiveOfficer), hereby assert and confirm the truthfulness, accuracy and completeness of theFinancial Report.? All the Company’s directors attended the board meeting for the review of this Report.? The forward-looking information described in this Report, such as future plans,development strategy, market trends and their effect etc., does not constitute, in anymanner whatsoever, a substantial commitment of the Company to investors. Investorsand other relevant people are cautioned to be sufficiently mindful of investment risksas well as the difference between plans, forecasts and commitments.? The Company has described its possible risks in “X - Risks Facing the Company andCountermeasures” under Section III herein. The major risks of the Company include,among others, exchange rate fluctuations; exposure to interest rate, Israel CPI andNIS exchange rate fluctuations; fluctuations in raw material inputs and prices, and insales. Investors and other relevant people are cautioned to be sufficiently mindful ofinvestment risks. For the complete “Risks Facing the Company and Countermeasures”of the Company, please see the relevant section below.? For the Reporting Period, the Company does not plan to distribute cash dividends or
bonus shares or convert capital reserve into share capital.? This Report and its Abstract have been prepared in both Chinese and English. Shouldthere be any discrepancies between the two versions, the Chinese version shall prevail.
ADAMA Ltd. Semi-Annual Report 2021
Table of Contents
Section I - Important Notice, Table of Contents and Definitions ...... 2
Section II - Corporate Profile and Financial Results ...... 6
Section III - Performance Discussion and Analysis ...... 9
Section IV – Corporate Governance ...... 34
Section V – Environmental and Social Responsibilities ...... 36
Section VI - Significant Events ...... 44
Section VII - Share Changes and Shareholders ...... 57
Section VIII - Preferred stock ...... 65
Section IX - Bonds ...... 66
Section X - Financial Report ...... 67
ADAMA Ltd. Semi-Annual Report 2021
Documents Available for Reference
(I) Duly signed Financial Statements by the Legal Representative and Accounting Principal as well as Head of theAccounting Organ;(II) Originals of all Company’s documents previously disclosed in media designated by the CSRC as well as the originalsof all the public notices, were deposited in the Company’s office.
ADAMA Ltd. Semi-Annual Report 2021
Definitions
General Terms
DefinitionCompany, the Company
ADAMA Ltd.Adama Solutions
Adama Agricultural Solutions Ltd., a wholly-
owned subsidiary of the Company,
incorporated in Israel according to its lawsAnpon, ADAMA Anpon
ADAMA Anpon (Jiangsu) Ltd., a wholly-
owned subsidiary of the Company,owned subsidiary of the Company,
incorporated in China according to its lawsBoard of Directors/Board The Board of Directors of the CompanyBoard of Supervisors The Board of Supervisors of the CompanyGroup, the Group, ADAMA The Company, including all its subsidiaries, unless expressly stated otherwiseChemChina
owned subsidiary of the Company,
China National Chemical Co., Ltd.ChemChina-SyngentaTransaction
The acquisition of Syngenta AG by ChemChina in 2017CNAC
China National Agrochemical Co., Ltd., the indirect controlling shareholder of the
Company, a wholly-owned subsidiary of ChemChinaCSRC China Securities Regulatory CommissionSZSE Shenzhen Stock ExchangeSASAC State Assets Supervision and Administration Commission of ChinaADAMA Huifeng
ADAMA Huifeng (Jiangsu) Ltd.
, a 51% owned subsidiary of the Company,
incorporated in China according to its lawsSyngenta Group
, a 51% owned subsidiary of the Company,Syngenta Group Co., Ltd, the controlling shareholder of the Company as of June
15, 2020, a wholly-owned subsidiary of CNACReport This 2021 Semi-Annual ReportReporting Period, this Period January 1, 2021 - June 30, 20212020 Annual Report The Company’s 2020 Annual Report published on March 31, 2021
ADAMA Ltd. Semi-Annual Report 2021
Section II - Corporate Profile and Financial ResultsI. Corporate InformationStock name ADAMA A, ADAMA B Stock code 000553, 200553Stock exchange Shenzhen Stock ExchangeCompany name in Chinese 安道麦股份有限公司Abbr. 安道麦
ADAMA Ltd.Abbr. (if any) ADAMALegal representative Ignacio Dominguez
II. Contact Information
III. Other Information
1. Ways to Contact the Company
Indicate by tick mark whether any changes occurred to the registered address, office address and theirpostal codes, website address and email address of the Company during the Reporting Period.
□ Applicable √ Not applicable
No changes occurred to the said information during the Reporting Period, which can be found in the 2020Annual Report.
2. Information Disclosure Media and Place where this Report is KeptIndicate by tick mark whether any changes occurred to the information disclosure media and the placewhere this Report is kept during the Reporting Period.
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by theCSRC for the publication of this Report and the location where this Report is kept did not change during
Board Secretary
Securities Affairs Representative &Investor Relations ManagerName Guo Zhi Wang ZhujunAddress 6/F, No.7 Office Building, No.10 Courtyard, Chaoyang Park South Road, Chaoyang District, Beijing
Company name in English (if any)
Tel. 010-56718110 010-56718110Fax 010-59246173 010-59246173E-mail irchina@adama.com irchina@adama.com
ADAMA Ltd. Semi-Annual Report 2021
the Reporting Period. Said information can be found in the 2020 Annual Report.
3. Other Relevant Documents
Indicate by tick mark whether any changes occurred to the relevant documents during the ReportingPeriod.
□ Applicable √ Not applicable
IV. Main Accounting Data and Financial Results
Indicate by tick mark whether the Company needs to retroactively adjust or restate any of its accountingdata.
□ Yes √ No
Reporting Period
year
+/- (%)Operating revenues (RMB’000) 15,063,780
Same period of last
14,121,040
6.68%
Net profit
attributable to shareholders of the
Company (RMB’000) 367,036
attributable to shareholders of the
204,649
79.35%
Net profit attributable to shareholders of the
Company excluding non-
| Net profit attributable to shareholders of the | |
| recurring profit and | |
loss (RMB’000)
322,123
219,772
46.57%
Net cash flow from operating activities
(RMB’000)1,491,293
Net cash flow from operating activities
1,234,531
20.80%
Basic EPS (RMB/share) 0.1575
0.0836
88.40%
Diluted EPS (RMB/share) N/A
N/A
N/A
Weighted average return on net assets 1.71%
0.91%
0.80%
End of Reporting Period
End of last year
+/- (%)Total assets (RMB’000) 49,450,006
46,801,034
5.66%
Net assets attributable to shareholders of
the Company (RMB’000)21,432,352
Net assets attributable to shareholders of
21,353,752
0.37%
V. Differences in Accounting Data under Domestic and Foreign Accounting
Standards
1. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared underChinese and International Accounting Standards
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2021
None during the Reporting Period.
2. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared underChinese and Foreign Accounting Standards
□ Applicable √ Not applicable
None during the Reporting Period.
3. Reason for accounting data differences under Chinese and Foreign Accounting Standards
□ Applicable √ Not applicable
VI. Non-Recurring Profit/Loss
√ Applicable □ Not applicable
Unit: RMB’000
Item Reporting Period NoteGains/losses on the disposal of non-
part of asset impairment provisions)
14,864
current assets (including the offset
Government grants recognized through profit or loss (excluding
Government grants recognized through profit or loss (excludinggovernment grants closely related to business of the Company and given
government grants closely related to business of the Company and givenat a fixed quota or amount in accordance with government’s uniform
standards)
20,630
at a fixed quota or amount in accordance with government’s uniform
Recovery or reversal of provision
for bad debts which is assessed
individually during the years
12,474
for bad debts which is assessed
Other non-operating income and expenses other than the above 6,792
Other profit or loss that meets the definition of non-recurring profit or loss
-44
Less: Income tax effects 9,803
NCI (after tax) -
Total 44,913
Explanation whether the Company has classified an item as non-recurring profit/loss according to thedefinition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering TheirSecurities to the Public - Non-Recurring Profit and Loss, and reclassified any non-recurring profit/lossitem given as an example in the said explanatory announcement to recurrent profit/loss
□ Applicable √ Not applicable
No such cases in the Reporting Period.
ADAMA Ltd. Semi-Annual Report 2021
Section III - Performance Discussion and Analysis
I. Main Business of the Company during the Reporting PeriodThe Company is a corporation incorporated in the People's Republic of China.The Group is a global leader in crop protection, engaging in the development, manufacturing andcommercialization of a wide range of crop protection products, that are largely off-patent. The Groupprovides solutions to farmers to combat weeds, insects and disease, and sells its products inapproximately 100 countries, through approximately 60 subsidiaries worldwide.The Group's business model integrates end-customer access, regulatory expertise, state-of-the art globalR&D, production and formulation facilities, thereby providing the Group a significant competitive edgeand allowing it to launch new and differentiated products that meet local farmers and customer needs inkey markets.The Group's primary operations are global, spanning activities in Europe, North America, Latin America,Asia-Pacific (including China) and India, the Middle-East and Africa.The Group also utilizes its expertise to adapt such products also for the development, manufacturing andcommercialization of similar products for non-agricultural purposes (Consumer and ProfessionalSolutions).In addition, the Group leverages its core capabilities in the agricultural and chemical fields and operatesin several other non-agricultural areas, none of which, individually, is material for the Group. Theseactivities, collectively reported as Intermediates and Ingredients, include primarily, (a) the manufacturingand marketing of dietary supplements, food colors, texture and flavor enhancers, and food fortificationingredients; (b) fragrance products for the perfume, cosmetics, body care and detergents industries; (c)the manufacturing of industrial products and (d) other non-material activities.
ADAMA Group is a distinctive member of Syngenta Group, a world leader in agricultural inputs, spanningcrop protection, seeds, fertilizers, additional agricultural and digital technologies, as well as an advanceddistribution network in China.
The general crop protection market environmentDuring the first half of 2021, crop prices of most of the major commodity crops remained elevated, drivingan increase in planted areas and strong crop protection demand in most regions. Demand was alsosupported by positive weather conditions in various regions, although drought conditions in the Americas,most notably in Brazil and the western United States, posed challenges for farmers in those regions.During the first half, prices of intermediates and active ingredients sourced from China were higher thanin the same period last year, driven by elevated raw material prices, and the stronger global demand. Oilprices have been rising considerably, following the alleviation of pandemic control measures in a numberof countries.Global freight and logistics costs rose significantly during the first half of 2021, as COVID-19 continuesto disrupt port activity, resulting in container shortages, while demand for container shipping remains high.Similarly, in-land logistics remain challenged as pandemic-related restrictions continue to create frictions
ADAMA Ltd. Semi-Annual Report 2021
in domestic supply lines. Taken together, these constraints have impacted both availability of shippingand transportation resources, as well as significantly increased their costs, a dynamic widely observedacross all international trade-related industries.The Company continues to actively manage its procurement and supply chain activities in order tomitigate these higher procurement and logistics costs. It also endeavors to adjust its pricing whereverpossible to compensate for these increased costs, but intense competition in certain key markets hasrestrained the Company's ability to do so in an effective and timely manner.Jingzhou Production Resumption UpdateFollowing the completion of the Relocation & Upgrade program for Sanonda, production has recentlyresumed at the Company's new, state-of-the-art Jingzhou site. While production is initially starting atrelatively low levels, the Company expects output levels to gradually ramp up over the remainder of theyear. This return to production at Sanonda will progressively reduce the need for incurring additionalprocurement costs which the Company has endured while the plant has been suspended, and is expectedto reduce idleness charges as production and utilization levels rise over the coming months.Crop Protection ProductsAs described within the Company’s 2020 annual report, the Group is focused on the development,manufacturing and commercialization of largely off-patent crop protection products, which are generallyherbicides, insecticides and fungicides, which protect agricultural and other crops against weeds, insectsand disease, respectively. Since the publication of the 2020 annual report, no major changes occurredwith that respect. For details, please refer to 2020 annual report.
Please see important additional information and further details included in the Annex.
II. Core Competitiveness AnalysisNo significant changes occurred to the core competitiveness of the Company during the Reporting Period.
III. Analysis of Main BusinessGeneral Description
Whether it is the same as main business of the Company during the Reporting Period disclosed or not?
√ Yes □ No
Please refer to the relevant information in section “I. Main Business of the Company during theReporting Period” above.
ADAMA Ltd. Semi-Annual Report 2021
Year-on-year changes of main financial data:
2021 Apr-June
(000’RMB)
Same period of
last year(000’RMB)
+/-%
2021 Apr-June
(000’USD)
Same period of
last year(000’USD)
+/-%Operating revenues
7,876,616
7,338,797
7.33%
1,219,619
1,035,873
17.74%
Cost of goods sold
5,579,320
5,147,057
8.40%
863,906
726,512
18.91%
Selling andDistributionexpenses
1,265,126
1,211,697
4.41%
196,170
171,033
14.70%
General andadministrativeexpenses
305,094
227,957
33.84%
46,972
32,176
45.98%
R&D expenses 116,458
96,177
21.09%
18,033
13,576
32.83%
Financial Expense 263,858
431,172
-38.80%
40,837
60,872
-32.91%
Profit before tax 233,415
312,215
-25.24%
36,151
44,051
-17.93%
Income taxexpenses
15,026
90,859
-83.46%
2,328
12,823
-81.85%
Net income 218,252
221,356
-1.40%
33,803
31,228
8.25%
EBITDA 1,060,189
1,191,383
-11.01%
164,151
168,159
-2.38%
Net cash flows fromoperating activities
2,329,066
1,619,239
43.84%
360,650
228,566
57.79%
Net cash flows usedin investing activities
(1,187,564)
(442,286)
168.51%
(183,765)
(62,439)
194.31%
Net cash flows usedin financing activities
(371,928)
846,222
-143.95%
(57,706)
119,445
-148.31%
Net increase in cashand cash equivalents
722,759
2,018,188
-64.19%
122,074
284,548
-57.10%
ADAMA Ltd. Semi-Annual Report 2021
ReportingPeriod(000’RMB)
Same period of
last year(000’RMB)
+/-%
Reporting
Period(000’USD)
Same period oflast year(000’USD)
+/-%Operating revenues
15,063,780
14,121,040
6.68%
2,328,523
2,008,404
15.94%
Cost of goods sold
10,706,710
9,904,470
8.10%
1,655,008
1,408,693
17.49%
Selling andDistributionexpenses
2,506,436
2,468,568
1.53%
387,417
351,260
10.29%
General andadministrativeexpenses
571,807
553,186
3.37%
88,391
78,810
12.16%
R&D expenses 226,940
188,185
20.59%
35,080
26,769
31.05%
Financial Expense 448,790
842,792
-46.75%
69,388
119,894
-42.13%
Profit before tax 420,314
448,847
-6.36%
64,976
63,652
2.08%
Income taxexpenses
51,081
244,198
-79.08%
7,890
34,811
-77.33%
Net income 367,036
204,649
79.35%
56,748
28,841
96.76%
EBITDA 1,952,421
2,119,271
-7.87%
301,820
301,217
0.20%
Net cash flows from(used in) operatingactivities
1,491,293
1,234,531
20.80%
231,391
173,400
33.44%
Net cash flows usedin investing activities
(1,892,047)
(815,385)
132.04%
(292,460)
(115,939)
152.25%
Net cash flowsprovided by financingactivities
1,208,791
1,475,449
-18.07%
186,183
209,672
-11.20%
Net increase(decrease) in cashand cash equivalents
780,137
1,936,200
-59.71%
126,656
264,458
-52.11%
Major changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
None during the Reporting Period.Analysis of Financial Highlights
(1) Operating Revenues
Revenues in the second quarter grew by 18% (+7% in RMB terms) to $1,220 million, driven by continuedrobust 15% volume growth.In the quarter, the Company delivered significant growth in Asia Pacific, led by a strong performance inChina and the Pacific region. In North America, the Company recorded continued growth from itsConsumer and Professional business, alongside a solid performance in the crop protection arm,recovering from first-quarter headwinds seen there. Pleasing growth was seen in Latin America despiteongoing drought conditions across the region, as well as strong growth in the India, Middle-East & Africa
ADAMA Ltd. Semi-Annual Report 2021
region, which enjoyed favorable weather including the start of the monsoon season in India. In Europesales grew, aided by a recent heatwave in the region, which caused higher disease and insect pressurein most countries.The accelerated growth in the quarter brought half-year sales to a record-high of $2,329 million, anincrease of 16% (+7% in RMB terms).
Unit: RMB’000
2021H1 2020H1
YoY +/-%
Amount
Ratio of theoperatingrevenue
Amount
Ratio of theoperatingrevenueTotal operating revenue 15,063,780
100.00%
14,121,040
100.00%
6.7%
Classified by industriesManufacture of chemical raw materialsand chemical products
15,063,780
100.00% 14,121,040
100.00%
6.7%
Classified by products
Herbicides 6,141,269 40.77% 6,230,425
44.12% -1.4%
Fungicides 2,943,265 19.54% 2,879,888
20.39% 2.2%
Insecticides 4,569,132 30.33% 3,724,051
26.37% 22.7%
Ingredients and Intermediates (Formerlyreferred to as Non-Agro)
1,410,114 9.36% 1,286,676
9.11% 9.6%
Classified by regions
Europe 3,915,671 25.99% 4,275,020
30.27% -8.4%
North America 2,880,327 19.12% 2,622,636
18.57% 9.8%
Latin America 2,895,965 19.22% 2,669,490
18.90% 8.5%
Asia-Pacific 3,124,576 20.75% 2,456,818
17.40% 27.2%
India, Middle East and Africa 2,247,241 14.92% 2,097,076
14.85% 7.2%
Note: the sales split per product category is provided for convenience purposes only, and is not representative of the waythe Company is managed or in which it makes its operational decisions.Regional Sales Performance in USD
Note: the following analysis of regional sales performance is based on USD results.Europe: Sales in the second quarter were in line with those of the same quarter last year, in ConstantExchange Rates (“CER”) terms, but were lower by 2.3% in the first half of the year compared with thecorresponding period last year.In the quarter, sales were aided by a recent region-wide heatwave, causing higher disease and insectpressure in most countries, following a prolonged cold spell. Noteworthy performances were seen across
Q2 2021
$m
Q2 2020$m
ChangeUSD
H1 2021$m
H1 2020
$m
ChangeUSDEurope 261 252 3.4% 605 609 -0.6%
North America
| North America | 256 | 205 | 25.2% | 445 | 373 | 19.4% |
| Latin America | 271 | 220 | 22.9% | 448 | 379 | 18.1% |
| Asia Pacific | 242 | 191 | 26.4% | 483 | 349 | 38.3% |
| Of which China | 135 | 99 | 36.0% | 259 | 168 | 54.6% |
| India, Middle East & | Africa | 190 | 167 | 13.5% | 347 | 298 | 16.6% |
| Total | 1, | 2 | 20 | 1,036 | 17.7% | 2,329 | 2,008 | 15.9% |
ADAMA Ltd. Semi-Annual Report 2021
eastern Europe, supported by favorable conditions in key crops, as well as in Italy and in Greece,bolstered by the Company’s recent acquisition in the latter country. These more than compensated forsofter performances in certain countries in the western part of the continent, but were largely offset by agenerally softer pricing environment across the region.In US dollar terms, sales were higher by 3.4% in the quarter but were lower by 0.6% in the half-yearperiod, compared to the corresponding periods last year, reflecting the net impact of the strengthening ofregional currencies compared to their weakening in the 2020 periods at the outbreak of COVID-19 then.North America: Sales were up by 24.0% in the second quarter and by 18.5% in the first half of the year,in CER terms, compared with the corresponding periods last year.In the quarter, ADAMA recorded continued robust growth and market share gain in key segments of itsConsumer and Professional business, alongside a solid performance in the crop protection arm,recovering from first-quarter headwinds seen there.In US dollar terms, sales were higher by 25.2% in the quarter and by 19.4% in the first half, compared tothe corresponding period last year, reflecting the strengthening of the Canadian Dollar.Latin America: Sales grew by 21.5% in the second quarter and by 21.7% in the first half of the year, inCER terms, compared to the corresponding periods last year.The Company delivered pleasing growth in the quarter, driven by business growth in Brazil supported bythe strong crop prices, and despite ongoing drought conditions which affected the corn planting seasonin the country, as well as growth seen in other countries across the region.In US dollar terms, sales in the region grew by 22.9% in the quarter, reflecting a strengthening in regionalcurrencies during the quarter compared to the parallel quarter in 2020. In the half year, sales in the regiongrew by 18.1% in US dollar terms, compared to the corresponding period last year, reflecting thesomewhat weaker average currency levels that prevailed during the first quarter of 2021 compared to theparallel quarter in 2020, which saw currency weakness against the USD only late in the quarter at theoutbreak of COVID-19.Asia-Pacific: Sales grew by 14.4% in the quarter and by 25.7% in the first half of the year, in CER terms,compared to the corresponding periods last year.In the second quarter, the Company delivered robust growth in the region, led by a strong performancein China and the Pacific. In China, ADAMA is seeing strong growth, both from sales of its branded,formulated portfolio, further aided by the acquisition of Huifeng’s domestic commercial arm at the end of2020, as well as from sales of its raw materials and intermediates which saw strong demand and higherprices. The Company also started to benefit from its recent acquisition of Huifeng's manufacturing assetsat the end of May 2021. In the Pacific region, the Company grew strongly in the quarter, driven bycontinued favorable seasonal conditions.In the rest of APAC, the Company recorded continued growth in the quarter, with noteworthyperformances delivered in Indonesia, Korea and Australia, more than offsetting the challenging seasonalconditions in other parts of South-East Asia, and the lingering effects of COVID-19 which continues tochallenge local farmers throughout the region.In US dollar terms, sales in the region grew by 26.4% in the second quarter and by 38.3% in the first halfof the year, compared to the corresponding periods last year, reflecting the impact of the strengthening
ADAMA Ltd. Semi-Annual Report 2021
of regional currencies, most notably the Australian Dollar and Chinese Renminbi.India, Middle East & Africa: Sales grew by 9.7% in the quarter and by 15.5% in the first half of the year,in CER terms, compared to the corresponding periods last year.In the quarter, the strong growth was led by India, which enjoyed favorable weather with a strong start tothe monsoon season, enabling good cropping conditions.In US dollar terms, sales in the region grew by 13.5% in the quarter and by 16.6% in the first half of theyear, compared to the corresponding periods last year, reflecting the impact of the strengthening ofregional currencies compared to the USD, most notably the Israeli Shekel.
(2) Cost of Goods Sold:
Cost of Goods Sold in the second quarter were $864 million (70.8 % of sales), compared to $727million (70.1% of sales) reported in the corresponding quarter last year. In the half year, Cost ofGoods sold were $1,655 million (71.1 % of sales), compared to $1,409 million (70.1% of sales)reported in the corresponding period last year.The Company recorded certain extraordinary charges within its reported cost of goods sold, totalingapproximately $16 million in the second quarter (Q2 2020: $9 million) and $25 million in the half-year period (H1 2020: $18 million). These charges were largely related to its continuing Relocation& Upgrade program, and include mainly (i) excess procurement costs, both in quantity and costterms, incurred as the Company continued to fulfill demand for its products in order to protect itsmarket position through replacement sourcing at significantly higher costs from third-party suppliers.Excluding the impact of the abovementioned extraordinary charges in the quarter, the higher Costof Goods sold, both in the quarter and in the half-year periods, were driven by the impacts of higherprocurement and logistics costs as well as the strengthening of local currencies against the USdollar.Despite the exceptionally strong sales growth, the Company continues to see pressure on grossmargins, reflecting the higher logistics and procurement costs, as well as the impact on productioncosts of the strengthening of the Chinese Renminbi and the Israeli Shekel.
(3) Operating Expenses:
Operating expenses include Sales and Marketing, General and Administration and R&D.Operating expenses in the second quarter were $261 million (RMB 1,687 million) (21.4 % of sales)and $511 million (RMB 3,305 million) (21.9 % of sales) in the half-year period, compared to $217million (RMB 1,536 million) (20.9% of sales) and $457 million (RMB 3,210 million) (22.7 % of sales)in the half-year period reported in the corresponding periods last year.
The Company recorded certain non-operational, mostly non-cash, charges within its reportedoperating expenses, mainly as follows:
(i) $7 million (RMB 43 million) in Q2 2021 (Q2 2020: $8 million (RMB 53 million)) and $15 million
(RMB 94 million) in H1 2021 (H1 2020: $15 million (RMB 107 million)) in non-cashamortization charges in respect of Transfer assets received and written-up related to the2017 ChemChina-Syngenta acquisition. The proceeds from the Divestment of cropprotection products in connection with the approval by the EU Commission of the acquisition
ADAMA Ltd. Semi-Annual Report 2021
of Syngenta by ChemChina, net of taxes and transaction expenses, were paid to Syngentain return for the transfer of a portfolio of products in Europe of similar nature and economicvalue. Since the products acquired from Syngenta are of the same nature, and with the samenet economic value as those divested, the Divestment and Transfer transactions had no netimpact on the underlying economic performance of the Company. These additionalamortization charges will continue until 2032 but at a reducing rate, yet will still be at ameaningful level until 2028;(ii) $4 million (RMB 24 million) in Q2 2021 (Q2 2020: $3 million (RMB 18 million)) and $8 million(RMB 49 million) in H1 2021 (H1 2020: $5 million (RMB 38 million)) in charges related mainlyto the non-cash amortization of intangible assets created as part of the Purchase PriceAllocation (PPA) on acquisitions, with no impact on the ongoing performance of thecompanies acquired, as well as other M&A-related costs.(iii) $9 million (RMB 55 million) in Q2 2021(Q2 2020: $2 million (RMB 15 million)) and $15 million(RMB 97 million) in H1 2021(H1 2020: $13 million (RMB 88 million)) in idleness chargeslargely related to suspensions at the facilities being relocated as well as to the temporarysuspension of the Jingzhou site in Q1 2020 at the outbreak of COVID-19 in Hubei Province.The higher aggregate amount of non-operational charges in Q2 and H1 2020 then also included$11 million (RMB 81 million) and $23 million (RMB 160 million), respectively, in non-cashamortization charges related to the legacy PPA of the 2011 acquisition of Adama AgriculturalSolutions, which have now largely finished, and $1 million (RMB 6 million) and $9 million (RMB 66million), respectively, in early retirement expenses. For further details on these non-operationalcharges, please see the appendix to this release.Excluding the impact of the abovementioned non-operational charges, the higher operatingexpenses in the quarter and half-year period reflect primarily an increase in sales and marketingteams in growing geographies to drive and support the strong sales growth, higher transportationand logistics costs driven by both an increase in freight costs and the increased volumes beingtransported, as well as the inclusion of recent acquisitions.In addition to these factors, operating expenses in the quarter were impacted by the strengtheningof local currencies against the US dollar.
(4) Financial Expenses:
“Financial Expenses” alone mainly reflect interest payments on corporate bonds and bank loansas well as foreign exchange gains/losses on the bonds and other monetary assets and liabilitiesbefore the Company carries out any hedging. The impact of Financial Expenses (before hedging)is RMB 449 million ($69 million) for the first half of 2021 compared with RMB 843 million ($120million) for the corresponding period in 2020.Given the global nature of its operational activities and the composition of its assets and liabilities,the Company, in the ordinary course of its business, uses foreign currency derivatives (forwardsand options) to hedge the cash flow risks associated with existing monetary assets and liabilitiesthat may be affected by exchange rate fluctuations. Net gains/losses from hedging of thosepositions, are recorded in “Gains/Losses from Changes in Fair Value”, and are then transferred
ADAMA Ltd. Semi-Annual Report 2021
to “Investment Income” upon realization. The combined impact of Gains/Losses from Changesin Fair Value and Investment Income is a net loss of RMB 140 million ($22 million) in the first halfof 2021 compared with a net gain RMB 303 million ($43 million) in the corresponding period in2020.The aggregate of Financial Expenses, Gains/Losses from Changes in Fair Value andInvestment Income (hereinafter as “Total Net Financial Expenses and Investment Income”),which more comprehensively reflects the financial expenses of the Company in supporting its mainbusiness and protecting its monetary assets/liabilities, amounts to RMB 589 million ($91 million) inthe first half of 2020 compared with RMB 540 million ($77 million) in the corresponding period in2020.The higher financial expenses in the quarter and half-year period were mainly driven by the neteffect of an increase in the Israeli CPI on the ILS-denominated, CPI-linked bonds. The increase inthe CPI was most marked in the second quarter of 2021, compared to its decline in the parallelquarter last year, and appears to be similar to the increase in inflation rates that has been observedin many countries across the world this year as the global economy continues to reopen followingpandemic-related shutdowns.
(5) Income Tax expenses:
The lower tax expenses recorded in the second quarter and first half of 2021 were mainly due tonon-cash tax income from the impact of the stronger Brazilian Real on the value of non-monetarytax assets, caused due to differences between the functional (US dollar) and tax (local) currencies'value of non-monetary assets. The higher tax expenses recorded in 2020 were largely due to theopposite impact, which was then caused by the significant weakening of the BRL in those periodsin 2020.
(6) Net income attributable to the shareholders of the companyThe improvement in net income in the half-year period was driven by the higher operating incomeand lower taxes, which were partially offset by the higher financial expenses.
(7) Cash Flow:
Net cash flows from (used in) operating activities: Operating cash flow of $361 million (RMB2,329 million) was generated in the quarter and $231 million (RMB 1,491 million) in the half-yearperiod, compared to $229 million (RMB 1,619 million) and $173 million (RMB 1,235 million)generated in the corresponding periods last year, respectively. The stronger operating cash flowgenerated in the second quarter and half-year period reflects the stronger operating incomegenerated this year, alongside improved collections during the periods.Net cash used in investing activities was $184 million (RMB 1,188 million) in the quarter and$292 million (RMB 1,892 million) in the half-year period, compared to $62 million (RMB 442 million)and $116 million (RMB 815 million) in the corresponding periods last year, respectively. The higherlevels of cash used in investing activities in the periods largely reflect an increase in investmentsin fixed assets, mainly driven by the relocation of manufacturing facilities in China and upgradingof facilities in Israel, as well as the acquisitions of majority stakes in Jiangsu Huifeng’s domesticcommercial crop protection business and its manufacturing assets.Free cash flow of $132 million (RMB 854 million) was generated in the second quarter and $116million (RMB 752 million) consumed in the half-year period compared to $127 million (RMB 900million) and $12 million (RMB 95 million) generated in the corresponding periods last year,
ADAMA Ltd. Semi-Annual Report 2021
respectively, reflecting the aforementioned operating and investing cash flow dynamics.Cash Flow from Financing Activities was $58 million (RMB 372 million) consumed in the quarterand $186 million (RMB 1,209 million) generated in the half-year period, compared to $119 million(RMB 846 million) and $210 million (RMB 1,475 million) generated in the corresponding periodslast year, respectively. The lower level of financing cash flow in both the second quarter and half-year period is due to the fact that in Q2 2020, as a result of the COVID-19 pandemic, the Companyutilized its credit lines and expanded its Israeli bond series, in order to strengthen its liquidity, whilein 2021, due to the strong collections of receivables, the Company has been able to pay down aportion of its short term loans. By contrast, the Company has seen an inflow of funds in 2021 dueto the realization of profit on hedging positions in respect of the Company's Israeli ILS-denominatedbonds, as a result of the strengthening of the Shekel against the US dollar.
List of the industries, products or regions which exceed 10% of the operating revenues oroperating profits of the Company as at the Reporting Period
Unit: RMB’000
Operatingrevenues
Cost ofgoods sold
Gross
Margin(%)
YoY
| increase/decrease |
of the operating
revenues
YoY
of the cost of
goods sold
YoYincrease/decreaseof the gross margin
increase/decrease
Classified by industriesManufacturingchemical rawmaterials andchemical products 15,063,780
10,706,710
28.9%
6.7% 8.1% 3.3%Classified by productsCrop Protection 13,653,666
9,635,518
29.4%
6.4% 8.8% 1.0%Ingredients andIntermediates 1,410,114
1,071,192
24.0%
9.6% 2.1% 42.5%Classified by regions-- -- -- -- -- --If the scope of the Company's main business was adjusted during the Reporting Period, the Company's annual financialdata of main business according to the adjusted scope at the end of the year is disclosed as follows:
□ Applicable √ Not applicable
Reasons for any over -30% YoY movement of the data above:
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2021
IV. Analysis of Non-Core Business
√ Applicable □ Not applicable
Unit: RMB’000Amount
total profit
Reasons
WhethersustainedInvestment income
527,756
Proportion in
125.56%
Mainly from the realization ofderivatives
NoGain/loss from change ofFair Value
(664,582)
-158.12%
Mainly from changes in fair value of
| derivatives. See explanation of financial | ||
expenses
NoAsset impairment reversal(losses)
29,403
7.00%
No
Gain or loss from disposal of
assets
14,799
Gain or loss from disposal of
3.52%
NoNon-operating income
33,032
7.86%
NoNon-operating loss
15,429
3.67%
No
V. Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB’000
End of Reporting Period End of last year
Change in
Change inpercentage
(%)
percentageReason for
Reason forsignificant
changeAmount
As a percentageof total assets (%)
| significant | ||
Amount
As a percentageof total assets (%)
Cash at bank and on hand
4,633,440
9.37%
| 3,863,886 | |
8.26%
1.11%
Accounts receivable 9,295,611
18.80%
| 8,766,869 | ||
18.73%
0.07%
Inventories 11,280,638
22.81%
| 10,338,273 | |||
22.09%
0.72%
Investment properties 3,186
0.01%
| 4,364 | ||
0.01%
0.00%
Long term equity investments
15,847
0.03%
| 14,081 | |
0.03%
0.00%
Fixed assets 7,695,471
15.56%
| 6,576,116 | ||
14.05%
1.51%
Construction in progress 1,812,323
3.66%
| 1,405,328 | ||
3.00%
0.66%
right-of-use asset 505,895
1.02%
483,618
1.03%
-0.01%
Short-term loans 1,209,421
2.45%
| 1,205,498 | ||
2.58%
-0.13%
Contract liabilities 1,260,942
2.55%
1,092,253
2.33%
0.22%
Long-term loans 3,271,544
6.62%
| 2,387,628 | |
5.10%
1.52%
Lease liabilities 394,531
0.80%
379,190
0.81%
-0.01%
Derivative financial assets 376,746
0.76%
| 1,560,788 | ||
3.33%
-2.57%
Intangible assets 5,150,421
10.42%
| 5,226,455 | ||
11.17%
-0.75%
Goodwill 4,600,258
9.30%
| 4,584,226 | ||
9.80%
-0.50%
Deferred tax assets 939,867
1.90%
| 773,673 | ||
1.65%
0.25%
Accounts payables 5,184,480
10.48%
| 4,557,006 | ||
9.74%
0.74%
Employee benefits payable 916,236
1.85%
| 1,208,834 | ||
2.58%
-0.73%
Debentures 7,995,724
16.17%
| 8,078,113 | ||
17.26%
-1.09%
Derivative financial liabilities
799,715
1.62%
| 1,463,614 | |
3.13%
-1.51%
Other payables 1,562,623
3.16%
| 1,075,721 | ||
2.30%
0.86%
ADAMA Ltd. Semi-Annual Report 2021
2. Main Overseas Assets
√ Applicable □ Not applicable
Specific
assets
Reason
Scale(Amount)
of the
assets(RMB’000)
contents of the
Location
Operation
| /Management |
mode
Controlmeasures
to
safety ofthe assets
guarantee
Net Profit
of theassets(RMB’000)
Net Profit
Proportion
of
Proportionoverseas
overseasassets out
| assets out |
| of total net |
assets (%)
Significant
| Significant |
| impairment |
risk?Equityinvestment inAdamaSolutions
Acquiredthrough
Restructuring
| Major Assets |
18,686,809
| Israel and |
globally
CorporateGovernance
CorporateGovernance
277,588
87%
NoOther explanations
3. Assets and Liabilities Measured at Fair Value
√ Applicable □ Not applicable
Unit: RMB’000Item
Openingbalance
Profit/loss onfair value
changes in the
ReportingPeriod
changes in theCumulative fair
| Cumulative fair |
| value changes |
charged toequity
Impairmentprovided intheReportingPeriod
theReportingPeriod
Purchased inSold in the
ReportingPeriod
Sold in the
Others
Closingbalance
Financial assetsFinancial assets heldfor trading (excludingderivative financialassets)
1,253 - - - 1,241 - - 2,494Derivative financialassets
(including long
term)
1,560,781
| (including long |
(980,250) 144,076 - 168,475 (516,342)
- 376,740
Other equityinvestments
152,200
- (663) - - - - 151,537
Total financial assets
1,714,234
(980,250) 143,413 - 169,716 (516,342)
- 530,771
Other 174,236
(18,733) - - 6,462 (24,713)
- 137,252
Total of above 1,888,470
(998,983) 143,413 - 176,178 (541,055)
- 668,023
Financial liabilities 1,463,612
(663,897) - - - - - 799,715
Significant changes in the measurement attributes of the main assets in the Reporting Period
□ Yes √ No
4. Limitation on Asset Rights as of End of the Reporting PeriodAt the end of this Reporting Period, restricted assets included RMB 18 million - restricted cash, most ofwhich as guarantee for bank acceptance bills; and RMB 109 million - other non-current assets, mainly asguarantee for asset securitization and lawsuits.
ADAMA Ltd. Semi-Annual Report 2021
VI. Investments Made
1. Overall Condition of the Total Investments Made
√ Applicable □ Not applicable
Investment during theReporting Period (RMB'000)
Investment during the SamePeriod Last Year (RMB'000)
+/-% YoY49,924,938
41,529,668
20.22%
2. Significant Equity Investments during the Reporting Period
□ Applicable √ Not applicable
3. Significant Non-Equity Investments executed during the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Investments in Securities
□ Applicable √ Not applicable
None during the Reporting Period.
ADAMA Ltd. Semi-Annual Report 2021
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable Unit: RMB’000Thepartythatoperates theinvestment
Relati
onwiththeCompany
Related
partytransac
Relatedtion or
not?
tion or
Type Initial
investment
amount
Starting date
investment
Expiring date
Investmentamount atbeginning of
the period
Amountpurchasedduring theReporting
Period
Amount
theReporting
Period
Impai
| sold during | rment |
accru
any)
ed (if
Investment
amount atend of the
period
| Investment | Percentage |
of
amount
investmentdivided by
net assetat end ofthe period
divided by
Gain/loss
during
the
Gain/lossReporting
Period
Reporting
Banks No No Option
1,994,238
29/3/2021 14/10/2021
1,994,238 9,096,960 -7,051,283
No
4,039,915
18.85% -94,906
Banks No No Forward
20,796,924
20/3/2021 31/07/2021
20,796,924 40,827,978 -41,186,892
No
20,438,010
95.36% -221,447
Total 22,791,162
-- -- 22,791,162 49,924,938 -48,238,175
24,477,925
114.21%
-316,353
Source of fund for the investment
Internal.
Litigation-related situations (ifapplicable)
N/A
Date of disclosure of Boardapproval (if any)
December 30, 2017Date of disclosure ofShareholders’ approval (if any)
N/A
Risk and control analysis for theReporting Period (including butnot limited to market risk,liquidity risk, credit risk,operational risk, legal risk, etc.)
The aforesaid refers to short term hedging currency transactions made with banks.
The Group’s transactions are not traded in the market. The Transactions are between the applicable company in the Group and the
applicable bank until the expiration date of the transaction, therefore no market risk is involved.
Regarding credit and liquidity risk, the Group is working with large and substantial banks only and with some of them the Gro
up has ISDA
agreements.
As to operational risk, the Group is working with relevant software, which is its back office for all transactions.
ADAMA Ltd. Semi-Annual Report 2021
No legal risk is involved.The actions taken in order to further reduce risks are:
? The relevant subsidiaries have specific guidelines, under the Group’s policy, which were approved by the subsidiaries' financialstatements committee of the board, which specifies, inter alia, the hedging policy, the persons that have the authorization to deal withhedging, the tools, ranges etc. The only subsidiary that has hedging positions in the Group in the period was Adama
subsidiaries.? The relevant subsidiaries apply management designed procedures and controls, which among other things, monitor the workingprocess and the controls of the hedging transactions and are quarterly reviewed and annually audited.? The controllers of the relevant subsidiaries are involved in the process and are monitoring the hedging accounting treatment.? Every 2-3 years the internal audit of the relevant subsidiaries’ department is auditing the entire procedure.Market price or fair value changeof investments during theReporting Period.Specific methodology andassumptions should bedisclosed in the analysis of fairvalue of the investments
The aforesaid refers to short time hedging currency transactions made by the relevant subsidiary with banks.Segregation of duties as follows:
For the fair value evaluation, the relevant subsidiary is usually using external experts. The relevant subsidiary hedges currencies only;the relevant transactions are simple (Options and forwards) for short terms. For fair value methodology see section X of the this Report,note IX. Fair Value. The exchange rates are provided by the accounting department of the relevant subsidiary and all other parametersare provided by the experts.Explanation for any significantchanges in accounting policiesand principles, compared withlast reporting period
N/AIndependent Directors’ opinionon the investment in derivative
Solutions and itsfinancial instruments and related
risk controls
The derivative investments carried by the Company are for hedging and narrowing down the risk
financial instruments and relatedof market fluctuations. The investments
respond to the Company’s routine business demands and are in accordance with the relevant laws and regulations. Additionally,
of market fluctuations. The investmentsthe
Company has adopted Currency Risk Hedging Policy to strengthen the risk management and
thecontrol which benefit the Company’s ability
to protect against market risk. The derivative investments do not harm the interests of the Company and its shareholders.
ADAMA Ltd. Semi-Annual Report 2021
VII. Sale of Major Assets and Equity Interests
1. Sale of Significant Assets
□ Applicable √ Not applicable
None during the Reporting Period.
2. Sale of Significant Equities
□ Applicable √ Not applicable
VIII. Main Controlled and Joint Stock Companies
√ Applicable □ Not applicable
List of the stock-participating companies influencing over 10% of the net profits on the majorsubsidiaries and the Company
Unit: RMB’000Name
Type
Main services
| Registered |
capital
Totalassets
Net assetsOperating
revenues
| Operating |
profit
| Operating | |
AdamaSolutions
Net profit
Subsidiary
Development,manufacturing andmarketing ofagrochemicals,
intermediatematerials for other
industries, food
additives and synthetic
aromatic products,mainly for export.
720,085
additives and synthetic
40,099,174
16,099,726
13,853,045
304,287
280,273
Subsidiaries acquired or disposed during the Reporting Period
√ Applicable □ Not applicable
Company Name
Way of Acquirement of
Disposal
Impact on the Business Operation and
Performance of the Company
ADAMA Huifeng(Jiangsu) Co., Ltd.
Purchase 51% of Share Equity
Upon and immediately after completion ofthe Transaction on May 28, 2021, theCompany currently owns and holds 51%equity interests in ADAMA Huifeng andADAMA Huifeng has become a controlledsubsidiary of the Company. Based on theAccounting Standards for BusinessEnterprises, ADAMA Huifeng has beenincluded in the Company’s consolidatedfinancial statements.For details, please refer to theAnnouncement on the Closing of theAcquisition of 51% Equity Interests inADAMA Huifeng (Jiangsu) Co., Ltd.(Announcement No. 2021-25)
ADAMA Ltd. Semi-Annual Report 2021
Explanations on the main controlled and joint stock companies
□ Applicable √Not applicable
IX. Structured Entities Controlled by the Company
□ Applicable √Not applicable
X. Risks Facing the Company and CountermeasuresThe Group is exposed to several major risk factors, resulting from its economic environment, the industryand the Group's unique characteristics, as follows (the order below does not indicate priority):
Exchange rate fluctuationsAlthough the Company reports its consolidated financial statements in RMB, the Company’s materialsubsidiary Solutions reports its consolidated financial statements in US dollars, which is its functionalcurrency, while its operations, sales and purchases of raw materials are carried out in various currencies.Therefore, fluctuations in the exchange rate of the selling currency against the purchasing currencyimpact the Company’s results. The Group's most significant exposures are to the Euro, the Israeli Shekeland the Brazilian Real. The Group has lesser exposures to other currencies. The strengthening of the USdollar against other currencies in which the Company operates reduces the dollar value of such salesand vice versa.On an annual perspective, approximately 25% of the Group’s sales are to the European market andtherefore the impact of long-term trends on the Euro may affect the Company's results and profitability.Concentration of currency exposure from foreign currency exchange rate fluctuations against assets,including inventory of finished products in countries of sale, liabilities and cash flow denominated inforeign currencies are done constantly. High volatility of the exchange rates of these currencies couldincrease the costs of transactions to hedge against currency exposure, thereby increasing the Company'sfinancing costs.The Group uses commonly accepted financial instruments to hedge most of its substantial net balancesheet exposure to any particular currency. Nonetheless, since as part of these operations the Grouphedges against most of its balance sheet exposure and only against part of its economic exposure,exchange rate volatility might impact the Group’s results and profitability. As of the date of approval ofthe financial statements, the Group has hedged most of its balance sheet exposure as it is on the date ofpublication of this report.In addition, as the Company’s product sales depend directly on the cyclical nature of the agriculturalseasons, therefore the Company’s income and its exposure to the various currencies is not evenlydistributed over the year. Countries in the northern hemisphere have similar agricultural seasons andtherefore, in these countries, the highest sales are usually during the first half of the calendar year. Duringthis period, the Company is most exposed to the Euro. In the southern hemisphere, the seasons areopposite and most of the local sales are carried out during the second half of the year. During thesemonths, most of the Company's exposure pertains to the Brazilian Real. The Company has more salesin markets in the northern hemisphere and therefore, the Company's sales volume during the first half ofthe year is higher than the sales volume during the second half of the year.Exposure to Interest rate, Israel CPI and NIS exchange rate fluctuations
ADAMA Ltd. Semi-Annual Report 2021
The debentures issued by Solutions, the material subsidiary of the Company, are Israeli Shekel basedand linked to the Israel Consumer Price Index (CPI) and therefore an increase in the CPI and anappreciation of the shekel rate against the dollar might lead to a significant increase in its financingexpenses. As of the date of approval of the financial statements, Solutions hedged most of its exposureto these risks on an ongoing basis, through CPI hedging and USD-ILS exchange rate hedgingtransactions.The Group is exposed to changes in the US dollar LIBOR interest rate as the Group has dollardenominated liabilities, which bear variable LIBOR interest. The Group prepares a quarterly summary ofits exposure to changes in the LIBOR interest rate and periodically examines hedging the variable interestrate by converting it to a fixed rate. As part of the global reform in interest rate benchmarks, the phasingout of LIBOR (the so-called LIBOR fallback) is scheduled for the end of 2021. Three global interest ratebenchmarks are expected to transition to alternative risk-free rates and to replace the existing benchmarkLondon Interbank Offered Rates (LIBOR): SOFR (USD), ESTR (EUR) and SONIA (GBP). As of the dateof approval of the financial statements, the Group has not carried out hedging for such exposure, sinceUS dollar interest rates have been relatively stable.Business operations in emerging marketsThe Group conducts business - mainly product sales and raw material procurement - inter alia, inemerging markets such as Latin America (particularly in Brazil, the largest market, country wise, in whichthe Group operates), Eastern Europe, South East Asia and Africa. The Group's activity in emergingmarkets is exposed to risks typical of those markets, including: political and regulatory instability; volatileexchange rates; economic and fiscal instability and frequent revisions of economic legislation; relativelyhigh inflation and interest rates; terrorism or war; restrictions on import and trade; differing businesscultures; uncertainty as to the ability to enforce contractual and intellectual property rights; foreigncurrency controls; governmental price controls; restrictions on the withdrawal of money from the country;barter deals and potential entry of international competitors and accelerated consolidations by large-scalecompetitors in these markets. Developments in these regions may have a significant effect on the Group'soperations. Distress to the economies of these markets could impair the ability of the Group's customersto purchase its products or the ability to market them at international market prices, as well as harm theGroup's ability to collect customer debts, in a way that could have a significant adverse effect on theGroup's operating results.The Group’s operations in multiple regions allows for the diversification of such risks and for the reductionof its dependency on particular economies. In addition, changes in registration requirements orcustomers' preferences in developed western countries, which may limit the use of raw materialspurchased from emerging economies, may require redeployment of the Group's procurementorganization, which might negatively affect its profitability for a certain period.Operating in a competitive marketThe crop protection products industry is highly competitive. Currently, seven multinational companies,including the Company, lead the global industry. Five of these, Bayer, Syngenta, Corteva, BASF andFMC, are Originator Companies, which develop, manufacture and market both patent-protected as wellas off-patent products. The Group competes with the original products with the aim of maintaining andincreasing its market share.The Originator Companies possess resources enabling them to compete aggressively, in the short-to-medium term, on price and profit margins, so as to protect their market share. Loss of market share or
ADAMA Ltd. Semi-Annual Report 2021
inability to acquire additional market share from the Originator Companies can affect the Group's positionin the market and adversely affect its financial results. For details regarding the Group’s competitiveadvantages see section III - subsection II. Core competitiveness analysis above.Similarly, the Group also competes in the more decentralized off-patent segment of the market, againstother off-patent companies and smaller-scale Originator Companies, which have significantly grown innumber in recent years and are materially changing the face of the crop protection industry, the majorityof whom have not yet deployed global distribution networks, and are only active locally. These companiesoften price their products aggressively and at times have lower profit margins than the Group, which mayadversely impact the Group's sales and product prices. The Group's ability to maintain its revenues andprofitability from a specific product in the long term is affected by the number of companies producingand selling comparable off-patent products and the timing of their entrance to the relevant market.Any delay in developing or obtaining registrations for products and/or delayed penetration into marketsand/or growth of competitors that focus on off-patent active ingredients (whether by the expansion of theirproduct portfolio, granting registrations to other manufacturers (including manufacturers in China andIndia) to operate in additional markets, transforming their distribution network to a global scale orincreasing the competition for distribution access), and/or difficulty in purchasing low cost raw materials,may harm the Group’s sales, affect its global position and lead to price erosion.Decline in scope of agricultural activities; exceptional changes in weather conditionsThe scope of general agricultural activities worldwide may be negatively affected by many exogenousfactors, such as extreme weather conditions, natural disasters, a decrease in agricultural commodityprices, government policies and the economic condition of farmers. A material decline in the scope ofagricultural activities would by necessary implication cause a decline in the demand for the Group’sproducts, erosion of its prices and collection difficulties, which may have a significant adverse effect onthe Group's results. Extreme weather conditions as well as other damages caused by nature may havean impact on the demand for the Group's products. The Group believes, that should a number of suchbad seasons occur in succession, without favorable seasons in the interim, its results may sustainsignificant harm.Environmental, health and safety legislation, standards, regulation and exposureMany aspects of the Group's operations are strictly regulated, including in relation to production andtrading, and particularly in relation to the storage, treatment, manufacturing, transport, usage and disposalof its products, their ingredients and byproducts, some of which are considered hazardous. The Group'sactivities involve hazardous materials. Defective storage or handling of hazardous materials may causeharm to human life or to the environment in which the Group operates. The regulatory requirementsregarding the environment, health and safety could, inter alia, include soil and groundwater clean-uprequirements; as well as restrictions on the volume and type of emissions the Group is permitted torelease into the air, water and soil.The regulatory requirements applicable to the Group vary from product to product and from market tomarket, and tend to become stricter with time. In recent years, both government authorities andenvironmental protection organizations have been applying increasing pressure, including throughinvestigations and indictments as well as increasingly stricter legislative proposals and class action suitsrelated to companies and products that may potentially pollute the environment. Compliance with theselegislative and regulatory requirements and protection against such legal actions requires the Group tocommit considerable human and financial resources (both in terms of substantial ongoing costs and in
ADAMA Ltd. Semi-Annual Report 2021
terms of material one-time investments) to meet mandatory environmental standards. In some instances,this may result in delaying the introduction of products into new markets or in adverse effects on theGroup’s profitability. In addition, the toughening, material alteration or revocation of environmentallicenses or permits, or their stipulations, or the inability to obtain such licenses and permits, maysignificantly affect the Group's ability to operate its production facilities, which in turn may have a materialadverse effect on the financial and business results of the Group. The Group may be required to bearsignificant civil liabilities (including due to class actions) or criminal liabilities (including high penaltiesand/or high compensation payments and/or costs of environmental monitoring and rehabilitation),resulting from violation of environmental, health and safety regulations, while some of the existinglegislation may impose obligations on the Group for strict liability, regardless of proof of negligence ormalice.While the Group invests material sums in adapting its facilities and in constructing special facilities inaccordance with environmental requirements, it is currently unable to assess with any certainty whetherthese investments (current and future) and their outcomes may satisfy current or future requirements,should these be significantly increased or changed. In addition, the Group is unable to predict with anycertainty the extent of future costs and investments it may incur in order to meet the requirements of theenvironmental authorities in the relevant countries in which it operates since, inter alia, the Group isunable to estimate the extent of potential pollutions, their duration, the extent of the measures requiredto be taken by the Group in handling them, the division of responsibility among other parties and theamounts recoverable from third parties.Furthermore, the Group may be the target of bodily injury claims and property damage claims caused byexposure to hazardous materials, which are largely covered under the Group’s insurance policies.Legislative, standard and regulatory changes in product registrationThe majority of the substances and products marketed by the Group require registration at various stagesof their development, production, import, utilization and marketing, and are also subject to strict regulatorysupervision by the regulatory authorities in each country. Compliance with the regulatory requirementsthat vary from country to country and which are becoming more stringent with time, involves significanttime and costs, and rigorous compliance with individual registration requirements for each product.Noncompliance with these regulatory requirements might materially adversely affect the Group’sexpenses, cost structure and profit margins, as well as penetration of its products in the relevant market,and may even lead to suspension of sales of the relevant product, and recall of those products alreadysold, or to legal action. Moreover, to the extent new regulatory requirements are imposed on existingregistered products (requiring additional investment or leading to the existing registration's revocation)and/or the Group is required to compensate another company for its use of the latter's product registrationdata, these might amount to significant sums, considerably increasing the Group's costs and adverselyaffecting its results and reputation. In recent years the industry has been suffering from revocation ofregistration for many products around the world. This trend is particularly evident in European countriesas well as in many other countries worldwide.Nevertheless, the Group believes that, in countries where the Group maintains a competitive edge, anytoughening of registration requirements may actually increase this edge, since this will make it difficult forits competitors to penetrate the same market, whereas in countries in which the Group possesses a smallmarket share, if any, such toughening may make further penetration of the Group's products into thatmarket more difficult.
ADAMA Ltd. Semi-Annual Report 2021
Product liabilityProduct and producer liability are a risk for the Group. Regardless of their prospects or actual results,product liability lawsuits might involve considerable costs as well as tarnish the Group's reputation, thuspotentially impacting its profits. The Group has a third-party and defective product liability insurance cover.However, there is no certainty that the scope of insurance cover is sufficient. Any future product liabilitylawsuit or series of lawsuits could materially affect the Group’s operations and results, should the Grouplose the lawsuit or should its insurance cover not suffice or apply in a particular instance. In addition,while the Group has not currently encountered any difficulty renewing such insurance policy, it is possiblethat it will encounter future difficulties in renewing an insurance policy for third party liability and defectiveproducts on terms acceptable to the Group.Successful market penetration and product diversificationThe Group’s growth and profit margins are affected, inter alia, by the extent of its success in developingdifferentiated products and obtaining registrations for them, so as to enable it to gain market share at theexpense of its competitors. Usually, being the first to launch a certain off-patent product affords the Groupcontinuing advantage, even after other competitors penetrate the same market. As such, the Group'srevenues and profit margins from a certain new off-patent product could be materially affected by itsability to launch such product ahead of the launch of a comparable product by its competitors.Should new products fail to meet registration requirements in the different countries or should it take along period of time to obtain such registrations, the Group's ability to successfully introduce a new productto the relevant market in the future may be affected, since entry into the market prior to other competitorsis important for successful market penetration. Furthermore, successful market penetration involves, interalia, product diversification in order to suit each market's changing needs. Therefore, if the Group fails toadapt its product mix by developing new products and obtaining the required regulatory approvals, itsfuture ability to penetrate that market and to maintain its existing market share could be affected. Failureto introduce new products to given markets and meet Group objectives (given the considerable time andresources invested in their development and registration) might affect the sales of the product in questionin the relevant market, the Group’s results and margins.Intellectual property rights of the Group and of third partiesThe Group's ability to develop off-patent products is dependent, inter alia, on its ability to oppose patentsor patent application of Originator Companies or other third parties, or to develop products that do nototherwise infringe intellectual property rights in a manner that may involve significant legal and othercosts. Originator Companies tend to vigorously defend their products and may attempt to delay the launchof competing off-patent products by registering patents on slightly different versions of products for whichthe original patent protection is about to expire or has expired, with the aim of competing against the off-patent versions of the original product. The Originator Companies may also change the branding andmarketing of their products. Such actions may increase the Group's costs and the risk it entails, and harmor even prevent its ability to launch new products.The Group is also exposed to legal claims that its products or production processes infringe on third-partyintellectual property rights. Such claims may involve time, costs, substantial damages and managementresources, impair the value of the Group's brands and its sales and adversely affect its results. Suchlawsuits that were concluded involved non-material amounts.Furthermore, although the Group protects its brands and trade secrets with patents, trademarks and othermethods of intellectual property protection, these protective means may not be sufficient for fully
ADAMA Ltd. Semi-Annual Report 2021
safeguarding its intellectual property. Any unlawful or other unauthorized use of the Group's intellectualproperty rights could adversely affect the value of its intellectual property and goodwill. In addition, theGroup may be required to take legal actions involving financial costs and resources to safeguard itsintellectual property rights.Fluctuations in raw material inputs and prices, and in sales costsSignificant percentage of the Groups’ cost of sales derives from raw material costs. Hence, significantincreases or decreases in raw material costs affect the cost of goods sold, and are, due to the length ofthe Company’s inventory cycle, generally reflected in the Company’s financials. Most of the Group's rawmaterials are distant derivatives of oil prices and therefore, extreme changes or decrease in oil pricesmay affect the costs of raw materials, although only partially.To reduce exposure to fluctuations in the prices of raw materials, the Group customarily engages in long-term purchase contracts for key raw materials, wherever possible. Similarly, the Group acts to adjust itssales prices, wherever possible, to reflect the changes in the costs of raw materials.As of the date of approval of the financial statements, the Group has not engaged in any hedgingtransactions against increases in oil and other raw material costs.Exposure due to recent developments in the genetically modified seeds marketAny significant development in the market of genetically modified seeds for agricultural crops, includingas a result of regulatory changes in certain countries currently prohibiting the use of genetically modifiedseeds, and/or any significant increase in the sales of genetically modified seeds and/or to the extent newcrop protection products are developed for further crops that would be widely used (substituting traditionalproducts), will affect demand for crop protection products, requiring the Group to respond by adapting itsproduct portfolio to the new demand structure. Consequently, to the extent that the Group fails to adaptits product mix accordingly, this may reduce demand for its products, erode their sales price and byimplication affect the Group’s results and market share.Nevertheless, the fact that the Group itself markets some of the products for which herbicide tolerancetraits have been developed, acts to mitigate this exposure (albeit only in terms of marketing margins).In addition, natural and/or biological substances that attack weeds, pests and diseases are potentialalternatives for the Company’s products, though as of the date of the report, their efficiency is relativelylimited, and they are commercialized in a relatively small volumes.Operational risksThe Group’s operations, including its manufacturing activities, rely, inter alia, on state-of-the-art computersystems. The Group continually invests in upgrading and protecting these systems from malfunctions andattack. Any unexpected failure of these systems, as well as the integration of new systems, could involvesubstantial costs and adversely affect the Group's operations until completion of the repair or integration.The potential occurrence of a substantial failure that cannot be repaired within a reasonable time framemay also affect the Group's operations and its results. Currently, the Group has a property and loss-of-profit insurance policy.Data protection and cyber securityDuring its activity, the Group may be exposed to risks and threats, related to the stability of its informationtechnologies systems, data protection and cyber security, which could appear in many different forms(such as service denial, misleading employees, malfunction, encryption or data erasing and other cyber-attacks via E-mail or malicious software). An attack on such computerized systems, mainly network basedsystems may cause the group material damages and expenses and even partial suspension and
ADAMA Ltd. Semi-Annual Report 2021
disruption of their proper functioning. In order to minimize the abovementioned risks, the group investsresources in its technological resilience and in proper protection of its systems.Raw material supply and/or shipping and port service disruptionsLack of raw materials or other inputs utilized in the manufacture of the Group’s products may prevent theGroup from supplying its products or significantly increase production costs. Moreover, the Group importsraw materials to its production facilities worldwide, from where it then exports the technical or formulatedproducts to its subsidiaries around the world for formulation and/or commercialization purposes.Disruptions in the supply of raw materials from regular suppliers may adversely affect operations until analternative supplier is engaged. If any of the Group's suppliers are unable to supply raw materials for aprolonged period, including due to ongoing disruptions and/or prolonged strikes and/or infrastructuredefects in the operating of a relevant port, and if the Group is unable to engage with an alternative supplierat similar terms and in accordance with the relevant product registration requirements, this may adverselyaffect the Group's results, significantly affect its ability to obtain raw materials in general, or obtain themat reasonable prices, as well as limit its ability to supply products and/or meet customer supply deadlines.These might negatively affect the Group, its finances and operating results. In order to reduce this risk, itis the Group's practice to occasionally adjust the volume of its product inventories and at times utilize airfreight.Failed mergers and acquisitions; difficulties in integrating acquired operationsThe Group's strategy includes growth through mergers, acquisitions, investments and collaborationsdesigned to expand its product portfolio and deepen its presence in certain geographical markets.Growth through mergers and acquisitions requires assimilation of acquired operations and their effectiveintegration in the Group, including realization of certain forecasts, profitability, market conditions andcompetition.Failure to successfully implement the above and/or non-realization of the relevant forecasts may result innot achieving the incremental value forecasted, loss of customers, exposure to unexpected liabilities,reduced value of the intangible assets included in the merger or acquisition as well as the loss ofprofessional and skilled human resources.Production concentration in limited plantsA large portion of the Group’s production operations is concentrated in a relatively small number oflocations. Natural disasters, hostilities, labor disputes, substantial operational malfunction or any othermaterial damage might significantly affect Group operations, as a result of the difficulty, the time andinvestment required for relocating the production operation or any other activity.International taxationMost of the Group’s sales are global, through its consolidated subsidiaries worldwide. These individualcompanies are assessed in accordance with the tax laws effective in each respective location. TheGroup’s effective tax rate could be significantly affected by different classification or attribution of theprofits arising from the proportional value of the components of each of the companies in the Group inthe various countries, as is recognized in each tax jurisdiction; changes in the characteristics (includingregarding the location of control and management) of these companies; changes in the breakdown of theGroup's profits into regions where differing tax rates apply; changes in statutory tax rates and otherlegislative changes; changes in assessment of the Group's deferred tax assets or deferred tax liabilities;changes in determining the areas in which the Group is taxed; and potential changes in the Group'sorganizational structure.
ADAMA Ltd. Semi-Annual Report 2021
Changes in tax regulations and the manner of their implementation, including with regard to theimplementation of BEPS, may lead to a substantial increase in the Group's applicable tax rates and havea material adverse effect on its financial position, results and cash flows.The Group’s Financial Statements do not include a material provision for exposure for internationaltaxation, as stated above.Risks arising from the Group’s debtThe Group finances its business operations by means of its own equity and loans from external sources(primarily traded debentures issued by Solutions and bank credit). The Group's main source for servicingthe debt and its operating expenses is by means of the profits from the Group companies’ operations.Restrictions applying to the Group companies regarding distribution of dividends to the Group, or the taxrate applicable on these dividends, may affect the Group's ability to finance its operations and service itsdebt.In addition, the Group's Finance Documents, as contained in the bank credit agreements, require meetingcertain Financial Covenants. Failure to meet these covenants due to an exogenous event or non-materialization of Group forecasts, and insofar as the financing parties refuse to extend or update theseFinancial Covenants as per the Group’s capabilities, may lead the financing parties to demand theimmediate payment of these liabilities (or part thereof).Exposure to customer credit risksThe Group’s sales to customers worldwide usually involve customer credit as is customary in each market.A portion of these credit lines is insured, while the remainder are exposed to risk, particularly duringeconomic slowdowns in the relevant markets. The Group’s aggregate credit, however, is diversifiedamong many customers in dozens of countries, mitigating this risk. In addition, in certain regions,particularly in South America, credit days are particularly long (compared to those extended to customersin regions such as Europe), and on occasion, inter alia, owing to agricultural seasons or economicdownturns in those countries, the Group may encounter difficulty in timely collection of customer debts,with the collection period being extended over several years.Generally, such issues arise more often in developing countries where the Group may be less familiarwith its customers, the collaterals might be in double until actual repayment and the insurance cover ofthese customers is likely to be limited. Credit default by any of the customers may negatively impact theGroup's cash flow and financial results.The Group’s working capital and cash flow needsSimilar to other companies operating in the crop protection industry, the Group has substantial cash flowand working capital requirements in the ordinary course of operations. In view of the Group's growth andconsidering its primary growth regions, the Group’s broad product portfolio and the Group’s investmentsin manufacturing infrastructures, the Group has significant financing and investment needs. The Groupacts continually to improve the state and management of its working capital. While currently the Group isin compliance with all its financial covenants, significant deterioration of its operating results may in thefuture lead the Group to fail to comply with its financial covenants and fail to meet its financial needs. Asa result, the Group's ability to meet its goals and growth plans, as well as its ability to meet its financialobligations, may be harmed.Contagious disease outbreakOutbreak of a contagious disease and pandemics, or other adverse public health developments, interritories where significant production activity is taking place or from which raw materials are supplied to
ADAMA Ltd. Semi-Annual Report 2021
a significant extent, may have a material adverse effect on the Company’s activity, such that the Companymay encounter difficulties with procurement of raw materials and intermediates, experience a certaindecrease of activity within its production facilities due to governmental instructions, and be constrainedwith respect to its logistics and supply lines. In addition, the Company sales could be potentially impactedby a temporary decrease in demand for its products, as well as by temporary disruption of the Company’sability to sell and distribute products as mentioned above.
ADAMA Ltd. Semi-Annual Report 2021
Section IV – Corporate GovernanceI. Annual and Special Meetings of Shareholders Convened during the ReportingPeriod
1. Meetings of Shareholders Convened during the Reporting PeriodMeeting Type
Investorparticipationratio
Convened date
Disclosure date
Resolutions of the meeting
2020 AnnualShareholdersMeeting
AnnualShareholdersMeeting
75.2124% May 21, 2021 May 22, 2021
Announcement on theResolutions of 2020Annual General Meeting(Announcement No. 2021-
22). Disclosed at the
website CNINFOwww.cninfo.com.cn
2. Special Meetings of Shareholders Convened at Request of Preference Shareholders with
Resumed Voting Rights
□ Applicable √ Not applicable
II. Changes in Directors, Supervisors and Senior Management
√Applicable □ Not applicable
Changes in directors, supervisors and senior management during the Reporting Period, were asfollows:
Name Position Type Date Reason
Jianhua Liu Supervisor
Elected bytheShareholders
May 21, 2021
--Yuan Yuan
Supervisor Elected by
theShareholders
May 21, 2021
--Dejun Li
Supervisor T
erm of office
expired
May 21, 2021
| erm of office |
--Clement Tung
Supervisor T
expired
May 21, 2021
| erm of office |
--
III. Basic Information on the Profit Distribution and Converting Capital Reserve into
Share Capital in the Reporting Period
□ Applicable √ Not applicable
For the Reporting Period, the Company does not plan to distribute cash dividends or bonus shares or
ADAMA Ltd. Semi-Annual Report 2021
convert capital reserve into share capital.IV. Stock Incentive Plans, ESOP or Other employee Incentives
□ Applicable √ Not applicable
To the date of the report, the Company does not have stock incentive plans, ESOP or other staff incentives.It shall be noted, that the Company’s subsidiary, Adama Solutions, currently has several long-termincentive plans according to which it has granted long-term cash rewards to executive officers andemployees. These long-term incentive plans are based either on the performance of the Company'sshares (phantom cash incentives) and/or the Company's performance. Adama Solutions has furtheradopted an incentive plan linked to the increase in the Syngenta Group EBITDA.
ADAMA Ltd. Semi-Annual Report 2021
Section V - Environmental and Social ResponsibilitiesI. Major Environmental Situation
Is the Company listed as a “Key Polluting Entity” by the environmental protection agencies?Yes
name
Mainpollutants
Companyand special
pollutants
and special
Way ofemission
Number
of
| emission |
points
Layout ofemission
points
Concentration
Pollution standards applied
Total amount
emitted/Discharged
(ton)
TotalamountApproved
(ton)
Exceeding limit
ADAMA COD Continuous
Centralized
dischargepoint
The old site:
24.53mg/L.
The new site:
Centralized
17.30mg/L.
(1)
for the old site: Comprehensive
for the old site: ComprehensiveStandard on Discharge of Waste
Water (GB8978-2002)，COD<100mg/L;(2)
Standard on Discharge of Wastefor the new site: Discharge Standards
for the new site: Discharge Standardsfor Pollutants from Urban Sewage
Treatment Plant (GB 18918 –
for Pollutants from Urban Sewage2002),
COD <50mg/L
4.59507 391.3 None
ADAMA
Ammonianitrogen
Continuous
2002),
Centralized
dischargepoint
The old site:
0.97mg/L.
The new site:
Centralized
2.04mg/L.
(1) for the old site: Comprehensive
Standard on Discharge of WasteWater (GB8978-2002), ammonianitrogen<15mg/L;
(2) for the new site: Discharge
Standards for Pollutants from Urban
Sewage Treatment Plant (GB 18918
– 2002), ammonia nitrogen<8mg/L;
Sewage Treatment Plant (GB 18918
0.14592 50 None
ADAMA
TotalPhosphorou
Continuous
Centralized
Discharge
The old site:
0.27mg/L.
for the old site & new site: DischargeStandards for Pollutants from Urban
N/A N/A None
ADAMA Ltd. Semi-Annual Report 2021
name
Mainpollutants
Companyand special
pollutants
and special
Way ofemission
Number
of
| emission |
points
Layout ofemission
points
Concentration
Pollution standards applied
Total amount
emitted/Discharged
(ton)
TotalamountApproved
(ton)
Exceeding limits Point The new site:
0.26mg/L.
Sewage Treatment Plant (GB 18918 –2002), total phosphorous <0.5mg/L
ADAMA NOx Continuous
1 Power plant
27.43mg/m?
Standard on Air Pollution of Power Plant（GB13223-2011）NOx <200mg/m?
16.560 212.22 NoneADAMA SO2 Continuous
1 Power plant
2.89mg/m?
Standard on Air Pollution of Power Plant（GB13223-2011）SO2<200mg/m?
1.886 126.09 NoneADAMA
Fume anddust
Continuous
1 Power plant
0.322mg/m?
Standard on Air Pollution of Power Plant（GB13223-2011）Fume and dust<30mg/m?
0.203 47.28 NoneAnpon COD Continuous
Centralized
DischargePoint
Comprehensive Standard on Dischargeof Waste Water (GB8978-2002)，COD<500mg/L
122.72 356.7124 None
Anpon
AmmoniaNitrogen
Continuous
Centralized
Centralized
DischargePoint
0.8
Water Quality Standard for SewageDischarged into Urban Sewerage（GBT31962-2015）, Ammonia Nitrogen<45mg/L
0.91 34.886 NoneAnpon
TotalPhosphorous
Continuous
Centralized
Centralized
DischargePoint
2.2
For Anpon: Water Quality Standard forSewage Discharged into UrbanSewerage （GBT 31962-2015）, totalphosphorous <8mg/L;For Anpon’s branch Maidao: Agreementon Waste Water Discharge, total
1.3925 20.611 None
ADAMA Ltd. Semi-Annual Report 2021
name
Mainpollutants
Companyand special
pollutants
and special
Way ofemission
Number
of
| emission |
points
Layout ofemissionpoints
Concentration
Pollution standards applied
Total amountemitted/Discharged(ton)
TotalamountApproved
(ton)
Exceeding limitphosphorous <3mg/L;Anpon
NOx Continuous
PowerPlant
/
Standard on Air Pollution of Power Plant（GB13223-2011）NOx <100mg/m
/ 447.366
NoneThe power plant hasbeen deactivated.Anpon
SO
Continuous
PowerPlant
/
Standard on Air Pollution of Power Plant（GB13223-2011）SO
<50mg/m
/ 447.366
NoneThe power plant hasbeen deactivated.Anpon
Fume andDust
Continuous
PowerPlant
/
Standard on Air Pollution of Power Plant（GB13223-2011）Fume andDust<20mg/m
/ 67.105
NoneThe power plant hasbeen deactivated.ADAMAHuifengCOD Continuous
Centralized
DischargePoint
196.63mg/L Industrial park standard 74.735 249.784 NoneADAMAHuifeng
AmmoniaNitrogen
Continuous
Centralized
Centralized
DischargePoint
2.609mg/L Industrial park standard 2.6096 19.467 NoneADAMAHuifeng
TotalPhosphorous
Continuous
Centralized
Centralized
DischargePoint
0.8123 mg/ L
Industrial park standard 0.3087 0.9383 NoneADAMAHuifeng
totalnitrogen
Continuous
Centralized
Centralized
DischargePoint
10.0627 mg/ L
Centralized
Industrial park standard
10.0629
46.964 None
ADAMA Ltd. Semi-Annual Report 2021
name
Mainpollutants
Companyand special
pollutants
and special
Way ofemission
Numberof
| emission |
points
Layout ofemission
points
Concentration
Pollution standards applied
Total amountemitted/Discharged(ton)
TotalamountApproved
(ton)
Exceeding limit
ADAMAHuifeng
NOx Continuous
RTOfurnace,workshopdischargepoint
14.357mg/m?
Discharge Standards for Air Pollutantsfrom Pesticide Manufacturing Industry(GB39727 – 2020)
7.906 147.7072 None
ADAMAHuifeng
SO
Continuous
RTOfurnace,workshopdischargepoint
5.235mg/m?
Discharge Standards for Air Pollutantsfrom Pesticide Manufacturing Industry(GB39727 – 2020)
3.123 47.1958 None
ADAMAHuifeng
Fume andDust
Continuous
RTOfurnace,workshopdischargepoint
13.824mg/m?
Discharge Standards for Air Pollutantsfrom Pesticide Manufacturing Industry(GB39727 – 2020)
4.675 22.7146 None
ADAMAHuifengnon-methanehydrocarbon
Continuous
RTOfurnace,workshopdischargepoint
11.1mg/m?
Discharge Standard of Volatile OrganicCompounds in Chemical Industry (DB32/3151-2016)
6.5 59.60094 None
ADAMA Ltd. Semi-Annual Report 2021
(1) Development and Operation of Environmental Facilities
1. Development and Operation of Waste Water Facilities
The Company has a 20,000-ton/day sewage treatment station. As of the date of this Report,the sewage treatment facilities are operating normally. COD, ammonia nitrogen and totalphosphorus discharged after the treatment are within the limit;There are waste water treatment facilities in both the Company and Anpon with the designedcapacity of 11,000 tons/day. As all the facilities are operating well, COD, ammonia nitrogen,and total phosphorous discharged after the treatment are within the limit.ADAMA Huifeng, a subsidiary of the Company, has a 5,000-ton/day sewage treatment station.As of the date of this Report, the sewage treatment facilities are operating normally. After thetreatment, COD, ammonia nitrogen, total nitrogen and total phosphorus are all dischargedwithin the limit.
2. Development and Operation of Waste Gas Facilities
The Company's self-owned coal-fired thermal power plant has undergone ultra-low emissiontransformation. After the transformation, the environmental protection facilities of the self-owned coal-fired thermal power plant operate normally. SO2, NOx and fume and dustdischarged all meet the ultra-low emission standards.Anpon, a subsidiary of the Company, adopted the distribution network in the second half of2020 and shut down its own coal-fired power plant by itself. In addition, its chemicalproduction unit has implemented upgrading and transformation of VOC treatment facilitiesfor tail gas, and is currently undergoing trial operation.ADAMA Huifeng, a subsidiary of the Company, has RTO furnace, alkali washing waste gastreatment facilities and acid washing waste gas treatment facilities, which are used to treatprocess waste gas containing volatile organic compounds, acid washing waste gas and alkaliwashing waste gas respectively. The main emission indexes of waste gas, such as SO2,NOx, fume and dust and non-methane hydrocarbon, have been within the limit.The exhaust treatment facilities in the coal-based power plants of the Company and Anponare running well. Therefore, SO
, Nitrogen oxide and fume and dust discharged after thetreatment are within the limit.
3. The Company, Anpon and ADAMA Huifeng disclose production and pollution information
according the Interim Measures on Environmental Information Disclosure and transfersinformation of main waste water and air pollutants to the information platform of the localenvironmental bureau on a daily basis.
(2) EIA of construction projects and other environmental administrative permitsIn the first half of 2021, the Company and its subsidiary - Anpon, have no environmentaladministrative permit for new projects, and all the pollutant discharge permits are within thevalidity period.The Company’s subsidiary - ADAMA Huifeng has obtained the following environmentaladministrative permits in the first half of 2021:
The technical transformation project of flutriafol approved by Yancheng EcologicalEnvironment Bureau on January 26, 2021 with the approval number: Yanhuanshen [2021]
ADAMA Ltd. Semi-Annual Report 2021
No.2;The technical transformation project of epoxiconazole approved by Yancheng EcologicalEnvironment Bureau on January 26, 2021 with the approval number: Yanhuanshen [2021]No.3;The technical transformation project of glufosinate-ammonium approved by YanchengEcological Environment Bureau on January 26, 2021 with the approval number:
Yanhuanshen [2021] No.4);The technical transformation project of 2,4-D isooctyl ester approved by Yancheng EcologicalEnvironment Bureau on May 31, 2021 with the approval number: Yanhuanshen [2021] No.9;The independent acceptance of wastewater, waste gas, noise and solid waste for theoctanoyl bromoxynil project and trinexapac-ethyl project was completed on February 8, 2021;The independent acceptance of solid waste was completed on May 30, 2021 for the projectof fluthrin and the project of 2,3-dimercapto-maleic cyanide disodium salt solution.On May 17, 2021, a new pollutant discharge permit was obtained.
(3) Contingency plan of environmental accidentsThe Company and its relevant subsidiaries have formulated the Contingency Plan for EnvironmentalEmergencies according to their production facilities and industry features, and then submitted filesto the local environmental protection authorities as record.
(4) Environment self-monitoring plan
The Company attributes great importance to protecting the environment, out of a sense ofresponsibility to society and the environment and strives to meet the relevant regulatory requirementsand to even go beyond mere compliance, engaging in constant dialogue with stakeholders, includingthe authorities and the community.In order to improve the environmental management, track the discharge of various pollutants,evaluate the impact on the surrounding environment, strengthen the discharge management ofpollutants in the production process, accept the supervision and inspection of environmentalauthorities and provide reference for pollution prevention and control, the Company and itssubsidiaries - Anpon and ADAMA Huifeng have formulated a self-monitoring plan, which conductsregular tests in strict accordance with the requirements.
The major monitored indicators and frequency of the Company, Anpon and ADAMA Huifeng are as thefollowing:
1. Monitored Indicators
Waste water: COD, NH
-N, PH, SS, Petroleum, TP.Air Pollutant: SO
, Nitrogen oxide, Fume and Dust, Non-methane Hydrocarbon.Noise: Noise at the Site Border
2. Frequency
Boiler emission, Non-methane Hydrocarbon in the waste gas, SO
in RTO furnace, NOx, Fumeand Dust, and waste water discharged from the centralized point: continuous auto monitoring(COD, Ammonia nitrogen, Total Phosphorous).Manual sampling: PM in some waste gas discharge outlets, SS in wastewater discharge outlet,
ADAMA Ltd. Semi-Annual Report 2021
Petroleum, once a month.Noise: once a quarter.
The Company continually examines the implications of the environmental laws, taking actions to preventor mitigate the environmental risks and to reduce the environmental effects that may result from itsactivities, and invests extensive resources to fulfill those legal provisions that are, and are anticipated to,affect it. The Company’s plants are subject to atmospheric emissions regulations, whether by virtue ofthe stipulations provided in the business licenses or under the applicable law. Hazardous materials arestored and utilized in the Company's plants, together with infrastructures and facilities containing fuelsand hazardous materials. The Company takes actions to prevent soil and water pollution by thesematerials and treats them, if revealed. The Company’s plants conduct various soil surveys, risk surveysand tests with regard to treatment of the soil or ground water at the plants.The Company intends to continue investing in environmental protection, to the extent required andbeyond this, whether on its own volition or in compliance with contractual commitments, regulatory orlegal standards relating to environmental protection, so as to realize its best available policy and complywith any legal requirements.As part of its policy of ecological process improvement, the Company also invests in remediation,changes in production processes, establishment of sewage facilities, as well as in byproduct storage andrecycling.
(5) Administrative punishment due to environmental problems in the Reporting PeriodNo
(6) Other environmental information that should be disclosedNo.
(7) Other related information on environmental protection
No.
ADAMA Ltd. Semi-Annual Report 2021
II. Social Responsibilities
ADAMA Group is being engaged in a 10 years journey of ongoing commitment toaccountability and transparency regarding its operations. During 2020, ADAMA Grouplaunched for the first time a dedicated website reflecting its activities during the years 2018-2019 and all the improvements that are the outcome of a 10 years investments. The websiteprovides meaningful insights into the challenges and opportunities it faces in becoming notonly a global supplier of crop protection products, solutions, and services, but one that aimsto bolster food security in a world where populations are rising, resources are dwindling, andenergy demands are increasing. The website is also an opportunity to engage with, and enterinto, a dialogue with its employees and stakeholders. ADAMA Group is committed in its effortsto further increase transparency and broaden its disclosures and will continue working closelywith all relevant stakeholders the years to come planning on reporting ESG during 2021. Withthe aid of a designated website, ADAMA Group shares how it integrates sustainability into itsbusiness and operations to create long-term value for all the Group’s stakeholders: customers,people, communities, shareholders, and society at large. In this respect, the Group’s practiceis to publish an updated Sustainability Report annually, which shall constitute ESG reportingas of the year 2021. The Sustainability Report was issued in accordance with the GlobalReporting Initiative (GRI) SRS framework at the “Core” level. In addition, the Companyadheres to by the principles of corporate governance to ensure checks and balances in theconduct of its affairs, and among others adopted a code of conduct which applies to its peopleand stakeholders, and has adopted internal enforcement programs in relevant fields of activity.Regarding the targeted poverty allegation and in order to thoroughly implement the central,provincial and municipal decision-making arrangements for poverty alleviation, and vigorouslyimplement accurate poverty alleviation and " transparency in poverty alleviation", theCompany’s subsidiary Anpon, has set up a leading group for poverty alleviation headed bythe Party Secretary, which is led by the chairman of the labor union, and the vice-chairmanof the labor union specifically participates in the support team of the municipal partycommittee in counties and districts. According to the work arrangement of the Municipal PartyCommittee and Municipal Government, Anpon helped Shidang Village, Boli Town, Huai 'anDistrict, an economically weak village in the province, and actively explored ways and meansof poverty alleviation to ensure that poverty alleviation work is in place. According to thecharacteristics of the company's production, Anpon actively organized the activities ofsending pesticides to the countryside, and organized a batch of pesticides to be used by localfarmers according to the agreement between Anpon and designated help villages and thesituation of local crops. Anpon provided RMB 160,000 yuan of special poverty alleviationfunds for the designated villages, which were used to build village service centers and partymember activity centers. Anpon actively participated in the project examination, publicity,allocation and use of funds, etc., ensuring the smooth implementation of the project andproviding guarantee for the improvement of the spiritual and cultural life of local people. Atthe same time, Anpon also took an active part in activities of assisting Gulang in GansuProvince and Pingshan in Hebei Province organized by the group.
ADAMA Ltd. Semi-Annual Report 2021
Section VI - Significant EventsI. Commitments completed by the Company, the shareholders, the actualcontrollers, the purchasers, or other related parties during the Reporting Period,and those which should have been completed failed to be fulfilled during theReporting Period
□Applicable √ Not applicable
Note: No commitment that should have been completed during the Reporting Period failed to be timelyfulfilled. For details of the on-going commitments, please refer to the 2020 Annual Report published onthe website www.cninfo.com.cnon March 31, 2021.
II. Inadequate use of Company’s capital by the controlling shareholder or its
related parties for non-operating purposes
□ Applicable √ Not applicable
No such situation occurred during the Reporting Period.III. Illegal guarantee
□ Applicable √ Not applicable
Non during the Reporting Period.IV. Engagement and Disengagement of CPA FirmHas the semi-annual financial report been audited?
□ Yes √ No
This Semi-Annual Report is unaudited.V. Explanations Given by the Board of Directors and Board of Supervisors
Regarding “Modified Auditor’s Report” Issued by CPA Firm for the ReportingPeriod
□ Applicable √ Not applicable
VI. Explanations Given by Board of Directors Regarding “Modified Auditor’s Report”Issued for Last Year
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2021
VII. Bankruptcy and Restructuring
□ Applicable √ Not applicable
None during the Reporting Period.VIII. Litigation and Arbitration Matters
Material litigations or arbitrations:
□ Applicable √ Not applicable
None during the Reporting Period.Other litigations or arbitrations:
□ Applicable √ Not applicable
No significant litigation or arbitrations during the Reporting Period.
IX. Punishment and Rectification
□Applicable √Not applicable
None during the Reporting Period.X. Integrity of the Company, its controlling shareholders and actual controller
□ Applicable √ Not applicable
XI. Material Related-Party Transactions
1. Related-Party Transactions in the ordinary course of business
□Applicable √ Not applicable
(1) The Company was not involved in any material related-party transactions during the ReportingPeriod.
(2) Item X of Section X “Financial Statements” of this Report sets out the related parties and therelated-party transactions of the Company.
2. Related-Party Transactions arising from Asset acquisition or sale
□ Applicable √ Not applicable
The Company was not involved in any related-party transactions arising from asset acquisition or saleduring the Reporting Period.
3. Related-Party Transactions with Joint Investments
□ Applicable √ Not applicable
The Company was not involved in any related-party transaction with joint investments during theReporting Period.
ADAMA Ltd. Semi-Annual Report 2021
4. Credits and Liabilities with Related Parties
√ Applicable □ Not applicable
Whether non-operating credits and liabilities with related parties exist or not?
□ Yes √ No
The Company was not involved in any non-operating credit and liability with related parties in theReporting Period.
5. Transactions with financial company which is a related-party of the Company or controlledby the Company
√ Applicable □ Not applicable
Deposit BusinessRelated Party
AssociatedRelationship
Maximum DailyDeposit Limit（RMB’0000）
DepositInterest R
| ate |
Range
OpeningBalance（RMB’0000）
OccurredAmount（RMB’0000）
ClosingBalance（RMB’0000）ChemChinaFinanceCorporation
Legal personcontrolled bycontrollingshareholder
40,000.0
0.05%-1.3%
37,014.1
2,776.9
39,791.0
Loan TransactionRelated Party
AssociatedRelationship
Loan Limit（RMB’0000）
Loan I
nterest
Rate Range
nterest
OpeningBalance（RMB’0000）
OccurredAmount（RMB’0000）
ClosingBalance（RMB’0000）
ChemChinaFinanceCorporation
Legal personcontrolled bycontrollingshareholder
40,000.0
3.6% -
3.85%
-
10,000.0
10,000.0
Credit or other financial businessRelated Party
AssociatedRelationship
Business Type
Total Amount（RMB’0000）
Actual OccurredAmount（RMB’0000）
ChemChina FinanceCorporation
Legal person
by controllingshareholder
Facilities40,000.0
controlled
10,000.0
ADAMA Ltd. Semi-Annual Report 2021
6. Other material related-party transactions
√Applicable □ Not applicable
The 2020 Annual Shareholders Meeting approved the Proposal on the Expected Related-PartyTransactions in the Ordinary Course of Business in 2021. Please refer to Item X of Section X “FinancialStatements” of this Report for details of the related-party transactions in the ordinary business course.
The website to disclose the interim announcements on significant related-party transactions:
XII. Particulars regarding material contracts and execution thereof
1. Particulars about trusteeship, Contract and Lease
(1) Trusteeship
□ Applicable √ Not applicable
There was no trusteeship of the Company in the Reporting Period.
(2) Contract operation
□ Applicable √ Not applicable
There was no contract operation of the Company in the Reporting Period.
(3) Lease
□Applicable√ Not applicable
There is no major lease in the Reporting Period.
2. Significant Guarantees
(1) Details of guarantees
√Applicable □ Not applicable
Name of the interim announcement
Disclosure date of theinterim announcement
Website to disclose theinterim announcement
Announcement on Expected Related-Party Transactions in theOrdinary Course of Business in 2021 (Announcement No. 2021-6)
March 31, 2021 www.cninfo.com.cn
ADAMA Ltd. Semi-Annual Report 2021
Unless otherwise specified, the unit hereunder is RMB ‘0000
Guarantees provided by the Company in favor of third parties (excluding subsidiaries)Guaranteed party
Disclosuredate of theannouncement
Planned
guarantee amount
Planned
Actual
occurrence
date
Actualguaranteeamount
occurrence
Type of
guaranteeCollateral（ifany）
Type of
Count
er
Guarantee（ifany）
er
Period of
guaranteeexpired ornot
Period of
Guarantee for arelated
| party or |
not
-- -- -- -- -- -- -- -- -- -- --Total guarantee line approved infavor of third parties (excluding
period (A1)
Total amount of the occurredguarantee in favor of third parties(excluding subsidiaries) during the
reporting period (A2)
Aggregated guarantee line infavor of third parties (excluding
subsidiaries) that has beenapproved by the end of thereporting period (A3)
5,000
Total guarantee balance in favor of
subsidiaries) during the reportingthird parties (excluding subsidiaries)
by the end of the reporting period
(A4)
Guarantees provided by the Company in favor of its subsidiariesGuaranteed party
third parties (excluding subsidiaries)
Disclosuredate of theannouncement
Planned
guarantee amount
Planned
Actual
occurrence
date
Actualguarant
eeamount
occurrence
Type of
guarant
ee
Collater
al（ifany）
Type of
Count
er
Guarant
ee（ifany）
er
Period of
guaranteeexpire
d ornot
Period of
Guarantee for arelated
| party or |
not
ADAMAAnpon(Jiangsu)Ltd.
February 27,2020,August 21,2020
147,000
May 19,
2020
3,000
Joint and
severalliability
Joint and
/ /
Threeyearsafter the
loanmatures
Yes
No
June 29,2020
5,000
Joint and
severalliability
Joint and
/ /
Three
yearsafter the
loanmatures
Yes
No
September1, 2020
3,000
Joint and
severalliability
Joint and
/ /
Two
years
after the
loanmatures
years
Yes
No
July 20,
2020
5,000
Joint and
severalliability
Joint and
/ /
Three
yearsafter the
loan
No No
ADAMA Ltd. Semi-Annual Report 2021
matures
December14, 2020
5,000
Joint and
severalliability
Joint and
/ /
Threeyearsafter theloanmatures
No No
December16, 2020
5,000
Joint and
severalliability
Joint and
/ /
Threeyearsafter the
loanmatures
No No
December22, 2020
2,000
Joint and
severalliability
Joint and
/ /
Two
years
after the
loanmatures
years
No No
ADAMAAnpon(Jiangsu)Ltd.
December22, 2020April 29, 2021
125,400
January 15
,
2021
4,050
,
| Joint and |
severalliability
/ /
Two
years
after the
loanmatures
years
No No
January 20
,
2021
3,000
| , | ||
severalliability
Joint and
/ /
Two
years
after the
loanmatures
years
No No
January 27
,
2021
7,000
,
| Joint and |
severalliability
/ /
Two
years
after the
loanmatures
years
No No
February 1,
2021
4,000
Joint and
severalliability
Joint and
/ /
Three
yearsafter the
loanmatures
No No
February 26
,
2021
3,000
| , | ||
severalliability
Joint and
/ /
Three
yearsafter the
loanmatures
No No
February 8,2021
2,776
| Joint and |
severalliability
/ /
Three
yearsafter the
loanmatures
Yes
No
ADAMA Ltd. Semi-Annual Report 2021
March 18,2021
4,000
Joint and
severalliability
Joint and
/ /
Threeyearsafter theloanmatures
No No
April 27,2021
5,950
| Joint and |
severalliability
/ /
Two
years
after theloanmatures
years
No No
May 21,
2021
6,000
Joint and
severalliability
Joint and
/ /
Two
years
after theloanmatures
years
No No
June 25,2021
3,000
Joint and
severalliability
Joint and
/ /
Threeyearsafter the
loanmatures
No No
HubeiSanondaForeignTrade Co.Ltd.
August 21,
2020
20,000
October 28,
2020
3,444
| October 28, | ||
severalliability
Joint and
/ /
Two
years
after the
loanmatures
years
Yes
No
January 29,
2021
1,453
| January 29, | ||
severalliability
Joint and
/ /
Two
years
after the
loanmatures
years
No NoADAMAHuifeng(Jiangsu)Co., Ltd.
June 29,2021
33,000
July 27,
2021
10,000
Joint and
severalliability
Joint and
/ /
Threeyearsafter the
loanmatures
No No
Total guarantee lineapproved in favor of
the subsidiaries during
the reporting period
(B1)
33,200
Total amount of the occurred guarantee infavor of the subsidiaries during the reporting
period (B2) 44,229Aggregated guaranteeline that has beenapproved in favor of
the subsidiaries duringthe subsidiaries by the
end of the reporting
period (B3)
325,400
Total guarantee balance in favor of the
the subsidiaries by thesubsidiaries by the end of the reporting period
(B4)
75,673
ADAMA Ltd. Semi-Annual Report 2021
Guarantees provided by subsidiaries in favor of subsidiaries (USD ’0000)Guaranteed party
Disclosuredate of the
| announcement |
guaranteeamount
Planned
Actualoccurrence date
Actualguaranteeamount
guarant
ee
Collater
al（ifany）
Type of
Count
er
Guarant
ee（ifany）
er
Period of
guaranteeexpire
d ornot
Period of
Guarantee for arelated
| party or |
notControl
Inc.
October 31,
2018
1,300
October30, 2018
1,300
| Solutions, |
severalliability
joint and
/ /
Generally
7 years(subject
to the
Generallyoverseas
laws)
No
No
Control
overseasSolutions,
Inc.
January 10,
2019
4,000
Solutions,January 9,
2019
4,000
| January 9, | ||
severalliability
joint and
/ /
The loan
The loanterm (5
years)
term (5and any
and anyapplicable
applicablestatute of
statute oflimitations
period
limitations(generally
7 years).
(generally
No
No
ADAMABrazil
Not applicable
27,399.5
Theguaranteeexisted
before the
companywasconsolidat
before theed into the
financial
ed into thestatements
statementsof the
Company.
of the
779.90
joint and
severalliability
joint and
/ /
Valid until
cancelled
Valid until
No No
Adama
IndiaPrivate
Ltd.
Not applicable
9,019.2
The
existed
guaranteebefore the
company
wasconsolidat
before theed into the
financial
3,974.67
ed into the
joint and
severalliability
joint and
/ /
Valid until
cancelled
Valid until
No No
ADAMA Ltd. Semi-Annual Report 2021
of theCompany.
statements
ADAMA(Beijing)Agricultura
lTechnology
Company
Limited
Company
Not applicable
2,500
The
guarantee
existed
guaranteebefore the
company
wasconsolidat
before theed into the
financial
ed into thestatements
of theCompany.
statements
joint and
severalliability
joint and
/ /
Valid until
cancellation
Yes
Valid until
No
ADAMATurkeyTar?m
Sanayi ve
TicaretLimited?irketi
Not applicable
Sanayi ve
3,850
The
guarantee
existed
guaranteebefore the
company
wasconsolidat
before theed into the
financial
ed into thestatements
of theCompany.
statements
2,185.63
joint and
severalliability
joint and
/ /
Valid until
cancelled
Valid until
No No
AdamaMakhteshim
Not applicable
unlimited
The
| guarantee | |
existed
companywasconsolidat
before theed into the
financial
ed into thestatements
of the
statementsCompany.
21,726.9
Company.
joint and
severalliability
joint and
/ /
Valid until
cancelled
Valid until
No No
Adama
Agan
Not applicable
unlimited
The
existed
guaranteebefore the
21,339
before the
joint and
severalliability
joint and
/ /
Valid until
cancelled
Valid until
No No
ADAMA Ltd. Semi-Annual Report 2021
companywasconsolidat
financial
ed into thestatements
of theCompany.
statements
ADAMAAgricultura
l Solutions
UK Ltd.
l Solutions
Not applicable
365.64
| Not applicable |
The
existed
guaranteebefore the
companywasconsolidat
before theed into the
financial
ed into thestatements
of theCompany.
statements
joint and
severalliability
joint and
/ /
Valid until
cancelled
Valid until
No
No
ADAMA
CELSIUS
BV,Curacao
CELSIUSbranch, &
ADAMA
branch, &Fahrenheit
BV,CuracaoBranch
Fahrenheit
Not applicable
4,500
The
guarantee
existed
guaranteebefore the
company
wasconsolidat
before theed into the
financial
ed into thestatements
of theCompany.
statements
1,954.68
joint and
severalliability
joint and
/ /
Valid until
cancelled
Valid until
No
No
ADAMAUkraine
LLC
Not applicable
2,500 The
guarantee
existed
guaranteebefore the
company
wasconsolidat
before theed into the
financial
ed into thestatements
of the
1,438.75
statements
joint and
severalliability
joint and
/ /
Valid until
cancelled
Valid until
No
No
ADAMA Ltd. Semi-Annual Report 2021
Company.
Total guarantee lineapproved in favor of thesubsidiaries during thereporting period (C1)
--
Total amount of the guarantee infavor of the subsidiaries occurredduring the reporting period (C2)
USD 58,699.53(approximately RMB379,204.83)Aggregated guaranteeline that has beenapproved in favor of the
subsidiaries by the end of
the reporting period (C3)
subsidiaries by the end of
USD 55,434.39(the
guarantee amount for
Adama Makhteshimand Adama Agan isunlimited)(approximately RMB 358,111.7)
guarantee amount for
Total guarantee balance in favor ofthe subsidiaries by the end of the
reporting period (C4)
USD 58,699.53(approximately RMB379,204.83)Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)Total guarantee lineapproved during thereporting period
(A1+B1+C1)
33,200
Total actual occurred amount ofguarantee during the reporting
period (A2+B2+C2)
423,433.83Total guarantee line
that has been approved
at the end of thereporting period(A3+B3+C3)
688,511.7
that has been approvedTotal actual guarantee balance at the
end of the reporting period
(A4+B4+C4)454,877.83
Proportion of total guarantee amount(A4+B4+C4) to the net assets of the Company
Total actual guarantee balance at the
21.22%
Of which:
The balance of the guarantee provided in favor
of the controlling shareholder and related
party.
Amount of debt guarantee provided for theguaranteed party whose asset-
The balance of the guarantee provided in favorliability ratio is
not less than 70% directly or indirectly (E)
USD 26,131.18(approximately RMB 168,810.04)
liability ratio isThe amount of the guarantee that exceeds 50%
of the net assets
Total amount of the above three guarantees
(D+E+F)
USD 26,131.18(approximately RMB 168,810.04)As for undue guarantee, liability to guaranteehas happened or there is evidence that jointliquidated liability may be undertaken duringthis Reporting Period (if existing)
--
Regulated procedures are violated to offer
guarantee (if existing)
--
ADAMA Ltd. Semi-Annual Report 2021
3. Wealth management entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Significant contracts in the routine course of the business
□ Applicable √ Not applicable
5. Other Significant Contracts
□ Applicable √ Not applicable
Non during the Reporting Period.
XIII. Other Significant Events
√ Applicable □ Not applicable
On March 31, 2021, the Company received a notification letter from ChemChina, stating that ChemChinahad received a Notice Regarding Restructuring of ChemChina and Sinochem Group Co., Ltd. (“SinochemGroup” and the “Restructuring Notice”, respectively) from SASAC. Pursuant to the Restructuring Notice,the State Council approved the joint restructuring of Sinochem Group and ChemChina, whereby a newholding company will be set up by SASAC who will perform the duties of the investor on behalf of theState Council, and Sinochem Group and ChemChina will be consolidated into the new holding company.Upon completion of the joint restructuring, the controlling shareholder and the de facto controller of theCompany will remain as is.On August 9, 2021, the Company received a notice from its shareholder Jingzhou Sanonda Holdings Co.,Ltd. (hereinafter referred to as "Sanonda Holdings"), stating that Sanonda Holdings and Syngenta Groupsigned the "Share Transfer Agreement" on August 9, 2021. Sanonda Holdings intends to transfer 5.14%of the Company's shares it holds to Syngenta Group via free transfer (hereinafter referred to as the"Transfer"). The implementation of the Transfer will not lead to changes in the Company's controllingshareholder and actual controller, and the total number of Company shares indirectly held by the actualcontroller remains unchanged.The following are the relevant announcements disclosed on the website www.cninfo.com.cn.
ADAMA Ltd. Semi-Annual Report 2021
XIV. Significant Events of Subsidiaries
□ Applicable √ Not applicable
Announcements Disclosure date
Announcement on Obtaining the Approval of the Joint Restructuring of Sinochem Group andChemChina (Announcement No. 2021-10)
March 31, 2021Announcement on the Transfer of State-owned Shares of Controlling Shareholders
(Announcement No. 2021-32)
August 11, 2021Simplified Report on Changes in Equity of ADAMA Ltd. August 11, 2021Detailed Report on Changes in Equity of ADAMA Ltd. August 11, 2021Legal Opinions of Haiwen & Partners on Exemption of Syngenta Group Co., Ltd. from Making anTender Offer for the Transfer
August 11, 2021
ADAMA Ltd. Semi-Annual Report 2021
Section VII - Share Changes and Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
Before the change Increase/decrease (+/-) After the changeAmount Proportion
Newlyissueshare
Bonus
shares
Bonus
Capitalization
of publicreserves
Other Subtotal Amount Proportion
Capitalization
I. Restricted shares 4,500 0.0002% -- -- -- -- -- 4,500 0.0002%a. State-owned legal person’sshares
0 0.0000% -- -- -- -- -- 0 0.0000%b. Shares held by domesticinvestors
4,500 0.0002% -- -- -- -- -- 4,500 0.0002%
i. Shares held by domestic legal
person
0 0.0000% -- -- -- -- -- 0 0.0000%ii. Shares held by domesticnatural person
4,500 0.0002% -- -- -- -- -- 4,500 0.0002%
II. Shares not subject to tradingmoratorium
2,344,116,802 99.9998% -- -- -- -14,309,536 -14,309,536 2,329,807,266 99.9998%a. RMB ordinary shares 2,177,067,461 92.8735% -- -- -- -- -- 2,177,067,461 93.4439%b. Domestically listed foreignshares
167,049,341 7.1263% -14,309,536 -14,309,536 152,739,805 6.5559%III. Total shares 2,344,121,302 100.0000%
i. Shares held by domestic legal
-- -- -- -14,309,536 -14,309,536 2,329,811,766 100.0000%
ADAMA Ltd. Semi-Annual Report 2021
Reasons for the change in shares
√Applicable □Not applicable
As of September 16, 2020, the first day on which the Company has initiated the B-Shares repurchase,until December 6, 2020 - the expiry period of the repurchase plan, the Company repurchased a totalnumber of 14,309,536 B-Shares by means of a centralized price bidding transaction, and on June 17,2021 completed the cancellation of the above repurchased shares at the China Securities Depositoryand Clearing Corporation Limited Shenzhen Branch. Upon the completion of said B shares’ cancellation,the total number of B-Shares decreased from 167,049,341 to 152,739,805, and the total share capital ofthe Company decreased from 2,344,121,302 shares to 2,329,811,766 shares.
Approval of the change in shares
√Applicable □Not applicable
The 26th Meeting of the 8th Session of the Board of Directors held on August 19, 2020 and the 3rd InterimShareholders Meeting held on September 7, 2020 approved the Repurchase Plan for Part of theCompany’s Domestically Listed Foreign Shares (B share), and agreed to repurchase and cancel a portionof the Company’s domestically listed foreign shares (B-Shares).Upon the completion of said repurchase plan, the Company approved the Proposal on the Cancellationof the Repurchased Shares and the Subsequent Decrease of the Registered Capital of the Company andthe Proposal on Revisions to the Articles of Association of the Company at the 31st Meeting of the 8thSession of the Board of Directors held on March 29, 2021 and the 2020 Annual General Meeting held onMay 21, 2021, and agreed to cancel the repurchased shares, reduce the registered capital of theCompany and amend the Articles of Association accordingly.
The registered status for the change in shares
√Applicable □Not applicable
As of September 16, 2020, the first day on which the Company has initiated the B-Shares repurchase,until December 6, 2020, the expiry period of the repurchase plan, the Company, the Companyrepurchased a total number of 14,309,536 B-Shares, and completed the cancellation of the aboverepurchased shares at the China Securities Depository and Clearing Corporation Limited ShenzhenBranch on June 17, 2021.
Status of share buyback
√Applicable □Not applicable
The 26th Meeting of the 8th Session of the Board of Directors held on August 19, 2020 and the 3rd InterimShareholders Meeting held on September 7, 2020 approved the Repurchase Plan for Part of theCompany’s Domestically Listed Foreign Shares (B share), and agreed to repurchase and cancel a portionof the Company’s domestically listed foreign shares (B-Shares). The Company subsequently disclosedthe repurchase report and repurchase progress announcements according to relevant regulations.As of December 6, 2020, the repurchase period has expired. From September 16, 2020, the first day theCompany started B-Shares repurchase, to December 6, 2020, the Company repurchased 14,309,536
ADAMA Ltd. Semi-Annual Report 2021
shares of B-Shares by means of a centralized price bidding transaction through a special securitiesrepurchase account for B-Shares, which accounts for 0.61% of the Company’s total share capital. Thehighest transaction price is 5.22 HKD/share, the lowest transaction price is 4.27 HKD/share, and the totalpayment amount is HKD 69,747,209 (including transaction fees). For details, please refer to theAnnouncement on the Expiry of the Repurchase Period and the Results of the B-Shares Repurchase(Announcement No. 2020-71).After the share repurchase was completed, the Company approved the Proposal on the Cancellation ofthe Repurchased Shares and the Subsequent Decrease of the Registered Capital of the Company andthe Proposal on Revisions to the Articles of Association of the Company at the 31st Meeting of the 8thSession of the Board of Directors held on March 29, 2021 and the 2020 Annual General Meeting held onMay 21, 2021, and agreed to cancel the repurchased shares, reduce the registered capital of theCompany and amend the Articles of Association accordingly.The Company completed cancellation of the above repurchased shares at the China SecuritiesDepository and Clearing Corporation Limited Shenzhen Branch on June 17, 2021. For details, pleaserefer to Announcement on the Completion of Cancelling Repurchased Shares and Share Capital Change(Announcement No. 2021-26)
Status of share buyback in the way of centralized bidding
□Applicable √Not applicable
Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable tocommon shareholders of the Company and other financial indexes over the last year and last period.
□ Applicable √ Not applicable
The above change in shares has no significant impact on the basic EPS, diluted EPS, net assets pershare attributable to common shareholders of the Company and other financial indexes over the last yearand last period.
Other contents that the Company considered necessary or is required by securities regulatory authoritiesto disclose
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2021
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
Shareholders Restricted
shares at theopening ofthe ReportingPeriod
Sharesreleased in theReportingPeriod
Restrictedsharesincreasedin theReportingPeriod
Restrictedshares at the
end of the
Reporting
Period
Restriction
reasons
Date ofrelease
Jiang Chenggang
4,500 0 0 4,500
Shares held
by asupervisorshould belocked up.
Sixmonthsafter theexpiration of the
termTotal
4,500
4,500
-- --
II. Issuance and Listing of Securities
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2021
III. Total Number of Shareholders and Their Shareholdings
Unit: share
of
Total numbershareholders
| shareholders |
| as of the end |
of theReportingPeriod
46,347
is 32,321;
(the number of ordinary A share shareholdersthe number of B share shareholders is
14,026)
Total number ofpreferred
the number of B share shareholders isstockholders with
| stockholders with |
| vote right restored |
(if any) as of the
end of theReporting Period
Shareholding of common shareholders holding more than 5% sharesName ofshareholder
Nature of
| shareholder |
Holding
(%)
Number of
percentageshareholding
| shareholding |
| at the end of |
Period
the ReportingIncrease
and
Increasedecrease
| decrease |
| of shares |
during
Period
| Reporting | |
common
Number ofshares held
subject totradingmoratorium
shares held
Number ofcommonshares heldnot subjectto tradingmoratorium
frozen shares
Pledged, marked orStatus
ofshares
Status
AmountSyngentaGroup Co.,Ltd.
State-
owned
legal person
| owned |
73.33% 1,708,450,759
-- -- 1,708,450,759
-- --JingzhouSanondaHolding Co.,Ltd.
State-
legal person
owned
5.14% 119,687,202
-- -- 119,687,202
-- --China CindaAssetManagementCo., Ltd.
State-
legal person
| owned |
1.34% 31,115,916
-- -- 31,115,916
-- --PortfolioNo.503 ofNational
Fund
Others 0.88% 20,500,000
Social Security
-2,500,052
-- 20,500,000
-- --HuarongRuitong Equity
InvestmentManagement
Co., Ltd.
State-
owned
legal person
| owned |
0.55% 12,885,906
-- -- 12,885,906
-- --Hong KongSecuritiesClearingCompanyLtd.(HKSCC)
Overseaslegal person
0.42% 9,877,317 3,928,997
-- 9,877,317 -- --ShanghaiGreenwoodsAssetManagementCo., Ltd.-GreenwoodsFengshouNo.3 PrivateEquity Fund
Others 0.32% 7,473,785
7,473,785
-- 7,473,785 -- --
Bosera Funds-ChinaMerchants
Others 0.28% 6,500,000 6,500,000
-- 6,500,000 -- --
ADAMA Ltd. Semi-Annual Report 2021
Bank- BoseraFunds
CollectiveAssetManagementPlanBosera Funds-Postal Savings
Xincheng No.2
Bank- BoseraFundsXincheng No.3
CollectiveAssetManagementPlan
Others 0.26% 6,000,000 6,000,000
-- 6,000,000 -- --
ChinaUniversalFund-IndustrialBank-ChinaUniversal-StrategicEnhancementNo.3CollectiveAssetManagementPlan
Others 0.19% 4,400,000 4,400,000
-- 4,400,000 -- --
Strategic investors or thegeneral legal person dueto the placement of new
shares become the top 10
common shareholders (ifany)
Not applicable
shares become the top 10Explanation on associated
| Explanation on associated |
| relationship or/and |
persons
Syngenta Group Co., Ltd. and Jingzhou Sanonda
are acting-in-
| Holdings Co., Ltd. are related parties, and | ||
| concert parties as prescribed in the Administrative Methods for Acquisition of | ||
| Listed Companies. Both of them are controlled subsidiaries of CNAC. It is unknown whether | ||
the other shareholders are related parties or acting-in-
Administrative Methods for Acquisition of Listed Companies.Explanation on
concert parties as prescribed in thesituations
of
| situations | |
| entrusted voting rights | |
or waiver of voting rights
in
| volved by the above |
shareholders
Not applicableExplanation on
existence of
thespecial
| special | |
| repurchase accounts | |
| among the top 10 | |
shareholders (if any)
Not applicableDetails of shares held by top 10 common shareholders not subject to trading moratorium
Name of shareholder
Number of commonshares held notsubject to tradingmoratorium at theend of the period
Type of shareType of share Amount
Syngenta Group Co., Ltd. 1,708,450,759 RMB ordinary share
1,708,450,759
ADAMA Ltd. Semi-Annual Report 2021
Jingzhou Sanonda Holding Co., Ltd. 119,687,202 RMB ordinary share
119,687,202
China Cinda Asset Management Co., Ltd. 31,115,916 RMB ordinary share
31,115,916
Portfolio No.503 of National Social Security Fund 20,500,000 RMB ordinary share
20,500,000
Huarong Ruitong Equity Investment Management Co.,Ltd.
12,885,906 RMB ordinary share
12,885,906
Hong Kong Securities Clearing Company Ltd. (HKSCC) 9,877,317 RMB ordinary share
9,877,317Shanghai Greenwoods Asset Management Co., Ltd.-Greenwoods Fengshou No.3 Private Equity Fund
7,473,785 RMB ordinary share
7,473,785Bosera Funds-China Merchants Bank- Bosera FundsXincheng No.2 Collective Asset Management Plan
6,500,000 RMB ordinary share
6,500,000Bosera Funds-Postal Savings Bank- Bosera FundsXincheng No.3 Collective Asset Management Plan
6,000,000 RMB ordinary share
6,000,000China Universal Fund-Industrial Bank-China Universal-Strategic Enhancement No.3 Collective AssetManagement Plan
4,400,000 RMB ordinary share
4,400,000
Explanation on associated relationship among the top
ten common shareholders of tradable share notsubject to trading moratorium, as well as among thetop ten common shareholders of tradable share notsubject to trading moratorium and top tenshareholders, or explanation on acting-in-concert
Syngenta Group Co., Ltd. a
Explanation on associated relationship among the topnd Jingzhou Sanonda Holdings
Co., Ltd. are related parties, and are acting-in-
| nd Jingzhou Sanonda Holdings | ||
| concert parties | ||
| as prescribed in the Administrative Methods for Acquisition of | ||
of CNAC. It is unknown whether the other
| Listed Companies. Both of them are controlled subsidiaries | |
| shareholders are | |
related parties or acting-in-
| concert parties as prescribed in | |
| the Administrative Methods for Acquisition of Listed | |
Companies.Particular about the top ten common shareholderparticipating in the securities lending and borrowingbusiness (if any)
--
ADAMA Ltd. Semi-Annual Report 2021
Did any top 10 common shareholders or the top 10 common shareholders not subject to tradingmoratorium of the Company carry out a promissory buy-back in the Reporting Period?
□ Yes √ No
The top 10 common shareholders or the top 10 common shareholders not subject to tradingmoratorium of the Company had not carried out any agreed buy-back in the Reporting Period.
IV. Changes in Shareholdings of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
No such cases in the Reporting Period that were not described in the Annual Report. For details, seeAnnual Report 2020.
V. Change of the Controlling Shareholder or the Actual ControllerChange of the controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
There was no change of the controlling shareholder of the Company in the Reporting Period.
Change of the actual controller in the Reporting Period
□ Applicable √ Not applicable
There was no change of the actual controller of the Company in the Reporting Period.
ADAMA Ltd. Semi-Annual Report 2021
Section VIII - Preferred stock
□ Applicable √ Not applicable
There was no preferred stock during Reporting Period.
ADAMA Ltd. Semi-Annual Report 2021
Section IX - Bonds
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2021
Section X - Financial Report
I. Audit report
Was the half-year report audited?
□ Yes √ No
The half-year report was not audited.
II. Financial Statements
Notes to the financial statements are presented in RMB’000.
ADAMA Ltd. Semi-Annual Report 2021
(Expressed in RMB '000)Consolidated Balance Sheet
| June | 3 | 0 | December 31 |
Notes 2021 2020
| Current assets | ||||||||||
| Cash at bank and on hand | V | .1 | ||||||||
| 4,633,440 | 3,863,886 | |||||||||||||||||||||||||||||||||
| Financial assets held for trading | V | .2 | 2,494 | 1,253 | ||||||||||||||||||||||||||||||
| Derivative financial assets | V | .3 | 376,746 | 1,560,788 | ||||||||||||||||||||||||||||||
| Bills receivable | V | .4 | 108,078 | 102,082 | ||||||||||||||||||||||||||||||
| Accounts receivable | V | .5 | 9,295,611 | 8,766,869 | ||||||||||||||||||||||||||||||
| Receivables financing | V | .6 | 99,066 | 109,483 | ||||||||||||||||||||||||||||||
| Prepayments | V | 7 | 363,364 | 406,008 | ||||||||||||||||||||||||||||||
| Other receivables | V | 8 | 1,045,685 | 1,310,029 | ||||||||||||||||||||||||||||||
| Inventories | V | .9 | 11,280,638 | 10,338,273 | ||||||||||||||||||||||||||||||
| Other current assets | V | 10 | ||||||||||||||||||||||||||||||||
940,835
769,641
| Total current assets |
28,145,957
27,228,312
| Non | current | assets | ||||||||||||
| Long | term receivables | V.11 | ||||||||||||
| 98,400 | 95,329 | |||||||||||||||||||||||||||||||
| Long | term equity investments | V.12 | 15,847 | 14,081 | ||||||||||||||||||||||||||||
| Other equity investments | V.13 | 151,537 | 152,200 | |||||||||||||||||||||||||||||
| Investment properties | 3,186 | 4,364 | ||||||||||||||||||||||||||||||
| Fixed assets | V.1 | 4 | 7,695,471 | 6,5 | 76 | 116 | ||||||||||||||||||||||||||
| Construction in progress | V.1 | 5 | 1,812,323 | 1, | 405 | 328 | ||||||||||||||||||||||||||
| Right | - | of | use assets | V.16 | 505,895 | 483,618 | ||||||||||||||||||||||||||
| Intangible assets | V.1 | 7 | 5, | 15 | 0,421 | 5,226,455 | ||||||||||||||||||||||||||
| Goodwill | V.1 | 8 | ||||||||||||||||||||||||||||||
| 4,6 | 00 | 258 | 4, | 584 | , | 226 | |||||||||||||||||||
| Deferred tax assets | V.1 | 9 | 939,867 | 773,673 | |||||||||||||||||||||
| Other | non | - | current assets | V.20 | |||||||||||||||||||||
330,844
257,332
| Total non | current assets |
21,304,049
19,572,722
Total assets
49,450,006
46,801,034
ADAMA Ltd. Semi-Annual Report 2021
(Expressed in RMB '000)
Consolidated Balance Sheet (continued)
| June | 3 | 0 | December 31 |
Notes 2021 2020
Current liabilities
| Short | term loans | V | .21 | 1,209,421 | 1,205,498 | |||||||||||||||||||||||||
| Derivative financial liabilities | V | .22 | 799,715 | 1,463, | 614 | |||||||||||||||||||||||||
| Bills payable | V | .23 | 198,428 | 369,791 | ||||||||||||||||||||||||||
| Accounts payable | V | .24 | 5,184,480 | 4,557,006 | ||||||||||||||||||||||||||
| Contract liabilities | V | .25 | 1,260,942 | 1,092,253 | ||||||||||||||||||||||||||
| Employee benefits payable | V | 26 | 916,236 | 1,208,834 | ||||||||||||||||||||||||||
| Taxes payable | V | 27 | 426,631 | 358,988 | ||||||||||||||||||||||||||
| Other payables | V | 28 | ||||||||||||||||||||||||||||
| 1,562,623 | 1,075,721 | |||||||||||||||||
| Non | - | current liabilities due within one year | V | .29 | 1,744,770 | 1,272, | 581 | |||||||||||
| Other current | liabilities | V | 30 | |||||||||||||||
347,366
315,597
| Total current liabilities |
13,650,612
12,919,883
| Non | current liabilities | |||||||||||||||||||||||
| Long | term loans | V. | 31 | 3,271,544 | 2,387,628 | |||||||||||||||||||
| Debentures payable | V.32 | 7,995,724 | 8,078, | 113 | ||||||||||||||||||||
| Lease | iabilities | V.33 | ||||||||||||||||||||||
| 394,531 | 379,190 | |||||||||||||||||||||
| Long | term payables | 99,815 | 27, | 327 | ||||||||||||||||||
| Long | term employee benefits payable | V | .34 | 748,266 | 645,755 | |||||||||||||||||
| Provisions | V | .35 | 178,699 | 163,251 | ||||||||||||||||||
| Deferred tax liabilities | V | 19 | ||||||||||||||||||||
| 3 | 6 | 2,973 | 331,942 | ||||||||||||
| Other non | current liabilities | V | 36 |
1,315,490
434,030
| Total non | current liabilities |
14,367,042
12,447,236
| Total liabilities | ||||||||||
28,017,654
25,367,119
| Shareholders' equity | |||||||||||||||||||||||||||||||
| Share capital | V.3 | 7 | 2,329,812 | 2,344,121 | |||||||||||||||||||||||||||
| Capital reserve | V | 38 | 12,882,324 | 13,023,21 | 9 | ||||||||||||||||||||||||||
| Less: Treasury shares | - | 60,357 | |||||||||||||||||||||||||||||
| Other comprehensive income | V | 39 | (194,9 | 61 | (72,055) | ||||||||||||||||||||||||||
| Special reserves | 18,45 | 8 | 15,960 | ||||||||||||||||||||||||||||
| Surplus reserve | V | 40 | 240,16 | 2 | 240,162 | ||||||||||||||||||||||||||
| Retained earnings | V | 41 | |||||||||||||||||||||||||||||
6,156,557
5,862,702
Total equity attributed to the shareholders
| of the company |
21,432,352
21,353,752
Non-controlling interests
-
80,163
Total Equity
21,432,352
21,433,915
| Total liabilities and equity |
49,450,006
46,801,034
Ignacio Dominguez
| Legal representative |
Aviram Lahav
| Chief of accounting work & Chief of accounting organ |
These financial statements were approved by the Board of Directors of the Company on August 24, 2021.
The notes form part of these financial statements.
ADAMA Ltd. Semi-Annual Report 2021
(Expressed in RMB '000)
Balance Sheet
| June | 3 | 0 | December 31 |
Notes 2021 2020
| Current assets | ||||||||||||||||||||||||||||
| Cash at bank and on hand | XV | .1 | 443,269 | 1,034,812 | ||||||||||||||||||||||||
| Accounts receivable | XV | .2 | 121,301 | 387,117 | ||||||||||||||||||||||||
| Receivables financing | XV | .3 | 22,031 | 25,060 | ||||||||||||||||||||||||
| Prepayments | 49,582 | 5,973 | ||||||||||||||||||||||||||
| Other receivables | XV | .4 | 26,995 | 27,138 | ||||||||||||||||||||||||
| Inventories | 51,746 | 141,235 | ||||||||||||||||||||||||||
Other current assets39,956
42,243
| Total current assets |
754,880
1,663,578
Non-current assets
| Long | - | term equity investments | XV | .5 | 17, | 511 | ,352 | 16,663,212 | |||||||||||||||||||||||||
| Other | equity investments | 85,495 | 85,495 | ||||||||||||||||||||||||||||||
| Investment properties | 3,186 | 4,364 | |||||||||||||||||||||||||||||||
| Fixed assets | 731,493 | 784,218 | |||||||||||||||||||||||||||||||
| Construction in progress | 1,163,591 | 992,863 | |||||||||||||||||||||||||||||||
| Right | of | use assets | 9 | 37 | |||||||||||||||||||||||||||||
| Intangible assets | 261,282 | 220,963 | |||||||||||||||||||||||||||||||
| Deferred tax assets | 66,264 | 66,036 | |||||||||||||||||||||||||||||||
Other non-current assets588,302
238,750
| Total non | current assets |
20,410,974
19,055,938
| Total assets |
21,165,854
20,719,516
| Current liabilities | ||||||||||||||
| Short | term loans | 100,000 | ||||||||||||
| Bills payables | 970 | 19,600 | ||||||||||||
| Accounts payables | ||||||||||||||
| 182,619 | 324,047 | ||||||||||||||||
| Contract liabilities | 3,701 | 17,480 | |||||||||||||||
| Employee benefits payable | 40,929 | 99,808 | |||||||||||||||
| Taxes payable | 2,029 | 3,143 | |||||||||||||||
| Other payables | |||||||||||||||||
| 573,086 | 240,939 |
Non-current liabilities due within one year564,000
39,302
| Total current liabilities |
1,367,334
844,319
Non-current liabilities
| Long | - | term loans | 8 | 10,200 | 941,430 | ||||||||||||||||
| Long | term employee benefits payable | 8 | 4,178 | 89,658 | |||||||||||||||||
| Provisions | 51,900 | 44,743 | |||||||||||||||||||
| Other non | current liabilities | ||||||||||||||||||||
260,000
143,770
| Total non | current liabilities |
1,206,278
1,219,601
| Total liabilities | |||||||||
2,573,612
2,063,920
Shareholders’ equity
| Share capital | V.3 | 7 | 2,329,812 | 2,344,121 | |||||||||||||||||||||||||
| Capital reserve | 15,523,881 | 15,569,929 | |||||||||||||||||||||||||||
| Less: | T | reasury share | s | 60,357 | |||||||||||||||||||||||||
| Other comprehensive income | 47,020 | 47,390 | |||||||||||||||||||||||||||
| Special reserves | 19,149 | 16,651 | |||||||||||||||||||||||||||
| Surplus reserve | 240,162 | 240,162 | |||||||||||||||||||||||||||
| Retained earnings |
V.41432,218
497,700
Total shareholders’ equity
18,592,242
18,655,596
Total liabilities and shareholders’ equity
| Total liabilities and shareholders’ equity |
21,165,854
20,719,516
ADAMA Ltd. Semi-Annual Report 2021
- 71 -
(Expressed in RMB '000)
Consolidated Income Statement
Six months ended June 30Notes 2021 2020
I. Operating income
| V. | 42 | 15,063,780 | 14,121,040 | |||||||||||||||
| Less | Cost of sales | V. | 42 | 10,706,710 | 9,904,470 | |||||||||||||
| Taxes and | surcharges |
| V.43 | 59,007 | 46,117 | |||||||||||||||||||||||||||||||||||
| Selling and Distribution expenses | V.44 | 2,506,436 | 2,468,568 | ||||||||||||||||||||||||||||||||||
| General and administrative expenses | V. | 45 | 571,807 | 553,186 | |||||||||||||||||||||||||||||||||
| Research and Development expenses | V. | 46 | 226,940 | 188,185 | |||||||||||||||||||||||||||||||||
| Financial expenses | V.47 | 448,790 | 842,79 | 2 | |||||||||||||||||||||||||||||||||
| Including: Interest expense | 322,765 | 350,041 | |||||||||||||||||||||||||||||||||||
| Interest income | 31,363 | 29,625 | |||||||||||||||||||||||||||||||||||
| Add: | Investment income | (loss) | , net | V.48 | 527,756 | 52,1 | 29 | ||||||||||||||||||||||||||||||
Including: Income from investment
| in associates and joint ventures |
| 3,243 |
| 14,392 | |||||||||||||||||||||||||||||||
| Gain (loss) from changes in fair value | V.49 | (664,582) | 265,510 | ||||||||||||||||||||||||||||
| Credit impairment | reversal ( | loss | es) | V.50 | 10,051 | 5,589 | |||||||||||||||||||||||||
| Asset impairment | reversal ( | loss | es) | V.51 | (29,403) | (25,376) | |||||||||||||||||||||||||
| Gain from | disposal of assets | V.52 | |||||||||||||||||||||||||||||
14,799
7,694
| II. Operating profit | 402,711 | 423,26 | 8 | |||||||||||||||||||
| Add: | Non | - | operating income | 33,032 | 39,020 | |||||||||||||||||
Less:
| Non | - | operating expenses |
15,429
13,441
III. Total profit
| 420,314 | 448,84 | 7 | |||||||||||||||||||
| Less: | Income tax expenses | V.5 | 3 | ||||||||||||||||||
51,081
244,198
IV. Net profit
369,233
204,649
| (1). | Classified by nature of operations | |||||||||||||||||||||||||||||||||||
| (1.1). Continuing operations | 369,233 | 204,64 | 9 | |||||||||||||||||||||||||||||||||
| (2). | Classified by | ownership | ||||||||||||||||||||||||||||||||||
| (2.1). Shareholders of the Company | 367,036 | 204,64 | 9 | |||||||||||||||||||||||||||||||||
| (2. | 2 | ). | Non | controlling interests | 2,197 | - | ||||||||||||||||||||||||||||||
| V. | Other comprehensive income, net of tax | V. 39 | (122,906) | 147,373 | ||||||||||||||||||||||||||||||||
Other comprehensive income (net of tax)
| attributable to shareholders of the Company |
| (122,906) | 147,373 | |||||||||||||||||||||
| (1) | Items that will not be reclassified to profit or loss: | (6,971) | 39,373 | |||||||||||||||||||
| (1.1) | R | e | - | measurement of defined benefit plan | liability | (6,971) | 39,373 | |||||||||||||||
| (2) | Items that were or will be reclassified to profit or loss | (115,935) | 108,000 | |||||||||||||||||||
| (2.1) | Effective portion of gains or loss of cash flow hedge | 144,297 | (78,285) | |||||||||||||||||||
| (2.2) | Translation | differences of foreign financial statements | ||||||||||||||||||||
(260,232)
186,285
VI. Total comprehensive income for the period attributable to
| Shareholders of the Company |
246,327
352,022
Total comprehensive income for the period
| attributable to shareholders of the Company |
| 244,130 | 352,022 |
Total comprehensive income for the period
| attributable to | Non | - | controlling interests |
| 2,197 | - | |||||||||||||||||||||
| VII. | Earnings per share | XIV.2 | ||||||||||||||||||||
| (1) Basic earnings per share | (Yuan/share) | 0.16 | 0. | 08 | ||||||||||||||||||
| (2) Diluted earnings per share (Yuan/share) | N/A | N/A | ||||||||||||||||||||
ADAMA Ltd. Semi-Annual Report 2021
- 72 -
(Expressed in RMB '000)Income Statement
Six months ended June 30
Notes 2021 2020
I. Operating income
| XV | .6 | 6 | 17,097 | 673,646 | ||||||||||||||
| Less: | Operating costs | XV | .6 | 4 | 82,937 | 537,314 | ||||||||||||
| Taxes and surcharges | ||||||||||||||||||
| 3 | ,982 | 2,821 | |||||||||||||||||||||||||||||||||||||||||
| Selling and Distribution expenses | 1 | 9,304 | 17,072 | ||||||||||||||||||||||||||||||||||||||||
| General | and | administrative expenses | 1 | 40,326 | 133,338 | ||||||||||||||||||||||||||||||||||||||
| Research and Development expenses | 1 | 9,709 | 4,559 | ||||||||||||||||||||||||||||||||||||||||
| Financial expenses (income) | 3 | ,523 | (4,826) | ||||||||||||||||||||||||||||||||||||||||
| Including: Interest expense | 1 | 0,176 | 3,143 | ||||||||||||||||||||||||||||||||||||||||
| Interest income | 9 | ,971 | 8,507 | ||||||||||||||||||||||||||||||||||||||||
| Add: | Credit impairment | reversal ( | loss | es) | 1 | 07 | (674) | ||||||||||||||||||||||||||||||||||||
| Asset Impairment | reversal ( | loss | es) | 1,068) | (2,864) | ||||||||||||||||||||||||||||||||||||||
| G | ain | from disposal of assets | |||||||||||||||||||||||||||||||||||||||||
16,081
| II. | Operating Profit | ( | 37, | 564 | ) | (20,069) | |||||||||||||||||||
| Add: | Non | operating income | 1 | 0,143 | 5,597 | ||||||||||||||||||||
Less:
| Non | - | operating expenses |
1,012
| III. Total profit | ( | 28,433) | (14,892) | ||||||||||||||
| Less: | Income tax expense (income) | ||||||||||||||||
(228)
27,872
IV. Net profit (loss)
(28,205)
(42,764)
V. Other comprehensive income, net of tax(370)
(4,041)
| (1) | Items that will not be reclassified to profit or loss | ( | 370) | (4,041) | |||||||||
(1.1) Re-measurement of defined benefit plan liability (370)
(4,041)
VI. Total comprehensive income (loss) for the period
(28,575)
(46,805)
ADAMA Ltd. Semi-Annual Report 2021
- 73 -
(Expressed in RMB '000)Consolidated Cash Flow Statement
Six months ended June 30
Notes 2021 2020
| I. | Cash flows from operating activities: |
| Cash received from sale of goods and rendering of services | 14,644,075 | 13,378,983 | ||||||||||||||||||||||||
| Refund of taxes and surcharges | 82,190 | 67 | , | 336 | ||||||||||||||||||||||
| Cash received relating to other operating activities | V | .5 | 5 | (1) | ||||||||||||||||||||||
363,408
630,515
| Sub | - | total of cash inflows from operating activities |
15,089,673
14,076,834
| Cash paid | for goods and services | 9,7 | 37 | 778 | 9,2 | 47 | , | 435 | ||||||||||||||||||
| Cash paid | to and on behalf of employees | 1,988,051 | 1,96 | 7 | 484 | |||||||||||||||||||||
| Payments of | taxes and surcharges | 208,458 | 16 | 8,816 | |||||||||||||||
| Cash paid relating to other operating activities | V | .5 | 5 | (2) | |||||||||||||||
1,664,093
1,458,568
| Sub | - | total of cash outflows from operating activities |
13,598,380
12,842,303
| Net cash flows from | (used in) | operating activities | V | .5 | 6 | (1)a | ||||||||||||
1,491,293
1,234,531
II. Cash flows from investing activities:
| Cash received from disposal of investments | 856 | 16,224 | ||||||||||||||
| Cash | received from returns of investments | - | 54,304 | |||||||||||||
Net cash received from disposal of fixed assets, intangible
| assets and other long | term assets | 19,507 |
| 15,677 | |||||||||||||
| Cash received relating to other investing activities | V | .5 | 5 | (3) |
6,754
-
| Sub | - | total of cash inflows from investing activities |
27,117
86,205
Cash paid to acquire fixed assets, intangible assets and
| other long | - | term assets | 1,179,017 | 803,315 | ||||||||||||||||||||||||||||||
| Cash paid | for acquisition of investments | - | 51 | , | 435 | |||||||||||||||||||||||||||||
| Net cash paid | to acquire subsidiaries or other business units | 655 | , | 039 | ||||||||||||||||||||||||||||||
| Cash paid relating to other investing activities | V | .5 | 5 | ) | ||||||||||||||||||||||||||||||
85,108
46,840
| Sub | - | total of cash outflows from investing activities |
1,919,164
901,590
| Net cash flows used in | investing activities | |||||||||||
(1,892,047)
(815,385)
| III. Cash flows from financing activities |
| Cash received | from borrowings | 3,776,407 | 2,822,626 | |||||||||||||||
| Cash received from other financing activities | V | .5 | 5 | ) | ||||||||||||||
412,308
4,449
| Sub | - | total of cash inflows | from financing activities |
4,188,715
2,827,075
| Cash | epayments of borrowings | 2, | 328 | , | 962 | 745,547 | |||||||||||||||||||||||||||||||
| Cash | payment | for dividends, profit distributions and interest | 387,611 | 356 | , | 793 | |||||||||||||||||||||||||||||||
| Including: Dividends paid to | non | - | controlling | interest | 35, | 904 | 26,828 | ||||||||||||||||||||||||||||||
| Cash | paid relating to other financing activities | V | .5 | 5 | ) | ||||||||||||||||||||||||||||||||
263,351
249,286
| Sub | - | total of cash outflows from financing activities |
2,979,924
1,351,626
| Net cash from financing activities |
1,208,791
1,475,449
IV. Effects of foreign exchange rate changes on cash and cash
| equivalents |
(27,900)
| 41,605 | |||||||
V. Net increase in cash and cash equivalents
| V. | 5 | 6 | (1)b | 780,137 | 1,936,200 |
| Add: | Cash and cash equivalents at the beginning of the year |
3,835,071
4,319,907
VI. Cash and cash equivalents at the end of the period
| V. | 5 | 6 | 2 |
4,615,208
6,256,107
ADAMA Ltd. Semi-Annual Report 2021
- 74 -
(Expressed in RMB '000)Cash Flow Statement
Six months ended June 30
Notes 2021 2020
I.
| I. | Cash flows from operating activities: |
| Cash received from sale of goods and rendering of services |
| 8 | 38,428 |
581,672
| Refund of taxes and surcharges |
| 2 | 2,166 |
27,022
| Cash received relating to other operating activities |
XV.7(1) 21,203
15,063
| Sub | - | total of cash inflows from operating | activities |
881,797
623,757
| Cash paid for goods and services | |||||||
| 4 | 40,234 |
467,607
Cash paid
| Cash paid | to and on behalf of employees |
| 1 | 22,202 |
122,633
| Payments of taxes and surcharges |
| 6 | ,834 |
4,959
| Cash paid relating to other operating activities |
XV.7(2) 67,311
90,807
| Sub | - | total of cash outflows | from operating activities |
636,581
686,006
| Net cash flows from | (used in) | operating activities | |||||||
XV.8 245,216
(62,249)
| II. | Cash flows from investing activities | : |
Net cash received from disposal of fixed assets, intangible assets and
| other long | term assets |
17,630
| Sub | - | total of cash inflows from investing activities |
17,630
Cash paid to acquire fixed assets, intangible assets and
| other | long | term assets |
| 280,865 | 154,378 | |||||
| Cash paid for acquisition of investments |
697,909
-
| Sub | - | total of cash outflows from investing activities |
978,774
154,378
| Net cash flows used in investing activities | |||||||
(961,144)
(154,264)
| III. | Cash | flows from financing activities | : |
| Cash received from borrowings |
615,200
| 441,500 |
| Cash received | relating to | other financing activities |
XV.7.(3)
5,880
4,449
| Sub | - | total of cash inflows | from financing activities |
621,080
445,949
| Cash | epayments of | borrowings | ||||||||
293,732
190,500
| Cash | payment | for dividends, profit distributions or interest |
24,027
14,606
| Cash paid relating to other financing activities |
XV.7.(4)
172,061
Sub
| Sub | - | total of cash outflows from financing activities |
489,820
205,306
| Net cash flow | provided by ( | used in | ) | financing activities | ||||||||
131,260
240,643
| IV. | Effects | of foreign exchange rate changes on cash and cash | equivalents |
(1,286)
| 3,172 |
| V. | Net | de | crease in cash and cash equivalents | |||||||||
| ( | 585,954) | ||
27,302
| Add: | Cash and cash equivalents at the beginning of the year |
XV.8(2) 1,022,758
1,395,994
| VI. Cash and cash equivalents at the end of the period |
XV.8(2) 436,804
1,423,296
ADAMA Ltd. Semi-Annual Report 2021
- 75 -
(Expressed in RMB '000)Consolidated Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2021
Attributable to shareholders of the Company
Sharecapital *
Capitalreserve *
Less: Treasuryshares *
Othercomprehensiveincome
Specialreserves
Surplusreserve
Retainedearnings Total
Non-controllinginterests
Total equity
I. Balance at December 31, 2020 2,344,121
13,023,219
60,357
(72,055)
15,960
240,162
5,862,702
| 21,353,752 |
80,163
21,433,915
| II. Changes in equity for the period | (14,309) | (140,895) | (60,357) | (122,906) | 2,498 | - | 293,855 | 78, | 600 | (80,163) | (1, | 563 | ) | ||||||||||||||||||||||
| 1. | |||||||||||||||||||||||||||||||||||
| Total comprehensive income | - | - | - | (122,906) | - | - | 367,036 | 244,130 | 2,197 | 246,327 | ||||||||||||||||||||||||||||||||||||||||||||
| 2. | Owner’s contributions and reduction | (14,309) | (140,895) | (60,357) | - | (94,847) | (82,360) | (177,207) | ||||||||||||||||||||||||||||||||||||||||||||||
| 2. | 1 | Repurchase of shares | (14,309) | (46,048) | (60,357) | - | ||||||||||||||||||||||||||||||||||||||||||||||||
2.2 Non-controlling interests in
| respect | of business combination | - | (94,847) | - | - | - | - | - | (94,847) | (82,360) | (177,207) | ||||||||||||||||||||||||||||||||||||||||||||||||
| 3. | Appropriation of profits | (73,18 | 1 | (73,18 | 1 | (73,18 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.1 | Distribution to owners | (37,277) | (37,277) | (37,277) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
3.2 Distribution to non-controlling
| interest |
-
-
-
-
-
-
| (35,90 | 4 |
| (35,904) |
-
| (35,904) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 4 | Special reserve | - | - | - | - | 2,498 | - | - | 2,498 | - | 2,498 | ||||||||||||||||||||||||||||||||||||||||
| 4 | . | 1 | Transfer to special reserve | 3,866 | 3,866 | 3,866 | |||||||||||||||||||||||||||||||||||||||||||||
4.2 Amount utilized -
-
-
-
(1,368)
-
-
(1,368)
-
(1,368)
III. Balance at June 30, 2021 2,329,812
12,882,324
-
(194,961)
18,458
240,162
6,156,557
21,432,352
-
21,432,352
* For further information of the changes during the period see Note XI.2 – Commitments and Contingent Liabilities
ADAMA Ltd. Semi-Annual Report 2021
- 76 -
(Expressed in RMB '000)
Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2020
Attributable to shareholders of the Company
Sharecapital
Capitalreserve
Othercomprehen-sive income
Specialreserves
Surplusreserve
Retainedearnings Total
I. Balance at December 31, 2019 2,446,554
12,903,168
1,192,681
14,927
240,162
| 5,574,173 |
22,371,665
| II. Changes in equity for the period | - | - | 147,373 | 2,278 | - | 148,462 | 298,113 | |||||||||||||||||||||||
| 1. | Total comprehensive income | 147,373 | - | 204,649 | 352,022 | |||||||||||||||||||||||||
| 2. | Owner’s contributions and reduction | - | ||||||||||||||||||||||||||||
| 3. | Appropriation of profits | (56,187) | (56,187) | |||||||||||||||||||||||||||
| 3.1 | Distribution to owners | (29,359) | (29,359) | |||||||||||||||||||||||||||
3.2 Distribution to non-
| controlling interest | - | - | ||||||||
-
-
| - | (26,828) | (26,828) | ||||||||||||||||||||||||||||||||
| 4. Transfers within owners’ equity | - | - | - | |||||||||||||||||||||||||||||||
| 5. | Special reserve | 2,278 | 2,278 | |||||||||||||||||||||||||||||||
| 5.1 | Transfer to special reserve | 3,756 | 3,756 | |||||||||||||||||||||||||||||||
5.2 Amount utilized -
-
-
(1,478)
-
-
(1,478)
III. Balance at June 30, 2020 2,446,554
12,903,168
1,340,054
17,205
240,162
5,722,635
22,669,778
ADAMA Ltd. Semi-Annual Report 2021
- 77 -
(Expressed in RMB '000)Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2021
Attributable to shareholders of the Company
Sharecapital
Capitalreserve
Less:
treasuryshare
Othercomprehensive
income
Specialreserves
Surplusreserve
Retainedearnings
Total
I. Balance at December 31, 20202,344,121
15,569,929
60,357
47,390
16,651
240,162
497,700
18,655,596
| II. | Changes in equity for the period |
(14,309)
(46,048)
(60,357)
(370)
2,498
-
(65,482)
(63,354)
| 1. | Total comprehensive income |
-
-
-
(370)
-
-
(28,205)
| (28,575) | |||||
| 2. |
(14,309)
| Owner’s contributions and reduction |
(46,048)
(60,357)
-
-
-
-
-
| 2. | 1 | Repurchase | of | shares |
(14,309)
(46,048)
(60,357)
-
-
-
-
-
| 2. | 2 | Other |
-
-
-
-
-
-
-
-
| 3. | Appropriation of profits |
-
-
-
-
-
-
(37,277)
(37,277)
| 3.1 Transfer to Distribution to shareholders |
-
-
-
-
-
-
(37,277)
(37,277)
| 4. | Special reserve |
-
-
-
-
2,498
-
-
2,498
| 4.1 | Transfer to special reserve |
-
-
-
-
3,866
-
-
3,866
| 4.2 | Amount utilized |
-
-
-
-
(1,368)
-
-
(1,368)
Ⅲ. Balance at June 30, 2021
2,329,812
15,523,881
-
47,020
19,149
240,162
432,218
18,592,242
For the six months ended June 30, 2020
Attributable to shareholders of the Company
Sharecapital
Capitalreserve
Other
income
Specialreserves
| comprehensive | ||
Surplusreserve
Retainedearnings
Total
I. Balance at December 31, 20192,446,554
15,449,878
41,308
12,973
240,162
531,784
18,722,659
| II. | Changes in equity for the period |
-
-
(4,041)
2,278
-
(72,123)
| (73,886) | |||||||||||
| 1. | Total comprehensive income |
-
-
(4,041)
-
-
(42,764)
| (46,805) | |||||||
| 2. |
-
| Owner’s contributions and reduction |
-
-
-
-
-
-
| 3. | Appropriation of profits |
-
-
-
-
-
(29,359)
| (29,359) | |||||||
| 3.1 Transfer to Distribution to shareholders |
-
-
-
-
-
(29,359)
| (29,359) | |||||||||||
| 4. | Special reserve |
-
-
-
2,278
-
-
| 2,278 | |||||||
| 4.1 |
| Transfer to special reserve |
-
-
-
3,756
-
-
| 3,756 |
| 4.2 | Amount utilized |
-
-
-
(1,478)
-
-
(1,478)
Ⅲ. Balance at June 30, 2020
2,446,554
15,449,878
37,267
15,251
240,162
459,661
18,648,773
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 78 -
I BASIC CORPORATE INFORMATION
ADAMA Ltd. (hereinafter the “Company” or the “Group”) is a company limited by shares established inChina with its head office located in Hubei Jingzhou.
In June 2020, the controlling shareholder of the Company changed from China National Agrochemical Co,.Ltd. (hereinafter – “CNAC") to Syngenta Group Co., Ltd. (hereinafter “Syngenta Group”). The ultimatecontrolling shareholder remains China National Chemical Corporation (hereinafter - “ChemChina”).
The principal activities of the Company and its subsidiaries (together referred to as the “Group”) are engagedin development, manufacturing and marketing of agrochemicals, intermediate materials for other industries,food additives and synthetic aromatic products, mainly for export. For information about the largestsubsidiaries of the Company, refer to Note VII.
The Company’s consolidated financial statements had been approved by the Board of Directors of theCompany on August 24, 2021.
Details of the scope of consolidated financial statements are set out in Note VII "Interest in other entities",whereas the changes of the scope of consolidation are set out in Note VI "Changes in consolidation scope".
II BASIS OF PREPARATION
1. Basis of preparation
The Group has adopted the Accounting Standards for Business Enterprises issued by the Ministry of Finance(the "MoF"). In addition, the Group has disclosed relevant financial information in these financial statementsin accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to thePublic No. 15－General Provisions on Financial Reporting (revised by China Securities RegulatoryCommission (hereinafter "CSRC”) in 2014).
2. Accrual basis and measurement principle
The Group has adopted the accrual basis of accounting. Except for certain financial instruments which aremeasured at fair value, deferred tax assets and liabilities, assets and liabilities relating to employee benefits,provisions, and investments in associated companies and joint ventures, the Group adopts the historical costas the principle of measurement in the financial statements. Where assets are impaired, provisions for assetimpairment are made in accordance with relevant requirements.
In the historical cost measurement, assets obtained shall be measured at the amount of cash or cashequivalents or fair value of the consideration paid. Liabilities shall be measured at the actual amount of cashor assets received, or the contractual amount in a present obligation, or the prospective amount of cash orcash equivalents paid to discharge the liabilities.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,willing market participants in an arm’s length transaction at the measurement date. Fair value measured anddisclosed in the financial statements are determined on this basis whether it is observable or estimated byvaluation techniques.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 79 -
II BASIS OF PREPARATION - (cont’d)
2. Accrual basis and measurement principle - (cont’d)
The following table provides an analysis, grouped into Levels 1 to 3 based on the degree to which the fairvalue input is observable and significant to the fair value measurement as a whole:
Level 1 - based on quoted prices (unadjusted) in active markets;
Level 2 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is observable (other than quoted prices included within Level 1), either directly orindirectly;
Level 3 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
3. Going concern
The financial statements have been prepared on the going concern basis.
The Group has performed going concern assessment for the following 12 months from June 30, 2021 andhave not identified any significant doubtful matter or event on the going concern, as such the financialstatement have been prepared on the going concern basis.
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
1. Statement of compliance
These financial statements are in compliance with the Accounting Standards for Business Enterprises to trulyand completely reflect the Company's consolidated financial position as at June 30, 2021 and the Company'sconsolidated operating results, changes in shareholders' equity and cash flows for the six months then ended.
2. Accounting period
The Group has adopted the calendar year as its accounting year, i.e. from 1 January to 31 December.
3. Business cycle
The company takes the period from the acquisition of assets for processing to their realisation in cash or cashequivalents as a normal operating cycle. The operating cycle for the company is 12 months.
4. Reporting currency
The Company and its domestic subsidiaries choose Renminbi (hereinafter "RMB") as their functionalcurrency. Functional currencies of overseas subsidiaries are determined on the basis of the principaleconomic environment in which the overseas subsidiaries operate. The functional currency of the overseassubsidiaries is mainly the United States Dollar (hereinafter "USD"). The presentation currency of thesefinancial statements is Renminbi.
- 80 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
5. Business combinations
5.1 Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which allof the combining enterprises are ultimately controlled by the same party or parties both before and after thecombination, and that control is not transitory. Assets and liabilities obtained shall be measured at theirrespective carrying amounts as recorded by the combining entities at the date of the combination. Thedifference between the carrying amount of the net assets obtained and the carrying amount of theconsideration paid for the combination is adjusted to the share premium in capital reserve. If the sharepremium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.Costs that are directly attributable to the combination are charged to profit or loss in the period in which theyare incurred.
5.2 Business combinations not involving enterprises under common control and goodwill.
A business combination not involving enterprises under common control is a business combination in whichall of the combining enterprises are not ultimately controlled by the same party or parties before and afterthe combination.
The costs of business combination are the fair value of the assets paid, liabilities incurred or assumed andequity instruments issued by the acquirer for the purpose of achieving the control rights over the acquiree.
The intermediary costs such as audit, legal services and assessment consulting costs and other relatedmanagement costs that are directly attributable to the combination by the acquirer are charged to profit orloss in the period in which they are incurred. Direct capital issuance costs incurred in respect of equityinstruments or liabilities issued pursuant to the business combination should be charged to the respect equityinstruments or liabilities upon initial recognition of the underlying equity instruments or liabilities.
The acquiree’s identifiable assets, liabilities and contingent liabilities acquired by the acquirer in a businesscombination, that meet the recognition criteria shall be measured at fair value at the acquisition date. Wherethe cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable netassets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on initialrecognition. Where the cost of combination is less than the acquirer’s interest in the fair value of theacquiree’s identifiable net assets, the remaining difference is recognized immediately in profit or loss for thecurrent year.
The goodwill raised because of the business combination should be separately disclosed in the consolidatedfinancial statement and measured by the initial amount less any accumulative impairment provision.
In a business combination achieved in stages, the Group remeasure its previously held equity interest in theacquiree at its acquisition-date fair value and recognise the resulting gain or loss, if any, in profit or loss.
- 81 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
6. Basis for preparation of consolidated financial statements
The scope of consolidation in consolidated financial statements is determined on the basis of control. Controlis achieved when the Company has power over the investee; is exposed, or has rights, to variable returnsfrom its involvement with the investee; and has the ability to use its power to affect its returns.
For a subsidiary disposed of by the Group, the operating results and cash flows before the date of disposal(the date when control is lost) are included in consolidated income statement and consolidated statement ofcash flows.
For a subsidiary acquired through a business combination not involving enterprises under common control,the operating results and cash flows from the acquisition date (the date when control is obtained) are includedin consolidated income statement and consolidated statement of cash flows.
For a subsidiary acquired through a business combination involving enterprises under common control, itwill be fully consolidated into consolidated financial statements from the date on which the subsidiary wasultimately under common control by the same party or parties.
The significant accounting policies and accounting years adopted by the subsidiaries are determined basedon the uniform accounting policies and accounting years set out by the Company.
All significant intra-group balances, transactions and unrealized profits are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as non-controllinginterests and presented as "non-controlling interests" in the shareholders’ equity in consolidated balancesheet. The portion of net profits or losses of subsidiaries for the period attributable to non-controllinginterests is presented as "non-controlling interests" in consolidated income statement below the "net profit"line item. Total comprehensive income attributable to non-controlling shareholders is presented separatelyin the consolidated income statement below the total comprehensive income line item.
When the amount of loss for the period attributable to the non-controlling shareholders of a subsidiaryexceeds the non-controlling shareholders' portion of the opening balance of owners' equity of the subsidiary,the excess amount is still allocated against non-controlling interests.
Acquisition of non-controlling interests or disposal of equity interest in a subsidiary that does not result inthe loss of control over the subsidiary is accounted for as equity transactions. The carrying amounts of theCompany's interests and non-controlling interests are adjusted to reflect the changes in their relative interestsin the subsidiary. The difference between the amount by which the non-controlling interests are adjusted andthe fair value of the consideration paid or received is adjusted to capital reserve under owners' equity. If thecapital reserve is not sufficient to absorb the difference, the excess is adjusted against retained earnings.Other comprehensive income attributed to the non-controlling interest is reattributed to the shareholders ofthe company.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 82 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
6. Basis for preparation of consolidated financial statements - (cont’d)
A put option issued by the Group to holders of non-controlling interests that is settled in cash or otherfinancial instrument is recognized as a liability at the present value of the exercise price (according to the"anticipated acquisition method"). The Group’s share of a subsidiary’s profits includes the share of theholders of the non-controlling interests to which the Group issued a put option.
In cases which the Group has a Call option in addition to the Put option above, due to the anticipatedacquisition method implementation no value is given to the Call option in the consolidated financialstatements.
When the Group loses control over a subsidiary due to disposal of certain equity interest or other reasons,any retained interest is re-measured at its fair value at the date when control is lost. The difference between(i) the aggregate of the consideration received on disposal and the fair value of any retained interest and (ii)the share of the former subsidiary's net assets cumulatively calculated from the acquisition date according tothe original proportion of ownership interest is recognized as investment income in the period in whichcontrol is lost. Other comprehensive income associated with the disposed subsidiary is reclassified toinvestment income in the period in which control is lost.
7. Classification and accounting methods of joint arrangement
Joint arrangement involves by two or more parties jointly control. Joint control is the contractually agreedsharing of control over an economic activity, and exists only when the strategic financial and operatingdecisions relating to the activity require the unanimous consent of the parties sharing control (the ventures).
The Group makes the classification of the joint arrangements according to the rights and obligations in thejoint arrangements to either joint operations or joint ventures.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement haverights to the net assets of the joint arrangement. Joint ventures are accounted for using the equity method.
8. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents arethe Group's short-term, highly liquid investments that are readily convertible to known amounts of cash andwhich are subject to an insignificant risk of changes in value.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
9. Translation of transactions and financial statements denominated in foreign currencies
9.1 Transactions denominated in foreign currencies
On initial recognition, foreign currency transactions are translated into functional currency using the spotexchange rate prevailing at the date of transaction.
At the balance sheet date, foreign currency monetary items are translated into functional currency using thespot exchange rates at the balance sheet date. Exchange differences arising from the differences between thespot exchange rates prevailing at the balance sheet date and those on initial recognition or at the previousbalance sheet date are recognized in profit or loss for the period, except that (i) exchange differences relatedto a specific-purpose borrowing denominated in foreign currency that qualify for capitalization arecapitalized as part of the cost of the qualifying asset during the capitalization period. (ii) exchange differencesrelated to hedging instruments for the purpose of hedging against foreign currency risks are accounted forusing hedge accounting.
When preparing financial statements involving foreign operations, if there is any foreign currency monetaryitems, which in substance forms part of the net investment in the foreign operations, exchange differencesarising from the changes of foreign currency are recorded as other comprehensive income, and will bereclassified to profit or loss upon disposal of the foreign operations.
Foreign currency non-monetary items measured at historical cost are translated to the amounts in functionalcurrency at the spot exchange rates on the dates of the transactions and the amounts in functional currencyremain unchanged.
9.2 Translation of financial statements denominated in foreign currency
For the purpose of preparing consolidated financial statements, financial statements of a foreign operationare translated from the foreign currency into RMB using the following method: assets and liabilities on thebalance sheet are translated at spot exchange rate prevailing at the balance sheet date; shareholders' equityitems, except for retained earnings, are translated at the spot exchange rates at the dates on which such itemsarose; all items in the income statement as well as items reflecting the distribution of profits are translated ataverage rate or at spot exchange rates on the dates of the transactions; the retained earnings opening balanceis previous year's translated retained earnings closing balance; the closing balance of retained earnings iscalculated and presented on the basis of each translated income statement and profit distribution item. Thedifference between the translated assets and the aggregate of liabilities and shareholders' equity items isrecorded as other comprehensive income. Cash Flows arising from transaction in foreign currency and thecash flows of a foreign subsidiary are translated at the spot exchange rate on the date of the cash flow, theeffect of exchange rate changes on the cash and cash equivalents is regarded as a reconciling item and presentseparately in the statement “effect of foreign exchange rate changes on the cash and cash equivalents".
The opening balances and the comparative figures of prior year are presented at the translated amounts inthe prior year's financial statements.
On disposal of the Group's entire equity interest in a foreign operation, or upon a loss of control over aforeign operation due to disposal of certain equity interest in it or other reasons, the Group transfers theaccumulated translation differences, which are attributable to the owners' equity of the Company andpresented under other comprehensive income to profit or loss in the period in which the disposal occurs.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
9. Translation of transactions and financial statements denominated in foreign currencies - (cont’d)
9.2 Translation of financial statements denominated in foreign currency - (cont’d)
In case of a disposal or other reason that does not result in the Group losing control over a foreign operation,the proportionate share of accumulated translation differences are re-attributed to non-controlling interestsand are not recognized in profit and loss. For partial disposals of equity interest in foreign operations, whichare associates or joint ventures, the proportionate share of the accumulated translation differences arereclassified to profit or loss.
10. Financial instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to the contractualprovisions of the instrument. At initial recognition, the Group measures a financial asset or financial liabilityat its fair value plus or minus, in the case of a financial asset or financial liability not at fair value throughprofit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial assetor financial liability. Initial recognition in trade receivables which do not contain a significant financingcomponent, shall be made according to their transaction price.
10.1 Classification and measurement of financial assets
After initial recognition, an entity shall measure a financial asset at: (a) amortised cost; (b) fair value throughother comprehensive income (“FVTOCI”); or (c) fair value through profit or loss (“FVTPL”).
10.1.1 Financial assets at amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met: (a) the financialasset is held within a business model whose objective is to hold financial assets in order to collect contractualcash flows; and (b) the contractual terms of the financial asset give rise on specified dates to cash flows thatare solely payments of principal and interest on the principal amount outstanding.
Such financial assets are subsequently measured at amortised cost, using effective interest method. Gains orlosses upon impairment and derecognition are recognized in profit or loss.
10.1.1.1 Effective interest method and amortised cost
Effective interest method represents the method for calculating the amortized costs and interest income orexpense of each period in accordance with the effective interest rate of financial assets or financial liabilities(inclusive of a set of financial assets or financial liabilities). Effective interest rate represents the rate thatdiscounts the future cash flow over the expected subsisting period or shorter period, if appropriate, of thefinancial asset or financial liability to the current carrying value of such financial asset or financial liability.
When calculating the effective interest rate, the Group will consider the anticipated future cash flow (notconsidering the future credit loss) on the basis of all contract clauses of financial assets or financial liabilities,as well as consider all kinds of charges which are an integral part of the effective interest rate, includingtransaction fees and discount or premium paid or received between both parties of financial asset or financialliability contract.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.1 Classification and measurement of financial assets - (cont’d)
10.1.2 Financial assets at FVTOCI
A financial asset is measured at fair value through other comprehensive income if both of the followingconditions are met: (a) the financial asset is held within a business model whose objective is achieved byboth collecting contractual cash flows and selling financial assets and (b) the contractual terms of thefinancial asset give rise on specified dates to cash flows that are solely payments of principal and interest onthe principal amount outstanding.
A gain or loss on a financial asset measured at fair value through other comprehensive income is recognizedin other comprehensive income, except for impairment gains or losses, foreign exchange gains and lossesand interest calculated using the effective interest method, until the financial asset is derecognized orreclassified. When the financial asset is derecognized the cumulative gain or loss previously recognized inother comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
10.1.3 Financial assets at FVTPL
Financial assets at FVTPL are either those that are classified as financial assets at FVTPL or designated asfinancial assets at FVTPL.
A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVTOCI.
The Group may, at initial recognition, irrevocably designate a financial asset as measured at FVTPL if doingso eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to asan ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing thegains and losses on them on different bases.
A gain or loss on a financial asset that is measured at FVTPL is recognized in profit or loss unless it is partof a hedging relationship. Dividends are recognized in profit or loss.
10.1.4 Designated financial assets at FVTOCI
At initial recognition, the Group makes an irrevocable election to designate to FVTOCI an investment in anequity instrument that is not held for trading.
When a non-trading equity instrument investment is designated as a financial asset that is measured at fairvalue through other comprehensive income, the changes in the fair value of the financial asset are recognisedin other comprehensive income. Upon realization the accumulated gains or losses from other comprehensiveincome are transferred from other comprehensive income and included in retained earnings. During theperiod in which the Group holds these non-trading investment instruments, the right to receive dividends inthe Group has been established, and the economic benefits related to dividends are likely to flow into theGroup, and when the amount of dividends can be reliably measured, the dividend income is recognized inthe current profit and loss.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses on financial assets that are classified toamortised cost and FVTOCI.
The Group always measures the loss allowance at an amount equal to lifetime expected credit losses fortrade receivables.
For financial assets other than trade receivables, the Group initially measure the loss allowance for thatfinancial instrument at an amount equal to 12-month expected credit losses. At each balance sheet date, ifthe credit risk on that financial instrument has increased significantly since initial recognition, the Groupmeasures the loss allowance for a financial instrument at an amount equal to the lifetime expected creditlosses. The Group recognizes in profit or loss, as an impairment gain or loss, the amount of expected creditlosses (or reversal) that is required to adjust the loss allowance to the amount that is required to be recognized.
10.2.1 Significant increases in credit risk
At each balance sheet date, the Group assesses whether the credit risk on a financial instrument hasincreased significantly since initial recognition.
The Group mainly considers the following list of information in assessing changes in credit risk:
(a) significant changes in internal price indicators of credit risk as a result of a change in credit risk since
inception.(b) significant changes in external market indicators of credit risk for a particular financial instrumentor similar financial instruments with the same expected life.(c) a significant change in the debtors’ ability to meet its debt obligations.(d) an actual or expected significant change in the operating results of the debtor.(e) significant increases in credit risk on other financial instruments of the same debtor.(f) an actual or expected significant adverse change in the regulatory, economic, or technologicalenvironment of the debtor.(g) significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements, which are expected to reduce the debtor’s economicincentive to make scheduled contractual payments or to otherwise have an effect on the probabilityof a default occurring.(h) significant changes that are expected to reduce the receivable’s economic incentive to makescheduled contractual payments.(i) significant changes in the expected performance and behaviour of the debtor.(j) past due information.
The Group assumes that the credit risk on a financial instrument has not increased significantly since initialrecognition if the financial instrument is determined to have low credit risk at the reporting date.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets - (cont’d)
10.2.2 Credit-impaired financial asset
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimatedfuture cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impairedinclude observable data about the following events:
(a) significant financial difficulty of the issuer or the receivable;(b) a breach of contract, such as a default or past due event;(c) the lender(s) of the receivable, for economic or contractual reasons relating to the receivable’sfinancial difficulty, having granted to the receivable a concession(s) that the lender(s) would nototherwise consider;
(d) it is becoming probable that the receivable will enter bankruptcy or other financial reorganization;
10.2.3 Recognition of expected credit losses
For the purpose of determining significant increases in credit risk and recognizing a loss allowance on acollective basis, financial instruments are grouped on the basis of shared credit risk. Examples of sharedcredit risk characteristics may include, but are not limited to, the:(a) instrument type; (b) credit risk ratings;(c) collateral type; (d) industry; (e) geographical location of the debtor; and (f) the value of collateralrelative to the financial asset if it has an impact on the probability of a default occurring.
Expected credit losses of financial instruments are determined as the present value of the differencebetween: (a) the contractual cash flows that are due to an entity under the contract; and (b) the cash flowsthat the entity expects to receive.
For a financial asset that is credit-impaired at the reporting date, an entity shall measure the expected creditlosses as the difference between the asset’s gross carrying amount and the present value of estimated futurecash flows discounted at the financial asset’s original effective interest rate. Any adjustment is recognizedin profit or loss as an impairment gain or loss.
The Group measures expected credit losses of a financial instrument in a way that reflects:
(a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible
outcomes;(b) the time value of money; and
(c) reasonable and supportable information that is available without undue cost or effort at the reporting
date about past events, current conditions and forecasts of future economic conditions.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets - (cont’d)
10.2.4 Written-off of financial assets
The Group directly reduces the gross carrying amount of a financial asset when the entity has no reasonableexpectations of recovering a financial asset in its entirety or a portion thereof. A write-off constitutes aderecognition event.
10.3 Transfer of financial asset
The Group derecognizes a financial asset if one of the following conditions is satisfied: (i) the contractualrights to the cash flows from the financial asset expire; or (ii) the financial asset has been transferred andsubstantially all the risks and rewards of ownership of the financial asset is transferred to the transferee; or(iii) although the financial asset has been transferred, the Group neither transfers nor retains substantially allthe risks and rewards of ownership of the financial asset but has not retained control of the financial asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financialasset, and it retains control of the financial asset, it recognizes the financial asset to the extent of its continuinginvolvement in the transferred financial asset and recognizes an associated liability. The extent of theGroup’s continuing involvement in the transferred asset is the extent to which it is exposed to changes in thevalue of the transferred asset.
When the company is derecognizing a financial asset in its entirety, except for equity instrument designatedto FVTOCI, the difference between (i) the carrying amount of the financial asset transferred; and (ii) the sumof the consideration received from the transfer is recognized in profit or loss.
10.4 Classification and measurement of financial liabilities
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with thesubstance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
All financial liabilities are subsequently measured at FVTPL or other financial liabilities.
Financial liabilities are classified as at FVTPL when the financial liability is (i) held for trading or (ii) it isdesignated as at FVTPL. The financial liability other than derivative financial liabilities are stated asliabilities held for trading.
Other financial liabilities are subsequently measured at amortized cost by using effective interest method.Gain or loss arising from derecognition or amortization is recognized in current profit or loss.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.5 Derecognition of financial liabilities
Financial liabilities are derecognized in full or in part only when the present obligation is discharged in fullor in part. An agreement entered into force between the Group (debtor) and a creditor to replace the originalfinancial liabilities with new financial liabilities with substantially different terms, derecognize the originalfinancial liabilities as well as recognize the new financial liabilities. When financial liabilities isderecognized in full or in part, the difference between the carrying amount of the financial liabilitiesderecognized and the consideration paid (including transferred non-cash assets or new financial liability) isrecognized in profit or loss for the current period.
10.6 Derivatives
Derivative financial instruments include forward exchange contracts, currency swaps and foreign exchangeoptions, etc. Derivatives are initially measured at fair value at the date when the derivative contracts areentered into and are subsequently re-measured at fair value. The resulting gain or loss is recognized in profitor loss unless the derivative is designated and highly effective as a hedging instrument, in which case thetiming of the recognition in profit or loss depends on the nature of the hedge relationship (Note III 28.1).
10.7 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the balance sheet and shall not beoffset, except for circumstances where the Group has a legal right that is currently enforceable to offset therecognized financial assets and financial liabilities, and intends either to settle on a net basis, or to realizethe financial asset and settle the financial liability simultaneously, a financial asset and a financial liabilityshall be offset and the net amount is presented in the balance sheet.
10.8 Equity instruments
The consideration received from the issuance of equity instruments net of transaction costs is recognized inshareholders’ equity. Consideration and transaction costs paid by the Company for repurchasing self-issuedequity instruments are deducted from shareholders’ equity.
When the Company repurchases its own shares, those shares are treated as treasury shares. All expendituresrelating to the repurchase are recorded in the cost of the treasury shares, with the transaction entering intothe share capital. Treasury shares are excluded from profit distributions and are stated as a deduction undershareholders’ equity in the balance sheet.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Receivables
Receivables are assessed for impairment on a collective group and/or on an individual basis as follows:
Expected credit losses in respect of a receivables is measured at an amount equal to lifetime expected creditlosses. The assessment is made collectively for account receivables, where receivables share similar creditrisk characteristics based on geographical location, using the expected credit losses model including inter-alia aging analysis, historical loss experiences adjusted by the observable factors reflecting current andexpected future economic conditions. The ratio of the collective provision for non-overdue accountreceivables is between 0%-1.7%.
When credit risk on a receivable has increased significantly since initial recognition, the group recordsspecific provision or collective provision, which is determined for groups of similar assets in countries inwhich there are large number of customers with immaterial balances.
In assessing whether the credit risk on a receivable has increased significantly since initial recognition, theGroup compares the risk of a default occurring on the receivable at the reporting date with the risk of adefault occurring on the receivable at the date of initial recognition and considers both quantitative andqualitative information that is reasonable and supportable, including observable data that comes to theattention of the Group about loss events such as a significant decline in the solvency of an individual debtoror the portfolio of debtors, and significant changes in the financial condition that have an adverse effect onthe debtor.
12. Inventories
12.1 Categories of inventories and initial measurement
The Group's inventories mainly include raw materials, work in progress, semi-finished goods, finished goodsand reusable materials. Reusable materials include low-value consumables, packaging materials and othermaterials, which can be used repeatedly but do not meet the definition of fixed assets.
Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs ofconversion and other expenditures incurred in bringing the inventories to their present location and conditionincluding direct labor costs and an appropriate allocation of production overheads.
12.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
12.3 Basis for determining net realizable value of inventories and provision methods for decline in value of
inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the netrealizable value is below the cost of inventories, a provision for decline in value of inventories is made. Netrealizable value is the estimated selling price in the ordinary course of business less the estimated costs ofcompletion, the estimated costs necessary to make the sale and relevant taxes.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
12. Inventories - (cont’d)
After the provision for decline in value of inventories is made, if the circumstances that previously causedinventories to be written down below cost no longer exist so that the net realizable value of inventories ishigher than their carrying amount, the original provision for decline in value is reversed and the reversal isincluded in profit or loss for the period.
12.4 The perpetual inventory system is maintained for stock system.
13. Long-term equity investments
Long-term equity investments include investments in subsidiaries, joint ventures and associates.
Subsidiaries are the companies that are controlled by the Company. Associates are the companies over whichthe Group has significant influence. Joint ventures are joint arrangements over which the Group has jointcontrol along with other investors and has rights to the net assets of the joint arrangement.
The Company accounts for the investment in subsidiaries at historical cost in the Company's financialstatements. Investments in associates and joint ventures are accounted for under equity method.
13.1 Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprises undercommon control, the investment cost of the long-term equity investment is the share of the carrying amountof the shareholders' equity of the acquiree attributable to the ultimate controlling party at the date ofcombination. The difference between initial investment cost and cash paid, non-cash assets transferred andbook value of liabilities assumed, is adjusted in capital reserve. If the balance of capital reserve is notsufficient to absorb the difference, any excess is adjusted to retained earnings.
For a long-term equity investment acquired through business combination not involving enterprises undercommon control, the investment cost of the long-term equity investment is the cost of acquisition. For abusiness combination not involving enterprises under common control achieved in stages that involvesmultiple exchange transactions, the initial investment cost is carried at the aggregate of the carrying amountof the acquirer’s previously held equity interest in the acquiree and the new investment cost incurred on theacquisition date.
Regarding the long-term equity investment acquired otherwise than through a business combination, if thelong-term equity investment is acquired by cash, the historical cost is determined based on the amount ofcash paid and payable; if the long-term equity investment is acquired through the issuance of equityinstruments, the historical cost is determined based on the fair value of the equity instruments issued.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
13. Long-term equity investments - (cont’d)
13.2 Subsequent measurement and recognition of profit or loss
If the long-term equity investment is accounted for at cost, it should be measured at historical cost lessaccumulated impairment losses. Dividend declared by the investee should be accounted for as investmentincome.
Under the equity method, where the long-term equity investment initial investment cost exceeds the Group’sshare of the fair value of the investee’s identifiable net assets at the time of acquisition, no adjustment ismade to the initial investment cost. Where the initial investment cost is less than the Group’s share of thefair value of the investee’s identifiable net assets at the time of acquisition, the difference is recognized inprofit or loss for the period, and the cost of the long-term equity investment is adjusted accordingly.
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensiveincome of the investee for the period as investment income or loss and other comprehensive income for theperiod. The Group recognizes its share of the investee’s net profit or loss based on the fair value of theinvestee’s individual separately identifiable assets, etc. at the acquisition date after making appropriateadjustments to be confirmed with the Group's accounting policies and accounting period. The Groupdiscontinues recognizing its share of net losses of the investee after the carrying amount of the long-termequity investment together with any long-term interests that in substance form part of its net investment inthe investee is reduced to zero. If the Group has incurred obligations to assume additional losses of theinvestee, a provision is recognized according to the expected obligation, and recorded as investment loss forthe period.
13.3 Basis for determining control, joint control and significant influence over investee
Control is achieved when the Company has power over the investee; is exposed, or has rights, to variablereturns from its involvement with the investee; and has the ability to use its power to affect its returns.
Joint control is the contractually agreed sharing of control over an economic activity, and exists only whenthe strategic financial and operating policy decisions relating to the activity require the unanimous consentof the parties sharing control.
Significant influence is the power to participate in the financial and operating policy decisions of the investeebut is not control or joint control over those policies.
When determining whether an investing enterprise is able to exercise control or significant influence overan investee, the effect of potential voting rights of the investee (for example, warrants and convertible debts)held by the investing enterprises or other parties that are currently exercisable or convertible shall beconsidered.
13.4 Methods of impairment assessment and determining the provision for impairment loss
If the recoverable amounts of the investments to subsidiaries, joint ventures and associates are less than theircarrying amounts, an impairment loss should be recognized to reduce the carrying amounts to the recoverableamounts (Note III 20).
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
13. Long-term equity investments - (cont’d)
13.5 The disposal of long-term equity investment
On disposal of a long term equity investment, the difference between the proceeds actually received andreceivable and the carrying amount is recognized in profit or loss for the period.
14. Investment properties
Investment property refers to real estate held to earn rentals or for capital appreciation, or both, includingleased land use rights, land use rights held and provided for transferring after appreciation and leasedconstructions, etc.
Investment property is initially measured at cost. Subsequent expenditures related to an investment propertyshall be included in cost of investment property only when the economic benefits associated with the assetwill likely flow to the Group and its cost can be measured reliably. All other subsequent expenditures oninvestment property shall be included in profit or loss for the current period when incurred.
The Group adopts cost method for subsequent measurement of investment property, which is depreciated oramortized using the same policy as that for buildings and land use rights.
When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal ofthe property net of the carrying amount and related taxes and surcharges is recognized in profit or loss forthe current period.
15. Fixed assets
15.1 Recognition criteria for fixed assets
Fixed assets include land owned by the Group and buildings, machinery and equipment, transportationvehicles, office equipment and others.
Fixed assets are tangible assets that are held for use in the production or supply of goods or for administrativepurposes, and have useful lives of more than one accounting year. A fixed asset is recognized only when itis probable that economic benefits associated with the asset will flow to the Group and the cost of the assetcan be reliably measured. Purchased or constructed fixed assets are initially measured at cost when acquired.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it isprobable that economic benefits associated with the asset will flow to the Group and the subsequentexpenditures can be measured reliably. Other subsequent expenditures are recognized in profit or loss in theperiod in which they are incurred.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
15. Fixed assets - (cont’d)
15.2 Depreciation of each category of fixed assets
Fixed asset is depreciated based on the cost of fixed asset recognized less expected net residual value overits useful life using the straight-line method since the month subsequent to the one in which it is ready forintended use. Depreciation is calculated based on the carrying amount of the fixed asset after impairmentover the estimated remaining useful life of the asset.
The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciationmethod applied at least once at each financial year-end, and account for any change as a change in anaccounting estimate.
The estimated useful life, estimated net residual value and annual depreciation rate of each category of fixedassets are as follows:
Category Depreciation
Useful life
(years)
Residualvalue(%)
Annualdepreciation rate(%)Buildings the straight-line method 15-50 0-4 1.9-6.7Machinery and equipment the straight-line method 3-22 0-4 4.4-33.3Office and other equipment the straight-line method 3-17 0-4 5.6-33.3Motor vehicles the straight-line method 5-9 0-2 10.9-20.0
Land owned by the Group is not depreciated.
15.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use ordisposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, theamount of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognizedin profit or loss for the period.
The difference between recoverable amounts of the fixed assets under the carrying amount is referred to asimpairment loss (Note III 20).
16. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various construction,installation costs, borrowing costs capitalized and other expenditures incurred until such time as the relevantassets are completed and ready for its intended use. When the asset concerned is ready for its intended use,the cost of the asset is transferred to fixed assets and depreciated starting from the following month.
The difference between recoverable amounts of the construction in progress under the carrying amount isreferred to as impairment loss (Note III 20).
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
17. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset arecapitalized when expenditures for such asset and borrowing costs are incurred and activities relating to theacquisition, construction or production of the asset that are necessary to prepare the asset for its intended useor sale have commenced. Capitalization of borrowing costs ceases when the qualifying asset being acquired,constructed or produced becomes ready for its intended use or sale. Borrowing costs incurred subsequentlyshould be charged to profit or loss. Capitalization of borrowing costs is suspended during periods in whichthe acquisition, construction or production of a qualifying asset is suspended abnormally and when thesuspension is for a continuous period of more than 3 months. Capitalization is suspended until the acquisition,construction or production of the asset is resumed.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized isthe actual interest expenses incurred on that borrowing for the period less any bank interest earned fromdepositing the borrowed funds before being used on the asset or any investment income on the temporaryinvestment of those funds.
Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interestto be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excessof cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The capitalizationrate is the weighted average of the interest rates applicable to the general-purpose borrowings.
During the capitalization period, exchange differences on foreign currency specific-purpose borrowing arefully capitalized whereas exchange differences on foreign currency general-purpose borrowing, charged toprofit or loss.
18. Intangible assets
18.1 Valuation methods, useful life, impairment test
The Group’s intangible assets include product registration assets, intangible assets upon purchase of products,marketing rights and rights to use tradenames and trademarks, land use rights, software and customerrelations. Intangible assets are stated at cost less accumulated amortization and impairment losses.
When an intangible asset with a finite useful life is available for use, its original cost less any accumulatedimpairment losses is amortized over its estimated useful life using the straight-line method. An intangibleasset with an indefinite useful life is not amortized.
For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method atthe end of the year, and makes adjustments when necessary.
The respective amortization periods for such intangible assets are as follows:
| Item | Amortization period | years) | ||||||||||||||||||||||||||||
| Land use rights | 49 | - | 50 years | |||||||||||||||||||||||||||
| Product registration | 8 years | |||||||||||||||||||||||||||||
| Intangible assets on purchase of products | 7 | - | 11, 20 years | |||||||||||||||||||||||||||
| Marketing rights, tradename and trademarks | 4 | - | 10, 30 years | |||||||||||||||||||||||||||
| Software | 3 | - | 5 | years | ||||||||||||||||||||||||||
| Customer relations | 5 | - | 10 years | |||||||||||||||||||||||||||
The difference between recoverable amounts of the intangible assets under the carrying amount is referredto as impairment loss (see Note III 20 – Impairment of long-term assets).
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
18. Intangible assets - (cont’d)
18.2 Research and development expenditure
Internal research and development project expenditures were classified into research expenditures anddevelopment expenditures depending on its nature and the greater uncertainty whether the research activitiesbecoming to intangible assets.
Expenditure during the research phase is recognized as an expense in the period in which it is incurred.Expenditure during the development phase that meets all of the following conditions at the same time isrecognized as intangible asset:
- It is technically feasible to complete the intangible asset so that it will be available for use or sale;- The Group has the intention to complete the intangible asset and use or sell it;- The Group can demonstrate the ways in which the intangible asset will generate economic benefits;- The availability of adequate technical, financial and other resources to complete the development and theability to use or sell the intangible asset;- The expenditure attributable to the intangible asset during its development phase can be reliablymeasured.Expenditures that do not meet all of the above conditions at the same time are recognized in profit or losswhen incurred. If the expenditures cannot be distinguished between the research phase and developmentphase, the Group recognizes all of them in profit or loss for the period. Expenditures that have previouslybeen recognized in the profit or loss would not be recognized as an asset in subsequent years. Thoseexpenditures capitalized during the development stage are recognized as development costs incurred andwill be transferred to intangible asset when the underlying project is ready for an intended use.
19. Goodwill
The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’s interest in the fairvalue of the identifiable net assets of the acquiree under a business combination not involving enterprisesunder common control.
Goodwill is not amortized and is stated in the balance sheet at cost less accumulated impairment losses (seeNote III 20 – Impairment of long-term assets). On disposal of an asset group
or a set of asset groups, anyattributable goodwill is written off and included in the calculation of the profit or loss on disposal.
20. Impairment of long-term assets
The Company assesses at each balance sheet date whether there is any indication that the fixed assets,construction in progress, right of use assets, intangible assets with finite useful lives, investment propertiesmeasured at historical cost, investments in subsidiaries, joint ventures and associates may be impaired. Ifthere is any indication that such assets may be impaired, recoverable amounts are estimated for such assets.The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value ofthe future cash flow estimated to be derived from the asset. The Group estimates the recoverable amount onan individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the Groupdetermines the recoverable amount of the asset group to which the asset belongs. Identification of an assetgroup is based on whether major cash inflows generated by the asset group are largely independent of thecash inflows from other assets or asset groups.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
20. Impairment of long-term assets - (cont’d)
Goodwill arising from a business combination is tested for impairment at least at each year end, irrespectiveof whether there is any indication that the asset may be impaired. For the purpose of impairment testing, thecarrying amount of goodwill acquired in a business combination is allocated from the acquisition date on areasonable basis to each of the related asset groups; if it is impossible to allocate to the related asset groups,it is allocated to each of the related set of asset groups. Each of the related asset groups or set of asset groupsis an asset group or set of asset group that is able to benefit from the synergies of the business combinationand shall not be larger than a reportable segment determined by the Group. If the carrying amount of theasset group or set of asset groups is higher than its recoverable amount, the amount of the impairment lossfirst reduced by the carrying amount of the goodwill allocated to the asset group or set of asset groups, andthen the carrying amount of other assets (other than the goodwill) within the asset group or set of asset groups,pro rata based on the carrying amount of each asset.
Once the impairment loss of such assets is recognized, it will not be reversed in any subsequent period.
21. Employee benefits
21.1 Short-term employee benefits
Employee wages or salaries, bonuses, social security contributions, measured on a non-discounted basis, andthe expense is recorded when the related service is provided. A provision for short-term employee benefitsin respect of cash bonuses is recognized in the amount expected to be paid where the Group has a currentlegal or constructive obligation to pay the said amount for services provided by the employee in the past andthe amount can be estimated reliably.
21.2 Post-employment benefits
Post-employment benefits are classified into defined contribution plans and defined benefit plans.
A defined contribution plan is a post-employment benefit plan under which the Group pays contributions toa separate entity and has no legal or constructive obligation to pay further amounts. Obligations forcontributions to defined contribution plans are recognized as an expense in profit or loss in the periods duringwhich related services are rendered by employees.
Defined benefit plans of the Group are post-employment benefit plans other than defined contribution plans.In accordance with the projected unit credit method, the Group measures the obligations under definedbenefit plans using unbiased and mutually compatible actuarial assumptions to estimate related demographicvariables and financial variables, and discount obligations under the defined benefit plans to determine thepresent value of the defined benefit liability. The discount rate used is the yield on the reporting date onhighly-rated corporate debentures denominated in the same currency, that have maturity dates approximatingthe terms of the Group’s obligation.
The Group attributes benefit obligations under a defined benefit plan to periods of service provided byrespective employees. Service cost and interest expense on the defined benefit liability are charged to profitor loss and remeasurements of the defined benefit liability are recognized in other comprehensive income.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
21. Employee benefits - (cont’d)
21.3 Termination benefits
When the Group terminates the employment with employees or provides compensation under an offer toencourage employees to accept voluntary redundancy, a provision is recognized with a correspondingexpense in profit or loss at the earlier of the following dates:
- When the Group cannot unilaterally withdraw the offer of termination benefits because of an employeetermination plan or a curtailment proposal.- When the Group has a formal detailed restructuring plan involving the payment of termination benefitsand has raised a valid expectation in those affected that it will carry out the restructuring by starting toimplement that plan or announcing its main features to those affected by it.If the benefits are payable more than 12 months after the end of the reporting period, they are discounted totheir present value. The discount rate used is the yield on the reporting date on highly-rated corporatedebentures denominated in the same currency, that have maturity dates approximating the terms of theGroup’s obligation.
21.4 Other long-term employee benefits
The Group’s net obligation for long-term employee benefits, which are not attributable to post-employmentbenefit plans, is for the amount of the future benefit to which employees are entitled for services that wereprovided during the current and prior periods.
The amount of these benefits is discounted to its present value and the fair value of the assets related to theseobligations is deducted therefrom. The discount rate used is the yield on the reporting date on highly-ratedcorporate debentures denominated in the same currency, that have maturity dates approximating the termsof the Group’s obligation.
22. Share-based payment
Share-based payment refers to the transaction in order to acquire the service offered by the employees orother parties that grants equity instruments or liabilities on the basis of the equity instruments. Share-basedpayment classified into equity-settled share-based payment and cash-settled share-based payment.
22.1 Cash-settled share-based payment
The cash-settled share-based payment should be measured according to the fair value of the liabilitiesrecognized based on the shares or other equity instrument undertaken by the Company. For cash-settledshare-based payment made in return for the rendering of employee services that cannot be exercised untilthe services are fully provided during the vesting period or specified performance targets are met, on eachbalance sheet date within the vesting period, the services acquired in the current period shall, based on thebest estimate of the number of exercisable instruments, be recognized in relevant expenses and thecorresponding liabilities at the fair value of the liability incurred by the Company.
On each balance sheet date and the settlement date before the settlement of the relevant liabilities, theCompany should re-measure the fair value of the liabilities and the changes should be included in the currentperiod profit and loss.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
23. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency, it is probablethat an outflow of economic benefits will be required to settle the obligation, and the amount of the obligationcan be measured reliably.
The amount recognized as a provision is the best estimate of the consideration required to settle the presentobligation at the settlement date, taking into account factors pertaining to a contingency such as the risks,uncertainties and time value of money. Where the effect of the time value of money is material, the amountof the provision is determined by discounting the related future cash outflows. The increase in the provisiondue to passage of time is recognized as interest expense.
If all or part of the provision settlements is reimbursed by third parties, when the realization of income isvirtually certain, then the related asset should be recognized. However, the amount of related assetrecognized should not be exceeding the respective provision amount.
At the balance sheet date, the amount of provision should be re-assessed to reflect the best estimation then.
24. Revenue
Revenue of the Group is mainly from sale of goods.
The Group recognizes revenue when transferring goods to a customer, at the amount of the transaction price.Goods are considered transferred when the customer obtains control of the goods. Transaction price is theamount of consideration to which an entity expects to be entitled in exchange for transferring goods to acustomer, excluding amounts collected on behalf of third parties.
Significant financing component
For a contract with a significant financing component, the Group recognize revenue at an amount that reflectsthe price that a customer would have paid for the goods if the customer had paid cash for those goods atreceipt. The difference between the amount of consideration and the cash selling price of the goods, isamortized in the contract period using effective interest rate. The Group does not adjust the amount ofconsideration for the effects of a significant financing component if the Group expects, at contract inception,that the period between when the entity transfers a good to a customer and when the customer pays for thatgood will be one year or less.
Sale with a right of return
For sale with a right of return, the Group recognizes revenue at the amount of consideration to which theGroup expects to be entitled (ie excluding the products expected to be returned). For any amounts received(or receivable) for which an entity does not expect to be entitled, the entity shall not recognize revenue whenit transfers products to customers but shall recognize those amounts received (or receivable) as a refundliability. An asset recognized for the Group’s right to recover products from a customer on settling a refundliability shall initially be measured by reference to the former carrying amount of the product less anyexpected costs to recover those products.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
25. Government grants
Government grants are transfer of monetary assets and non-monetary assets from the government to theGroup at no consideration, including tax returns, financial subsidies and so on. A government grant isrecognized only when the Group can comply with the conditions attached to the grant and the Group willreceive the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount receivedor receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. Ifthe fair value cannot be reliably determined, it is measured at a nominal amount.
Government grants are either related to assets or income.
(1) The basis of judgment and accounting method of the government grants related to assets
Government grants obtained for acquiring long-term assets are government grants related to assets. Agovernment grant related to an asset is offset with the cost of the relevant asset.
(2) The basis of judgment and accounting method of the government grants related to income
For a government grant related to income, if the grant is a compensation for related expenses or losses to beincurred in subsequent periods, the grant is recognized as deferred income, and recognized in profit or lossover the periods in which the related costs are recognized. If the grant is a compensation for related expensesor losses already incurred, the grant is recognized immediately in profit or loss for the period.
Government grants related to the Group’s normal course of business are offset with related costs andexpenses. Government grants related that are irrelevant with the Groups’s normal course of business areincluded in non-operating gains.
26. Current and deferred tax
The income tax expenses include current income tax and deferred income tax.
26.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods aremeasured at the amount expected to be paid (or recovered) according to the requirements of tax laws.
26.2 Deferred tax assets and deferred tax liabilities
Temporary differences are differences between the carrying amounts of certain assets or liabilities and theirtax base.
All taxable temporary differences are recognized as related deferred tax liabilities. Deferred tax assets arerecognized to the extent that it is probable that future taxable profits will be available against which thedeductible losses and tax credits can be utilized.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
26. Current and deferred tax - (cont’d)
26.2 Deferred tax assets and deferred tax liabilities - (cont’d)
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to theextent that it is probable that future taxable profits will be available against which the deductible losses andtax credits can be utilized. However, for deductible temporary differences associated with the initialrecognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not abusiness combination) that affects neither the accounting profit nor taxable profits (or deductible losses) atthe time of transaction, no deferred tax asset or liability is recognized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to taxlaws, that are expected to apply in the period in which the asset is realized or the liability is settled.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments insubsidiaries and associates, and interests in joint ventures, except where the Group is able to control thetiming of the reversal of the temporary difference and it is probable that the temporary difference will notreverse in the foreseeable future.
The Group may be required to pay additional tax in case of distribution of dividends by the Group companies.This additional tax was not included in the financial statements, since the policy of the Group is not todistribute in the foreseeable future a dividend which creates a significant additional tax liability.
Except for those current income tax and deferred tax charged to comprehensive income or shareholders’equity in respect of transactions or events which have been directly recognized in other comprehensiveincome or shareholders’ equity, and deferred tax recognized on business combinations, all other currentincome tax and deferred tax items are charged to profit or loss in the current period.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longerprobable that sufficient taxable profits will be available in the future to allow the benefit of deferred taxassets to be utilized. Such reduction is reversed when it becomes probable that sufficient taxable profits willbe available.
26.3 Offset of income tax
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and tax assets andtax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entityor different taxable entities which intend to realize the assets and liabilities simultaneously, current tax assetsand liabilities are offset and presented on a net basis.
When the Group has a legal right to settle deferred tax assets and liabilities on a net basis which relates toincome taxes levied by the same taxation authority, on either the same taxable entity or different taxableentities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets andliabilities simultaneously, in each future period in which significant amounts of deferred tax assets orliabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presentedon a net basis.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
27. Leases
Lease is a contract, that conveys the right to use an asset for a period of time in exchange for consideration.
27.1 Determining whether an arrangement contains a lease
On the inception date of the lease, the Group determines whether the arrangement is a lease or contains alease, while assessing if it conveys the right to control the use of an identified asset for a period of time inexchange for consideration. In its assessment of whether an arrangement conveys the right to control the useof an identified asset, the Group assesses whether it has the following two rights throughout the lease term:
(a) The right to obtain substantially all the economic benefits from use of the identified asset; and(b) The right to direct the identified asset’s use.An arrangement does not contain a lease if an asset is leased for a period of less than 12 months, or to lease ofasset with low economic value.
27.2 Initial recognition of leased assets and lease liabilities
Upon initial recognition, the Group recognizes a liability at the present value of future lease payments(exclude certain variable lease payments, as detailed in note III 27.4), and concurrently the Group recognizesa right-of-use asset at the same amount, adjusted for any prepaid lease payments paid at the lease date orbefore, plus initial direct costs incurred in respect of the lease.
When the interest rate implicit in the lease is not readily determinable, the incremental borrowing rate of thelessee is used.The Group presents right-of-use assets separately from other assets in the balance sheet.
27.3 The lease term
The lease term is the non-cancellable period of the lease plus periods covered by an extension or terminationoption, if it is reasonably certain that the lessee will exercise or not exercise the option, respectively.
If there is a change in the lease term, or in the assessment of an option to purchase the underlying asset, theGroup remeasures the lease liability, on the basis of the revised lease term and the revised discount rate andadjust the right-of-use assets accordingly.
27.4 Variable lease payments
Variable lease payments that depend on an index or a rate, are initially measured using the index or rateexisting at the commencement of the lease. When the cash flows of future lease payments change as theresult of a change in an index or a rate, the balance of the liability is adjusted with a correspondence changein the right-of-use asset.
Other variable lease payments that are not included in the measurement of the lease liability are recognizedin profit or loss in the period in which the condition that triggers payment occurs.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
27. Leases (cont’d)
27.5 Subsequent measurement
After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciationand accumulated impairment losses and is adjusted for re-measurements of the lease liability. The asset isdepreciated on a straight-line basis over the useful life or contractual lease period, whichever earlier.
The Group applies ASBE8 Impairment of Assets, to determine whether the right-of-use asset is impairedand to account for any impairment loss identified.
A lease liability is measured after the lease commencement date at amortized cost using the effective interestmethod.
28. Other significant accounting policies and accounting estimates
28.1 Hedging
The Group uses derivative financial instruments to hedge its risks related to foreign currency and inflationrisks and derivatives that are not used for hedging.
Hedge accounting
The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoingbasis, whether the hedge is expected to be effective in offsetting the changes in the fair value of cash flowsthat can be attributed to the hedged risk during the period for which the hedge is designated.
An effective hedge exists when all of the below conditions are met:
? There is an economic relationship between the hedged item and the hedging instrument;? the effect of credit risk does not dominate the value changes that result from that economicrelationship;? the hedge ratio of the hedging relationship is the same as that resulting from the quantity of thehedged item that the entity actually hedges and the quantity of the hedging instrument that the entityactually uses to hedge that quantity of hedged item.
On the commencement date of the accounting hedge, the Group formally documents the relationship betweenthe hedging instrument and hedged item, including the Group’s risk management objectives and strategy inexecuting the hedge transaction, together with the methods that will be used by the Group to assess theeffectiveness of the hedging relationship.
With respect to a cash-flow hedge, a forecasted transaction that constitutes a hedged item must be highlyprobable and must give rise to exposure to changes in cash flows that could ultimately affect profit or loss.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.1 Hedging (cont’d)
Measurement of derivative financial instruments
Derivative financial instruments are recognized initially at fair value; attributable transaction costs arerecognized in profit or loss as incurred.
Cash-flow hedges
Subsequent to the initial recognition, changes in the fair value of derivatives used to hedge cash flows arerecognized through other comprehensive income directly in a hedging reserve, with respect to the part of thehedge that is effective. Regarding the portion of the hedge that is not effective, the changes in fair value arerecognized in profit and loss. The amount accumulated in the hedging reserve is reclassified to profit andloss in the period in which the hedged cash flows impact profit or loss and is presented in the same line itemin the statement of income as the hedged item.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated orexercised, the hedge accounting is discontinued. The cumulative gain or loss previously recognized in ahedging reserve through other comprehensive income remains in the reserve until the forecasted transactionoccurs or is no longer expected to occur. If the forecasted transaction is no longer expected to occur, thecumulative gain or loss in respect of the hedging instrument in the hedging reserve is reclassified to profitor loss.
Economic hedge
Hedge accounting is not applied with respect to derivative instruments used to economically hedge financialassets and liabilities denominated in foreign currency or CPI linked. Changes in the fair value of suchderivatives are recognized in profit or loss as gain (loss) from changes in fair value or investment income.
Derivatives that are not used for hedging
Changes in the fair value of derivatives that are not used for hedging are recognized in profit or loss as gain(loss) from changes in fair value or investment income.
28.2 Securitization of assets
Details of the securitization of asset agreements and accounting policy are set out in Note V.5 - Accountreceivables.
28.3 Segment reporting
Reportable segments are identified based on operating segments which are determined based on the structureof the Group’s internal organization, management requirements and internal reporting system.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.3 Segment reporting - (cont’d)
Two or more operating segments may be aggregated into a single operating segment if the segments havesimilar economic characteristics and are same or similar in respect of the nature of each product and service,the nature of production processes, the type or class of customers for the products and services, the methodsused to distribute the products or provide the services, and the nature of the regulatory environment.
Inter-segment revenues are measured on the basis of actual transaction price for such transactions forsegment reporting. Segment accounting policies are consistent with those for the consolidated financialstatements.
28.4 Profit distributions to shareholders
Dividends which are approved after the balance sheet date are not recognized as a liability at the balancesheet date but are disclosed in the notes separately.
29. Changes in significant accounting policies and accounting estimates
29.1 Changes in significant accounting policies
There are no significant changes in accounting policies in the reporting period.
29.2 Changes in significant accounting estimates
There are no significant changes in accounting estimates in the reporting period.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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30. Significant accounting estimates and judgments
The preparation of the financial statements requires management to make estimates and assumptions thataffect the application of accounting policies and the reported amounts of assets, liabilities, income andexpenses. Actual results may differ from these estimates. Estimates as well as underlying assumptions anduncertainties involved are reviewed on an ongoing basis. Revisions to accounting estimates are recognizedin the period in which the estimate is revised and in any future periods affected.
Notes V.34, Note VIII, Note IX and Note XIII contain information about the assumptions and their riskfactors relating to post-employment benefits – defined benefit plans, fair value of financial instruments andshare-based payments. Other key sources of estimation uncertainty are as follows:
30.1 Expected credit loss of trade receivables
As described in Note III.11, trade receivables are reviewed at each balance sheet date to determine whethercredit risk on a receivable has increased significantly since initial recognition, lifetime expected losses isaccrued for impairment provision. Evidence of impairment includes observable data that comes to theattention of the Group about loss events such as a significant decline in the solvency of an individual debtoror the portfolio of debtors, and significant changes in the financial condition that have an adverse effect onthe debtor. If there is objective evidence of a recovery in the value of receivables which can be relatedobjectively to an event occurring after the impairment was recognized, the previously recognized impairmentloss is reversed .
30.2 Provision for impairment of inventories
As described in Note III.12, the net realisable value of inventories is under management’s regular review,and as a result, provision for impairment of inventories is recognized for the excess of inventories’ carryingamounts over their net realisable value. When making estimates of net realisable value, the Group takes intoconsideration the use of inventories held on hand and other information available to form the underlyingassumptions, including the inventories’ market prices and the Group’s historical operating costs. The actualselling price, the costs of completion and the costs necessary to make the sale and relevant taxes may varybased on the changes in market conditions and product saleability, manufacturing technology and the actualuse of the inventories, resulting in the changes in provision for impairment of inventories. The net profit orloss may then be affected in the period when the impairment of inventories is adjusted.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments - (cont’d)
30.3 Impairment of assets other than inventories and financial assets
As described in Note III.20, if impairment indication exists, assets other than inventories and financial assetsare assessed at balance sheet date to determine whether the carrying amount exceeds the recoverable amountof the assets. If any such case exists, an impairment loss is recognized.
The recoverable amount of an asset (or an asset group) is the greater of its fair value less costs to sell and itspresent value of expected future cash flows. Since a market price of the asset (or the asset group) cannot beobtained reliably, the fair value of the asset cannot be estimated reliably, the recoverable amount is calculatedbased on the present value of estimated future cash flows. In assessing the present value of estimated futurecash flows, significant judgements are exercised over the asset’s production, selling price, related operatingexpenses and discount rate to calculate the present value. All relevant materials which can be obtained areused for estimation of the recoverable amount, including the estimation of the production, selling price andrelated operating expenses based on reasonable and supportable assumptions.
30.4 Depreciation and amortisation of assets such as fixed assets and intangible assets
As described in Note III.15 and III.18, assets such as fixed assets and intangible assets are depreciated andamortised over their useful lives after taking into account residual value. The estimated useful lives of theassets are regularly reviewed to determine the depreciation and amortisation costs charged in each reportingperiod. The useful lives of the assets are determined based on historical experience of similar assets and theestimated technical changes. If there have been significant changes in the factors used to determine thedepreciation or amortisation, the rate of depreciation or amortisation is revised prospectively.
30.5 Income taxes and deferred income tax
The Company and Group companies are assessed for income tax purposes in a large number of jurisdictionsand, therefore, Company management is required to use considerable judgment in determining the totalprovision for taxes and attribution of income.
When assessing whether there will be sufficient future taxable profits available against which the deductibletemporary differences can be utilised, the Group recognizes deferred tax assets to the extent that it is probablethat future taxable profits will be available against which the deductible temporary differences can be utilised,using tax rates that would apply in the period when the asset would be utilised. In determining the amountof deferred tax assets, the Group makes reasonable judgements and estimates about the timing and amountof taxable profits to be utilised in the following periods, and of the tax rates applicable in the future accordingto the existing tax policies and other relevant regulations. If the actual timing and amount of future taxableprofits or the actual applicable tax rates differ from the estimates made by management, the differences affectthe amount of tax expenses.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments - (cont’d)
30.6 Contingent liabilities
When assessing the possible outcomes of legal claims filed against the Company and its investee companies,the company positions are based on the opinions of their legal advisors. These assessments by the legaladvisors are based on their professional judgment, considering the stage of the proceedings and the legalexperience accumulated regarding the various matters. Since the results of the claims will be determined bythe courts, the outcomes could be different from the assessments.
In addition to the said claims, the Group is exposed to unasserted claims, inter alia, where there is doubt asto interpretation of the agreement and/or legal provision and/or the manner of their implementation. Thisexposure is brought to the Company’s attention in several ways, among others, by means of contacts madeto Company personnel. In assessing the risk deriving from the unasserted claims, the Company relies oninternal assessments by the parties dealing with these matters and by management, who weigh assessmentof the prospects of a claim being filed, and the chances of its success, if filed. The assessment is based onexperience gained with respect to the filing of claims and the analysis of the details of each claim. By theirnature, in view of the preliminary stage of the clarification of the legal claim, the actual outcome could bedifferent from the assessment made before the claim was filed.
30.7 Employee benefits
The Group’s liabilities for long-term post-employment and other benefits are calculated according to theestimated future amount of the benefit to which the employee will be entitled in consideration for his servicesduring the current period and prior periods. The benefit is stated at present value net of the fair value of theplan’s assets, based on actuarial assumptions. Changes in the actuarial assumptions could lead to materialchanges in the book value of the liabilities and in the operating results.
30.8 Derivative financial instruments
The Group enters into transactions in derivative financial instruments for the purpose of hedging risks relatedto foreign currency and inflationary risks. The derivatives are recorded at their fair value. The fair value ofderivative financial instruments is based on quotes from financial institutions. The reasonableness of thequotes is examined by discounting the future cash flows, based on the terms and length of the period tomaturity of each contract, while using market interest rates of a similar instrument as of the measurementdate. Changes in the assumptions and the calculation model could lead to material changes in the fair valueof the assets and liabilities and in the results.
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IV. Taxation
1. Main types of taxes and corresponding tax rates
The income tax rate in China is 25% (2020: 25%). The subsidiaries outside of China are assessed based onthe tax laws in the country of their residence.
Set forth below are the tax rates outside China relevant to the subsidiaries with significant sales to third party:
Name of subsidiary
Location
2021ADAMA agriculture solutions Ltd.
Israel
23.0%
ADAMA Makhteshim Ltd.
Israel
7.5%
ADAMA Agan Ltd.
Israel
7.5%
ADAMA Brasil S/A
Brazil
34.0%
Makhteshim Agan of North America Inc.
U.S.
24.7%
ADAMA India Private Ltd
India
25.2%
ADAMA Deutschland GmbH
Germany
32.5%
Control Solutions Inc.
U.S.
24.0%
Adama Australia Pty Ltd
Australia
30.0%
ADAMA France S.A.S
France
28.0%
ADAMA Northern Europe B.V.
Netherlands
25.0%
ADAMA Italia S.R.L.
Italy
27.9%
Alligare Inc.
U.S.
27.5%
The VAT rate of the Group's subsidiaries is in the range between 2.5% to 27%.
- 110 -
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(1) Benefits from High-Tech Certificate
The Company, was jointly approved as new and high-tech enterprise, by the Hubei Provincial Departmentof Science and Technology, Department of Finance of Hubei Province, Hubei Provincial Office of the StateAdministration of Taxation and Hubei Local Taxation Bureau. The applicable income tax rate from 2020 to2022 is 15%.
Adama Anpon (Jiangsu) Ltd. (Formally know as Jiangsu Anpon Electrochemical Co. Ltd, hereinafter -“Anpon"), a subsidiary of the Company, was jointly approved as new and high-tech enterprise, by the JiangsuProvincial Department of Science and Technology, Department of Finance of Jiangsu Province, JiangsuProvincial Office of the State Administration of Taxation. The applicable income tax rate from 2018 to 2020is 15%.
(2) Benefits under the Law for the Encouragement of Capital Investments
Industrial enterprises of subsidiaries in Israel were granted “Approved Enterprise” or “Beneficiary Enterprise”status under the Israeli Law for the Encouragement of Capital Investments, 1959. Should a dividend bedistributed from the retained earning produced in which the company was considered as an “ApprovedEnterprise” or “Beneficiary Enterprise”, the company may be liable for tax at the time of distribution.
On December 29, 2010 the Knesset approved the Economic Policy Law for 2011-2012, which includes anamendment to the Law for the Encouragement of Capital Investments - 1959 (hereinafter - “theAmendment”). The Amendment is effective from January 1, 2011 and its provisions apply to preferredincome derived or accrued in 2011 and thereafter by a preferred company, per the definition of these termsin the Amendment.
The Amendment provides that only companies in Development Area A will be entitled to the grants trackand that they will be entitled to receive benefits under this track and under the tax benefits track at the sametime. The tax benefit tracks under the law constitute a preferred enterprise and a special preferred enterprise,which mainly provide a uniform and reduced tax rate for all the company’s income entitled to benefits. Taxrates on preferred income as from 2017 tax year are as follows: 7.5% for Development Area A and 16% forthe rest of the country.
The amendment further determined that no tax shall apply to dividend distributed out of preferred income toIsrael resident company shareholder.
As of the date of the report, all subsidiaries in Israel adopted the amendment and the deferred taxes werecalculated accordingly.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 111 -
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(2) Benefits under the Law for the Encouragement of Capital Investments - (cont’d)
On December 21, 2016 the Knesset plenum passed the second and third reading of the Economic EfficiencyLaw (Legislative Amendments for Achieving Budget Objectives in the Years 2017 and 2018) – 2016 inwhich the Encouragement Law was also amended (hereinafter: “the Amendment”). The Amendment iseffective as from January 1, 2017 and added new tax benefit tracks for a “preferred technological enterprise”and a “special preferred technological enterprise” which award reduced tax rates to a technological industrialenterprise for the purpose of encouraging activity relating to the development of qualifying intangible assets.
The benefits will be awarded to a “preferred company” that has a “preferred technological enterprise” or a“special preferred technological enterprise” with respect to taxable “preferred technological income” per itsdefinition in the Encouragement Law.
Preferred technological income that meets the conditions required in the law, will be subject to a reducedcorporate tax rate of 12%, and if the preferred technological enterprise is located in Development Area A toa tax rate of 7.5%. Special preferred technological enterprise will be subject to a reduced corporate tax rateof 6% regardless of the development area in which the enterprise is located.
In addition, as part of the amendment, a temporary provision was enacted, valid until June 30, 2021, whichsettles tax benefits continuation on income that is eligible to the Preferred Enterprise tax benefits as at June30, 2016. ADAMA Agricultural Solutions Ltd. (hereinafter: “Solutions”) implement and act in accordancewith the temporary provision.
On May 16, 2017 the Knesset Finance Committee approved Encouragement of Capital InvestmentRegulations (Preferred Technological Income and Capital Gain of Technological Enterprise) – 2017(hereinafter: “the Regulations”), which provides rules for applying the “preferred technological enterprise”and “special preferred technological enterprise” tax benefit tracks including the Nexus formula that providesthe mechanism for allocating the technological income eligible for the benefits.
Solutions, through a subsidiary, filed an application to the Israeli Tax Authority for settling its eligibility tothe tax benefits in accordance with the amendment to the Encouragement Law.
(3) Benefits under the Law for the Encouragement of Industry (Taxes), 1969
Under the Israeli Law for the Encouragement of Industry (Taxes) 1969, Solutions is an Industrial HoldingCompany and some of the subsidiaries in Israel are “Industrial Companies”. The main benefit under this lawis the filing of consolidated income tax returns (Solutions files a consolidated income tax return with AdamaMakhteshim and submission of a consolidated report together with Adama Agan as of 2017), amortizationof know-how over 8 years and higher rates of depreciation.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 112 -
V. Notes to the consolidated financial statements
1. Cash at Bank and On Hand
June 30 December 31
2021 2020
| Cash on hand | 3,504 | 4 | 590 | |||||||||||||||||||||||
| Deposits in banks | 4,611,704 | 3,830,481 | ||||||||||||||||||||||||
Other cash and bank18,232 28,815
4,633,440 3,863,886
| Including cash and bank placed outside China |
| 3,379,563 | 2,064,876 | |||||||||
As at June 30, 2021 restricted cash and bank balances was 18,232 thousand RMB (as at December 31, 202028,815 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Financial assets held for trading
June 30 December 31
2021 2020
| Debt instruments | - | - | |||||||||||
| Other |
2,494 1,253
2,494 1,253
3. Derivative financial assets
June 30 December 31
2021 2020
| Economic hedge | 359,401 | 1,545,481 |
Accounting hedge derivatives17,345 15,307
376,746 1,560,788
4. Bills Receivable
June 30 December 31
2021 2020
| Post | - | dated checks receivable | 87,302 | 91,975 | ||||||||||||
| Bank acceptance draft | ||||||||||||||||
20,776 10,107
108,078 102,082
All bills receivables are due within 1 year.
- 113 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable
a. By category
June 30, 2021
Book value
Provision for expectedcredit losses
Amount
Percentage (%)
Amount
Percentage (%)
Carrying
amount
Account receivables assessed
| individually for impairment | 4 | 22 | ,926 | 4 | 253,510 | 60 | 169,416 |
Account receivables assessed
| collectively for impairment |
9,211,527
85,332
9,126,195
9,634,453
338,842
9,295,611
December 31, 2020
Book value
Provision for expectedcredit losses
Amount
Percentage (%)
Amount
Percentage (%)
Carrying
amount
Account receivables assessed
| individually for impairment | 467 | , | 325 | 5 | 262,933 | 56 | 204,392 |
Account receivables assessed
| collectively for | impairment |
8,661,818
99,341
8,562,477
9,129,143
362,274
8,766,869
b. Aging analysis
June 30, 2021
| Within 1 year (inclusive) | 9,150,914 | ||||||||
| Over 1 year but within 2 years | 167,433 | ||||||||
| Over 2 years but within 3 years | 78,705 | ||||||||
| Over 3 years but | within 4 years | 74,239 | |||||||
| Over 4 years but within 5 years | 35,808 | ||||||||
Over 5 years 127,354
9,634,453
- 114 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
Main groups of account receivables assessed collectively for impairment based on geographicallocation:
Geographical location A:
Account receivables in geographical location A are grouped based on similar credit risk:
June 30, 2021
Book value
| Book value |
Provision for expected
| credit loss | Percentage (%) | ||||||||||||||||
| Credit group | A | 1,250,702 | 4,270 | 0.07 | - | 0.62 | |||||||||||
| Credit group | B | 746,847 | 6,463 | 0.87 | |||||||||||||
| Credit group | C | 226,381 | 9,876 | 4.36 | |||||||||||||
| Credit group | D | ||||||||||||||||
43,419
2.09
2,267,349
21,515
0.95
Geographical location B:
Account receivables in geographical location B are grouped based on aging analysis:
June 30, 2021
Book value
| Book value |
Provision for expected
| credit loss | Percentage (%) | ||||||||||||||||
| Accounts receivable that are not overdue | 463,544 | 4,118 | 0.9 | ||||||||||||||
| Debts overdue less than 60 days | 29,029 | 871 | 3.0 | ||||||||||||||
Debts overdue less than 180 days but
| more than 60 days | 29,812 | 2,981 | 10.0 | |||||||||||
| Debts overdue above 180 days | 19,002 | 7,601 | 40.0 | |||||||||||
| Legal Debtors | ||||||||||||||
35,648
35,648
100.0
577,035
51,219
8.9
Other geographical locations:
| June 30, 2021 |
| Book value |
Provision for expected
| credit loss | Percentage (%) | ||||||||
Other account receivables assessed
| collectively for impairment |
6,367,143
12,598
0.0-2.03%
- 115 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
c. Addition, written-back and written-off of provision for expected credit losses during the period
Addition of provision for expected credit loss during the period
Lifetime expected credit
loss (credit losses hasnot occurred)
Lifetime expected
| Lifetime expected credit | ||
| credit loss (credit losses |
has occurred) Total
| January 1, 20 | 21 | 51,89 | 5 | 310,37 | 9 | 362,274 | ||||||||||||||||||||||||
| First time consolidation | - | 246 | 246 | |||||||||||||||||||||||||||
| Addition during the | period, net | (12,761) | 18,294 | 5,533 | ||||||||||||||||||||||||||
| W | rite back during the period | - | (15,470) | (15,470) | ||||||||||||||||||||||||||
| Write | - | off during the period | - | (14,343) | (14,343) | |||||||||||||||||||||||||
| Exchange rate effect | ||||||||||||||||||||||||||||||
(903)
1,505
Balance as of
| Balance as of | June | 3 | 0 | , 20 | 21 |
38,231
300,611
338,842
d. Five largest accounts receivable at June 30, 2021:
Name Closing balance
Proportion of Accountsreceivable (%)
Allowance of expectedcredit losses (credit losseshas occurred)
Customer
| Customer | 1 | 151,580 | 2 | - | ||||||||
| Customer | 2 | 140,391 | 2 | - | ||||||||
| Customer | 3 | 126,838 | 1 | - | ||||||||
| Customer | 4 | 108,497 | 1 | - |
Customer 595,325
13,095
Total622,631
13,095
e. Derecognition of accounts receivable due to transfer of financial assets
Certain subsidiaries of the group entered into a securitization transaction with Rabobank International forsale of trade receivables (hereinafter – “the Securitization Program” and/or “the Securitization Transaction”).
Pursuant to the Securitization Program, the companies will sell their trade receivables debts, in variousdifferent currencies, to a foreign company that was set up for this purpose and that is not owned by theAdama Ltd. (hereinafter – “the Acquiring Company”). Acquisition of the trade receivables by the AcquiringCompany is financed by Cooperative Rabobank U.A..
The trade receivables included as part of the Securitization Transaction are trade receivables that meet thecriteria provided in the agreement.
Every year the credit facility is re approved in accordance with the Securitization Program. As at the reportdate, the Securitization agreement was approved up to October 31, 2021.
- 116 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The maximum scope of the securitization is adjusted for the seasonal changes in the scope of the Company’sactivities, as follows: during the months March through June the maximum scope of the securitization is$350 million (as of June 30, 2021 – 2,261 million RMB), during the months July through September themaximum scope of the securitization is $300 million (as of June 30, 2021 – 1,938 million RMB) and duringthe months October through February the maximum scope of the securitization is $250 million (as of June30, 2021 - 1,615 million RMB). In addition the company has uncommitted facility of $50 million (as of June30, 2021 - 326 million RMB) which will be applicable each period. The proceeds received from thosecustomers whose debts were sold are used for acquisition of new trade receivables.
The price at which the trade receivables debts are sold is the amount of the debt sold less a discount calculatedbased on, among other things, the expected length of the period between the date of sale of the tradereceivable and its anticipated repayment date. In the month following acquisition of the debt, the AcquiringCompany pays in cash most of the debt while the remainder is recorded as a subordinated note and ascontinuing involvement that is paid after collection of the debt sold. If the customer does not pay its debt onthe anticipated repayment date, the Company bears interest up to the earlier of the date on which the debt isactually repaid or the date on which debt collection is transferred to the insurance company (the actual costsare not significant and are not expected to be significant).
The Acquiring Company bears 95% of the credit risk in respect of the customers whose debts were sold andwill not have a right of recourse to the Company in respect of the amounts paid in cash, except regardingdebts with respect to which a commercial dispute arises between the companies and their customers, that is,a dispute the source of which is a claim of non-fulfillment of an obligation of the seller in the supplyagreement covering the product, such as: a failure to supply the correct product, a defect in the product,delinquency in the supply date, and the like.
The Acquiring Company appointed a policy manager who will manage for it the credit risk involved withthe trade receivables sold, including an undertaking with an insurance company.
Pursuant to the Receivables Servicing Agreement, the Group subsidiaries handle collection of the tradereceivables as part of the Securitization Transaction for the benefit of the Acquiring Company.
As part of the agreement, Solutions is committed to comply with certain financial covenants, mainly the ratioof the liabilities to equity and profit ratios. As of June 30, 2021, Solutions was in compliance with thefinancial covenants.
The accounting treatment of sale of the trade receivables included as part of the Securitization Program is:
The Company is not controlling the Acquiring Company, therefore the Acquiring Company is notconsolidated in the financial statements.
The Company continues to recognize the trade receivables included in the Securitization Program based onthe extent of its continuing involvement therein.
In respect of the part of the trade receivables included in the securitization Program with respect to whichcash proceeds were not yet received, however regarding which the Company has transferred the credit risk,a subordinated note is recorded.
The continuing involvement and subordinated note recorded in the balance sheet as part of the “otherreceivables” line item.
- 117 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The loss from sale of the trade receivables is recorded at the time of sale in the statement of income in the“financing expenses”.
The Company’s subsidiary in Brazil (hereinafter - “the subsidiary”) entered into a securitization agreementwith Rabobank Brazil for sale of trade receivables. Under the agreement, the subsidiary will sell its tradereceivables to a securitization structure (hereinafter - “the entity”) that was formed for this purpose wherethe subsidiary has subordinate rights of 5% of the entity's capital.
As at the report date, the subsidiary agreement was approved up to September 1, 2022. The maximumsecuritization scope as of June 30, 2021 is BRL 364 million (470 million RMB).
On the date of the sale of the trade receivables, the entity pays the full amount which is the debt amount soldnet of discount calculated, among others, over the expected length of the period between the date of sale ofthe customer receivable and its anticipated repayment date.
The entity bears 95% of the credit risk in respect of the customers whose debts were sold such that the entityhas the right of recourse of 5% of the unpaid amount. The subsidiary should make a pledged deposit equalto the amount the entity’s right of recourse.
The subsidiary handles the collection of receivables included in the securitization for the entity.
The subsidiary does not control the entity and therefore the entity is not consolidated in the group's financialstatements.
The subsidiary continues to recognize the trade receivables sold to the entity based on the extent of itscontinuing involvement therein (5% right of recourse) and also recognizes an associated liability in the sameamount.
The loss from the sale of the trade receivables is recorded at the time of sale to profit and loss under financingexpenses.
June 30
December 31
2021
2020
| Accounts receivables derecognized | 2,899,468 | 2, | 850,745 | |||||||||||||
| Continuing involvement | 127,981 | 125,578 | ||||||||||||||
| Subordinated note in respect of trade receivables | 512,938 | 762,598 | ||||||||||||||
| Liability in respect of trade receivables | 303,121 | 22,002 | ||||||||||||||
Six months ended June 30
2021
2020
| Loss in respect of sale of trade receivables | 15,403 | 36,790 | ||||||
- 118 -
V. Notes to the consolidated financial statements – (cont'd)
6. Receivables financing
June 30 December 31
2021 2020
| Bank acceptance draft |
99,066 109,483
99,066 109,483
As at June 30, 2021, bank acceptance endorsed but not yet due amounts to 531,091 thousands RMB.
7. Prepayments
(1) The aging analysis of prepayments is as follows:
June 30 December 31
2021 2020
Amount
Percentage (%)
Amount
Percentage (%)
| Within 1 year (inclusive) | 354,921 | 98 | 400,549 | 99 | |||||||||||||||||||||||
| Over 1 year but within 2 years (inclusive) | 5,595 | 1 | 3,037 | 1 | |||||||||||||||||||||||
| Over 2 years but within 3 years (inclusive) | 687 | - | 640 | - | |||||||||||||||||||||||
2,161 1
| Over 3 years |
1,782
-
363,364
406,008
(2) Total of five largest prepayments by debtor at the end of the period:
Amount
Percentage of prepayments (%)
| June | 3 | 0 | , 20 | 21 |
115,867
- 119 -
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables
(1) Other receivables by nature
June 30
| December 31 |
2021
2020
| Dividends receivable | 903 | - |
Others1,044,782
1,310,029
1,045,685
1,310,029
a. Others breakdown by categories
June 30
| December 31 |
2021
2020
| Trade receivables as part of securitization transactions | ||||||||||||||||||
| not yet eliminated | 127,981 | 125,578 | ||||||||||||||||
| Subordinated note in respect of trade receivables | 512,938 | 762,598 | ||||||||||||||||
| Financial institutions | 175,747 | 231,183 | ||||||||||||||||
| Receivables in respect of disposal of fixed assets | 23,949 | 23,949 | ||||||||||||||||
| Other | ||||||||||||||||||
220,188
182,867
| Sub total | 1,060,803 | 1,326,175 | |||||||||||||
| Provision for expected credit losses | - | other receivables | (16,021) | (16,146) | |||||||||||
1,044,782
1,310,029
b. Other receivables by aging
June 30
2021
| Within 1 year (inclusive) | 1,001,463 | |||||||
| Over 1 year but within 2 years | 17,151 | |||||||
| Over 2 years but within 3 years | 13,730 | |||||||
| Over 3 years but within 4 years | 2,218 | |||||||
| Over 4 years but within 5 years | 2,843 | |||||||
Over 5 years23,398
1,060,803
- 120 -
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables - (cont'd)
(2) Additions, recovery or reversal and written-off of provision for expected credit losses during the
period:
| Six months ended | ||||||||
| June 30, 20 | 21 | |||||||
| Balance as of January 1 20 | 21 | , | 16,146 | ||||||||||||||
| Addition during the period | - | ||||||||||||||||
| Written back during the period | (11 | 4 | ) | ||||||||||||||
| Write | - | off during the period | - | ||||||||||||||
| Exchange rate effect | |||||||||||||||||
(11)
Balance as of
| Balance as of | June | 3 | 0 | , 20 | 21 | 16,021 |
(3) Five largest other receivables at June 30, 2021:
Name Closing balance
Proportion of otherreceivables (%)
Allowance ofexpected credit
losses
| Party 1 | 512,938 | 49 | - | |||||||||
| Party 2 | 175,747 | 17 | - | |||||||||
| Party 3 | 13,321 | 1 | - | |||||||||
| Party 4 | 12,921 | 1 | - | |||||||||
Party 510,627
-
Total725,554
-
9. Inventories
(1) Inventories by category:
| June 30, | 2021 | ||||
Book value
impairment Carrying amount
Provision for
| Raw materials | 3,780,831 | 31,450 | 3,749,38 | 1 | |||||||||||||||||||
| Work in progress | 632,631 | 1,236 | 631,395 | ||||||||||||||||||||
| Finished goods | 6,692,17 | 6 | 157,11 | 8 | 6,535,05 | 8 | |||||||||||||||||
| Others | |||||||||||||||||||||||
372,730
7,926
364,804
| 11,478,368 | 197,73 | 0 | 11,280,638 |
December 31, 2020
Book value
impairment Carrying amount
| Provision for | ||||||||||||||||||||||||||||
| Raw materials | 3,060,965 | 42,945 | 3,018,020 | |||||||||||||||||||||||||
| Work in progress | 704,391 | - | 704,391 | |||||||||||||||||||||||||
| Finished goods | 6,488,658 | 153,577 | 6,335,081 | |||||||||||||||||||||||||
| Others | ||||||||||||||||||||||||||||
288,218
7,437
280,781
| 10,542,232 | 203,959 | 10,338,273 |
- 121 -
V. Notes to the consolidated financial statements – (cont'd)
9. Inventories - (cont'd)
(2) Provision for impairment of inventories:
For the six months ended June 30, 2021
January 1,
2021
| January 1, | First time |
consolidation
Provision
write-off
| Reversal or | |
Other
June 30, 2021
| Raw material | 42,945 | 956 | 7,356 | ( | 19,325 | ) | ( | 482 | ) | 31,450 | ||||||||||||||||||||||||||||||||||||
| Work in progress | - | 1,134 | 50 | ( | 55 | ) | 107 | 1,236 | ||||||||||||||||||||||||||||||||||||||
| Finished goods | 153,577 | 3,355 | 42,380 | (40,449) | (1,745) | 157,118 | ||||||||||||||||||||||||||||||||||||||||
| Others | 7,437 | - | 879 | 265 | 125 | ) | 7,926 | |||||||||||||||||||||||||||||||||||||||
| 203,959 | 5,445 | 50,665 | (60,094) | (2,245) | 197,730 | |||||||||||||||||||||||||||||||||||||||||
10. Other Current Assets
June 30
December 31
2021
2020
| Deductible VAT | 564,790 | 499,136 | ||||||||||||||
| Current tax assets | 262,515 | 232,051 | ||||||||||||||
| Short term investments | 80,267 | - | ||||||||||||||
| Others |
38,454
| 33,263 |
940,835
769,641
11. Long-Term Receivables
June 30
December 31
2021
2020
| Long term account receivables from sale of goods | 98,400 | 95,329 | ||||||||
98,400 95,329
- 122 -
V. Notes to the consolidated financial statements – (cont'd)
12. Long-Term Equity Investments
(1) Long-term equity investments by category:
June 30
December 31
2021
2020
| Investments in joint ventures | 15,847 | 14,081 | |||||
| 15,847 |
14,081
(2) Movements of long-term equity investments for the period are as follows:
13. Other equity investments
June 30
December 31
2021
2020
| Investment | A |
| 85,495 | 85,495 | |||||||
| Investment | B |
| 64,388 | 65,034 | |||||||||||
| Investment | C | 1, | 654 | 1,671 | ||||||||
151,537 152,200
Other equity investments are non-core businesses that are intended to be held in the foreseeable future. For thesix months period ended at June 30, 2021 the company did not recognize dividend income from other equityinvestments.
January1, 2021
Investmentincome
OtherComprehensiveincome
Declareddistribution ofcash dividend
Capitalinvestment
Change inconsolidationscope Impairment
Balanceat the endof theperiod
Jointventures
| Investee | A | 2,884 | 566 | (26) | - | - | - | - | 3,424 | ||||||||||||||||||||||||
| Investee | B | 933 | - | (84) | - | - | (849) | - | - | ||||||||||||||||||||||||
Investee C 10,264
2,678
(868)
-
-
-
12,423
Sub-total 14,081
3,244
(868)
-
(849)
-
15,847
- 123 -
V. Notes to the consolidated financial statements – (cont'd)
14. Fixed assets
Land &
Buildings
Machinery &equipment
Motor vehicles
Office & otherequipment
Total
| Cost | |||||||||||||||||||||||||||||||||||||||||
| Balance as at January 1, 202 | 1 | 3,299,569 | 13,982,376 | 122,215 | 371,573 | 17,775,733 | |||||||||||||||||||||||||||||||||||
| First time consolida | ti | on | 327,898 | 909,326 | 1,830 | 7,490 | 1,246,544 | ||||||||||||||||||||||||||||||||||
| Purchases | 22,474 | 132,069 | 7,031 | 10,848 | 172,422 | ||||||||||||||||||||||||||||||||||||
| Transfer from construction in progress | 12,714 | 180,102 | 1,210 | 1,229 | 195,255 | ||||||||||||||||||||||||||||||||||||
| Disposals | (13,613) | (28,950) | (5,745) | (14,493) | (62,801) | ||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | |||||||||||||||||||||||||||||||||||||||||
(28,689)
(113,265)
(2,449)
(5,170)
(149,573)
Balance as at June 30, 202
| Balance as at June 30, 202 | 1 |
3,620,353
15,061,658
124,092
371,477
19,177,580
| Accumulated depreciation | ||||||||||||||||||||||||||||||||||||||
| Balance as at January 1, 202 | 1 | (1,673,044) | (8,647,241) | (62,224) | (293,523) | (10,676,032) | ||||||||||||||||||||||||||||||||
| First time consolida | ti | on | (11,075) | (49,997) | (256) | (1,406) | (62,734) | |||||||||||||||||||||||||||||||
| Charge for the period | (46,557) | (292,582) | (8,245) | (17,877) | (365,261) | |||||||||||||||||||||||||||||||||
| Disposals | 13,344 | 27,498 | 4,432 | 15,236 | 60,510 | |||||||||||||||||||||||||||||||||
| Currency | translation adjustment | |||||||||||||||||||||||||||||||||||||
11,311
72,720
1,293
4,514
89,838
Balance as at June 30, 2021
| Balance as at June 30, 2021 |
(1,706,021)
(8,889,602)
(65,000)
(293,056)
(10,953,679)
| Provision for impairment | ||||||||||||||||||||||||||||||||||||||
| Balance as at January 1, 202 | 1 | (159,691) | (363,008) | (651) | (235) | (523,585) | ||||||||||||||||||||||||||||||||
| First time consolida | ti | on | - | (5,915) | (8) | - | (5,923) | |||||||||||||||||||||||||||||||
| Charge for the period | - | - | ||||||||||||||||||||||||||||||||||||
| Disposals | 245 | 7 | 252 | |||||||||||||||||||||||||||||||||||
| Currency translation adjustment | ||||||||||||||||||||||||||||||||||||||
(1)
| Balance as at June 30, 2021 |
(159,591)
(367,953)
(653)
(233)
(528,430)
| Carrying amounts | ||||||||||||
| As at | June | 3 | 0 | , 202 | 1 |
1,754,741
5,804,103
58,439
78,188
7,695,471
As at
| As at | January 1, 202 | 1 |
1,466,834
4,972,127
59,340
77,815
6,576,116
The lands reported as fixed assets are owned by the group subsidiaries and are located outside of China.
- 124 -
V. Notes to the consolidated financial statements - (cont'd)
15. Construction in Progress
(1) Construction in progress
June 30 December 312021 2020
Book value
Provision forimpairment Carrying amount
Book value
Provision forimpairment Carrying amount
1,838,063
(25,740)
1,812,323
1,431,068
(25,740)
1,405,328
(2) Details and Movements of major construction projects in progress during year ended June 30,2021
Budget
January 1,
2021 Additions
Currencytranslationdifferences
Transferto fixedassets
June 30,
2021
Actualcost tobudget(%)
Projectprogress(%) Source of funds
| Project A | 1,509,420 | 632,656 | 87,045 | - | - | 719,701 | 55% | 55% | Bank loan | ||||||||||||||||||||||||||||||||||||||||
| Project B | 722,302 | 25,441 | 13,820 | 39,261 | 5% | 5% | Bank loan | ||||||||||||||||||||||||||||||||||||||||||
| Project | C | 333,373 | 15,803 | 22,955 | (191) | 38,567 | 12% | 12% | Internal finance | ||||||||||||||||||||||||||||||||||||||||
| Project | D | 279,367 | 56,460 | 84,942 | (688) | 140,714 | 50% | 50% | Internal finance | ||||||||||||||||||||||||||||||||||||||||
| Project | E * | 172,055 | 51,402 | 10,855 | (14,920) | 47, | 337 | 50% | 50% | Internal finance | |||||||||||||||||||||||||||||||||||||||
| Project | F | 138,000 | 39,786 | 33,627 | 73,413 | 53% | 53% | Internal finance | |||||||||||||||||||||||||||||||||||||||||
| Project | G | 140,649 | 53,922 | 71,956 | (455) | (125,423) | - | 100% | 100% | Internal finance | |||||||||||||||||||||||||||||||||||||||
| Project | H | 135,662 | 59,699 | 17,611 | (620) | 76,690 | 57% | 57% | Internal finance | ||||||||||||||||||||||||||||||||||||||||
| Project | 70,101 | 32,300 | 33,177 | 65,477 | 93% | 93% | Internal finance | ||||||||||||||||||||||||||||||||||||||||||
| Project | J | 70,035 | 54,618 | 6,171 | 60,789 | 87% | 87% | Internal finance | |||||||||||||||||||||||||||||||||||||||||
* As of June 30, 2021 Project E include impairment of RMB 26 million.
- 125 -
V. Notes to the consolidated financial statements - (cont'd)
16. Right-of-use assets
Land &
Buildings
Machinery &equipment
Motor vehicles
Office & otherequipment
Total
Cost
| Balance as at January 1, 202 | 1 | 468,521 | 45,329 | 223,914 | 3,445 | 741,20 | 9 | |||||||||||||||||||||
| Additions | 62,899 | 757 | 53,038 | 1,837 | 118,531 | |||||||||||||||||||||||
| Disposals | (12,105) | (408) | (30,110) | (970) | (43,593) | |||||||||||||||||||||||
| Currency translation adjustment | ||||||||||||||||||||||||||||
(10,077)
(451)
(2,747)
(67)
(13,342)
Balance as at June 30, 202
| Balance as at June 30, 202 | 1 |
509,238
45,227
244,095
4,245
802,805
| Accumulated depreciation | ||||||||||||||||||||||||||||||||||||||
| Balance as at January 1, 202 | 1 | (145,22 | 6 | (12,553) | (98,233) | (1,579) | (257,59 | 1 | ||||||||||||||||||||||||||||||
| Charge for the period | (40,323) | (705) | (38,249) | (408) | (79,685) | |||||||||||||||||||||||||||||||||
| Disposals | 10,630 | 401 | 25,167 | 660 | 36,858 | |||||||||||||||||||||||||||||||||
| Currency translation adjustment | ||||||||||||||||||||||||||||||||||||||
2,081
1,268
3,508
Balance as at June 30, 2021
| Balance as at June 30, 2021 |
(172,838)
(12,720)
(110,047)
(1,305)
(296,910)
| Provision for impairment | |||||||||||||||
| Balance as at | January 1, 202 | 1 | |||||||||||||
-
-
-
-
-
Balance as at June 30, 2021
| Balance as at June 30, 2021 |
-
-
-
-
-
| Carrying amounts | ||||||||||||
| As at | June | 3 | 0 | , 202 | 1 |
336,400
32,507
134,048
2,940
505,895
As at January 1, 202
| As at January 1, 202 | 1 |
323,295
32,776
125,681
1,866
483,618
ADAMA LTD.(Expressed in RMB '000)Notes to the Financial Statements
- 126 -
V. Notes to the consolidated financial statements - (cont'd)
17. Intangible Assets
(1) Include land parcel in Israel that has not yet been registered in the name of the Group subsidiaries at the Land Registry Office, mostly due to registration procedures or technical problems.
(2) Mainly non-compete.
(3) Product registration includes provisional purchase price allocation related to Adama Huifeng (shanghai) Agricultural Technology Co. Ltd acquired in December 31, 2020.
Productregistration
Intangible assetson Purchase of
Products Software
Marketingrights,tradename andtrademarks
Customersrelations Land use rights
(1)
Others(2)Total
Costs
| Costs |
| Balance as at | January 1, 20 | 21 | 10,693,031 | 3,918, | 407 | 856,741 | 744,060 | 451,008 | 392,876 | 320,747 | 17, | 376,870 | |||||||||||||||||||
| First time consolidation | |||||||||||||||||||||||||||||||
(3)
| 63 | ,642 | - | 2 | ,833 | - | - | 65,397 | 2,809 | 134,681 | |||||||||||||||||||||||||||||||||||||||||||||
| Purchases | 218,551 | 757 | 71,146 | 757 | 7 | ,647 | 298,858 | |||||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | (107,518) | (38,924) | (9,747) | (7,582) | (4,822) | (361) | (3,226) | (172,180) | ||||||||||||||||||||||||||||||||||||||||||||||
| Transfer from construction in progress | 45,418 | 45,418 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disposal | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(212,688)
-
(1,048)
(841)
-
-
-
(214,577)
Balance as at June 30, 2021 10,655,018
3,880,240
965,343
736,394
446,186
457,912
327,977
17,469,070
| Accumulated amortization | |||||||||||||||||||||||||||||||||||||||
| Balance as at January 1, 2021 | ( | 8,106,183 | ( | 2,456,612 | ( | 538,255 | ) | ( | 443,625 | ) | 220,302 | 71,468 | 183,235 | 12,019,680 | ) | ||||||||||||||||||||||||
| First time consolidation | |||||||||||||||||||||||||||||||||||||||
(3)
| (1,879) | - | (141) | - | - | (886) | (609) | (3,515) | ||||||||||||||||||||||||||||||||||||||||
| Charge for the period | (271,853) | (143,888) | (36,558) | (15,075) | (16,026) | (4,455) | (14,890) | (502,745) | |||||||||||||||||||||||||||||||||||||||
| Currency | translation adjustment | 83,275 | 24,613 | 5,825 | 4 | ,542 | 2,555 | (3) | 2,136 | 122,943 | |||||||||||||||||||||||||||||||||||||
Disposal212,688
-
-
-
-
213,788
Balance as at June 30, 2021 (8,083,952)
(2,575,887)
(568,281)
(453,906)
(233,773)
(76,812)
(196,598)
(12,189,209)
| Provision for impairment | ||||||||||||||||||||||||||||||||||
| Balance as at January 1, 2021 | 81,679 | 48,806 | - | - | 250 | ( | 130,735 | ) | ||||||||||||||||||||||||||
| Charge for the period | ||||||||||||||||||||||||||||||||||
| Disposal | ||||||||||||||||||||||||||||||||||
Currency translation adjustment
-
-
-
-
-
1,295
Balance as at June 30, 2021 (80,868)
(48,322)
-
-
-
-
(250)
(129,440)
| Carrying amount | ||||||||||||||||||
As at June 30, 20212,490,198
1,256,031
397,062
282,488
212,413
381,100
131,129
5,150,421
As at January 1, 2021 2,505,169
1,412,989
318,486
300,435
230,706
321,408
137,262
5,226,455
- 127 -
V. Notes to the consolidated financial statements - (cont'd)
18. Goodwill
Changes in goodwill
The Group allocates goodwill to two cash generating units ("CGU "), Crop Protection (Agro) and a non-coreactivity included in the Intermediates and ingredients segment. At the end of the year, or more frequently whetherindicators for impairment exists, the Group estimates the recoverable amount of each CGU for which goodwillhas been allocated to using th DCF model.
The carrying amount of goodwill is mainly allocated to Agro units, which includes RMB 261 million from theacquisitions of Adama Huifeng (shanghai) Agricultural Technology Co., Ltd and Adama Huifeng (Jiangsu) Co.Ltd.. The goodwill allocated to non-core CGU is not significant.
As of December 31, 2020 the fair value of the cash generating units to which goodwill has been allocated toexceeds its carrying amount.
January 1,2021 Additions
Currencytranslationadjustment
Balance atJune 30, 2021
| Book value | |||||||||
| 4,584,226 | 59,305 | (43,273) | 4, | 600 | , | 258 |
| Impairment provision |
-
-
-
-
| Carrying amount |
4,584,226
59,305
(43,273)
4,600,258
19. Deferred Tax Assets and Deferred Tax Liabilities
(1) Deferred tax assets without taking into consideration of the offsetting of balances within the same
tax jurisdiction
June 30 December 31
2021 2020
Deductibletemporary
differences
assets
| Deferred tax | |
Deductible
differences
| temporary | |
assets
| Deferred tax | |||||||||||
Deferred tax assets
Deferred tax assets in respect of carry
| forward losses | 978,130 | 173,245 | 785,259 | 142,312 |
Deferred tax assets in respect of
| inventories | 1,688,325 | 472,415 | 1,555,528 | 422,995 |
Deferred tax assets in respect of
| employee benefits | 900,207 | 130,032 | 910,081 | 128,676 |
| Other deferred tax asset |
1,586,051
391,185
1,569,188
366,652
5,152,713
1,166,877
4,820,056
1,060,635
- 128 -
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont’d)
(2) Deferred tax liabilities without taking into consideration of the offsetting of balances within thesame tax jurisdiction
June 30 December 31
2021 2020
Taxable
temporary
differences
| temporary | |
Deferred tax
liabilities
Taxable
temporary
differences
| temporary | |
Deferred taxliabilities
Deferred tax liabilities
| Deferred tax liabilities |
Deferred tax liabilities in respect of
| fixed assets and intangible assets |
3,321,928
589,983
3,512,629
618,904
3,321,928
589,983
3,512,629
618,904
(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting
June 30 December 31
2021 2020
The offsetamount ofdeferred taxassets and
liabilities
Deferred taxassets orliabilitiesafter offset
The offset
| amount of | |
| deferred tax | |
| assets and | |
liabilities
Deferred tax
| Deferred tax | ||
| assets or | ||
| liabilities after | ||
offset
Presented as:
| Deferred tax assets |
227,010
939,867
286,962
773,673
| Deferred tax liabilities |
227,010
362,973
286,962
331,942
(4) Details of unrecognized deferred tax assets
June 30
December 31
2021
2020
| Deductible temporary differences | 450,995 | 523,951 | ||||||||||
| Deductible losses | ||||||||||||
| carry forward |
211,553
103,402
662,548
627,353
(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets
June 30
December 31
2021
2020
| 2021 | 2,364 | 2,388 | ||||||||||||||
| 2022 | 1,612 | 1,626 | ||||||||||||||
| 2023 | 2,089 | 2,105 | ||||||||||||||
| 2024 | 1,764 | 1,785 | ||||||||||||||
| 2025 | 5,827 | 5,885 | ||||||||||||||
| After 202 | 5 | |||||||||||||||
197,897
89,613
211,553
103,402
- 129 -
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont'd)
(6) Unrecognized deferred tax liabilities
When calculating the deferred taxes, taxes that would have applied in the event of realizing investmentsin subsidiaries were not taken into account since it is the Company’s intention to hold these investmentsand not realize them.
20. Other Non-Current Assets
June 30
December 31
| 20 | 21 | 20 | 20 | ||||||||||||||||||||||||||||||
| Judicial | deposits | 99,854 | 93,182 | ||||||||||||||||||||||||||||||
| Asset | s | related to securitization | 28,566 | 31 | , | 979 | |||||||||||||||||||||||||||
| Advances in respect of non | - | current assets | 122,431 | 40,857 | |||||||||||||||||||||||||||||
| Call option in respect of business combination | - | 18,733 | |||||||||||||||||||||||||||||||
| Others | 79,993 | 72 | 581 | ||||||||||||||||||||||||||||||
330,844
21. Short-Term Loans
Short-term loans by category:
257,332
June 30
December 31
2021
2020
| Unsecured loans | 1,209,421 | |||||||
1,205,498
| 1,209,421 |
1,205,498
22. Derivative financial liabilities
June 30
December 31
2021
2020
| Economic hedge | 675,59 | 7 | 1,197, | 274 | ||||||||||||||
| Accounting hedge derivatives | 124, | 118 | 266, | 340 | ||||||||||||||
799,715
1,463,614
- 130 -
V. Notes to the consolidated financial statements - (cont'd)
23. Bills Payables
June 30
December 31
2021
2020
| Post | - | dated checks payables | 179,610 | 264,402 | ||||||||||
| Note payables draft | ||||||||||||||
| 18,818 | 105,389 |
| 198,428 |
As at June 30, 2021, none of the bills payable are overdue.
24. Accounts payable
369,791
June 30
December 31
2021
2020
| Within 1 year (including 1 year) | 5,143,044 | 4,523,845 | ||||||||||||
| 1 | - | 2 years (including 2 years) | 14,492 | 7,454 | ||||||||||
| 2 | - | 3 years (including 3 years) | 3,659 | 4,349 | ||||||||||
Over 3 years23,285
21,358
5,184,480
4,557,006
There are no significant accounts payables aging over one year.
25. Contract liabilities
June 30
December 31
2021
2020
| Discount for customers | 1,015,799 | 633,882 | ||||||||
Advances from customers245,143
1,260,942
| 458,371 | |
| 1,092,253 | |
26. Employee Benefits Payable
June 30
December 31
2021
2020
| Short | - | term employee benefits | ||||||
| 488,340 | 660,144 | |||||||||||||||
| Post | - | employment benefits* | 63,467 | 122,216 | ||||||||||||
| Share based payment (See note XIII) | 116 | 348 | 85,900 | |||||||||||||
| Other benefits within one year | ||||||||||||||||
219,150
306,506
| 887,305 | 1,174,766 | |||||||||
| Current maturities | 28,931 | |||||||||
34,068
916,236
1,208,834
* For further information regarding the termination benefits to employees during the periods see note XI.2 –
Commitments and contingent liabilities.
- 131 -
V. Notes to the consolidated financial statements - (cont'd)
27. Taxes Payable
June 30
December 31
2021
2020
| Corporate income tax | 206,365 | 168,033 | |||||||||||
| VAT | 195,635 | 166,073 | |||||||||||
| Others |
| 24,631 | 24,882 |
426,631
358,988
28. Other Payables
358,988
June 30
December 31
2021
2020
Dividends payables38,027
3,780
Other payables1,524,596
1,071,941
1,562,623
1,075,721
(1) Other payables
June 30
December 31
2021
2020
| Accrued expenses | 613,152 | 541,250 | ||||||||||||||||||||
| Payables in respect of intangible assets | 109,447 | 135,176 | ||||||||||||||||||||
| Financial institutions | 13,870 | 111,863 | ||||||||||||||||||||
| Liability in respect of | securitization transactions | 303,121 | 22,002 | |||||||||||||||||||
| Other | s | |||||||||||||||||||||
485,006 261,650
1,524,596
1,071,941
As at June 30, 2021, the Group did not have any significant other payables overdue.
29. Non-Current Liabilities Due Within One Year
Non-current liabilities due within one year by category are as follows:
June 30
December 31
2021
2020
| Long | - | term loans due within one year | 1,064,97 | 4 | 587, | 864 | |||||||||||||
| Lease liabilities due within one year | 146,74 | 7 | 146,17 | 8 | |||||||||||||||
| Debentures payable due within one | year |
533,049
538,539
1,744,770
1,272,581
| 1,744,770 |
- 132 -
V. Notes to the consolidated financial statements - (cont'd)
30. Other Current Liabilities
June 30
December 31
2021
2020
| Put options to holders of non | - | controlling interests | 85,700 | 87,388 | |||||||||||||||
| Provision in respect of returns | 195,373 | 194,775 | |||||||||||||||||
| Provision in respect of claims | 65,912 | 33,036 | |||||||||||||||||
| Others | |||||||||||||||||||
| 347,366 |
31. Long-Term Loans
Long-term loans by category
315,597
June 30 December 31
2021
Interest range
2020
Interest range
Long term loans
| Guaranteed loans | 373,200 | 3.9 | % | 4. | 1 | % | - | - | |||||||||||||||||
| Unsecured loans | |||||||||||||||||||||||||
3,963,318
1.4%-4.1%
2,947,492
| 1. | 4 | % | - | 4 | 7 | % |
| Total Long term loans | 4,336,518 |
| 2,947,492 |
Less: Long term loans from banks due within 1
| year | (1,064,974) |
(559,864)
| Long term loans, net | 3,271,544 |
2,387,628
For the maturity analysis, see note VIII.C - Liquidity risk.
32. Debentures Payable
June 30
December 31
2021
2020
| Debentures Series B | 8,528,773 | 8,616,65 | 2 | ||||||||
| Current maturities |
(533,049)
(538,539)
7,995,724
8,078,113
June 30
2021
| First year (current maturities) | 533,049 | ||||||||
| Second year | 533,049 | ||||||||
| Third year | 533,049 | ||||||||
| Fourth year | 533,049 | ||||||||
Fifth year and thereafter6,396,577
8,528,773
- 133 -
V. Notes to the consolidated financial statements - (cont'd)
32. Debentures Payable - (cont'd)
Movements of debentures payable:
For the six months ended June 30, 2021:
Maturity
period
Face value
in RMB
Face value
NIS
Issuance
date
Maturity
period
Issuanceamount
Balance atJanuary 1,2021
Issuanceduringtheperiod
Amortizationof discountsor premium
CPI andexchangerate effect
Repayment
during the
period
Currencytranslationadjustment
Balance atJune 30,2021
Debentures
| Series B | 2,673,640 | 1,650,000 | 4.12.2006 |
November
| 2020 | - | 2036 | 3,043,742 | 3,611,389 | - | 104 | (6) | - | (35,82 | 8 | ) | 3,575,659 |
Debentures
| Series B | 843,846 | 513,527 | 16.1.2012 |
November
| 2020 | - | 2036 | 842,579 | 1,074,338 | - | 5,318 | - | - | (10,677) | 1,068,979 |
Debentures
| Series B | 995,516 | 600,000 | 7.1.2013 |
November
| 2020 | - | 2036 | 1,120,339 | 1,335,327 | - | 2,329 | 19 | - | (13,264) | 1,324,411 |
Debentures
| Series B | 832,778 | 533,330 | 1.2.2015 |
November
| 2020 | - | 2036 | 1,047,439 | 1,255,064 | - | (1,456) | 19 | - | (12,467) | 1,241,160 |
Debentures
| Series B | 418,172 | 266,665 | 1 | - | 6.2015 |
November
| 2020 | - | 2036 | 556,941 | 687,307 | - | (3,979) | 6 | - | (6,813) | 676,521 |
Debentures
| Series B | 497,989 | 246,499 | 5. | 5 | . | 2020 |
November
| 2020 | - | 2036 | 692,896 |
653,227
-
(4,710)
-
(6,480)
642,043
8,616,652
-
(2,394)
-
(85,529)
8,528,773
Series B debentures amounts to NIS 3,810 million par value (3,510 million par value, net of self-purchased) linked to the CPI, bearing basic annual interest of 5.15%. Theprincipal is repaid in 17 equal payments in the years 2020 to 2036.On November 30, 2020 the Company made the first principal repayment of its Series B debentures, for a total of NIS 219.4 million par value (approximately RMB 525million).
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 134 -
V. Notes to the consolidated financial statements - (cont'd)
33. Lease liabilities
June 30
December 31
2021
Interest range
2020
Interest range
| Lease liabilities | |||
541,278
| 1. | 1 | % | - | 6. | 3 | % |
525,368
| 1. | 3 | % | - | 6. | 1 | % |
| Less: Lease liabilities due within one year |
(146,747)
(146,178)
| Long term lease liabilities, net |
| 394,531 |
379,190
34. Long-Term Employee Benefits Payable
Post-employment benefit plans – defined benefit plan and early retirement
June 30
December 31
2021
2020
| Total present value of obligation | 672,093 | 594,165 | ||||||
Less: fair value of plan's assets (88,161)
)92,634 (
| Net liability related to Post | - | employment benefits | 583,932 | 501,531 | ||||||||||
| Termination benefits | 83,325 | 99,466 | ||||||||||||
Total recognized liability for defined benefit plan, net (1)
| 667,257 | 600,997 |
| Share based payment (See note XIII) | 33,589 | 21,088 |
Other long-term employee benefits76,351
57,738
| Total long | - | term employee benefits, net | 777,197 | 679,823 | ||||||
Including: Long-term employee benefits payable due within one year28,931
34,068
748,266
645,755
(1) Movement in the net liability and assets in respect of defined benefit plans, early retirement andtheir components
Defined benefit
obligation and earlyretirement
Fair value of plan'sassets Total 2021
2020
2021
2020
2021
2020
| Balance as at January 1 | , 2020 | 693,631 | 721,931 | 92,634 | 104,448 | 600,997 | 617,483 | ||||||||||||||||
Expense/income recognized
| in profit and loss: | |||||||||||||||||||||||||||||||||||||||
| Current service cost | 7,595 | 7,975 | - | - | 7,595 | 7,975 | |||||||||||||||||||||||||||||||||
| Interest costs | 9,495 | 9,532 | 1,113 | 1,399 | 8,382 | 8,133 | |||||||||||||||||||||||||||||||||
| Losses (gains) on curtailments and settlements | 9,369 | 57,120 | 9,369 | 57,120 | |||||||||||||||||||||||||||||||||||
| Changes in exchange rates | (9,436) | 2,209 | (1,204) | 260 | (8,232) | 1,949 | ) | ||||||||||||||||||||||||||||||||
| Actuarial gain (losses) due to early retirement | (10,298) | 1,822 | (10,298) | 1,822 | |||||||||||||||||||||||||||||||||||
Included in other comprehensive income:
Actuarial gain (losses) as a result of changes in
| actuarial assumptions | 9,121 | 55,882 | ) | 1,540 | ( | 8,449 | 7,581 | ( | 47,433 | ||||||||||||||||||
Foreign currency translation differences in respect of
| foreign operations | (6,859) | 8,906 | (967) | 1,218 | (5,892) | 7,688 | ||||||||||||||||||||||||||||||||
| Additional movements: | ||||||||||||||||||||||||||||||||||||||
| Benefits paid | (47,174) | 50,156 | (6,825) | ( | 8,153 | ) | (40,349) | ( | 42,003 | ) | ||||||||||||||||||||||||||||
| Contributions paid by the Group | 1,870 | 2,362 | (1,870) | ( | 2,362 | |||||||||||||||||||||||||||||||||
Cllasification 99,974
-
-
-
99,974
-
Balance as at June 30, 2021 755,418
695,395
88,161
92,565
667,257
602,830
- 135 -
V. Notes to the consolidated financial statements - (cont'd)
34. Long-Term Employee Benefits Payable - (cont'd)
Post-employment benefit plans – defined benefit plan and early retirement - (cont'd)
(2) Actuarial assumptions and sensitivity analysis
The principal actuarial assumptions at the reporting date for defined benefit plan
June 30
December 31
2021
2020
| Discount rate (%)* |
0.4%-3.3%
0.6%-3.3%
*According to the demographic and the benefit components.
The assumptions regarding the future mortality rate are based on published statistical data and acceptablemortality rates.
Possible reasonable changes as of the date of the report in the discount rate, assuming the other assumptionsremain unchanged, would have affected the defined benefit obligation as follows:
As of June 30, 2021
Increase of 1%
Decrease of 1%
Change in defined benefit obligation)55,314 (
68,136
35. Provisions
June 30
December 31
2021
2020
| Liabilities in respect of | contingencies* |
| 85,122 | 77,138 |
| Provision in respect of site restoration |
| 73,733 | 79,706 |
| Long | - | term liability in | respect of business combinations |
17,434
| 3,954 |
| Other |
2,410
2,453
178,699
| 163,251 |
* Liabilities in respect of contingencies includes obligations of pending litigations, where an outflow of
resources had been reliably estimated.
- 136 -
V. Notes to the consolidated financial statements - (cont'd)
36. Other Non-Current Liabilities
June 30
December 31
2021
2020
| Put options to holders of non | - | controlling interests | (1) | 1,315,490 | 290,260 | |||||||||
| Long term loans | – | others |
-
171,770
| 1,315,490 | 462,030 | |||||||
| Current maturities | ||||||||
-
(28,000)
1,315,490
434,030
(1) For further information see note VI.1 – Change in consolidation Scope.
37. Share Capital
Balance atJanuary 1, 2021
Issuance of new
shares
Buyback
Balance at
of shares
June 30, 2021
| Share capital |
2,344,121
-
(14,309)
2,329,812
* For further information of the changes see note XI.2 – Commitments and contingent liabilities.
38. Capital Reserve
Balance atJanuary 1, 2021
Additions during
the period
the period
| Reductions during | |
Balance at
June 30, 2021
| Share premiums | 12,652,610 | - | (46,048) | 12,606,562 | |||||||||||
| Other capital reserve |
370,609
-
(94,847)
275,762
13,023,219 -
(140,895)
12,882,324
* For further information of the changes see note XI.2 – Commitments and contingent liabilities.
39. Other Comprehensive Income, net of tax
Attributable to shareholders of the company
Balance atJanuary 1,2021
Before taxamount
Less:
transferto profitor loss
Less:
Income
taxexpenses
Net-of-tax
amount
Less:
transfer to
retainedearnings
Balance at
June 30,
2021
Items that will not be
| reclassified to | profit or loss | 49,933 | (7,581) | - | (610) | (6,971) | - | 42,962 | ||||||||||||||||||
Re-measurement of changesin liabilities under defined
| benefit plans | (5,258) | (7,581) | - | (610) | (6,971) | - | (12,229) | |||||||||||||||||
Changes in fair value of
| other equity investment | 55,191 | - | - | - | - | - | 55,191 | ||||||||||||||||||||
Items that may be
| reclassified to profit or loss | (121,988) | (296,048) | (179,892) | (221) | (115,935) | - | (237,923) | ||||||||||||||||
Effective portion of gain or
| loss of cash flow hedge | (220,719) | (35,816) | (179,892) | (221) | 144,297 | - | (76,422) | ||||||||||||||||
Translation difference of
| foreign financial statements |
98,731
(260,232)
-
-
(260,232)
-
(161,501)
(72,055)
(303,629)
(179,892)
(831)
(122,906)
-
(194,961)
- 137 -
V. Notes to the consolidated financial statements - (cont'd)
40. Surplus reserve
Balance at
January 1, 2021
Additionsduring theperiod
Reductionsduring theperiod
Balance at
June 30, 2021
| Statutory surplus reserve | 236,348 | |||||||||||
-
-
| 236,348 |
Discretional surplus reserve3,814
-
-
3,814
240,162
-
-
240,162
41. Retained Earnings
2021
2020
| Retained earnings as at January 1 | 5,862,702 | 5,574,1 | 73 | ||||||||||||||||||||||||
| Net profits for the period | attributable to shareholders of the Company | 367,03 | 6 | 204,64 | 9 | ||||||||||||||||||||||
| Dividends to non | - | controlling Interest | (35,90 | 4 | ) | (26,828) | |||||||||||||||||||||
| Dividend to the shareholders of the company (Note | 1 & 2 | ) | |||||||||||||||||||||||||
(37,277)
(29,359)
| Retained earnings as at | June | 3 | 0 |
6,156,557
5,722,635
Note 1:
On April 27, 2020, following approval of the 25th meeting of the Company's 8th session of the Board of Directors,the Company declared RMB 0.12 (before tax) per 10 shares as cash dividend to all shareholders, resulting in atotal cash dividend of 29,359 thousands RMB (before tax). No shares were distributed as share dividend and noreserve was transferred to equity capital. The proposal was approved by the 2019 Annual General Meeting of theCompany held on May 20, 2020 and was fully paid during the third quarter of 2020.
Note 2:
On March 29, 2021, after obtaining the approval of the 31st meeting of the Company's 8th Board of Directors,the Company declared RMB 0.16 (before tax) per 10 shares as cash dividend to all shareholders, resulting in atotal cash dividend of 37,277 thousands RMB (before tax). No shares were distributed as share dividend and noreserve was transferred to equity capital. The proposal was approved by the 2020 Annual General Meeting of theCompany held on May 21, 2021 and was fully paid during the third quarter of 2021.
- 138 -
V. Notes to the consolidated financial statements - (cont'd)
42. Operating Income and Cost of Sales
Six months ended June 30 Six months ended June 30
2021 2020
Income
Cost of sales
Income
Cost of sales
| Principal | activities | 15,037,841 | 10,694,295 | 14,100,337 | 9, | 89 | 4 | 415 | |||||||||||||||||
| Other | businesses | ||||||||||||||||||||||||
25,939
| 12,415 |
10,055
| 20,703 |
15,063,780
10,706,710
14,121,040
9,904,470
43. Taxes and Surcharges
Six months ended June 30
2021
2020
| Tax on turnover | 12,693 | 11,087 | |||||||||
Others46,314
35,030
| 59,007 |
46,117
44. Selling and Distribution Expenses
Six months ended June 30
2021
2020
| Salaries and related expense | 885,15 | 3 | 804,3 | 71 | ||||||||||||||||||||||||||
| Depreciation and amortization | 536,51 | 6 | 712,432 | |||||||||||||||||||||||||||
| Transportation and Commissions | 481,26 | 3 | 384,90 | 6 | ||||||||||||||||||||||||||
| Advertising and sales promotion | 154,157 | 161,027 | ||||||||||||||||||||||||||||
| Travel expenses | 38,18 | 0 | 42,16 | 9 | ||||||||||||||||||||||||||
| Warehouse expenses | 83,456 | 77,121 | ||||||||||||||||||||||||||||
| Registration | 62,030 | 81,67 | 6 | |||||||||||||||||||||||||||
| Professional services | 51,735 | 45,113 | ||||||||||||||||||||||||||||
| Insurance | 48,945 | 36,863 | ||||||||||||||||||||||||||||
| Others | ||||||||||||||||||||||||||||||
165,001
122,890
2,506,436
2,468,568
- 139 -
V. Notes to the consolidated financial statements - (cont'd)
45. General and Administrative Expenses
Six months ended June 30
2021
2020
| Salaries | and related expenses | 265,783 | 263,52 | 3 | |||||||||||||||||||||||||||
| Idleness expenses | 96,638 | 87,755 | |||||||||||||||||||||||||||||
| Professional services | 47,805 | 56,03 | 0 | ||||||||||||||||||||||||||||
| Depreciation | and amortization | 41,558 | 44,550 | ||||||||||||||||||||||||||||
| IT systems | 49,294 | 46,2 | 59 | ||||||||||||||||||||||||||||
| Office rent, maintenance and expenses | 19,315 | 17,75 | 9 | ||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||
51,414
37,310
571,807
553,186
46. Research and development expenses
Six months ended June 30
2021
2020
| Salaries | and related expenses | ||||||||
| 109,731 | 91,56 | 6 | ||||||||||||||||||||||||
| Field trial | 18,063 | 17,652 | ||||||||||||||||||||||||
| Professional services | 22,169 | 31,06 | 8 | |||||||||||||||||||||||
| Depreciation | and amortization | 22,19 | 4 | 13,942 | ||||||||||||||||||||||
| Materials | 27,714 | 3,251 | ||||||||||||||||||||||||
| Office rent, maintenance and expenses | 4,946 | 3,631 | ||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
22,123 27,075
226,940
188,185
47. Financial expenses, net
Six months ended June 30
2021
2020
| Interest expenses on debentures and loans | 333,733 | 352,342 | |||||||||||||||||||
| CPI | expense | (income) | in respect of debentures | 118,106 | (63,213) | ||||||||||||||||
| Loss in respect of sale of trade receivables | 15,403 | 36,790 | |||||||||||||||||||
Interest expense in respect of post-employment benefits and early
| retirement, net | 12,967 | 8,133 | |||||||||||||||||
| Revaluation of put | option, net | 24,449 | 8,566 | ||||||||||||||||
| Interest income from customers, banks and others | (31,363) | (29,625) | |||||||||||||||||
| Exchange rate differences, net | (45,084) | 507,673 | |||||||||||||||||
| Interest expense on lease liabilities | 12,364 | 11,955 | |||||||||||||||||
| Other expenses |
10,171
| 8,215 |
| 448,790 |
842,792
- 140 -
V. Notes to the consolidated financial statements - (cont'd)
48. Investment income, net
Six months ended June 30
2021
2020
| Investment income (expenses) from disposal of derivatives | 524,51 | 3 | 37,737 | |||||||||
Income from long-term equity investments accounted for using
| the equity method |
14,392
| 3,243 |
| 527,756 |
52,129
49. Gain (loss) from Changes in Fair Value
Six months ended June 30
2021
2020
Gain (loss) from changes in fair value of derivative financial
| instruments |
(660,975)
267,775
| Others |
(3,607)
(2,265)
(664,582)
265,510
50. Credit impairment reversal (losses)
Six months ended June 30
2021
2020
| Bills receivable and accounts receivable | 9,937 | 5, | 780 | |||||||||||
| Other | receivables | |||||||||||||
(191)
10,051
5,589
51. Asset impairment reversal (losses)
Six months ended June 30
2021
2020
| Inventories | (29,40 | 3 | ) | (24,724) | |||||||||||||
| Intangible asset | - | ( | 21 | ) | |||||||||||||
| Other |
-
(631)
(29,403)
(25,376)
52. Gain from Disposal of Assets
Six months ended June 30 Included in
non-recurring
items
2021
2020
Gain from disposal of fixed assets
| 15,654 | 720 |
15,654Gain
| Gain | (loss) | from disposal of intangible assets |
(855)
6,974
(855)
14,799
| 14,799 |
7,694
| 14,799 |
- 141 -
V. Notes to the consolidated financial statements - (cont'd)
53. Income Tax Expenses
Six months ended June 30
2021
2020
| Current year | 204,125 | 211,77 | 9 | ||||||||||||||||||
| Deferred tax expenses (income) | (120, | 113 | ) | 17,03 | 6 | ||||||||||||||||
| Adjustments for previous years, net | |||||||||||||||||||||
(32,931)
15,383
51,081
244,198
(1) Reconciliation between income tax expense and accounting profit is as follows:
Six months ended June 30
2021
2020
| Profit before taxes | 420,314 | 448,84 | 7 | ||||||||||||
| Statutory tax in china | |||||||||||||||
25%
25%
| Tax calculated | according to statutory tax in china | 105,079 | 112,21 | 2 | ||||||||||
| Tax benefits from Approved Enterprises | (48,293) | 30,179 | ) | |||||||||||
Difference between measurement basis of income for financial
| statement and for tax purposes | (5 | ,629) |
| 138,291 | |||||||||||||||
| Taxable income and | temporary differences at other tax rate | (32,963) | 41,814 | ) | |||||||||||
| Taxes in respect of prior years | (32,931) | 15,383 | |||||||||||||
Utilization of tax losses prior years for which deferred taxes were
| not created | - |
| ( | 771 | ) |
Temporary differences and losses in the report year for which
| deferred taxes were not created | 9,293 |
| 33,094 | ||||||||||||
| Non | deductible expenses and other differences | 22,144 | 12,99 | 4 | ||||||||
Neutralization of tax calculated in respect of the Company’s share
| in results of equity accounted investees | (1,051) |
| ( | 3,889 | ) | |||||||||
| Effect of change in tax rate in respect of deferred taxes | 15,399 | 15,435 | |||||||||
Creation and reversal of deferred taxes for tax losses and temporary
| differences from previous years |
20,033
)6,558 (
| Income tax expenses |
51,081
244,198
54. Other comprehensive income
Details of the Other comprehensive income are set out in Note V.39
- 142 -
V. Notes to the consolidated financial statements - (cont'd)
55. Notes to items in the cash flow statements
(1) Cash received relating to other operating activities
Six months ended June 30
2021
2020
| Derivatives transactions | 19,943 | 404,824 | ||||||||||||||||||||
| Financial institutions | 265,280 | 126,770 | ||||||||||||||||||||
| Interest income | 24,203 | 26,314 | ||||||||||||||||||||
| Government subsidies | 10,922 | 6,236 | ||||||||||||||||||||
| Others | ||||||||||||||||||||||
| 43,060 |
66,371
| 363,408 |
630,515
(2) Cash paid relating to other operating activities
Six months ended June 30
2021
2020
| Transportation, Commissions and Warehouse | 507,772 | 389,972 | ||||||||||||||||||||||||||||
| Advertising and sales promotion | 146,744 | 145,267 | ||||||||||||||||||||||||||||
| Professional | services | 117,566 | 134,480 | |||||||||||||||||||||||||||
| Financial institutions | 211,211 | 136,897 | ||||||||||||||||||||||||||||
| IT and Communication | 87,785 | 94,321 | ||||||||||||||||||||||||||||
| Registration and Fiel | d | trial | s | 79,988 | 81,576 | |||||||||||||||||||||||||
| Derivatives transactions | 168,475 | 90,297 | ||||||||||||||||||||||||||||
| Travel | 35,094 | 51,360 | ||||||||||||||||||||||||||||
| Insurance | 41,736 | 36,663 | ||||||||||||||||||||||||||||
| Others |
267,722
297,735
Net cash flow from operating activities
| Net cash flow from operating activities |
1,664,093
1,458,568
(3) Cash received relating to other investing activities
Six months ended June 30
2021
2020
| Investment grant | 6,754 | |||||||||
-
| 6,754 |
-
(4) Cash paid relating to other investing activities
Six months ended June 30
2021
2020
| I | ncrease in | securitization facility | - | 31,483 | |||||||||||
| Incraese in short and long term investments | |||||||||||||||
85,108
15,357
| 85,108 |
46,840
- 143 -
V. Notes to the consolidated financial statements - (cont'd)
55. Notes to items in the cash flow statements - (cont'd)
(5) Cash received from other financing activities
Six months ended June 30
2021
2020
| Cash received in respect of hedging transactions on | debentures | 396,096 | - | |||||||||||||
| Deposit for issuing bills payables | ||||||||||||||||
| 16,212 |
4,449
412,308
4,449
(6) Cash paid relating to other financing activities
Six months ended June 30
2021
2020
| Repayment of lease liability | 8 | 5 | 595 | 81,915 | |||||||||||||||||||||
| Payment in | respect of hedging transactions on debentures | - | 154,335 | ||||||||||||||||||||||
| Repayment | of loan from others | 171,770 | - | ||||||||||||||||||||||
| Deposit for issuing bills payable | |||||||||||||||||||||||||
5,986
13,036
263,351
249,286
56. Supplementary Information on Cash Flow Statement
(1) Supplementary information on Cash Flow Statement
a. Reconciliation of net profit to cash flows from operating activities:
Six months ended June 30
2021
2020
| Net profit | 369,233 | 204,649 | ||||||||||||||||||||||||
| Add: Impairment provisions for assets | 29,403 | 25,376 | ||||||||||||||||||||||||
| Credit impairment | gain | (10,051) | (5,589) | |||||||||||||||||||||||
| Depreciation of fixed assets and investment property | 365,261 | 391,110 | ||||||||||||||||||||||||
| Depreciation of right | - | of | use asset | 79,685 | 78,568 | |||||||||||||||||||||
| Amortization of intangible asset | 502,745 | 673,105 | ||||||||||||||||||||||||
Gains on disposal of fixed assets, intangible assets, and other long-
| term assets, net | (14,799) | (7,694) | ||||||||||||||||||||||||||||||
| Losses (g | ain | s) | from changes in fair value | 664,582 | (265,510) | |||||||||||||||||||||||||||
| Financial expenses | 340,716 | 245,591 | ||||||||||||||||||||||||||||||
| Investment income, net | (34,729) | (245,248) | ||||||||||||||||||||||||||||||
| I | ncrease in deferred tax assets | (159,673) | (43,845) | |||||||||||||||||||||||||||||
| Increase in deferred tax liabilities | 39,560 | 60,881 | ||||||||||||||||||||||||||||||
| I | ncrease in inventories, net | (748,037) | (717,127) | |||||||||||||||||||||||||||||
| Increase in operating receivables | (1,049,194) | (701,359) | ||||||||||||||||||||||||||||||
| Increase in operating payables | 1,069,229 | 1,525,228 | ||||||||||||||||||||||||||||||
| Others | ||||||||||||||||||||||||||||||||
47,362
16,395
Net cash flow from operating activities
| Net cash flow from operating activities |
1,491,293
1,234,531
- 144 -
V. Notes to the consolidated financial statements - (cont'd)
56. Supplementary Information on Cash Flow Statement - (cont'd)
b. Net increase (decrease) in cash and cash equivalents
Six months ended June 30
2021
2020
| Closing balance of cash | 4,615,208 | 6,256,107 | ||||||||
| Less: Opening balance of cash | ||||||||||
3,835,071
4,319,907
In
| In | crease in cash and cash equivalents |
780,137
1,936,200
(2) Information on acquisition or disposal of subsidiaries and other business units
Six monthsended June 30
2021
| Cash paid for business combination not under common control | 697,909 | |||||
| Less: | cash and cash equivalents of the acquirees at the date of acquisition | |||||
(42,870)
Net cash
| Net cash | paid to acquire subsidiaries |
655,039
(3) Details of cash and cash equivalents
June 30
January 1
2021
2021
| Cash on hand | 1,598 | 4,590 | |||||||||||
| Bank deposits available on demand without restrictions | |||||||||||||
4,613,610
3,830,481
4,615,208
3,835,071
57. Assets with Restricted Ownership or Right of Use
June 30
2021
Reason
| Cash | 18,232 | Pledged | |||||||||
| Other non | - | current assets |
108,660
Guarantees
126,892
- 145 -
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items
(1) Foreign currencies denominated items
As at June 30, 2021Foreign currency at
the end of the
period Exchange rate
RMB at the end ofthe period
| Cash and bank balances | ||||||||||||||||||||||
| BRL | 350,009 | 1.2915 | 452,020 | |||||||||||||||||||
| USD | 46,718 | 6.4601 | 301,801 | |||||||||||||||||||
| EUR | 28,881 | 7.6784 | 221,762 | |||||||||||||||||||
| PLN | 128,520 | 1.6985 | 218,287 | |||||||||||||||||||
| ILS | 80,724 | 1.9816 | 159,965 | |||||||||||||||||||
| ZAR | 133,888 | 0.4503 | 60,286 | |||||||||||||||||||
| GBP | 6,548 | 8.9524 | 58,619 | |||||||||||||||||||
| ARS | 371,489 | 0.0675 | 25,072 | |||||||||||||||||||
Other
254,007
Total
1,751,819
Bills and Accounts receivable
| BRL | 1,253,654 | 1.2915 | 1,619,034 | ||||||||||||||||||||
| EUR | 125,571 | 7.6784 | 964,183 | ||||||||||||||||||||
| RON | 220,340 | 1.5595 | 343,613 | ||||||||||||||||||||
| TRY | 386,911 | 0.7421 | 287,126 | ||||||||||||||||||||
| USD | 44,018 | 6.4601 | 284,361 | ||||||||||||||||||||
| HUF | 8,064,722 | 0.0218 | 175,986 | ||||||||||||||||||||
| CAD | 22,167 | 5.2101 | 115,494 | ||||||||||||||||||||
| ILS | 75,368 | 1.9816 | 149,351 | ||||||||||||||||||||
| RUB | 1,278,240 | 0.0893 | 114,098 | ||||||||||||||||||||
| ZAR | 193,615 | 0.4503 | 87,179 | ||||||||||||||||||||
| GBP | 7,576 | 8.9524 | 67,825 | ||||||||||||||||||||
Other
436,021
Total
4,644,271
Other receivables
| Other receivables | |||||||||||||||||
| EUR | 46,041 | 7.6784 | 353,525 | ||||||||||||||
| ILS | 98,628 | 1.9816 | 195,444 | ||||||||||||||
| GBP | 11,406 | 8.9524 | 102,108 | ||||||||||||||
Other
125,983
Total
777,060
| Other current assets | |||||||||||||||||||||||
| ILS | 96,153 | 1.9816 | 190,541 | ||||||||||||||||||||
| BRL | 85,017 | 1.2915 | 109,796 | ||||||||||||||||||||
| ARS | 404,991 | 0.0675 | 27,333 | ||||||||||||||||||||
| EUR | 3,174 | 7.6784 | 24,374 | ||||||||||||||||||||
| USD | 2,963 | 6.4601 | 19,141 | ||||||||||||||||||||
Other
70,452
Total
441,637
- 146 -
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at June 30, 2021Foreign currency at
the end of theperiod Exchange rate
RMB at the end ofthe period
| Long | - | term receivables | ||||||||
BRL
| 76,193 | 1.2915 |
98,400
Total
98,400
Other non-current assets
| BRL | 67,795 | 1.2915 | 87,554 | ||||||||||
Other
3,728
Total
91,282
| Short | term loans | |||||||||||||
| TRY | ||||||||||||||
| 203,536 | 0.7421 | 151,044 | ||||||||||||||||
| UAH | 391,013 | 0.2377 | 92,948 | |||||||||||||||
| EUR | 653 | 7.6784 | 5,013 | |||||||||||||||
| Other | 17,842 | |||||||||||||||||
Total
266,847
| Bills and Accounts payable | |||||||||||||||||||||||||||||
| ILS | 322,602 | 1.9816 | 639,279 | ||||||||||||||||||||||||||
| EUR | 23,718 | 7.6784 | 182,120 | ||||||||||||||||||||||||||
| BRL | 114,950 | 1.2915 | 148,453 | ||||||||||||||||||||||||||
| USD | 9,668 | 6.4601 | 62,457 | ||||||||||||||||||||||||||
Other
138,100
Total
1,170,409
Other payables
| ILS | 102,637 | 1.9816 | 203,390 | |||||||||||||||||||
| BRL | 42,153 | 1.2915 | 54,439 | |||||||||||||||||||
| PLN | 24,152 | 1.6985 | 41,022 | |||||||||||||||||||
| ILS CPI | 18,149 | 1.9816 | 35,965 | |||||||||||||||||||
| OTHER | 42,354 | |||||||||||||||||||||
TOTAL
377,170
| Contract liabilities | ||||||||||||||||||||||||||||
| EUR | 49,527 | 7.6784 | 380,287 | |||||||||||||||||||||||||
| CAD | 20,448 | 5.2101 | 106,534 | |||||||||||||||||||||||||
| BRL | 60,142 | 1.2915 | 77,670 | |||||||||||||||||||||||||
| TRY | 50,891 | 0.7421 | 37,766 | |||||||||||||||||||||||||
| Other | 82,850 | |||||||||||||||||||||||||||
Total
685,107
- 147 -
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at June 30, 2021
Foreign currency at
the end of the period
Exchange rate
RMB at the end ofthe period
Non-current liabilities due within one year
| ILS | CPI | 288,883 | 1.9816 | 572,461 | |||||||||||||
| EUR | 24,429 | 7.6784 | 187,575 | ||||||||||||||
Other
| 21,313 |
Total
781,349
Other current liabilities
| EUR | 3,198 | 7.6784 | 24,555 | ||||||||||||||
| ILS | 4,169 | 1.9816 | 8,262 | ||||||||||||||
Other
| 730 |
Total
33,547
Long-term loan
| EUR | 33,659 | 7.6784 | 258,449 |
Total
258,449
| Debentures payable | ||||||||
ILS CPI
| 4,034,911 | 1.9816 |
7,995,724
Total
7,995,724
| Provision and Long | term payables | |||||||||||||||||||||
| BRL | 50,017 | 1.2915 | 64,595 | |||||||||||||||||||
| EUR | 374 | 7.6784 | 2,874 | |||||||||||||||||||
Total
67,469
Other non-current liabilities
| USD | 11,784 | 6.4601 | 76,126 | ||||||||||||||||
| EUR | 7,599 | 7.6784 | 58,349 | ||||||||||||||||
| ILS CPI | 18,840 | 1.9816 | 37,334 | ||||||||||||||||
| GBP | 1,055 | 8.9524 | 9,445 | ||||||||||||||||
Other
38,178
Total
219,432
- 148 -
V. Notes to the consolidated financial statements - (cont'd)
58. Foreign currencies denominated items - (cont'd)
(2) Major foreign operations
Name of the Subsidiary
Registration &Principal place ofbusiness Business nature
Functionalcurrency
| ADAMA France S.A.S | France | Distribution | USD | |||||||||||||
ADAMA Brasil S/A Brazil Manufacturing; Distribution;
| Registration |
USD
| ADAMA Deutschland GmbH | Germany | Distribution; Registration | USD |
ADAMA India Private Ltd. India Manufacturing
| Distribution; Registration |
INRMakhteshim Agan of North
| America Inc. |
United States Manufacturing; Distribution;
| Registration |
USDControl Solutions Inc. United States Manufacturing; Distribution;
| Registration |
USDADAMA Agan Ltd. Israel Manufacturing; Distribution;
| Registration |
USDADAMA Makhteshim Ltd. Israel Manufacturing; Distribution;
| Registration |
USDADAMA Australia Pty
| Limited |
Australia Distribution AUD
| ADAMA Italia SRL | Italy | Distribution | USD |
ADAMA Northern
| Europe B.V. |
Netherlands Distribution USDAlligare LLC United States Manufacturing; Distribution;
| Registration |
USD
The functional currency of the subsidiaries above is the main currency that represent the principaleconomic environment.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 149 -
VI. Change in consolidation Scope
1. Business combinations involving enterprises not under common control
(1) Business combinations involving enterprises not under common control during current period
Name ofthe
| Company |
Acquisition
| date |
Cost of equityinvestment–cash
| consideration |
Proportionof equity
| investment |
Acquisition
| method |
Basis ofacquisition date
| determination |
From acquisition date
| till period end |
Revenue
Net
profit
| profit |
AdamaHuifeng(Jiangsu)
| Co. Ltd. |
1.6.2021 664,000 51% Stock
purchase
Obtained control 108,691
(2) Acquisition cost and goodwill
Acquisition costs
Adama Huifeng(Jiangsu) Co.Ltd.
Total acquisition cost in cash
| Total acquisition cost in cash | 664,000 | ||||||
| Contingent consideration | 13,140 | ||||||
Put option 826,730
| Other | 254,000 |
Less: share of the fair value of the identifiablenet assets acquired
1,723,861
Goodwill34,009
In June 2021, the Company acquired a 51% stake in ADAMA Huifeng (Jiangsu) Co., Ltd (hereinafter –"ADAMA Huifeng"), a wholly owned subsidiary of Jiangsu Huifeng Bio Agriculture Co., Ltd (hereinafter– "Jiangsu Huifeng"). ADAMA Huifeng was established to incorporate Jiangsu Huifeng's key cropprotection synthesis and formulation facilities. This acquisition follows the acquisition of a 51% stake inAdama Huifeng (Shanghai) Agricultural Technology Co. Ltd, a wholly owned subsidiary of JiangsuHuifeng focused on the sale and distribution of key formulated crop protection products in China, whichtook place on December 31
st, 2020.
ADAMA Huifeng was purchased for a total cash consideration of approximately RMB 918 million RMB(including RMB 254 million RMB held back to secure the post-Cacquisition closing obligations of JiangsuHuifeng). As of June 1st, 2021 (hereinafter: “date of the business combination”), cControl has beenachieved acquired over ADAMA Huifeng as of June 1st, 2021 (hereinafter: “date of the businesscombination”), and from this date forward, the Group consolidates ADAMA Huifeng's results in itsconsolidated financial statements.
The initial accounting treatment for the acquisition of the operations, as presented in these financialstatements, is accounted for using "provisional amounts" (as this term is defined in ASBE 20 Businesscombination). Until the date of approval of the financial statements, the Group has not yet completed theinitial treatment of Huifeng and Adama Huifeng (Shanghai) Agricultural Technology Co. Ltd businesscombination, including the estimation of the fair value of the acquired assets and the goodwill. Therefore,the fair value data is still provisional, based on the information available to the company's management atthe time of the acquisition, and may be subject to changes affecting the data as included in these financialstatements.
- 150 -
VI. Change in consolidation Scope - (cont'd)
1. Business combinations involving enterprises not under common control - (cont'd)
(3) Identifiable assets and liabilities of the acquiree, at acquisition date
Adama Huifeng (Jiangsu) Co. Ltd.
Fair value atacquisition date
Book value atacquisition date
Assets:
| Cash and bank balances | 42,870 | 42,870 | ||||||||||||||||||||||
| Bills and Accounts receivable | 102,679 | 102,679 | ||||||||||||||||||||||
| Prepayments | 10,221 | 10,221 | ||||||||||||||||||||||
| Inventories | 332,473 | 332,473 | ||||||||||||||||||||||
| Fixed assets | 1,177,886 | 1,177,886 | ||||||||||||||||||||||
| Intangible assets | 131,192 | 131,192 | ||||||||||||||||||||||
| Deferred tax assets | 18,929 | 18,929 | ||||||||||||||||||||||
| Other assets | 101,229 | 101,229 | ||||||||||||||||||||||
Liabilities:
| Bills and Accounts payable | 179,461 | 179,461 | ||||||||||||||
| Employee benefits | payable | 11,198 | 11,198 | |||||||||||||
| Deferred tax liabilities | - | - | ||||||||||||||
Other Liabilities2,959
2,959
Net assets
| 1,723,861 | 1,723,861 |
Less: Non-controlling interests-
-
Net assets acquired1,723,861
1,723,861
- 151 -
VII. Interest in Other Entities
1. Interests in subsidiaries
Composition of the largest subsidiaries of the Group in respect of assets and operating income
Name of the Subsidiary
Registration &Principal place of
business
Business nature Direct Indirect
Method ofobtaining thesubsidiary
| ADAMA France S.A.S | FRANCE | Distribution | 100% | Established | ||||||||||||||||||||
ADAMA Brasil S/A BRAZIL Manufacturing; Distribution;
| Registration |
100% Purchased
ADAMA Deutschland GmbH
| ADAMA Deutschland GmbH | GERMANY | Distribution; Registration; | 100% | Established |
ADAMA India Private Ltd. INDIA Manufacturing;
| Distribution; Registration |
100% EstablishedMakhteshim Agan of North America
Inc.
| Inc. |
UNITED STATES Manufacturing; Distribution;
| Registration |
100% EstablishedControl Solutions Inc. UNITED STATES Manufacturing; Distribution;
Registration
| Registration |
67% PurchasedADAMA Agan Ltd. ISRAEL Manufacturing; Distribution;
Registration
| Registration |
100% RestructureADAMA Makhteshim Ltd. ISRAEL Manufacturing; Distribution;
| Registration |
100% Restructure
| ADAMA Australia Pty Limited | AUSTRALIA | Distribution | 100% | Purchased | |||||||||||||||||||
| ADAM Italia SRL | ITALY | Distribution | 100% | Established | |||||||||||||||||||
| ADAMA Northern Europe B.V. | NETHERLANDS | Distribution | 55% | Purchased | |||||||||||||||||||
Alligare LLC UNITED STATES
Manufacturing; Distribution;
| Registration |
100% Purchased
| Adama Anpon | (Jiangsu) Ltd. | CHINA | Manufacturing; Distribution | 100% | Purchased |
2. Interests in joint ventures or associates
June 30
December 31
2021
2020
| Joint ventures | 15,847 | 14,081 | ||||||||
| Associates | ||||||||||
-
-
| 15,847 |
14,081
3. Summarized financial information of joint ventures and associates
June 30, 2021
and six
months then ended
| and six | |
June 30, 2020 and sixmonths then ended
| Joint ventures: | |||||||||||||||||||
| Total carrying amount | 15,847 | 93,419 | |||||||||||||||||
| The Group's share of the following items: | |||||||||||||||||||
| Net profit | 3,244 | 14,392 | |||||||||||||||||
Other comprehensive income
(2,427)
| Total comprehensive income | 3,483 | 11,965 | |||||||||||||||||||
| Associates: | |||||||||||||||||||||
| Total carrying amount | - | 41,001 | |||||||||||||||||||
| The Group's share of the following items: | |||||||||||||||||||||
| Net profit | - | - | |||||||||||||||||||
Other comprehensive income-
Total comprehensive income
| - | 598 |
- 152 -
VIII. Risk Related to Financial Instruments
A. General
The Group has extensive international operations, and, therefore, it is exposed to credit risks, liquidity risksand market risks (including currency risk, interest risk and other price risk). In order to reduce the exposure tothese risks, the Group uses financial derivatives instruments, including forward transactions and options(hereinafter - “derivatives”).
Transactions in derivatives are undertaken with major financial institutions, and therefore, in the opinion ofGroup Management the credit risk in respect thereof is low.
This note provides information on the Group’s exposure to each of the above risks, the Group’s objectives,policies and processes regarding the measurement and management of the risk. Additional quantitativedisclosure is included throughout the consolidated financial statements.
The Board of Directors has overall responsibility for establishing and monitoring the framework of the Group'srisk management policy. The Finance Committee is responsible for establishing and monitoring the Group'sactual risk management policy. The Chief Financial Officer reports to the Finance Committee on a regularbasis regarding these risks.
The Group’s risk management policy, established to identify and analyze the risks facing the Group, to setappropriate risk limits and controls, and to monitor risks and adherence to limits. The policy and methods formanaging the risks are reviewed regularly, in order to reflect changes in market conditions and the Group'sactivities. The Group, through training, and management standards and procedures, aims to develop adisciplined and constructive control environment in which all the employees understand their roles andobligations.
B. Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument failsto meet its contractual obligations, and derives mainly from trade receivables and other receivables as well asfrom cash and deposits in financial institutions.
Accounts and other receivables
The Group’s revenues are derived from a large number of widely dispersed customers in many countries.Customers include multi-national companies and manufacturing companies, as well as distributors,agriculturists, agents and agrochemical manufacturers who purchase the products either as finished goods oras intermediate products for their own requirements.
The Company entered into an agreement for the sale of trade receivables in a securitization transaction, fordetails see note V.5.e.
In April 2021, a two-years agreement with an international insurance company was renewed. The amount ofthe insurance coverage was fixed at $150 million cumulative per year. The indemnification is limited to about90% of the debt.
The Group’s exposure to credit risk is influenced mainly by the personal characterization of each customer,and by the demographic characterization of the customer’s base, including the risk of insolvency of theindustry and geographic region in which the customer operates. No single customer accounted for greater than5% of total accounts receivable.
- 153 -
VIII. Risk Related to Financial Instruments - (cont’d)
B. Credit risk - (cont’d)
The Company management has prescribed a credit policy, whereby the Company performs current ongoingcredit evaluations of existing and new customers, and every new customer is examined thoroughly regardingthe quality of his credit, before offering him the Group’s customary shipping and payment terms. Theexamination made by the Group includes an outside credit rating, if any, and in many cases, receipt ofdocuments from an insurance company. A credit limit is prescribed for each customer, outstanding amount ofthe accounts receivable balance. These limits are examined annually. Customers that do not meet the Group’scriteria for credit quality may do business with the Group on the basis of a prepayment or against furnishingof appropriate collateral.
Most of the Group’s customers have been doing business with it for many years. In monitoring customer creditrisk, the customers were grouped according to a characterization of their credit, based on geographical location,industry, aging of receivables, maturity, and existence of past financial difficulties. Customers defined as “highrisk” are classified to the restricted customer list and are supervised by management. In certain countries,mainly, Brazil, customers are required to provide property collaterals (such as agricultural lands and equipment)against execution of the sales, the value of which is examined on a current ongoing basis by the Company. Inthese countries, in a case of expected credit risk, the Company records a provision for the amount of the debtless the value of the collaterals provided and acts to realize the collaterals.
The Group closely monitors the economic situation in Eastern Europe and South America on an ongoing basis.As a result of the Covid-19 pandemic, the Group also closely monitors the economic situation worldwide.Where necessary, the Group operates to limit its exposure to customers.
The Group recognizes an impairment provision, which reflects its assessment regarding the credit risk ofaccount receivables, Other receivables and investments on a lifetime expected credit loss basis. See also notesⅢ.10 – Financial instruments and Ⅲ.11 – Receivables.
Cash and deposits in banks
The Company holds cash and deposits in banks with a high credit rating. These banks are also required tocomply with capital adequacy or maintain a level of security based on different situations.
Guarantees
The Company’s policy is to provide financial guarantees only to investee companies.
Aging of receivables and expected credit risk
Presented below is the aging of the past due trade receivables:
June 30, 2021
| Past due by less than 90 days | 527,612 | |||||
Past due by more than 90 days672,583
1,200,195
- 154 -
VIII. Risk Related to Financial Instruments - (cont’d)
B. Credit risk - (cont’d)
The company measure the provision for credit losses on a collective group basis, where receivables sharesimilar credit risk characteristics based on geographical locations. The examination for expected credit lossesis performed using model including aging analysis and historical loss experiences, and adjusted by theobservable factors reflecting current and expected future economic conditions.When credit risk on a receivable has increased significantly since initial recognition, the group records specificprovision or general provision which is determined for groups of similar assets in countries in which there arelarge number of customers with immaterial balances.The Group has credit risk exposures for accounts receivables amounted to RMB 9,098,035 thousand relate tocategory of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 536,418thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has creditrisk exposures for other receivables amounted to RMB 16,021 thousand related to category of "Lifetimeexpected credit losses (credit losses occurred)". The credit risk exposures for all remaining balance of financialassets at amortised cost and financial assets at FVTOCI are related to "12-month expected credit losses".
C. Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligation when theycome due. The Group's approach to managing its liquidity risk is to assure, to the extent possible, an adequatedegree of liquidity for meeting its obligations timely, under ordinary conditions and under pressure conditions,without sustaining unwanted losses or hurting its reputation.
The cash-flow forecast is determined both at the level of the various entities as well as of the consolidatedlevel. The Company examines the current forecasts of its liquidity requirements in order to ascertain that thereis sufficient cash for the operating needs, including the amounts required in order to comply with the financialliabilities, while taking strict care that at all times there will be unused credit frameworks so that the Companywill not exceed the credit frameworks granted to it and the financial covenants with which it is required tocomply with. These forecasts take into consideration matters such as the Company’s plans to use debt forfinancing its activities, compliance with required financial covenants, compliance with certain liquidity ratiosand compliance with external requirements such as laws or regulation.
The surplus cash held by the Group subsidiaries, which is not required for financing the current ongoingoperations, is invested in short-term interest-bearing investment channels.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 155 -
VIII. Risk Related to Financial Instruments - (cont’d)
C. Liquidity risk - (cont’d)
(1) Presented below are the contractual maturities of the financial liabilities at undiscounted amounts,
including estimated interest payments:
As at June 30, 2021
| Third | Fifth year | Contractual | Carrying |
First year
Second year
Fourth year
and above
Cash flow
amount
Non-derivative financial
| liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Short | term loans | 1,228,852 | - | - | 1,228,852 | 1,209,421 | |||||||||||||||||||||||||||||||||||||||||
| Bills payables | 198,428 | 198,428 | 198,428 | ||||||||||||||||||||||||||||||||||||||||||||
| Accounts payables | 5,184,480 | 5,184,480 | 5,184,480 | ||||||||||||||||||||||||||||||||||||||||||||
| Other payables | 1,562,623 | 1,562,623 | 1,562,623 | ||||||||||||||||||||||||||||||||||||||||||||
| Other current liabilities | 85,700 | 85,700 | 85,700 | ||||||||||||||||||||||||||||||||||||||||||||
| Debentures payable | 919,886 | 928,471 | 1,774,822 | 8,349,492 | 11,972,671 | 8,528,773 | |||||||||||||||||||||||||||||||||||||||||
| Long | term loans | 1,182,370 | 825,806 | 1,533,310 | 1,181,959 | 4,723,445 | 4,336,518 | ||||||||||||||||||||||||||||||||||||||||
| Long | term payables | 3,170 | 8,616 | 16,967 | 86,383 | 115,136 | 99,815 | ||||||||||||||||||||||||||||||||||||||||
| Lease | Liabilities | 161,457 | 112,354 | 127,245 | 235,865 | 636,921 | 541,27 | 8 | |||||||||||||||||||||||||||||||||||||||
Long-term liability in respect of
| business combinations | - | 969 | 2,471 | 34,133 | 37,573 | 17,434 | |||||||||||||||||||||||||||
| Other non | current liabilities | 47,368 | 283,865 | 1,749,835 | 2,081,068 | 1,315,490 | |||||||||||||||||||||||||||
Derivative financial liabilities
| Foreign currency derivatives | 798,931 | - | - | 798,931 | 798,931 | ||||||||||||||||||
| CPI/shekel forward transactions | 784 | 784 | 784 | ||||||||||||||||||||
11,326,681
1,923,584
3,738,680
11,637,667
28,626,612
23,879,675
D. Market risks
Market risk is the risk that changes in market prices, such as foreign exchange rates, CPI, interest rates andprices of capital instruments, will affect the Group’s revenues or the value of its holdings in its financialinstruments. The objective of market risk management is to manage and monitor the exposure to market riskswithin acceptable parameters, while optimizing the return.
During the ordinary course of business, the Group purchases and sells derivatives and assumes financialliabilities for the purpose of managing market risks.
(1) CPI and foreign currency risks
Currency risk
The Group is exposed to currency risk from its sales, purchases, expenses and loans denominated in currenciesthat differ from the Group’s functional currency. The main exposure is in Euro, Brazilian real, USD and inNIS. In addition, there are smaller exposures to various currencies such as the British pound, Polish zloty,Australian dollar, Indian rupee, Argentine peso, Canadian dollar, South African Rand, Ukraine Hryunia, theTurkish lira and Chinese Yuan Renminbi.
The Group uses foreign currency derivatives – forward transactions and currency options – in order to hedgethe cash flows risk, which derive from existing monetary assets and liabilities and anticipated sales andpurchases, which may be affected by exchange rate fluctuations.
- 156 -
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
The Group hedged a part of the estimated currency exposure to anticipate sales and purchases for thesubsequent year. Likewise, the Group hedges most of its monetary assets and liabilities denominated in anon- U.S. dollar currency. The Group uses foreign currency derivatives to hedge its currency risk, mostly withmaturity dates of less than one year from the reporting date.
Solutions debentures are linked to the NIS-CPI and, therefore, an increase in the NIS-CPI, as well as changesin the NIS exchange rate, could cause significant exposure with respect to the subsidiary functional currency– the U.S. dollar. As of the approval date of the financial statements, the subsidiary had hedged most of itsexposure deriving from issuance of the debentures, in options and forward contracts.
(A) The Group’s exposure to NIS-CPI and foreign currency risk, except in respect of derivative financialinstruments is as follows:
June 30, 2021
Total assets
Total liabilities
| In US Dollar | 1,207,365 | 886,469 | |||||||||||||||||||
| In Euro | 1,717,704 | 1,092,291 | |||||||||||||||||||
| In Brazilian real | 2,386,733 | 281,027 | |||||||||||||||||||
| CPI | - | linked NIS | 1,195 | 8,632,213 | |||||||||||||||||
| In New Israeli Shekel | 695,301 | 871,687 | |||||||||||||||||||
| Denominated in or linked to other foreign currency | |||||||||||||||||||||
4,497,907
967,887
10,506,205
12,731,574
(B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows:
June 30, 2021
Currency/
linkagereceivable
Currency/linkagepayable
Averageexpiration
date
USDthousandsPar value
RMBthousandsPar value
Fair value
| Forward foreign currency |
USD
| EUR | 20/11/2021 | 229,814 | 1,484,622 | ( | 185,762 | ) | ||||||||||||||
| Contracts and call options |
USD
| PLN | 01/08/2021 | 17,950 | 115,960 | ( | 2,632 | ) | |||||||||||||
USD
| BRL | 17/09/2021 | 440,092 | 2,843,037 | ( | 304,481 | ) | |||||||||||||
USD
| GBP | 31/07/2021 | 39,154 | 252,936 | 197 | |||||||||||||
USD
| ZAR | 17/08/2021 | 30,422 | 196,528 | ( | 7,830 | ) | |||||||||||||
ILS
| USD | 19/07/2021 | 1,595,647 | 10,308,039 | ( | 21,344 | ) | |||||||||||||
USD
| OTHER | 1,495,697 | 9,662,350 | 40,621 | ||||||||||||||
| CPI forward contracts |
CPI
| ILS | 07/01/2022 | 774,540 | 5,003,605 | 58,256 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 157 -
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
(C) Sensitivity analysis
The appreciation or depreciation of the Dollar against the following currencies as of December 31, 2020and the increase or decrease in the CPI would increase (decrease) the equity and profit or loss by theamounts presented below. This analysis assumes that all the remaining variables, among others interestrates, remains constant.
June 30, 2021Decrease of 5% Increase of 5% Equity Profit (loss) Equity Profit (loss)
| New Israeli | shekel | 96,283 | 69,176 | (41,178) | (16,956) | |||||||||||||||||||||||||||||||
| British pound | (1,059) | 1,729 | 1,112 | (1,464) | ||||||||||||||||||||||||||||||||
| Euro | (29,229) | 16,828 | 32,953 | (15,950) | ||||||||||||||||||||||||||||||||
| Brazilian real | (54,973) | 3,880 | 39,582 | (13,504) | ||||||||||||||||||||||||||||||||
| Polish zloty | (1,557) | 199 | 1,530 | (60) | ||||||||||||||||||||||||||||||||
| South African Rand | (3,785) | (553) | 2,786 | (141) | ||||||||||||||||||||||||||||||||
| Chinese Yuan Renminbi | 19,859 | (814) | (10,975) | 2,426 | ||||||||||||||||||||||||||||||||
| CPI | - | linked NIS | 316,824 | 316,824 | (316,824) | (316,824) | ||||||||||||||||||||||||||||||
(2) Interest rate risks
The Group has exposure to changes in the variable interest rate. The Group has different assets andliabilities in different countries which bear interest according to the economic environment in each country.Most of the loans, other than the debentures, bear Dollar and Euro Libor interest. As a result, most of thevariable interest exposure of those loans is to the Libor interest. Due to market conditions, the variableinterest rates on cash are relatively low.
The Company prepares a quarterly summary of exposure to a change in the Libor interest rate. As at theapproval date of the financial statements, the Company had not hedged this exposure.
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(2) Interest rate risks - (cont’d)
(A) Type of interest
The interest rate profile of the Group’s interest-bearing financial instruments was as follows:
June 30, 2021
Fixed-rate instruments – unlinked to the CPI
| Financial assets | ||||
| Cash at banks | ||||
| 891 | ||||||||
| Other non | - | current assets | 45,738 | |||||
Financial liabilities
| Long | - | term loans | 2,651,614 |
Long-term payables21,997
(2,626,982)
Fixed-rate instruments – linked to the CPI
Financial liabilities
Debentures payable (1)8,528,773
Variable-rate instruments
Financial assets
| Cash at banks | 1,033,900 | |||||||||||||||||
| Financial assets at fair value | through profit or loss | 2,494 | ||||||||||||||||
| Other current assets | 80,267 | |||||||||||||||||
| Other non | - | current assets | 24,006 | |||||||||||||||
Financial liabilities
| Short | - | term loans and credit from banks | 1,209,421 | |||||||
| Long | - | term loans | (1) | 1,684,904 | ||||||
Long-term payables72,579
(1,826,237)
(1) Including current maturities.
(B) Sensitivity analysis of cash flows regarding variable-interest instruments
A change of 5% in the interest rates on the reporting date would increase or reduce equity and profit or lossby the amounts presented below. This analysis assumes that all the remaining variables, among othersexchange rates, remained fixed.
Profit or loss Equity
interest
| Increase in | |
interest
| Decrease in | |
interest
| Increase in | |
interest
| Decrease in | |
As at June 30, 20211,915
(1,931)
1,915
(1,931)
IX. Fair Value
The fair value of forward contracts on foreign currency is based on their listed market price, if available. In theabsence of market prices, the fair value is estimated based on the discounted difference between the statedforward price in the contract and the current forward price for the residual period until redemption, using anappropriate interest rate.
The fair value of foreign currency options is based on bank quotes. The reasonableness of the quotes is evaluatedthrough discounting future cash flow estimates, based on the conditions and duration to maturity of each contract,using the market interest rates of a similar instrument at the measurement date and in accordance with the Black& Scholes model.
1. Financial instruments measured at fair value for disclosure purposes only
The carrying amount of certain financial assets and liabilities, including cash at bank and on hand, bills andaccounts receivable, receivables financing, other receivables, derivatives financial assets, short-term loans, billsand accounts payable and other payable, are the same or proximate to their fair value.
The following table details the carrying amount in the books and the fair value of groups of non-current financialinstruments presented in the financial statements not in accordance with their fair values:
June 30, 2021
Carrying amount
Fair value
Financial assets
Other non-current assets (a – Level 2)
| 66,642 | 63,341 |
Financial liabilities
Long-term loans and others (b – Level 2)
| 4,98 | 0 | 021 | 5,0 | 58 | 332 |
Debentures (c – Level 1)
| 8,528,773 | 11,395,230 |
a) The fair value of the other non-current assets is based on a discounted future cash flows, using the acceptableinterest rate for similar investment having similar characteristics (Level 2).b) The fair value of the long-term loans and others is based on a discounted future cash flows, using the acceptable
interest rate for similar loans having similar characteristics (Level 2).c) The fair value of the debentures is based on stock exchange quotes (Level 1).
2. The interest rates used in determining fair value
The interest rates used to discount the estimate of anticipated cash flows are:
June 30, 2021
%
| U.S. dollar interest | (1.16) | – | 1.82 | |||||||||||||||||||
| Chinese Yuan | Renminbi | 2.06 | – | 3.07 | ||||||||||||||||||
| Euro | (0.65) | – | (0.07) | |||||||||||||||||||
- 160 -
IX. Fair Value - (cont’d)
3. Fair value hierarchy of financial instruments measured at fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants at the measurement date. The table below presents an analysis of financialinstruments measured at fair value. The various levels have been defined as follows:
? Level 1: quoted prices (unadjusted) in active market for identical instrument.? Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.? Level 3: inputs that are not based on observable market data (unobservable inputs).
The Company’s forward contracts and options are carried at fair value and are evaluated by observable inputsand therefore are concurrent with the definition of level 2.
June 30
2021
| Forward contracts and options | used for hedging | the cash flow | (Level 2) | (106,779) | ||||||||||||||||||||||||||
| Forward contracts and options | used for economic hedging | (Level 2) | (316,196) | |||||||||||||||||||||||||||
| Other equity investment (Level 2) | 151,537 | |||||||||||||||||||||||||||||
| Receivables financing (Level 2) | 99,066 | |||||||||||||||||||||||||||||
| Other non | - | current asset | s | (Level 2) | 38,186 | |||||||||||||||||||||||||
| Other | (Level 2) | 2,494 | ||||||||||||||||||||||||||||
Financial Instrument Fair valueForward contracts
Fair value measured on the basis of discounting the difference between thestated forward price in the contract and the current forward price for theresidual period until redemption using an appropriate interest rates.
Foreign currency options
| The fair value is measured based on the Black | & | Scholes model. | ||
No transfer between any levels of the fair value hierarchy in the reporting period.
No change in the valuation techniques in the reporting period.
- 161 -
X. Related parties and related party transactions
1. Information on parent Company
Companyname
Registeredplace Business nature
Registered capital(Thousand RMB)
Shareholding
percentage
Percentageof voting rights
Syngenta
| Group |
Shanghai,
| China |
Production and salesof agrochemicals,fertilizers and GM
| seeds | 1 | 1 | , | 144 | 545 | 73.33% | 73.33% |
The Company’s ultimate controlling shareholder is ChemChina.
2. Information on the largest subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
3. Information on largest joint ventures and associates of the Company
For information about the joint ventures and associates of the Company, refer to Note V.12.Other joint ventures and associates that have related party transactions with the Group during this period or theprevious periods are as follows:
Name of entity Relationship with the Company
| Innovaroma | SA | Joint venture of the Group |
- 162 -
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties
Name of other related parties Related party relationship
Bluestar Engineering co.,Ltd .
| Bluestar Engineering co.,Ltd . | Common control | ||||||||||||||||||||||||||||||||||||||||
| Bluestar (Beijing) Chemical Machinery Co.,Ltd | Common control | ||||||||||||||||||||||||||||||||||||||||
| Changsha Huaxing Construction Supervision Co., Ltd. | Common control | ||||||||||||||||||||||||||||||||||||||||
| ChemChina Asset Management co.,Ltd .(Headquarter) | Common | control | |||||||||||||||||||||||||||||||||||||||
| ChemChina Information Center co.,Ltd . | Common control | ||||||||||||||||||||||||||||||||||||||||
| China Bluestar Chengrand Research Institute Chemical Industry | Common control | ||||||||||||||||||||||||||||||||||||||||
| Elkem Silicones Brasil Ltda | Common control | ||||||||||||||||||||||||||||||||||||||||
| Hangzhou (Torch) Xidoumen Membrane Industry co.,Ltd | Common | control | |||||||||||||||||||||||||||||||||||||||
| Jiangsu Ruixiang Chemical co., Ltd . | Common control | ||||||||||||||||||||||||||||||||||||||||
| Jiangsu Youjia Plant Protection Co., Ltd. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Jiangsu Youshi Chemical co., Ltd . | Common control | ||||||||||||||||||||||||||||||||||||||||
| Jiangsu Huaihe Chemical co.,Ltd .(H&H) | Common control | ||||||||||||||||||||||||||||||||||||||||
| Jingzhou Sanonda | Holdings Co.,Ltd. | Common control | |||||||||||||||||||||||||||||||||||||||
| Jiangsu Yangnong Chemical Co.,Ltd. | Common control | ||||||||||||||||||||||||||||||||||||||||
| OOO Syngenta | Common control | ||||||||||||||||||||||||||||||||||||||||
| PT Syngenta Indonesia | Common control | ||||||||||||||||||||||||||||||||||||||||
| PT Syngenta Seed Indonesia | Common control | ||||||||||||||||||||||||||||||||||||||||
| Shandong Dacheng Biochemical Co., Ltd. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem (Hainan) Crop Technology Co. Ltd | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem Agricultural Ecological Technology (Hubei) Co. Ltd | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem Agriculture (Xinjiang) Biotechnology Co. Ltd | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem Agro Co.,Ltd. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem | Chongqing Fuling Chemical Co. Ltd | Common control | |||||||||||||||||||||||||||||||||||||||
| Sinochem Fertilizer Co., Ltd | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem Fertilizer Co., Ltd Fujian Branch | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem Fertilizer Co., Ltd Guangxi Branch | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem Fertilizer Co., Ltd Hebei | Branch | Common control | |||||||||||||||||||||||||||||||||||||||
| Sinochem Fertilizer Co., Ltd Jiangsu Branch | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem Fertilizer Co., Ltd Jilin Branch | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem Fertilizer Co., Ltd Nothwest Branch | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem Fertilizer Co., Ltd Shandong Branch | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem Fertilizer Co., Ltd Southwest Branch | Common control | ||||||
| Sinochem International Crop Care (Overseas) Pte. Ltd. | Common control | ||||||
| Sinochem Modern Agriculture Anhui Co. Ltd | Common control | ||||||
| Sinochem Modern Agriculture Sichuan Co. Ltd | Common control | ||||||
- 163 -
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties - (cont’d)
Name of other related parties
Related party relationship
| Sinochem Modern Agriculture Xinjiang Co. Ltd | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem Modern Agriculture(Jiangsu) Co. Ltd | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem Modern Agriculture(Shandong) Co. Ltd | Common control | ||||||||||||||||||||||||||||||||||||||||
| Sinochem Modern Agriculture(Shanxi) Co. Ltd | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta AG | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Agro AG | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Agro GmbH | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Agro S.A. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Agro SRL | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Agro,S.A.deC.V. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta AustraliaPty Limited | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Canada Inc. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Coml Agr Ltda | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Crop Protection AG | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Crop Protection B.V. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Crop Protection Limited | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Crop Protection S.A. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Crop | Protection, LLC | Common control | |||||||||||||||||||||||||||||||||||||||
| Syngenta Czech s.r.o. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta France S.A.S. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Hellas AEBE | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Hungary Kft. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta India Limited | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Italia S.p.A | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Korea Ltd. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Limited Liability Company | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Polska Sp.z.o.o. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Protecao Cultivos Ltda | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta S.A.(Colombia) | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta | Slovakia s.r.o | Common control | |||||||||||||||||||||||||||||||||||||||
| Syngenta South Africa (Pty) Ltd. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta (China) Investment Co.Ltd | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Espana S.A | Common control | ||||||||||||||||||||||||||||||||||||||||
| Syngenta Tarim Sanayive Ticaret A.S. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Zhonglan International | Chemical co.,Ltd | Common control | |||||||||||||||||||||||||||||||||||||||
| Zhonglan Lianhai Design Institute co.,Ltd. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Zhonglan Lianhai (Shanghai) Chemical Engineering Technology Co.,Ltd. | Common control | ||||||||||||||||||||||||||||||||||||||||
| Zhonglan Chenguang Chemical Co., Ltd | Common control | ||||||||||||||||||||||||||||||||||||||||
- 164 -
5. Transactions and balances with related parties
(1) Transactions with related parties
Six months ended June 30Type of purchase Related Party Relationship
2021
2020
| Summary of purchase of goods/services: |
Purchase of goods/services received Common control under
| ChemChina |
| 875,206 | 618,225 | |||||||||||
| Joint venture | - | 1,891 | ||||||||||
Purchase of fixed assets and other assets
Common control under
| ChemChina |
42,917
163,931
| Summary of Sales | of goods | ||||||||||||
Sale of goods/ Service rendered Common control under
| ChemChina |
| 550,260 | 408,470 | ||||||||||||
| Joint venture | 45,515 | 96,378 | |||||||||||
(2) Guarantee
The Group as the guarantee receiver
Guarantee provider
Amount ofguaranteed loan
Inception dateof guaranty
Maturity dateof guaranty
Guarantycompleted (Y / N)
| Parent company |
| 300,000 | 2 | 1 | / | 04 | /20 | 21 | 20/ | 04 | /202 | 8 | N |
| 73 | 200 | 01/0 | 6 | /20 | 21 | 31 | / | 05 | /202 | 8 | N | ||||||||||
(3) Remuneration of key management personnel and directors
Periods ended June 30
2021
2020
| Remuneration of key management personnel | and directors | 34,203 | 22,043 |
(4) Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
2021 2020
| Items | Related Party Relationship |
BookBalance
Expectedcreditlosses
BookBalance
Expected
credit
losses
Trade receivables Common control under
| ChemChina |
144,395
- 155,050
-
| Joint venture | 29,484 | - | 21,630 | - | ||||||||||||||
| Associates | - | - | 327 | - | ||||||||||||||
Other receivables Common control under
| ChemChina |
- 681
-Prepayments Common control under
| ChemChina |
17,879
- 17,065
-
| Associates | - | - | 350 | - |
- 165 -
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties - (cont'd)
(4) Receivables from and payables to related parties (including loans) - (cont'd)
Payable Items
June 30
December 31
Items Related Party Relationship 2021
2020
Trade payables Common control under
| ChemChina |
490,713
357,148
| Associates | - | 15,907 |
Other payables Common control under
| ChemChina |
36,520
19,354
Contract liability
Common control under
| ChemChina |
-
2,355
| Associates | - | 340 |
Other non-currentliabilities due within
| one year |
Common control underChemChina
-
28,000
Other non-current
| liabilities | * |
Common control under
| ChemChina |
-
143,770
* The liability is a loan from a related party, the interest expense for the six months ended June 30, 2021 is
2,865 thousand RMB (six months ended June 30, 2020: 1,048 thousand RMB).
(5) Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 397,910 thousand RMB(31.12.20: 370,141 thousand RMB) Interest income of bank deposit for the current period was 810 thousandRMB (amount for six months ended June 30, 2020 is 670 thousand RMB).The closing balance of a loan received from ChemChina Finance corporation was 100,000 thousand RMB(2031.12.: 0 thousand RMB). Interest expenses in the current period was 1,471 thousand RMB (amount forsix months ended June 30, 2021 is 370 thousand RMB).
- 166 -
XI. Commitments and contingencies
1. Significant commitments
June 30
December 31
2021
2020
| Investment in Fixed assets |
590,714
571,367
2. Commitments and Contingent Liabilities
On December 10, 2018 the 9th meeting of the 8th session of the Board of Directors of the Company approvedthe extension of the engagement in annual liability insurance policies for directors, supervisors and seniorofficers of the Company (“D&O Liability Insurance) as originally approved by the 22nd meeting of the 7thsession of Board of Directors and the 4th Interim Shareholders Meeting in 2017, and authorized the managementto annually deal with all matters relating to renewal/extension of the customary D&O Liability Insurancepolicies, with up to 20% flexibility in the relevant terms of the original policy. On December 26, 2018 the 3rdInterim Shareholders Meeting approved the above resolution. The current D&O Liability Insurance wasrenewed for an additional one-year term commencing November 15, 2020.
Environmental protectionThe manufacturing processes of the Company and the products it produces and market, entail environmentalrisks that impact the environment. The Company invests substantial resources in order to comply with theapplicable environmental laws and attempts to prevent or minimize the environmental risks that could occur asa result of its activities. To the best of the Company’s knowledge, at the balance sheet date, there are no materialenvironmental issues relating to the Company, there are no material administrative penalties or investigationsrelated to environment, health and safety imposed or initiated by regulatory authorities, and none of the materialpermits and licenses regarding environmental issues required for the Company’s day to day operations havebeen revoked.
OtherTwo of the Company’s production sites, Jingzhou old site in Jingzhou, Hubei Province and Anpon old site inHuai’An, Jiangsu Province (hereinafter the “Sites”) are in the process of relocating to new sites. As part of therelocation process, the Company and its subsidiary, Anpon, began to execute a reduction plan to reduce thenumber of employees.
Claims against subsidiariesIn the ordinary course of business, legal claims are filed against subsidiaries, including claims for patentinfringement. The Company, inter alia like other companies operating in the crop protection market, is exposedto class actions for large amounts, which it must defend against while incurring considerable costs, even if theseclaims have no basis. In the opinion of the Company’s management, which is based, inter alia, on opinions ofits legal advisors regarding the prospects of the proceedings, the financial statements include adequateprovisions where necessary to cover the exposure resulting from the claims.
- 167 -
XI. Commitments and contingencies - (cont’d)
2. Commitments and Contingent Liabilities - (cont’d)
Claims against subsidiaries (cont’d)Various immaterial claims have been filed against Group companies in courts throughout the world, inimmaterial amounts, for causes of action involving mainly employee-employer relations and various civil claims,for which the Company did not record a provision in the financial statements. Furthermore, claims were filedagainst the Company for product liability damages, for which the Company has adequate insurance coverage,such that the Company’s exposure in respect thereof is limited to the deductible amount or the amount thereofdoes not exceed the deductible amount.In June 2021, a lawsuit was filed against a subsidiary of the Company, alleging a patent owned by a largecompetitor of the Company, has been infringed by such subsidiary. Among the claims, the plaintiff seeks apreliminary and permanent injunction to prevent the subsidiary from manufacturing, using or commercializingany product that infringed the plaintiff’s patent, and seeks actual damages and profits loss. The preliminaryinjunction motion as well as an ex-parte appeal, were rejected by the court at this time. Prior to such claims, thesubsidiary filed lawsuits against the said plaintiff and the local Patent and Trademark Office seeking to declarethe said patent is invalid and the subsidiary does not infringe it. All these lawsuits are pending as of theCompany’s financial results. At this preliminary stage, the claim filed by the plaintiff is not expected to have amaterial effect on the Company.
Repurchase of the Company’s B-sharesThe 3rdInterim Shareholders Meeting held on September 7, 2020 approved a repurchase plan for part of theCompany’s domestically listed foreign shares (B share) (the “Repurchase Plan”).According to the Repurchase Plan, during the period beginning at September 16, 2020 (the date on which theCompany commenced repurchasing of the B-shares) and ending on December 6, 2020 (the end date of theRepurchase Plan), the Company repurchased 14,309,536 B-Shares, which account for 0.61% of the Company’stotal share capital. The amount paid for the repurchased shares amounted to RMB 60,399,296 (HKD69,747,209), including transaction fees.Within three years following the disclosure of the announcement on the results of the B-shares repurchase, theB-Shares that have been repurchased will be cancelled and the registered capital will be reduced accordinglyfollowing approval of the shareholders.During the 2020 Annual General Meeting of the Company, held on May 21 2021, the cancellation of therepurchased shares and subsequent the decrease of the Company's registered capital was approved and on June17, 2021, the Company completed the cancellation at the Shenzhen Branch of China Securities Depository andClearing Co., Ltd,.
- 168 -
XIII. Share-based Payments
1. In February 2019, the remuneration committee and Solutions Board of Directors (as well as the GeneralMeeting with respect to theformer CEO and Vice President who also serves as a director) approved theallocation of 77,864,910 phantom warrants to officers and employees in accordance with the long-termphantom compensation plan (hereinafter - "the 2019 Plan"), out of which 75,814,897 phantom warrants weregranted at the grant date of February 21, 2019. During 2019, 1,206,081 additional Phantom warrants weregranted.
The warrants will vest in four equal portions, where the first and second quarters are exercisable after twoyears, the third quarter after three years and the fourth quarter after four years from January 1, 2019. Thewarrants will be exercisable, in whole or in part, in accordance with the terms of the 2019 plan, and subject toachieving financial targets as determined in the plan. The warrants will be exercisable until the end of 2025.
Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the differencebetween the base price as determined at the time of the grant and the closing price of one share of the Companyon the Shenzhen Stock Exchange, as it will be on the exercise date up, to the ceiling that was determined underthe plan.
The fair value of the granted warrants as aforesaid was estimated using the binomial pricing model.
The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at thegrant date, amounted to a total of approximately 186 million RMB. The liability at the end of the reportingperiod was recorded according to the vesting period as determined in the plan, taking into account the extentof the service that the employees provided until that date and the Company’s share price at the end of thereporting period.
Statement of share based payments in the period
Phantom warrants
| Total number of Phantom warrants at the beginning of the period | 60,047,067 | ||||||||||
| Total number of Phantom | warrants granted in current period | - | |||||||||
| Total number of Phantom warrants exercised in current period | - | ||||||||||
Total number of Phantom warrants forfeited in current period(785,438)
| Total number of Phantom warrants at the end of the period | 59,261,629 |
The exercise prices and the remainder of the contractual period for Phantom
| warrants | outstanding at the end of period |
RMB 9.91 – 10.85
| 4.5 | years |
The parameters used in implementing the model at the grant date are as follows:
| Stock price (RMB) | 10.85 | |||||||||
| Exercise increment (RMB) | 10.03/10.85 | |||||||||
| Expected volatility | 43.97% | |||||||||
| Risk | - | free interest rate | 3.06 | % | ||||||||||||||||
| Economic value as of | February | 21 | , 20 | 19 | (in thousands RMB) | 186,206 | ||||||||||||||
The methods for the determination of the fair value of liabilities arising from
| cash | - | settled share | - | based payments | The binomial pricing model |
Accumulated amount of liabilities arising from cash-settled share-based
| payments (in thousands RMB) | 111,396 |
Expenses arising from cash-settled share-based payments in current period
| (in | thousands RMB) | 32,418 |
XIII. Share-based Payments - (cont’d)
- 169 -
2. In September 2019, the remuneration committee and Solutions Board of Directors (and the General Meetingwith respect to the CEO and Vice President who also serves as a director) approved the cancellation of 2017Plan against the allocation of 28,258,248 warrants in accordance with the long-term phantom compensationplan (hereinafter - "The Alternative Warrants" and "The Alternative Plan"). The cancellation and allocationdate is September 26, 2019. During 2019, an additional 90,130 Alternative Phantom Warrants were granted.
The alternative warrants will vest in four equal portions, where the first quarter is exercisable after one year,the second quarter after two years, the third quarter after three years and the fourth quarter after four yearsfrom October 1, 2019. The warrants will be exercisable, in whole or in part, in accordance with the terms ofthe Alternative Plan, and subject to achieving financial targets as determined in the plan. The warrants will beexercisable until October 1, 2026.
Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the differencebetween the base price as determined at the time of the grant and the closing price of one share of the parentcompany on the Shenzhen Stock Exchange, as it will be on the exercise date up to the ceiling that wasdetermined under the plan.
The fair value of the total granted alternative Warrants at the allocated date is equal to the fair value of thetotal warrants canceled from the 2017 plan.
The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at thecancellation and allocation date, amounted to a total of approximately 69 million RMB. The liability in thefinancial statements at the end of the reporting period was recorded at the fair value estimated using thebinomial option pricing model and by the vesting period from the original grant date of the 2017 plan to theend of the service period determined by the alternative plan, taking into account the extent of the service thatthe employees provided until that date and the stock price at the reporting date.
Statement of share based payments in the period
Phantom warrantsChanges in the number of 2017 Plan:
| Total number of Phantom warrants at the beginning of the period | 20,739,142 | ||||||||
| Total number of Phantom warrants granted in current period | - | ||||||||
| Total number of Phantom warrants exercised in current period | - | ||||||||
Total number of Phantom warrants forfeited in current period(398,150)
| Total number of Phantom warrants at the end of the period | 20,340,992 | ||||
The range of the exercise prices and the remainder of the contractual period
| for Phantom warrants | outstanding at the end of period |
RMB 9.40 – 9.43
| 5.25 | years | ||||
- 170 -
XIII. Share-based Payments - (cont’d)The parameters used in implementing the model at the grant date are as follows:
| Stock price (RMB) | 9.23 | ||||||||
| Exercise increment (RMB) | 9.43 | ||||||||
| Expected volatility | 40.29% | ||||||||
| Risk | - | free interest rate | 3.14 | % | ||||||||
| Economic value | as of September 26, 2019 | (in thousands RMB) | 68,836 | |||||||||
The methods for the determination of the fair value of liabilities arising from
| cash | - | settled share | - | based payments | related | to t | he alternative plan | The binomial pricing model |
Accumulated amount of liabilities arising from cash-settled share-based
| payments | related to | the alternative plan | (in thousands RMB) | 38,541 |
Expenses (income) arising from cash-settled share-based payments in
| current period | related to | he alternative plan | (in thousands RMB) | 11,713 |
XIV. Other significant items
1. Segment reporting
The Company presents its segment reporting based on a format that is based on a breakdown by businesssegments:
? Crop Protection (Agro)
This is the main area of the Company’s operations and includes the manufacture and marketing ofconventional agrochemical products.
? Intermediates and ingredients
This field of activity includes a large number of sub-fields, including: Lycopan (an oxidization retardant),aromatic products, and other chemicals. It combines all the Company’s activities not included in the CropProtection products segment.
Segment results reported to the chief operating decision maker include items directly attributable to a segmentas well as items that can be allocated on a reasonable basis. Unallocated items comprise mainly financingexpenses, net, gains from changes in fair value, investment income and tax expenses.
All assets and liabilities that can be attributed to a specific segment were allocated accordingly. Attributedassets include: accounts and bills receivables, receivables financing, inventory, fixed assets, right-of-use assets,construction in progress, intangible assets, goodwill, non-current trade receivables and long-term equityinvestments. Attributed liabilities include account payables, bill payablesand lease liabilities. All other assetsand liabilities which are not attributable to a specific segment are presented as unallocated assets and liabilities.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 171 -
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Information regarding the results and assets and liabilities of each reportable segment is included below:
Crop Protection Intermediates and ingredients Elimination among segments Total
Six months endedJune 30
Six months endedJune 30
Six months ended
June 30
Six months endedJune 30
2021
2020
2021
2020
2021
2020
2021
2020
Operating income from external
| customers | 13,653,666 | 12,834,364 | 1,410,114 | 1,286,676 | - | - | 15,063,780 | 14,121,0 | 40 | |||||||||||||||||||||||||||||
| Inter | - | segment operating income | - | - | 977 | 665 | (977) | (665) | - | - | ||||||||||||||||||||||||||||
Interest in the profit or loss of
| associates and joint ventures |
-
11,118
3,243
3,274
-
-
3,243
14,392
| Segment's results | |||||||||||||||||||||||||||||||||
| 840,793 | 927, | 549 | 168,380 | 60,843 | - | - | 1,009,173 | 988,39 | 2 | ||||||||||||||||||||||||
| Financial expenses, net | 448,790 | 842,792 | |||||||||||||||||||||||||||||||
| Gain (loss) from changes in fair | |||||||||||||||||||||||||||||||||
| value | (664,582) | ||||||||||||||||||||||||||||||||
265,510
| Investment income | |||||||||||||||||||||||
| 524,513 | 37,73 | 7 | |||||||||||||||||||||
| Profit before tax | 420,314 | 448,847 | |||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
(51,081)
(244,198)
| Net profit |
369,233
204,649
Crop Protection Intermediates and ingredients Unallocated assets and liabilities Total
June 30 December 31 June 30 December 31 June 30 December 31 June 30 December 31
2021
2020
2021
2020
2021
2020
2021
2020
| Total assets | 39,158,700 | 36,454,726 | 2,144,227 | 2,135,310 | 8,147,079 | 8,210,998 | 49,450,006 | 46,801,034 | |||||||||||||||||||||||||
| Total liabilities | 5,537,583 | 5,037,016 | 239,856 | 268,972 | 22,240,215 | 20,061,131 | 28,017,654 | 25,367,119 | |||||||||||||||||||||||||
- 172 -
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Geographic information
The following tables sets out information about the geographical segments of the Group’s operating incomebased on the location of customers (sales target) and the Group's non-current assets (including fixed assets,right-of-use assets, construction in progress, investment properties intangible assets and goodwill). In the caseof investment property, fixed assets, right of used assets and construction in progress, the geographical locationof the assets is based on its physical location. In case of intangible assets and goodwill, the geographicallocation of the company which owns the assets.
Operating income from external
customers
Six months ended June 30
2021 2020
| Europe | 3,915,671 | 4,275,020 | ||||||||||||||
| North America | 2,880,327 | 2,622,636 | ||||||||||||||
| Latin | America | 2,895,965 | 2,669,490 | |||||||||||||
| Asia Pacific | 3,124,576 | 2,456,818 | ||||||||||||||
| Africa, Middle East and India | ||||||||||||||||
2,247,241
2,097,076
15,063,780
14,121,040
Specified non-current assets
June 30
December 31
2021
2020
| Europe | 992 | ,265 | 1,039,248 | |||||||||||||
| Latin | America | 2,165,484 | 2,122,291 | |||||||||||||
| North America | 1,148,709 | 1,169,812 | ||||||||||||||
| Asia Pacific | 5,117,155 | 3,550,785 | ||||||||||||||
| Africa, Middle East and India |
10,523,975
10,489,849
19,947,588
18,371,985
The dependency on major customers
No single customer's proportion of the total amount of sales is over 10%.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 173 -
XIV. Other significant items - (cont'd)
2. Calculation of Earnings per share and Diluted earnings per share
Amount for thecurrent period
Amount for theprior period
Net profit from continuing operations attributable to ordinary
| shareholders |
367,036
| 204,649 |
| S | hares |
Amount for thecurrent period
Amount for theprior period
Number of ordinary shares outstanding at the beginning of the
| year | 2,329,811,766 | 2,446,553,582 |
Add: weighted average number of ordinary shares issued during
| the year | - | - |
Less: weighted average number of ordinary shares repurchased
| during the year |
-
-
Weighted average number of ordinary shares outstanding at the
| end | of the year |
2,329,811,766
2,446,553,582
Amount forthe currentperiod
Amount forthe priorperiod
Calculated based on net profit attributable to ordinary shareholders
| Basic earnings per share | 0.16 | 0.08 | ||||||
| Diluted earnings per share | N/A | N/A | ||||||
Calculated based on net profit from continuing operationsattributable to ordinary shareholders:
| Basic earnings per share | 0.16 | 0.08 | ||||||
| Diluted earnings per share | N/A | N/A | ||||||
Calculated based on net profit from discontinued operationsattributable to ordinary shareholders:
| Basic earnings per share | N/A | N/A | ||||||
| Diluted earnings per share | N/A | N/A | ||||||
- 174 -
XV. Notes to major items in the Company's financial statements
1. Cash at bank and on hand
June 30 December 31
2021
2020
| Deposits in banks | 4 | 36,804 | 1,022,758 |
Other cash and bank6,465
12,054
443,269
1,034,812
As at June 30, 2021, restricted cash and bank balances was 6,465 thousand RMB (as at December 31, 2020:
12,054 thousand RMB).
2. Accounts receivable
a. By category
June 30, 2021
Book value
Provision for expectedcredit losses
Amount
Percentage (%)
Amount
Percentage (%)
Carrying
amount
Account receivables assessed
| individually for impairment | 1 | 3,879 | 1 | 0 | 1 | 3,879 | 1 | 00 | - |
Account receivables assessed
| collectively for | impairment |
121,324
-
121,301
135,203
13,902
121,301
December 31, 2020
Book value
Provision for expected
credit losses
Amount
Percentage (%)
Amount
Percentage (%)
Carrying
amount
Account receivables assessed
| individually for impairment | 13,879 | 3 | 13,879 | 100 | - | ||||||||||||||
Account receivables assessed
| collectively for impairment |
387,132
-
387,117
401,011
13,894
387,117
b. Aging analysis
June 30, 2021
| Within 1 year | (inclusive) | 1 | 21,310 | |||||||||||
| Over 1 year but within 2 years | 1 | 5 | ||||||||||||
| Over 2 years but within 3 years | 1 | |||||||||||||
| Over 3 years but within 4 years | 1 | |||||||||||||
| Over 4 years but within 5 years | 1 | ,699 | ||||||||||||
Over 5 years12,177
135,203
XV. Notes to major items in the Company's financial statements - (cont'd)
- 175 -
2. Accounts receivable - (cont'd)
c. Addition, written-back and written-off of provision for expected credit losses during the period
Six months ended June 30, 2021
| Balance as of | January 1 | 1 | 3,894 | ||||||||||||||
| Addition during the year, net | 2 | 3 | |||||||||||||||
| Write back during the year | ( | 15) | |||||||||||||||
| Write | - | off during the year | |||||||||||||||
| - | |||
| Exchange rate effect |
-
Balance as of
| Balance as of | June 30 |
13,902
d. Five largest accounts receivable at June 30, 2021:
Name
Closing balance
Proportion ofAccountsreceivable (%)
Allowance ofexpectedcredit losses
| Party 1 | (1) | 5 | 6,971 | 4 | 2 | - | ||||||||||
| Party 2 | (1) | 2 | 5,048 | 1 | 8 | - | ||||||||||
| Party 3 | 7 | ,764 | 6 | 2 | ||||||||||||
| Party 4 | 6 | ,868 | 5 | - | ||||||||||||
Party 55,098
101,749
(1) The amounts are intergroup balances with Solutions' subsidiaries.
3. Receivable financing
June 30 December 31
2021 2020
| Bank acceptance draft |
22,031 25,060
22,031 25,060
As at June 30, 2021, bank acceptance endorsed but not yet due amounts to 153,514 thousand RMB.
- 176 -
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables
June 30
December 31
2021
2020
Other receivables26,995
27,138
26,995
27,138
(1) Other receivables
a. Other receivables by categories
June 30
December 31
2021
2020
| Other |
| 3 | 2,561 | 32,819 | ||||||
| Provision for expected credit losses |
(5,566)
(5,681)
26,995
27,138
b. Other receivables by aging
June 30, 2021
Within 1 year
| Within 1 year | (inclusive) | 7 | 20 | ||||||||||
| Over 1 year but within 2 years | 1 | 3,283 | |||||||||||
| Over 2 years but within 3 years | 1 | 3,329 | |||||||||||
| Over 3 years but within 4 years | 2 | 65 | |||||||||||
| Over 4 years but within 5 years | - | ||||||||||||
| Over 5 years | 4 | ,964 | |||||||||||
32,561
- 177 -
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables - (cont'd)
(2) Other receivables - (cont'd)
c. Additions, recovery or reversal and written-off of provision for expected credit losses during the
period:
| Year ended June 30 | , 20 | 21 | ||||||||||||||||||
| Balance as of January 1, 20 | 21 | 5,681 | ||||||||||||||||||
| Addition during the period | - | |||||||||||||||||||
| Written back during the period | ( | 115) | ||||||||||||||||||
| Write | - | off during the period | ||||||||||||||||||
-
Balance as of
| Balance as of | June 30 | , 20 | 21 |
5,566
d. Five largest other receivables at June 30 2021:
Name Closing balance
Proportion of otherreceivables (%) Credit loss provision
Party 1
| Party 1 | 1 | 3,322 | 4 | 1 | - | ||||||||||||
| Party 2 | * | 1 | 1,611 | 3 | 6 | - | |||||||||||
| Party 3 | 3 | ,125 | 9 | 3 | ,125 | ||||||||||||
| Party 4 | 1 | ,753 | 5 | - | |||||||||||||
Party 5
30,359 93 3,673
* The amount are intergroup balances with Anpon.
- 178 -
XV. Notes to major items in the Company's financial statements - (cont'd)
5. Long-term equity investments
June 30, 2021 December 31, 2020
Amount balance
Impairment
loss Book value Amount balance
Impairmentloss Book value
Invest in
| subsidiaries |
17,511,352
-
17,511,352
16,663,212
-
16,663,212
17,511,352
-
17,511,352
16,663,212
-
16,663,212
Investments in subsidiaries
Invested unit
Openingbalance Increase
Decrease
Closingbalance
CurrentprovisionImpairment
loss
BalanceprovisionImpairment
loss
| ADAMA Agricultural Solutions Ltd. | 15,890,213 | - | - | 15,890,213 | - | - | ||||||||||||||||||||||||
| Adama Anpon (Jiangsu) Ltd. | 450,449 | - | - | 450,449 | - | - | ||||||||||||||||||||||||
| ADAMA Hiufeng (Jiangsu) Co. Ltd. | - | 848,140 | - | 848,140 | - | - | ||||||||||||||||||||||||
Hubei Sanonda Foreign Trade Co.
| Ltd. | 11,993 |
-
| - | 11,993 | - | - |
Adama Huifeng (shanghai)
Agricultural Technology Co., Ltd310,557
-
-
310,557
-
-
16,663,212
848,140
-
17,511,352
-
-
6. Operating Income and operating costs
Six months ended June 30, 2021 Six months ended June 30, 2020
Revenue
Operating
costs Revenue
Operating
costs
| Main operations | 591,292 | 4 | 67,717 | 653,055 | 526,904 | ||||||||||||||
| Other operations |
25,805 15,220 20,591 10,410
617,097 482,937 673,646 537,314
- 179 -
XV. Notes to major items in the Company's financial statements - (cont'd)
7. Notes to items in the cash flow statements
(1) Other cash received relevant to operating activities
Six months endedJune 30, 2021
Six months endedJune 30, 2020
| Interest | income | 9 | ,971 |
8,507
| Government subsidies | 9 | ,976 |
4,992
| Other |
1,2561,564
21,203 15,063
(2) Other cash paid relevant to operating activities
Six months ended
June 30, 2021
Six months endedJune 30, 2020
| Professional services | 48,027 | 56,487 | |||||||||||
| Transportation and Commissions | 1 | 1,122 | 13,067 | ||||||||||
Other8,162 21,253
67,311 90,807
(3) Other cash received relevant to financing activities
Six months endedJune 30, 2021
Six months endedJune 30, 2020
Deposit for issuing bills payables5,880 4,449
(4) Other cash paid relevant to financing activities:
Six months endedJune 30, 2021
Six months ended
June 30, 2020
Other291 200
291 200
- 180 -
XV. Notes to major items in the Company's financial statements - (cont'd)
8. Supplementary information to cash flow statement
(1) Reconciliation of net profit to net cash flows generated from operating activities:
Six months ended June 30
2021 2020
Net profit
| ( | 28,205 | ) | (42,764) |
Add: Assets impairment loss
| 1 | ,068 | 2,864 |
Credit impairment loss
| ( | 107 | ) | 674 |
Depreciation of fixed assets
| 5 | 3,021 | 76,057 |
| Depreciation | of | - | right | - | of use assets | 2 | 8 | 233 |
Amortization of intangible assets
| 5 | ,099 | 2,222 |
Loss (gain) on disposal of fixed assets, intangible assets andother long-term assets
| ( | 15,239 | ) |
| (101) |
Financial expenses
| 1 | 3,438 | 3,518 |
Decrease (increase) in deferred income tax assets
| ( | 228 | ) | 27,873 |
Decrease (increase) in inventory
| 8 | 8,421 | 11,596 |
Increase in accounts receivable from operating activities
| 227,772 | (102,463) |
Increase in payables from operating activities)99,852 ((41,958)Net cash flows generated from operating activities245,216 (62,249)
(2) Net increase in cash and cash equivalents
Six months ended June 30
2021 2020
| Closing balance of cash | 4 | 36,804 | 1,423,296 | ||||||||
Less: Opening balance of cash1,022,7581,395,994Net increase in cash and cash equivalents)585,954 (27,302
- 181 -
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Related parties and related parties transactions
(1) Information on parent Company
Companyname
Registeredplace Business nature
Registered
capital(ThousandRMB)
Shareholdingpercentage
Percentageof voting rights
Syngenta
| Group |
Shanghai,
| China |
Production and sales
of agrochemicals,fertilizers and GM
| seeds | 11,144,545 | 73.33 | % | 73.33 | % |
The ultimate controlling shareholder is ChemChina.
(2) Information on the subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
(3) Transactions with related parties
a. Transactions of goods and services
Six months ended June 30
2021
2020
Summary of Purchase of goods/services
received:
| received: |
Related Party Relationship
Purchase of goods/services received Common control
| under ChemChina | 40 | 2,063 | |||||||||||
| Subsidiary | 58,038 | 45,630 | |||||||||||
Purchase of fixed assets and other assets Common control
| under ChemChina | 39,580 |
| 155,616 | |||||||||||||||||
| Subsidiary | - | 136 | |||||||||||||||
| Summary of Sales of goods: | |||||||||||||||||
Sale of goods Associated enterprises
| under ChemChina | 1,082 | - | |||||||||||||
| Subsidiary | 328,762 | 450,283 | |||||||||||||
| Sale of raw materials | Subsidiary | 3,396 | - | ||||||||||||
- 182 -
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
b. Guarantees
The Company as the guarantor
Amount ofguaranteed
loan
Inceptiondate ofguaranty
Maturity
date ofguaranty
Guarantycompleted(Y/ N)
Subsidiary
| 30,000 | 21/07/2020 | 21/01/2021 |
Y
18,000
| 18,000 | 19/08/2020 | 19/02/2021 |
Y
30,000
| 30,000 | 01/09/2020 | 17/08/2021 |
Y
50,000
| 50,000 | 20/07/2020 | 14/07/2021 |
N
30,000
| 30,000 | 19/05/2020 | 18/05/2021 |
Y
20,000
| 20,000 | 22/12/2020 | 16/12/2021 |
N
50,000
| 50,000 | 16/12/2020 | 15/12/2021 |
N
50,000
| 50,000 | 14/12/2020 | 13/12/2021 |
N
50,000
| 50,000 | 29/06/2020 | 27/06/2021 |
Y
20,438
| 20,438 | 30/10/2020 | 30/04/2021 |
Y
14,004
| 14,004 | 17/12/2020 | 17/06/2021 |
Y
40,500
| 40,500 | 15/01/2021 | 14/01/2022 |
N
59,500
| 59,500 | 27/04/2021 | 26/04/2022 |
N
40,000
| 40,000 | 01/02/2021 | 03/01/2022 |
N
30,000
| 30,000 | 26/02/2021 | 24/02/2022 |
N
30,000
| 30,000 | 25/06/2021 | 24/06/2022 |
N
60,000
| 60,000 | 21/05/2021 | 18/05/2022 |
N
40,000
| 40,000 | 18/03/2021 | 17/03/2022 |
N
30,000
| 30,000 | 20/01/2021 | 20/01/2022 |
N
70,000
| 70,000 | 27/01/2021 | 27/01/2022 |
N
14,534
| 14,534 | 29/01/2021 | 29/07/2021 |
N
The Company as the guarantee receiver
Guarantee provider
Amount ofguaranteed loan
Inception dateof guaranty
Maturity date
of guaranty
Guarantycompleted (Y / N)
| Parent company |
| 300,000 | 2 | 1 | / | 04 | /20 | 21 | 20/ | 04 | /202 | 8 | N |
| 73 | 200 | 01/0 | 6 | /20 | 21 | 31 | / | 05 | /202 | 8 | N | ||||||||||
- 183 -
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
c. Receivables from and payables to related parties (including loans)
Receivable Items
June 30
December 31
2021
2020
Items
Related PartyRelationship
BookBalance
Expectedcreditlosses
BookBalance
Expectedcreditlosses
| Trade receivables | Subsidiary | 8 | 5,769 | 3 | 44,436 | - | ||||||||||||||
Other non-current
| assets | Subsidiary | 212,716 | 212,771 | - | ||||||||||||||||
| Other receivables | Subsidiary | 1 | 1,611 | 11,744 | - | |||||||||||||||
Payable Items
June 30
December 31
Items Related Party Relationship 2021
2020
| Trade | payables | Common control under ChemChina | 5 | 0,409 | 127,082 | ||||||||||||||||||
| Other payables | Subsidiary | 219,931 | 143,840 | ||||||||||||||||||||
| Common control under ChemChina | 1 | 08 | 108 | ||||||||||||||||||||
| Contract liability |
Associated enterprises under
| ChemChina | 340 |
Other non-currentliabilities due within one
| year * | Common control under ChemChina | - | 28,000 |
Other non-current
| liabilities* | Common control under ChemChina | - | 143,770 |
* loans from related party, the interest expense for the 6 months ended June 30, 2021 was 2,865
thousand RMB (1,048 thoussand RMB in 2020).
d. Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 200,467 thousand RMB(2031.12.: 170,210 thousand RMB). Interest income of bank deposit for the current period was 598thousand RMB (amount for six months ended June, 2020 is 219 thousand RMB).
The closing balance of a loan received from ChemChina Finance corporation was 0 thousand RMB(2031.12.: 0 thousand RMB). Interest expense in the current period was 0 thousand RMB (amountfor six months ended June 30, 2020 is 370 thousand RMB).
ADAMA Ltd. Semi-Annual Report 2021
Supplementary information(Expressed in RMB '000)
1. Extraordinary Gain and Loss
Six months ended
June 30, 2021
Disposal of non-current assets 14,864
Government grants recognized through profit or loss 20,630
Recovery or reversal of expected credit losses which is assessed individually duringthe years 12,474
Other non-operating income or expenses other than the above 6,792
Other profit or loss that meets the definition of non-recurring profit or loss (44)
Tax effect(9,803)
44,913
Note 1: Extraordinary gain and loss items listed above are presented in the amount before taxation
2. Return on net assets and earnings per share (“EPS”)
The information of Return on net assets and EPS is in accordance with the Preparation Rules forInformation Disclosure by Companies Offering Securities to the Public No. 9 – Calculation andDisclosure of Return on net assets and Earnings per share (2010 Amendment) issued by China SecuritiesRegulatory Commission.
Profit during the reporting period
| Weighted average | |
| rate of return on net | |
assets
Basic EPS
(RMB/share)
Diluted EPS
(RMB/share)
Net profit attributable to ordinary
| shareholders of the Company | 1.71 | 0.16 |
N/A
| N/A |
Net profit after deduction of extraordinarygains/losses attributable to ordinary
| shareholders of the Company | 1.50 | 0.14 |
N/A
| N/A |
ADAMA Ltd.Legal Representative：Ignacio Dominguez
August 24, 2021