ADAMA Ltd.
H1 2023 Performance Estimation
The Company and all the directors confirm that the information disclosed herein is true,accurate, complete and contains no false recording, misleading statement or material omission.
I. Performance Estimation
1. Estimation period: January 1, 2023 - June 30, 2023
2. Estimated performance: net loss
| Item | Current reporting period January to June 2023 | Same period last year January to June 2022 |
Net income (loss) attributableto the shareholders of thelisted company(RMB in millions)
| Net income (loss) attributable to the shareholders of the listed company (RMB in millions) | (291) - (193) | 732 |
Net income (loss) excluding
non-recurring profits and
losses(RMB in millions)
| Net income (loss) excluding non-recurring profits and losses (RMB in millions) | (357) - (259) | 655 |
Basic earnings per share
(RMB)
| Basic earnings per share (RMB) | (0.1251) - (0.0830) | 0.3142 |
Note: The ‘non-recurring profits and losses’ referred to above are as defined in the Explanatory Announcement No. 1on Information Disclosure for Companies Offering their Securities to the Public-Non-Recurring Profit and Loss.
II. Pre-audit of the estimated performance
The estimated results of this period are the preliminary estimation of the Company and have notbeen audited nor reviewed by certified accountants.
III. Explanations for Performance Variation
SalesFor the first half year of 2023, ADAMA is expecting to report a decline in sales of approximately8% in RMB terms (14% in USD terms), compared to the first half year of 2022, mainly reflecting
lower volumes, as well as the negative impact of exchange rates and prices. The lower salesreflect market dynamics of channel destocking in light of high interest rates and a "wait and see"approach, given the high inventory in the channel and declining active ingredient pricing.Additionally, sales were also impacted by negative weather conditions in certain geographies.This is in comparison to the first half year of 2022, in which the Company achieved record salesreflecting high demand due to supply uncertainty in the market.
EBITDAIn the first half year of 2023, the Company is expecting to report a decrease in EBITDA and itsmargin in comparison to the first half year of 2022. The decrease in EBITDA is due to the declinein sales, as described above, high-cost inventory exchange rates and despite a decrease inoperating expenses and improvement in the Company's sales mix of higher margin products. Inresponse to the market conditions, the Company has taken certain measures to manage itsCOGS and OPEX.
Net LossIn the first half year of 2023, the Company is expecting to report Reported Net Loss (291 - 193million RMB), compared to the reported net income in the first half year of 2022. This is due tolower Operating Profit and an increase in financial expenses in light of higher bank interestexpenses due to an increase in short-term loans as well as the sharp increase in interest rateswhich also impacted hedging costs on exchange rates. These financial expenses weremoderated by the lower Israeli CPI. The Company anticipates that once expensive marketinventories have been depleted, the overall market dynamics should stabilize.The Company’s reported net loss in the first half of 2023 is expected to reflect net expenses inrespect of certain transitory or non-operational and non-cash items, including mainly:
i. Non-cash amortization charges in respect of Transfer assets received from Syngentarelated to the 2017 ChemChina-Syngenta acquisition.ii. Non-cash amortization net charges related to intangible assets created as part of the
Purchase Price Allocation (PPA) on acquisitions, with no impact on the ongoingperformance of the companies acquired.iii. Incentive plans: ADAMA granted certain of its employees a long-term incentive (LTI) in
the form of 'phantom' awards linked to the Company’s share price. As such, the Companyrecords an expense, or recognizes income, depending on the fluctuation in theCompany’s share price, regardless of award exercises. To neutralize the impact of suchshare price movements on the measurement of the Company’s performance andexpected employee compensation and to reflect the existing phantom awards, in theCompany’s adjusted financial performance, the LTI is presented on an equity-settledbasis in accordance with the value of the existing plan at the grant date.
Excluding the impact of the abovementioned transitory or non-operational and non-cash items,the Company is expecting to deliver the following:
? Adjusted net income (loss) attributable to shareholders in the first half period is expectedto be between RMB (190) - (92) million, compared to Adjusted net income of RMB 978million in the same period last year;? Adjusted basic earnings per share in the first half period is expected to be between RMB(0.0816) - (0.0395), compared to RMB 0.4197 in the same period last year.
IV. Other Remarks
The estimated results above are only preliminary calculations performed by the finance team ofthe Company based on initial financial data available to the Company, and have not been auditedor reviewed by the Company's independent auditors. These estimations may change, inter alia,as a result of the further processing and analysis of the financial data that the Company willperform for the preparation of its H1 2023 financial statements. Please refer to the H1 2023 Reportto be duly disclosed by the Company on August 31, 2023 for specific and accurate financialinformation.Investors are reminded to exercise caution when making investment decisions.
Media for Information Disclosure of the Company: China Securities Journal, Securities Times andCninfo (www.cninfo.com.cn).
By order of the BoardADAMA Ltd.July 15th, 2023