ADAMA LTD.
THIRD QUARTER REPORT 2023
ADAMA Ltd. (hereinafter referred to as “the Company”) is a global leader in crop protection,providing solutions to farmers across the world to combat weeds, insects and disease.ADAMA has one of the widest and most diverse portfolios of active ingredients in the world,state-of-the art R&D, manufacturing and formulation facilities, together with a culture thatempowers our people in markets around the world to listen to farmers and ideate from thefield. This uniquely positions ADAMA to offer a vast array of distinctive mixtures, formulationsand high-quality differentiated products, delivering solutions that meet local farmer andcustomer needs in over 100 countries globally.Please see important additional information and further details included in the Annex.
October 2023
Stock Code: 000553(200553) Stock Abbreviation: ADAMA A(B) Announcement No.2023-35The Company and all members of its board of directors hereby confirm that allinformation disclosed herein is true, accurate and complete with no false or misleadingstatement or material omission.
Important NoticeThe 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 statements, misleading presentations or material omissions,and assume joint and several legal liability arising therefrom.Steve Hawkins, the person leading the Company (President and Chief ExecutiveOfficer) as well as its legal representative, and Efrat Nagar, the person leading theaccounting function (Chief Financial Officer), hereby assert and confirm thetruthfulness, accuracy and completeness of the Financial Report.The Third Quarter Report has not been audited.This Report has been prepared in both Chinese and English. Should there be anydiscrepancy between the two versions, the Chinese version shall prevail.
I. Main accounting and financial results
1. Whether the Company performs any retroactive adjustments to, or restatements of, its accounting data of last year dueto change in accounting policies or correction of accounting errors
□ Yes √ No
| July - September 2023 | +/- (%) | January - September 2023 | +/- (%) | |
| Operating revenues (RMB’000) | 7,406,903 | -20.20% | 24,660,104 | -12.17% |
| Net profit (loss) attributable to shareholders of the Company (RMB’000) | (800,317) | -2,320.27% | (1,042,473) | -235.71% |
| Net profit (loss) attributable to shareholders of the Company excluding non-recurring profit and loss (RMB’000) | (818,268) | -18,897.79% | (1,123,234) | -270.35% |
| Net cash flow from operating activities (RMB’000) | 590,706 | 377.54% | 525,830 | 133.74% |
| Basic EPS (RMB/share) | (0.3435) | -2,316.19% | (0.4474) | -235.70% |
| Diluted EPS (RMB/share) | N/A | N/A | N/A | N/A |
| Weighted average return on net assets | -3.46% | -3.62% | -4.55% | -7.99% |
| End of Reporting Period | End of last year | +/- (%) | ||
| Total assets (RMB’000) | 58,239,864 | 57,980,489 | 0.45% | |
| Net assets attributable to shareholders (RMB’000) | 22,642,235 | 23,124,655 | -2.09% | |
2. Non-Recurring profit/loss
√ Applicable □ Not applicable
Unit: RMB’000
| Item | July - September 2023 | January - September 2023 | Note |
| Gains/losses on the disposal of non-current assets (including the offset part of asset impairment provisions) | 4,820 | 28,222 | |
| Government grants recognized through profit or loss (excluding government grants closely related to business of the Company and given at a fixed quota or amount in accordance with government’s uniform standards) | 4,401 | 23,454 | |
| Recovery or reversal of provision for bad debts which is assessed individually during the years | 17,395 | 44,720 | |
| Other non-operating income and expenses other than the above | 1,724 | 15,293 | |
| Other profit or loss that meets the definition of non-recurring profit or loss | (2,149) | (4,900) | Mainly provision for early retirement plan of employees at the Company’s Israeli manufacturing facilities. |
| Less: Income tax effects | 8,240 | 26,028 | |
| Total | 17,951 | 80,761 |
Explanation of other profit or loss that meets the definition of non-recurring profit or loss
√ Applicable □ Not applicable
Mainly provisions for early retirement plan of employees at the Company’s Israeli manufacturing facilities as explainedabove in the note.
Explanation of why the Company classified an item as non-recurring profit/loss according to the definition in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering their Securities to the Public. Non-recurring Profitand Loss, and reclassified any non-recurring profit/loss items are given as examples in the said explanatory announcementto recurrent profit/loss
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Changes in main accounting statement items and financial indicators in the Reporting Period, as well as reasons forthe changes
√ Applicable □ Not applicable
General Crop Protection (CP) Market Environment
High crop protection channel inventories across all geographies due to channel loading in 2022 continued to negativelyimpact channel consumption over Q3 2023. In addition, the distribution channel is opting to buy crop inputs on a "just intime" basis and striving to carry minimal inventory given wide high interest rate environment outside China and abundantsupply of CP products. As a result, customers are buying much closer to the season, leading to a phasing of purchasesinto later quarters vs last year. The Brazilian CP market, the largest crop protection market, was down significantly in USDterms
, mostly driven by lower volumes. This trend, coupled with the ongoing decline in Active Ingredients prices comingout of China, is also putting pressure on commodity crop protection prices.Over Q3 2023 the price trend of crop commodities continued to be mixed. Farmer CP consumption remained positiveacross most regions supported by strong planted area.Update on the War Situation in IsraelOn October 7
th
2023, an unprecedented attack was launched against Israel, which thrust Israel into a state of war.ADAMA is headquartered in Israel and has three manufacturing sites in the country. ADAMA is continuing the productionin its manufacturing sites in Israel, with certain non-significant restrictions, and globally and, at this time, does not expectthis situation to have a material impact on ADAMA's ability to support its markets or on ADAMA’s consolidated financialresults.ADAMA continues to monitor the situation closely and support its people through these challenging times.
| January - September 2023 (000’RMB) | Same period last year (000’RMB) | +/-% | January - September 2023 (000’USD) | Same period last year (000’USD) | +/-% |
Operating income(Revenues)
| Operating income (Revenues) | 24,660,104 | 28,077,814 | -12.17% | 3,524,283 | 4,257,997 | -17.23% |
Cost of goods sold
| Cost of goods sold | 19,435,730 | 20,838,317 | -6.73% | 2,775,876 | 3,159,552 | -12.14% |
Sales & Marketing expenses
| Sales & Marketing expenses | 3,206,154 | 3,231,093 | -0.77% | 457,749 | 489,682 | -6.52% |
General & Administrativeexpenses
| General & Administrative expenses | 713,482 | 972,450 | -26.63% | 101,885 | 147,192 | -30.78% |
R&D expenses
| R&D expenses | 372,361 | 415,855 | -10.46% | 53,240 | 63,027 | -15.53% |
Financial Expenses
| Financial Expenses | 686,670 | 132,048 | 420.02% | 97,891 | 15,496 | 531.72% |
Gain (loss) from Changes inFair Value
| Gain (loss) from Changes in Fair Value | (1,068,797) | (1,364,883) | -21.69% | (152,786) | (210,040) | -27.26% |
Total Net Financial Expenses
| Total Net Financial Expenses | 1,755,467 | 1,496,931 | 17.27% | 250,677 | 225,536 | 11.15% |
Total profits (loss)
| Total profits (loss) | (1,104,176) | 901,110 | -222.54% | (154,701) | 138,853 | -211.41% |
Sources: Rabobank, Agri Commodity Markets Research, Sep 2023; AgbioInvestor-Quarterly-Briefing-Service-PLUS_Q3-2023;
Year-to-date as of Aug 2023, Source: Brazil Industry Panel
| January - September 2023 (000’RMB) | Same period last year (000’RMB) | +/-% | January - September 2023 (000’USD) | Same period last year (000’USD) | +/-% |
Income tax expenses(income)
| Income tax expenses (income) | (61,703) | 132,966 | -146.41% | (8,894) | 20,121 | -144.20% |
Net profit (loss) attributableto shareholders of theCompany
| Net profit (loss) attributable to shareholders of the Company | (1,042,473) | 768,144 | -235.71% | (145,807) | 118,732 | -222.80% |
EBITDA
| EBITDA | 2,209,544 | 3,983,221 | -44.53% | 318,310 | 604,598 | -47.35% |
| Q3 2023 (000’RMB) | Q3 2022 (000’RMB) | +/-% | Q3 2023 (000’USD) | Q3 2022 (000’USD) | +/-% |
Operating income(Revenues)
| Operating income (Revenues) | 7,406,903 | 9,281,986 | -20.20% | 1,032,600 | 1,359,044 | -24.02% |
Cost of goods sold
| Cost of goods sold | 6,077,003 | 7,015,562 | -13.38% | 847,196 | 1,027,235 | -17.53% |
Sales & Marketing expenses
| Sales & Marketing expenses | 1,044,955 | 1,072,004 | -2.52% | 145,675 | 156,961 | -7.19% |
General & Administrativeexpenses
| General & Administrative expenses | 252,336 | 330,137 | -23.57% | 35,177 | 48,309 | -27.18% |
R&D expenses
| R&D expenses | 109,983 | 141,117 | -22.06% | 15,335 | 20,664 | -25.79% |
Financial Expenses
| Financial Expenses | 230,815 | 570,273 | -59.53% | 32,164 | 83,487 | -61.47% |
Gain (loss) from Changes inFair Value
| Gain (loss) from Changes in Fair Value | (286,579) | (23,165) | 1,137.12% | (39,952) | (3,392) | 1,077.83% |
Total Net Financial Expenses
| Total Net Financial Expenses | 517,394 | 593,438 | -12.81% | 72,116 | 86,879 | -16.99% |
Total profits (loss)
| Total profits (loss) | (785,587) | 67,736 | -1,259.78% | (109,501) | 9,918 | -1,204.06% |
Income tax expenses
| Income tax expenses | 14,730 | 31,690 | -53.52% | 2,054 | 4,639 | -55.72% |
Net profit (loss) attributableto shareholders of theCompany
| Net profit (loss) attributable to shareholders of the Company | (800,317) | 36,046 | -2,320.27% | (111,555) | 5,279 | -2,213.18% |
EBITDA
| EBITDA | 268,554 | 1,211,159 | -77.83% | 37,444 | 177,324 | -78.88% |
Note: Since the functional currency of main overseas subsidiaries is the USD, and the Company’s management review ofthe Company’s performance is based on the USD results, following explanations and analysis are based on USD-denominated numbers as listed above.
Analysis of Financial Highlights
(1) Revenues
Revenues in the third quarter declined by approximately 24% (-20% in RMB terms; -25% in CER terms) to $1,033million, reflecting a decrease of 12% in volumes and a decrease of 13% in prices. The lower sales reflect marketdynamics of high channel inventories, last-minute purchasing following channel destocking in light of high interestrates and pressure on crop protection product pricing due to the lower channel demand.These results brought the revenues in the first nine months of 2023 to $3,524 million, a decline of approximately
17% (-12% in RMB terms; -15% in CER terms), reflecting a decrease of 10% in volumes and a decrease of 5% inprices. This is in comparison to the record sales the Company achieved in 2022, which reflected the high demanddue to supply uncertainty in the market.
Regional Sales Performance
* 2022 denote proforma sales. As of 2023, the India, Middle East & Africa (IMA) region has been reorganized such that thecountries formerly included in this region are now included in the Europe region (renamed EAME) or in the Asia Pacificregion.Note: the numbers in this table may not sum due to rounding.
Europe, Africa & Middle East (EAME): Sales in EAME decreased in the third quarter and nine-month period followingoverall crop protection market slow down leading to lower volumes and pressure on prices. In Europe this trend wasparticularly notable in Northern Europe with high channel inventory and in Central Europe, where cheap grain from Ukraineimpacted farmers' investments in crops. The Company succeeded in increasing its sales in France, Italy and Iberiafollowing weak seasons last year and with the company seizing opportunities in the cereal market in France.North America: Consumer & Professional Solutions - Sales in the third quarter and nine-month period were impactedby softening demand both in the consumer and professional solutions markets following a decline in disposable income,an outcome of inflationary pressures and high interest rates, and high channel inventories. Additionally, sales shifted fromthe third quarter to the fourth quarter to align with season use.In the US Ag market sales in the third quarter and the nine-month period declined reflecting the overall dynamic of thechannel lowering inventory levels due to high interest rates with demand focusing on "just-in-time" supply from producers.Sales in Canada were significantly impacted in the third quarter among others due to the negative effect of the weather onfungicide sales and pricing pressure. In the nine-month period the decline in sales was more moderate as the sales weresupported by the strong performance in the first half of the year following expansion of the Company's portfolio during 2022and relatively stable pricing in the market.Latin America: Brazil - CP market contraction, characterized by channel destocking and softening pricing, led to a declinein the company's sales in the third quarter and nine-month period.In the rest of LATAM, sales in the third quarter and nine-month period decreased, following pressure on prices and dryerweather than expected. This is despite the strong performance of the biologicals portfolio and gaining market share insome key countries.Asia-Pacific: In China, the market is experiencing oversupply and pricing pressure impacting both the branded formulation
| Q3 2023 $m | Q3 2022 $m | Change USD | 9M 2023 $m | 9M 2022 $m | Change USD |
Europe, Africa & Middle East (EAME)*
| Europe, Africa & Middle East (EAME)* | 235 | 257 | -8.8% | 999 | 1,051 | -4.9% |
North America
| North America | 133 | 174 | -23.9% | 568 | 736 | -22.8% |
Latin America
| Latin America | 350 | 548 | -36.1% | 912 | 1,161 | -21.4% |
Asia Pacific
| Asia Pacific | 315 | 380 | -17.0% | 1,044 | 1,310 | -20.3% |
Of which China
| Of which China | 130 | 156 | -16.5% | 453 | 605 | -25.1% |
Total
| Total | 1,033 | 1,359 | -24.0% | 3,524 | 4,258 | -17.2% |
and non-ag sales, partially offset by the increase of AI sales as a result of active efforts to expand the markets andcustomers along with the Sanonda Jingzhou site reaching high utilization after relocation.Sales in the wider APAC and in India decreased in the third quarter and first nine-month period despite an increase involumes sold in Asia and Pacific regions. Sales were negatively impacted by pressure on prices, especially in Australiaand India with the beginning of El Ni?o and a weak monsoon season.
(2) Cost of Goods and Gross Profit
The decline in the gross profit in the first nine months was due to the decline in sales, as described above, high-cost inventory and negative exchange rates moderated by lower transportation and logistics costs. In the thirdquarter, these impacts had a higher adverse effect, though moderated by lower transportation and logistics costsand slightly moderated by the positive impact of exchange rates and the initial effect of new inventory sold, pricedat market levels.
(3) Operating Expenses:
Operating expenses include Sales and Marketing, General and Administration and R&D.The Company recorded certain non-operational charges within its operating expenses amounting to RMB 49 million($7 million) in Q3 2023 in comparison to RMB 20 million ($3 million) in Q3 2022, and RMB 153 million ($22 million)in 9M 2023 in comparison to RMB 202 million ($31 million) in 9M 2022, mainly as follows:
(i) Non-cash amortization charges in respect of Transfer assets received and written-up related to the 2017ChemChina-Syngenta acquisition. The proceeds from the Divestment of crop protection products in connection withthe approval by the EU Commission of the acquisition of Syngenta by ChemChina, net of taxes and transactionexpenses, were paid to Syngenta in return for the transfer of a portfolio of products in Europe of similar nature andeconomic value. Since the products acquired from Syngenta are of the same nature, and with the same neteconomic value as those divested, the Divestment and Transfer transactions had no net impact on the underlyingeconomic performance of the Company. These additional amortization charges will continue until 2032 but at areducing rate, yet will still be at a meaningful level until 2028; (ii) Charges related mainly to the non-cash amortizationof intangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions, with no impact on theongoing performance of the companies acquired; and (iii) Incentive plans - share-based compensation.Excluding the impact of the abovementioned non-operational items, the lower operating expenses in the thirdquarter and first nine-month period of 2023 were mainly due to OPEX management measures, an adjustment of aprovision for success-based compensation and the positive impact of exchange rates. Additionally, in the first ninemonths year of 2022 the Company recorded a provision for doubtful debts in Ukraine.
(4) Financial Expenses
“Financial Expenses” alone mainly reflect interest payments on corporate bonds and bank loans as well as foreignexchange gains/losses on the bonds and other monetary assets and liabilities before the Company carries out anyhedging.The impact of Financial Expenses (before hedging) is an expense of RMB 687 million ($98 million) for the ninemonths of 2023 compared with an expense of RMB 132 million ($15 million) for the corresponding period in 2022.Given the global nature of its operational activities and the composition of its assets and liabilities, the Company, inthe ordinary course of its business, uses foreign currency derivatives (forwards and options) to hedge the cash flowrisks associated with existing monetary assets and liabilities that may be affected by exchange rate fluctuations.“Gains/Losses from Changes in Fair Value” amounted to a net loss of RMB 1,069 million ($153 million) in the
first nine months of 2023, mainly due to hedging transactions, compared with a net loss of RMB 1,365 million ($210million) in the corresponding period in 2022The aggregate of Financial Expenses and Gains/Losses from Changes in Fair Value (hereinafter as “Total NetFinancial Expenses”), which more comprehensively reflects the financial expenses of the Company in supportingits main business and protecting its monetary assets/liabilities, amounts to RMB 1,755 million ($251 million) in thenine months of 2023 compared with RMB 1,497 million ($226 million) in the corresponding period in 2022.The higher Total Net Financial Expenses were mainly due to higher bank interest expenses as stated above partiallyoffset by lower bond interest and CPI.
(5) Credit and Asset Impairment Loss
During the first nine months of 2023, the Company recorded provisions for asset and credit loss impairments totalingRMB 275 million (approximately $39 million). These provisions are mainly related to impairment of inventoriesmainly due to the decline in the market price of certain products and other inventory management issues part of theordinary course of the Company’s business and credit loss impairment of accounts receivables made during theordinary course of the Company’s business. For details, please refer to Asset Impairment Announcement(Announcement No. 2023-36) disclosed on October 31, 2023 at cninfo.com.
(6) Income Tax Expenses
Despite reaching losses before tax, the Company recorded tax expenses in the third quarter and recorded a lowtax income in the first nine-month period of 2023, mainly because the generation of the losses were primarily bysubsidiaries with relatively lower tax rates than the subsidiaries that generated profit. Additionally, in the third quarterthe company recorded tax expenses due to the non-cash impact of the weakness of the BRL in the third quarterthat effect the value of non-monetary tax assets. In the first nine months of 2022, the company recognized a highdeferred tax asset, related to inter-group sales, that led to a decline in the tax on income.
Changes in main assets and liabilities
Unit: RMB’000
| Assets and liabilities | End of Reporting Period | End of last year | +/- (%) | Explanation |
| Cash at bank and on hand | 5,294,442 | 4,290,961 | 23.39% | Additional financing and less procurement |
| Derivative financial assets | 308,208 | 233,809 | 31.82% | Changes due to revaluation of derivatives |
| Other receivables | 684,280 | 1,021,824 | -33.03% | Mainly decrease in receivables in respect of securitization transaction |
| Inventories | 15,283,558 | 16,927,241 | -9.71% | Decrease in the procurement of goods |
| Deferred tax assets | 1,758,080 | 1,347,263 | 30.49% | Mainly due to losses carried forward |
| Short-term loans | 6,513,139 | 3,342,921 | 94.83% | Supporting the on-going business activities |
| Derivative financial liabilities | 792,872 | 545,516 | 45.34% | Changes due to revaluation of derivatives |
| Bills payable | 469,390 | 1,114,775 | -57.89% | Decrease in the procurement of goods |
| Accounts payable | 4,727,821 | 7,527,269 | -37.19% | Decrease in the procurement of goods |
| Employee benefits payable | 847,842 | 1,370,786 | -38.15% | Adjustment of a provision for success-based compensation |
| Other payables | 2,422,564 | 1,611,282 | 50.35% | Mainly increase liabilities in respect of securitization transaction and accrued expenses for interests |
| Other non-current liabilities | 2,389,178 | 1,255,875 | 90.24% | Increase in loan from related party |
II. Information regarding the Shareholders
1. Total number of ordinary shareholders and preference shareholders who had resumed their voting
rights, and shareholdings of top 10 shareholders at the period-end
Unit: share
| Total number of ordinary shareholders at the end of the Reporting Period | 41,822 (the number of ordinary A share shareholders is 28,918; the number of B share shareholders is 12,904) | Total number of preference shareholders who had resumed their voting right at the end of the Reporting Period (if any) | 0 | ||||
| Shareholdings of top 10 shareholders | |||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Number of shares held | Number of restricted shares held | Pledged or frozen shares | ||
| Status | Number | ||||||
| Syngenta Group Co., Ltd. | State-owned legal person | 78.47% | 1,828,137,961 | -- | -- | -- | |
| China Cinda Asset Management Co., Ltd. | State-owned legal person | 1.34% | 31,115,916 | -- | -- | -- | |
| Bosera Funds-China Merchants Bank- Bosera Funds Xincheng No.2 Collective Asset | Others | 0.28% | 6,500,000 | -- | -- | -- | |
Management PlanWu Feng
| Wu Feng | Domestic Natural Person | 0.26% | 6,156,969 | -- | -- | -- | |
| Bosera Funds-Postal Savings Bank- Bosera Funds Xincheng No.3 Collective Asset Management Plan | Others | 0.26% | 6,000,000 | -- | -- | -- | |
| Zhu Shenglan | Domestic Natural Person | 0.25% | 5,756,000 | -- | -- | -- |
Hong Kong Securities ClearingCompany Ltd. (HKSCC)
| Hong Kong Securities Clearing Company Ltd. (HKSCC) | Overseas Legal Person | 0.24% | 5,566,301 | ||||
| China Universal Asset Management Fund-Industrial Bank-CUAM-Strategic Enhancement No.3 Collective Asset Management Plan | Others | 0.19% | 4,400,000 | -- | -- | -- | |
| Qichun County State-owned Assets Supervision and Administration Bureau | State-owned Legal Person | 0.18% | 4,169,266 | -- | -- | -- | |
| Bosera Funds-Postal Savings Bank- Bosera Funds Xincheng No.4 Collective Asset Management Plan | Others | 0.17% | 4,000,000 | -- | -- | -- |
Shareholdings of top 10 non-restricted shareholders
| Shareholdings of top 10 non-restricted shareholders | |||
| Name of shareholder | Number of non-restricted shares held at the period-end | Type of shares | |
| Type | Number | ||
| Syngenta Group Co., Ltd. | 1,828,137,961 | RMB ordinary share | 1,828,137,961 |
| China Cinda Asset Management Co., Ltd. | 31,115,916 | RMB ordinary share | 31,115,916 |
| Bosera Funds-China Merchants Bank- Bosera Funds Xincheng No.2 Collective Asset Management Plan | 6,500,000 | RMB Ordinary Share | 6,500,000 |
| Wu Feng | 6,156,969 | RMB Ordinary Share | 6,156,969 |
| Bosera Funds-Postal Savings Bank- Bosera Funds Xincheng No.3 Collective Asset Management Plan | 6,000,000 | RMB Ordinary Share | 6,000,000 |
| Zhu Shenglan | 5,756,000 | RMB Ordinary Share | 5,756,000 |
| Hong Kong Securities Clearing Company Ltd. (HKSCC) | 5,566,301 | RMB Ordinary Share | 5,566,301 |
China Universal AssetManagement Fund-IndustrialBank-CUAM-StrategicEnhancement No.3 CollectiveAsset Management Plan
| China Universal Asset Management Fund-Industrial Bank-CUAM-Strategic Enhancement No.3 Collective Asset Management Plan | 4,400,000 | RMB Ordinary Share | 4,400,000 |
| Qichun County State-owned Assets Supervision and Administration Bureau | 4,169,266 | RMB Ordinary Share | 4,169,266 |
| Bosera Funds-Postal Savings Bank- Bosera Funds Xincheng No.4 Collective Asset Management Plan | 4,000,000 | RMB Ordinary Share | 4,000,000 |
| Related or act-in-concert parties among the shareholders above | Syngenta Group Co., Ltd. is not a related party or acting-in-concert party as prescribed in the Administrative Methods for Acquisition of Listed Companies to other shareholders. It is unknown to the Company whether shareholders above are related parties or acting-in-concert parties as prescribed in the Administrative Methods for Acquisition of Listed Companies. | ||
| Top 10 ordinary shareholders | Shareholder Wu Feng held 4,776,243 shares of the Company through an ordinary | ||
| conducting securities margin trading | securities trading account and 1,380,726 shares of the Company through a credit collateral securities trading account, the total sum of which is 6,156,969 shares. Shareholder Zhu Shenglan held 5,756,000 shares of the Company through a credit collateral securities trading account. |
2. Total number of preference shareholders and shareholdings of the top 10 of such at the period-end
□ Applicable √ Not applicable
III. Other Significant Events
□ Applicable √ Not applicable
IV. Financial Statements
i. Financial Statements
1. Consolidated balance sheet
Prepared by ADAMA Ltd.
30 September 2023
Unit: RMB’000
| Item | September 30, 2023 | December 31, 2022 | Item | September 30, 2023 | December 31, 2022 |
| Current assets: | Current liabilities: | ||||
| Cash at bank and on hand | 5,294,442 | 4,290,961 | Short-term loans | 6,513,139 | 3,342,921 |
| Financial assets held for trading | 1,881 | 1,685 | Derivative financial liabilities | 792,872 | 545,516 |
| Derivative financial assets | 308,208 | 233,809 | Bills payable | 469,390 | 1,114,775 |
| Bills receivable | 129,839 | 112,297 | Accounts payable | 4,727,821 | 7,527,269 |
| Accounts receivable | 8,655,994 | 9,018,375 | Contract liabilities | 1,657,021 | 1,776,573 |
| Receivables financing | 191,102 | 63,639 | Employee benefits payable | 847,842 | 1,370,786 |
| Prepayments | 348,360 | 341,102 | Taxes payable | 419,240 | 459,574 |
| Other receivables | 684,280 | 1,021,824 | Other payables | 2,422,564 | 1,611,282 |
| Inventories | 15,283,558 | 16,927,241 | Non-current liabilities due within one year | 2,519,292 | 2,262,131 |
| Other current assets | 1,117,735 | 1,129,688 | Other current liabilities | 748,337 | 703,794 |
| Total current assets | 32,015,399 | 33,140,621 | Total current liabilities | 21,117,518 | 20,714,621 |
| Non-current assets: | Non-current liabilities: | ||||
| Long-term receivables | 73,126 | 82,510 | Long-term loans | 3,037,852 | 3,662,870 |
| Long-term equity investments | 28,955 | 26,368 | Debentures payable | 7,199,797 | 7,353,511 |
| Other equity investments | 163,503 | 158,341 | Lease liabilities | 506,316 | 431,076 |
| Investment properties | 22,554 | 3,168 | Long-term accounts payable | 102,463 | 107,686 |
| Fixed assets | 9,386,997 | 8,952,184 | Long-term employee benefits payables | 648,046 | 792,153 |
| Construction in progress | 3,241,534 | 2,961,401 | Provisions | 291,561 | 222,181 |
| Right-of-use assets | 646,491 | 555,889 | Deferred tax liabilities | 304,898 | 315,861 |
| Intangible assets | 5,392,647 | 5,342,754 | Other non-current liabilities | 2,389,178 | 1,255,875 |
| Goodwill | 5,068,366 | 4,805,157 | Total non-current liabilities | 14,480,111 | 14,141,213 |
| Deferred tax assets | 1,758,080 | 1,347,263 | Total liabilities | 35,597,629 | 34,855,834 |
| Other non-current assets | 442,212 | 604,833 | Shareholders’ equity: | ||
| Total non-current assets | 26,224,465 | 24,839,868 | Share capital | 2,329,812 | 2,329,812 |
| Total assets | 58,239,864 | 57,980,489 | Capital reserves | 12,950,464 | 12,986,333 |
| Other comprehensive income | 1,829,985 | 1,080,590 | |||
| Special reserves | 16,852 | 15,818 | |||
| Surplus reserves | 242,498 | 242,498 | |||
| Retained earnings | 5,272,624 | 6,469,604 | |||
| Total equity attributed to the shareholders of the company | 22,642,235 | 23,124,655 | |||
| Non-controlling interests | - | - | |||
| Total equity | 22,642,235 | 23,124,655 | |||
| Total liabilities and equity | 58,239,864 | 57,980,489 |
| Legal representative | Efrat Nagar Chief of the accounting work | Efrat Nagar Chief of the accounting organ |
2. Consolidated income statement for the period from the year-beginning to the end of the Reporting Period
Unit: RMB’000
| Item | January-September, 2023 | January-September, 2022 |
| 1. Total operating Income | 24,660,104 | 28,077,814 |
| Less: Cost of sales | 19,435,730 | 20,838,317 |
| Taxes and surcharges | 79,817 | 80,507 |
| Selling and Distribution expenses | 3,206,154 | 3,231,093 |
| General and Administrative expenses | 713,482 | 972,450 |
| Research and Development expenses | 372,361 | 415,855 |
| Financial expenses | 686,670 | 132,048 |
| Including: Interest expense | 873,611 | 525,681 |
| Interest income | 235,730 | 111,595 |
| Add: Investment income, net | 17,134 | 10,889 |
| Including: Income from investment in associates and joint ventures | 4,393 | 10,889 |
| Loss from changes in fair value | (1,068,797) | (1,364,883) |
| Credit impairment losses | (46,205) | (97,785) |
| Asset Impairment losses | (228,926) | (132,121) |
| Gain from disposal of assets | 26,971 | 62,491 |
| 2. Operating profit (loss) | (1,133,933) | 886,135 |
| Add: Non-operating income | 61,910 | 38,257 |
| Less: Non-operating expense | 32,153 | 23,282 |
| 3. Total profit (loss) | (1,104,176) | 901,110 |
| Less: income tax expense (income) | (61,703) | 132,966 |
| 4. Net profit (loss) | (1,042,473) | 768,144 |
| 4.1 Classified by nature of operations | ||
| 4.1.1 Continuing operations | (1,042,473) | 768,144 |
| 4.2 Classified by ownership | ||
| 4.2.1 Shareholders of the Company | (1,042,473) | 768,144 |
| 4.2.2 Non-controlling interests | - | - |
| 5. Other comprehensive income net of tax | 749,395 | 1,797,634 |
| Other comprehensive income net of tax attributable to shareholders of the Company | 749,395 | 1,797,634 |
| 5.1 Items that will not be reclassified into profit/loss | 15,564 | 75,796 |
| 5.1.1 Re-measurement of defined benefit plan liability | 15,564 | 75,796 |
| 5.2 Items that were or will be reclassified to profit or loss | 733,831 | 1,721,838 |
| 5.2.1 Effective portion of gains or loss of cash flow hedge | 56,675 | (24,433) |
| 5.2.2 Translation differences of foreign financial statements | 677,156 | 1,746,271 |
| Other comprehensive income net of tax attributable to Non-controlling interests | - | - |
| 6. Total comprehensive income (loss) for the period | (293,078) | 2,565,778 |
| Total comprehensive income (loss) attributable to shareholders of the Company | (293,078) | 2,565,778 |
| Total comprehensive income attributable to Non-controlling interests | - | - |
| 7. Earnings (loss) per share | ||
| 7.1 Basic earnings (loss) per share (RMB/ share) | (0.4474) | 0.3297 |
| 7.2 Diluted earnings per share (RMB/ share) | N/A | N/A |
| Legal representative | Efrat Nagar Chief of the accounting work | Efrat Nagar Chief of the accounting organ |
3. Consolidated cash flow statement for the period from the year-beginning to the end of the Reporting
Period
Unit: RMB’000
| Item | January-September, 2023 | January-September, 2022 |
| 1. Cash flows from operating activities: | ||
| Cash received from sale of goods and rendering of services | 24,801,386 | 26,141,756 |
| Refund of taxes and surcharges | 120,349 | 240,522 |
| Cash received relating to other operating activities | 360,690 | 729,056 |
| Sub-total of cash inflows from operating activities | 25,282,425 | 27,111,334 |
| Cash paid for goods and services | 18,461,118 | 22,192,149 |
| Cash paid to and on behalf of employees | 3,439,222 | 3,130,092 |
| Payments of taxes and surcharges | 487,549 | 771,897 |
| Cash paid relating to other operating activities | 2,368,706 | 2,575,896 |
| Sub-total of cash outflows from operating activities | 24,756,595 | 28,670,034 |
| Net cash flows from operating activities | 525,830 | (1,558,700) |
| 2. Cash flows from investing activities: | ||
| Cash receipts from disposal of investments | 171,646 | 5,887 |
| Cash received from investment income | 4,637 | 1,588 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 36,850 | 71,850 |
| Cash received for other investing activities | 37,984 | 2,325 |
| Sub-total of cash inflows from investing activities | 251,117 | 81,650 |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 1,706,970 | 1,968,585 |
| Cash paid for acquisition of investments | 2,843 | - |
| Net cash paid to acquire subsidiaries or other business units | 148,460 | - |
| Cash paid for other investing activities | 6,481 | 89,395 |
| Sub-total of cash outflows from investing activities | 1,864,754 | 2,057,980 |
| Net cash flows from investing activities | (1,613,637) | (1,976,330) |
| 3. Cash flows from financing activities: | ||
| Cash received from borrowings | 4,458,035 | 3,909,042 |
| Cash received relating to other financing activities | 1,191,050 | 26,750 |
| Sub-total of cash inflows from financing activities | 5,649,085 | 3,935,792 |
| Cash repayment of borrowings | 1,973,706 | 1,324,163 |
| Cash payment for dividends, profit distributions or interest | 915,438 | 571,867 |
| Including: dividends paid to non-controlling interest | 91,597 | 39,074 |
| Cash paid relating to other financing activities | 723,786 | 932,457 |
| Sub-total of cash outflows from financing activities | 3,612,930 | 2,828,487 |
| Net cash flows from financing activities | 2,036,155 | 1,107,305 |
| 4. Effect of foreign exchange rate changes on cash and cash equivalents | 107,187 | 311,082 |
| 5. Net increase (decrease) in cash and cash equivalents | 1,055,535 | (2,116,643) |
| Add: Cash and cash equivalents at the beginning of the period | 4,225,253 | 5,759,480 |
| 6. Cash and cash equivalents at the end of the period | 5,280,788 | 3,642,837 |
ii. Impact of initial application of new accounting standards on the opening balances ofcurrent year
□ Applicable √ Not applicable
iii. Auditor’s reportIs this Report audited?
□ Yes √ NoThis Report is unaudited.
Board of Directors
ADAMA Ltd.October 31, 2023