ADAMA Ltd.Annual Report 2023
ADAMA LTD.ANNUAL REPORT 2023
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.For further important additional information and details, please refer to the Annex.
March 2024
ADAMA Ltd.Annual Report 2023
Section I - Important Notice, Table of Contents and Definitions
? The Company’s Board of Directors, Board of Supervisors, directors, supervisors and senior managers confirmthat the content of the Report is true, accurate and complete and contains no false statements, misleadingpresentations or material omissions, and assume joint and several legal liability arising therefrom.
? Steven Hawkins, the person leading the Company (President and Chief Executive Officer) as well as its legalrepresentative, and Efrat Nagar - the person leading the accounting function (Chief Financial Officer), herebyassert and confirm the truthfulness, accuracy and completeness of the Financial Report.
? All of the Company’s directors attended the board meeting for the review of this Report.
? The forward-looking information described in the Report, such as future plans, development strategy etc., doesnot constitute, in any manner whatsoever, a substantial commitment of the Company to investors. Investors andother relevant people are cautioned to be sufficiently mindful of investment risks as well as the difference betweenplans, forecasts and commitments.
? The Company has described its future development strategies, work plan for 2024 and possible risks in “XI.Outlook of the Company’s future development” in Section III. The major risks of the Company include, amongothers, exchange rate fluctuations; exposure to interest rate, Israel CPI and NIS exchange rate fluctuations;fluctuations in raw material inputs and prices, and in sales. Investors and other relevant people are cautioned tobe sufficiently mindful of investment risks. For the complete “Risk factors and countermeasures” of the Company,please see the relevant section below.
? Pre-plan of dividend distribution or reserve transfer to equity capital approved for the reporting period by the
meeting of the Board of Directors on March 25, 2024
□Applicable √Not applicable
The Company does not plan to distribute cash or share dividends, nor plan to transfer capital reserve to equitycapital.
? This Report and its abstract have been prepared in both Chinese and English. Should there be any discrepancies
between the two versions, the Chinese version shall prevail.
ADAMA Ltd.Annual Report 2023
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 ...... 12
Section IV - Corporate Governance ...... 53
Section V - Environment and Social Responsibilities ...... 80
Section VI - Significant Events ...... 93
Section VII - Change in Shares & Shareholders ...... 141
Section VIII - Preferred Stock ...... 152
Section IX - Corporate Bonds ...... 153
Section X - Financial Report ...... 154
ADAMA Ltd.Annual Report 2023
Contents of Documents Available for Reference
(I) Duly signed Financial Statements by the Legal Representative and Accounting Principal as well as Head of theAccounting Organ.(II) Duly signed Auditor’s Report and seals the certified public accountants.(III) 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.Annual Report 2023
Definitions
In this Report, the following terms have the meaning appearing alongside them, unless otherwise specified:
| General Terms | Definition |
Company, the Company
| Company, the Company | ADAMA Ltd. |
Adama Solutions
| Adama Solutions | Adama Agricultural Solutions Ltd., a wholly-owned subsidiary of the Company, incorporated in Israel according to its laws |
Anpon, ADAMA Anpon
| Anpon, ADAMA Anpon | ADAMA Anpon (Jiangsu) Ltd., a wholly-owned subsidiary of the Company |
Board of Directors/Board
| Board of Directors/Board | The Board of Directors of the Company |
Board of Supervisors
| Board of Supervisors | The Board of Supervisors of the Company |
Articles of Association / AOA
| Articles of Association / AOA | The Articles of Association of the Company |
Group, the Group, ADAMA
| Group, the Group, ADAMA | The Company, including all its subsidiaries, unless expressly stated otherwise |
ChemChina
| ChemChina | China National Chemical Co., Ltd. |
CNAC
| CNAC | China National Agrochemical Co., Ltd. |
CSRC
| CSRC | China Securities Regulatory Commission |
SZSE
| SZSE | Shenzhen Stock Exchange |
SASAC
| SASAC | State Assets Supervision and Administration Commission of China |
Syngenta Group
| Syngenta Group | Syngenta Group Co., Ltd., the controlling shareholder of the Company as of June 15, 2020, a wholly-owned subsidiary of CNAC |
Sinochem Holdings
| Sinochem Holdings | Sinochem Holdings Corporation Ltd. |
Sinochem Group
| Sinochem Group | Sinochem Holdings including all its subsidiaries unless otherwise indicated or the context otherwise requires |
Report
| Report | This 2023 Annual Report |
Financial Report
| Financial Report | The Financial Reports for the year 2023, as contained in this Report |
Reporting Period, this Period,Current Year
| Reporting Period, this Period, Current Year | Year 2023 |
Company Law
| Company Law | Company Law of the People’s Republic of China |
Securities Law
| Securities Law | Securities Law of the People’s Republic of China |
Listing Rules
| Listing Rules | Listing Rules of the SZSE |
ADAMA Ltd.Annual Report 2023
Section II - Corporate Profile and Financial Results
I. Corporate Information
| Stock name | ADAMA A, ADAMA B | Stock code | 000553, 200553 |
| Stock exchange | Shenzhen Stock Exchange | ||
| Company name in Chinese | 安道麦股份有限公司 | ||
| Abbr. | 安道麦 | ||
| Company name in English (if any) | ADAMA Ltd. | ||
| Abbr. (if any) | ADAMA | ||
| Legal representative | Steve Hawkins | ||
| Registered address | No. 93, East Beijing Road, Jingzhou, Hubei | ||
| Zip code | 434001 | ||
| Office address | No. 93, East Beijing Road, Jingzhou, Hubei | ||
| Zip code | 434001 | ||
| Company website | www.adama.com | ||
| irchina@adama.com | |||
II. Contact Information
| Board Secretary | Securities Affairs Representative Investor Relations Manager | |
| Name | Guo Zhi | Wang Zhujun |
| Address | 6/F, No.7 Office Building, No.10 Courtyard, Chaoyang Park South Road, Chaoyang District, Beijing | |
| Tel. | 010-56718110 | 010-56718110 |
| Fax | 010-59246173 | 010-59246173 |
| irchina@adama.com | irchina@adama.com | |
ADAMA Ltd.Annual Report 2023
III. Information Disclosure
| Website of the Stock Exchange on which the Company Discloses its Annual Report | www.szse.cn |
| Media and Website on which the Company Discloses its Annual Report | China Securities Journal Securities Times http://www.cninfo.com.cn |
| Location on which this Report is kept | Securities office of the Company |
IV. Company Registration and Alteration
| Credibility code | 91420000706962287Q |
| Changes in main business activities of the Company after going public (if any) | None in the reporting period. |
| Historic Changes of controlling shareholder (if any) | The Company was reorganized as Hubei Sanonda Co., Ltd. in 1992 after being approved by departments of Commission for Reorganization of Hubei Province. The largest shareholder of the Company was Shashi State-Owned Assets Administration Bureau. In 1994, the original Shashi State-Owned Assets Administration Bureau and Jiangling State-owned Assets Administration Bureau were classified as Jingsha State-Owned Assets Administration Bureau. Therefore, the shares of the Company held by Shashi State-Owned Assets Administration Bureau and Jiangling State-Owned Assets Administration Bureau were all held by Jingsha State-Owned Assets Administration Bureau, and Jingsha State-Owned Assets Administration Bureau became the controlling shareholder of the Company. In 1996, according to the Reply of Hubei Provincial People's Government on Authorization of Sanonda Group Co., Ltd. Operating the State-Owned Assets (EZBH[1995] No.92), Jingsha State-Owned Assets Administration Bureau set up Sanonda Group Co., Ltd. (renamed “Jingzhou Sanonda Holdings Co., Ltd.”). On March 20, 2005, Jingzhou State-Owned Assets Administration Bureau and China Mingda Chemical and Mining Corporation (later renamed "China National Agrochemical Co., Ltd., CNAC") signed the Asset Transfer Agreement of Sanonda Group Co., Ltd, and CNAC received 100% equity of Sanonda Group Co., Ltd, from Jingzhou State-Owned Assets Administration Bureau. After the completion of the above transfer, the actual controller of the Company was changed from Jingzhou State-Owned Assets Administration Bureau to SASAC. In July, 2017, the Company received the Approval on Issuing Shares by Hubei Sanonda Co., Ltd. to China National Agrochemical Corporation for Acquiring Assets and Raising Supporting Funds (CSRC license No. [2017]1096). CSRC approved of the Company’s issuance of 1,810,883,039 shares to China National Agrochemical Corporation for the purchase of 100% equity of ADAMA Solutions held by it. After the completion of the major assets restructuring, the controlling shareholder of the Company was changed from Jingzhou Sanonda Holdings |
ADAMA Ltd.Annual Report 2023
Co., Ltd. to CNAC.In June, 2020, CNAC transferred 1,810,883,039 shares of the Company held by it to SyngentaGroup free of charge and completed the registration procedures for the above transferredshares. After the completion of the share transfer, Syngenta Group has become the directcontrolling shareholder of the Company.During the reporting period, the controlling shareholder of the Company did not change.
V. Other Information
The Accounting Firm Engaged by the Company
| Company’s Auditors | Name | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| Office address | 30/F, Bund Center, 222 Yan An Road East, Shanghai PRC | |
| Signing Certified Public Accountant | Ji Yuting and Zhao Jingyuan |
Sponsor engaged by the Company to continuously perform its supervisory function during the Reporting Period
□ Applicable √ Not applicable
Financial advisor engaged by the Company to continuously perform its supervisory function during the Reporting Period
□ Applicable √ Not applicable
ADAMA Ltd.Annual Report 2023
VI. Main Accounting and Financial Results
Whether the Company performed any retroactive adjustments to or restatement of its accounting data
√ Yes □ No
Reasons for Retroactive Adjustments or Restatement of the Accounting Data: Other reason
Unit: RMB’000
| 2023 | 2022 | +/- (%) | 2021 | |||
| Before adjustment | After adjustment | Before adjustment | After adjustment | |||
| Operating revenue (RMB’000) | 32,779,456 | 37,381,915 | 37,381,915 | -12.31% | 31,038,605 | 31,038,605 |
| Net profit (loss) attributable to the shareholders (RMB’000) | (1,605,887) | 609,391 | 609,391 | -363.52% | 157,397 | 157,397 |
| Net profit (loss) attributable to the shareholders, excluding non-recurring profit and loss (RMB’000) | (1,851,491) | 490,428 | 501,621 | -469.1% | 77,853 | 106,438 |
| Net cash flows from operating activities (RMB’000) | 2,617,877 | 940,745 | 940,745 | 178.28% | 4,561,875 | 4,561,875 |
| Basic EPS (RMB/share) | (0.6893) | 0.2616 | 0.2616 | -363.49% | 0.0676 | 0.0676 |
| Diluted EPS (RMB/share) | N/A | N/A | N/A | N/A | N/A | N/A |
| Weighted average return on equity | -7.13% | 2.76% | 2.76% | -9.89% | 0.74% | 0.74% |
| 31.12.2023 | 31.12.2022 | +/- (%) | 31.12.2021 | |||
| Before adjustment | After adjustment | Before adjustment | After adjustment | |||
| Total assets (RMB’000) | 55,405,803 | 57,980,489 | 57,980,489 | -4.44% | 50,235,308 | 50,235,308 |
| Net assets attributable to the shareholders (RMB’000) | 21,924,475 | 23,124,655 | 23,124,655 | -5.19% | 21,075,083 | 21,075,083 |
Reason for retroactive adjustments: The Company recognized the non-recurring profit and loss items in accordance withthe “Explanatory Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public -Non-Recurring Profit and Loss (2023 Revised)” and made retrospective adjustments. The implementation of this regulationhas no significant impact on the non-recurring profit and loss in comparable accounting periods.
The net income before or after deduction of non-recurring profit or loss for the last three fiscal years is negative no matterwhich amount is less and the audit report for the most recent year shows that there is uncertainty about the company'sability to continue its operation.
□ Yes √ No
ADAMA Ltd.Annual Report 2023
The less amount of the net income before and after extraordinary gain or loss is negative
√ Yes □ No
| Items | 2023 | 2022 | Remarks |
| Sales (RMB’000) | 32,779,456 | 37,381,915 | |
| Sales deductions (RMB’000) | 49,068 | 76,542 | |
| Sales after deductions (RMB’000) | 32,730,388 | 37,305,373 |
VII. Differences in Accounting Data under Domestic and Foreign Accounting
Standards
1. Differences in the net profit and the net assets disclosed in the financial reports preparedunder Chinese and international accounting standards
□ Applicable √ Not applicable
None during the Reporting Period.
2. Differences in the net profit and the net assets disclosed in the financial reports preparedunder Chinese and foreign accounting standards
□ Applicable √ Not applicable
None during the Reporting Period.
3. Explanation on the differences in accounting data
□ Applicable √ Not applicable
VIII. Main Financial Results by Quarter
Unit: RMB’000
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | |
| Operating revenue | 8,610,576 | 8,642,625 | 7,406,903 | 8,119,352 |
| Net profit attributable to the shareholders | 83,273 | (325,429) | (800,317) | (563,414) |
| Net profit attributable to the shareholders excluding non-recurring profit and loss | 44,893 | (343,038) | (845,864) | (707,482) |
| Net cash flows from operating activities | (2,905,168) | 2,840,292 | 590,706 | 2,092,047 |
Any material differences between the financial indicators above or their summations and those which have been disclosedin quarterly or semi-annual reports
□ Yes √ No
ADAMA Ltd.Annual Report 2023
IX. Non-Recurring profit/loss
√ Applicable □ Not applicable
Unit: RMB’000
| Item | 2023 | 2022 | 2021 | Note |
| Gains/losses on the disposal of non-current assets (including the offset part of asset impairment provisions) | 19,679 | 67,525 | 846 | |
| Government grants charged to the profit/loss for the Reporting Period (except for the government grants closely related to the regular operation of the Company, in line with national policies and in accordance with defined criteria, and that have a continuing impact on the Company's profit or loss) | 20,743 | 17,771 | 19,377 | |
| Custodian fees earned from entrusted operation | - | 3,280 | - | |
| Recovery or reversal of provision for bad debts which is assessed individually during the years | 57,422 | 46,530 | 32,487 | |
| Post vesting fair value revaluation of cash-settled share-based payment | 41,959 | - | - | |
| Gains or losses arising from the holding or disposal of financial assets or financial liabilities by non-financial corporations, except for effective hedging related to the normal operating of the Company | 123,315 | - | - | |
| Other non-operating income and expenses other than the above | 31,747 | 2,475 | 12,446 | |
| Less: Income tax effects | 49,261 | 29,811 | 14,197 | |
| NCI (after tax) | - | - | - | |
| Total | 245,604 | 107,770 | 50,959 |
Details of other profit and loss items that meet the definition of non-recurring profit or loss.
□ Applicable √ Not applicable
No such cases during the Reporting Period.
Explanation of non-recurring items of profit or loss listed in "Explanatory Announcement No. 1 on Information Disclosurefor Companies Offering their Securities to the Public-Non-Recurring Profit and Loss" reclassified as recurring items of profitor loss
□ Applicable √ Not applicable
No such cases during the Reporting Period.
ADAMA Ltd.Annual Report 2023
Section III - Performance Discussion and AnalysisI. Industry in which the Company Operates during the Reporting PeriodThe company is required to comply with the “Self-regulatory Guidelines for Listed Companies on Shen-zhen Stock Exchange: No. 3 - Disclosure of Industry Information”.The 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 and commercialization of awide range of crop protection products, that are largely off-patent. The Group provides solutions to farmers to combatweeds, insects and disease, and sells its products in over 100 countries, through approximately 60 subsidiaries worldwide.The Group's business model integrates end-customer access, regulatory expertise, state-of-the art global R&D, productionand formulation facilities, thereby providing the Group a significant competitive edge and allowing it to launch new anddifferentiated products that meet local farmers and customer needs in key markets.The Group's primary operations are global, spanning activities in North America, Latin America, Asia-Pacific (includingChina) and Europe, Africa and the Middle East
.The Group also utilizes its expertise to adapt such products also for the development, manufacturing and commercializationof similar products for non-agricultural purposes (Consumer and Professional Solutions).In addition, the Group leverages its core capabilities in the agricultural and chemical fields and operates in several othernon-agricultural areas, none of which, individually, is material for the Group. These activities, collectively reported asIntermediates and Ingredients, include primarily, (a) the manufacturing and marketing of dietary supplements, food colors,texture and flavor enhancers, and food fortification ingredients; (b) fragrance products for the perfume, cosmetics, bodycare and detergents industries; (c) the manufacturing of industrial products and (d) other non-material activities.Syngenta GroupAs of June 2020, the Group is a distinctive member of Syngenta Group, a world leader in agricultural inputs, spanning cropprotection, seeds, fertilizers, additional agricultural and digital technologies, as well as an advanced distribution network inChina. As of August 2021, following the combination between ChemChina and Sinochem Group, Syngenta Group, andsubsequently the Group, are ultimately controlled by Sinochem Holdings - parent of both ChemChina and Sinochem Group,subordinated to SASAC.For further important additional information and details, please refer to the Annex.
General Environment and the Effect of External Factors on the Company’s OperationsAs a global leader in the crop protection industry, major trends, events and key developments in the Group's macro-economic environment may materially impact the Group’s business results and development. The impact of these factorsmay differ by geographic region and the different products of the Group. Since the Group offers one of the widest and mostdiverse product portfolios of crop protection products and since it operates in many geographic regions, the aggregateeffect of these factors in any given year, and during the course thereof, is not uniform and may sometimes be mitigated byoffsetting effects. The activities and results of the Group are further subject to, and affected by, certain global, localized
As of 2023, the India, Middle East & Africa (IMA) region has been reorganized such that the countries formerly included in this regionwill now be included in the Europe region (renamed EAME) or in the Asia Pacific region.
ADAMA Ltd.Annual Report 2023
and other factors, such as: demographic changes; economic growth and rising standards of living; agricultural commodityprices; significant fluctuations in raw material costs and global energy prices; development of new crop protectiontechnologies; patent expiries and growth in volumes of off-patent products; the global agricultural markets and volatileweather conditions; regulatory changes; government policies; world ports, international monetary policies and the financialmarkets.Key commodity crop prices declined substantially during 2023 as weather conditions normalized and the global crop supplysituation improved. However, key commodity crop prices were still relatively high through 2023, supporting planted areaand investment in crops, leading to healthy demand, at the farmer level, of crop inputs, including crop protection products.However, due to very high channel inventory across all geographies, channel demand was weak during 2023. The highinterest rate environment coupled with low prices of active ingredient from China, also encouraged the just-in-timepurchasing approach adopted by the channel. As a result, sales into the channel declined sharply across the entire industry.Going into 2024, channel inventories have improved across most geographies but they have still not normalizedeverywhere. The cost environment further improved in 2023 as active ingredient prices in China continued to decline allthrough 2023 reaching low levels.
II. Main business of the Company during the Reporting Period
The company is required to comply with the “Self-regulatory Guidelines for Listed Companies on Shen-zhen Stock Exchange: No. 3 - Disclosure of Industry Information”.
Procurement model of major raw materials
| Main raw materials | Procurement model | Proportion out of total purchase amount | Significant change in the settlement method | Average price in H1 (RMB/Kg)* | Average price in H2 (RMB/Kg)* |
| AI Tech | Purchase through multiple channels | 30.8% | No | 54.08 | 45.13 |
| Raw Materials | 24.6% | No | 7.51 | 7.06 | |
| Co-Formulants | 5.9% | No | 18.49 | 15.63 | |
| Formulated Products | 22.1% | No | 36.41 | 29.28 | |
| Packaging | 6.7% | No | 1.43 | 1.56 | |
| Other | 9.8% | No | 6.78 | 4.19 |
* Prices in RMB are based on average exchange rates for the relevant period.
Reasons for significant changes in raw material prices compared with the previous reporting period
□ Applicable √ Not applicable
Whether the Company spends more than 30% of its total production cost on energy supply
□ Applicable √ Not applicable
Reasons that there is material change to the main energy types during the reporting period
□ Applicable √ Not applicable
ADAMA Ltd.Annual Report 2023
Production Technologies of Main Products
| Main Products | Stage of Production Technologies of Main Products | Key Technical Experts | Patents | R&D advantages |
| Herbicides | Industrialized production | Employed by the Group | Some are patent protected | Off-patent AIs developed into differentiated mixtures and formulations, in combination with new formulation and delivery technologies that provide more efficient ways to deliver the products into the plants |
| Fungicides | Industrialized production | Employed by the Group | Some are patent protected | Off-patent AIs developed into differentiated mixtures and formulations, in combination with new formulation and delivery technologies that provide more efficient ways to deliver the products into the plants |
| Insecticides | Industrialized production | Employed by the Group | Some are patent protected | Off-patent AIs developed into differentiated mixtures and formulations, in combination with new formulation and delivery technologies that provide more efficient ways to deliver the products into the plants |
Capacity of main products
| Main Products | Normal Capacity (tons/year) | Capacity Utilization (%) | Capacity Under Construction (tons/year) | Construction Investment in the production of Main Products |
| Herbicides | 53,303 | 46% | 0 | Ongoing investment |
| Fungicides | 18,636 | 29% | 0 | Ongoing investment |
| Insecticides | 75,257 | 67% | 0 | Ongoing investment |
Note: Capacity figures in the above table is the synthesis capacity of the Group. In addition, the Group has approximately590,000 tons of formulation capacity globally.
ADAMA Ltd.Annual Report 2023
Products Produced in Major Chemical Industry Parks
| Major Chemical Industry Parks | Products |
| Neot Hovav, Israel | Plant for production of insecticides and fungicides active ingredients as well as formulations, R&D center and Non-Agro activity |
| Ashdod, Israel | Manufacturing of the herbicides’ active ingredients, formulations and Non-Agro activity as well |
| Anpon, China | Plant for the manufacturing of insecticides and herbicides active ingredients, formulations, Flame Retardants and Non-Agro activity |
| Sanonda, China | Plant for the manufacturing of insecticides active ingredients as well as number of formulations and Non-Agro activity |
| ADAMA Huifeng, China | Plant for production of Herbicides and Fungicides AIs, as well as number of formulations, alongside a packaging plant |
| Taquari, Brazil | Plant for the manufacturing of active ingredients as well as number of formulations used for the manufacturing of insecticides, fungicides and herbicides |
EIA approval status that is being applied or newly obtained during the reporting period
√ Applicable □ Not applicable
During the reporting period, the Company received the following EIA approval: "Approval Opinions on the EnvironmentalImpact Assessment Report Form for the Overall Relocation and Upgrading Project of ADAMA Ltd's Insecticide SeriesProducts - Recycling Solvent Purification Project".
Abnormal production suspension during the reporting period
□ Applicable √ Not applicable
Relevant approvals, permits and qualifications
√ Applicable □ Not applicable
| Entity in China | Name of the Certificate | Number | Expiration |
| ADAMA Ltd. | Pesticide Production Permit | Pesticide Production Permit (E) 0010 | August 7th, 2027 |
| Safety Production Permit | （E）WH [2022] No. 1139 | November 6th, 2025 | |
| Safety Production Permit | （E）FM [2021] No.050781 | August 13th , 2024 | |
| Business record certificate of non-pharmaceutical precursor chemicals | （E）3J42100111328 | July 2nd , 2024 | |
| Special Permit for the Manufacturing of Monitored Chemicals | HW-42I0002 | September 28th, 2027 | |
| National Industrial Production Permit | XK13-008-00019 of Hubei | June 5th, 2028 | |
| Business License for Hazardous Chemicals | No. [2021] 980014 of Safety Operation of Hubei D | July 5th, 2024 | |
| Port Operation Permit | No.（0045）for Port Operation of Jingzhou of Hubei | January 20th, 2025 | |
| Port Shoreline Use Permit | No. 5, 2015 for Use of Port Shoreline | August 7th, 2061 | |
| Water Extraction Permit | No. 3, 2020 for Water Extraction of Jingzhou of Hubei | August 13th, 2025 | |
| Registration Certificate of Hazardous Chemicals | 421012001 | December 9th, 2024 | |
| Pollutant Emission Permit | 91420000706962287Q001P | December 25th, 2025 |
ADAMA Ltd.Annual Report 2023
| Entity in China | Name of the Certificate | Number | Expiration |
| ADAMA Anpon (Jiangsu) Ltd. | Safety Production Permit | WH No. [H00029] for Safety Production of Jiangsu | January 17th, 2025 |
| Business License for Hazardous Chemicals | No. 00394 for Business of Hazardous Chemicals of Huai’an of Jiangsu | October 11th, 2024 | |
| Pesticide Business License | No. 32080020026 for Pesticide Business of Jiangsu | December 26th, 2024 | |
| Pesticide Production Permit | No. 0014 for Pesticide Production of Jiangsu | December 6th, 2027 | |
| Pollutant Emission Permit | 91320800139433337K001P | May 31st,2025 | |
| National Industrial Production Permit | XK13-010-00189 of Jiangsu | January 12th, 2029 | |
| National Industrial Production Permit | XK13-008-00007 of Jiangsu | September 23rd, 2028 | |
| National Industrial Production Permit | XK13-014-00235 of Jiangsu | July 11th, 2029 | |
| Mining License | C3200002009096120039192 | September 30th, 2025 | |
| Water Extraction Permit | D320812G2021-0016 | December 22nd, 2027 | |
| Water Extraction Permit | D320812S2021-0014 | December 31st, 2027 | |
| Special Permit for the Manufacturing of Monitored Chemicals | HW-32I0001 | November 29th, 2027 | |
| Safety Production Permit | FM No. [2021]0818 of Jiangsu | November 9th, 2024 | |
| Maidao, Branch of ADAMA Anpon (Jiangsu) Ltd. | Business License for Hazardous Chemicals | No. 00641 for Business of Hazardous Chemicals of Jiangsu | May 18th, 2026 |
| Safety Production Permit | WH No. [H00015] for Safety Production of Jiangsu | July 22nd, 2024 | |
| Pollutant Emission Permit | 91320800MA1NX3QW56001P | December 19th, 2026 | |
| Jiangsu Anpon International Trading Co., Ltd. | Pesticide Business License | No. 32080020050 for Pesticide Business of Jiangsu | May 11th, 2028 |
| Hubei Sanonda Trading Co., Ltd. | Pesticide Business License | No. 42000010083 for Pesticide Business of Hubei | September 3rd, 2028 |
| Business License for Hazardous Chemicals | No. [2022]000532 of Hubei D for Business of Hazardous Chemicals | May 8th, 2025 | |
| Business License for Hazardous Chemicals | 42100213202300029 | December 7th, 2026 | |
| ADAMA (Beijing) Agricultural Technology Company Limited | Pesticide Business License | No. 11000010005 for Pesticide Business of Beijing | April 11th, 2028 |
| ADAMA Huifeng (Shanghai) Agricultural Technology Co., Ltd. | Pesticide Business License | No. 31011420006 for Pesticide Business of Shanghai | August 21st, 2028 |
| Business License for Hazardous Chemicals | No. [2023]203919 of Shanghai for Business of Hazardous Chemicals | July 31st , 2026 | |
| ADAMA Huifeng (Jiangsu) Ltd. | Safety Production Permit | （Su）WH No. [J00138] | February 10th, 2027 |
| Pesticide Business License | No. 32090420577 for Pesticide Business of Jiangsu | January 6th, 2026 | |
| Pesticide Production Permit | Pesticide Production Permit (Su) 0199 | May 13th, 2026 | |
| Registration Certificate of Hazardous Chemicals | 32092400034 | March 7th, 2027 |
ADAMA Ltd.Annual Report 2023
| Entity in China | Name of the Certificate | Number | Expiration |
| Pollutant Emission Permit | 91320982MA1WNXWQX6001P | December 20th,2025 | |
| Business record certificate of non-pharmaceutical precursor chemicals | （Su）3S320900220700005 | February 10th, 2027 | |
| Export Enterprise Registration Form | 04136730 | -- |
Company focused on oil processing and trade
□ Applicable √ Not applicable
Company focused on fertilizer
□ Applicable √ Not applicable
Company focused on agrochemicals
√ Applicable □ Not applicable
Market share - As mentioned herein, ADAMA is a leading company among the crop-protection companies that focus onoff-patent crop protection solutions. The Group’s global crop protection market share was approximately 5.1% in 2023,based on preliminary estimation made by AgBio Investor regarding total sales in the agrochemical industry, and 6.5% in2022.Registration - The materials and products marketed by the Group require, at various stages of their development productionand marketing, registration in every country where the Company intends to market them. The Company has developmentand registration centers, located in Europe, Israel, Latin America, Brazil, North America, India and Asia. Further, its globalregistration network, providing local registration capabilities in over 100 countries, enables the Group to efficiently introducenew products in all major markets and provide farmers with a comprehensive portfolio of crop protection solutions. In thelast three years, the Group’s registration network of highly-skilled professionals has obtained approximately 1,300 newproduct registrations. These capabilities are increasingly important as regulatory requirements continue to increase globally.Application of Main ProductsThe Group is focused on the development, manufacturing and commercialization of largely off-patent crop protectionproducts, which are generally herbicides, insecticides and fungicides, which protect agricultural and other crops againstweeds, insects and disease, respectively.Herbicides - During cultivation, crops are exposed to various weeds that grow in their environment and compete for water,light and nutrients. Herbicides are designed to prevent or stunt the development of such weeds to allow the cultivated cropto develop optimally throughout the different stages of its growth, and therefore to reach optimum yield. The herbicidessold by the Company are both selective (do not affect or harm the crop itself) and non-selective. The best-selling herbicidesare those designed to protect soy, corn, cereals, rice and cotton.Insecticides - Insecticides are designed to control various types of insects and pests in a selective manner (without harmingthe crop itself). The best-selling insecticides are designed to protect fruits and vegetables, corn, cotton and soy.Fungicides - Fungicides are designed to combat various diseases and parasitical fungi. In general, when weatherconditions in the agricultural season are dry, the prevalence of crop diseases is much smaller, reducing demand for suchproducts. Fungicides are used most frequently in crops such as cereals, fruit, vegetables, soy, grapevines and rice.
ADAMA Ltd.Annual Report 2023
Tax policies - The Group develops, purchases, manufactures and markets its products through many companies worldwide,and as such operates through approximately 60 subsidiaries. To the best of the Group’s knowledge, it is in materialcompliance with applicable tax laws.
Company focused on chlorine alkali and caustic soda business
□ Applicable √ Not applicable
III. Core Competitiveness AnalysisAs a leading off-patent crop protection provider in the global crop protection market, the Group believes that the followingstrengths provide it with sustainable competitive advantages and the foundation to capitalize on favorable underlyingagriculture and crop protection industry trends:
? Off-patent Industry Leader. The Group’s success as one of the world’s leading off-patent companies has given it
a deep understanding of the industry and enabled it to build one of the most extensive off-patent product offerings,giving it the ability to provide efficient, value-added solutions to farmers of every major crop around the world.Moreover, the breadth of the Group’s product portfolio, with most active ingredients individually constituting no morethan 5% of its sales in 2023, combined with its extensive geographic reach, provide effective diversification andenhanced stability. The Group strives to continue to gain market share, building on its leading role in the market,farmer-centric focus and broad product portfolio. Furthermore, the Group’s addressable market continues to expandas the crop protection market globally continues to shift towards off-patent products, the segment of the market onwhich the Group focuses. This shift is the result of significant increases in the costs and risks of discovering anddeveloping novel and effective Active Ingredients (AIs), which over time has led to fewer introductions of newmolecules each year by the Company’s Research-Based Company (RBC) competitors. The Group believes that itsstrength in the off-patent market provides it with a certain competitive advantage relative to RBCs, as it is able, withits research, technology and know-how, to access off-patent crop protection products developed by all of the variousmajor RBCs. This allows the Group to enhance existing crop protection products and introduce unique mixturesand formulations. In parallel, the Group’s global scale, registration expertise and manufacturing footprint arecompetitive advantages in comparison to many of its off-patent peers.? Global Reach and Strength in Emerging Markets. The Group has an industry leading global footprint with
extensive market presence. The Group enjoys broad geographic diversification by selling in over 100 countries witha balanced regional split, as evidenced by its 2023 revenue breakdown of approximately 27% in Latin America, 18%in North America, 28% in Asia Pacific, and 27% in the Europe, Middle East and Africa (EAME). This regional balanceenhances the Group’s growth profile and provides diversification across different countries, climates, crops andplanting seasons. The Group has a particularly strong presence in emerging markets, where growth is expected tooutpace developed markets, and from which it derived more than half of its 2023 sales.? Unique Positioning and Access to China. The Group believes that the foundation provided by the integration of
Adama Solutions with the operational and commercial infrastructure of the Company in China, together with itsunique relationship with its ultimate controlling shareholder, Sinochem Holdings, provides it with a clear advantagein penetrating the Chinese market, one of the largest and fastest growing agricultural markets in the world. TheGroup is one of the only global crop protection providers with a significant integrated commercial and operationalinfrastructure within China. The Group intends to leverage this infrastructure to pursue a leading position in theChinese crop protection market and capitalize on the growing importance of high-quality global brands in China.With its activities in China also forming part of Syngenta Group China, the Group believes it is uniquely positionedto capitalize on the trend toward consolidation within the high-growth, highly fragmented Chinese crop protection
ADAMA Ltd.Annual Report 2023
market. In addition to helping it become a leader in the Chinese crop protection market, the integration of theCompany’s China-based manufacturing facilities into the Group’s global manufacturing operations provides it withthe ability to more effectively develop and commercialize advanced, differentiated products, as well as benefit fromimproved cost positions in key molecules, enhance the optimization of its global supply chain over time, drive greaterefficiency throughout the organization, and secure both revenue growth as well as increased profitability.? Collaborations with members of the Syngenta Group. The Group is working together with the other companies
within the Syngenta Group to create value for itself and the Syngenta Group through increasing the Group’s sales,reducing costs and improving processes. Such efforts include various collaboration initiatives for the sale anddistribution of finished products, raw materials supply and procurement, logistics and supply chain, as well as in theR&D and products’ registration fields.? Vertically Integrated Business with Global Scale. The Group is one of the few off-patent crop protection providers
that is active across virtually the entire value chain, from worldwide marketing, sales and distribution, to registration,production and R&D. As a result, the Group is able to efficiently manage its product portfolio and operations inresponse to the dynamic needs of farmers, changing weather conditions, government policies and regulations, andcapture value at each point in the value chain. Approximately 85% of the Group’s products are synthesized and/orformulated or both in its world-class, well-invested facilities across the globe. Having deep knowledge, expertiseand experience in all aspects of the development process, integrated chemical synthesis and formulation productionand control over the entire supply chain, provides the Group with cost and control advantages, and the agility toaddress market challenges and capture value. Further, its global registration network, providing local registrationcapabilities in over 100 countries, enables the Group to efficiently introduce new products in all major markets andprovide farmers with a comprehensive portfolio of crop protection solutions. In the three years, the Group’sregistration network of highly-skilled professionals has obtained approximately 1,300 new product registrations.These capabilities are increasingly important as regulatory requirements continue to increase globally. The Group’ssales and marketing infrastructure is characterized by its local sales forces in each of its strategic markets, whobuild strong relationships with local distributors and with the end users, the farmers, to better understand their needs.This drives demand at the wholesale, retail and farmer level and provides the Group with valuable market insightand understanding.? Extensive, Differentiated Offering. The Group offers farmers a hybrid portfolio of increasingly differentiated
products and solutions that are tailored to the specific needs of each geographic region and each type of crop. TheGroup utilizes an integrated, solutions-based approach to its entire offering in order to meet the unique demands ofits global customer base. The Group strives to offer farmers a branded portfolio that is comprised of both high-valuedifferentiated products as well as high-volume off-patent products, alongside an increasing number of uniquemixtures and formulations and novel, innovative products and services, aimed to provide solutions to farmers innearly every region, and for all major crops. The Group’s extensive portfolio is composed of over 300 centrallymanaged AIs and over 1,650 different mixtures and formulations.? Experienced and Empowered Management Team. With a deep understanding of the crop protection industry and
firm focus on sustaining the Group’s leadership and financial strength, its management team is a cohesive andintegrated team that has the knowledge, skills and experience required to guide the Group on its path to achievingits ambition of global leadership. The Group believes in empowering its teams and creating leaders from itsstrongest performers, with the result that its management team is composed of the people who have successfullymanaged its business, and developed and executed its strategy over the last few years, continuing its track recordof consistent, profitable growth.
ADAMA Ltd.Annual Report 2023
IV. Main Business Analysis
1. Overview
For general crop protection market environment, please refer to I. Industry in which the Company Operates during theReporting Period of Section III above.
| Item | Fourth Quarter of the Reporting Period (000’RMB) | Same period of last year as previously reported (000’RMB) | +/-% |
| Revenues | 8,119,352 | 9,304,101 | -12.7% |
| Pre-Tax Profits (loss) | (300,734) | (144,277) | -108.4% |
| Pre-tax profit (loss) margin | -3.7% | -1.6% | - |
| Net income (loss) | (563,414) | (158,753) | -254.9% |
| Net income margin | -6.9% | -1.7% | - |
| EBITDA | 611,456 | 897,224 | -31.9% |
| EBITDA margin | 7.5% | 9.6% | - |
| Item | Fourth Quarter of the Reporting Period (000’USD) | Same period of last year as previously reported (000’USD) | +/-% |
| Revenues | 1,136,271 | 1,311,992 | -13.4% |
| Pre-Tax Profits (loss) | (42,084) | (20,383) | -106.5%- |
| Pre-tax profit margin | -3.7% | -1.6% | - |
| Net income (loss) | (78,844) | (22,425) | -251.6% |
| Net income margin | -6.9% | -1.7% | - |
| EBITDA | 85,654 | 126,520 | -32.3% |
| EBITDA margin | 7.5% | 9.6% | - |
| Item | Reporting Period (000’RMB) | Same period of last year as previously reported (000’RMB) | +/-% |
| Revenues | 32,779,456 | 37,381,915 | -12.3% |
| Pre-Tax Profits (loss) | (1,404,910) | 756,833 | -285.6% |
| Pre-tax profit margin | -4.3% | 2.0% | - |
| Net income (loss) | (1,605,887) | 609,391 | -363.5% |
| Net income margin | -4.9% | 1.6% | - |
| EBITDA | 2,790,156 | 4,880,445 | -42.8% |
| EBITDA margin | 8.5% | 13.1% | - |
| Item | Reporting Period (000’USD) | Same period of last year as previously reported (000’USD) | +/-% |
| Revenues | 4,660,554 | 5,569,989 | -16.3% |
| Pre-Tax Profits (loss) | (196,785) | 118,470 | -266.1% |
| Pre-tax profit margin | -4.2% | 2.1% | - |
| Net income (loss) | (224,651) | 96,307 | -333.3% |
| Net income margin | -4.8% | 1.7% | - |
| EBITDA | 399,581 | 731,118 | -45.4% |
| EBITDA margin | 8.6% | 13.1% | - |
ADAMA Ltd.Annual Report 2023
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.
2. Revenues and costs
RevenuesSales in the fourth quarter declined by approximately 13% (-13% in RMB terms; -14% in CER terms) to $1,136 million,reflecting a decrease of 15% in prices and an increase of 1% in volumes. The lower sales reflect the market dynamics ofhigh channel inventories, last-minute purchasing following channel destocking in light of high interest rates and pressureon crop protection product pricing due to the lower channel demand and lower active ingredient pricing. In some certaingeographies, the Company sees initial signs of channel normalization.These results brought the revenues in the full year of 2023 to $4,661 million, a decline of approximately 16% (-12% in RMBterms; -15% in CER terms), reflecting a decrease of 8% in prices and a decrease of 7% in volumes. This is in comparisonto the record sales the Company achieved in 2022, which reflected the high demand due to supply uncertainty in themarket.
(1) Operating revenues
Unit: RMB’000
| 2023 | 2022 | YoY +/-% | |||
| Amount | Ratio of the operating revenue | Amount | Ratio of the operating revenue | ||
| Total operating revenue | 32,779,456 | 100% | 37,381,915 | 100% | -12.3% |
| Classified by industries | |||||
| Manufacture of chemical raw materials and chemical products | 32,779,456 | 100% | 37,381,915 | 100% | -12.3% |
| Classified by products | |||||
| Herbicides | 13,831,829 | 42.2% | 16,597,770 | 44.4% | -16.7% |
| Fungicides | 6,790,381 | 20.7% | 7,050,530 | 18.9% | -3.7% |
| Insecticides | 9,392,448 | 28.6% | 10,120,287 | 27.1% | -7.2% |
| Ingredients and Intermediates (Formerly referred to as non-Agro) | 2,764,799 | 8.4% | 3,613,328 | 9.7% | -23.5% |
| Classified by regions2 | |||||
| Europe, Africa & Middle East (EAME) | 8,691,499 | 26.5% | 9,030,951 | 24.16% | -3.8% |
| North America | 5,770,415 | 17.6% | 6,895,702 | 18.45% | -16.3% |
| Latin America | 9,122,996 | 27.8% | 10,792,732 | 28.87% | -15.5% |
| Asia-Pacific | 9,194,546 | 28.0% | 10,662,529 | 28.52% | -13.8% |
| Classified by Sales Channel | |||||
| Direct Sales | 1,584,828 | 4.8% | 1,992,450 | 5.3% | -20.5% |
| Dealership | 28,429,829 | 86.7% | 31,782,088 | 85.0% | -10.5% |
| Others | 2,764,799 | 8.4% | 3,607,377 | 9.7% | -23.4% |
As of 2023, the India, Middle East & Africa (IMA) region has been reorganized such that the countries formerly included in this region
will now be included in the Europe region (renamed EAME) or in the Asia Pacific region.
ADAMA Ltd.Annual Report 2023
Unit: USD’000
| 2023 | 2022 | YoY +/-% | |||
| Amount | Ratio of the operating revenue | Amount | Ratio of the operating revenue | ||
| Total operating revenue | 4,660,554 | 100% | 5,569,989 | 100% | -16.3% |
| Classified by industries | |||||
| Manufacture of chemical raw materials and chemical products | 4,660,554 | 100% | 5,569,989 | 100% | -16.3% |
| Classified by products | |||||
| Herbicides | 1,969,111 | 42.3% | 2,478,957 | 44.5% | -20.6% |
| Fungicides | 964,635 | 20.7% | 1,048,303 | 18.8% | -8.0% |
| Insecticides | 1,334,206 | 28.6% | 1,505,222 | 27.0% | -11.4% |
| Ingredients and Intermediates (Non-Agro) | 392,602 | 8.4% | 537,507 | 9.7% | -27.0% |
| Classified by regions | |||||
| Europe, Africa & Middle East (EAME) | 1,240,151 | 26.6% | 1,352,497 | 24.3% | -8.3% |
| North America | 820,319 | 17.6% | 1,027,292 | 18.4% | -20.1% |
| Latin America | 1,291,606 | 27.7% | 1,592,286 | 28.6% | -18.9% |
| Asia-Pacific | 1,308,478 | 28.1% | 1,597,914 | 28.7% | -18.1% |
| Classified by Sales Channel | |||||
| Direct Sales | 225,329 | 4.8% | 296,880 | 5.3% | -24.1% |
| Dealership | 4,042,623 | 86.7% | 4,735,602 | 85.0% | -14.6% |
| Others | 392,602 | 8.4% | 537,507 | 9.7% | -27.0% |
Notes: (1) the sales split per product category is provided for convenience purposes only, and is not representative of theway the Company is managed or in which it makes its operational decisions; (2) The discrepancies between the ‘ratio ofthe operating revenue’ in RMB and USD detailed in the tables above derive mainly from exchange rates recorded at theend of each quarter.
Regional Performance ReviewEurope, Africa & Middle East (EAME): Sales in EAME decreased in the fourth quarter and full year of 2023 impacted byhigh channel inventories, erratic weather patterns and channel destocking, leading to lower volumes and pressure onprices. While the Company maintained pricing in the first half of 2023, pricing pressure was more notable in the secondhalf of the year with increased market competition. In Central Eastern Europe demand was particularly impacted by lowergrain market prices and negative weather impacted the cereal season in the North. Despite this, the Company focused onquality of the business, with sales in the UK increasing in the full year supported by new product introductions.North America: Consumer & Professional Solutions – Sales in the fourth quarter and twelve-month period were lowerthan the corresponding periods. In the consumer market demand was impacted by a decline in disposable income, anoutcome of inflationary pressures and high interest rates, while in the professional market this was due to demand beingsupplied from the channel inventories. Despite this, the professional market has begun showing signs of normalizationreturning to pre-COVID channel inventory levels for branded products, while commoditized products are still being held atand lower levels reflecting just-in-time purchasing patterns.In the US Ag market sales in the fourth quarter and the twelve-month period reflected low demand, weak pricing and strongcompetition due to high inventory levels at manufactures. While inventory levels in the channel are steadily declining,manufactures are still holding high inventory levels leading to strong competition, thus pricing is still not presenting a
ADAMA Ltd.Annual Report 2023
recovery with the market leaning into just-in-time purchasing patterns.ADAMA reached record sales in Canada in the fourth quarter following expansion to new business segments as well asrenewed demand with the restocking in certain segments where inventories had normalized coming out of the 2023application season. Despite this, sales in the full year of 2023 remained mostly flat, also impacted by soft pricing forcommoditized products and dry weather conditions in western Canada.Latin America: Brazil – the Company's sales in the fourth quarter and full year declined following contraction of the overallcrop protection market due to drought conditions leading to a weak soybean crop season, channel destocking and softerpricing. ADAMA focused on improving the quality of the business with differentiated products and reducing the share ofhighly generic sales.Such differentiated products included Almada? (fungicide against soybean rust), Forasteiro
?(herbicide for pasture) andAraddo
?
(herbicide for soybean and cotton).In the rest of LATAM the sales in the fourth quarter recovered and increased with the normalization of channel inventoriesin most countries while sales remained flat in the full year of 2023, mainly impacted by pricing of commoditized products.It is noteworthy that the Company gained market share in key countries Argentina, Paraguay, Columbia and Mexico, whilefocusing on improving the quality of the business. Additionally, the Company's biologicals portfolio continued to be wellreceived in specialty export countries. El Ni?o was a positive impact on the southern part of the region, with very goodrains and was challenging for the Northern part of the region.Asia-Pacific: In China, the market is still experiencing high channel inventories and pricing pressure especially incommodities impacting both the branded formulation and non-ag sales. Sales were supported by the branded business,driven by recent and new launches of differentiated products, and ADAMA's active ingredient business which recoveredsubstantially, benefiting from the Sanonda Jingzhou site reaching high utilization after relocation.In the Pacific region, sales in the full year and fourth quarter were impacted by high channel inventories and pricingpressure, combined with just in time purchasing patterns. In Australia, dryer weather also impacted sales. Despite this,sales benefited from the launch of the differentiated product Grindstone
?and the Company's biologicals portfolio.Sales in India declined over the full year period following high channel inventory, creating pressure on pricing in the market.Moreover, the erratic weather did not support the consumption of such inventory. Despite this, it is noteworthy thatdifferentiated product Trassid
TMwas well accepted in the market and along with increased focus on farmer demandgeneration, the Company's sales increase in Q4.Sales in the wider APAC region continued to experience pricing pressure, particularly from commoditized products.Despite this, particularly noteworthy was the performance of the Company's sales in South Korea resulting in market sharegain, supported by positive weather conditions.
(2) List of the industries, products, regions and distribution models exceed 10% of the operatingrevenues or operating profits of the Company
√ Applicable □ Not applicable
The company is required to comply with the “Self-regulatory Guidelines for Listed Companies on Shen-zhen Stock Exchange: No. 3 - Disclosure of Industry Information”.
Unit: RMB’000
| Operating revenues | Cost of goods sold | Gross Margin | YoY increase/decreas | YoY increase/decrease | YoY increase/decre |
ADAMA Ltd.Annual Report 2023
| (%) | e of the operating revenues | of the cost of goods sold | ase of the gross margin | |||
| Classified by industries | ||||||
| Manufacturing chemical raw materials and chemical products | 32,779,456 | 25,984,108 | 20.7% | -12.3% | -7.1% | -4.4% |
| Classified by Products | ||||||
| Crop Protection | 30,014,657 | 23,589,113 | 21.4% | -11.1% | -6.6% | -3.8% |
| Ingredients and Intermediates | 2,764,799 | 2,394,995 | 13.4% | -23.5% | -12.1% | -11.2% |
In the event that the statistical manner of the Company's main business data is adjusted during the reporting period, theCompany's main business data for the most recent year adjusted to the manner at the end of the reporting period
□ Applicable √ Not applicable
| Production Volume (Ton) | Sales Volume (Ton) | Sales (RMB’000) | Pricing Trend during reporting period | Reasons to change | |
| Crop Protection | 389,772 | 653,113 | 30,014,657 | YoY down | price of raw materials decreased, combined with inflation and high inventory level in the channel |
| Ingredients and Intermediates | 433,369 | 1,561,507 | 2,764,799 | YoY down | price of raw materials decreased, combined with low demand in the market |
Whether the Company generates more than 10% revenue or net profit from its overseas business against the auditedannual revenue and net profit for the most recent accounting year
√ Applicable □ Not applicable
| Overseas Business | How it operates in foreign markets | Whether the tax policy influences the business overseas | measures it takes during the reporting period |
| Adama Solutions | The Group develops, purchases, manufactures and markets its products through many companies worldwide. As such, the Group operates through approximately 60 subsidiaries, with each of the Group companies being independent and fulfilling a different role and making a different contribution to the Group's operations, and being assessed according to the tax laws in their specific localities. | No material influence exists. | The Group’s services or products are priced based on transfer pricing studies conducted to reflect the market price that would have been determined for these services or products were they to be provided to non-group members. Such transfer prices are reviewed on a quarterly basis. |
ADAMA Ltd.Annual Report 2023
(3) Whether the Company’s revenue from sale of goods exceed the revenue from services
√ Yes □ No
| Industries | Items | Units | 2023 | 2022 | YoY +/-% |
| Crop Protection | Sales volume | Ton | 653,113 | 690,015 | -5% |
| Production | Ton | 389,772 | 472,619 | -18% | |
| Inventory | Ton | 161,146 | 241,095 | -33% |
Reasons for any over -30% YoY movement of the data above:
√ Applicable □ Not applicable
Throughout 2023, the Group strengthened inventory management and implemented selective procurement practices,prioritizing high margin products. As of December 31st, 2023, the inventory level decreased significantly compared withDecember 31, 2022.
(4) Execution of the significant sales and procurement contracts signed by the Company up tothe Reporting Period
□Applicable √ Not applicable (5) Composition of Operating Costs
Category of the industries
Unit: RMB’000
| Industries | Items | 2023 | 2022 | YoY +/-% | ||
| Amount | Ratio of the operating costs | Amount | Ratio of the operating costs | |||
| Industry of manufacturing chemical raw materials and chemical products | Cost of materials (procurement costs) | 17,569,198 | 67.6% | 26,200,706 | 93.6% | -32.9% |
| Industry of manufacturing chemical raw materials and chemical products | Labor cost | 1,258,850 | 4.8% | 1,303,087 | 4.7% | -3.4% |
| Industry of manufacturing chemical raw materials and chemical products | Depreciation expense | 818,569 | 3.2% | 793,086 | 2.8% | 3.2% |
Explanations:
Over the full-year period, the decline in the gross profit was mainly due to the weak pricing, moderated by the positiveimpact of new inventory sold, priced at market levels and an improvement in the sales mix of higher margin products,following management focus on the quality of business. Exchange rates also had an adverse impact moderated by lowerlogistic and production costs. Despite that, following focus on the quality of business the Company presented animprovement in the sales mix of higher margin products.
ADAMA Ltd.Annual Report 2023
(6) Has the consolidated scope changed during the Reporting Period
√ Yes □No
During the reporting period, the Group acquired 100% equity interest in Agrinova New Zealand Limited.
(7) List of significant changes or adjustment of the industries, products or services of theCompany during the reporting period
□ Applicable √ Not applicable
(8) List of major trade debtors and major suppliers
List of the major trade debtors of the Company
| Total sales to top 5 customers (RMB’000) | 2,920,686 |
| Ratio of total sales to top 5 customers to annual total sales | 8.85% |
| Ratio of total sales to related parties (within top 5 customers) to annual total sales | 3.43% |
Information of the Top 5 Customers
| Customers | Sales Amount (RMB’000) | Ratio of the sales to this customer to the annual total sales | |
| 1 | A | 1,130,675 | 3.43% |
| 2 | B | 877,773 | 2.66% |
| 3 | C | 367,040 | 1.11% |
| 4 | D | 303,373 | 0.92% |
| 5 | E | 241,825 | 0.73% |
| Aggregated | 2,920,686 | 8.85% |
Notes of other situation of the major customers
□ Applicable √ Not applicable
List of the major suppliers of the Company
| Total purchase from top 5 suppliers (RMB’000) | 2,594,628 |
| Ratio of total purchase from top 5 suppliers to annual total purchase | 17.7% |
| Ratio of total purchase from related parties (within top 5 suppliers) to annual total purchase | 9.28% |
Information of the Top 5 Suppliers
| Suppliers | Purchase Amount (RMB’000) | Ratio to the annual total sales | |
| 1 | A | 1,074,590 | 7.34% |
ADAMA Ltd.Annual Report 2023
| 2 | B | 522,947 | 3.57% |
| 3 | C | 385,504 | 2.63% |
| 4 | D | 328,223 | 2.24% |
| 5 | E | 283,364 | 1.94% |
| Aggregated | 2,594,628 | 17.73% |
Notes of the other situation of the major suppliers
□ Applicable √ Not applicable
3. Expenses
| In RMB ’000 | In USD ’000 | |||||
| 2023 | 2022 | YoY +/-% | 2023 | 2022 | YoY +/-% | |
| Sales and Marketing expenses | 4,208,108 | 4,396,279 | -4.28% | 597,966 | 653,982 | -8.6% |
| General and Administrative expenses | 1,057,410 | 1,406,828 | -24.84% | 150,011 | 208,444 | -28.03% |
| R&D expenses | 482,754 | 577,859 | -16.46% | 68,688 | 85,874 | -20.01% |
| Financial (income) / expenses | 1,183,118 | 325,796 | 263.15% | 167,378 | 42,854 | 290.58% |
| Profit or (Loss) from Changes of Fair Value | (650,374) | (1,504,832) | -56.78% | (94,230) | (229,774) | -58.99% |
| Total Net Financial Expenses | 1,833,492 | 1,830,628 | 0.16% | 261,608 | 272,628 | -4.04% |
| Tax expenses | 200,977 | 147,442 | 36.31% | 27,866 | 22,163 | 25.73% |
Explanations for the change of above expenses:
Note: As noted above and since functional currency of main overseas subsidiaries is the USD, and the Company’smanagement review of the Company’s performance is based on the USD results, following explanations and analysis arebased on USD-denominated numbers.
(1) Sales and Marketing Expenses
In recent years, the Company conducted various corporate development activities, including mergers and acquisitions,which resulted in the inclusion within its sales and marketing expenses of various non-operational, mostly non-cashcharges affecting the Company’s reported numbers amounting to RMB 251 million ($36 million) in the full year of 2023 incomparison to RMB 250 million ($37 million) in 2022. These charges include mainly:
(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 to the non-cash amortization ofintangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions, with no impact on theongoing performance of the companies acquired.
ADAMA Ltd.Annual Report 2023
Excluding the abovementioned non-operational charges, the lower selling and marketing expenses reflected the OPEXmanagement measures taken by the Company to address the market conditions, a reduction in performance-basedcompensation, and the positive impact of exchange rates.
(2) General and Administrative Expenses
The Company continues to maintain strong operating cost discipline. The lower general and administrative expensesreflected the same reasons as the selling and marketing expenses above.
(3) R&D Expenses
In order to capitalize on future opportunities in the agrochemical market, the Company has intensified its efforts in recentyears to develop a leading pipeline of crop protection products aimed at providing value-added solutions to farmers aroundthe world and build significant positions in a number of strategic market segments, under the strategic plans named “CoreLeap” and “Formulation Mastery” targeted at AIs and formulation technologies respectively. During 2023, Adama launched11 new differentiated products and registered 20 new differentiated products in select countries. The R&D expensesreflected part of the Company’s inputs in innovation, development and registration activities.
(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 any hedging.The impact of Financial Expenses (before hedging) is RMB 1,183 million ($167 million) for 2023 compared with RMB 326million ($43 million) for 2022.Given the global nature of its operational activities and the composition of its assets and liabilities, the Company, in theordinary course of its business, uses foreign currency derivatives (forwards and options) to hedge the cash flow risksassociated 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 650 million ($94 million) in 2023 comparedwith a net loss of RMB 1,505 million ($230 million) in 2022.The aggregate of Financial Expenses and Gains/Losses from Changes in Fair Value (hereinafter as “Total Net FinancialExpenses”), which more comprehensively reflects the financial expenses of the Company in supporting its main businessand protecting its monetary assets/liabilities, amounts to RMB 1,833 million ($262 million) in 2023 compared with RMB1,831 million ($273 million) in 2022.The level of Total Net Financial Expenses were mainly due to higher bank interest expenses due to the increase in interestrates and an increase in short-term loans, partially offset by lower bond interest and CPI and holdback release related tothe original acquisition.
(5) Income Tax expenses:
Despite reaching losses before tax, the Company recorded tax expenses in the full year of 2023, mainly because thelosses were primarily incurred by subsidiaries with relatively lower tax rates, while some of them did not create deferredtax assets on the losses. On the other hand, the subsidiaries that generated profit have a higher tax rate.
ADAMA Ltd.Annual Report 2023
4. R&D Investment
√ Applicable □ Not applicable
| Name of Major R&D Projects | Purpose | Progress | Objectives to be Achieved | Expected Impact on the Future Development of the Company |
| Fungicide project A | AI Production to achieve pipeline increase and resistance management | In launch phase | Process improvement | To increase the Company’s pipeline and expand future portfolio |
| Fungicide project B | AI Production of a fungicide for broad spectrum disease control | In launch phase | Process improvement | To expand the Company’s future portfolio |
| Herbicide project C | AI Production of a selective broad spectrum herbicide | In launch phase | Process validation | To expand the Company’s future portfolio |
| Insecticide project D | AI Production of a broad spectrum insecticide | In launch phase | Process improvement | To expand the Company’s future portfolio |
| Insecticide project E | AI Production for cross spectrum insect control | Pre-launch phase | Tech Transfer | To expand the Company’s future portfolio |
R&D Personnel
| 2023 | 2022 | Change (%) | |
| R&D Headcount | 289 | 277 | 4% |
| Ratio to the Total Headcount | 3.26% | 3.01% | 8% |
| Composition of Educational Background | —— | —— | |
| B.A. | 12 | 17 | -29% |
| M.A. | 20 | 16 | 25% |
| Doctor | 5 | 5 | 0 |
| College | 1 | 5 | -80% |
| Composition of Age | —— | —— | |
| Under 30 Years Old | 1 | 5 | -80% |
| 30 to 40 Years Old | 25 | 29 | -14% |
| Over 40 Years Old | 12 | 9 | 33% |
Note: The figures under “Composition of Educational Background” and “Composition of Age” represent those of theCompany and the domestic subsidiaries held by it and do not cover the Group’s overseas R&D employees.
R&D Investment of the Company
| 2023 | 2022 | Change (%) | |
| R&D Investment (RMB’000) | 482,754 | 577,859 | -16.46% |
ADAMA Ltd.Annual Report 2023
| 2023 | 2022 | Change (%) | |
| Ratio of R&D investment to operating income | 1.47% | 1.55% | -0.08% |
| Amount of capitalized R&D investment (RMB’000) | - | - | - |
| Ratio of capitalized R&D investment to total R&D investment | - | - | - |
Reasons for and effects of significant changes to the composition of the Company's R&D personnel
□ Applicable √ Not applicable
Reason of notable changes over the last year in the ratio of total R&D investment amount to operating income
□ Applicable√ Not applicable
Reason of notable change in the ratio of R&D investment capitalization and its reasonable explanation
□ Applicable √ Not applicable
5. Cash flow
Unit: RMB’000
| Item | 2023 | 2022 | YoY +/-% |
| Subtotal of cash inflows from operating activities | 33,353,503 | 36,575,473 | -8.81% |
| Subtotal of cash outflows from operating activities | 30,735,626 | 35,634,728 | -13.75% |
| Net cash flows from operating activities | 2,617,877 | 940,745 | 178.28% |
| Subtotal of cash inflows from investing activities | 256,312 | 136,738 | 87.45% |
| Subtotal of cash outflows from investing activities | 2,644,565 | 2,797,180 | -5.46% |
| Net cash flows from investing activities | (2,388,253) | (2,660,442) | -10.23% |
| Subtotal of cash inflows from financing activities | 7,127,882 | 4,632,633 | 53.86% |
| Subtotal of cash outflows from financing activities | 6,753,600 | 4,688,423 | 44.05% |
| Net cash flows from financing activities | 374,282 | (55,790) | 770.88% |
| Net increase in cash and cash equivalents | 632,105 | (1,534,227) | 141.20% |
Notes of the major effects on the YoY significant changes occurred of the data above
√ Applicable □ Not applicable
Cash flow from Operating Activities: Despite lower sales, the significantly higher cash flow generated in the full year of2023 was primarily due to a decrease in the procurement of goods as well as intensive collection.Cash flow from Investing Activities: The cash used in investing activities in the fourth quarter and full year of 2023reflected the prioritization of investments, part of the actions taken by the Company to improve its cash flow. The Companyinvested in fixed assets including its new production facilities in ADAMA Anpon and manufacturing capabilities in Israel andinvestments in intangible assets relating to ADAMA's global registrations of the Company's products, integration of an ERPsystem as well as the acquisition of AgriNova New Zealand in Q1 2023.Cash flow from Financing Activities: The cash used in financing activities in 2023 reflected the realization of loss onhedging positions (in respect to the Company's Israeli ILS-denominated bonds, following the weakening of the Shekelagainst the US dollar), which was offset by an increase in loan borrowing to support the negative free cash flow. .
Notes to the reason of the significant differences between the net cash flow from the operating activities and the net profitsof 2023 of the Company during the Reporting Period
ADAMA Ltd.Annual Report 2023
√ Applicable □ Not applicable
Please refer to the notes provided above under this item.V. Analysis of the non-core business
√ Applicable □ Not applicable
Unit: RMB’000
| Amount | % of total loss | Explanation | Recurrence | |
| Investment income | 19,078 | -1.36% | No | |
| Gain/loss from change of FV | (650,374) | 46.29% | Mainly foreign currency effect on financial assets and liabilities (refer to explanation to Financial expenses above). | No |
| Impairment of asset | 549,893 | 39.14% | Please refer to the Announcement on Asset Impairment (Announcement No. 2023-30 and 2023-36), Announcement on Asset Impairments Made by a Controlled Subsidiary for the Fourth Quarter of 2023 (Announcement No. 2024-1) and Announcement on Asset Impairment for 2023 Full Year (Announcement No. 2024-7) disclosed on www.cninfo.com.cn | No |
| Credit impairment loss | 54,453 | 3.88% | Please refer to the Announcement on Asset Impairment (Announcement No. 2023-30 and 2023-36) and Announcement on Asset Impairment for 2023 Full Year (Announcement No. 2024-7) disclosed on www.cninfo.com.cn | No |
| Gain from disposal of assets | 19,679 | -1.40% | No | |
| Non-operating income | 110,046 | -7.83% | No | |
| Non-operating loss | 53,941 | 3.84% | No |
VI. List and Analysis of the assets and liabilities
1. List of significant changes of assets
Unit: RMB’000
| Item | As at 31 Dec. 2023 | As at 31 Dec. 2022 | % change | Explanation for any major change | ||
| Amount | % of total assets | Amount | % of total assets | |||
| Cash at bank and on hand | 4,881,328 | 8.81% | 4,290,961 | 7.40% | 1.41% | Additional financing and less procurement. |
| Accounts receivable | 8,146,677 | 14.70% | 9,018,375 | 15.55% | -0.85% | |
| Inventories | 13,088,757 | 23.62% | 16,927,241 | 29.19% | -5.57% | Decrease in the procurement of goods. |
| Investment property | 22,145 | 0.04% | 3,168 | 0.01% | 0.03% | |
| Long term equity | 31,474 | 0.06% | 26,368 | 0.05% | 0.01% | |
ADAMA Ltd.Annual Report 2023
Oversea assets account for a higher proportion
√ Applicable □ Not Applicable
| Specific contents of the assets | Reason | Scale (Amount) of the assets (RMB’000) | Location | Operation /Management mode | Control measures to guarantee safety of the assets | Net Profit of the assets (RMB’000) | Proportion of overseas assets out of total net assets (%) | Significant impairment risk? |
| Equity investment in Adama Solutions | Acquired through Major Assets Restructuring | 18,662,632 | Israel and globally | Corporate Governance | Corporate Governance | (1,701,449) | 85% | No |
| Other explanations | N/A | |||||||
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB’000
| Item | Opening balance | Fair value change recognized in P&L | Fair value change recognized in equity | Purchase | Sale | Other change | Closing balance |
| Financial assets | |||||||
| 1. Financial assets measured at FVTPL (excluding derivative financial assets) | 1,685 | - | - | 227 | - | - | 1,912 |
| 2. Derivative financial assets | 233,809 | (808,041) | 44,824 | 1,442,712 | (63,167) | - | 850,137 |
| 3. Other equity investments | 158,341 | - | (26,323) | - | - | - | 132,018 |
| Total financial assets | 393,835 | (808,041) | 18,501 | 1,442,939 | (63,167) | - | 984,067 |
| Others | 189,601 | (44,539) | - | 65,163 | (5,752) | - | 204,473 |
| Total of above | 583,436 | (852,580) | 18,501 | 1,508,102 | (68,919) | - | 1,188,540 |
| Financial liabilities | 545,516 | 62,271 | - | - | - | - | 607,787 |
Item
| Item | As at 31 Dec. 2023 | As at 31 Dec. 2022 | % change | Explanation for any major change | ||
| Amount | % of total assets | Amount | % of total assets | |||
| investments | ||||||
| Fixed assets | 10,040,113 | 18.12% | 8,952,184 | 15.44% | 2.68% | The increase is mainly due to transfer of CIP projects. |
| Construction in progress | 2,507,328 | 4.53% | 2,961,401 | 5.11% | -0.58% | |
| Rights of use assets | 625,235 | 1.13% | 555,889 | 0.96% | 0.17% | |
| Short-term loans | 5,733,522 | 10.35% | 3,342,921 | 5.77% | 4.58% | Supporting the increased working capital. |
| Contract Liabilities | 1,514,365 | 2.73% | 1,776,573 | 3.06% | -0.33% | |
| Long-term loans | 2,885,939 | 5.21% | 3,662,870 | 6.32% | -1.11% | |
| Lease liabilities | 495,459 | 0.89% | 431,076 | 0.74% | 0.15% | |
ADAMA Ltd.Annual Report 2023
Significant changes in the measurement attributes of the main assets in the Reporting Period
□ Yes √ No
3. Restriction / limitation on asset rights
At the end of the Reporting Period, restricted assets including Company’s bank balance of RMB 23,970,000 as cashdeposit for bills receivable; and other non-current assets of RMB 207,027,000 as deposit for legal suits.VII. List and Analysis of the investment
1. Overall condition
√ Applicable □ Not applicable
| Investment during the Reporting Period (RMB'000) | Investment during the Same Period Last Year (RMB'000) | +/-% YoY |
| 16,053,799 | 15,361,143 | 4.5% |
2. List of the significant equity investment during the Reporting Period
√ Applicable □Not Applicable
ADAMA Ltd. Annual Report 2023
Unit: ‘000 RMB yuan
| Name of the Invested Company | Main Business | Mode of Investment | Investment Amount | Shareholding Proportion | Source of Funds | Investment Partner | Investment Term | Types of Products | Progress as of the Balance Sheet Date | Estimated Return | Profit or Loss on Investments for the Reporting Period | Involved in Litigation or Not | Date of Disclosure (if applicable) | Disclosure Index (if applicable) |
| Agrinova New Zealand Limited | Pesticides | Acquisition | 170,155 | 100% | Self-raised funds | None | Long Term | Crop protection products, growth regulators, biological formulations and plant nutrients for horticulture | Completed | -- | 23,852 | No | January 6th, 2023 | Announcement on the Closing Acquisition of 100% Equity Interests in Agrinova New Zealand Limited by a Wholly-Owned Subsidiary (No.2023-1) disclosed by the Company on www.cninfo.com |
| Adama Chile S.A.* | Pesticides | Acquisition | 116,311 | 100% | Self-raised funds | None | Long Term | Chemical crop protection products and biological stimulants | Completed | -- | --* | No | March 14th, 2023 | Announcement on the Acquisition of Equity Held by Minority Shareholders of a Controlling Subsidiary (No. 2023-7) disclosed by the Company on www.cninfo.com |
| Total | -- | -- | 286,466 | -- | -- | -- | -- | -- | -- | 23,852 | -- | -- | -- |
*Note: The Company previously indirectly held 60% equity of Adama Chile S.A., and consolidated Adama Chile S.A. in the financial statements as a subsidiary. After the acqui-sition, the Company indirectly held 100% equity of Adama Chile S.A.
ADAMA Ltd.Annual Report 2023
3. List of the significant non-equity investments executed during the Reporting Period
□ Applicable √ Not applicable
4. Investment on the financial assets
(1) List investments in securities
□ Applicable √ Not applicable
No such investments were executed during the Reporting Period.
ADAMA Ltd. Annual Report 2023
(2) Investment in derivative financial instruments
√ Applicable □ Not applicable
(1) Investment in Derivative Financial Instruments for Hedging during the Reporting Period
√ Applicable □ Not Applicable
Unit: 000 RMB
| Investment Type | Initial investment amount | Opening Balance | Profit/loss on fair value changes in the Reporting Period | Cumulative fair value changes charged to equity | Purchased in the Reporting Period | Sold in the Reporting Period | Closing Balance | Percentage of investment amount divided by net asset at end of the period |
| Option | 3,490,710 | 3,490,710 | (261,094) | (249,175) | 4,774,021 | (3,490,710) | 4,774,021 | 61.03% |
| Forward | 22,863,927 | 22,863,927 | (609,218) | (581,407) | 11,279,778 | (22,863,927) | 11,279,778 | 144.19% |
| Total | 26,354,637 | 26,354,637 | (870,312) | (830,582) | 16,053,799 | (6,354,637) | 16,053,799 | 205.22% |
| Explanation of accounting pol-icies and principles for hedg-ing, and any significant changes compared with last reporting period | Please refer to Section X of this Report, note III. 28.1 for the disclosure of the accounting policies for hedging. There is no change in the accounting policies for hedging during the reporting period. | |||||||
| Explanations about gain/loss during the Reporting Period | The loss this year is mainly due to the devaluation in the ILS of 3.3% and evaluation in the BRL of 7.2% | |||||||
| Explanations for hedging ef-fect | Despite of the loss incurred from the hedging transactions, the Group has effectively mitigated the impact from the exchange rate fluctuations during the year. | |||||||
| Source of fund for the invest-ment | Internal. | |||||||
| Risk and control analysis for the Reporting Period (includ-ing but not 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 Group has ISDA agreements. As to operational risk, the Group is working with relevant software, which is its back office for all transactions. 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' financial statements committee of | |||||||
ADAMA Ltd. Annual Report 2023
| the board, which specifies, inter alia, the hedging policy, the persons that have the authorization to deal with hedging, the tools, ranges etc. The only subsidiary that has hedging positions in the Group in the period was Adama Solutions and its subsidiaries. ? The relevant subsidiaries apply management designed procedures and controls, which among other things, monitor the working process 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 change of investments during the Reporting Period. Specific methodology and as-sumptions should be dis-closed in the analysis of fair value 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 transac-tions are simple (Options and forwards) for short terms. For fair value methodology see Section X of this Report, note IX. Fair Value. The exchange rates are provided by the accounting department of the relevant subsidiary and all other parameters are provided by the experts. |
| Litigation-related situations (if applicable) | N/A |
| Date of disclosure of Board approval (if any) | December 30, 2017 |
| Date of disclosure of Share-holders’ approval (if any) | N/A |
| Independent Directors’ opinion on the investment in derivative financial instruments and re-lated risk controls | The derivative investments carried by the Company are for hedging and narrowing down the risk of market fluctuations. The investments respond to the Company’s routine business demands and are in accordance with the relevant laws and regulations. Additionally, the Company has adopted Currency Risk Hedging Policy to strengthen the risk management and control 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.Annual Report 2023
The company is required to comply with the “Self-regulatory Guidelines for Listed Companies on Shen-zhen Stock Exchange: No. 3 - Disclosure of Industry Information”.The derivative transactions carried out by the Group were mainly through options and forward in order to mitigate thecurrency exposure and the fluctuation in Israeli CPI. For more details, please refer to the section above.
(2) Investment in Derivative Financial Instruments for Speculation during the Reporting Pe-riod
□ Applicable √ Not Applicable
No such situation occurred during the Reporting Period.
5. Use of raised funds
□Applicable √Not applicable
VIII. Sale of significant assets and equities
1. Sale of significant assets
□ Applicable √ Not applicable
No selling of significant assets occurred during the reporting period.
2. Sale of significant equities
□ Applicable √ Not applicable
IX. Analysis of major controlling and stock-participating companies
√ Applicable □ Not applicable
List of stock-participating companies responsible for over 10% of the net profits of the Company:
Unit: RMB’000
| Name | Type | Main services | Registered capital | Total assets | Net assets | Operating revenues | Operating profit | Net profit |
| Adama Solutions | Subsidiary | Development, manufacturing and marketing of agrochemicals, intermediate materials for other industries, food additives and synthetic aromatic products, mainly for export. | 720,085 | 46,287,085 | 15,839,934 | 29,527,356 | (1,670,809) | (1,730,125) |
ADAMA Ltd.Annual Report 2023
Subsidiaries acquired or disposed during the Reporting Period
√ Applicable □Not Applicable
| Name of the Subsidiary | Mode of Acquisition and Disposal of Subsidiaries during the Reporting Period | Impact on Production, Operation and Performance |
| Agrinova New Zealand Limited | Equity Acquisition | The transaction will enable the Company to grow its product portfolio in the New Zealand market and pave its expansion into the complimentary segments of biologicals, plant nutrition and Plant Growth Regulators (PGR). Agrinova's product portfolio targets the horticulture market, complementing the Company's focus in New Zealand on row crops and fodder markets. Its expertise in biologicals plant nutrition and PGR is in line with Company's aim to increase its activities in the emerging market of biological products, increasing its offering that supports sustainable food production. |
Description of major holding and equity participating companies
During the Reporting Period, total sales of Solutions, a wholly-owned subsidiary of the Company, amounted to USD 4,192million, a decrease of 15% (7% decrease in volume and 7% decrease in prices), driven by high channel inventory andchannel destocking in light of high interest rates creating last-minute purchase patterns, as well as pressure on marketprices. Solutions made a net loss of USD 242 million in the full year period. For detailed explanation of the performancemovement, see above explanation of the Section.
X. List of the structured main entities controlled by the Company
□ Applicable √ Not applicable
XI. Outlook of the Company’s future development(I) Industry structure and trends
1. The competitive structure of crop protection industry
(1) The competitive structure of the global crop protection industry
The global crop protection market is dominated by seven multinational companies, including the Group, five of whichare originator companies. In the past decade, a number of mergers and acquisitions were completed among the largestplayers in the crop protection industry. Nonetheless, the crop protection industry as a whole is relatively decentralized, witha number of local manufacturers competing in each country against the global multinational companies. The Groupbelieves that entry barriers for the crop protection market are relatively high, although they vary from region to region.ADAMA is a leading company among the crop-protection companies that focus on off-patent crop protection solutions.The Group’s global crop protection market share was approximately 5.1% in 2023, based on preliminary estimation madeby AgBio Investor regarding total sales in the agrochemical industry, and 6.5% in 2022.
The Group's competitors are multinational Originator Companies that continue producing and marketing their originalproducts after their patent expiry (“Originator Companies”), as well as other crop protection companies. In the Group'sexperience, in most cases the Originator Company’s market share in a particular product fall to approximately 30% - 70%within a number of years following the expiry of the relevant patent, leaving the remaining market share open to competitionamong off-patent crop protection companies, in addition to their competition with the Originator Company (which continues
ADAMA Ltd.Annual Report 2023
manufacturing the product and even leads its market prices and sales terms).
The Group competes with Originator Companies and other international off-patent crop protection companies in allthe markets in which it operates, as these companies generally also have global marketing and distribution networks. Inaddition, there are several smaller Originator Companies that also compete with the Group. As a rule, other off-patent cropprotection companies that do not have international marketing and distribution networks compete with the Group locally inthose geographical markets in which they operate.
(2) The competitive structure of the crop-protection industry in China
The chemicals industry in China, which the Company understands to be the largest in the world, as well as theagrochemicals industry in the country, includes thousands of companies which have invested in manufacturinginfrastructure, most of whose production capacity is currently aimed at exports, intended for sale through small and largecompanies across the world, including companies like the Group and its competitors. The growth in production capacity,on one hand, and the price levels and competitiveness of the products produced in China on the other, affect the structureof competition in the entire industry. However, price levels of the products manufactured in China have risen in recentyears, mainly stemming from the increase of costs relating to environment protection and regulation in China, including byway of limited granting of production permits, shutting down of plants, fines, etc. Active Ingredient prices in China beganto increase at the end of 2020 due to the recovery of oil prices together with reduced capacities of chemical manufacturescaused by higher raw material costs - a dynamic that has continued throughout 2021. In the beginning of 2022, the pricesof AI peaked, and have since been declining, though maintaining historically elevated levels. The cost environment furtherimproved in 2023 as active ingredient prices in China continued to decline all through 2023 reaching low levels.
2. The development trends of the crop-protection industry
In the last few years, some new emerging trends that may affect the nature of competition in this sector can beidentified: (1) The market share of products whose patents have expired continues to rise relative to that of patented originalproducts, primarily due to the fact that the rate of patent expiry exceeds that of the launching of new patent-protectedproducts; (2) a trend of some off-patent companies expanding and becoming stronger (inter alia, as a result of corporatemergers and acquisitions as well as product acquisitions), which may lead to them competing with the Group in geographicmarkets in which they have not operated up to now; (3) smaller companies have begun operating, in limited scale, in certainmarkets with relatively low entry barriers; (4) improvement of the agrochemicals industry in China inter alia, increasingmarket entry barriers; (5) price competition in certain markets by multinational Originator Companies and/or increasing thecredit days to its customers; and (6) large mergers and acquisitions among leading companies in the sector.
The Group believes that in view of the industry's development trends, the following are critical success factors: (i)reputation, branding, expertise and accumulated knowledge in the sector in the various countries and among customersand suppliers; (ii) financial strength and resilience combined with consistent growth, allowing the Group to realize acorporate development strategy including the potential for mergers and acquisitions with other companies in the sphere,and being able to respond efficiently to attractive business opportunities in order to expand its product portfolio and thescale of its operations; and (iii) access to funding sources and reasonable funding terms allowing the Group to makeinvestments that earn a positive return.(II) Development strategy of the Company
The Group strives to be a global leader in the Crop Protection industry, and intends to achieve this aim by executionof the following strategies:
? Utilize the Group’s Differentiated Offering to Strengthen and Grow its Market Position. The Group intends tocontinue to drive the growth of its business through effective commercialization of differentiated, high quality productsthat meet farmers’ needs efficiently. To that end, the Group will leverage its extensive R&D and registration capabilitiesto continue to provide unique yet simple solutions to farmers. In addition, the Group adds value by enhancing the
ADAMA Ltd.Annual Report 2023
functionality and efficacy of the industry’s most successful and commercially proven molecules, by developing new andunique mixtures and advanced formulations. These innovative products are designed to provide farmers with bettersolutions to the challenges they face, including weeds, insects and disease, increasing resistance and insufficient pestcontrol related to the use of genetically modified seeds.Aiming to provide distinct benefit to farmers and enhance the sustainability of the business, in addition to the ongoingefforts to expand existing product registrations to additional crops and regions, a key portion of the Group’s strategyinvolves the deliberate shift of its product offering towards more innovative and value-added solutions. Such solutionsinclude higher-margin, higher-value complex off-patent products, unique mixtures and formulations as well as innovative,novel products that are protected by patents and other intellectual property rights. As evidence of this effort, the Grouphas significantly increased the proportion of unique mixtures and formulations in its R&D pipeline over the last severalyears. Over the coming years, as this shift in the pipeline towards more differentiated and innovative solutions starts tobe reflected in the Group’s commercial offering, it is expected to be a significant driver of growth in profitability. In thisrespect, and in order to capitalize on future opportunities in the agrochemical market, the Group has intensified its effortsto develop a leading pipeline of crop protection products aimed at providing value-added solutions to farmers around theworld, based on AIs that are expected to come off-patent in the coming years. These newly off-patent AIs will bedeveloped into new mixtures and formulations, in combination with new formulation and delivery technologies thatprovide more efficient ways to deliver the products into the plants, thereby creating truly unique and differentiated, value-added solutions to farmers. In this way, the Group strives to achieve a double competitive advantage – to be the first tomarket launching new products after the expiry of the patent on the AI, and to capitalize on cost leadership throughincreased backward integration through the Group’s global operations capabilities.? Bridge China and the World. The Group is striving to become a leading global crop protection company in China, both
commercially and operationally, and in so doing, to drive its global growth in the future.China is currently the third largest, and one of the fastest growing, agricultural markets in the world. Moreover, in recentdecades, China has become the leading manufacturing center for the global crop protection industry - from the sourcingof raw materials and chemical intermediates to the synthesizing of active ingredients and the formulation of finishedproducts.The Group intends to capitalize on its status in China and its relationship with ChemChina, as well as close collaborationSyngenta Group, to increase its commercial activity in the country, where it is already building additional infrastructure.The Group’s commercial teams are working closely together. Through the commercial collaborations, the Group has anoperational infrastructure and commercial foundation upon which a leading Chinese domestic distribution network hasbeen built, and which the Group believes will make it one of the only global crop protection providers with significantintegrated commercial and operational infrastructures both within and outside of China.Through the combination with Solutions and the collaboration with the Syngenta Group Companies, the Group intendsto achieve cost savings and improved margins and efficiencies through the vertical integration of manufacturing andformulation together with the Group’s global supply chain and logistics capabilities. In addition, the Group’s global R&Defforts are being complemented by a new R&D center in Nanjing to service the Group’s expanded product developmentneeds and enable the introduction of advanced technologies into China and globally. The Group expects to drivesignificant demand for its products by launching new and advanced active ingredients and intermediates with higher R&Dcontent. In addition, the advanced formulation center in Jiangsu Province will serve as a platform to introduce cost-advantaged crop protection solutions into China and globally.The Group expects that its unique positioning and profile in China, including the relationship with Syngenta group andSinochem, should establish it as a partner of choice for companies outside China seeking to access its domestic market,as well as for Chinese companies looking to expand their global footprint. In addition to the combination and thecommercial collaboration, the Group is assessing strategic joint ventures and selected acquisitions to further bolster its
ADAMA Ltd.Annual Report 2023
commercial and operational platform in China.? Collaboration of the Company with Syngenta and Sinochem as members of the Syngenta Group. The Companyengaged with Syngenta in collaboration agreements for sale and distribution of finished products, raw materials supply,joint ventures in the fields of procurement, logistics, production and supply chain as well as in the R&D and products’registration fields, in order to reduce costs, to improve processes and to increase the Company’s sales. Suchcollaborations have and are expected to continue to generate meaningful additional benefits for the Group as well asSyngenta Group.? Continue to Strengthen Position in Emerging Markets. In addition to developing its China platform, the Group enjoys
strong and leading positions in key emerging agricultural markets such as Latin America, India, Asia and Eastern Europe,
with around half of its global sales achieved in these emerging markets. Over the last several years, in order to establish
direct market access and distribution capabilities in these markets, the Group has successfully integrated acquisitions in
Chile, France, Greece, Paraguay, Peru, Romania, New Zealand, China and the US. Similarly, the Group has a direct go-
to-market strategy in many high-growth markets around the world, leveraging a direct sales force and driving demand at
the retail and farmer level. The Group intends to continue to invest in its growth in the key emerging markets with high
growth potential. The Group’s strong global platform and leading commercial infrastructure in such markets will allow it
to capitalize on worldwide growth opportunities, and continue to drive its profitable growth.? Grow Revenues and Increase Profitability. The Group believes that it has the capacity and operational leverage to
increase profitability through focused execution of its strategy within the framework of prudent working capital
management. The Group is aiming to increase its revenues and margins consistently over time as it shifts to a more
differentiated, higher-margin product portfolio and continues to strengthen its product pipeline with significant number of
higher-value products, based on AIs which patent protection has just expired, unique mixtures and formulations, as well
as innovative and, in some cases, patent-protected products. The Group believes that its investment in developing an
operational footprint in China will lower costs and improve manufacturing efficiency and distribution logistics and reduce
inventory requirements in many markets worldwide.
In recent years, the Group has focused on growing and improving its business, infrastructure and brand. Other than
investments in the further development of its China operations, the Group believes that its existing global infrastructure
is largely of sufficient scale to support higher revenues, allowing it to enjoy economies of scale and continually improve
profitability over time.? Continue to Capitalize on the Global Portfolio Integration and Rebranding Initiative. In 2014 the ADAMA brand
was launched, integrating dozens of legacy brands across the globe to form a single, streamlined sales and distribution
entity under a unified brand name. In 2019, following extensive farmer and customer research in 13 major markets, the
Company further evolved its brand, creating a unique and compelling brand story that elevates ADAMA’s distinct
entrepreneurial and agile culture; increases its relevance to its customers (channel partners and growers); and further
differentiates the Company from key competitors. The evolved brand positioning, known as “Listen, Learn, Deliver”,
focuses on a process of listening to customer needs, bringing insights from the field and combining them with the
extensive know-how and experience in the Company; and delivering solutions that meet local farmer and customer pain
points. The Core Leap strategy discussed above provides the platform needed to create distinct mixtures and
formulations based on farmer needs. With this new brand positioning the Company is investing in platforms to ensure
ongoing and intimate farmer and customer interactions which will provide the source for future product and solution
ideation.? Strategically Pursue Acquisitions to Enhance Market Access and Strengthen the Product Portfolio. Throughout
its history, the Group has successfully completed and integrated several add-on acquisitions across the globe. The Group
intends to continue to pursue acquisitions, in-licensing agreements and joint ventures that offer attractive opportunities
to enhance its market access and position, as well as strengthen and further differentiate its product portfolio.
ADAMA Ltd.Annual Report 2023
(III) 2024 Business planIn 2024, the Company anticipates a maintained depressed environment in global economic growth due to the high-interest environment, which will lead to a cautious crop protection channel purchasing behavior, with no sharp inventoryrestocking. Despite this, crop protection consumption at the farmer level is expected to remain healthy, supported byhigh crop area and reasonable farmer margins. The prices of AI from China are expected to remain low due to over-capacity in China, however, the eventual increase in volumes may outpace the pricing pressure, leading to somewhatmoderate growth in the market.
Overall, the Group is expecting to see moderate revenue growth driven by volume growth and the continued launchof new products. However, the extent to which this will materialize will be determined by its ability to execute on its plans,as well as other external impacts such as weather conditions, competition in the market and other unforeseeabledynamics.The Group aims to continue to exercise discipline in management of its operating expenses, while focusing onimprovement in working capital efficiency and quality of business.
In 2024, the Group strives to expand its differentiated offering, specifically with the registrations and launch of productswith proprietary formulations. This will be driven by investment in Innovation, Research and Development, and focusingon all aspects of development of its portfolio – product development, obtaining of registrations, development of advancedformulations and innovative delivery technologies, as well as differentiated mixtures, alongside further investments inchemical R&D.
Furthermore, following the completion of the Relocation & Upgrade program in Jingzhou, and reaching high utilizationrate, in the coming year the Group will continue to focus on the upgrading and relocation of the production facilities inHuai’An, as well as the continued build-up of its commercial and operational presence in China.
Note: The business plan described above does not constitute a commitment to investors on the Company’sperformance, and the Company suggests that investors should maintain adequate risk awareness therefor, andunderstand the difference between the Company’s business plan and a performance commitment.(IV) Company’s financing and credit
The Group finances its business activities by means of its equity as well as credit from external sources. The primaryexternal financing is by means of long-term bonds issued by Solutions.
The Group has additional sources of external funding from: (1) long-term credit from banks and related parties; (2)short-term bank credit and related parties, as well as non-tradable commercial securities; and (3) supplier credit. In addition,the Group has significant cash balances as well as unused set bank credit lines.(V) Risk factors and countermeasures
The Group is exposed to several major risk factors, resulting from its economic environment, the industry and theGroup'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 material subsidiary Solutionsreports its consolidated financial statements in US dollars, which is its functional currency, while its operations, sales andpurchases of raw materials are carried out in various currencies. Therefore, fluctuations in the exchange rate of the sellingcurrency against the purchasing currency impact the Company’s results. The Group's most significant exposures are tothe Euro, the Israeli Shekel and the Brazilian Real. The Group has lesser exposures to other currencies. The strengtheningof the US dollar against other currencies in which the Company operates reduces the dollar value of such sales and viceversa.On an annual basis, approximately 22% of the Group’s sales are to the European market and therefore the impact of long-term trends on the Euro may affect the Company's results and profitability.
ADAMA Ltd.Annual Report 2023
Analyses of currency exposure from foreign currency exchange rate fluctuations against assets, liabilities and cash flowdenominated in foreign 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's financing costs.The Group uses commonly accepted financial instruments to hedge most of its substantial net balance sheet exposure toany particular currency. Nonetheless, since as part of these operations the Group hedges against most of its balance sheetexposure and only against part of its economic exposure, exchange rate volatility might impact the Group’s results andprofitability. As of the date of publication of this Report, the Group has hedged most of its balance sheet exposure.In addition, as the Company’s product sales depend directly on the cyclical nature of the agricultural seasons, thereforethe Company’s income and its exposure to the various currencies is not evenly distributed over the year. Countries in thenorthern hemisphere have similar agricultural seasons and therefore, in these countries, the highest sales are usuallyduring the first half of the calendar year. During this period, the Company is most exposed to the Euro. In the southernhemisphere, the seasons are opposite and most of the local sales are carried out during the second half of the year. Duringthese months, most of the Company's exposure pertains to the Brazilian Real.Exposure to Interest rate, Israel CPI and NIS exchange rate fluctuationsThe debentures issued by Solutions, the material subsidiary of the Company, are Israeli Shekel based and linked to theIsrael Consumer Price Index “CPI” and therefore an increase in the CPI and an appreciation of the shekel rate against thedollar might lead to a significant increase in its financing expenses. In addition, high volatility of the exchange rate ofUSD/NIS and expectations of material changes in the inflation rate, may increase the costs of hedging transactions oncurrency exposure, and as a result, may lead to a further increase in the company's financing costs. As of the date ofapproval of the financial statements, Solutions hedged most of its exposure to these risks on an ongoing basis, throughCPI hedging and USD-ILS exchange rate hedging transactions.In addition, inflation in several global markets has a cross effect on the business results of the Group, since on one hand,it contributes to the Group's ability to increase the sale price of its products, but on the other hand, it may increase theGroup's production costs and operating expenses. As of the date of the Report, the Group is unable to isolate the influenceof inflation on its sale prices and its costs. The Group estimates that the cumulative cross influence of inflation does nothave a material effect on to its financial results.Since December 31, 2021, the Group have had dollar denominated liabilities bearing variable London Interbank OfferedRates (LIBOR) interest. As a result, the Group was exposed to changes in the US dollar LIBOR interest rate. The Groupprepares a quarterly summary of its exposure to changes in the relevant interest rate benchmarks (which replaced theLIBOR interest rate) and periodically examines hedging the variable interest rate by converting it to a fixed rate. As part ofthe global reform in interest rate benchmarks, the phasing out of LIBOR (the so-called LIBOR fallback) was scheduled forthe end of 2021. As of January 1, 2022 three global interest rate benchmarks has transitioned to alternative risk-free rateswhile replacing the former benchmark LIBOR: SOFR (USD), ESTR (EUR) and SONIA (GBP). As of the date of publicationof this Report, the Group has not carried out hedging for such exposure, since US dollar interest rates have been relativelystable.In addition, the effect of interest changes on the debt that serves the Group’s working capital is seasonal. Such debt bearsa variable interest, but has no material effect on the Group’s financing expenses. As a result, the net increase in interestrate does not have a material effect on the Group’s business.Business operations in emerging marketsThe Group conducts business - mainly product sales and raw material procurement – inter alia, in emerging markets suchas Latin America (particularly in Brazil, the largest market, country wise, in which the Group operates), Eastern Europe,Southeast Asia and Africa. The Group's activity in emerging markets is exposed to risks typical of those markets, including:
political and regulatory instability; volatile exchange rates; economic and fiscal instability and frequent revisions of
ADAMA Ltd.Annual Report 2023
economic legislation; relatively high inflation and interest rates; terrorism or war; restrictions on import and trade; differingbusiness cultures; uncertainty as to the ability to enforce contractual and intellectual property rights; foreign currencycontrols; governmental price controls; restrictions on the withdrawal of money from the country; barter deals and potentialentry of international competitors and accelerated consolidations by large-scale competitors in these markets.Developments in these regions may have a significant effect on the Group's operations. Distress to the economies of thesemarkets could impair the ability of the Group's customers to purchase its products or the ability to market them atinternational market prices, as well as harm the Group's ability to collect customer debts, in a way that could have asignificant adverse effect on the Group's operating results.The Group’s operations in multiple regions allows for the diversification of such risks and for the reduction of its dependencyon particular economies. In addition, changes in registration requirements or customers' preferences in developed westerncountries, which may limit the use of raw materials purchased from emerging economies, may require redeployment of theGroup's procurement organization, 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 theCompany, lead the global industry. Five of these, Bayer, Syngenta, Corteva, BASF and FMC, are Originator Companies,which develop, manufacture and market both patent-protected as well as off-patent products. The Group competes withthe original products with the aim of maintaining and increasing its market share.The Originator Companies possess resources enabling them to compete aggressively, in the short-to-medium term, onprice and profit margins, so as to protect their market share. Loss of market share or inability to acquire additional marketshare from the Originator Companies can affect the Group's position in the market and adversely affect its financial results.For details regarding the Group’s competitive advantages see Section III - subsection III. Core competitiveness analysisabove.Similarly, the Group also competes in the more decentralized off-patent segment of the market, against other off-patentcompanies and smaller-scale Originator Companies, which have significantly grown in number in recent years and arematerially changing the face of the crop protection industry, the majority of whom have not yet deployed global distributionnetworks, and are only active locally. These companies often price their products aggressively and at times have lowerprofit margins than the Group, which may adversely impact the Group's sales and product prices. The Group's ability tomaintain its revenues and profitability from a specific product in the long term is affected by the number of companiesproducing and 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 markets and/or growth ofcompetitors that focus on off-patent active ingredients (whether by the expansion of their product portfolio, grantingregistrations to other manufacturers (including manufacturers in China and India) to operate in additional markets,transforming their distribution network to a global scale or increasing the competition for distribution access), and/ordifficulty in purchasing low cost raw materials, may harm the Group’s sales, affect its global position and lead to priceerosion.Decline in scope of agricultural activities; Climate change and exceptional changes in weather conditionsThe scope of general agricultural activities worldwide may be negatively affected by many exogenous factors, someresulting from climate change, including but not limited to extreme weather conditions, natural disasters, a decrease inagricultural commodity prices, government policies and the economic condition of farmers. A material decline in the scopeof agricultural activities would by necessary implication cause a decline in the demand for the Group’s products, erosionof its prices and collection difficulties, which may have a significant adverse effect on the Group's results. Extreme weatherconditions, both chronic and acute, as well as other damages caused by nature may have an impact on the demand forthe Group's products, as well as to price thereof. For example, drought may reduce the need for fungicides, which could
ADAMA Ltd.Annual Report 2023
result in fewer sales and greater unsold inventories in the market, whereas excessive rain could lead to increased plantdisease or weed growth requiring growers to purchase and use more crop protection products. Drought and/or increasedtemperatures may change insect pest pressures, requiring growers to use more, less, or different insecticides. Climatechange may increase the frequency or intensity of extreme weather such as storms, floods, heat waves, droughts andother events that could affect the demand for the Company’s products. The Group believes, that should extreme weatherconditions or a number of such bad seasons occur in succession, without favorable seasons in the interim, its results maysustain significant harm.Environmental, health and safety legislation, standards, regulation and exposureMany aspects of the Group's operations are strictly regulated, including in relation to production and trading, and particularlyin relation to the storage, treatment, manufacturing, transport, usage and disposal of its products, their ingredients andbyproducts, some of which are considered hazardous. The Group's activities involve hazardous materials. Defectivestorage or handling of hazardous materials may cause harm to human life or to the environment in which the Groupoperates. The regulatory requirements regarding the environment, health and safety could, inter alia, include soil andgroundwater clean-up requirements; as well as restrictions on the volume and type of emissions the Group is permitted todischarge into the air, water and soil.The regulatory requirements applicable to the Group vary from product to product and from market to market, and tend tobecome stricter with time. In recent years, both government authorities and environmental protection organizations havebeen applying increasing pressure, including through investigations and indictments as well as increasingly stricterlegislative proposals and class action suits related to companies and products that may potentially pollute the environment.Compliance with these legislative and regulatory requirements and protection against such legal actions requires the Groupto commit considerable human and financial resources (both in terms of substantial ongoing costs and in terms of materialone-time investments) to meet mandatory environmental standards. In some instances, this may result in delaying theintroduction of products into new markets or in adverse effects on the Group’s profitability. In addition, the toughening,material alteration or revocation of environmental licenses or permits, or their stipulations, or the inability to obtain suchlicenses and permits, may significantly affect the Group's ability to operate its production facilities, which in turn may havea material adverse effect on the financial and business results of the Group. The Group may be required to bear significantcivil liabilities (including due to class actions) or criminal liabilities (including high penalties and/or high compensationpayments and/or costs of environmental monitoring and rehabilitation), resulting from violation of environmental, healthand safety regulations, while some of the existing legislation may impose “strict liability” regime on the Group, i.e. the Groupwill be held liable, regardless of proof of negligence or malice.While the Group invests material sums in adapting its facilities and in constructing special facilities in accordance withenvironmental requirements, it is currently unable to assess with any certainty whether these investments (current andfuture) 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 any certainty the extent of future costs and investments it may incur in orderto meet the requirements of the environmental authorities in the relevant countries in which it operates since, inter alia, theGroup is unable to estimate the extent of potential pollutions, their duration, the extent of the measures required to betaken by the Group in handling them, the division of responsibility among other parties and the amounts recoverable fromthird parties.Furthermore, the Group may be the target of bodily injury claims and property damage claims caused by exposure tohazardous 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 stages of theirdevelopment, production, import, utilization and marketing, and are also subject to strict regulatory supervision by theregulatory authorities in each country. Compliance with the regulatory requirements that vary from country to country and
ADAMA Ltd.Annual Report 2023
which are becoming more stringent with time, involves significant time and costs, and rigorous compliance with individualregistration requirements for each product. Noncompliance with these regulatory requirements might materially adverselyaffect the Group’s expenses, 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 already sold, or to legalaction. Moreover, to the extent new regulatory requirements are imposed on existing registered products (requiringadditional investment or leading to the existing registration's revocation) and/or the Group is required to compensateanother company for its use of the latter's product registration data, these might amount to significant sums, considerablyincreasing the Group's costs and adversely affecting its results and reputation. In recent years the industry has beensuffering from revocation of registration for many products around the world. This trend is particularly evident in Europeancountries as well as in many other countries worldwide.Nevertheless, the Group believes that, in countries where the Group maintains a competitive edge, any toughening ofregistration requirements may actually increase this edge, since this will make it difficult for its competitors to penetrate thesame market, whereas in countries in which the Group possesses a small market share, if any, such toughening may makefurther penetration of the Group's products into that market more difficult.Product liabilityProduct and producer liability are a risk for the Group. Regardless of their prospects or actual results, product liabilitylawsuits might involve considerable costs as well as tarnish the Group's reputation, thus potentially impacting its profits.The Group has a third-party and defective product liability insurance cover. However, there is no certainty that the scopeof insurance cover is sufficient. Any future product liability lawsuit or series of lawsuits could materially affect the Group’soperations and results, should the Group lose the lawsuit or should its insurance cover not suffice or apply in a particularinstance. In addition, while the Group has not currently encountered any difficulty renewing such insurance policy, it ispossible that it will encounter future difficulties in renewing an insurance policy for third party liability and defective productson 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 developing differentiatedproducts and obtaining registrations for them, so as to enable it to gain market share at the expense of its competitors.Usually, being the first to launch a certain off-patent product affords the Group continuing advantage, even after othercompetitors penetrate the same market. As such, the Group's revenues and profit margins from a certain new off-patentproduct could be materially affected by its ability to launch such product ahead of the launch of a comparable product byits competitors.Should new products fail to meet registration requirements in the different countries or should it take a long period of timeto obtain such registrations, the Group's ability to successfully introduce a new product to the relevant market in the futuremay be affected, since entry into the market prior to other competitors is important for successful market penetration.Furthermore, successful market penetration involves, inter alia, product diversification in order to suit each market'schanging needs. Therefore, if the Group fails to adapt its product mix by developing new products and obtaining therequired regulatory approvals, its future ability to penetrate that market and to maintain its existing market share could beaffected. Failure to 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 question in the relevantmarket, 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 patents or patentapplication of Originator Companies or other third parties, or to develop products that do not otherwise infringe intellectualproperty rights in a manner that may involve significant legal and other costs. Originator Companies tend to vigorously
ADAMA Ltd.Annual Report 2023
defend their products and may attempt to delay the launch of competing off-patent products by registering patents onslightly different versions of products for which the original patent protection is about to expire or has expired, with the aimof competing against the off-patent versions of the original product. The Originator Companies may also change thebranding and marketing of their products. Such actions may increase the Group's costs and the risk it entails, and harm oreven prevent its ability to launch new products.The Group is also exposed to legal claims that its products or production processes infringe on third-party intellectualproperty rights. Such claims may involve time, costs, substantial damages and management resources, impair the valueof the Group's brands and its sales and adversely affect its results. Such lawsuits that were concluded involved non-material amounts.Furthermore, although the Group protects its brands and trade secrets with patents, trademarks and other methods ofintellectual property protection, these protective means may not be sufficient for fully safeguarding its intellectual property.Any unlawful or other unauthorized use of the Group's intellectual property rights could adversely affect the value of itsintellectual property and goodwill. In addition, the Group may be required to take legal actions involving financial costs andresources to safeguard its intellectual 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, significant increases ordecreases in raw material costs affect the cost of goods sold, and are, due to the length of the Company’s inventory cycle,generally reflected in the Company’s financials. Most of the Group's raw materials are distant derivatives of oil prices andtherefore, extreme changes or decrease in oil prices may 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 purchasecontracts for key raw materials, wherever possible. Similarly, the Group acts to adjust its sales 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 hedging transactions againstincreases 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, including as a result ofregulatory changes in certain countries currently prohibiting the use of genetically modified seeds, and/or any significantincrease in the sales of genetically modified seeds and/or to the extent new crop protection products are developed forfurther crops that would be widely used (substituting traditional products), will affect demand for crop protection products,requiring the Group to respond by adapting its product portfolio to the new demand structure. Consequently, to the extentthat the Group fails to adapt its product mix accordingly, this may reduce demand for its products, erode their sales priceand by implication affect the Group’s results and market share.Nevertheless, the fact that the Group itself markets some of the products for which herbicide tolerance traits have beendeveloped, 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 potential alternatives for theCompany’s products, though as of the date of the report, their efficiency is relatively limited, and they are commercializedin a relatively small volumes.Operational risksThe Group’s operations, including its manufacturing activities, rely, inter alia, on state-of-the-art computer systems. TheGroup continually invests in upgrading and protecting these systems from malfunctions and attack. Any unexpected failureof these systems, as well as the integration of new systems, could involve substantial costs and adversely affect theGroup's operations until completion of the repair or integration. The potential occurrence of a substantial failure that cannotbe repaired within a reasonable time frame may also affect the Group's operations and its results. Currently, the Group
ADAMA Ltd.Annual Report 2023
has a property and loss-of-profit insurance policy.The Group's production capacity is affected, among others, by its facilities’ output and individual area and time allocationat full capacity. The Group's Multi-purpose facilities provide manufacturing flexibility and enable the Group to prepare forthe manufacturing of new products. Although the Group believes that its existing sites have sufficient facilities and landareas to expand its production capacity, if necessary, in the case of immediate or short-term increases in demand for newproducts supply may be delayed due to lack of capacity to meet demand for such new products.Data protection and cyber securityDuring its activity, the Group may be exposed to risks and threats, related to the stability of its information technologiessystems, data protection and cyber security, which could appear in many different forms (such as service denial, misleadingemployees, malfunction, encryption or data erasing and other cyber-attacks via E-mail or malicious software). An attackon such computerized systems, mainly network based systems may cause the group material damages and expenses andeven partial suspension and disruption of their proper functioning. In order to minimize the abovementioned risks, the groupinvests resources in its technological resilience and in proper protection of its systems.Raw material supply and/or shipping, port service disruptions and inventoryLack of raw materials or other inputs utilized in the manufacture of the Group’s products may prevent the Group fromsupplying its products or significantly increase production costs. Moreover, the Group imports raw materials to itsproduction facilities worldwide, from where it then exports the technical or formulated products to its subsidiaries aroundthe world for formulation and/or commercialization purposes. Disruptions in the supply of raw materials from regularsuppliers may adversely affect operations until an alternative supplier is engaged. If any of the Group's suppliers are unableto supply raw materials for a prolonged period, including due to ongoing disruptions and/or prolonged strikes and/orinfrastructure defects 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 adversely affect the Group'sresults, significantly affect its ability to obtain raw materials in general, or obtain them at reasonable prices, as well as limitits ability to supply products and/or meet customer supply deadlines. These might negatively affect the Group, its financesand operating results. In order to reduce this risk, it is the Group's practice to occasionally adjust the volume of its productinventories or in certain scenarios, to increase the levels of inventory held by the Company to overcome possible supplyshortages, logistic challenges and increases in cost of inventory, as mentioned above, in order to support expected futuresales. Additionally, in the case of fluctuations in the market prices for inventory held by the Company, this may affect itsfinances and operating results. In addition, war, regional conflicts, acts of terror and/or governmental instability around theworld may negatively impact the Company's operations. This may result, among others, in the suspension of operationsor the shutdown of affected facilities, hence causing production and distribution delays, loss of property, injury to employees,and increased insurance premiums.Failed mergers and acquisitions; difficulties in integrating acquired operationsThe Group's strategy includes growth through mergers, acquisitions, investments and collaborations designed to expandits product portfolio and deepen its presence in certain geographical markets.Growth through mergers and acquisitions requires assimilation of acquired operations and their effective integration in theGroup, including realization of certain forecasts, profitability, market conditions and competition.Failure to successfully implement the above and/or non-realization of the relevant forecasts may result in not achieving theincremental value forecasted, loss of customers, exposure to unexpected liabilities, reduced value of the intangible assetsincluded in the merger or acquisition as well as the loss of professional and skilled human resources.Production concentration in limited plantsA large portion of the Group’s production operations is concentrated in a relatively small number of locations. Naturaldisasters, hostilities, labor disputes, substantial operational malfunction or any other material damage might significantly
ADAMA Ltd.Annual Report 2023
affect Group operations, as a result of the difficulty, the time and investment required for relocating the production operationor any other activity.International taxationMost of the Group’s sales are global, through its consolidated subsidiaries worldwide. These individual companies areassessed in accordance with the tax laws effective in each respective location. The Group’s effective tax rate could besignificantly affected by different classification or attribution of the profits arising from the proportional value of thecomponents of each of the companies in the Group in the various countries, as is recognized in each tax jurisdiction;changes in the characteristics (including regarding the location of control and management) of these companies; changesin the breakdown of the Group'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 indetermining the areas in which the Group is taxed; and potential changes in the Group's organizational structure.Changes in tax regulations and the manner of their implementation, including with regard to the implementation of BEPS,may lead to a substantial increase in the Group's applicable tax rates and have a material adverse effect on its financialposition, results and cash flows.Risks arising from the Group’s debtThe Group finances its business operations by means of its own equity and loans from external sources (primarily tradeddebentures issued by Solutions, bank credit and credit from related parties). The Group's main source for servicing thedebt and its operating expenses is by means of the profits from the Group companies’ operations. Restrictions applying tothe Group companies regarding distribution of dividends to the Group, or the tax rate applicable on these dividends, mayaffect the Group's ability to finance its operations and service its debt.In addition, the Group's Finance Documents, as contained in the bank credit agreements, require meeting certain FinancialCovenants. Failure to meet these covenants due to an exogenous event or non-materialization of Group forecasts, andinsofar as the financing parties refuse to extend or update these Financial Covenants as per the Group’s capabilities, maylead the financing parties to demand the immediate 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 ofthese credit lines is insured, while the remainder are exposed to risk, particularly during economic slowdowns in therelevant markets. The Group’s aggregate credit, however, is diversified among many customers in dozens of countries,mitigating this risk. In addition, in certain regions, particularly in South America, credit days are particularly long (comparedto those extended to customers in regions such as Europe), and on occasion, inter alia, owing to agricultural seasons oreconomic downturns in those countries, the Group may encounter difficulty in timely collection of customer debts, with thecollection period being extended over several years.Generally, such issues arise more often in developing countries where the Group may be less familiar with its customers,the collaterals might be in double until actual repayment and the insurance cover of these customers is likely to be limited.Credit default by any of the customers may negatively impact the Group'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 flow and workingcapital requirements in the ordinary course of operations. In view of the Group's growth and considering its primary growthregions, the Group’s broad product portfolio and the Group’s investments in manufacturing infrastructures, the Group hassignificant financing and investment needs. The Group acts continually to improve the state and management of its workingcapital. While currently the Group is in compliance with all its financial covenants, significant deterioration of its operatingresults may in the future 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 financial obligations, may
ADAMA Ltd.Annual Report 2023
be harmed.Contagious disease outbreakOutbreak of a contagious disease and pandemics, or other adverse public health developments, in territories wheresignificant production activity is taking place or from which raw materials are supplied to a significant extent, may have amaterial adverse effect on the Company’s activity, such that the Company may encounter difficulties with procurement ofraw materials and intermediates, experience a certain decrease of activity within its production facilities due togovernmental instructions, and be constrained with respect to its logistics and supply lines. In addition, the Company salescould be potentially impacted by a temporary decrease in demand for its products, as well as by temporary disruption ofthe Company’s ability to sell and distribute products as mentioned above.
XII. Information regarding communication with investors during the Reporting Period
√ Applicable □ Not applicable
| Date | Place | Reception Mode | Type of Visitor | Name of the Visitor | About | Index |
| March 22nd, 2023 | Not Applicable | Online Platform | Institutional Investors | Institutional Investors and Securities Firms, such as CCB Life Asset Management, China Life Asset Management Company Limited, Guotai Fund Management Co., Ltd., Xinyuan Asset Management, JYAH Asset Management Co., Ltd., Zhonggeng Fund Management Co., Ltd., Foresight Fund Management Co., Ltd., CITIC Pru-fund Management Co., Ltd., China Universal Asset Management Co., Ltd. and Southern Asset Management Co., Ltd., etc. | Introduction on 2022 Q4 and FY performance as well as the differentiated sales strategy around the world. The corresponding presentations was published on the website of the Company (IR page on www.adama.com). | Record of the Communications between the Company and the Investors (No. 2023-01) was published by the Company on March 24th, 2023 at www.cninfo.com.cn. |
| March 23rd, 2023 | Not Applicable | Online Platform | Institutional and individual investors | The performance presentation was a live webcast for all investors. | Introduction on 2022 Q4 and FY performance of the Company as well as its differentiated sales strategy around the world. The corresponding presentations was published on the website of the Company (IR page on www.adama.com). | Record of the Communications between the Company and the Investors (No. 2023-02) was published by the Company on March 27th, 2023 at www.cninfo.com.cn. |
| April 25th, 2023 | Not Applicable | Online Platform | Institutional Investors | Dacheng Fund Management Co., Ltd, Guangfa Fund | Introduction on 2023 Q1 performance. The corresponding | Record of the Communications between the |
ADAMA Ltd.Annual Report 2023
| Date | Place | Reception Mode | Type of Visitor | Name of the Visitor | About | Index |
| Management Co., Ltd, CPIC Fund Management Co., Ltd, Guotai Fund Management Co., Ltd, Focus Bridge Fund Management Co., Ltd, BOCOM Schroder Fund Management Co., Ltd, AXA SPDB Investment Managers, CCB Life Asset Management Co., Ltd, CPIC and dozens of other Institutional Investors and Securities Firms | presentation was published on the website of the Company (IR page on www.adama.com). | Company and the Investors (No. 2023-03) was published by the Company on April 27th, 2023 at www.cninfo.com.cn. | ||||
| August 31st, 2023 | Not Applicable | Online Platform | Institutional and individual investors | The performance presentation was a live webcast for all investors. | Introduction on 2023 Q2 and Half-year perfor-mance as well as the global operation progress and strategies of the Company. Corresponding presentation was published on the website of the Company (IR page on www.adama.com). | Record of the Communications between the Company and the Investors (No. 2023-04) was published by the Company on September 4th, 2023 at www.cninfo.com.cn |
| November 1st, 2023 | Not Applicable | Online Platform | Institutional and individual investors | The performance presentation was a live webcast for all investors. | Introduction on 2023 Q3 and 9M performance. Corresponding presentation was published on the website of the Company (IR page on www.adama.com). | Record of the Communications between the Company and the Investors (No. 2023-05) was published by the Company on November 2nd, 2023 at www.cninfo.com.cn. |
XIII. Implementation of Action Plan on Enhancing Quality ReturnsHas the Company disclosed Action Plan on Enhancing Quality Returns
□Yes √ No
ADAMA Ltd.Annual Report 2023
Section IV - Corporate GovernanceI. Basic details of corporate governanceDuring the Reporting Period, the Company continuously improved the awareness of corporate governance and corporategovernance structure and perfected the corporate system as well as standardized the operation of the Company, promotedinternal control activities, and constantly improve the Company's management levels stringently according to requirementsof relevant laws and regulations, such as the Company Law, Securities Law, and Corporate Governance Principle of ListedCompany, as well as Rules for Listing Shares in Shenzhen Stock Exchange.
1. About Shareholders and the Shareholders’ meeting
During the Reporting Period, the Company has ensured that all shareholders, especially small and medium shareholders,are treated equal and able to fully exercise their rights. It held one annual general meeting of shareholders and threeinterim shareholders meeting, during which 14 proposals in total were reviewed and approved. Lawyers were invited toattend all the meetings mentioned above for testimony and issuing legal opinions. Online voting has been applied duringall above-mentioned meetings to ensure that all shareholders, especially small and medium shareholders, enjoy equalstatus and fully exercise their rights. Notices of shareholders' meeting, meeting proposals, discussion procedures, votingon proposals and information disclosure all meet the requirements. Every major decision of the Company has been decidedby the shareholders' meeting according to laws and regulations with lawyers as the witness to ensure that the right to know,to participate and vote on major issues of all shareholders, especially the small and medium shareholders are properlyprotected.
2. About Directors and the Board of Directors
During the Reporting Period, the number, composition and qualifications of the board of directors were in compliance withthe laws and regulations as well as the Articles of Association of the Company. All board members are diligent andresponsible for attending the board and shareholders’ meetings in accordance with the relevant provisions of the CompanyLaw and the Articles of Association. During the Reporting Period, the Company held 12 board meetings during which 37proposals were reviewed. The organizing, convening and formation of resolutions were carried out in accordance withrelevant provisions of the Articles of Association and the Rules of Procedure for the Board of Directors. The Company hasestablished an independent director system in accordance with relevant regulations. Each of the independent directorshave expressed independent opinions on important business of the Company during the Reporting Period. The Company'sboard of directors consists of one strategy committee, one nomination committee, one audit committee and oneremuneration and appraisal committee, all of which are functioning with respective implementation rules to ensure thescientific and compliant decision-making by the board of directors.
3. About Supervisors and the Board of Supervisors
During the Reporting Period, the board of supervisors of the Company consisted of three supervisors. The number,composition and qualifications of the Board of Supervisors were in compliance with laws and regulations as well as theArticles of Association of the Company. During the Reporting Period, four meetings were held and 9 proposals werereviewed. All meetings were organized and convened in accordance with the procedures of the Articles of Association andthe Rules of Procedure for the Board of Supervisors. All supervisors have earnestly performed their duties by reviewingthe company's periodic reports and other matters and issuing verification opinions with a strong sense of responsibilitiesto the shareholders. All of them have effectively fulfilled their duties and safeguarded the legitimate rights and interests ofthe Company and its shareholders.
4. About Investors’ Relations
ADAMA Ltd.Annual Report 2023
The Company communicates with investors through public announcements, consultations by telephone, interactiveplatforms, e-mails and other multiple media to enhance opinion exchange. It has been making various efforts on deepeningthe understanding of investors about the Company's operation and development outlook and also maintaining goodrelations with them. Meanwhile, it has been serious to receive investors' opinions and suggestions and encouraged theinteraction between investors and itself. During the Reporting Period, the Company has been patient to respond investorsby answering calls and questions through all interactive platforms, which has guaranteed a sound and fair access forinvestors to obtain information.Whether there is any difference between the actual corporate governance situation of the Company and the provisions ofthe laws, administrative regulations and relevant rules of CSRC or not?
□ Yes √ No
There is no difference between the actual corporate governance situation of the Company and the provisions of the relevantrules of CSRC.
II. Particulars about the Company’s independence from the controlling shareholder
and the actual controller in ensuring the company’s assets, personnel, financials,institutions and business, etc.
1. In respect of assets: The assets relationship between the Company and the controlling shareholder is clear. Thecompany has complete control over all its assets. There is no such thing as a free possession or usage by the controllingshareholder.
2. In respect of personnel: The Company and controlling shareholder are mutually independent in the labor, personnel andsalary management, the Company CEO and other senior management personnel get the salary in the Company, and notperform administrative work in the controlling shareholder unit.
3. In respect of financing, the Company owned independent financial department, established independent accountingsystem and financial management system, opened independent bank account, paid tax in line with laws.
4. In respect of organization, the Company has set up the organization that was independent from the controllingshareholder completely, the Board of Directors, the Supervisory Committee and internal organization could operateindependently.
5. In respect of business: the Company had a complete business system and independent operation, and conducts itsindependent and complete business with self-management ability.
ADAMA Ltd.Annual Report 2023
III. Horizontal competition
√ Applicable □ Not applicable
| Type | Type of Affiliation with the Company | Name of the Company | Nature of the Company | Cause of the problem | Solutions | Work-schedule and follow-up plan |
| Horizontal competition and related party transactions | ultimate controlling party of the Company’s controlling shareholder | Sinochem Holdings Corporation Ltd. | Central enterprise | The subsidiaries controlled by Sinochem Holdings are in similar or the same business as the Company or the supplier or the client of the Company. | Sinochem Holdings commits itself to take appropriate actions to solve the horizontal competition and related party transactions between its subsidiaries and the Company. For details, please refer to I Performance of commitments of Section VI of the Annual Report. | In process/ performance. |
IV. Particulars regarding the annual shareholders’ general meeting and special
shareholders’ general meetings held during the Reporting Period
1. Particulars regarding the shareholders’ general meeting during Reporting Period
| Session | Type | Proportion of investors' participation | Convening date | Disclosure date | Resolution |
| 2022 Annual Shareholders Meeting | Annual Shareholders Meeting | 80.31% | April 12, 2023 | April 13, 2023 | Announcement on the Resolutions of 2022 Annual General Meeting (Announcement Number: 2023-18). Disclosed at the website CNINFO www.cninfo.com.cn |
| 1st Interim Shareholders Meeting in 2023 | Interim Shareholders Meeting | 3.07% | September 15, 2023 | September 16, 2023 | Announcement on the Resolutions of the 1st Interim Shareholders Meeting in 2023 (Announcement Number: 2023-32). Disclosed at the website CNINFO www.cninfo.com.cn |
| 2nd Interim Shareholders Meeting in 2023 | Interim Shareholders Meeting | 80.11% | December 1, 2023 | December 2, 2023 | Announcement on the Resolutions of the 2nd Interim Shareholders Meeting in 2023 (Announcement Number: 2023-39). Disclosed at the website CNINFO www.cninfo.com.cn |
ADAMA Ltd.Annual Report 2023
| Session | Type | Proportion of investors' participation | Convening date | Disclosure date | Resolution |
| 3rd Interim Shareholders Meeting in 2023 | Interim Shareholders Meeting | 79.97% | December 25, 2023 | December 26, 2023 | Announcement on the Resolutions of the 3rd Interim Shareholders Meeting in 2023 (Announcement Number: 2023-45). Disclosed at the website CNINFO www.cninfo.com.cn |
2. Special Shareholders’ General Meeting applied by the preferred stockholder with restitution ofvoting right
□ Applicable √ Not applicable
V. Directors, Members of the Supervisory Board, Senior Management Staff &
Employees
1. Basic Information
ADAMA Ltd. Annual Report 2023
| Name | Position | Office Status | Gender | Age | Beginning date of office term | Ending date of office term | Shares held at the year-begin (share) | Amount of shares increased at the Reporting Period (share) | Amount of shares decreased at the Reporting Period (share) | Other changes increase/ decrease (share) | Shares held at the end of the Reporting Period (share) | Reasons for the Shareholding Changes |
| Qin Hengde | Chairman of the BOD | In Office | Male | 54 | Elected as the director in Dec 1, 2023 and Chairman of the BOD in Dec 18, 2023 | 0 | 0 | 0 | 0 | 0 | N/A | |
| Erik Fyrwald | Director | In Office | Male | 65 | April 9, 2020 | 0 | 0 | 0 | 0 | 0 | N/A | |
| An Liru | Director | In Office | Male | 54 | Apr 29, 2015 | 0 | 0 | 0 | 0 | 0 | N/A | |
| Ge Ming | Independent Director | In Office | Male | 72 | Nov 16, 2020 | 0 | 0 | 0 | 0 | 0 | N/A | |
| Yang Guangfu | Independent Director | In Office | Male | 54 | Dec 25, 2023 | 0 | 0 | 0 | 0 | 0 | N/A | |
| Steve Hawkins | President & CEO | In Office | Male | 58 | May 1, 2023 | 0 | 0 | 0 | 0 | 0 | N/A | |
| Efrat Nagar | Chief Financial Officer | In Office | Female | 50 | Feb 16, 2023 | 0 | 0 | 0 | 0 | 0 | N/A | |
| Jiang Chenggang | Chairman of the Supervisory Board | In Office | Male | 49 | Jan 6, 2013 | 6,000 | 0 | 0 | 0 | 6,000 | N/A | |
| Liu Jianhua | Member of the Supervisory Board | In Office | Male | 45 | May 21, 2021 | 0 | 0 | 0 | 0 | 0 | N/A | |
| Yuan Yuan | Member of the Supervisory Board | In Office | Male | 43 | May 21, 2021 | 0 | 0 | 0 | 0 | 0 | N/A | |
| Guo Zhi | Secretary of the BOD | In Office | Male | 46 | Nov 27, 2020 | 0 | 0 | 0 | 0 | 0 | N/A | |
| Shahar Florentz | Chief Financial Officer | Demission | Male | 59 | May 1, 2022 | Feb 15, 2023 | 0 | 0 | 0 | 0 | 0 | N/A |
ADAMA Ltd. Annual Report 2023
| Name | Position | Office Status | Gender | Age | Beginning date of office term | Ending date of office term | Shares held at the year-begin (share) | Amount of shares increased at the Reporting Period (share) | Amount of shares decreased at the Reporting Period (share) | Other changes increase/ decrease (share) | Shares held at the end of the Reporting Period (share) | Reasons for the Shareholding Changes |
| Michal Arlosoroff | General Legal Counsel | Demission | Female | 65 | Sep 29, 2017 | Jan 1, 2023 | 0 | 0 | 0 | 0 | 0 | N/A |
| Ignacio Dominguez | President & CEO | Demission | Male | 64 | March 1, 2020 | May 1, 2023 | 0 | 0 | 0 | 0 | 0 | N/A |
| Chen Lichtenstein | Director | Demission | Male | 56 | Sep 29, 2017 | Nov 30, 2023 | 0 | 0 | 0 | 0 | 0 | N/A |
| Xi Zhen | Independent Director | Demission | Male | 60 | Dec 25, 2017 | Dec 25, 2023 | 0 | 0 | 0 | 0 | 0 | N/A |
| Total | -- | -- | -- | -- | -- | 6,000 | 0 | 0 | 0 | 6,000 | -- |
ADAMA Ltd.Annual Report 2023
VI. Whether there was any departure of directors and supervisors and dismissal of
senior management during the reporting period
√ Yes □ No
1. Ms. Michal Arlosoroff resigned as the General Legal Counsel of the Company, effective from January 1st, 2023, due toretirement.
2. Mr. Shahar Florentz resigned as the Chief Financial Officer, effective from February 15, 2023, due to personal reasons.
3. Mr. Ignacio Dominguez resigned as the President and CEO (legal representative of the Company) due to resignationfrom the Company, effective from May 1, 2023.
4. Mr. Chen Lichtenstein resigned as the director in the Company due to his resignation from Syngenta Group, effectivefrom November 30, 2023.
5. Mr. Xi Zhen resigned from his position as an independent director in the Company due to his consecutive tenure as theindependent director exceeding six years, effective from December 25, 2023.
VII. Particulars regarding changes of Directors, Supervisors and Senior Executives
√ Applicable □ Not applicable
| Name | Position | Type | Date | Reason |
| Michal Arlosoroff | General Legal Counsel | Left the position | Jan 1, 2023 | Retirement |
| Shahar Florentz | Chief Financial Officer | Left the position | Feb 15, 2023 | Resignation for personal reasons |
| Efrat Nagar | Chief Financial Officer | Accepted the position | Feb 16, 2023 | -- |
| Ignacio Dominguez | President and CEO (legal representative of the Company) | Left the position | May 1, 2023 | Resignation from the Company |
| Steve Hawkins | President and CEO (legal representative of the Company) | Accepted the position | May 1, 2023 | - |
| Chen Lichtenstein | Director | Left the position | November 30, 2023 | Resignation from Syngenta Group |
| Xi Zhen | Independent Director | Left the position | December 25, 2023 | Consecutive tenure as the independent director for six years |
| Erik Fyrwald | Chairman of the BOD | Change of the position | December 18, 2023 | Retire as the CEO of Syngenta Group |
| Qin Hengde | Director | Elected | December 1, 2023 | -- |
| Qin Hengde | Chairman of the BOD | Elected | December 18, 2023 | -- |
ADAMA Ltd.Annual Report 2023
| Yang Guangfu | Independent Director | Elected | December 25, 2023 | -- |
2. Resumes of important personnel
Professional background, main working experience and main responsibilities of current directors, supervisors and seniormanagement staffMr. Qin Hengde, serves as the Chairman of the Board of Directors of the Company. He holds a master's degree, senioraccountant, is the Chief Financial Officer of Syngenta Group Co., Ltd., the Chairman of Winall Hi-tech Seed Co.,Ltd., theChairman of Zhenda Xianjing (Shanghai) Science and Technology Development Co., Ltd. He joined in work in August 1991and served as deputy chief accountant of Hubei Hongqi Cable Factory, chief accountant of SDIC YuanYi Industry Co.,Ltd.,as well as deputy general manager of investment management department of D'Long International Strategic InvestmentCo.,Ltd. Mr. Qin Hengde joined Sinochem in July 2004 and served as General Manager of Business DevelopmentDepartment, Financial Controller, Deputy General Manager, Executive Deputy General Manager, General Manager andthe Party Secretary of Sinochem International Corporation. He previously served as the Party Secretary and President ofAgricultural Division of Sinochem Corporation, Vice Chairman of Qinghai Salt Lake Industry Co., Ltd., the Party Secretaryand Executive Director of China National Seed Group Co., Ltd, Party Secretary and President of Syngenta Group China,Chairman and General Manager of Syngenta Group Modern Agricultural Technology Co., Ltd, the Vice President and ChiefHuman Resources Officer of Syngenta Group, Party Secretary, General Manager and Executive Director of SinofertHoldings Limited, and General Manager and Executive Director of Sinofert Company Limited as well as Chairman ofJiangsu Yangnong Chemical Co., Ltd..
Mr. Erik Fyrwald, American, serves as a Director of the Company. He is currently a Director of Syngenta Group, Directorof Syngenta A.G. and Chairman of Syngenta Foundation for Sustainable Agriculture. He currently also serves on the boardof directors of CropLife International, the Swiss-American Chamber of Commerce and Eli Lilly & Company as well asPresident and Director of a listed company International Flavors & Fragrances. Previously served as the Chairman of theBoard of Directors of the Company, the CEO of Syngenta Group, and the CEO a of Syngenta A.G,. He also Previouslyserved as President and CEO Univar, a leading distributor of chemistry and related services, President of Ecolab, acleaning and sanitation, water treatment, and oil and gas products and services provider, and Chairman, President andCEO of Nalco, a water treatment and oil and gas products and services company, and Group Vice President of theAgriculture and Nutrition Division of the DuPont Company. He graduated from the University of Delaware with a bachelor'sdegree in Chemical Engineering and completed the Advanced Management Program at Harvard Business School..
Mr. An Liru, serves as a Director of the Company. He holds a master degree of chemical engineering and MBA, seniorengineering, senior economist. He used to be the Assistant of General Manager, Vice General Manager, General Manager,Deputy Party Secretary of Jiangsu Anpon Electrochemical Co., Ltd., Chairman of Directors, Party Secretary of JiangsuHuaihe Chemicals Co., Ltd., Executive Director and CEO of Jiangsu Maidao Agrochemical Co., Ltd., the Chairman of theBoard of Directors of the Company, Executive Director of Jiangsu Anpon Electrochemical Co., Ltd., Chairman of Directorsand Party Secretary of China National Agrochemical Co., Ltd. Currently, he serves also as a Director and the ExecutiveVice President of Solutions, Executive Director and General Manager of Adama (China) Investment Co., Ltd., Vicepresident of Syngenta Group Modern Agricultural Technology Co., Ltd.
Mr. Ge Ming, serves as an independent director of the Company. He holds a master’s degree in western accounting, and
ADAMA Ltd.Annual Report 2023
he is a senior accountant, a certified Chinese public accountant as well as an Australian certified public accountant. Hepreviously served as the chairman and chief accountant of Ernst & Young Hua Ming Certified Public Accountants Firm, andas the managing partner, chief accountant and senior advisor of Ernst & Young Hua Ming Certified Public Accountants(special general partnership). Mr. Ge currently serves as an independent director on the boards of AsiaInfo, China TourismGroup Duty Free Corporation Limited, GAC Aion New Energy Automobile Co., Ltd. and Apollobio Corp. He currently alsoserves on the supervisory boards of the Bank of Shanghai, Tencent Foundation as well as Taikang Insurance Group Inc.,and serves as the executive director and general manager of Beijing Huaming Fulong Accounting Consulting Co., Ltd.
Mr. Yang Guangfu,He holds a title of PhD in pesticide science. He is the recipient of National Outstanding Youth Science Fund, and he is alsohonored as a leading talent in science and technology innovation of the “Ten Thousand Talents Plan” of the OrganizationDepartment of the Central Commitment of the CPC, the Innovation Team Leader of the Ministry of Education, the NationalModel Teacher and one of the National Outstanding Scientific and Technological Professionals, etc. Starting his career lifein July 1997, Yang has successively served as lecturer, associate professor and professor in the Institute of PesticideChemistry of Central China Normal University. He also held positions including dean and professor for the School ofChemistry as well as the assistant to the President of the University, etc. He is currently a professor, doctoral supervisor,deputy director of the Academic Committee of the University, director of the National Key Laboratory of Green Pesticide(based at the University), director of International Joint Research Center for Intelligent Biosensor Technology and Health,and director of the Pesticide Engineering Research Centre of Hubei Province. Additional academic appointments ofProfessor Yang include Member of the 5th and 6th Chemistry and Chemical Engineering Department of the Science andTechnology Committee of the Ministry of Education, Member of the 13th Evaluation Team for Chemistry of the NationalNatural Science Foundation of China, Member of the Pesticide Industry Development Guidance Expert Group of theMinistry of Agriculture and Rural Development, Director of the Chinese Chemical Society, Director of the Chinese PlantProtection Society, Deputy Director of the Agricultural Chemistry Committee of the Chinese Chemical Society, Member ofthe Chemical Biology Committee of the Chinese Chemical Society, Member of the Pesticide Committee of the ChineseSociety of Chemical Engineering, Vice President of the Hubei Chemical Engineering Society, Vice President of the HubeiPlant Protection Society, and so on..
Mr. Steve Hawkins, Canadian, serves as the President & Chief Executive Officer of both the Company and AdamaSolutions, concurrent with his position as Chairman of the Board of Directors of Adama Solutions. Holds a Diploma inAgriculture Engineering and an Executive MBA in Food and Agribusiness, both from the Ontario Agricultural College of theUniversity of Guelph, and has a Bachelor’s Degree in Administrative Studies from York University. He previously served asADAMA’s SVP Americas, and prior to that served as Regional Director EAME for Syngenta Crop Protection A.G.
Ms. Efrat Nagar, Israeli, serves as the Chief Financial Officer. She holds master’s degree in business administration (focusin Finance) from Bar Ilan University, Israel and bachelor's degree in Economics and Accounting from Bar Ilan University,Israel. She previously served as Regional CFO of India, Middle East and Africa, Executive Corporate Business Director(serving as the Chief of Staff for ADAMA’s CEO) and VP Finance in ADAMA.
Mr. Jiang Chenggang, serves as the Chairman of the Supervisory Board of the Company, Deputy Secretary of the PartyCommittee of Jingzhou Site, the Chairman of the Labor Union and Director of the Discipline Inspection Commission ofJingzhou Site. He acted as the Chairman of the Labor Union, Supervisor, Deputy Director of the Office and DeputySecretary of the Discipline Inspection Commission of the Company from Jun. 2012 to Dec. 2012.
ADAMA Ltd.Annual Report 2023
Mr. Liu Jianhua, Doctor of Engineering, serves as a member of the Supervisory Board of the Company and as the NonAg Business Manager of ADAMA China. He previously served as the GM Assistant of Hubei Sanonda Co. Ltd., as theCOO of Jiangsu Anpon Electrochemical Co., Ltd., and as the member of CPC Committee of China National AgrochemicalCorporation.
Ms. Yuan Yuan, serves as a member of the Supervisory Board of the Company and as Strategy & Business Manager ofADAMA China. She obtained a bachelor’s degree of international trade from Zhongnan University of Economics and Lawand a master degree of business administration from University of International Business and Economics. Before joiningADAMA，she served as Deputy and Executing Director of Commerce Dept. in China National Agrochemical Corporation.
Mr. Guo Zhi, serves as the secretary of the Board of Directors, Director of the Discipline Inspection Commission of theCompany and the legal head of ADAMA China. Mr. Guo got his Master of Laws severally from Peking University andMelbourne University. From 2004 to 2017, he practiced law in Commerce & Finance Law Offices (“C&F”) and had been apartner of C&F for eight years. His practicing area covers IPO, M&A, and Foreign Investment. From March 19, 2018 toNovember 16, 2020, he was a member of the Supervisory Board of the Company.
Positions in shareholder units
√ Applicable □ Not applicable
| Name of the person holding any post in any shareholder unit | Name of the shareholder unit | Position in the shareholder unit | Beginning date of office term | Ending date of office term | Receives payment from the shareholder unit? |
| Qin Hengde | Syngenta Group | CFO | December 2023 | -- | Yes |
| Syngenta Group | Vice President, CHRO | January 2023 | December 2023 | Yes | |
| Erik Fyrwald | Syngenta Group | CEO | June 2016 | December 2023 | Yes |
| Syngenta Group | Director | June 2021 | -- | Yes (starting from January 2024) | |
| Syngenta AG | CEO and Executive Director | June 2016 | December 2023 | Yes | |
| Syngenta AG | Non-Executive Director | December 2023 | -- | No | |
| Explanations about Positions in Shareholder Units | N/A | ||||
Positions in other units
√ Applicable □ Not applicable
ADAMA Ltd.Annual Report 2023
| Name of the person holding any post in any shareholder unit | Name of other unit | Position in other unit | Beginning date of office term | Ending date of office term | Receives payment from the other unit? |
| Qin Hengde | Winall Hi-tech Seed Co.,Ltd. | Chairman of Directors | January 2019 | -- | No |
| Zhenda Xianjing (Shanghai) Science and Technology Development Co., Ltd. | Chairman of Directors | January 2022 | -- | No | |
| Syngenta Group Modern Agricultural Technology Co., Ltd. | Chairman of Directors, General Manager | August, 2022 | January 2023 | Yes | |
| Sinochem Fertilizer Co., Ltd. | Executive Director, General Manager | December 2016 | January, 2023 | No | |
| Jiangsu Yangnong Chemical Co., Ltd. | Chairman of Directors | June 2022 | March 2023 | No | |
| Erik Fyrwald | International Flavors & Fragrances | President and Director | 2024 | - | Yes |
| CropLife International | Director of the Board | 2016 | - | No | |
| Swiss-American Chamber of Commerce | Director of the Board | 2016 | - | No | |
| Bunge Limited | Director of the Board | 2018 | 2023 | Yes | |
| Eli Lilly & Co. | Director of the Board | 2006 | - | Yes | |
| An Liru | Solutions | Director | February 2014 | - | Yes |
| An Liru | Solutions | Head of China Cluster | September 2017 | - | Yes |
| An Liru | Adama (China) Investment Co., Ltd. | General Manager | November 2018 | - | No |
| An Liru | Adama (China) Investment Co., Ltd. | Executive Director | December 2022 | - | No |
| An Liru | Syngenta Group Modern Agricultural Technology Co., Ltd. | Vice President | August 2022 | - | No |
| Efrat Nagar | Solutions | EVP, Chief Financial Officer | February 2023 | - | Yes |
| Adama Makhteshim Ltd. | Director | February 2023 | - | No | |
| Adama Agan Ltd. | Director | February 2023 | - | No | |
| Lycored Ltd. | Director | January 2024 | - | No | |
| Agan Aroma and Fine Chemicals Ltd. | Director | May 2022 | - | No | |
| Ge Ming | China Tourism Group Duty Free Corporation Limited | Independent Director | August 2022 | -- | Yes |
| Ge Ming | AsiaInfo | Independent Director | December 2018 | -- | Yes |
| Ge Ming | GAC Aion New Energy Automobile Co., Ltd. | Independent Director | September 2022 | -- | Yes |
| Ge Ming | Apollobio Corp. | Independent Director | August 2021 | -- | Yes |
| Ge Ming | Bank of Shanghai | Supervisor | June 2017 | -- | Yes |
| Ge Ming | Taikang Insurance Group Inc. | Supervisor | February 2023 | -- | Yes |
| Ge Ming | Tencent Foundation | Supervisor | Jan 2019 | -- | No |
ADAMA Ltd.Annual Report 2023
| Name of the person holding any post in any shareholder unit | Name of other unit | Position in other unit | Beginning date of office term | Ending date of office term | Receives payment from the other unit? |
| Ge Ming | Beijing Huaming Fulong Accounting Consulting Co., Ltd. | Executive Director and General Manager | December 2001 | -- | No |
| Yang Guangfu | Central China Normal University | Professor, Doctoral Supervisor, Deputy Director of the Academic Committee of the University | September 2001 | - | Yes |
| Liu Jianhua | Hubei Sanonda Foreign Trade Co., Ltd. | Executive Director | June 2021 | - | No |
| Liu Jianhua | Jiangsu Anpon International Trading Co., Ltd. | Executive Director | April 2021 | - | No |
| Liu Jianhua | ADAMA Huifeng (Jiangsu) Ltd. | Director | March 2024 | - | No |
| Guo Zhi | ADAMA Huifeng (Shanghai) Agricultural Technology Co., Ltd. | Director | June 2021 | - | No |
| Explanations about Positions in Other Units | N/A | ||||
Particulars regarding the Company's current directors, supervisors and senior managers who received punishments, if any,from Securities Regulatory Institution during the recent three years (including the Reporting Period)
□ Applicable √ Not applicable
3.Remuneration of directors, supervisors and senior managementDecision-making procedures, basis for determination and actual payment of the remuneration to directors,supervisors and senior executivesRemuneration of office holders is decided by the authorized organs of the Company according to the Remuneration Policy.In addition, global professional benchmarks, implementations of performance at the Company level, and the actualperformance of the respective person are also taken into account in the resolutions regarding remuneration.Independent directors are entitled to receive annual allowance and would not receive salary by the Company. TheCompany also adopted a remuneration plan of the non-independent directors. A non-independent director who holds amanagement position in the Company and/or any of its subsidiaries, shall receive the remuneration set for such positionand will not be entitled to any additional remuneration for serving as a director; A non-independent director who doesn’thold a management position in the Company or any of its subsidiaries, may receive a monthly remuneration. For details,please see the Announcement of the Resolutions of 25
th meeting of the 7
thSession of the Board of Directors(Announcement no. 2018-5) and the Announcement of the Resolutions of 21
st meeting of the 8
thSession of the Board ofDirectors (Announcement no. 2020-7).Internal supervisors, who are full-time employees of the Company (or any of its subsidiaries), will be entitled to receive a
ADAMA Ltd.Annual Report 2023
remuneration set for their posts and will not be entitled to any additional remuneration for serving as supervisors.External supervisors, who are not employees of the Company (or any of its subsidiaries), will be entitled to receive annualallowance and would not receive salary by the Company.For details, please see the Announcement of the Resolutions of 4
th meeting of the 8
thSession of the Board of Supervisors(Announcement no. 2018-25).Total remuneration of the directors, supervisors and senior management of the Company during the Reporting Period isas follow:
Unit RMB’0000
| Name | Position | Gender | Age | Current/Former | Total before-tax remuneration gained from the Company | Whether gained remuneration from the related parties of the Company |
| Qin Hengde | Chairman of the BOD | Male | 54 | Current | Yes | |
| Erik Fyrwald | Director | Male | 65 | Current | Yes | |
| An Liru | Director | Male | 54 | Current | No | |
| Ge Ming | Independent Director | Male | 72 | Current | No | |
| Yang Guangfu | Independent Director | Male | 54 | Current | No | |
| Steve Hawkins | President & CEO | Male | 58 | Current | No | |
| Efrat Nagar | CFO | Female | 49 | Current | No | |
| Jiang Chenggang | Chairman of the Supervisory Board | Male | 49 | Current | No | |
| Liu Jianhua | Member of the Supervisory Board | Male | 45 | Current | No | |
| Yuan Yuan | Member of the Supervisory Board | Female | 43 | Current | No | |
| Guo Zhi | Secretary of the BOD | Male | 46 | Current | No | |
| Shahar Florentz | Chief Financial Officer | Male | 59 | Former | No | |
| Michal Arlosoroff | General Legal Counsel | Female | 65 | Former | No | |
| Ignacio Dominguez | President & CEO | Male | 64 | Former | No | |
| Chen Lichtenstein | Director | Male | 56 | Former | Yes | |
| Xi Zhen | Independent Director | Male | 60 | Former | No | |
| Total | 3,273.7 |
Particulars regarding other information
□ Applicable √ Not applicable
ADAMA Ltd.Annual Report 2023
VIII. Performance of Directors of the Board during the Reporting Period
1. Particulars regarding the Board meeting during Reporting Period
| Session | Convening date | Disclosure date | Resolutions of the Meeting |
| the 18th Meeting of the 9th Session of the Board of Directors | February 15, 2023 | February 16, 2023 | The following resolutions were deliberated and adopted: 1. Proposal on the Matters Relating to the Company’s Chief Financial Officer 2. Proposal on Credit Facilities from the Related Party |
| the 19th Meeting of the 9th Session of the Board of Directors | March 19, 2023 | March 21, 2023 | The following resolutions were deliberated and adopted: 1. Proposal on the 2022 Annual Report and its Abstract 2. Proposal on the 2022 Financial Statements 3. Proposal on the Pre-Plan of the 2022 Dividend Distribution 4. Proposal on the Self-Assessment report on the 2022 Internal Control of the Company 5. Proposal on the 2022 Working Report of the Board of Directors 6. Proposal on the 2022 Risk Appraisal Report of Sinochem Finance Co., Ltd. 7. Proposal on the Remuneration of Senior Executives 8. Proposal on the Engagement with an Audit Firm for the Audit of the Financial Statements and Internal Control of the Company for 2023 9. Proposal on the Expected Related Party Transactions in the Ordinary Course of Business in 2023 10. Proposal on Revisions to the Articles of Association of the Company and relevant Rules of Procedures 11. Proposal on Revisions to the Management Measures for the Delegation of Certain Powers of the Board of Directors to the Chief Executive Officer of ADAMA Ltd. 12. Proposal on the Company’s Work Plan on Supporting External Directors to Perform Duties 13. Proposal on the Work Rules of the President and Chief Executive Officer of ADAMA Ltd. After the review of the above proposals, 2022 Working Reports of the Independent Directors were presented to the meeting. |
| the 20th Meeting of the 9th Session of the Board of Directors | March 20, 2023 | March 21, 2023 | The following resolution was deliberated and adopted: 1. Proposal on Calling for the 2022 Annual General Meeting |
| the 21st Meeting of the 9th Session of the Board of Directors | April 2, 2023 | April 4, 2023 | The following resolution was deliberated and adopted: 1. Proposal on Change of the Senior Executive of the Company |
| the 22nd Meeting of the 9th Session of the Board of Directors | April 24, 2023 | April 25, 2023 | The following resolutions were deliberated and adopted: 1. Proposal on the Q1 2023 Report 2. Proposal on Providing Guarantees in favor of the Company’s Wholly-owned Subsidiary 3. Proposal on Bank Loans for the Working Capital of Jingzhou Site |
| the 23rd Meeting of the 9th Session of the Board of Directors | July 25, 2023 | July 26, 2023 | The following resolutions were deliberated and adopted: 1. Proposal on ADAMA’s 2022 Environmental, Social, and Governance (ESG) Report |
ADAMA Ltd.Annual Report 2023
| Session | Convening date | Disclosure date | Resolutions of the Meeting |
| the 24th Meeting of the 9th Session of the Board of Directors | August 28, 2023 | August 31, 2023 | The following resolutions were deliberated and adopted: 1. Proposal on the 2023 Semi-Annual Report and its Abstract 2. Proposal on the Risk Appraisal Report of Sinochem Finance Co., Ltd. 3. Proposal on Bank Loans 4. Proposal on Credit Facility from the Related Party 5. Proposal on Calling for the 1st Interim Shareholders Meeting in 2023 |
| the 25th Meeting of the 9th Session of the Board of Directors | October 29, 2023 | -- | The following resolution was deliberated and adopted: 1. Proposal on the Q3 2023 Report |
| the 26th Meeting of the 9th Session of the Board of Directors | November 15, 2023 | November 16, 2023 | The following resolution was deliberated and adopted: 1. Proposal on the Nomination of a Non-Independent Director of the 9th Session of the Board of Directors 2. Proposal on Calling for the 2nd Interim Shareholders Meeting in 2023 |
| the 27th Meeting of the 9th Session of the Board of Directors | December 8, 2023 | December 9, 2023 | The following resolution was deliberated and adopted: 1. Proposal on Revisions to the Articles of Association of the Company 2. Proposal on the Nomination of an Independent Director of the 9th Session of the Board of Directors 3. Proposal on Calling for the 3rd Interim Shareholders Meeting in 2023 |
| the 28th Meeting of the 9th Session of the Board of Directors | December 18, 2023 | December 20, 2023 | The following resolution was deliberated and adopted: 1. Proposal on the 2024 Work Plan 2. Proposal on Change of the Chairman of the Board and Members of the Special Committees of the 9th Session of the Board of Directors |
| the 29th Meeting of the 9th Session of the Board of Directors | December 29, 2023 | December 30, 2023 | The following resolution was deliberated and adopted: 1. Proposal on Salary Management Measures, External Guarantee Management Rules, Liability Management Measures and External Donation Management Measures 2. Proposal on Revisions to the Management Policy of Investor Relations 3. Proposal on Signing of Supplemental Agreement to the Entrusted Operation and Management Agreement on Anhui Petro & Chemical |
2. Particulars regarding directors’ attendance to board sessions and shareholders’general meetings
| Details of directors’ attendance to board sessions and shareholders’ meetings | |||||||
| Name of the Directors | Sessions required to attend during the Reporting Period | On-Site Attendance | Attendance by way of communication | Entrusted presence (times) | Absence rate | Non-attendance in person for two consecutive times | Attendance to shareholder meetings |
| Erik Fyrwald | 12 | 0 | 11 | 1 | 0 | No | 4 |
ADAMA Ltd.Annual Report 2023
| Chen Lichtenstein | 9 | 0 | 9 | 0 | 0 | No | 2 |
| An Liru | 12 | 4 | 8 | 0 | 0 | No | 4 |
| Ge Ming | 12 | 0 | 12 | 0 | 0 | No | 4 |
| Xi Zhen | 11 | 0 | 11 | 0 | 0 | No | 4 |
| Qin Hengde | 3 | 0 | 3 | 0 | 0 | No | 1 |
| Yang Guangfu | 1 | 0 | 1 | 0 | 0 | No | -- |
Explanation of failure to attend two consecutive board meetings in personNo such cases during the reporting period.
3. Particulars regarding directors’ objections
Whether directors objected to various events
□ Yes √ No
During the Reporting Period, no directors proposed any objection on relevant events of the Company.
4. Other explanations regarding the directors’ duty performance
Whether directors’ advice were adopted
√ Yes □ No
Explanation regarding advices of directors:
According to the Company Law, the Listed Corporate Governance Standards, and "Articles of Association", the directors,in general, during the Reporting Period, focus actively over Company’s operation, and earnestly performs their duties,render professional suggestions to the Company's information disclosure and daily management decision-making, etc.The directors play a proper role in improving the supervision, and safeguard the legitimate rights and interests of theCompany and its shareholders. The directors especially pay attention (and paid attention - during the Reporting Period) tothe Company’s operation state, dynamic state of the industry, public opinion and dynamic state report of the Company.They actively and effectively perform the duties of directors and well maintained overall benefits of the Company and thelegal interests of all shareholders, especially the middle and small shareholders. Their roll is required for positive, normal,stable and healthy development of the Company.
ADAMA Ltd.Annual Report 2023
IX. Performance of the Special Committees under the Board during the Reporting
Period
| Name of the Committees | Member of Committees | Number of Meetings Held | Convening Date | Themes of Meetings | Important Comments and Proposals Made | Other Performance of Duties | Specifics of Objection Matters (if any) |
| Audit Committee | Ge Ming (Chairperson), Yang Guangfu, An Liru | 6 | February 14, 2023 | Proposal on Credit Facilities from the Related Party | Approved | -- | -- |
| March 15, 2023 | 1. Proposal on the 2022 Financial Report 2. Proposal on the Pre-Plan of the 2022 Dividend Distribution 3. Proposal on the Engagement with an Audit Firm for the Audit of the Financial Statements and Internal Control of the Company for 2023 4. Proposal on the Expected Related Party Transactions in the Ordinary Course of Business in 2023 5. Proposal on the Self-Assessment Report on the 2022 Internal Control of the Company 6. Proposal on the 2022 Risk Appraisal Report of Sinochem Finance Co., Ltd. 7. Proposal on the 2022 Internal Audit Working Report and the 2023 Internal Audit Work Plan 8. Proposal on the 2022 Inspection Report on Major Issues. | Approved | -- | -- | |||
| April 23, 2023 | 1. Proposal on the Q1 2022 Report 2. Proposal on the Q1 Internal Audit | Approved | -- | -- |
ADAMA Ltd.Annual Report 2023
| Name of the Committees | Member of Committees | Number of Meetings Held | Convening Date | Themes of Meetings | Important Comments and Proposals Made | Other Performance of Duties | Specifics of Objection Matters (if any) |
| Working Report | |||||||
| August 22, 2023 | 1. Proposal on the 2023 Semi-Annual Report and its Abstract 2. Proposal on the Risk Appraisal Report of Sinochem Finance Co., Ltd. 3. Proposal on the Semi-annual Internal Audit Working Report and the Internal Audit Work Plan for the Second Half of 2023 4. Proposal on the 2023 Semi-annual Inspection Report on Major Issues 5. Proposal on Credit Facility from the Related Party | Approved | -- | -- | |||
| October 26, 2023 | 1. Proposal on the Q3 2023 Report 2. Proposal on the Q3 Internal Audit Working Report | Approved | -- | -- | |||
| December 28, 2023 | 1. Proposal on Signing of Supplemental Agreement to the Entrusted Operation and Management Agreement on Anhui Petro & Chemical | Approved | -- | -- | |||
| Remuneration and Appraisal Committee | Yang Guangfu (Chairperson), Ge Ming, An Liru | 3 | February 14, 2023 | 1. Proposal on the Remuneration and resignation arrangement of the Chief Financial Officers | Approved | -- | -- |
| March 15, 2023 | 1. Proposal on the Remuneration of Senior Executives | Approved | -- | -- | |||
| March 30, 2023 | 1. Proposal on the Remuneration and Separation arrangement of the President and CEO | Approved | -- | -- |
ADAMA Ltd.Annual Report 2023
| Name of the Committees | Member of Committees | Number of Meetings Held | Convening Date | Themes of Meetings | Important Comments and Proposals Made | Other Performance of Duties | Specifics of Objection Matters (if any) |
| Nomination Committee | Yang Guangfu (Chairperson), Ge Ming, An Liru | 4 | February 14, 2023 | 1. Proposal on the Appointment of the Company’s Chief Financial Officer | Approved | -- | -- |
| March 30, 2023 | 1. Proposal on Change of the Senior Executive of the Company | Approved | -- | -- | |||
| November 14, 2023 | 1. Proposal on the Nomination of a Non-Independent Director of the 9th Session of the Board of Directors | Approved | -- | -- | |||
| December 7, 2023 | 1. Proposal on the Nomination of an Independent Director of the 9th Session of the Board of Directors | Approved | -- | -- | |||
| Strategy Committee | Qin Hengde (Chairperson), Erik Fyrwald Chen Lichtenstein, An Liru, Ge Ming Yang Guangfu | 0 | -- | -- | -- | -- | -- |
Note: 1. On December 1, 2023, Mr. Qin Hengde replaced Mr. Chen Lichtenstein as a member of the Strategy Committee,and on December 18, 2023, he acted as the chairperson of the Strategy Committee.
2. On December 25, 2023, Mr. Yang Guangfu replaced Mr. Xi Zhen as the chairperson of the Nomination Committee, thechairperson of the Remuneration and Appraisal Committee, the member of the Audit Committee as well as the member ofthe Strategy Committee.
X. Performance of the Supervisory CommitteeHas the Supervisory Committee, during the Reporting Period, found a risk in the Company within its supervisory activity
□ Yes √ No
The Supervisory Committee had no objection on the supervised events during the Reporting Period.
ADAMA Ltd.Annual Report 2023
XI. Particulars regarding Group’s employees
1. Number of employees, professional composition and educational background
| The number of on-duty employees in ADAMA Ltd. (person) | 713 |
| The number of on-duty employees in main subsidiary companies (person) | 8,159 |
| The total number of on-duty employees of the Group (person) | 8,872 |
| The total number of employees of the Group who received salaries in the period (person) | 8,872 |
| The number of retired employees for whom ADAMA Ltd. and main subsidiary companies need to pay retirement expense. | 3,090 |
| Professional Composition | |
| Category | Number |
| Production personnel | 4,911 |
| Sales personnel | 2,243 |
| Technicians | 668 |
| Financial personnel | 495 |
| Administrative personnel* | 555 |
| Total | 8,872 |
| Educational Background | |
| Category | Number |
| Doctor | 9 |
| Master | 171 |
| Bachelor | 804 |
| College | 770 |
| Others | 1,610 |
| Total | 3,364 |
Note: The figures under “Educational Background” represent those of the Company and the domestic subsidiaries held byit and do not cover the Group’s 5,508 overseas employees.*Administrative personnel include employees of all the functional departments.
ADAMA Ltd.Annual Report 2023
2. Employee’s remuneration policy
The Company's remuneration policy in 2023 is the same as in 2022. It is still a salary structure that integrates post salary,quarterly performance bonus and annual performance bonus.The Company established an online and offline assessment model. Online assessment is carried out by SF system.Individual goals are set at the beginning of the year and are assessed at the end of the year.
3. Employee’s training plan
The Group usually conducts seminars, trainings, exercises and refresh of procedures (including with respect to increasingsafety awareness) to its various employees in its various entities, as needed and/or required under its applicableprocedures.
4. Labor outsourcing
√ Applicable □ Not applicable
Details of ADAMA Ltd. on labor sourcing are as follows.
| Total number of hours of service outsourcing (hours) | 606,936 |
| Total remuneration paid for service outsourcing (RMB) | 31,815,344 |
X. Situations for dividend distribution and turning capital reserve into share capitalDividend distribution policies, especially the formulation, execution or theadjustment of the cash dividend policies during the Reporting Period
√ Applicable □ Not applicable
The Company did not revise its dividend distribution policy over the Reporting Period. The 2022 Annual General Meetingwhich was held on April 12, 2023 approved the dividend distribution plan for the year 2022. The Company accordinglypublished the Announcement of Dividend Distribution for the Year 2022 on May 31, 2023 (announcement No. 2023-22).
| Special explanation of the cash dividend policy | |
| Whether conformed with the regulations of the Articles of association or the requirements of the resolutions of the shareholders’ meeting: | Yes |
| Whether the dividend standard and the proportion were definite and clear: | Yes |
| Whether the relevant decision-making process and the system were complete: | Yes |
| Whether the independent director acted dutifully and exerted the proper function: | Yes |
| Specific reasons should be disclosed and next steps to be taken to enhance investors’ returns If the Company has not made cash dividends | Not Applicable |
| Whether the medium and small shareholders had the chances to fully express their suggestions and appeals, of which their legal interest had gained fully | Yes |
ADAMA Ltd.Annual Report 2023
| protection: | |
| Whether the conditions and the process met the regulations and was transparent of the adjustment or altered of the cash dividend policy: | Not Applicable |
The Company (including its subsidiaries) made profit in the reporting period and the retained earnings for profit distributionof the common shares held by the shareholders of the Company (without subsidiaries) were positive, but it did not putforward a preplan for cash dividend distribution of the common shares:
□ Applicable √ Not applicable
Situations for dividend distribution and turning capital reserve into share capital for the Reporting Period
□ Applicable √ Not applicable
The Company does not plan to distribute cash or share dividends for the year, and does not plan to transfer capitalreserve to equity capital.XI. Stock incentive plans, ESOPs 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 benoted, that Adama Solutions currently has several long-term incentive plans according to which it has granted long-termcash rewards to executive officers and employees. These long-term incentive plans are based either on the performanceof the Company's shares (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.
XII. System Establishment and Implementation for Internal Control during theReporting Period
1. System Establishment and Implementation
The Group's existing internal control system adapts to the management requirements. It also provides a reasonable basisfor the preparation of true and fair financial statements, and ensures the healthy operation of the Group's various businessactivities, as well as the implementation and compliance of relevant laws and regulations and the Group's own internalrules. With the changes in the external environment and the development of the Group's business, the Company plans totake the following measures to further improve the internal control system:
(1) Further improve the internal control system by strengthening the research and implementation of internal controlmanagement and risk management. Based on the risk assessment result and the needs of the Group, adjust and improvethe relevant business processes in a timely manner to establish effective internal control system which would support thesmooth operations of the Company.
(2) Emphasizing on the importance of the internal control system within the Group. Providing training to managerialpersonnel on the related laws and regulations regarding internal controls. This would enhance the awareness and level ofstandardization of operation, which could further improve the corporate governance structure.
(3) Regularly evaluating key controls in the business processes. Through the rectification of issues identified, themanagement and operational risks would be reduced which could lead to a better operation and compliant environment.
(4) Continuously improving the execution of internal controls. Constructing the internal control systems including internalenvironment, risk assessment, control activities, information and communication, and internal supervision in accordance
ADAMA Ltd.Annual Report 2023
with the requirements by the "Basic Standards for Enterprise Internal Control", in order to improve the systematization andeffectiveness of the internal control.
(5) Strengthening the management and control of high-risk areas through effective integration with the internal controlevaluation system to ensure that the Group's major risks are under control. At the same time, the existing internal controlsystem is continuously reviewed and improved along with the optimization of management processes, which is to minimizebusiness risks and ensure the Group's sustainable, stable and healthy development.For details, please refer to the "2023 Annual Internal Control Self-Assessment Report" published by the Company onwww.cninfo.com.cn on March 27, 2024.
2. Details of the Material deficiencies in internal control identified during the reporting period
□ Yes √ No
XIII. Management and Control of the Company’s Subsidiaries during the Reporting
Period
| Name of the Company | Integration Plan | Integration Progress | Challenges Encountered during Integration | Measures Taken to Resolve the Issue | Settlement Progress | Subsequent Settlement Plan |
| Agrinova New Zealand Limited |
Integrated finance and ITfunction immediately afterClosing, furtherintegration of commercialand other supportingfunctions after 3 years.
| Finance and IT have already fully integrated with ADAMA. | No major challenges | Not applicable | Not applicable | Not applicable |
Note: The Company should disclose its management and control over subsidiaries during the reporting period. Where anew subsidiary is added as a result of any acquisition during the reporting period, it should provide a detailed descriptionof the integration plan in terms of assets, personnel, finances, organizations, business, etc., the progress of the integration,challenges encountered, measures taken to resolve them, the progress of the resolution, and the plan for subsequentresolution.
XIV. Self-assessment Report or Audit Report on Internal Control
1. Self-assessment report on internal control
| Date of disclosure of self-assessment report on internal control | March 27, 2024 |
| Reference website of self-assessment report on internal control | www.cninfo.com.cn |
| Rate of total Assets of Units within the Assessment Scope Compared to Total Assets in the Consolidated Statements of the Company | 70.3% |
ADAMA Ltd.Annual Report 2023
| Rate of total Operating Income of Units within the Assessment Scope Compared to Total Operating Income in the Consolidated Statements of the Company | 70.0% | ||
| Criteria of Deficiency | |||
| Categories | Internal control over financial reporting | Internal control not related to financial reporting | |
| Qualitative criteria | Material Deficiency: Resulting in an adverse opinion or disclaimer of opinion, by the external auditor, on the Company’s financial statements; or resulting in a material correction of the Company’s publicly announced financial statements. Significant Deficiency: Resulting in a qualified opinion, by the external auditor, on the Company’s financial statements; or resulting in an adverse opinion or disclaimer of opinion, by the external auditor, on the Company’s material subsidiaries’ (i.e. Solutions) financial statements; or resulting in a significant correction of the Company’s material subsidiaries’ (i.e. Solutions) publicly announced financial statements. In addition, where no internal control or no relevant compensation control is established or implemented for the accounting treatment for unusual or special transactions. General Deficiency: Resulting in an unqualified opinion, with an explanatory paragraph, by the external auditor, on the Company’s financial statements; or resulting in a qualified opinion, or unqualified opinion with an explanatory paragraph, by the external auditor, on the Company’s subsidiaries’ financial statements. | Material Deficiency: 1) Fraud committed in the Company by any of its directors, supervisors and senior management personnel; 2) The Company materially violates material laws and regulations, resulting in a material effect on the Company's business; 3) Material design deficiencies in the Company's relevant management system; 4) The Company materially violates the decision-making process thereby causing a material negative impact on the Company's business (generally related to matters that need to be approved by the shareholders meeting or the board of directors). 5) Material impact to the Company’s reputation. Significant Deficiency: 1) Significant fraud committed by any department head of the Company; 2) Significant fraud committed by a head of any of the Company’s material subsidiaries; 3) The Company violates significant laws and regulations, resulting in significant fines as well as a significant effect on the Company's business; 4) Significant design deficiencies found in the Company's relevant management system; Material design deficiencies are found in the relevant management systems of subsidiaries; 5) The Company violates material decision-making procedures, resulting in a significant effect on the Company's business (generally referred to matters subject to senior management's decision); 6) Material Subsidiaries violate decision-making process, thereby causing a material negative impact on the Company's business (generally referred to matters that need to be decided by the shareholders’ meeting or the board of directors). 7) Significant impact to the Company’s reputation. General Deficiency: 1) Fraud committed by any other personnel in the Company; | |
ADAMA Ltd.Annual Report 2023
| 2) Fraud committed by any other personnel in material subsidiaries; 3) The Company materially violates material internal regulations or non-materially violates material laws and regulations, resulting in negative feedback from regulatory authorities; 4) There are other violations of laws and regulations or internal regulations found in material subsidiaries. 5) There are general design deficiencies in the relevant management system of the Company; other design deficiencies exist in the relevant management system of the material subsidiaries; 6) The Company violates the decision-making process, resulting in a negative impact on the Company's business; 7) Material Subsidiaries violate decision-making process, resulting in a negative impact on the Company's business. | ||
| Quantitative criteria | Material Deficiency: The misstatement in financial report relates to an amount that is greater than or equal to RMB 100 million. Significant Deficiency: The misstatement in financial report relates to an amount that is greater than or equal to RMB 50 million, but less than RMB 100 million. General Deficiency: Resulting in other misstatement related amounts. | Material Deficiency: Asset Loss ≥ RMB 150 million Significant Deficiency: RMB 80 million ≤ Asset Loss < 150 million RMB General Deficiency: Asset Loss < 80 million RMB |
| Number of material deficiencies in internal control over financial reporting | 0 | |
| Number of material deficiencies in internal control not related to financial reporting | 0 | |
| Number of significant deficiencies in internal control over financial reporting | 0 | |
| Number of | 0 | |
ADAMA Ltd.Annual Report 2023
significantdeficiencies ininternal controlnot related tofinancialreporting
2. Audit report on internal control
√ Applicable □ Not applicable
| Audit opinion paragraph in the internal control audit report | |
| Disclosure of internal control audit report | Disclose |
| Date of disclosure of internal control audit report | March 27, 2024 |
| Reference website of internal control audit report | www.cninfo.com.cn |
| Type of audit opinion in the internal control audit report | Unqualified opinion. |
| Is there any material deficiencies in internal control not related to financial reporting | No. |
Does the accounting firm issue non-standard audit opinion on internal control?
□ Yes √ No
Is the opinion issued by accounting firm consistent with the opinion in the self-assessment report by the Board?
√ Yes □ No
ADAMA Ltd.Annual Report 2023
XV. Rectification of Problems Identified during the Self-examination Action Dedicatedfor Corporate Governance of Listed CompaniesAccording to the self-inspection results on special actions of corporate governance of listed companies in 2021, theCompany should carry out actions on a long-term basis to continuously enhance corporate governance in the followingaspects:
? Update relevant policies and procedures of corporate governance and internal control according to latest laws,regulations and regulatory requirements and in combination with the actual situation of the Company;? Further strengthen training of the Company's directors, supervisors and senior management of relevant laws and
regulations, and further standardize their work and raise self-discipline awareness;In the year of 2023, the Company carried out the following accordingly:
? Upon consideration and approval at the 19th meeting of the Ninth Session of the Board of Directors held on March
19th, 2023, the Company amended the Articles of Association and the relevant Rules of Procedure (which were later
adopted at the 2022 Annual General Meeting held on 12 April), the Management Measures for the Delegation of Certain
Powers of the Board of Directors to the Chief Executive Officer, and formulated the Work Plan on Supporting External
Directors to Perform Duties and the Work Rules of the President and Chief Executive Officer. It continued to promote
the implementation of relevant requirements for deepening the reform of state-owned enterprises, improve system
development, enhance the efficiency of decision-making and strengthen the services and support for independent
directors to perform their duties.? As being considered and approved by the 27th meeting of the Ninth Session of the Board of Directors held on December
8th, 2023 and the 3rd Extraordinary General Meeting of 2023 held on December 25th, 2023, the Company once again
amended its Articles of Association, which included new provisions reflecting the Measures for the Administration of
Independent Directors issued by CSRC in August 2023.? As being considered and approved at the 29th meeting of the Ninth Session of the Board of Directors held on December
29th, 2023, the Company revised the Management Policy of Investor Relations, and formulated the Remuneration
Management Measures, External Guarantee Management Measures, Liability Management Measures and External
Donation Management Measures to institutionalize the duties and authorities of the Board of Directors and to reach
requirements of SASAC for state-owned held listed companies.? The Company ensures that its directors and supervisors participate in relevant trainings organized by the CSRC's
authorized agencies and the Stock Exchange, which include annual report training and special trainings on the reform
of the independent director system, the quality of listed companies and corporate governance. As some directors and
most of its senior management members are foreigners, the Company regularly compiles newsletters containing the
contents of trainings, important updates on laws and regulations of China's capital market, and regulatory cases in both
English and Chinese versions. The newsletters are sent to the directors, supervisors, and senior management to
enhance their understanding of the policy environment in China and facilitate the implementation of relevant
requirements in the Company's global business.
ADAMA Ltd. Annual Report 2023
Section V - Environment and Social Responsibilities
I. Major Environmental Protection Issues
Is the Company listed as key polluting entities by environmental protection agencies?
√ Yes □ No
Policies and Sector Standards related to Environmental ProtectionThe Group complies with the following laws, regulations and sector standards related to environmental protection in the process of production and operation:
1. Laws and Regulations
1) Environmental Protection Law of the People's Republic of China;
2) Law of the People's Republic of China on the Prevention and Control of Air Pollution;
3) Law of the People's Republic of China on the Prevention and Control of Water Pollution;
4) Law of the People's Republic of China on the Prevention and Control of Environmental Pollution by Solid Waste;
5) Law of the People's Republic of China on the Prevention and Control of Environmental Noise Pollution;
6) Law of the People's Republic of China on the Prevention and Control of Soil Pollution;
7) Water Law of the People's Republic of China;
8) Cleaner Production Promotion Law of the People's Republic of China;
9) Yangtze River Protection Law of the People's Republic of China;
10) Regulations on the Administration of Pesticides;
11) Regulations on the Administration of Environmental Protection of Construction Projects;
2. Sector Standards
1) Discharge Standard of Pollutants for Urban Sewage Treatment Plant (GB18918-2002);
2) Water Quality Standard for Sewage Discharged into Urban Sewers (GB/T 31962-2015);
3) Emission Standard of Air Pollutants for Pesticide Manufacturing Industry (GB 39727-2020);
4) Standard for Pollution Control of Hazardous Waste Incineration GB18484-2020;
5) Emission Standard of Air Pollutants for Thermal Power Plants (GB 13223-2011);
ADAMA Ltd. Annual Report 2023
6) Emission Standard of Air Pollutants for Pesticide Manufacturing Industry (GB 39727-2020);
7) Standard for fugitive emission control of volatile organic compounds (GB37822-2019);
8) Emission Standard for Volatile Organic Compounds in Chemical Industry (DB 32/3151-2016);
9) Emission Standard for Odor Pollutants (GB 14554-93);
10) Emission Standard for Industrial Enterprises Noise at Boundary GB12348-2008;
11) Standard for Pollution Control of Storage and Landfill of General Industrial Solid Waste GB18599-2020;
12) Standard for Pollution Control of Hazardous Waste Storage GB18597-2023.
Environmental Protection Administrative Permits
1. EIA Approval
During the reporting period, the EIA approval obtained by the Company is “Approval Opinions on the Environmental Impact Reporting Form for the Overall Relocation andUpgrading Project of Insecticides and the Recycled Solvent Purification Project of ADAMA Ltd.”.
2. Waste Discharge Permits
The Company made a change to its discharge permit on 7 November 2023 and therefore, the discharge permit for 2023 is in force. ADAMA Anpon, one of the Company’ssubsidiaries had its discharge permit for its plant changed on 7 September 2023 and reapplied for a discharge permit for its Maidao plant on 4 December 2023. Therefore, bothdischarge permits in 2023 are within the validity period. The discharge permit of the Company's subsidiary, ADAMA Huifeng, was changed on 7 December 2023, and it is alsowithin the validity period for the year.
Sector Discharge/Emission Standards and Pollutant Discharge and Emission during Operational Activities
| Company name | Category of Pollutants | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit |
| ADAMA Ltd. | Waste water | COD | Continuous | 1 | General Discharge Port | The new site: 16.7425mg/L | For the new site: Discharge Standards for Pollutants from Urban Sewage Treatment Plant (GB 18918 – 2002), COD <50mg/L | 65.4231 | 173.2104 | None |
ADAMA Ltd. Annual Report 2023
| Company name | Category of Pollutants | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit |
| Waste water | Ammonia nitrogen | Continuous | 1 | General Discharge Port | The new site: 0.2966mg/L | For the new site: Discharge Standards for Pollutants from Urban Sewage Treatment Plant (GB 18918 – 2002), ammonia nitrogen<8mg/L; | 1.1591 | 17.321 | None | |
| Waste water | Total Phosphorous | Continuous | 1 | General Discharge Port | The new site: 0.296 mg/L. | For the new site: Discharge Standards for Pollutants from Urban Sewage Treatment Plant (GB 18918 – 2002), total phosphorous <0.5mg/L | 1.1568 | 1.722 | None | |
| Waste gas | NOx | Continuous | 4 | Power plant, Hazardous waste incinerator and RTO | Power plant: 12.253 mg/m3 Hazardous waste incinerator: 31.8375 mg/m3 Acephate RTO: 6.3942mg/m3 ww RTO: 2.5975 mg/m3 | (1) The power plant complies with the ultra-low limit of the standard range for pollutant emission, which is NOx < 50mg/m3; (2) Hazardous waste incinerator: Table 3 in the "Standards for the Control of Hazardous Waste Incineration Pollution " (GB18484-2020), which is NOx <300mg/m3; (3) RTO: Table 1 and 2 and specifically the air pollutant emission | 33.5304 | 200.27 | None |
ADAMA Ltd. Annual Report 2023
| Company name | Category of Pollutants | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit |
| limits in Table 2 of the "Standards for the Air Pollutant Emission of the Pesticide manufacturing Industry" (GB 39727-2020), which is NOx <200mg/m3; | ||||||||||
| Waste gas | SO2 | Continuous | 4 | Power plant, Hazardous waste incinerator and RTO | Power plant: 3.1408 mg/m3 Hazardous waste incinerator: 8.4692 mg/m3 Acephate RTO: 6.8752 mg/m3 ww RTO: 1.6133 mg/m3 | (1) The power plant complies with the ultra-low limit of the standard range for pollutant emission, which is SO2 < 35 mg/m3; (2) Hazardous waste incinerator: Table 3 in the "Standards for the Control of Hazardous Waste Incineration Pollution " (GB18484-2020), which is SO2 <100mg/m3; (3) RTO: Table 1 and 2 and specifically the air pollutant emission limits in Table 2 of the "Standards for the Air Pollutant Emission of the Pesticide manufacturing Industry" (GB 39727-2020), which is SO2 <200mg/m3; | 7.9219 | 110.48 | None |
ADAMA Ltd. Annual Report 2023
| Company name | Category of Pollutants | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit |
| Waste gas | Fume and dust | Continuous | 4 | Power plant, Hazardous waste incinerator and RTO | Power plant: 0.7353 mg/m3 Hazardous waste incinerator: 3.3167mg/m3 Acephate RTO: 3.5275 mg/m3 ww RTO: 7.8242 mg/m3 | (1) The power plant complies with the ultra-low limit of the standard range for pollutant emission, which is fume and dust < 10 mg/m3; (2) Hazardous waste incinerator: Table 3 in the "Standards for the Control of Hazardous Waste Incineration Pollution " (GB18484-2020), which is fume and dust <30 mg/m3; (3) RTO: Table 1 and 2 and specifically the air pollutant emission limits in the " the Emission Standards for Air Pollutants of the Pesticide Manufacturing Industry" (GB 39727-2020), which is fume and dust < 30 mg/m3; | 9.5559 | 35.126 | None | |
| Waste gas | VOCs | Continuous | 1 | RTO | Acephate RTO: 25.5233 mg/m3 | Table 1 and 2 and specifically, the emission limits of air pollutants in Table 2 of the the Emission Standards for Air Pollutants of the Pesticide | 3.3276 | 6.221 t/a | None |
ADAMA Ltd. Annual Report 2023
| Company name | Category of Pollutants | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit |
| Manufacturing Industry (GB 39727-2020), which is VOCs <100mg/m3 | ||||||||||
| ADAMA Anpon (Jiangsu) Co., Ltd. | Waste water | COD | Continuous | 2 | General Discharge Port | Maidao: 82.85mg/L Discharge Port at the Old Plant of Anpon: 76.13mg/L Discharge Port at the North Plant of Anpon: 32.15mg/L | Comprehensive Standard on Discharge of Waste Water (GB8978-2002)，COD< 500 mg/l; Maidao site: industry park’s waste water discharge agreement, COD<500mg/L | 87.88 | Maidao:197.718 Anpon: 265.69 | None |
| Waste water | Ammonia Nitrogen | Continuous | 2 | General Discharge Port | Maidao: 0.62mg/L; Discharge Port at the Old Plant of Anpon: 4.05mg/L Discharge Port at the North Plant of Anpon: 1.92mg/L | Water Quality Standard for Sewage Discharged into Urban Sewerage (GBT 31962-2015), Ammonia Nitrogen <45 mg/l; Maidao site: industry park’s waste water discharge agreement, Ammonia Nitrogen <35 mg/l | 2.633 | Maidao: 4.385 Anpon: 28.348 | None | |
| Waste water | Total Phosphorous | Continuous | 2 | General Discharge Port | Maidao: 0.89mg/L; Discharge Port at the Old Plant of Anpon: 0.29mg/L Discharge Port at the North Plant of Anpon: 1.34mg/L | For Anpon: Water Quality Standard for Sewage Discharged into Urban Sewerage （GBT 31962-2015）, total phosphorous < 8 mg/l; For Anpon’s branch Maidao: Agreement on | 0.39 | Maidao: 0.426 Anpon: 20.273 | None |
ADAMA Ltd. Annual Report 2023
| Company name | Category of Pollutants | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit |
| Wastewater Discharge, total phosphorous < 3 mg/l; | ||||||||||
| Waste gas | NOx | Continuous | 1 | DFTO Incinerator Vent | Maidao: 14.64mg/m3 | Emission Standard of Air Pollutants for Pesticide Industry GB 39727-2020NOx < 200 mg/m3 | 0.1989 | Maidao: 3.986 Anpon: 181.516 | None | |
| Waste gas | SO2 | Continuous | 1 | DFTO Incinerator Vent | Maidao: 1.39mg/m3 | Hazardous Waste Incineration Pollution Control standards GB 18484-2020SO2 < 100 mg/m3 | 0.0279 | Maidao: 1.943 Anpon: 396.902 | None | |
| Waste gas | Particles | Continuous | 1 | Pymetrozine dryer tail gas | Anpon: 2.5 mg/m3 | Emission Standard of Air Pollutants for Pesticide Industry GB 39727-2020 | 0.107 | Maidao: 2.115 Anpon: 67.515 | None | |
| Waste gas | VOCs | Continuous | 22 | 17 in Anpon Site and five in Maidao | Maidao: 2.21mg/m3; Anpon:5.28mg/m3 | Standards for the Volatile Organic Compound Emission of the Chemical Industry, DB 32/3151-2016 | 0.6186 | Maidao: 41.712 Anpon: 47.313 | None | |
| ADAMA Huifeng (Jiangsu) Co., Ltd. | Waste water | COD | Continuous | 1 | General Discharge Port | 152.97 mg/l | Standards of the Industrial Park | 48.7942 | 247.6378 | None |
| Waste water | Ammonia Nitrogen | Continuous | 1 | General Discharge Port | 3.26 mg/l | Standards of the Industrial Park | 0.7242 | 19.3783 | None | |
| Waste water | Total Phosphorous | Continuous | 1 | General Discharge Port | 0.45 mg/l | Standards of the Industrial Park | 0.1315 | 0.9285 | None |
ADAMA Ltd. Annual Report 2023
| Company name | Category of Pollutants | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit |
| Waste water | total nitrogen | Continuous | 1 | General Discharge Port | 20.78 mg/l | Standards of the Industrial Park | 6.3706 | 46.77204 | None | |
| Waste gas | NOx | Continuous | 6 | RTO and the Discharge Ports at Various Workshops | 7.33 mg/m? | Jiangsu Comprehensive Standard on Air Pollutants Emission (DB32/4041-2021) | 7.4837 | 147.7072 | None | |
| Waste gas | SO2 | Continuous | 6 | RTO and the Discharge Ports at Various Workshops | 6.82 mg/m? | Jiangsu Comprehensive Standard on Air Pollutants Emission (DB32/4041-2021) | 4.4502 | 47.1958 | None | |
| Waste gas | Particles | Continuous | 6 | RTO and the Discharge Ports at Various Workshops | 2.22mg/m? | Jiangsu Comprehensive Standard on Air Pollutants Emission (DB32/4041-2021) | 1.4009 | 22.7146 | None | |
| Waste gas | non-methane hydrocarbon | Continuous | 9 | RTO and the Discharge Ports at Various Workshops | 11.69 mg/m? | Jiangsu Comprehensive Standard on Air Pollutants Emission (DB32/4041-2021) | 21.6505 | 62.92994 | None |
ADAMA Ltd Annual Report 2023
Treatment of Pollutants
(1) Development and Operation of Wastewater Facilities
The Company has a 20,000 tons/ D wastewater treatment station, adopting the process of "two-layer A / O + MBR + ozonesynergistic oxidation + MBBR + calcium removal of phosphorus". The wastewater treatment facilities are running normally.After treatment, the COD, ammonia nitrogen and total phosphorus in the discharged wastewater are within the limit.ADAMA Anpon, the subsidiary of the Company, has a 11,000 tons/ D wastewater treatment station. As all its facilities areoperating well, COD, ammonia nitrogen, and total phosphorous discharged after the treatment are within the limit.ADAMA Hufieng, the subsidiary of the Company has a 5000 tons/D wastewater treatment station. As all its facilities areoperating well, COD, ammonia nitrogen, total nitrogen and total phosphorous discharged after the treatment are within thelimit.
(2) Development and Operation of Waste Gas Facilities
The Company's coal-fired thermal power plant was carried out ultra-low emission transformation. After the transformation,the environmental protection facilities of the power plant operate normally. Sulfur dioxide, nitrogen oxides and dust in fluegas all meet the ultra-low emission standards.The incinerator of hazardous waste of the Company adopt the process of "SNCR + semi dry (quench) deacidification +activated carbon injection + bag dust removal + SCR" for the tail gas. Sulfur dioxide, nitrogen oxides and fume and dust intail gas all meet the standard.The RTO of the Company adopts treatment process of VOCs using "acid washing and absorption + alkali washing andabsorption + three-chamber RTO incineration + quench tower + alkali absorption”. Sulfur dioxide, nitrogen oxide, fume anddust, and VOCs in the tail gas all meet the standard.ADAMA Anpon, the subsidiary of the Company, is equipped with RTO, TO, resin adsorption and other tail gas treatmentfacilities. Under the condition of meeting the emission standard, operation management is strengthened to further reducethe total VOCs emission.ADAMA Huifeng, the subsidiary of the Company, has RTO, alkali washing facilities and acid washing facilities, which arerespectively used to treat process waste gas containing volatile organic compounds, acid washing waste gas and alkaliwashing waste gas. The main emission indicators of waste gas, such as sulfur dioxide, nitrogen oxides, fume and dust,and NMHC in tail gas all meet the standard.ADAMA (Nanjing) Agricultural Technology Co., Ltd，an indirectly owned subsidiary of the Company, is equipped withblowers and vent piping, each of which has scrubber and active carbon filters. VOC and HCl in treated waste gas meet thestandards.
(3) Implementation of the Interim Measures on Environmental Information
The Company and its subsidiaries disclose production and pollution information according the Interim Measures onEnvironmental Information Disclosure and transfer information of main wastewater and air pollutants to the informationplatform of the local environmental bureaus on a daily basis.
Contingency Plan of Environmental AccidentsThe Company and its relevant subsidiaries have formulated the Contingency Plan for Environmental Emergenciesaccording to their production facilities and industry features, and then submitted files to the local environmental protectionauthorities as record.
Environment self-monitoring planADAMA attributes great importance to protecting the environment, out of a sense of responsibility to society and theenvironment and strives to meet the relevant regulatory requirements and to even go beyond mere compliance, engagingin constant dialogue with stakeholders, including the authorities and the community.
ADAMA Ltd Annual Report 2023
In order to improve the environmental management, track the discharge of various pollutants, evaluate the impact on thesurrounding environment, strengthen the discharge management of pollutants in the production process, accept thesupervision and inspection of environmental authorities and provide reference for pollution prevention and control, thecompany has formulated a self-monitoring plan, which conducts regular tests in strict accordance with the requirements.The major monitored indicators and frequency are as the following:
1. Monitored Indicators
Wastewater: COD, NH3-N, pH, SS, Petroleum, TP.Air Pollutant: SO2, Nitrogen oxide, Fume and Dust, Non-Methane HydrocarbonNoise: Noise at the Site Border
2. Frequency
Continuous auto monitoring: Fume and dust and NMHC in boiler emission, SO2, NOx, fume and dust of RTO, andwastewater discharged from the centralized point (COD, Ammonia Nitrogen and total phosphorous)Manual sampling: particles from certain air emissions, suspended particles from wastewater and Petroleum once a month.Noise: once a quarter.ADAMA continually examines the implications of the environmental laws, takes actions to prevent or mitigate theenvironmental risks and to reduce the environmental effects that may result from its activities, and invests extensiveresources to fulfill those legal provisions that are, and are anticipated to, affect it. ADAMA’s plants are subject toatmospheric emissions regulations, whether by virtue of the stipulations provided in the business licenses or under theapplicable law. Hazardous materials are stored and utilized in the Company's plants, together with infrastructures andfacilities containing fuels and hazardous materials. ADAMA takes actions to prevent soil and water pollution by thesematerials and treats them, if revealed. ADAMA’s plants conduct various soil surveys, risk surveys and tests with regard totreatment of the soil or ground water at the plants.ADAMA intends to continue investing in environmental protection, to the extent required and beyond this, whether on itsown volition or in compliance with contractual commitments, regulatory or legal standards relating to environmentalprotection, so as to realize its best available policy and comply with any legal requirements.As part of its policy of ecological process improvement, ADAMA also invests in remediation, changes in productionprocesses, establishment of sewage facilities, as well as in byproduct storage and recycling.
ADAMA Ltd Annual Report 2023
Inputs in Environmental Protection and Treatment and Payment of Environmental Tax
| Company Name | Inputs in Environmental Protection and Treatment during 2023 (0,000RMB) | Payment of Environmental Tax in 2023 (0,000RMB) |
| ADAMA Ltd. | 5,650 | 34.2 |
| Adama Anpon (Jiangsu) Ltd. | 2,680 | 1.5 |
| Adama Huifeng (Jiangsu) Ltd. | 11,552 | 6.27 |
Measures taken to reduce its carbon emissions during the reporting period and their effects
√ Applicable □ Not applicable
During the reporting period, the Company established the working group on energy conservation and carbon reduction,formulated the indicators of energy conservation and carbon reduction in the future, completed carbon emission verificationand compliance, and carried out a number of energy conservation and emission reduction work, such as recovering thewaste heat of hydrogen brine by adding heat exchangers, saving steam consumption, and reasonably allocating resourcesthrough the combined transformation of utilities (refrigeration station and compressed air station), reducing energyconsumption and maintaining facilities, changing the model of water pumps and motors, adding frequency converter makewater pump motors better match the actual demand, optimizing the design of chlor-alkali brine process pipeline to reduceenergy consumption and CO2 emission, etc.
Administrative punishment for environmental problems during the reporting periodNone
Other environmental information that should be disclosedNone
Other environmental related informationNone
Occurrence of Environmental AccidentsDuring the reporting period, the Company and its subsidiaries didn’t have material environmental accidents.
II. Social Responsibilities
In ADAMA's 2022 Environmental, Social, and Corporate Governance (ESG) report, published July 2023, it set a target ofreducing scope 1 and 2 carbon emissions by 5% on average every year until 2030, in order to support the 1.5°C ParisAgreement.As of the end of 2023, ADAMA is in line with achieving this target.Sustainability in Products:
? In 2023 the first product based on Sesgama? was launched. Sesgama? is ADAMA's proprietary formulationtechnology platform for high-load and other challenging formulations, enabling less use of co-formulants, transport and
ADAMA Ltd Annual Report 2023
packaging materials per acre treated with a resulting improved product sustainability profile. The product launched wasthe herbicide FullScript?, launched in the US.? During 2023 ADAMA continued to register and launch products based on its proprietary Asorbital
? formulation tech-nology platform a unique formulation that improves the leaf penetration and systemic movement of the Active Ingredientin the plant, while minimizing environmental impact. This technology provides greater efficacy and sustainability andcan be used to reduce application rates.? Expanded use of containers with reduced environmental impact – Containers that have been redesigned to a
rectangular shape from a cylinder allow for product to be placed more densely on pallets and trucks, enabling a 45%increase in product packed, reducing transportation needs and associated carbon emissions, as well as comprise 10%less plastic. Following a successful launch in India, this design is expected to be launched in additional geographiesbringing a reduction of 17.2% in GHG emissions, eliminating the release of up to 340 metric tons of CO2e into theatmosphere annually.Sustainability in manufacturing:
? Shift of Company vehicles to electrical – during 2023 52% of ADAMA's forklifts at its manufacturing sites in Israeland 42% of its private cars in Israel transitioned to electrical. This trend will continue in 2024, aiming to double thenumber of electrical forklifts and increase by 20% the number of electrical private cars. The electrical forklifts saved160,000 liters of diesel in 2023.? Recycling hazardous waste back to raw materials – ADAMA collaborates with inhouse or external recycling com-panies to reuse/recycle 13,817 tons of hazardous wastes back to raw materials utilizing by its own operations or otherindustries. In Israel, ADAMA operates two plastic recycling centers at its largest formulation sites, Agan and Beer Sheva.These centers clean contaminated plastic packing products, allowing the use of the plastic to produce pipes in theconstruction and communication sectors.The Company is required to comply with the “Self-regulatory Guidelines for Listed Companies on Shenzhen StockExchange: No. 3 - Disclosure of Industry Information”, specifically for the chemical sector.The Company and its manufacturing subsidiaries have all passed the safety standardization audit for enterprises(hazardous chemicals). It integrates the safety standardization with Sinochem’s “FORUS” system and operates effectively.According to the structure and functions of each department, it has strengthened the implementation of the safetyresponsibility of the leadership team at all levels, optimized the management organization, practically implemented doubleresponsibility for one post, revised the production safety responsibility system, improved the safety management networkand assigned dedicated personnel for production safety. It has also adjusted the composition of the workforce for safetystandardization according to the actual operation and differentiated the responsibilities and duties for various members.The Company successfully completed renewal of production permits and other compliance procedures.The Company’s safety performance has been maintained at a sound level with no material casualty occurred. During thereporting period, the Company improved the safety production process from multiple perspectives, such as resourcebudget, equipment process and safety management. The Company built a dual prevention mechanism and HSEapplication systems integrating material hazard source monitoring, personnel positioning, five-in-one, electronic work ticketand on-site inspection.In terms of production processes, chemicals of less hazards replaced more hazardous ones, continuous reactions replacedthe batch-based ones, and the principle of safety fundamentals were given priority by buying intermediates directly insteadof operating some high-risk reactions, adopting vacuum feeding machine (PTS) and automatic feeding silo instead ofmanual operation, etc. In terms of hardware, the company continuously improves and perfects the application of automationand implements a number of safety initiatives while being equipped with automatic control, alarms, interlocks, safetyinstrumentation systems, emergency pressure relief and other safety devices and instruments, which provide multipleprotections for safe production. In terms of management, it has persistently pushed to ensuring core elements such as
ADAMA Ltd Annual Report 2023
process safety information, process hazard analysis, change management, pre-start safety inspection, mechanical integrity,process safety event management, etc., which has resulted in significant progress in the level of process safetymanagement and obtained the certification of process safety management audits from an internationally renowned third-party company. Meanwhile, the company continuously strengthens safety investment and attaches importance to theimplementation of safety protection facilities, equipment maintenance and testing, daily monitoring and evaluation, training,promotion and application of new technologies and other aspects of safety work.In terms of safe production education and training, the Company has carried out HSE training for employees and provideda series of HSE IDP training for the management. This year, it will continue to promote the implementation of relevanttraining at the front line, focusing on learning and complying with various regulatory requirements such as the tieredsubcontracting accountability for safety guarantee of hazardous chemical production enterprises. During the reportingperiod, the Company received inspections to its sites by government agencies and the shareholding group for more than200 times and has basically completed rectification according to the inspection results. In terms of emergency response,the Company organizes emergency drills and fire drills in various scenarios according to the laws and regulations, recruitsprofessional emergency management personnel, participates in professional emergency training and assessmentorganized by Sinochem, so as to strengthen the emergency response ability of front-line employees through daily trainingKPIs and drills. In terms of occupational health, the Company has strengthened its employees' hazard identification ability,organized chemical protection knowledge assessment and IDP HSE ability examination, and through a series ofspecialized action plans, it has effectively raised employees' awareness of safety and protection and improved the level ofplant safety and production management. CHRA risk assessment has been promoted for each exposure position acrossthe company, job-based occupational hazards been identified and risk reduction measures been formulated, all of whichhas further laid a solid foundation for enhancing the occupational status.
III. Enhancement of the results of poverty alleviation and rural revitalization
In terms of consolidating and expanding the achievements of poverty eradication and rural revitalization, during 2023, theCompany’s Jingzhou site actively responded to the call of the Hubei Provincial Federation of Trade Unions and theJingzhou Municipal Federation of Trade Unions, and purchased poverty relief materials of 218,100 RMB from thedesignated counterpart poverty relief counties in Jingzhou. ADAMA Anpon, one of the Company’s subsidiaries, continuedto provide paired-up assistance to Sanhe Village, Shunhe Township, Huai'an District in Huai’an City of Jiangsu Province inaccordance with the arrangements of the local provincial government for the economically less developed villages. Duringthe spring farming season, various towns and communities at Huai'an District pushed forward the public space governancefor the countryside. According to the unified planning of the task force, volunteers from ADAMA Anpon analyzed anddeployed with the village councils to facilitate the implementation. Thanks to the efforts on public space governance, SanheVillage managed to rectify 235 problems, recovered land area of 743.67 mu, and increased collective income by 321,300yuan through a variety of methods such as land transfer, revitalization of idle assets and resources, and remediation ofencroached assets and resources.
ADAMA Ltd Annual Report 2023
Section VI - Significant Events
I. Performance of commitments
1. Commitments completed by the Company, the shareholders, the actual controllers, the purchasers, or the other related parties during the ReportingPeriod and those hadn’t been completed execution up to the period-end
√ Applicable □ Not applicable
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| Commitment on share reform | - | - | - | - | - | - |
| Commitment in the acquisition report or the report on equity changes | ChemChina | Commitments on the horizontal competition | 1. The business of ChemChina’s subsidiaries - Jiangsu Anpon Electrochemical Co., Ltd., Anhui Petroleum Chemical Group Co., Ltd., Shangdong Dacheng Agrochemical Co., Ltd., Jiamusi Heilong Agrochemicals Co., Ltd., and Hunan Haohua Chemical Co., Ltd. and its subsidiary are the same or similar business as the main business of ADAMA. As for horizontal domestic competition, ChemChina committed to gradually eliminate such kind of horizontal competition in the future and to fight for the internal assets reconstruction, to adjust the industrial plan and business structure, to transform technology and to upgrade products, to divide the market so as to make each corporation differ in the products and its ultimate users according to the securities laws and regulations and industry policy within 7 years, thus to | September 7, 2013 | Regarding commitment 1, September 6, 2020 (According to the commitments made by ChemChina on October 12, 2016, the date to eliminate the domestic horizontal competition between the | Regarding Commitment 1, completed. The committed party complies with the commitments:(1) ChemChina had transferred its shares in Anpon to ADAMA; (2) ChemChina had transferred its shares in Jiamusi Heilong to a third party, such that. Jiangmusi Heilong is no longer a subsidiary of |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| eliminate the current domestic horizontal competition between ChemChina’s controlled subsidiaries and ADAMA. 2. Other than the existing and potential horizontal competition stated in the acquisition report, ChemChina will take effective measures to avoid engagements by itself and its controlled subsidiaries in new business that is in the same or similar business to ADAMA, within the territory in future. 3. If ChemChina or its controlled subsidiaries domestically conduct related business which form horizontal competition with ADAMA, in the future, ChemChina will actively take steps, to gradually eliminate the competition, the concrete measures including but not limited to internal assets reorganization, (including putting the business into ADAMA or operated through ADAMA) to adjust the industrial plan and business structure, to modify technology and to upgrade products, to segment the market so as to distinguish each corporation in terms of products and its end users, thus to avoid and eliminate domestic horizontal competition between ChemChina’s controlled subsidiaries and ADAMA. | Company and Jiangsu Anpon Electrochemical Co., Ltd., Anhui Petroleum Chemical Group Co., Ltd., and Jiamusi Heilong Agrochemicals Co., Ltd., is January 4, 2022). Regarding commitments 2 and 3, long term. | ChemChina; (3) Shangdong Dacheng is not a subsidiary of CNAC and doesn’t carry out agrochemical business; (4) ChemChina is not the actual controller of Haohua; (5) CNAC, the wholly-owned subsidiary of ChemChina, signed an Entrusted Operation and Management Agreement as well as a Supplemental Agreement with the Company, and entrusted the operation and management of Anhui Petrochemical Co., Ltd.to the Company. Regarding commitments 2 and 3, On-going. The committed party |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| complies with the commitments. | ||||||
| ChemChina | Commitments on the independence of ADAMA and related- party transactions | ChemChina will comply with laws, regulations and other regulatory documents to avoid and reduce related-party transactions with ADAMA. However, for related-party transactions that are inevitable or based on reasonable grounds, ChemChina will follow the market principles of just, fairness and openness, and enter into agreement(s) legally and go through lawful procedures. ChemChina will honor its disclosure obligations and apply for relevant approvals according to the AoA of ADAMA, rules regarding related-party transactions and relevant regulations, not impairing the lawful rights and interest of ADAMA and its shareholders by related-party transactions. After completion of the acquisition transaction, ADAMA will continue to keep complete procurement, production and sales systems and to possess independent intellectual properties. ChemChina and its affiliated parties will be completely independent from ADAMA in terms of staff, assets, finance, business and organization. ADAMA will have full capacity of operation in Chinese agricultural chemical market. ChemChina will continue to follow the Company Law and Securities Law so as to avoid any action that may impair the operating independence of ADAMA. | September 7, 2013 and January 7, 2020 | Long term | On-going. The committed party complies with the commitments. | |
| ChemChina | Commitments on horizontal competition | ChemChina will keep taking appropriate measures to resolve the same issue between ADAMA and Anhui Petrochemical Co., Ltd. within four years after ADAMA buys 100% shares of ADAMA Solutions | January 7, 2020 | January 4, 2022 | Completed. The committed party complies with the commitments. |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| through the issuance of shares to CNAC and finishes the raising of supporting finance in accordance with the original commitments as well as various the requirements of securities laws and regulations and industry policies. | CNAC, the wholly-owned subsidiary of ChemChina, signed an Entrusted Operation and Management Agreement as well as a Supplemental Agreement with the Company, and entrusted the operation and management of Anhui Petrochemical Co., Ltd. to the Company. Note: On January 4, 2018, ADAMA completed the purchase of the shares of ADAMA Agricultural Solutions Ltd. and the raising of supporting finance. | |||||
| Based on a preliminary review, ChemChina believes that Syngenta A.G. and ADAMA may have horizontal competition to some extent. It will further analyze, confirm and specify if the two companies share the | January 7, 2020 | January 7, 2025 | On-going. The committed party complies with the commitments. |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| same or similar businesses and products in terms of business content, suppliers and customers, product substitution, processes and core technologies and distribution channels, etc. If the result will be positive, ChemChina will gradually solve the issue within 5 years after the issuance of this Letter by taking appropriate measures, including but not limited to internal asset restructuring, industrial planning and business structure adjustment, technology transformation and product upgrading, market segmentation or other feasible solutions in accordance with the requirements of securities laws and regulations and industry policies. | ||||||
| Once Sinofert and Sinochem Agriculture are the subsidiaries of ChemChina, ChemChina will analyze if there are same or similar businesses among the three subsidiaries. If the result will be positive, ChemChina will then propose corresponding solutions for any business or product that constitutes competition in accordance with the requirements of applicable laws, regulations and regulations to solve the issue of horizontal competition. | January 7, 2020 | Long term | On-going. The committed party complies with the commitments. | |||
| Other than the foregoing, none of the main business of ChemChina and other controlled subsidiaries is the same or similar to that of ADAMA. | January 7, 2020 | Long term | On-going. The committed party complies with the commitments. | |||
| ChemChina will continue to take effective measures | January 7, 2020 | Long term | On-going. |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| to prevent itself and its other subsidiaries from adding new businesses in the future that are the same as or similar to those of ADAMA. If ChemChina or any of its other subsidiaries develops related businesses that constitutes horizontal competition against the domestic business of ADAMA in the future, it will actively take relevant measures, including but not limited to asset restructuring, adjustment of industrial planning and business structure, technological transformation and Product upgrades, market segmentation and other feasible solutions, so that each enterprise will be different in their portfolio and end users and avoid and eliminate the horizontal competition with ADAMA. | The committed party complies with the commitments. | |||||
| From the effective date of the Commitment Letter, if ChemChina violates the above commitments, it should compensate ADAMA for the losses or expenses suffered or incurred by the violation. | January 7, 2020 | Long term effective | On-going. The committed party complies with the commitments. | |||
| Sinochem Holdings | Commitment to maintain the independence of ADAMA | This acquisition will not materially adversely affect the independence of ADAMA in terms of staff, assets, finance, business and organization. After completion of the acquisition transaction, ADAMA will continue to keep complete procurement, production and sales systems and to possess independent intellectual properties. Sinochem Holdings and its affiliated parties will strictly abide by the relevant provisions on the independence of listed companies in relevant laws, regulations and normative documents and be completely independent from ADAMA in terms of staff, assets, finance, business and organization, so as to ensure ADAMA | September 16, 2021 | continue to be effective during the period that Sinochem Holdings controls ADAMA | On-going. The committed party complies with the commitments. |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| will have full capacity of operation in Chinese agricultural chemical market. Sinochem Holdings will follow related regulations in Company Law and Securities Law, and avoid engagement in any action that impairs the operating independence of ADAMA. | ||||||
| Sinochem Holdings | Commitments on the horizontal competition | With regard to the present or future possible competition between the subsidiaries of ChemChina and ADAMA, Sinochem Holdings will earnestly urge ChemChina to fulfill its commitments to ADAMA to avoid horizontal competition. | September 16, 2021 | continue to be effective during the period that Sinochem Holdings controls ADAMA | On-going. The committed party complies with the commitments. | |
| As for the horizontal competition between Sinochem Holdings’ subsidiaries and ADAMA arising from this equity transfer, Sinochem Holdings will, according to the requirements of relevant securities regulatory authorities, within five years from the effective date of this letter of commitment, comprehensively use entrusted management, asset reorganization, equity replacement/transfer, business merger/adjustment or other legal means to steadily promote the integration of related assets or businesses that meet the requirements of injection into ADAMA in line with the principle of benefiting the development of ADAMA and safeguarding shareholders' interests, especially those of minority shareholders. | September 16, 2021 | September 16, 2026 | On-going. The committed party complies with the commitments. | |||
| Sinochem Holdings will strictly abide by the relevant laws, regulations and normative documents, AOA and other internal management system of ADAMA, exercise the rights of shareholders according to the | September 16, 2021 | continue to be effective during the period that Sinochem | On-going. The committed party complies with the commitments. |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| law through the equity relationship, in line with the principle of state ownership and hierarchical management of state-owned assets, properly handle matters involving ADAMA's interests, and shall not use the control position to seek improper interests or transfer interests. | Holdings controls ADAMA | |||||
| Sinochem Holdings | Commitment to standardize related-party transactions | Sinochem Holdings and its controlled subsidiaries will, as required by law, regulation and other specifications, avoid and reduce related party transactions with ADAMA; however, for the related party transactions that are inevitable or based on reasonable grounds, Sinochem Holdings and its controlled subsidiaries will strictly abide by the relevant laws, regulations and normative documents and relevant systems of ADAMA, legally enter into agreement(s) by law, go through lawful procedures, ensure fair pricing and perform its disclosure obligations. Sinochem Holdings and its controlled subsidiaries warrant that no related party transaction will be done to impair lawful rights and interest of ADAMA and its shareholders. | September 16, 2021 | continue to be effective during the period that Sinochem Holdings controls ADAMA | On-going. The committed party complies with the commitments. | |
| Commitments made at the time of assets reorganization | ChemChina | Commitments on the horizontal competition | The subsidiaries controlled by ChemChina, namely Anpon, HH, Maidao, Anhui Petrochemical and Heilong as well as their subsidiaries are in similar or the same business as ADAMA. For the horizontal competition in China, ChemChina commits to take appropriate actions to solve the horizontal competition between its subsidiaries and ADAMA step-by-step in an appropriate way within 4 years after completion of the reorganization, in accordance with securities laws, regulations and sector/industrial policies. | October 12, 2016 | January 4, 2022 | The commitments listed in the left column have been completed. The committed party complies with the commitments: (1) the reorganization, i.e. the issuance of shares to CNAC for |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| The means by which ChemChina addresses the horizontal competition include but are not limited to the following, ADAMA acquires crop protection-related assets under ChemChina. ADAMA holds or controls other crop protection-related assets of ChemChina in line with national laws and by reasonable commercial means such as entrusted operation. ChemChina divests other crop protection-related assets or transfers the control power of such subsidiaries to external parties. ChemChina reorganizes internal assets, adjusts sector planning and business structure, upgrades technologies and products and makes market segmentation so that each company will differentiate its products and end users to eliminate horizontal competition between the subsidiaries controlled by ChemChina and ADAMA. | purchasing assets and implementation of private placement, completed on January 4, 2018; (2) Anpon merged with Maidao and ChemChina’s shares in Anpon had been transferred to ADAMA; (3) ChemChina had transferred its shares in Heilong to a third party. Heilong is no longer a subsidiary of ChemChina; (4) HH withdrew from the agrochemical business;(5) CNAC, the wholly-owned subsidiary of ChemChina, signed an Entrusted Operation and Management Agreement as well as a Supplemental Agreement with the Company, and entrusted the |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| operation and management of Anhui Petrochemical Co., Ltd. to the Company. | ||||||
| ChemChina | Commitments on Potential Horizontal Competition | ChemChina will take effective actions to avoid that it or its controlled subsidiaries will add new business in China same or similar to ADAMA. If ChemChina or its controlled subsidiaries will in the future be engaged in business in China that constitutes horizontal competition with ADAMA, ChemChina will take active actions, including but not limited to reorganizing internal assets, adjusting sector planning and business structure, upgrading technologies and products and making market segmentation so that each company will differentiate its products and end users to avoid and eliminate horizontal competition between the subsidiaries controlled by ChemChina and ADAMA. | October 12, 2016 | Long term | On-going. The committed party complies with the commitments. | |
| ChemChina | Commitment to reduce and standardize related-party transactions | ChemChina will, as required by law, regulation and other specifications, avoid and reduce related party transactions with ADAMA; however, for the related party transactions that are inevitable or based on reasonable grounds, ChemChina will follow the just, fairness and open principles in market, legally enter into agreement(s) by law, go through lawful procedures, and perform its disclosure obligations and approving procedures as required by related systems and regulations. ChemChina warrants that no related party transaction will be done to impair lawful rights and interest of ADAMA and its | August 4, 2016 | Long term | On-going. The committed party complies with the commitments. |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| shareholders. | ||||||
| ChemChina | Commitment to maintain independence of the ADAMA | After completion of the acquisition transaction, ADAMA will continue to keep complete procurement, production and sales systems and to possess independent intellectual properties, and ChemChina and its affiliated parties will be completely independent from ADAMA in terms of staff, assets, finance, business and organization, and ADAMA will have full capacity of operation in Chinese agricultural chemical market. ChemChina will follow related regulations in Company Law and Securities Law, and avoid engagement in any action that impairs the operating independence of ADAMA. | August 4, 2016 | Long term | On-going. The committed party complies with the commitments. | |
| Commitments made at IPO or refinancing | -- | -- | -- | -- | -- | -- |
| Share incentive commitments | -- | -- | -- | -- | -- | -- |
| Other commitments to the company's minority shareholders | Syngenta Group | Commitments on Horizontal Competition | I. Companies that are controlled by Syngenta Group and have horizontal competition with ADAMA After reviewing, as of the date of issuance of the commitment letter, there is a small amount of overlap in the field of off-patent crop protection products between SAG, a subsidiary of Syngenta Group, and the Company, and a small amount of overlap in the field of active ingredients and formulation products between Yangnong Chemical Co., Ltd. (hereinafter referred to as "YN Chemical") and the Company. In both cases, such small overlap is not causing a negative impact on any of the subject companies. | November 1, 2021 | January 7, 2025 | On-going. The committed party complies with the commitments. |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| Except for the aforementioned scenarios, the major business of Syngenta Group and other companies controlled by Syngenta Group does not operate the same or similar business with the Company. II. Commitment and timetable to address the horizontal competitions mentioned above In accordance with and in compliance with the applicable laws, regulations and relevant regulatory requirements then in effectiveness, Syngenta Group will adopt appropriate measures to gradually solve the horizontal competitions among SAG, YN Chemical and the Company within 5 years after the issuance of Supplemental Commitment Letter of China National Chemical Corporation on Avoiding Horizontal Competition with ADAMA by ChemChina on January 7, 2020. The aforementioned solutions include but not limited to: (1) Asset restructuring: adopt different methods permitted by relevant laws, regulations and regulatory policies such as cash or issuance of shares to purchase assets, asset replacement, asset transfer or other feasible restructuring methods. Assets are sorted out and reorganized to eliminate the overlap of relevant businesses; (2) Adjust industry planning and business structure: sort out business boundaries, realize business differentiation through asset transactions, business divisions and other different methods, including but not limited to business composition, product grades, |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| application areas, and customer groups. Syngenta Group will try its best to achieve differentiated business operations; (3) Technological transformation and product upgrade: achieve product differentiation through appropriate technological transformation and product upgrade, and Syngenta Group will try its best to achieve differentiated operations; (4) Market segmentation: signing agreements while taking into consideration of the business and other factors to appropriately divide the market; (5) Entrusted management: by signing an entrustment agreement, one party will delegate the decision-making and management involved in the operation of the overlapped assets to the other party for unified management; (6) Establish a joint venture company: jointly establish a company in an appropriate way; (7) Other feasible solutions within the scope permitted by relevant laws, regulations and regulatory policies. The implementation of the above-mentioned resolution is based on the implementation of the necessary review procedures for listed companies, the approval procedures of the securities regulatory authority and relevant authorities (including but not limited to the antitrust review that may be applicable) in accordance with relevant laws and regulations, and the information disclosure obligations should be fulfilled according to relevant laws and regulations. |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment |
| III. Syngenta Group’s commitment to potential horizontal competition with the Company in the future Syngenta Group will continue to take effective measures to prevent itself and its controlled companies from having new businesses that are the same or similar to the Company’s domestic business in the future. If Syngenta Group or a company controlled by Syngenta Group develops related businesses that constitute horizontal competition with the Company’s domestic business in the future, Syngenta Group will actively take relevant measures, including but not limited to asset restructuring, adjustment of industry planning and business structure, technological transformation and product upgrades, market segmentation or other feasible solutions to differentiate between products and end users of each company, so as to avoid and eliminate horizontal competition between Syngenta Group or the company controlled by the Syngenta Group and the Company. If Syngenta Group breaches the above undertakings, it will bear the corresponding legal liabilities in accordance with the relevant laws and regulations, including the Guidelines for the Supervision of Listed Companies No. 4 - Undertakings and Performance by Actual Controllers, Shareholders, Related Parties, Purchasers of Listed Companies and Listed Companies. The letter of commitment will take effect on the date | November 1, 2021 | continue to be valid during the period when Syngenta Group is the controlling shareholder of the Company | On-going. The committed party complies with the commitments. |
ADAMA Ltd Annual Report 2023
| Commitment | Commitment maker | Commitment type | Contents | Time of making commitment | Period of commitment | Fulfillment | ||
| of signing and will continue to be valid during the period when Syngenta Group is the controlling shareholder of the Company. | ||||||||
| Other commitments | -- | -- | -- | -- | -- | -- | ||
| Whether the commitments are fulfilled on time | Yes | |||||||
| If the commitment is overdue, the specific reasons for not completing the performance and the next work plan should be explained in detail. | -- | |||||||
ADAMA Ltd Annual Report 2023
2. Assets or projects with profit forecast, still relevant for forecast period
√Applicable □Not applicable
Unit: 10,000 RMB
| Assets or Projects with Profit Forecast | Start of the Forecast | End of the Forecast | Estimated Performance for the Current Period | Actual Performance of the Current Period | Reasons for Falling Short of the Forecast (if applicable) | Original Forecast Disclosure Time | Original Forecast Disclosure Index |
| ADAMA Huifeng (Shanghai) Agricultural Technology Co., Ltd. | January 1st, 2021 | December 31st, 2023 | 2580 | 1090.7117 | Please refer to “Fulfilment of Performance Commitments and Their Impact on Goodwill Impairment Testing” below | February 27th, 2020 | Announcement on Signing the Supplemental Agreement to the Equity Purchase Agreement (Announcement No. 2020-9) disclosed at http://www.cninfo.com.cn |
Commitments made by the Company's shareholders and transaction counterparties in respect of operating results for thereporting period
√Applicable □ Not Applicable
On 26 February 2020, the Company entered into the Supplemental Agreement to the Equity Purchase Agreement withJiangsu Huifeng Bio-Agriculture Company Limited (hereinafter referred to as “Jiangsu Huifeng”), pursuant to which JiangsuHuifeng undertook that in the full years of 2021, 2022 and 2023, the average annual contribution to the gross profit ofADAMA Huifeng (Shanghai) Agricultural Technology Co., Ltd. (ADAMA Huifeng (Shanghai)) from the business of its heldcompany Nongyi E-commerce (Beijing) Co., Ltd., and its subsidiaries (collectively as “Nongyi.Net” and “Nongyi.Net grossprofit”), should be at least RMB 8.6 million (Nongyi.Net business benchmark). If the Nongyi.Net gross profit fails to reachthe Nongyi.Net business benchmark, Jiangsu Huifeng should pay the price to the Company in accordance with the formulathat the amount payable by Jiangsu Huifeng (the “Price Adjustment Payment”) = (Nongyi.Net business benchmark –Nongyi.Net gross profit) x 13, and it shall also bear all taxes and expenses that the Company undertakes due to the priceadjustment.
Fulfilment of Performance Commitments and their Impact on Goodwill Impairment TestAccording to Deloitte’s Special Report on Difference between Actual and Promised Gross Profits for Purchase of ADAMAHuifeng (Shanghai) Agricultural Technology Co., Ltd (De Shi Bao (He) Zi (24) No. E00116), the total contribution byNongyi.Net to the gross profit of ADAMA Huifeng (Shanghai) for the period from 2021 to 2023 totaled RMB 10,907,117,with an average annual gross profit of RMB 3,635,706.The procurement volume of Nongyi.Net business from ADAMA Huifeng (Shanghai) during the performance forecast periodfell short of the business benchmark, resulting in the gross profit of Nongyi.Net business not meeting Nongyi.Net businessbenchmark. The Company will resolve the above matters with the committed party in accordance with the Agreement.The goodwill generated from the above acquisition was included in the goodwill allocated to the Crop Protection (Agro)unit of the Group for the purpose of goodwill impairment testing. The unfulfillment of the performance commitments has
ADAMA Ltd Annual Report 2023
already been considered in the future cash flows used in the goodwill impairment testing for the Argo unit. According to theresult of the goodwill impairment testing, there was no need to provide for goodwill impairment.For details please refer to Announcement on the Fulfillment of Performance Commitments Related to a ControlledSubsidiary (Announcement No. 2024-9) disclosed on www.cninfo.com.cn on March 27, 2024.
II. Inadequate use of Company’s capital by the controlling shareholder or by its
related parties for non-operating purposes
□ Applicable √ Not applicable
No such situation occurred during the Reporting Period.
III. Non-compliance with external guarantees
□ Applicable √ Not applicable
No such cases during the reporting period.
IV. Explanation by the board of directors on the latest "non-standard audit report"
□ Applicable √ Not applicable
V. Explanation by the Board of Directors, the Supervisory Board and independent
directors (if any) regarding “non-standard audit report” issued by Company’sauditor for the Reporting Period
□ Applicable √ Not applicable
VI. Changes in accounting standards, accounting estimates or corrections of
significant accounting errors compared to last financial report
√ Applicable □ Not applicable
On 30 December 2021, the Ministry of Finance issued "Accounting Standards for Business Enterprises Interpretation No.15” (hereinafter referred to as “Interpretation No. 15”) which clarified the accounting treatments for the sale of the productsor by-products produced before the assets being capable of operating in a predetermined manner or produced during theresearch and development process and clarified the costs a company should include as the cost of fulfilling a contractwhen assessing whether a contract is onerous.
According to the Interpretation No.15, the above clarifications were effective from 1 January 2022. Adoption of theinterpretations has no significant impact on the Group’s financial statements.
On 30 November 2022, the Ministry of Finance issued "Accounting Standards for Business Enterprises Interpretation No.16” (hereinafter referred to as “Interpretation No. 16”) which clarified the following accounting treatments:
(1) Deferred tax related to assets and liabilities arising from a single transaction;
ADAMA Ltd Annual Report 2023
(2) The income tax treatment of the dividend paid as the issuer of an equity instrument; and
(3) When an entity changes a cash-settled share-based payment to an equity-settled share-based payment.
According to the Interpretation No.16, the second and the third clarifications were effective from 30 November 2022. Adop-tion of the interpretations has no significant impact on the Group’s financial statements.
VII. Change of the consolidation scope as compared with the financial reporting of
last year
□Applicable √ Not applicable
VIII. Engagement of Company’s Auditor
Auditor engaged at present
| Name of domestic Auditor | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| Remuneration for domestic Auditor for the Reporting Period (RMB Ten Thousand Yuan) | 315 |
| Consecutive years of the audit services provided by domestic Auditor | 7 |
| Name of domestic accountants | Ji Yuting and Zhao Jingyuan |
| Consecutive years of the audit services provided by the domestic accountants | 4 |
| Name of overseas Auditor | Not applicable |
| Remuneration for overseas Auditor for the Reporting Period (RMB Ten Thousand Yuan) | -- |
| Consecutive years of the audit services provided by overseas Auditor | -- |
| Name of overseas accountants | -- |
| Consecutive years of the audit services provided by the overseas accountants | -- |
Change of the Auditor at Reporting Period
□ Yes √ No
Engagement of the Auditor for internal control, financial adviser or sponsor
√ Applicable □ Not applicable
In the Reporting Period, the Company continued to engage Deloitte Touche Tohmatsu Certified Public Accountants LLP asthe auditor of the Company for 2023 annual financial reports and 2023 annual internal control of the Company. Totalremuneration for the Auditor was RMB 3.15 million.
IX. Trading termination of Company’s securities that the Company will face after the
disclosure of this annual report
□ Applicable √ Not applicable
ADAMA Ltd Annual Report 2023
X. Bankruptcy and reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XI. Material Legal Claims/proceedings
□ Applicable √ Not applicable
No such cases in the Reporting Period.XII. Punishment and rectification
□ Applicable √ Not applicable
None during the Reporting Period.
XIII. Credibility of the Company, its controlling shareholders and actual controller
√ Applicable □ Not applicable
The Company’s controlling shareholder and actual controller are in good credibility status. They are not in the situation thatthe effective judgment of the court was not executed and the large amount of debt was not repaid when due during thereporting period.
ADAMA Ltd Annual Report 2023
XIV. Significant related-party transactions
1. Related-party transactions in the ordinary course of business
√ Applicable □Not applicable
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| Syngenta AG and its sub-sidiaries | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 106,418 | 5.95% | 144,486 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Bluestar (Bei-jing) Chemi-cal Machin-ery Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 40 | 0.00% | 856 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Jiangsu Huaihe Chemicals Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products | Purchase of raw materi-als/products | Market price | Market price | 19,917 | 1.11% | 23,512 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| from re-lated par-ties | Course of Business in 2023 (No.2023-12) | ||||||||||||
| Sinofert | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 791 | 0.04% | 115 | Yes | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Jiangsu Yangnong Chemical Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 105 | 0.01% | 52,875 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Jiangsu Youjia Plant Protection Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 16,866 | 0.94% | 29,561 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Hangzhou (Torch) Xidou | Under the same control | Purchasing raw | Purchase of raw | Market price | Market price | 14 | 0.00% | 14 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related- |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| Door Film In-dustry Co., Ltd. | of Sinochem Holdings | materials and prod-ucts from related par-ties | materi-als/products | Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) | |||||||||
| Sinochem Lantian Fluorine Materials Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 133 | 0.01% | 288 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Zhonglan International Chemical Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 8,269 | 0.46% | 25,300 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinochem Agro Co.,Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 949 | 0.05% | 8,090 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| Jiangsu Youshi Chemical Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 611 | 0.03% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Bluestar En-gineering Co.,Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 2,011 | 0.11% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| ELKEM SILICONES BRASIL LTDA | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 135 | 0.01% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Beijing Guangyuan Yinong Chemical Co., LTD | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from | Purchase of raw materi-als/products | Market price | Market price | 15 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| related par-ties | in 2023 (No.2023-12) | ||||||||||||
| Syngenta (China) Investment Company Limited | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 3,583 | 0.20% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Shandong Dacheng Ag-rochemical Company Limited | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 311 | 0.02% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinochem In-ternational Crop Care Company Limited | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 2,602 | 0.15% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| China Bluestar Chengrand | Under the same control of Sinochem | Purchasing raw materi-als and | Purchase of raw materi-als/products | Market price | Market price | 1 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| Research In-stitute Chem-ical Industry | Holdings | products from re-lated par-ties | in the Ordinary Course of Business in 2023 (No.2023-12) | ||||||||||
| Shenyang Sciencreat Chemicals Co. Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 445 | 0.02% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Shenyang Si-nochem Ag-rochemicals R&D Co.,Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 6 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Liaocheng Luxi Methyla-mine Chemi-cal Co. Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 81 | 0.01% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Liaocheng | Under the | Purchasing | Purchase of | Market | Market | 1,350 | 0.08% | - | - | Cash | N/A | March | Announcement on |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| Luxi Polyol New Material Technology Co. Ltd. | same control of Sinochem Holdings | raw materi-als and products from re-lated par-ties | raw materi-als/products | price | price | Settlement | 21,2023 | Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) | |||||
| Luxi Group Co.Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 1,044 | 0.06% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Ningxia Ruitai Tech-nology Co. Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materi-als and products from re-lated par-ties | Purchase of raw materi-als/products | Market price | Market price | 44 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Syngenta AG and its sub-sidiaries | Under the same control of Sinochem Holdings | Selling raw materials and prod-ucts to re-lated par-ties | Selling prod-ucts | Market price | Market price | 111,261 | 3.40% | 159,178 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| Jiangsu Huaihe Chemicals Co., Ltd. | Under the same control of Sinochem Holdings | Selling raw materials and prod-ucts to re-lated par-ties | Selling prod-ucts | Market price | Market price | 21,197 | 0.65% | 26,893 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinofert | Under the same control of Sinochem Holdings | Selling raw materials and prod-ucts to re-lated par-ties | Selling prod-ucts | Market price | Market price | 11,987 | 0.37% | 14,168 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sino MAP | Under the same control of Sinochem Holdings | Selling raw materials and prod-ucts to re-lated par-ties | Selling prod-ucts | Market price | Market price | 1,048 | 0.03% | 1,150 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Jiangsu Yangnong Chemical Co., Ltd. | Under the same control of Sinochem Holdings | Selling raw materials and prod-ucts to re-lated | Selling prod-ucts | Market price | Market price | 1 | 0.00% | 6 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| parties | in 2023 (No.2023-12) | ||||||||||||
| Jiangsu Youshi Chemical Co., Ltd. | Under the same control of Sinochem Holdings | Selling raw materials and prod-ucts to re-lated par-ties | Selling prod-ucts | Market price | Market price | 6,410 | 0.20% | 12,650 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Jiangsu Youjia Plant Protection Co., Ltd. | Under the same control of Sinochem Holdings | Selling raw materials and prod-ucts to re-lated par-ties | Selling prod-ucts | Market price | Market price | 113 | 0.00% | 173 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Syngenta Nantong Crop Protec-tion Co.,Ltd. | Under the same control of Sinochem Holdings | Selling raw materials and prod-ucts to re-lated par-ties | Selling prod-ucts | Market price | Market price | 328 | 0.01% | 610 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinochem In-ternational Crop Care | Under the same control of Sinochem | Selling raw materials and | Selling prod-ucts | Market price | Market price | 1,802 | 0.06% | 1,898 | No | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| Company Limited | Holdings | products to related par-ties | in the Ordinary Course of Business in 2023 (No.2023-12) | ||||||||||
| Sinochem Agro Co.,Ltd. | Under the same control of Sinochem Holdings | Selling raw materials and prod-ucts to re-lated par-ties | Selling prod-ucts | Market price | Market price | 762 | 0.02% | 230 | Yes | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Syngenta (China) Investment Company Limited | Under the same control of Sinochem Holdings | Selling raw materials and prod-ucts to re-lated par-ties | Selling prod-ucts | Market price | Market price | 2,906 | 0.09% | 725 | Yes | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Beijing Guangyuan Yinong Chemical Co., LTD | Under the same control of Sinochem Holdings | Selling raw materials and prod-ucts to re-lated par-ties | Selling prod-ucts | Market price | Market price | 118 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Henan | Under the | Selling raw | Selling | Market | Market | 4 | 0.00% | - | - | Cash | N/A | March | Announcement on |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| Junhua De-velopment Co. Ltd. | same control of Sinochem Holdings | materials and prod-ucts to re-lated par-ties | products | price | price | Settlement | 21,2023 | Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) | |||||
| Shenyang Sciencreat Chemicals Co. Ltd. | Under the same control of Sinochem Holdings | Selling raw materials and prod-ucts to re-lated par-ties | Selling prod-ucts | Market price | Market price | 2 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinochem Information Technology Co., Ltd | Under the same control of Sinochem Holdings | Receiving services from re-lated par-ties | Value-added OA services | Market price | Market price | 46 | 0.00% | 40 | Yes | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinochem Information Technology Co., Ltd | Under the same control of Sinochem Holdings | Receiving services from re-lated par-ties | IT services | Market price | Market price | 38 | 0.00% | 35 | Yes | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| Syngenta AG and its sub-sidiaries | Under the same control of Sinochem Holdings | Receiving services from re-lated par-ties | Regular ser-vices | Market price | Market price | 370 | 0.02% | 52 | Yes | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sino MAP | Under the same control of Sinochem Holdings | Receiving services from re-lated par-ties | Regular ser-vices | - | - | - | - | 40 | No | - | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Bluestar (Beijing) Chemical Machinery Co., Ltd. | Under the same control of Sinochem Holdings | Receiving services from re-lated par-ties | Regular ser-vices | - | - | - | - | 100 | No | - | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Shenyang Chemical Co., Ltd. | Under the same control of Sinochem Holdings | Receiving services from re-lated par-ties | Regular ser-vices | Market price | Market price | 43 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| in 2023 (No.2023-12) | |||||||||||||
| China Bluestar Chengrand Research In-stitute Chem-ical Industry | Under the same control of Sinochem Holdings | Receiving services from re-lated par-ties | Regular ser-vices | Market price | Market price | 1 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Shenyang Shenhua In-stitute Test-ing Technol-ogy Co., Ltd. | Under the same control of Sinochem Holdings | Receiving services from re-lated par-ties | Regular ser-vices | Market price | Market price | 32 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinofert | Under the same control of Sinochem Holdings | Receiving services from re-lated par-ties | Regular ser-vices | Market price | Market price | 1 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Syngenta (China) Investment | Under the same control of Sinochem | Receiving services from | Regular ser-vices | Market price | Market price | 45 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| Company Limited | Holdings | related par-ties | in the Ordinary Course of Business in 2023 (No.2023-12) | ||||||||||
| Sinochem Zhoushan Hazardous Chemicals Emergency Rescue Base Co. Ltd. | Under the same control of Sinochem Holdings | Receiving services from re-lated par-ties | Regular ser-vices | Market price | Market price | 45 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinochem Chemical Science and Technology Research In-stitute Co., LTD | Under the same control of Sinochem Holdings | Receiving services from re-lated par-ties | Regular ser-vices | Market price | Market price | 4 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Zhonglan Lianhai De-sign Institute Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing fixed as-sets from related par-ties | Purchase of fixed assets | Market price | Market price | 93 | 0.01% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Bluestar | Under the | Purchasing | Purchase of | Market | Market | 127 | 0.01% | - | - | Cash | N/A | March | Announcement on |
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| Engineering Co.,Ltd. | same control of Sinochem Holdings | fixed as-sets from related par-ties | fixed assets | price | price | Settlement | 21,2023 | Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) | |||||
| Syngenta AG and its sub-sidiaries | Under the same control of Sinochem Holdings | Purchasing fixed as-sets from related par-ties | Purchase of fixed assets | Market price | Market price | 45 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Syngenta AG and its sub-sidiaries | Under the same control of Sinochem Holdings | Rendering services to related par-ties | Regular ser-vices | Market price | Market price | 72 | 0.00% | - | - | Cash Set-tlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Total | -- | -- | 324,642 | -- | 503,045 | -- | -- | -- | -- | -- | |||
| Details of large sales return | - | ||||||||||||
| Execution of related-party transactions in the ordi-nary course of business whose value was expected by types during this reporting period (if any) | According to the Company's daily business operation needs, the Company estimates that the total amount of daily related party transactions in 2023 will not exceed RMB 5,030.45 million. For details, please refer to Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.: 2023-12). The Company’s ac-tual amount of daily related party transactions defined in the listing rules incurred for the twelve months ended | ||||||||||||
ADAMA Ltd Annual Report 2023
| Related party | Relationship | Type of re-lated party transac-tion | Content of related party trans-action | Pricing principle of re-lated party transac-tion | Price | Value (RMB ‘0000) | Per-cent-age against trans-actions of the same kind | Ap-proved transac-tion quota (RMB ‘0000) | Whether exceeds the ap-proved quota | Settlement methods | Market price of similar transac-tions if the Com-pany knows | Date of an-nounce-ment | Index of the dis-closure |
| December 31,2023 is RMB 3,246.42 million, which does not exceed the expected amount. The gap between the ac-tual amount and the estimations of the related party transactions in the course of routine business in 2023 is due to the related impacts from the changing market conditions and the actual needs fluctuation of the Company. | |||||||||||||
| Reasons for large difference between transaction price and market reference price (if applicable) | The Company’s related transactions with related party shall be carried out in accordance with the principle of volun-tary, equality and mutual benefit, fair, and will not harm the interests of the Company. | ||||||||||||
ADAMA Ltd Annual Report 2023
2. Related-party transactions arising from asset acquisition or sale
□ Applicable √ Not applicable
There were no related-party transactions arising from asset acquisition or sale in the Reporting Period.
3. Related-party transitions with joint investments
□ Applicable √ Not applicable
The Company was not involved in any significant related-party transaction with joint investments during the ReportingPeriod.
4. Credits and liabilities with related parties
√ Applicable □ Not applicable
Whether there was non-operating credit and liability with related parties
□ Yes √ No
The Company was not involved in any non-operating credit and liability with related parties.
5. Transactions with finance companies with related relationships
√ Applicable □ Not applicable
Deposit business
In RMB ’0000
| Related Parties | Relations | Maximum Daily Deposit Limit | Range of Interest Rate | Opening Balance | Transactions during the Reporting Period | Ending Balance | |
| Total Deposit Amount for the Reporting Period | Total Withdrawal Amount for the Reporting Period | ||||||
| Sinochem Finance Co., Ltd | Under the same control of Sinochem Holdings | 150,000 | 0.55%-1.9% | 41,766 | 71,695 | 56,899 | 56,562 |
ADAMA Ltd Annual Report 2023
Loans
In RMB ’0000
| Related Parties | Relations | Size of the Loan | Range of Interest Rate | Opening Balance | Transactions during the Reporting Period | Ending Balance | |
| Total Loan Amount for the Reporting Period | Total Repayment Amount for the Reporting Period | ||||||
| Sinochem Finance Co., Ltd | Under the same control of Sinochem Holdings | 50,000 | 2.7%-3.0% | - | 5,056 | 5,056 | - |
Facilities and Other Financial Services
In RMB ’0000
| Related Party | Relations | Type of the Services | Total Amount | Actual Amount Incurred |
| Sinochem Finance Co., Ltd | Under the same control of Sinochem Holdings | Facilities | 80,000 | 50,000 |
6. Transactions between the finance company controlled by the Company and related parties
□ Applicable √ Not applicable
The company does not hold any equity interest in any finance company.
7. Other material related-party transactions
√ Applicable □ Not applicable
(1) The 2022 Annual General Meeting approved the Proposal on Credit Facilities from the Related Party.
(2) The 1st Interim Shareholders Meeting in 2023 approved the Proposal on Credit Facility from the Related Party.
(3) The 29th Meeting of the 9th Session of the Board of Directors approved the Proposal on Signing of SupplementalAgreement to the Entrusted Operation and Management Agreement on Anhui Petro & Chemical
The website to disclose the interim announcements on significant related-party transactions:
| Name of the interim announcement | Disclosure date of the interim announcement | Website to disclose the interim announcement |
| Announcement on Credit Facility of USD 250 million from a Related Party（Announcement No.2023-6 ） | February 16, 2023 | Juchao website www.cninfo.com.cn |
| Announcement on Expected Related-Party Transactions in the | March 21, 2023 | Juchao website www.cninfo.com.cn |
ADAMA Ltd Annual Report 2023
| Name of the interim announcement | Disclosure date of the interim announcement | Website to disclose the interim announcement |
| Ordinary Course of Business in 2022（Announcement No.2023-12 ） | ||
| Announcement on Credit Facility from the Related Party（Announcement No.2023-29 ） | August 31, 2023 | Juchao website www.cninfo.com.cn |
| Announcement of the Resolutions of the 29th Meeting of the 9th Session of the Board of Directors（Announcement No.2023-46 ） | December 30, 2023 | Juchao website www.cninfo.com.cn |
XV. 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
√ Applicable □ Not applicable
(1) Guarantees
Unless otherwise specified, the unit hereunder is RMB ‘0000
| Guarantees provided by the Company in favor of third parties (excluding subsidiaries) | ||||||||||
| Guaranteed party | Disclosure date of the announcement | Planned guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter-guarantee (if any) | Period of guarantee | expired or not | Guarantee for a related party or not |
| -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
ADAMA Ltd Annual Report 2023
| Total guarantee line approved in favor of third parties (excluding subsidiaries) during the reporting period (A1) | -- | Total amount of the occurred guarantee in favor of third parties (excluding subsidiaries) during the reporting period (A2) | -- | ||||||||
| Aggregated guarantee line in favor of third parties (excluding subsidiaries) that has been approved by the end of the reporting period (A3) | 5,000 | Total guarantee balance in favor of third parties (excluding subsidiaries) by the end of the reporting period (A4) | -- | ||||||||
| Guarantees provided by the Company in favor of its subsidiaries | |||||||||||
| Guaranteed party | Disclosure date of the announcement | Planned guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter-guarantee (if any) | Period of guarantee | expired or not | Guarantee for a related party or not | |
| ADAMA Anpon (Jiangsu) Ltd. | December 22, 2020 April 29, 2021 October 28, 2021 | 125,800 | December 1, 2021 | 3,600 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |
| December 1, 2021 | 200 | Joint liability and several liability | -- | -- | Three years after the project loan matures | Yes | No | ||||
| December 1, 2021 | 200 | Joint liability and several liability | -- | -- | Three years after the project loan matures | Yes | No | ||||
| January 1, 2022 | 3,500 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | ||||
| February 28, 2022 | 2,100 | Joint liability | -- | -- | Three years after | No | No | ||||
ADAMA Ltd Annual Report 2023
| and several liability | the project loan matures | |||||||||
| April 28, 2022 | 1,400 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| May 20, 2022 | 750 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| June 26, 2022 | 2,350 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| January 18, 2022 | 4,000 | Joint liability and several liability | -- | -- | Three years after the loan matures | Yes | No | |||
| January 25, 2022 | 400 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| February 28, 2022 | 390 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| July 2, 2022 | 810 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| March 30, 2022 | 3,000 | Joint liability and several | -- | -- | Three years after the loan matures | Yes | No |
ADAMA Ltd Annual Report 2023
| liability | ||||||||||
| August 11, 2022 | 1,000 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| August 31, 2022 | 1,000 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| October 28, 2022 | 1,100 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| October 31, 2022 | 1,000 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| ADAMA Anpon (Jiangsu) Ltd. | March 31, 2022 | 104,100 | November 17, 2022 | 2,000 | Joint liability and several liability | -- | -- | Three years after the loan matures | No | No |
| November 23, 2022 | 2,500 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| November 30, 2022 | 1,100 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| December 17, 2022 | 2,000 | Joint liability and several liability | -- | -- | Three years after the loan matures | Yes | No |
ADAMA Ltd Annual Report 2023
| January 12, 2023 | 1,000 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| January 16, 2023 | 1,000 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| April 4, 2023 | 1,200 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| April 4, 2023 | 1,400 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| April 13, 2023 | 200 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| April 13, 2023 | 240 | Joint liability and several liability | -- | -- | Three years after the project loan matures | Yes | No | |||
| April 26, 2023 | 200 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| October 17, 2023 | 300 | Joint liability and several liability | -- | -- | Three years after the project loan matures | No | No | |||
| October 17, 2023 | 500 | Joint liability | -- | -- | Three years after | No | No |
ADAMA Ltd Annual Report 2023
| and several liability | the loan matures | ||||||||||
| ADAMA Anpon (Jiangsu) Ltd. | April 25, 2023 | 114,000 | August 10, 2023 | 4,000 | Joint liability and several liability | -- | -- | Three years after the loan matures | No | No | |
| Total guarantee line approved in favor of the subsidiaries during the reporting period (B1) | 114,000 | Total amount of the occurred guarantee in favor of the subsidiaries during the reporting period (B2) | 10,040 | ||||||||
| Aggregated guarantee line that has been approved in favor of the subsidiaries by the end of the reporting period (B3) | 343,900 | Total guarantee balance in favor of the subsidiaries by the end of the reporting period (B4) | 34,800 | ||||||||
| Guarantees provided by subsidiaries in favor of subsidiaries (USD ’0000) | |||||||||||
| Guaranteed party | Disclosure date of the announcement | Planned guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter-guarantee (if any) | Period of guarantee | expired or not | Guarantee for a related party or not | |
| Control Solutions, Inc. | October 31, 2018 | 1,300 | October 30, 2018 | 0 | joint and several liability | -- | -- | Generally 7 years (subject to the overseas laws) | No | No | |
| Control Solutions, Inc. | January 10, 2019 | 4,000 | January 9, 2019 | 250 | joint and several liability | -- | -- | The loan term (5 years) and any applicable statute of limitations period (generally 7 years). | No | No | |
ADAMA Ltd Annual Report 2023
| ADAMA Brazil | Not applicable | 22,299.05 | Related guarantees existed before the company was consolidated into the financial statements of the Company. | 1,635.98 | joint and several liability | -- | -- | Valid until cancelled | No | No |
| ADAMA Brazil | January 22, 2022 | 900 | December 29, 2021 | 900 | joint and several liability | -- | -- | December 31, 2025 | No | No |
| Adama India Private Ltd. | Not applicable | 8,870.91 | Related guarantees existed before the company was consolidated into the financial statements of the Company. | 4,589.20 | joint and several liability | -- | -- | Valid until cancelled | No | No |
| ADAMA Turkey Tar?m Sanayi ve Ticaret Limited ?irketi | Not applicable | 7,150 | Related guarantees existed before the company was consolidated into the financial statements of the Company. | 615.62 | joint and several liability | -- | -- | Valid until cancelled | No | No |
| Adama Makhteshim | Not applicable | unlimited | Related guarantees existed before the company was consolidated into the financial statements of | 31,131.40 | joint and several liability | -- | -- | Valid until cancelled | No | No |
ADAMA Ltd Annual Report 2023
| the Company. | ||||||||||
| Adama Makhteshim | April 25, 2023 | 7,875 | May 3, 2023 | 7,500 | joint and several liability | -- | -- | Valid until cancelled | No | No |
| Adama Agan | Not applicable | unlimited | Related guarantees existed before the company was consolidated into the financial statements of the Company. | 22,584.10 | joint and several liability | -- | -- | Valid until cancelled | No | No |
| ADAMA Agricultural Solutions UK Ltd. | January 22, 2022 | 417.87 | January 22, 2022 | 33.84 | joint and several liability | -- | -- | Valid until cancelled | No | No |
| ADAMA CELSIUS BV, Curacao branch, & ADAMA Fahrenheit BV, Curacao Branch | November 25, 2022 | 4,500 | November 24, 2022 | 0 | joint and several liability | -- | -- | Valid until cancelled | No | No |
| ADAMA CELSIUS BV, Curacao branch, & ADAMA Fahrenheit BV, Curacao Branch | January 22, 2022 | 7,000 | January 22, 2022 | 2,307.38 | joint and several liability | / | / | Valid until cancelled | No | No |
| ADAMA Ukraine LLC | Not applicable | 3,000 | Related guarantees | 0 | joint and several | -- | -- | Valid until cancelled | No | No |
ADAMA Ltd Annual Report 2023
| existed before the company was consolidated into the financial statements of the Company. | liability | ||||||||||
| ADAMA Ukraine LLC | October 10, 2023 | 773.92 | October 28, 2023 | 157.97 | joint and several liability | -- | -- | Valid until cancelled | No | No | |
| Makhteshim Agan of North Amercia Inc. | Not applicable | 4,000 | Related guarantees existed before the company was consolidated into the financial statements of the Company. | 200 | joint and several liability | -- | -- | Valid until cancelled | No | No | |
| Total guarantee line approved in favor of the subsidiaries during the reporting period (C1) | 11,648.92 (approximately RMB 813.15million) | Total amount of the guarantee in favor of the subsidiaries occurred during the reporting period (C2) | 71,905.49 (approximately RMB 5,092.85 million) | ||||||||
| Aggregated guarantee line that has been approved in favor of the subsidiaries by the end of the reporting period (C3) | 75,086.75 (approximately RMB 5,318.17million) (As for Adama Makhteshim and Adama Agan, the planned guarantee amount is unlimited) | Total guarantee balance in favor of the subsidiaries by the end of the reporting period (C4) | 71,905.49 (approximately RMB 5,092.85 million) | ||||||||
| Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees) | |||||||||||
| Total guarantee line approved during the reporting period (A1+B1+C1) | 195,314.64 | Total actual occurred amount of guarantee during the reporting period (A2+B2+C2) | 519,325.01 | ||||||||
| Total guarantee line that has been approved at the end of the reporting period (A3+B3+C3) | 880,716.92 | Total actual guarantee balance at the end of the reporting period (A4+B4+C4) | 544,085.01 | ||||||||
ADAMA Ltd Annual Report 2023
| Proportion of total guarantee amount (A4+B4+C4) to the net assets of the Company | 24.82% |
| Of which: | |
| The balance of the guarantee provided in favor of the controlling shareholder and related party. | 0 |
| Amount of debt guarantee provided for the guaranteed party whose asset-liability ratio is not less than 70% directly or indirectly (E) | USD 668.66 million (approximately RMB 4,735.94 million) |
| The amount of the guarantee that exceeds 50% of the net assets | 0 |
| Total amount of the above three guarantees (D+E+F) | USD 668.66 million (approximately RMB 4,735.94 million) |
| As for undue guarantee, liability to guarantee has happened or there is evidence showing that joint liquidated liability may be undertaken during this Reporting Period (if existing) | -- |
| Regulated procedures are violated to offer guarantee (if existing) | -- |
3. Cash assets management entrustment
(1) Wealth management entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Entrustment loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other significant contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
ADAMA Ltd Annual Report 2023
XVI. Other significant events
□ Applicable √ Not applicable
There were no other significant events during the Reporting Period.
XVII. Significant events of subsidiaries
□ Applicable √ Not applicable
ADAMA Ltd Annual Report 2023
Section VII - Change in Shares & ShareholdersI. Changes in shares
1. Change in Shares
Unit: share
| Before the Change | Increase/Decrease (+/-) | After the Change | |||||||
| Amount | Proportion | Newly Issued share | Bonus Shares | Capitalization of Public reserves | Other | Subtotal | Amount | Proportion | |
| I. Restricted shares | 4,500 | 0.0002% | -- | -- | -- | -- | -- | 4,500 | 0.0002% |
| a) State-owned shares | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| b) State-owned legal person’s shares | 0 | 0.0000% | -- | -- | -- | -- | -- | 0 | 0.0000% |
| c) Shares held by domestic investors | 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 domestic natural person | 4,500 | 0.0002% | -- | -- | -- | -- | -- | 4,500 | 0.0002% |
| II. Shares not subject to trading moratorium | 2,329,807,266 | 99.9998% | -- | -- | -- | -- | -- | 2,329,807,266 | 99.9998% |
| a) RMB ordinary shares | 2,177,067,461 | 93.4439% | -- | -- | -- | -- | -- | 2,177,067,461 | 93.4439% |
| b) Domestically listed foreign shares | 152,739,805 | 6.5559% | -- | -- | -- | -- | -- | 152,739,805 | 6.5559% |
| III. Total shares | 2,329,811,766 | 100.00% | -- | -- | -- | -- | -- | 2,329,811,766 | 100.00% |
ADAMA Ltd Annual Report 2023
Reason for the change in shares
□ Applicable √ Not applicable
Approval of the change in shares
□ Applicable √ Not applicable
The registered status for the change in shares
□Applicable √ Not applicable
Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common shareholdersof the Company and other financial indexes over the last year and last period.
□ Applicable √ Not applicable
Other contents that the Company considered necessary or were required by the securities regulatory authorities todisclose
□ Applicable √ Not applicable
ADAMA Ltd Annual Report 2023
2. Changes in restricted shares
√ Applicable □ Not applicable
Unit: share
| Shareholders | Restricted shares at the opening of the Reporting Period | Shares released in the Reporting Period | Restricted shares increased in the Reporting Period | Ending shares restricted | Restricted reasons | Date for released |
| Jiang Chenggang | 4,500 | 0 | 0 | 4,500 | Shares held by a supervisor should be locked up. | six months after the expiration of the term |
| Total | 4,500 | 0 | 0 | 4,500 | -- | -- |
ADAMA Ltd Annual Report 2023
II. Issuance and listing of securities
1. Issuance of securities (excluding preferred stock) during the Reporting Period
□ Applicable √ Not applicable
2. Explanation on changes in share capital & the structure of shareholders, the structure of assetsand liabilities
□ Applicable √ Not applicable
3. Shares held by internal staffs of the Company as a measure of the reform of State-OwnedEnterprises
□ Applicable √ Not applicable
ADAMA Ltd Annual Report 2023
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholding
Unit: share
| Total number of shareholders as of the end of the Reporting Period | 41,388 (the number of ordinary A share shareholders is 28,656; the number of B share shareholders is 12,732) | Total number of shareholders on the 30th trading day before the disclosure date of the annual report | 41,393 | Total number of preferred stockholder with vote right restored (if any) | 0 | Total number of preferred stockholder with vote right restored on the 30th trading day before the disclosure date of the annual report | 0 | |||||||
| Shareholding of shareholders holding more than 5% shares (not including Shares Lent for the Relending Financing) | ||||||||||||||
| Name of shareholder | Nature of shareholder | Holding percentage (%) | Number of shareholding at the end of the Reporting Period | Increase and decrease of shares during Reporting Period | Number of shares held subject to trading moratorium | Number of shares held not subject to trading moratorium | Pledged or frozen shares | |||||||
| Status of shares | Amount | |||||||||||||
| Syngenta Group Co., Ltd. | State-owned legal person | 78.47% | 1,828,137,961 | -- | -- | 1,828,137,961 | -- | -- | ||||||
| China Cinda Asset Management Co., Ltd. | State-owned legal person | 1.34% | 31,115,916 | -- | -- | 31,115,916 | -- | -- | ||||||
| Bosera Funds-China Merchants Bank- Bosera Funds Xincheng No.2 Collective Asset Management Plan | Others | 0.28% | 6,500,000 | -- | -- | 6,500,000 | -- | -- | ||||||
| Hong Kong Securities Clearing Company Ltd. (HKSCC) | Overseas legal person | 0.27% | 6,374,253 | -4,231,827 | - | 6,374,253 | - | - | ||||||
| Wu Feng | Domestic Individual | 0.27% | 6,190,669 | 710,754 | - | 6,190,669 | - | - | ||||||
ADAMA Ltd Annual Report 2023
| Bosera Funds-Postal Savings Bank- Bosera Funds Xincheng No.3 Collective Asset Management Plan | Others | 0.26% | 6,000,000 | -- | -- | 6,000,000 | -- | -- |
| Zhu Shenglan | Domestic Individual | 0.25% | 5,756,000 | 1,766,000 | - | 5,756,000 | - | - |
| China Universal Fund-Industrial Bank-China Universal-Strategic Enhancement No.3 Collective Asset Management Plan | Others | 0.19% | 4,400,000 | - | -- | 4,400,000 | -- | -- |
| Qichun County State-owned Assets Operation Center | State-owned legal person | 0.18% | 4,169,266 | - | - | 4,169,266 | - | - |
| Bosera Funds-Postal Savings Bank- Bosera Funds Xincheng No.4 Collective Asset Management Plan | Others | 0.17% | 4,000,000 | - | - | 4,000,000 | - | - |
| Strategic investors or the general legal person due to the placement of new shares become the top 10 shareholders (if any) | Not applicable | |||||||
| Explanation on associated relationship or/and persons | Syngenta Group Co., Ltd. is not 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. | |||||||
| Description of the above shareholders involved in proxy/trustee voting rights and abstention from voting rights | Not applicable | |||||||
| Special note on the existence of | Not applicable | |||||||
ADAMA Ltd Annual Report 2023
| dedicated accounts for repurchase among the top 10 shareholders (if any) | |||||
| Details of shares held by top 10 shareholders not subject to trading moratorium | |||||
| Name of shareholder | Number of shares held not subject to trading moratorium at the end of the period | Type of share | |||
| Type of share | Amount | ||||
| 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 | ||
| Hong Kong Securities Clearing Company Ltd. (HKSCC) | 6,374,253 | RMB ordinary share | 6,374,253 | ||
| Wu Feng | 6,190,669 | RMB ordinary share | 6,190,669 | ||
| 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 | ||
| China Universal Fund-Industrial Bank-China Universal-Strategic Enhancement No.3 Collective Asset Management Plan | 4,400,000 | RMB ordinary share | 4,400,000 | ||
| Qichun County State-owned Assets Operation Center | 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 | ||
| Explanation on associated relationship among the top ten shareholders of tradable share not subject to trading moratorium, as well as among the top ten shareholders of tradable share not subject to trading moratorium and top ten shareholders, or explanation on acting-in-concert | 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. | ||||
| Particular about shareholder participate in the securities lending and borrowing business (if any) | Shareholder Wu Feng held 4,809,943 shares of the Company through a common securities account and 1,380,726 shares of the Company through a credit collateral securities trading account, altogether 6,190,669 shares. Shareholder Zhu Shenglan held 5,756,000 shares of the Company through a credit collateral securities trading account. | ||||
Involvement of Top 10 Shareholders in Lending of Shares in the Relending Financing of Funds and Securities
□ Applicable √ Not Applicable
Change of the Top 10 Shareholders from the Previous Reporting Period
√ Applicable □ Not Applicable
ADAMA Ltd Annual Report 2023
| Change of the Top 10 Shareholders from the Previous Reporting Period | |||||
| Full Name of the Shareholder | Addition or With-drawal Shares during the Re-porting Period | Shares Lent for the Relending Financing at the Ending Period and Amount not yet Returned | Shares in General Shareholders’ Accounts, Credit Ac-counts and Lent for the Relending Financing at the End-ing Period and Amount not yet Returned | ||
| Total | Proportion of the Total Eq-uity | Total | Proportion of the Total Eq-uity | ||
| Zhu Shenglan | Addition | 0 | 0 | 5,756,000 | 0.25% |
| Qichun County State-owned Assets Operation Center | Addition | 0 | 0 | 4,169,266 | 0.18% |
| Bosera Funds-Postal Savings Bank- Bosera Funds Xincheng No.4 Collective Asset Management Plan | Addition | 0 | 0 | 4,000,000 | 0.17% |
| Wang Xiuqin | Withdrawal | 0 | 0 | 3,181,579 | 0.14% |
| Portfolio No.503 of National Social Security Fund | Withdrawal | 0 | 0 | 0 | 0 |
| CITIC Securities - Huarong Ruitong Equity Investment Management Co., Ltd. - CITIC Securities - Changfeng Single Asset Management Plan | Withdrawal | 0 | 0 | 0 | 0 |
Did any top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company carry out an agreed buy-back in the ReportingPeriod?
□ Yes √ No
The top 10 common shareholders or the top 10 common shareholders of the Company were not subject to trading moratorium of the Company carry out an agreedbuy-back in the reporting period.
ADAMA Ltd Annual Report 2023
2. Particulars about the controlling shareholder
Nature of controlling shareholder: The central state-ownedType of controlling shareholder: legal person
| Name of controlling shareholder | Legal representative / company principal | Date of establishment | Organization code | Business scope |
| Syngenta Group Co., Ltd. | Li Fanrong | June 27, 2019 | 91310000MA1FL6MN13 | General projects: agricultural scientific research and experimental development; Engineering and technical research and experimental development; Natural science research and experimental development; Research and development of biopesticide technology; Smart Agriculture Management; Agricultural specialty and auxiliary activities; Information technology consulting services; Technical services, technical development, technical consultation, technical exchange, technology transfer and technology promotion; Research and development of biochemical product technology; Sales of chemical products (excluding licensed chemical products); Fertilizer sales; General cargo warehousing services (excluding hazardous chemicals and other items requiring license); Low temperature storage (excluding hazardous chemicals and other items requiring license); Socio economic advisory services; Import and export of goods; Technology import and export, Crop seed business (limited to packed seeds without further repackaging; seed production for non-major crops. (except for the projects that must be approved according to law, business activities shall be carried out independently and legally according to the business license). Licensed projects: seed production of main crops; Crop seed business; Genetically modified crop seed production, agro-chemical production, agro-chemical wholesale, crop seed import and export. (for projects that must be approved according to law, business activities shall be carried out only with the approval of relevant departments. The specific business projects shall be subject to the approval documents or licenses of relevant departments). |
| Shares held by the controlling shareholder in other listed companies by holding or shareholding during the | By the end of the Reporting Period, Syngenta Group directly holds 35.86% equity of Jiangsu Yangnong Chemical Co., Ltd., and indirectly holds 52.65% equity of SinoFert Holdings Limited through Syngenta Group (HK) Holdings | |||
ADAMA Ltd Annual Report 2023
| Reporting Period | Company Limited and 20.51% equity of Win-All High-tech Seed Co., Ltd. through China National Seed Group Co., Ltd. |
Change of the controlling shareholder during the Reporting Period
□ Applicable √ Not applicable
The controlling shareholder did not change during the Reporting Period.
3. Particulars regarding actual controller and the persons acting in concert
Nature of actual controller: State-owned Assets Supervision and Administration CommissionType of actual controller: Legal person
| Name of the actual controller | Legal representative / company principal | Date of establishment | Organization code | Business scope |
| State-owned Assets Supervision and Administration Commission of the State Council | Zhang Yuzhuo | March 16, 2003 | - | - |
| Shares held by the actual controller in other listed companies by holding or shareholding during the reporting period | Not applicable | |||
Change of the actual controller during the Reporting Period
□ Applicable √ Not applicable
The actual controller did not change during the Reporting Period.Block diagram of equity and control relationship between the Company and actual controller:
ADAMA Ltd Annual Report 2023
The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Not applicable
4. The controlling shareholder or the largest shareholder of the Company and its concert partieshave pledged 80% of their shares in the Company
□ Applicable √ Not applicable
5. Particulars regarding other corporate shareholders with over 10% holdings
□ Applicable √ Not applicable
6. Particulars regarding restriction of reducing holding-shares of controlling shareholders, actualcontroller, restructuring parties and other commitment entities
□ Applicable √ Not applicable
IV. Specific implementation of share repurchases during the reporting periodProgress of share repurchase
□ Applicable √ Not applicable
Status of reducing holding of repurchased shares in the way of centralized bidding
□ Applicable √ Not applicable
ADAMA Ltd Annual Report 2023
Section VIII - Preferred stock
□ Applicable √ Not applicable
There was no preferred stock during Reporting Period.
ADAMA Ltd Annual Report 2023
Section IX - Corporate Bonds
□ Applicable √ Not applicable
ADAMA Ltd Annual Report 2023
Section X - Financial Report
| Type of auditor’s opinion | Standard Unqualified Opinion |
| Audit opinion signoff date | March 25, 2024 |
| Name of the auditor | Deloitte Touche Tohmatsu CPA LLP |
| Reference number of the audit report | De Shi Bao (Shen) Zi (24) No. P02683 |
| Name of CPA | Ji Yuting and Zhao Jingyuan |
ADAMA Ltd. Annual Report 2023
AUDITOR'S REPORT
De Shi Bao (Shen) Zi (24) No.P02683
(Page 1 of 6)
To the shareholders of ADAMA Ltd.:
I. Opinion
We have audited the financial statements of ADAMA Ltd. (hereinafter referred to as the "Company"), which comprisethe consolidated and the Company's balance sheets as at 31 December 2023, and the consolidated and the Company'sincome statements, the consolidated and the Company's statements of changes in shareholders' equity and the consol-idated and the Company's statements of cash flows for the year then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and theCompany's financial position as of 31 December 2023, and the consolidated and the Company's results of operationsand cash flows for the year then ended in accordance with Accounting Standards for Business Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities under those standardsare further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics for Chinese Certified Public Accountants(the "Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of thefinancial statements for the current year. These matters were addressed in the context of our audit of the financialstatements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.The followings are key audit matters that we have determined to communicate in the auditor's report.
ADAMA Ltd. Annual Report 2023
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III. Key Audit Matters - continued
(I) Cut-off of revenue recognition
Description
ADAMA's sale revenue is mainly contributed by the sales of goods in over 100 countries all over the world. As statedin Note (V), 42 operating income, ADAMA's consolidated principal activities revenue for 2023 was RMB32,779,456,000, which was significant to the financial statements. As stated in Note (III), 26, ADAMA recognizesrevenue when the customer obtains control over relevant commodities, and the Company has a risk of overstating therevenue by late cutoffs. Therefore, we considered the appropriateness of cutoffs and correctness of accounting periodsfor principal activities revenue recognition as a key audit matter.
Audit response
Our procedures in relation to this matter mainly include:
1. Testing and assessing the design, implementation and operating effectiveness of internal controls relating to the
cut-off of principal activities revenue recognition;
2. Reviewing the contracts with key customers for the terms and conditions relating to the transfer of controls of
goods and services, and assessing whether the timing of principal activities revenue recognition complies with theAccounting Standards for Business Enterprises;
3. Performing cut-off test by selecting samples from sales of goods recorded in the current year, checking the sup-
porting documents such as sales invoices and inventory transfer documents, and checking whether the income isrecorded in the correct accounting period;
4. Performing analytic procedures and comparing whether there is abnormal fluctuation in the sales of the majorsales regions in the current period and the previous period, and analyzing whether there is any abnormality in thesales return of the products.
ADAMA Ltd. Annual Report 2023
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De Shi Bao (Shen) Zi (24) No.P02683
(Page 3 of 6)
III. Key Audit Matters - continued
(II) Provision for Impairment of Goodwill on Crop Protection Units
Description
As stated in Note (V), 18, the carrying amount of goodwill was RMB5,001,538,000 as of 31 December 2023, out ofwhich RMB4,931,000,000 was allocated to Crop Protection unit. As disclosed in Note III, 20 and 21, ADAMA’sgoodwill arising from business combination is measured at the cost less the accumulated impairment loss after initialrecognition, and should be entitled to impairment test at least at the end of each year. When performing impairmenttest of Crop Protection unit with goodwill allocated, the management determined the recoverable amount of relevantassets group of units based on the model of present value determined on future cash flows, which depend on thejudgement of the management, it requires the management to estimate the cash flows from relevant assets group ofunits and select an appropriate discount rate that reflects the time value of money in the current market and the specificrisk of the assets. As significant accounting estimates and judgments are involved and the goodwill allocated to CropProtection unit is significant in amount, we considered the provision for impairment of goodwill on Crop Protectionunit as a key audit matter.
Audit response
Our procedures in relation to this matter mainly include:
1. Testing and assessing the design, implementation and operating effectiveness of internal controls relating to theprovision for impairment of goodwill on Crop Protection unit;
2. Checking the basis on which the management allocated goodwill to Crop Protection unit and assessing the rea-sonableness;
3. Compare the key assumptions used in estimating future cash flows with ADAMA's historical data, approved fi-nancial budgets and operating plans, and evaluate the reasonableness of the key assumptions used by managementin preparing future cash flows, including expected revenue growth rate and gross profit margin;
4. Analyzing and reviewing the significant accounting estimates and judgements used in estimation of future cashflows, including the key parameters such as discount rate and growth rate, etc., with assistance from internalvaluation specialist;
5. Checking the expected future cash flows to historical data and other supporting evidence, and assess the reasona-bleness;
6. Performing sensitivity analysis on possible changes in relevant key assumptions in impairment test models.
ADAMA Ltd. Annual Report 2023
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De Shi Bao (Shen) Zi (24) No.P02683
(Page 4 of 6)
IV. Other Information
Management of the Company is responsible for the other information. The other information comprises the infor-mation included in the 2023 annual report, but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form ofassurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, indoing so, consider whether the other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information;we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of Management and Those Charged with Governance for the Financial Statements
The management of the Company is responsible for the preparation and fair presentation of the financial statementsin accordance with Accounting Standards for Business Enterprises, and designing, implementing and maintaininginternal control that is necessary to enable the financial statements that are free from material misstatement, whetherdue to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as agoing concern, disclosing, as applicable, matters related to going concern and using the going concern basis of ac-counting unless management either intends to liquidate the Company or to ceases operations, or has no realistic alter-native but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Rea-sonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ChinaStandards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if, individually or in the aggregate, they could reasonably be expected to influencethe economic decisions of users taken on the basis of these financial statements.
ADAMA Ltd. Annual Report 2023
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De Shi Bao (Shen) Zi (24) No.P02683
(Page 5 of 6)
VI. Auditor's Responsibilities for the Audit of the Financial Statements - continued
As part of an audit in accordance with China Standards on Auditing, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control;
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are ap-propriate in the circumstances;
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by the management;
(4) Conclude on the appropriateness of the management' use of the going concern basis of accounting and, based onthe audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncer-tainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financialstatements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However, future events or conditions may cause theCompany to cease to continue as a going concern;
(5) Evaluate the overall presentation (including the disclosures), structure and content of the financial statements, andwhether the financial statements represent the underlying transactions and events in a manner that achieves fairpresentation;
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activi-ties within the Company to express an opinion on the financial statements. We are responsible for the direction,supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timingof the audit and significant audit findings, including any significant deficiencies in internal control that we identifyduring our audit.
ADAMA Ltd. Annual Report 2023
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (24) No.P02683
(Page 6 of 6)
VI. Auditor's Responsibilities for the Audit of the Financial Statements - continued
We also provide those charged with governance with a statement that we have complied with relevant ethical require-ments regarding independence, and to communicate with them all relationships and other matters that may reasonablybe thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of mostsignificance in the audit of the financial statements of the current year and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant
Shanghai China Ji Yuting(Engagement Partner)
Chinese Certified Public AccountantZhao Jingyuan
25 March 2024
This independent auditor's report of the financial statements and the accompanying financial statements are Englishtranslations of the independent auditor's report and the financial statements prepared under accounting principlesand practices generally accepted in the People's Republic of China. These financial statements are not intended topresent the balance sheet and results of operations and cash flows in accordance with accounting principles andpractices generally accepted in other countries and jurisdictions. In case the English version does not conform to theChinese version, the Chinese version prevails
ADAMA Ltd. Annual Report 2023
(Expressed in RMB '000)Consolidated Balance Sheet
| December 31 | December 31 | ||||
| Notes | 2023 | 2022 | |||
| Current assets | |||||
| Cash at bank and on hand | V.1 | 4,881,328 | 4,290,961 | ||
| Financial assets held for trading | V.2 | 1,912 | 1,685 | ||
| Derivative financial assets | V.3 | 850,137 | 233,809 | ||
| Bills receivable | V.4 | 86,303 | 112,297 | ||
| Accounts receivable | V.5 | 8,146,677 | 9,018,375 | ||
| Receivables financing | V.6 | 123,050 | 63,639 | ||
| Prepayments | V.7 | 305,883 | 341,102 | ||
| Other receivables | V.8 | 1,054,302 | 1,021,824 | ||
| Inventories | V.9 | 13,088,757 | 16,927,241 | ||
| Other current assets | V.10 | 1,083,714 | 1,129,688 | ||
| Total current assets | 29,622,630 | 33,140,621 | |||
| Non-current assets | |||||
| Long-term receivables | V.11 | 68,752 | 82,510 | ||
| Long-term equity investments | V.12 | 31,474 | 26,368 | ||
| Other equity investments | V.13 | 132,018 | 158,341 | ||
| Investment properties | 22,145 | 3,168 | |||
| Fixed assets | V.14 | 10,040,113 | 8,952,184 | ||
| Construction in progress | V.15 | 2,507,328 | 2,961,401 | ||
| Right-of-use assets | V.16 | 625,235 | 555,889 | ||
| Intangible assets | V.17 | 5,318,281 | 5,342,754 | ||
| Goodwill | V.18 | 5,001,538 | 4,805,157 | ||
| Deferred tax assets | V.19 | 1,601,641 | 1,347,263 | ||
| Other non-current assets | V.20 | 5435,21 | 604,833 | ||
| Total non-current assets | 25,783,407 | 24,839,868 | |||
| Total assets | 55,405,803 | 57,980,489 | |||
ADAMA Ltd. Annual Report 2023
(Expressed in RMB '000)Consolidated Balance Sheet (continued)
| December 31 | December 31 | ||
| Notes | 2023 | 2022 | |
| Current liabilities | |||
| Short-term loans | V.21 | 5,733,522 | 3,342,921 |
| Derivative financial liabilities | V.22 | 607,787 | 545,516 |
| Bills payable | V.23 | 613,507 | 1,114,775 |
| Accounts payable | V.24 | 4,649,733 | 7,527,269 |
| Contract liabilities | V.25 | 1,514,365 | 1,776,573 |
| Employee benefits payable | V.26 | 847,039 | 1,370,786 |
| Taxes payable | V.27 | 407,230 | 459,574 |
| Other payables | V.28 | 1,469,319 | 1,611,282 |
| Non-current liabilities due within one year | V.29 | 2,297,888 | 2,262,131 |
| Other current liabilities | V.30 | 753,827 | 703,794 |
| Total current liabilities | 18,894,217 | 20,714,621 | |
| Non-current liabilities | |||
| Long-term loans | V.31 | 2,885,939 | 3,662,870 |
| Debentures payable | V.32 | 6,919,423 | 7,353,511 |
| Lease liabilities | V.33 | 495,459 | 431,076 |
| Long-term payables | 97,840 | 107,686 | |
| Long-term employee benefits payable | V.34 | 671,530 | 792,153 |
| Provisions | V.35 | 299,251 | 222,181 |
| Deferred tax liabilities | V.19 | 297,103 | 315,861 |
| Other non-current liabilities | V.36 | 2,920,566 | 1,255,875 |
| Total non-current liabilities | 14,587,111 | 14,141,213 | |
| Total liabilities | 33,481,328 | 34,855,834 | |
| Shareholders' equity | |||
| Share capital | V.37 | 2,329,812 | 2,329,812 |
| Capital reserve | V.38 | 12,950,464 | 12,986,333 |
| Less: Treasury shares | - | - | |
| Other comprehensive income | V.39 | 1,675,896 | 1,080,590 |
| Special reserves | 16,595 | 15,818 | |
| Surplus reserve | V.40 | 273,617 | 242,498 |
| Retained earnings | V.41 | 4,678,091 | 6,469,604 |
| Total equity attributed to the shareholders of the company | 21,924,475 | 23,124,655 | |
| Non-controlling interests | - | - | |
| Total Equity | 21,924,475 | 23,124,655 | |
| Total liabilities and equity | 55,405,803 | 57,980,489 | |
| Steve Hawkins Legal representative | Efrat Nagar Chief Financial Officer |
These financial statements were approved by the Board of Directors of the Company on March 25 2024.
The notes form part of these financial statements.
ADAMA Ltd. Annual Report 2023
(Expressed in RMB '000)Company's Balance Sheet
| December 31 | December 31 | ||
| Notes | 2023 | 2022 | |
| Current assets | |||
| Cash at bank and on hand | XV.1 | 163,646 | 271,080 |
| Accounts receivable | XV.2 | 1,141,839 | 758,462 |
| Receivables financing | XV.3 | 7,929 | 2,596 |
| Prepayments | 10,233 | 7,944 | |
| Other receivables | XV.4 | 11,611 | 11,611 |
| Inventories | 218,984 | 256,001 | |
| Non-current assets due within one year | 125,000 | 125,000 | |
| Other current assets | 7,574 | 2,312 | |
| Total current assets | 1,686,816 | 1,435,006 | |
| Non-current assets | |||
| Long-term equity investments | XV.5 | 17,430,716 | 17,511,352 |
| Other equity investments | 54,299 | 84,720 | |
| Investment properties | 2,619 | 3,168 | |
| Fixed assets | 1,711,062 | 1,822,134 | |
| Construction in progress | 56,791 | 90,074 | |
| Right-of-use assets | 1,877 | 2,842 | |
| Intangible assets | 249,236 | 258,997 | |
| Deferred tax assets | 80,241 | 75,383 | |
| Other non-current assets | 273,783 | 269,574 | |
| Total non-current assets | 19,860,624 | 20,118,244 | |
| Total assets | 21,547,440 | 21,553,250 | |
| Current liabilities | |||
| Short-term loans | 100,000 | 50,000 | |
| Bills payables | 64,588 | 42,451 | |
| Accounts payables | 150,265 | 205,767 | |
| Contract liabilities | 12,190 | 15,116 | |
| Employee benefits payable | 12,091 | 14,699 | |
| Taxes payable | 4,852 | 3,529 | |
| Other payables | 619,857 | 730,901 | |
| Non-current liabilities due within one year | 537,820 | 671,454 | |
| Total current liabilities | 1,501,663 | 1,733,917 | |
| Non-current liabilities | |||
| Long-term loans | 949,017 | 836,795 | |
| Lease liabilities | 885 | 701 | |
| Long-term employee benefits payable | 101,628 | 97,574 | |
| Provisions | 26,116 | 28,516 | |
| Other non-current liabilities | 269,500 | 374,360 | |
| Total non-current liabilities | 1,347,146 | 1,337,946 | |
| Total liabilities | 2,848,809 | 3,071,863 | |
| Shareholders’ equity | |||
| Share capital | V.37 | 2,329,812 | 2,329,812 |
| Capital reserve | 5,523,8811 | 15,523,881 | |
| Other comprehensive income | (1,002) | 30,822 | |
| Special reserves | 17,286 | 16,509 | |
| Surplus reserve | V.40 | 273,617 | 242,498 |
| Retained earnings | 555,037 | 337,865 | |
| Total shareholders’ equity | 18,698,631 | 18,481,387 | |
| Total liabilities and shareholders’ equity | 21,547,440 | 21,553,250 |
ADAMA Ltd. Annual Report 2023
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(Expressed in RMB '000)Consolidated Income Statement
| Year ended December 31 | ||||
| Notes | 2023 | 2022 | ||
| I. Operating income | V.42 | 32,779,456 | 37,381,915 | |
| Less: Cost of sales | V.42 | 25,984,108 | 27,984,966 | |
| Taxes and surcharges | V.43 | 109,010 | 110,414 | |
| Selling and Distribution expenses | V.44 | 4,208,108 | 4,396,279 | |
| General and administrative expenses | V.45 | 1,057,410 | 1,406,828 | |
| Research and Development expenses | V.46 | 482,754 | 577,859 | |
| Financial expenses (incomes) | V.47 | 1,183,118 | 325,796 | |
| Including: Interest expense | 1,144,515 | 777,827 | ||
| Interest income | 368,990 | 180,619 | ||
| Add: Investment income, net | V.48 | 19,078 | 12,683 | |
| Including: Income from investment in associates and joint ventures | 6,336 | 10,358 | ||
| Loss from changes in fair value | V.49 | (650,374) | (1,504,832) | |
| Credit impairment losses | V.50 | (54,453) | (91,667) | |
| Asset impairment losses | V.51 | (549,893) | (325,386) | |
| Gain from disposal of assets | V.52 | 19,679 | 59,596 | |
| II. Operating profit | (1,461,015) | 730,167 | ||
| Add: Non-operating income | 110,046 | 58,395 | ||
| Less: Non-operating expenses | 53,941 | 31,729 | ||
| III. Total profit (loss) | (1,404,910) | 756,833 | ||
| Less: Income tax expenses (income) | V.53 | 200,977 | 147,442 | |
| IV. Net profit (loss) | (1,605,887) | 609,391 | ||
| (1). Classified by nature of operations | (1,605,887) | 609,391 | ||
| (1.1). Continuing operations | ||||
| (2). Classified by ownership | (1,605,887) | 609,391 | ||
| (2.1). Shareholders of the Company | ||||
| (2.2). Non-controlling interests | ||||
| V. Other comprehensive income, net of tax | V. 39 | 595,306 | 1,512,974 | |
| Other comprehensive income (net of tax) attributable to shareholders of the Company | 595,306 | 1,512,974 | ||
| (1) Items that will not be reclassified to profit or loss: | (18,425) | 82,699 | ||
| (1.1) Re-measurement of defined benefit plan liability | 7,432 | 82,699 | ||
| (1.2) Fair Value changes in other equity investment | (25,857) | - | ||
| (2) Items that were or will be reclassified to profit or loss | 613,731 | 1,430,275 | ||
| (2.1) Effective portion of gains or loss of cash flow hedge | 39,730 | (73,324) | ||
| (2.2) Translation differences of foreign financial statements | 574,001 | 1,503,599 | ||
| VI. Total comprehensive income for the period attributable to Shareholders of the Company | (1,010,581) | 2,122,365 | ||
| Total comprehensive income for the period attributable to shareholders of the Company | (1,010,581) | 2,122,365 | ||
| Total comprehensive income for the period attributable to Non-controlling interests | - | |||
| VII. Earnings per share | XIV.2 | |||
| (1) Basic earnings (loss) per share (Yuan/share) | (0.69) | 0.26 | ||
| (2) Diluted earnings per share (Yuan/share) | N/A | N/A | ||
ADAMA Ltd. Annual Report 2023
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(Expressed in RMB '000)
Company's Income Statement
| Year ended December 31 | |||
| Notes | 2023 | 2022 | |
| I. Operating income | XV.6 | 2,008,574 | 2,297,898 |
| Less: Operating costs | XV.6 | 1,678,097 | 1,777,065 |
| Taxes and surcharges | 9,819 | 8,058 | |
| Selling and Distribution expenses | 8,621 | 4,959 | |
| General and administrative expenses | 125,154 | 151,840 | |
| Research and Development expenses | 19,226 | 74,944 | |
| Financial expenses | 35,061 | 45,748 | |
| Including: Interest expense | 48,234 | 51,463 | |
| Interest income | 8,584 | 8,605 | |
| Add: Investment income, net | 29,818 | 13,811 | |
| Gain from changes in fair value (“-” means loss) | 230,135 | (314,670) | |
| Credit impairment reversal (losses) | 655 | (48) | |
| Asset Impairment reversal (losses) | (91,574) | 2,816 | |
| Gain from disposal of assets | 17 | 60,292 | |
| II. Operating Profit | 301,647 | (2,515) | |
| Add: Non-operating income | 10,800 | 13,749 | |
| Less: Non-operating expenses | 1,546 | 2,595 | |
| III. Total profit | 310,901 | 8,639 | |
| Less: Income tax expense (income) | (295) | (14,715) | |
| IV. Net profit (loss) | 311,196 | 23,354 | |
| V. Other comprehensive income, net of tax | (31,824) | 154 |
| (1) Items that will not be reclassified to profit or loss | (31,824) | 154 |
| (1.1) Re-measurement of defined benefit plan liability | (5,967) | 154 |
| (1.2) FV changes in other equity investment | (25,857) | - |
| VI. Total comprehensive income (loss) for the period | 279,372 | 23,508 |
ADAMA Ltd. Annual Report 2023
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(Expressed in RMB '000)
Consolidated Cash Flow Statement
| Year ended December 31 | |||
| Notes | 2023 | 2022 | |
| I. Cash flows from operating activities: | |||
| Cash received from sale of goods and rendering of services | 32,508,956 | 35,470,804 | |
| Refund of taxes and surcharges | 153,866 | 300,092 | |
| Cash received relating to other operating activities | V.56(1) | 690,681 | 804,577 |
| Sub-total of cash inflows from operating activities | 33,353,503 | 36,575,473 | |
| Cash paid for goods and services | 22,723,297 | 27,540,166 | |
| Cash paid to and on behalf of employees | 4,425,057 | 4,087,028 | |
| Payments of taxes and surcharges | 578,482 | 871,493 | |
| Cash paid relating to other operating activities | V.56(2) | 3,008,790 | 3,136,041 |
| Sub-total of cash outflows from operating activities | 30,735,626 | 35,634,728 | |
| Net cash flows from operating activities | V.57(1)a | 2,617,877 | 940,745 |
| II. Cash flows from investing activities: | |||
| Cash received from disposal of investments | 173,990 | 46,366 | |
| Cash received from returns of investments | 4,637 | 3,162 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 39,701 | 84,885 | |
| Cash received relating to other investing activities | V.56(3) | 37,984 | 2,325 |
| Sub-total of cash inflows from investing activities | 256,312 | 136,738 | |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 2,369,778 | 2,667,236 | |
| Cash paid for acquisition of investments | 2,843 | - | |
| Net cash paid to acquire subsidiaries or other business units | 148,460 | - | |
| Cash paid relating to other investing activities | V.56(4) | 123,484 | 129,944 |
| Sub-total of cash outflows from investing activities | 2,644,565 | 2,797,180 | |
| Net cash flows used in investing activities | (2,388,253) | (2,660,442) | |
| III. Cash flows from financing activities: | |||
| Cash received from borrowings | 3,636,887 | 3,782,897 | |
| Cash received from other financing activities | V.56(5) | 3,490,995 | 849,736 |
| Sub-total of cash inflows from financing activities | 7,127,882 | 4,632,633 | |
| Cash repayments of borrowings | 4,175,881 | 2,330,610 | |
| Cash payment for dividends, profit distributions and interest | 1,306,996 | 951,221 | |
| Including: Dividends paid to non-controlling interest | 91,602 | 59,278 | |
| Cash paid relating to other financing activities | V.56(6) | 1,270,723 | 1,406,592 |
| Sub-total of cash outflows from financing activities | 6,753,600 | 4,688,423 | |
| Net cash flow provided by (used in) financing activities | 374,282 | (55,790) | |
| IV. Effects of foreign exchange rate changes on cash and cash equiva-lents | 28,199 | 241,260 | |
| V. Net increase (decrease) in cash and cash equivalents | V.57(1)b | 632,105 | (1,534,227) |
| Add: Cash and cash equivalents at the beginning of the year | 4,225,253 | 5,759,480 | |
| I. VI. Cash and cash equivalents at the end of the period | V.57(2) | 4,857,358 | 4,225,253 |
ADAMA Ltd. Annual Report 2023
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(Expressed in RMB '000)Company's Cash Flow Statement
| Year ended December 31 | |||
| Notes | 2023 | 2022 | |
| I. Cash flows from operating activities: | |||
| Cash received from sale of goods and rendering of services | 1,276,375 | 1,447,293 | |
| Refund of taxes and surcharges | 42,472 | 78,753 | |
| Cash received relating to other operating activities | XV.7(1) | 39,163 | 114,271 |
| Sub-total of cash inflows from operating activities | 1,358,010 | 1,640,317 | |
| Cash paid for goods and services | 1,026,140 | 1,230,277 | |
| Cash paid to and on behalf of employees | 124,860 | 135,760 | |
| Payments of taxes and surcharges | 12,084 | 8,242 | |
| Cash paid relating to other operating activities | XV.7(2) | 156,722 | 124,903 |
| Sub-total of cash outflows from operating activities | 1,319,806 | 1,499,182 | |
| Net cash flows from operating activities | XV.8 | 38,204 | 141,135 |
| II. Cash flows from investing activities: | |||
| Cash received from returns of investments | 29,818 | 13,811 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 17 | 67,065 | |
| Cash received relating to other investing activities | XV.7.(3) | 131,042 | 150,000 |
| Sub-total of cash inflows from investing activities | 160,877 | 230,876 | |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 99,826 | 85,707 | |
| Cash paid for other investing activities | XV.7.(4) | 125,000 | 250,000 |
| Sub-total of cash outflows from investing activities | 224,826 | 335,707 | |
| Net cash flows used in investing activities | (63,949) | (104,831) | |
| III. Cash flows from financing activities: | |||
| Cash received from borrowings | 760,000 | 650,000 | |
| Cash received relating to other financing activities | XV.7.(5) | 15,960 | 24,865 |
| Sub-total of cash inflows from financing activities | 775,960 | 674,865 | |
| Cash repayments of borrowings | 730,046 | 610,046 | |
| Cash payment for dividends, profit distributions or interest | 112,199 | 71,290 | |
| Cash paid relating to other financing activities | XV.7.(6) | 10,297 | 31,491 |
| Sub-total of cash outflows from financing activities | 852,542 | 712,827 | |
| Net cash flow provided by (used in) financing activities | (76,582) | (37,962) | |
| IV. Effects of foreign exchange rate changes on cash and cash equivalents | 1,183 | 554 | |
| V. Net decrease in cash and cash equivalents | (101,144) | (1,104) | |
| Add: Cash and cash equivalents at the beginning of the year | XV.8(2) | 258,330 | 259,434 |
| VI. Cash and cash equivalents at the end of the period | XV.8(2) | 157,186 | 258,330 |
ADAMA Ltd. Annual Report 2023
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(Expressed in RMB '000)Consolidated Statement of Changes in Shareholders’ Equity
For the year ended December 31, 2023
| Share cap-ital | Capital re-serve | Other compre-hensive in-come | Special reserves | Surplus re-serve | Retained earn-ings | Total | Non-controlling interests | Total equity | ||
| I. Balance at January 1, 2023 | 2,329,812 | 12,986,333 | 1,080,590 | 15,818 | 242,498 | 6,469,604 | 23,124,655 | - | 23,124,655 | |
| II. Changes in equity for the period | - | (35,869) | 595,306 | 777 | 31,119 | (1,791,513) | (1,200,180) | - | (1,200,180) | |
| 1. Total comprehensive income (loss) | - | - | 595,306 | - | - | (1,605,887) | (1,010,581) | - | (1,010,581) | |
| 2. Owner’s contributions and reduction | - | (35,869) | - | - | - | - | (35,869) | - | (35,869) | |
| 2.1 Transactions with holders of non controlling interest | - | (35,869) | - | - | - | - | (35,869) | - | (35,869) | |
| 3. Appropriation of profits | - | - | - | - | 31,119 | (185,626) | (154,507) | - | (154,507) | |
| 3.1 Transfer to surplus reserve | - | - | - | - | 31,119 | (31,119) | - | - | ||
| 3.2 Distribution to owners | - | - | - | - | - | (62,905) | (62,905) | - | (62,905) | |
| 3.3 Distribution to non-control-ling interest | - | - | - | - | - | (91,602) | (91,602) | - | (91,602) | |
| 4. Special reserve | - | - | - | 777 | - | - | 777 | - | 777 | |
| 4.1 Transfer to special reserve | - | - | - | 10,021 | - | - | 10,021 | - | 10,021 | |
| 4.2 Amount utilized | - | - | - | (9,244) | - | - | (9,244) | - | (9,244) | |
| III. Balance at December 31, 2023 | 2,329,812 | 12,950,464 | 1,675,896 | 16,595 | 273,617 | 4,678,091 | 21,924,475 | - | 21,924,475 | |
ADAMA Ltd. Annual Report 2023
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(Expressed in RMB '000)Statement of Changes in Shareholders’ Equity
For the year ended December 31, 2022
| Share cap-ital | Capital re-serve | Other compre-hensive in-come | Special reserves | Surplus re-serve | Retained earn-ings | Total | Non-controlling interests | Total equity | ||
| I. Balance at January 1, 2022 | 2,329,812 | 12,977,171 | (432,384) | 19,857 | 240,162 | 5,940,465 | 21,075,083 | - | 21,075,083 | |
| II. Changes in equity for the period | - | 9,162 | 1,512,974 | (4,039) | 2,336 | 529,139 | 2,049,572 | - | 2,049,572 | |
| 1. Total comprehensive income | - | - | 1,512,974 | - | - | 609,391 | 2,122,365 | - | 2,122,365 | |
| 2. Owner’s contributions and reduction | - | 9,162 | - | - | - | - | 9,162 | - | 9,162 | |
| 2.1 Transactions with holders of non controlling interest | - | 9,162 | - | - | - | - | 9,162 | - | 9,162 | |
| 3. Appropriation of profits | - | - | - | - | 2,336 | (80,252) | (77,916) | - | (77,916) | |
| 3.1 Transfer to surplus reserve | - | - | - | - | 2,336 | (2,336) | - | - | - | |
| 3.2 Distribution to owners | - | - | - | - | - | (18,638) | (18,638) | - | (18,638) | |
| 3.3 Distribution to non-control-ling interest | - | - | - | - | - | (59,278) | (59,278) | - | (59,278) | |
| 4. Special reserve | - | - | - | (4,039) | - | - | (4,039) | - | (4,039) | |
| 4.1 Transfer to special reserve | - | - | - | 7,015 | - | - | 7,015 | - | 7,015 | |
| 4.2 Amount utilized | - | - | - | (11,054) | - | - | (11,054) | - | (11,054) | |
| III. Balance at December 31, 2022 | 2,329,812 | 12,986,333 | 1,080,590 | 15,818 | 242,498 | 6,469,604 | 23,124,655 | - | 23,124,655 | |
ADAMA Ltd. Annual Report 2023
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(Expressed in RMB '000)Company's Statement of Changes in Shareholders’ Equity
For the year ended December 31, 2023
| Share capital | Capital re-serve | Other compre-hensive income | Special reserves | Surplus reserve | Retained earnings | Total | |||||
| I. Balance at January 1, 2023 | 2,329,812 | 15,523,881 | 30,822 | 16,509 | 242,498 | 337,865 | 18,481,387 | ||||
| II. Changes in equity for the period | - | - | (31,824) | 777 | 31,119 | 217,172 | 217,244 | ||||
| 1. Total comprehensive income | - | - | (31,824) | - | - | 311,196 | 279,372 | ||||
| 2. Owner’s contributions and reduction | - | - | - | - | - | - | - | ||||
| 2.1 Repurchase of shares | - | - | - | - | - | - | - | ||||
| 2.2 Other | - | - | - | - | - | - | - | ||||
| 3. Appropriation of profits | - | - | - | - | 31,119 | (94,024) | (62,905) | ||||
| 3.1 Appropriations to surplus reserves | - | - | - | - | 31,119 | (31,119) | - | ||||
| 3.2 Transfer to Distribution to shareholders | - | - | - | - | - | (62,905) | (62,905) | ||||
| 4. Special reserve | - | - | - | 777 | - | - | 777 | ||||
| 4.1 Transfer to special reserve | - | - | - | 10,021 | - | - | 10,021 | ||||
| 4.2 Amount utilized | - | - | - | (9,244) | - | - | (9,244) | ||||
| Ⅲ. Balance at December 31, 2023 | 2,329,812 | 15,523,881 | (1,002) | 17,286 | 273,617 | 555,037 | 18,698,631 | ||||
For the year ended December 31, 2022
| Share capital | Capital re-serve | Other compre-hensive income | Special reserves | Surplus reserve | Retained earnings | Total | |
| I. Balance at January 1, 2022 | 2,329,812 | 15,523,881 | 30,668 | 20,548 | 240,162 | 335,485 | 18,480,556 |
| II. Changes in equity for the period | - | - | 154 | (4,039) | 2,336 | 2,380 | 831 |
| 1. Total comprehensive income | - | - | 154 | - | - | 23,354 | 23,508 |
| 2. Owner’s contributions and reduction | - | - | - | - | - | - | - |
| 2.1 Repurchase of shares | - | - | - | - | - | - | - |
| 2.2 Other | - | - | - | - | - | - | - |
| 3. Appropriation of profits | - | - | - | - | 2,336 | (20,974) | (18,638) |
| 3.1 Appropriations to surplus reserves | - | - | - | - | 2,336 | (2,336) | - |
| 3.2 Transfer to Distribution to shareholders | - | - | - | - | - | (18,638) | (18,638) |
| 4. Special reserve | - | - | - | (4,039) | - | - | (4,039) |
| 4.1 Transfer to special reserve | - | - | - | 7,015 | - | - | 7,015 |
| 4.2 Amount utilized | - | - | - | (11,054) | - | - | (11,054) |
| Ⅲ. Balance at December 31, 2022 | 2,329,812 | 15,523,881 | 30,822 | 16,509 | 242,498 | 337,865 | 18,481,387 |
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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”). As of August2021, following the combination between China National Chemical Co., Ltd. (hereinafter - “ChemChina”)and Sinochem Holdings Corporation Ltd. (hereinafter - “Sinochem Holdings”), Syngenta Group, and subse-quently the Company, are ultimately controlled by Sinochem Holdings - parent of both ChemChina andSinochem Group Co., Ltd. (hereinafter “Sinochem Holdings”), subordinated to SASAC.
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 largest subsid-iaries of the Company, refer to Note VII.
The Company’s consolidated financial statements had been approved by the Board of Directors of the Com-pany on March 25, 2024.
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 Regulatory Com-mission (hereinafter "CSRC”) in 2023).
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 cash equiva-lents or fair value of the consideration paid. Liabilities shall be measured at the actual amount of cash orassets received, or the contractual amount in a present obligation, or the prospective amount of cash or cashequivalents 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.
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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 Decemberr 31,2023and have 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 December 31, 2023 and the Com-pany's consolidated operating results, changes in shareholders' equity and cash flows for the six months thenended.
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 functional cur-rency. Functional currencies of overseas subsidiaries are determined on the basis of the principal economicenvironment in which the overseas subsidiaries operate. The functional currency of the overseas subsidiariesis mainly the United States Dollar (hereinafter "USD"). The presentation currency of these financial state-ments is Renminbi.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
5. Criteria of determining material item in the report and its benchmark
| Item | Benchmark for Material Item | |
| Material construction in progress projects | Individual construction in progress project with a budget higher than RMB 100 million |
6. Business combinations
6.1 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. The dif-ference between the carrying amount of the net assets obtained and the carrying amount of the considerationpaid for the combination is adjusted to the share premium in capital reserve. If the share premium is notsufficient to absorb the difference, any excess shall be adjusted against retained earnings. Costs that aredirectly attributable to the combination are charged to profit or loss in the period in which they are incurred.
6.2 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 related man-agement costs that are directly attributable to the combination by the acquirer are charged to profit or loss inthe period in which they are incurred. Direct capital issuance costs incurred in respect of equity instrumentsor liabilities issued pursuant to the business combination should be charged to the respect equity instrumentsor 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 the ac-quiree’s identifiable net assets, the remaining difference is recognized immediately in profit or loss for thecurrent year.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
6. Business combination - (cont’d)
6.2 Business combinations not involving enterprises under common control and goodwill - (cont’d)
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.
7. 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-controlling inter-ests and presented as "non-controlling interests" in the shareholders’ equity in consolidated balance sheet.The portion of net profits or losses of subsidiaries for the period attributable to non-controlling interests ispresented as "non-controlling interests" in consolidated income statement below the "net profit" line item.Total comprehensive income attributable to non-controlling shareholders is presented separately in the con-solidated 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 subsidiary ex-ceeds 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.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
7. Basis for preparation of consolidated financial statements - (cont’d)
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.
A put option issued by the Group to holders of non-controlling interests that is settled in cash or other finan-cial instrument is recognized as a liability at the present value of the exercise price (according to the "antic-ipated acquisition method"). The Group’s share of a subsidiary’s profits includes the share of the holders ofthe 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 anticipated acqui-sition method implementation no value is given to the Call option in the consolidated financial statements.
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 to invest-ment income in the period in which control is lost.
8. Classification and accounting methods of joint arrangement
There are two types of joint arrangements – joint operations and joint ventures. The type of joint arrange-ments is determined based on the rights and obligations of joint operator to the joint arrangements by con-sidering the factors, such as the structure, the legal form of the arrangements, and the contractual terms, etc.A joint operation is a joint arrangement whereby the joint operators have rights to the assets, and obligationsfor the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the joint ven-tures have rights to the net assets of the arrangement.
9. 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)
10. Translation of transactions and financial statements denominated in foreign currencies
10.1 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 are capital-ized 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 be re-classified 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.
10.2 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 the
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Translation of transactions and financial statements denominated in foreign currencies - (cont’d)
10.2 Translation of financial statements denominated in foreign currency - (cont’d)
accumulated translation differences, which are attributable to the owners' equity of the Company and pre-sented under other comprehensive income to profit or loss in the period in which the disposal occurs.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 are reclas-sified to profit or loss.
11. 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 (which is not measured at fair value through profit or loss) transaction coststhat are directly attributable to the acquisition or issue of the financial asset or financial liability. Initialrecognition in trade receivables which do not contain a significant financing component, shall be made ac-cording to their transaction price.
11.1 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”).
11.1.1 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.
11.1.1.1 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)
11. Financial instruments - (cont’d)
11.1 Classification and measurement of financial assets - (cont’d)
11.1.2 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 the finan-cial asset give rise on specified dates to cash flows that are solely payments of principal and interest on theprincipal 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 or reclas-sified. When the financial asset is derecognized the cumulative gain or loss previously recognized in othercomprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
11.1.3 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.
11.1.4 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 the pe-riod in which the Group holds these non-trading investment instruments, the right to receive dividends in theGroup has been established, and the economic benefits related to dividends are likely to flow into the Group,and when the amount of dividends can be reliably measured, the dividend income is recognized in the currentprofit and loss.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Financial instruments - (cont’d)
11.2 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.
11.2.1 Significant increases in credit risk
At each balance sheet date, the Group assesses whether the credit risk on a financial instrument has in-creased 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 sinceinception.(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 technological envi-ronment 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.
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)
11. Financial instruments - (cont’d)
11.2 Impairment of financial assets - (cont’d)
11.2.2 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’s finan-cial difficulty, having granted to the receivable a concession(s) that the lender(s) would not otherwiseconsider;(d) it is becoming probable that the receivable will enter bankruptcy or other financial reorganization;
11.2.3 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 collateral rela-tive 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 difference be-tween: (a) the contractual cash flows that are due to an entity under the contract; and (b) the cash flows thatthe 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 possibleoutcomes;(b) the time value of money; and
(c) reasonable and supportable information that is available without undue cost or effort at the reportingdate about past events, current conditions and forecasts of future economic conditions.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Financial instruments - (cont’d)
11.2 Impairment of financial assets - (cont’d)
11.2.4 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.
11.3 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 transferred to the transferee; or (iii)although the financial asset has been transferred, the Group neither transfers nor retains substantially all therisks 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 contin-uing involvement 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.
11.4 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 as liabil-ities 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)
11. Financial instruments - (cont’d)
11.5 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 is derecog-nized in full or in part, the difference between the carrying amount of the financial liabilities derecognizedand the consideration paid (including transferred non-cash assets or new financial liability) is recognized inprofit or loss for the current period.
11.6 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 29.1).
11.7 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.
11.8 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.
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. 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 and ex-pected future economic conditions. The ratio of the account receivables collective provision for expectedcredit losses in which credit losses has not occurred is between 0%-4.36%.
When credit risk on a receivable has increased significantly since initial recognition, the group records spe-cific provision or collective provision, which is determined for groups of similar assets in countries in whichthere 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 the atten-tion of the Group about loss events such as a significant decline in the solvency of an individual debtor orthe portfolio of debtors, and significant changes in the financial condition that have an adverse effect on thedebtor.
13. Inventories
13.1 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 of con-version and other expenditures incurred in bringing the inventories to their present location and conditionincluding direct labor costs and an appropriate allocation of production overheads.
13.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
13.3 Basis for determining net realizable value of inventories and provision methods for decline in value of in-
ventories
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.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
13. Inventories - (cont’d)
13.3 Basis for determining net realizable value of inventories and provision methods for decline in value of in-
ventories - (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.
13.4 The perpetual inventory system is maintained for stock system.
14. 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 financial state-ments. Investments in associates and joint ventures are accounted for under equity method.
14.1 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 of combi-nation. The difference between initial investment cost and cash paid, non-cash assets transferred and bookvalue of liabilities assumed, is adjusted in capital reserve. If the balance of capital reserve is not sufficient toabsorb 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 involves mul-tiple exchange transactions, the initial investment cost is carried at the aggregate of the carrying amount ofthe 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 equity instru-ments, 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)
14. Long-term equity investments - (cont’d)
14.2 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 appropriate ad-justments to be confirmed with the Group's accounting policies and accounting period. The Group discon-tinues recognizing its share of net losses of the investee after the carrying amount of the long-term equityinvestment together with any long-term interests that in substance form part of its net investment in theinvestee is reduced to zero. If the Group has incurred obligations to assume additional losses of the investee,a provision is recognized according to the expected obligation, and recorded as investment loss for the period.
14.3 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 be con-sidered.
14.4 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 21).
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
14. Long-term equity investments - (cont’d)
14.5 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.
15. 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 leased con-structions, 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.
16. Fixed assets
16.1 Recognition criteria for fixed assets
Fixed assets include land owned by the Group and buildings, machinery and equipment, motor vehicles,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 subsequent expend-itures can be measured reliably. Other subsequent expenditures are recognized in profit or loss in the periodin which they are incurred.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
16. Fixed assets - (cont’d)
16.2 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 an ac-counting 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) | Residual value (%) | Annual deprecia-tion rate (%) |
| Buildings | the straight-line method | 15-50 | 0-4 | 1.9-6.7 |
| Machinery and equipment | the straight-line method | 3-22 | 0-4 | 4.4-33.3 |
| Office and other equipment | the straight-line method | 3-17 | 0-4 | 5.6-33.3 |
| Motor vehicles | the straight-line method | 5-9 | 0-2 | 10.9-20.0 |
Overseas Land owned by the Group is not depreciated.
16.3 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 21).
17. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various construction, instal-lation costs, borrowing costs capitalized and other expenditures incurred until such time as the relevant assetsare completed and ready for its intended use. When the asset concerned is ready for its intended use, the costof 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 21).
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
18. 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 the sus-pension 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.
19. Intangible assets
19.1 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 customer rela-tions. 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.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
19. Intangible assets - (cont’d)
19.1 Valuation methods, useful life, impairment test - (cont’d)
The respective amortization periods for such intangible assets are as follows:
| Item | Amortization period (years) | |
| Land use rights | 49-50 years | |
| Product registration | 8-11 years | |
| Intangible assets on purchase of products | 7-11, 20 years | |
| Marketing rights, tradename and trademarks | 4-10, 30 years | |
| Exclusivity agreement | 21 years | |
| Software | 3-5 years | |
| Customer relations | 5-10, 13 years |
The difference between recoverable amounts of the intangible assets under the carrying amount is referredto as impairment loss (see Note III 21).
19.2 Research and development expenditure
Internal research and development project expenditures were classified into research expenditures and de-velopment 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 reliably meas-ured.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. Those expend-itures capitalized during the development stage are recognized as development costs incurred and will betransferred to intangible asset when the underlying project is ready for an intended use.
20. 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 21). On disposal of an asset group
or a set of asset groups, any attributable goodwill is written offand included in the calculation of the profit or loss on disposal.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
21. Impairment of long-term assets
The Company assesses at each balance sheet date whether there is any indication that the fixed assets, con-struction 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.
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.
22. Contract liabilities
Contract liabilities refer to the Group’s obligation to transfer goods or services to a customer for which theGroup has received consideration from the customer.
23. Employee benefits
23.1 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.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
23. Employee benefits - (cont’d)
23.2 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 for contri-butions 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 defined ben-efit 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 by re-spective employees. Service cost and interest expense on the defined benefit liability are charged to profit orloss and remeasurements of the defined benefit liability are recognized in other comprehensive income.
.332 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 corresponding ex-pense in profit or loss at the earlier of when the Group can no longer withdraw the offer of the terminationbenefit and when it recognises any related restructuring costs.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 corporate de-bentures denominated in the same currency, that have maturity dates approximating the terms of the Group’sobligation.
23.4 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.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
24. 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.
24.1 Cash-settled share-based payment
The cash-settled share-based payment should be measured according to the fair value of the liabilities rec-ognized based on the shares or other equity instrument undertaken by the Company. For cash-settled share-based payment made in return for the rendering of employee services that cannot be exercised until theservices are fully provided during the vesting period or specified performance targets are met, on each bal-ance sheet date within the vesting period, the services acquired in the current period shall, based on the bestestimate of the number of exercisable instruments, be recognized in relevant expenses and the correspondingliabilities 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, the Com-pany should re-measure the fair value of the liabilities and the changes should be included in the currentperiod profit and loss.
25. 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 asset recog-nized 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.
26. 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.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
26. Revenue - (cont’d)
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, is amor-tized in the contract period using effective interest rate. The Group does not adjust the amount of consider-ation for the effects of a significant financing component if the Group expects, at contract inception, that theperiod between when the entity transfers a good to a customer and when the customer pays for that goodwill 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 any ex-pected costs to recover those products.
27. 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 is rec-ognized only when the Group can comply with the conditions attached to the grant and the Group will receivethe 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. A gov-ernment 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
27. Government grants - (cont’d)
Government grants related to the Group’s normal course of business are offset with related costs and ex-penses. Government grants related that are irrelevant with the Groups’s normal course of business are in-cluded in non-operating gains.
28. Current and deferred tax
The income tax expenses include current income tax and deferred income tax.
28.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are meas-ured at the amount expected to be paid (or recovered) according to the requirements of tax laws.
28.2 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.
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 initial recog-nition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a businesscombination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the timeof 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 in sub-sidiaries and associates, and interests in joint ventures, except where the Group is able to control the timingof the reversal of the temporary difference and it is probable that the temporary difference will not reversein 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 comprehensive in-come or shareholders’ equity, and deferred tax recognized on business combinations, all other current in-come tax and deferred tax items are charged to profit or loss in the current period.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Current and deferred tax - (cont’d)
28.2 Deferred tax assets and deferred tax liabilities - (cont’d)
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.
28.3 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 or liabil-ities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on anet basis.
29. Leases
Lease is a contract, that conveys the right to use an asset for a period of time in exchange for consideration.
29.1 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.
29.2 Initial recognition of leased assets and lease liabilities
Upon initial recognition, the Group recognizes a liability at the present value of future lease payments (ex-clude certain variable lease payments, as detailed in Note III 29.4), and concurrently the Group recognizes aright-of-use asset at the same amount, adjusted for any prepaid lease payments paid at the lease date or before,plus initial direct costs incurred in respect of the lease.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
29. Leases - (cont’d)
29.2 Initial recognition of leased assets and lease liabilities - (cont’d)
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.
29.3 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.
29.4 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.
29.5 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.
30. Other significant accounting policies and accounting estimates
30.1 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.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Other significant accounting policies and accounting estimates - (cont’d)
30.1 Hedging - (cont’d)
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 economic relation-
ship;? 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.
Measurement of derivative financial instruments
Derivative financial instruments are recognized initially at fair value; attributable transaction costs are rec-ognized 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.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Other significant accounting policies and accounting estimates - (cont’d)
30.1 Hedging - (cont’d)
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 such deriv-atives are recognized in profit or loss as gain (loss) from changes in fair value.
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.
30.2 Securitization of assets
Details of the securitization of asset agreements and accounting policy are set out in Note V.5 - Accountreceivables.
30.3 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.
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 for seg-ment reporting. Segment accounting policies are consistent with those for the consolidated financial state-ments.
30.4 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.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
31. Changes in significant accounting policies and accounting estimates
31.1 Changes in significant accounting policies
On 30 November 2022, the Ministry of Finance issued "Accounting Standards for Business Enterprises In-terpretation No. 16” (hereinafter referred to as “Interpretation No. 16”) which clarified the following ac-counting treatments:
(1) Deferred tax related to assets and liabilities arising from a single transaction;
(2) The income tax treatment of the dividend paid as the issuer of an equity instrument; and
(3) When an entity changes a cash-settled share-based payment to an equity-settled share-based payment.
According to the Interpretation No.16, the clarification regarding “Deferred tax related to assets and liabili-ties arising from a single transaction” was effective from 1 January 2023. Adoption of the interpretation hasno significant impact on the Group’s financial statements.
31.2 Changes in significant accounting estimates
There are no significant changes in accounting estimates in the reporting period.
32. 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 and ex-penses. 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:
32.1 Expected credit loss of trade receivables
As described in Note III.12, 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 the atten-tion of the Group about loss events such as a significant decline in the solvency of an individual debtor orthe portfolio of debtors, and significant changes in the financial condition that have an adverse effect on thedebtor. If there is objective evidence of a recovery in the value of receivables which can be related objectivelyto an event occurring after the impairment was recognized, the previously recognized impairment loss isreversed .
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
32. Significant accounting estimates and judgments - (cont’d)
32.2 Provision for impairment of inventories
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As described in Note III.13, 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.
32.3 Impairment of assets other than inventories and financial assets
As described in Note III.21, 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.
If it is not practical to estimate the recoverable amount of an individual asset, the recoverable amount of theasset group to which the asset belongs will be estimated. Impairment exists if the carrying amount of an assetor asset group is higher than recoverable amount, the higher of its fair value less costs of disposal and thepresent value of the future cash flows expected to be derived from the asset or asset group. In assessing thepresent value of estimated future cash flows, significant judgements are exercised over the asset’s production,selling price, related operating expenses and discount rate to calculate the present value. All the parametersused for estimation of the recoverable amount are based on reasonable and supportable assumptions.
32.4 Depreciation and amortisation of assets such as fixed assets and intangible assets
As described in Note III.16 and III.19, 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 the de-preciation or amortisation, the rate of depreciation or amortisation is revised prospectively.
32.5 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 total pro-vision for taxes and attribution of income.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
32. Significant accounting estimates and judgments - (cont’d)
32.5 Income taxes and deferred income tax - (cont’d)
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.
32.6 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.
32.7 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.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
32. Significant accounting estimates and judgments - (cont’d)
32.8 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.
IV. Taxation
1. Main types of taxes and corresponding tax rates
The income tax rate in China is 25% (2022: 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 | 2023 | ||
| ADAMA agriculture solutions Ltd. | Israel | 23.0% | ||
| ADAMA Makhteshim Ltd. | Israel | 7.5% | ||
| ADAMA Agan Ltd. | Israel | 16.0% | ||
| ADAMA Brasil S/A | Brazil | 34.0% | ||
| Makhteshim Agan of North America Inc. | U.S. | 24.3% | ||
| ADAMA India Private Ltd | India | 25.2% | ||
| ADAMA Deutschland GmbH | Germany | 32.5% | ||
| Control Solutions Inc. | U.S. | 26.0% | ||
| Adama Australia Pty Ltd | Australia | 30.0% | ||
| ADAMA Northern Europe B.V. | Netherlands | 25.8% | ||
| ADAMA Italia SRL | Italy | 27.9% | ||
| Alligare LLC | U.S. | 26.1% |
The VAT rate of the Group's subsidiaries is in the range between 2.5% to 27%.
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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 and Hubei Provincial Office of theState Administration of Taxation. The applicable income tax rate for 2023 and 2022 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 and JiangsuProvincial Office of the State Administration of Taxation. The applicable income tax rate for 2023 and 2022is 15%.
(2) Benefits In Israel under the Law for the Encouragement of Capital Investments
The Israeli enterprises are entitled to tax benefits under the Israeli Law for the Encouragement of CapitalInvestments, 1959. The Israeli enterprises have retained earnings that have been generated under the statusof “Approved Enterprise” or “Beneficiary Enterprise”. In the event that a dividend is distributed from theseretained earnings, such dividend may be liable to tax at the time of distribution.
(3) Amendment to the Law for the Encouragement of Capital Investments, 1959
Since 2013 the Israeli enterprises are taxed under the "Preferred Enterprise" regime. The benefits include agrants track for enterprises located on Area A. Tax rates on preferred income as from 2017 tax year are asfollows: 7.5% for Development Area A and 16% for the rest of the country. The amendment further deter-mined that no tax shall apply to dividend distributed out of preferred income to Israel resident companyshareholder.
On December 21, 2016 the Israel legislature 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 is ef-fective 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. Regulations that provide a nexus formula for allocating eligible profitsgovern these regimes.
Income of a Preferred Technological Enterprise a Special Preferred Technological Enterprise will be subjectto a reduced corporate tax rate of 6% regardless of the development area in which the enterprise is located.
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IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(3) Amendment to the law for the encouragement of Capital Investments, 1959 - (cont’d)
On November 15, 2021 the Economic Efficiency Law (Legislative Amendments for the 2021 and 2022Budget Years) – 2021 was published as well as a Temporary Order to the Law for the Encouragement ofCapital Investments – 1959 (hereinafter: “the temporary order”), which offers a reduced tax rate arrangementto companies that received an exemption from corporate tax under the aforesaid law. The temporary orderprovided that companies that choose to apply the temporary order, which is effective until November 14,2022, will be entitled to a reduced tax rate on the “release” of exempt profits (hereinafter: “the beneficiarycorporate tax rate”). The release of exempt profits makes it possible to distribute them at a reduced rate ofcorporate tax at the company level based on the rate of the profits being distributed pursuant to the condi-tions set forth in the Amendment.
During 2022, Solutions announced its choice to release the retained earnings in a number of subsidiaries andcommitted to pay a reduced corporate tax in the amount of approximately 101 million RMB, which wasrecorded as tax expenses in the financial statements of 2022.
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V. Notes to the consolidated financial statements
1. Cash at Bank and On Hand
| December 31 | December 31 | ||
| 2023 | 2022 | ||
| Cash on hand | 820 | 785 | |
| Deposits in banks | 4,856,538 | 4,224,468 | |
| Other cash and bank balances | 23,970 | 65,708 | |
| 4,881,328 | 4,290,961 | ||
| Including cash and bank balances placed outside China | 3,916,967 | 3,300,538 | |
As at December 31, 2023 restricted cash and bank balances was 23,970 thousand RMB (as at December 31,2022 65,708 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Financial assets held for trading
| December 31 | December 31 | ||
| 2023 | 2022 | ||
| Bank deposits | 1,912 | 1,685 | |
| 1,912 | 1,685 |
3. Derivative financial assets
| December 31 | December 31 | ||
| 2023 | 2022 | ||
| Economic hedge | 833,400 | 224,128 | |
| Accounting hedge derivatives | 16,737 | 9,681 | |
| 850,137 | 233,809 |
4. Bills Receivable
| December 31 | December 31 | ||
| 2023 | 2022 | ||
| Post-dated checks receivable | 86,303 | 112,297 | |
| 86,303 | 112,297 |
.
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V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable
a. By category
| December 31, 2023 | |||||
| Book value | Provision for expected credit losses | ||||
| Amount | Percentage (%) | Amount | Percentage (%) | Carrying amount | |
| Account receivables assessed individually for impairment | 464,335 | 5 | 280,971 | 61 | 183,364 |
| Account receivables assessed collectively for impairment | 8,068,869 | 95 | 105,556 | 1 | 7,963,313 |
| 8,533,204 | 100 | 386,527 | 5 | 8,146,677 | |
| December 31, 2022 | |||||
| Book value | Provision for expected credit losses | ||||
| Amount | Percentage (%) | Amount | Percentage (%) | Carrying amount | |
| Account receivables assessed individually for impairment | 383,265 | 4 | 212,640 | 55 | 170,625 |
| Account receivables assessed collectively for impairment | 8,945,138 | 96 | 97,388 | 1 | 8,847,750 |
| 9,328,403 | 100 | 310,028 | 3 | 9,018,375 | |
b. Aging analysis
| December 31, 2023 | |
| Within 1 year (inclusive) | 8,067,906 |
| Over 1 year but within 2 years | 189,972 |
| Over 2 years but within 3 years | 65,317 |
| Over 3 years but within 4 years | 18,939 |
| Over 4 years but within 5 years | 55,018 |
| Over 5 years | 136,052 |
| 8,533,204 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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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 geographical loca-tion:
Geographical location A:
Account receivables in geographical location A are grouped based on similar credit risk:
| December 31, 2023 | |||
| Book value | Provision for expected credit loss | Percentage (%) | |
| Credit group A | 1,055,296 | 4,217 | 0.4 |
| Credit group B | 805,354 | 6,970 | 0.9 |
| Credit group C | 307,447 | 13,412 | 4.4 |
| Credit group D | 46,770 | 976 | 2.1 |
| 2,214,867 | 25,575 | 1.2 | |
Geographical location B:
Account receivables in geographical location B are grouped based on aging analysis:
| December 31, 2023 | |||
| Book value | Provision for expected credit loss | Percentage (%) | |
| Accounts receivable that are not overdue | 813,950 | 7,231 | 0.9 |
| Debts overdue less than 60 days | 91,709 | 2,751 | 3.0 |
| Debts overdue less than 180 days but more than 60 days. | 39,557 | 3,956 | 10.0 |
| Debts overdue above 180 days | 21,221 | 8,488 | 40.0 |
| Legal Debtors | 44,144 | 44,144 | 100.0 |
| 1,010,581 | 66,570 | 6.6 | |
Other geographical locations:
| December 31, 2023 | |||
| Book value | Provision for expected credit loss | Percentage (%) | |
| Other account receivables assessed collectively for impairment | 4,843,421 | 13,411 | 0.3 |
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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
| Lifetime expected credit loss (credit losses has not oc-curred) | Lifetime expected credit loss (credit losses has occurred) | Total | |
| January 1, 2023 | 44,012 | 266,016 | 310,028 |
| Addition (write back) during the period, net | 1,029 | 59,346 | 60,375 |
| Write-off during the period | - | 3,345 | 3,345 |
| Exchange rate effect | 1,502 | 11,277 | 12,779 |
| Balance as of December 31, 2023 | 46,543 | 339,984 | 386,527 |
d. Five largest accounts receivable at December 31, 2023:
| Name | Closing balance | Proportion of Accounts receivable (%) | Allowance of expected credit losses (credit losses has occurred) |
| Customer 1 | 148,155 | 1.7 | - |
| Customer 2 | 99,037 | 1.2 | - |
| Customer 3 | 96,941 | 1.1 | - |
| Customer 4 | 96,311 | 1.1 | - |
| Customer 5 | 81,671 | 1.0 | - |
| Total | 522,115 | 6.1 | - |
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 various dif-ferent currencies, to a foreign company that was set up for this purpose and that is not owned by the AdamaLtd. (hereinafter – “the Acquiring Company”). Acquisition of the trade receivables by the Acquiring Com-pany 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 31 Decem-ber 2023, the Securitization agreement was approved up to October 25, 2024.
- 209 -
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 January - 300m$ (as of Dec-2023 2,124 million RMB), during February –350m$ (as of Dec-2023 2,478 million RMB), during the months of March through August – 400m$ (as ofDec-2023 2,832 million RMB), during the months of September through October - 300m$ (as of Dec-20232,124 million RMB) and during the months of November through December – 275m$ (as of Dec-20231,975 million RMB). In addition the company has a permanent uncommitted facility of 50$ million (as ofDecember 31, 2023- 354 million RMB) which will be applicable each period. The proceeds received fromthose customers 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 trade receiv-able and its anticipated repayment date. In the month following acquisition of the debt, the Acquiring Com-pany pays in cash most of the debt while the remainder is recorded as a subordinated note and as continuinginvolvement that is paid after collection of the debt sold. If the customer does not pay its debt on the antici-pated repayment date, the Company bears interest up to the earlier of the date on which the debt is actuallyrepaid or the date on which debt collection is transferred to the insurance company (the actual costs are notsignificant 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 supply agree-ment covering the product, such as: a failure to supply the correct product, a defect in the product, delin-quency 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 trade re-ceivables 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 December 31, 2023, 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 not consoli-dated 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.
A subordinated note is recorded in respect of the portion of trade receivables included in the SecuritizationProgram with respect to outstanding cash proceeds, however the Company has transferred the credit risk.The continuing involvement and subordinated note recorded in the balance sheet as part of the “other receiv-ables” line item.
- 210 -
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”.
f. A subsidiary in Brazil (hereinafter - “the subsidiary”) entered into the following securitization agree-ments:
(1) Since 2016, a securitization transaction with Rabobank Brazil for sale of customer receivables (herein-after "FIDC-Donegal agreement"). Under the FIDC-Donegal agreement, the subsidiary will sell its receiva-bles to a securitization structure (hereinafter - “the entity”) that was formed for this purpose where the sub-sidiary has subordinate rights of 5% of the entity's capital.
As at December 31 2023, the FIDC-Donegal agreement was approved up to September 30, 2024. The max-imum securitization scope as of December 31, 2023 is BRL 385 million (as of December 31, 2023 – 563million RMB).
On the date of the sale of the customer receivables, the entity pays the full amount which is the debt amountsold net of discount calculated, among others, over the expected length of the period between the date of saleof the 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 to 5% of the unpaid amount. The subsidiary has a pledged deposit with regards tothe entity’s right of recourse.
The subsidiary continues to recognize the trade receivables sold to the entity based on the extent of its con-tinuing involvement therein (5% right of recourse) and also recognizes an associated liability in the sameamount.
In "FIDC-Donegal agreement" the subsidiary handles the collection of receivables included in the securiti-zation for the entity.
(2) During 2021, the subsidiary has entered into an additional securitization agreement (hereinafter -“FIDC – Liverpool agreement”) with Itau Bank and Farm investments, for sale of customer receivables to asecuritization structure that was formed for this purpose where the subsidiary has mezzanine quotes of 10.5%of the entity's capital.
As at December 31 2023, the FIDC-Liverpool agreement was approved up to November 10, 2024. Themaximum securitization scope as of December 31, 2023 is BRL 311 million (as of December 31, 2023 – 455million RMB).
The entity bears 100% of the credit risk in respect of the customers whose debts were sold (non-recourse),therefore the subsidiary has no continuing involvement in those account receivables sold.
In "FIDC-Liverpool agreement" the collection of receivables is being handled by the entity.In all the agreements above, the subsidiary does not control the entities and therefore the entities are notconsolidated in the Group's financial statements.
The loss from the sale of the trade receivables is recorded at the time of sale in the statement of income inthe “financing expenses” category.
- 211 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
f. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
| December 31 | December 31 | |
| 2023 | 2022 | |
| Accounts receivables derecognized | 4,039,429 | |
| 3,392,091 | ||
| Continuing involvement | 139,862 | 193,532 |
| Subordinated note in respect of trade receivables | 754,739 | 591,998 |
| Liability in respect of trade receivables | 32,368 | 79,619 |
| Year ended December 31 | ||
| 2023 | 2022 | |
| Loss in respect of sale of trade receivables | 283,076 | 226,575 |
6. Receivables financing
| December 31 | December 31 | |
| 2023 | 2022 | |
| Bank acceptance draft | 123,050 | 63,639 |
| 123,050 | 63,639 |
As at December 31, 2023, bank acceptance endorsed but not yet due amounts to 272,745 thousands RMB.
7. Prepayments
(1) The aging analysis of prepayments is as follows:
| December 31 | December 31 | |||
| 2023 | 2022 | |||
| Amount | Percentage (%) | Amount | Percentage (%) | |
| Within 1 year (inclusive) | 290,540 | 95 | 327,809 | 97 |
| Over 1 year but within 2 years (inclusive) | 11,818 | 4 | 11,047 | 3 |
| Over 2 years but within 3 years (inclusive) | 2,925 | 1 | 1,204 | - |
| Over 3 years | 600 | - | 1,042 | - |
| 305,883 | 100 | 341,102 | 100 | |
(2) Total of five largest prepayments by debtor at the end of the period:
| Amount | Percentage of prepayments (%) | |
| December 31, 2023 | 89,682 | 29 |
- 212 -
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables
(1) Other receivables by nature
| December 31 | December 31 | |
| 2023 | 2022 | |
| Others | 1,054,302 | 1,021,824 |
| 1,054,302 | 1,021,824 |
a. Others breakdown by categories
| December 31 | December 31 | |
| 2023 | 2022 | |
| Subordinated note in respect of trade receivables | 754,739 | 591,998 |
| Trade receivables as part of securitization transactions not yet eliminated | 139,862 | 193,532 |
| Financial institutions | 44,429 | 38,354 |
| Other | 154,080 | 242,688 |
| Sub total | 1,093,110 | 1,066,572 |
| Provision for expected credit losses - other receivables | (38,808) | (44,748) |
| 1,054,302 | 1,021,824 |
b. Other receivables by aging
| December 31 | |
| 2023 | |
| Within 1 year (inclusive) | 1,043,559 |
| Over 1 year but within 2 years | 14,043 |
| Over 2 years but within 3 years | 26,280 |
| Over 3 years but within 4 years | 986 |
| Over 4 years but within 5 years | 1,393 |
| Over 5 years | 6,849 |
| 1,093,110 |
(2) Additions, recovery or reversal and written-off of provision for expected credit losses during the
period:
| Year ended | ||
| December 31, 2023 | ||
| Balance as of January 1 2023, | 44,748 | |
| Addition (written back) during the period | (5,922) | |
| Write-off during the period | - | |
| Exchange rate effect | (18) | |
| Balance as of December 31, 2023 | 38,808 |
- 213 -
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables – (cont'd)
(3) Five largest other receivables at December 31, 2023:
| Name | Closing balance | Proportion of other re-ceivables (%) | Allowance of ex-pected credit losses |
| Party 1 | 754,739 | 69 | - |
| Party 2 | 44,430 | 4 | - |
| Party 3 | 6,991 | 1 | - |
| Party 4 | 3,125 | - | - |
| Party 5 | 3,074 | - | - |
| Total | 812,359 | 74 | - |
9. Inventories -
(1) Inventories by category:
| December 31, 2023 | |||
| Book value | Provision for impair-ment | Carrying amount | |
| Raw materials | 3,062,950 | 20,940 | 3,042,010 |
| Work in progress | 1,834,185 | 6,277 | 1,827,908 |
| Finished goods | 8,089,285 | 368,489 | 7,720,796 |
| Others | 507,676 | 9,633 | 498,043 |
| 13,494,096 | 405,339 | 13,088,757 | |
| December 31, 2022 | |||
| Book value | Provision for impair-ment | Carrying amount | |
| Raw materials | 4,341,176 | 20,939 | 4,320,237 |
| Work in progress | 2,410,883 | 5,952 | 2,404,931 |
| Finished goods | 9,954,831 | 237,337 | 9,717,494 |
| Others | 495,125 | 10,546 | 484,579 |
| 17,202,015 | 274,774 | 16,927,241 | |
- 214 -
V. Notes to the consolidated financial statements – (cont'd)
9. Inventories - (cont'd)
(2) Provision for impairment of inventories:
For the Year ended December 31, 2023
| January 1, 2023 | Provision | Reversal or write-off | Other | December 31, 2023 | |
| Raw material | 20,939 | 11,555 | (12,085) | 531 | 20,940 |
| Work in progress | 5,952 | 8,721 | (8,449) | 53 | 6,277 |
| Finished goods | 237,337 | 526,185 | (402,255) | 7,222 | 368,489 |
| Others | 10,546 | 1,295 | (2,342) | 134 | 9,633 |
| 274,774 | 547,756 | (425,131) | 7,940 | 405,339 |
10. Other Current Assets
| December 31 | December 31 | |
| 2023 | 2022 | |
| Deductible VAT | 667,550 | 679,428 |
| Current tax assets | 210,362 | 219,057 |
| Short term investments | 158,603 | 171,496 |
| Others | 47,199 | 59,707 |
| 1,083,714 | 1,129,688 |
11. Long-Term Receivables
| December 31 | December 31 | |
| 2023 | 2022 | |
| Long term account receivables from sale of goods | 68,752 | 82,510 |
| 68,752 | 82,510 |
- 215 -
V. Notes to the consolidated financial statements – (cont'd)
12. Long-Term Equity Investments
(1) Long-term equity investments by category:
| December 31 | December 31 | ||
| 2023 | 2022 | ||
| Joint venture | 1,437 | 2,110 | |
| Associate | 30,037 | 24,258 | |
| 31,474 | 26,368 | ||
(2) Movements of long-term equity investments for the period are as follows:
| January 1, 2023 | Investment income | Other Compre-hensive income | Declared dis-tribution of cash dividend | Balance at the end of the period | |
| Joint ven-ture | |||||
| Investee A | 2,110 | 176 | 6 | (855) | 1,437 |
| Sub-total | 2,110 | 176 | 6 | (855) | 1,437 |
| Associate | |||||
| Investee B | 24,258 | 6,160 | 2,412 | (2,793) | 30,037 |
| Sub-total | 24,258 | 6,160 | 2,412 | (2,793) | 30,037 |
| Sub-total | 26,368 | 6,336 | 2,418 | (3,648) | 31,474 |
13. Other equity investments
| Dividend received during 2023 | |||
| December 31, 2023 | December 31, 2022 | ||
| Investment A | 54,299 | 84,720 | 2,325 |
| Investment B | 75,905 | 71,840 | 10,417 |
| Investment C | 1,814 | 1,781 | - |
| 132,018 | 158,341 | 12,742 |
Other equity investments are non-core businesses that are intended to be held in the foreseeable future.
- 216 -
V. Notes to the consolidated financial statements – (cont'd)
14. Fixed assets
| Land & Buildings | Machinery & equipment | Motor vehicles | Office & other equipment | Total | |
| Cost | |||||
| Balance as at January 1, 2023 | 4,240,658 | 16,516,306 | 166,587 | 438,542 | 21,362,093 |
| Purchases | 85,685 | 129,330 | 54,999 | 37,357 | 307,371 |
| Transfer from construction in progress | 264,157 | 1,455,337 | 1,835 | 12,166 | 1,733,495 |
| Classification to Investment property | (20,125) | - | - | - | (20,125) |
| Disposals | (8,775) | (60,901) | (31,396) | (9,027) | (110,099) |
| Newly consolidated subsidiaries | - | 3,483 | 270 | 478 | 4,231 |
| Currency translation adjustment | 64,858 | 239,804 | 5,035 | 11,673 | 321,370 |
| Balance as at December 31, 2023 | 4,626,458 | 18,283,359 | 197,330 | 491,189 | 23,598,336 |
| Accumulated depreciation | |||||
| Balance as at January 1, 2023 | (1,791,373) | (9,815,859) | (74,448) | (342,199) | (12,023,879) |
| Charge for the period | (126,163) | (795,596) | (29,909) | (39,362) | (991,030) |
| Classification to Investment property | 2,149 | - | - | - | 2,149 |
| Disposals | 3,785 | 51,689 | 26,150 | 8,827 | 90,451 |
| Newly consolidated subsidiaries | - | (2,348) | (256) | (277) | (2,881) |
| Currency translation adjustment | (33,729) | (148,538) | (2,529) | (9,051) | (193,847) |
| Balance as at December 31, 2023 | (1,945,331) | (10,710,652) | (80,992) | (382,062) | (13,119,037) |
| Provision for impairment | |||||
| Balance as at January 1, 2023 | (132,663) | (251,190) | (1,107) | (1,070) | (386,030) |
| Charge for the period | (8,579) | (50,172) | (35) | (46) | (58,832) |
| Disposals | 2,866 | 3,829 | 390 | 120 | 7,205 |
| Currency translation adjustment | (1,036) | (482) | (5) | (6) | (1,529) |
| Balance as at December 31, 2023 | (139,412) | (298,015) | (757) | (1,002) | (439,186) |
| Carrying amounts | |||||
| As at December 31, 2023 | 2,541,715 | 7,274,692 | 115,581 | 108,125 | 10,040,113 |
| As at January 1, 2023 | 2,316,622 | 6,449,257 | 91,032 | 95,273 | 8,952,184 |
The lands reported as fixed assets are owned by the group subsidiaries and are located outside of China.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 217 -
V. Notes to the consolidated financial statements - (cont'd)
15. Construction in Progress
(1) Construction in progress
| December 31 | December 31 | ||||
| 2023 | 2022 | ||||
| Book value | Provision for im-pairment | Carrying amount | Book value | Provision for im-pairment | Carrying amount |
| 2,829,054 | (321,726) | 2,507,328 | 3,079,882 | (118,481) | 2,961,401 |
(2) Details and Movements of major construction projects in progress during period ended December 31, 2023
| Budget | January 1, 2023 | Additions | Including: Interest capitalized | Currency translation differences | Transfer to fixed assets | Impairment | December 31, 2023 | Actual cost to budget (%) | Project progress (%) | Source of funds | ||||
| Project A | 837,385 | 542,618 | 252,317 | 10,904 | - | (674,178) | - | 120,757 | 97% | 97% | Bank loan | |||
| Project B | 708,072 | 531,817 | 130,084 | 41,732 | 9,765 | - | - | 671,666 | 95% | 95% | Internal finance | |||
| Project C | 381,495 | 333,514 | 34,113 | - | 3,718 | (371,345) | - | - | 100% | 100% | Internal finance | |||
| Project D | 180,674 | 74,523 | 3,519 | - | - | (39,127) | - | 38,915 | 87% | 87% | Internal finance | |||
| Project E | 949,082 | 352,422 | 248,028 | 29,803 | 7,402 | - | - | 607,852 | 64% | 64% | Internal finance | |||
| Project F | - | 212,586 | 319 | - | - | (3,686) | (199,218) | 10,001 | - | - | Internal finance | |||
* As of December 31, 2023 Project A, Project D and Project F are include impairment of RMB 14 million, 35 million and 225 million , respectively.
- 218 -
V. Notes to the consolidated financial statements - (cont'd)
16. Right-of-use assets
| Land & Build-ings | Machinery & equipment | Motor vehicles | Office & other equipment | Total | |
| Cost | |||||
| Balance as at January 1, 2023 | 593,790 | 46,364 | 294,122 | 3,858 | 938,134 |
| Additions | 152,215 | 4,110 | 93,265 | 594 | 250,184 |
| Decrease | (47,835) | (301) | (71,074) | (358) | (119,568) |
| Currency translation adjustment | 28,329 | 844 | 6,283 | 63 | 35,519 |
| Balance as at December 31, 2023 | 726,499 | 51,017 | 322,596 | 4,157 | 1,104,269 |
| Accumulated depreciation | |||||
| Balance as at January 1, 2023 | (221,223) | (23,108) | (136,165) | (1,749) | (382,245) |
| Charge for the period | (96,313) | (6,627) | (94,602) | (725) | (198,267) |
| Decrease | 44,702 | 294 | 66,358 | 137 | 111,491 |
| Currency translation adjustment | (6,258) | (334) | (3,363) | (58) | (10,013) |
| Balance as at December 31, 2023 | (279,092) | (29,775) | (167,772) | (2,395) | (479,034) |
| Provision for impairment | |||||
| Balance as at January 1, 2023 | - | - | - | - | - |
| Balance as at December 31, 2023 | - | - | - | - | - |
| Carrying amounts | |||||
| As at December 31, 2023 | 447,407 | 21,242 | 154,824 | 1,762 | 625,235 |
| As at January 1, 2023 | 372,567 | 23,256 | 157,957 | 2,109 | 555,889 |
- 219 -
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 and exclusivity agreements.
| Product registra-tion | Intangible assets on Purchase of Products | Software | Marketing rights, trade-name and trade-marks | Customers rela-tions | Land use rights (1) | Others(2) | Total | |
| Costs | ||||||||
| Balance as at January 1, 2023 | 12,204,376 | 4,182,457 | 1,216,249 | 794,577 | 578,572 | 510,272 | 588,585 | 20,075,088 |
| Newly consolidated subsidiaries | 6,418 | - | - | 30,070 | 52,182 | - | - | 88,670 |
| Purchases | 539,543 | - | 168,812 | - | - | 517 | 43,391 | 752,263 |
| Currency translation adjustment | 231,021 | 70,917 | 21,139 | 15,735 | 11,569 | 655 | 7,190 | 358,226 |
| Disposal | (21,147) | - | (8,836) | - | - | (4,427) | - | (34,410) |
| Balance as at December 31, 2023 | 12,960,211 | 4,253,374 | 1,397,364 | 840,382 | 642,323 | 507,017 | 639,166 | 21,239,837 |
| Accumulated amortization | ||||||||
| Balance as at January 1, 2023 | (9,525,327) | (3,125,941) | (732,640) | (524,730) | (312,019) | (95,570) | (262,984) | (14,579,211) |
| Charge for the period | (527,003) | (167,213) | (95,765) | (27,808) | (46,106) | (10,340) | (22,483) | (896,718) |
| Currency translation adjustment | (180,329) | (53,994) | (13,503) | (10,168) | (6,903) | (1,684) | (4,383) | (270,964) |
| Disposal | 2,208 | - | 8,815 | - | - | 681 | - | 11,704 |
| Balance as at December 31, 2023 | (10,230,451) | (3,347,148) | (833,093) | (562,706) | (365,028) | (106,913) | (289,850) | (15,735,189) |
| Provision for impairment | ||||||||
| Balance as at January 1, 2023 | (95,951) | (56,601) | (49) | - | - | (272) | (250) | (153,123) |
| Charge for the period | (7,989) | (21,566) | - | - | - | - | (1,368) | (30,923) |
| Currency translation adjustment | (1,547) | (770) | - | - | - | (4) | - | (2,321) |
| Balance as at December 31, 2023 | (105,487) | (78,937) | (49) | - | - | (276) | (1,618) | (186,367) |
| Carrying amount | ||||||||
| As at December 31, 2023 | 2,624,273 | 827,289 | 564,222 | 277,676 | 277,295 | 399,828 | 347,698 | 5,318,281 |
| As at January 1, 2023 | 2,583,098 | 999,915 | 483,560 | 269,847 | 266,553 | 414,430 | 325,351 | 5,342,754 |
- 220 -
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-core ac-tivity 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 the DCF model, based on:
? The actual results of 2023, 2024 workplan and the forecast results for the next 4 years.? The discount rate (9% WAAC) based on the company's cost of equity and cost of debt, taking into accountthe comprehensive risk factors.? The annual growth rate (1.5%) based on the management projections and market expectations.
The carrying amount of goodwill is mainly allocated to Agro units. Total amount of goodwill allocated to theAgro units amounts to RMB 4,931 thousand. The goodwill allo-cated to non-core CGU is not significant.
As of December 31, 2023 the value in use of the cash generating units to which goodwill has been allocated toexceeds its carrying amount.
| January 1, 2023 | Change dur-ing the year | Currency translation adjustment | Balance at De-cember 31, 2023 | |
| Book value | 4,805,157 | 113,075 | 83,306 | 5,001,538 |
| Impairment provision | - | - | - | - |
| Carrying amount | 4,805,157 | 113,075 | 83,306 | 5,001,538 |
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
| December 31 | December 31 | |||
| 2023 | 2022 | |||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Deferred tax assets | ||||
| Deferred tax assets in respect of carry forward losses | 3,544,797 | 775,364 | 1,568,088 | 256,749 |
| Deferred tax assets in respect of inven-tories | 2,387,244 | 643,527 | 2,402,900 | 689,062 |
| Deferred tax assets in respect of em-ployee benefits | 829,840 | 132,616 | 1,005,874 | 166,264 |
| Other deferred tax asset | 2,161,309 | 521,143 | 2,030,651 | 545,937 |
| 8,923,190 | 2,072,650 | 7,007,513 | 1,658,012 | |
- 221 -
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
| December 31 | December 31 | |||
| 2023 | 2022 | |||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Deferred tax liabilities | ||||
| Deferred tax liabilities in respect of fixed assets, intangible assets and right-of-use assets | 4,159,172 | 768,112 | 3,430,096 | 626,610 |
| 4,159,172 | 768,112 | 3,430,096 | 626,610 | |
(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting
| December 31 | December 31 | |||
| 2023 | 2022 | |||
| The offset amount of deferred tax assets and li-abilities | Deferred tax assets or lia-bilities after offset | The offset amount of de-ferred tax as-sets and liabili-ties | Deferred tax assets or liabili-ties after offset | |
| Presented as: | ||||
| Deferred tax assets | 471,009 | 1,601,641 | 310,749 | 1,347,263 |
| Deferred tax liabilities | 471,009 | 297,103 | 310,749 | 315,861 |
(4) Details of unrecognized deferred tax assets
| December 31 | December 31 | |
| 2023 | 2022 | |
| Deductible temporary differences | 803,476 | 518,542 |
| Deductible losses carry forward | 1,819,005 | 229,672 |
| 2,622,481 | 748,214 |
(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets
| December 31 | December 31 | |
| 2023 | 2022 | |
| 2023 | - | 1,713 |
| 2024 | 36,433 | 33,646 |
| 2025 | 6,389 | 6,282 |
| 2026 | 6,481 | 6,373 |
| 2027 | 170,968 | 7,724 |
| After 2027 | 1,598,734 | 173,934 |
| 1,819,005 | 229,672 |
- 222 -
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
| December 31 | December 31 | ||
| 2023 | 2022 | ||
| Judicial deposits | 207,027 | 154,273 | |
| Assets related to securitization | 81,423 | 112,388 | |
| Advances in respect of non-current assets | 18,003 | 174,035 | |
| Others | 128,762 | 164,137 | |
| 435,215 | 604,833 |
21. Short-Term Loans
Short-term loans by category:
| December 31 | December 31 | |
| 2023 | 2022 | |
| Unsecured loans | 5,733,522 | 3,342,921 |
| 5,733,522 | 3,342,921 |
22. Derivative financial liabilities
| December 31 | December 31 | |
| 2023 | 2022 | |
| Economic hedge | 590,442 | 490,496 |
| Accounting hedge derivatives | 17,345 | 55,020 |
| 607,787 | 545,516 |
- 223 -
V. Notes to the consolidated financial statements - (cont'd)
23. Bills Payables
| December 31 | December 31 | |
| 2023 | 2022 | |
| Post-dated checks payables | 481,645 | 900,537 |
| Note payables draft | 131,862 | 214,238 |
| 613,507 | 1,114,775 |
As at December 31, 2023, none of the bills payable are overdue.
24. Accounts payable
| December 31 | December 31 | |
| 2023 | 2022 | |
| Within 1 year (including 1 year) | 4,590,057 | 7,447,355 |
| 1-2 years (including 2 years) | 23,467 | 59,671 |
| 2-3 years (including 3 years) | 14,445 | 2,048 |
| Over 3 years | 21,764 | 18,195 |
| 4,649,733 | 7,527,269 |
There are no significant accounts payables aging over one year.
25. Contract liabilities
| December 31 | December 31 | |
| 2023 | 2022 | |
| Discount for customers | 952,123 | 904,615 |
| Advances from customers | 562,242 | 871,958 |
| 1,514,365 | 1,776,573 |
26. Employee Benefits Payable
| December 31 | December 31 | |
| 2023 | 2022 | |
| Short-term employee benefits | 500,932 | 1,027,543 |
| Post-employment benefits | 60,438 | 33,317 |
| Share based payment (See note XIII) | 18,401 | 76,875 |
| Other benefits within one year | 200,144 | 204,794 |
| 779,915 | 1,342,529 | |
| Current maturities | 67,124 | 28,257 |
| 847,039 | 1,370,786 |
- 224 -
V. Notes to the consolidated financial statements - (cont'd)
27. Taxes Payable
| December 31 | December 31 | |
| 2023 | 2022 | |
| Corporate income tax | 197,983 | 240,672 |
| VAT | 179,471 | 187,066 |
| Others | 29,776 | 31,836 |
| 407,230 | 459,574 |
28. Other Payables
| December 31 | December 31 | |
| 2023 | 2022 | |
| Dividends payables | 750 | 750 |
| Other payables | 1,468,569 | 1,610,532 |
| 1,469,319 | 1,611,282 |
(1) Other payables
| December 31 | December 31 | |
| 2023 | 2022 | |
| Accrued expenses | 721,034 | 758,158 |
| Hold-back payment due to acquistions | 131,000 | 254,000 |
| Payables in respect of intangible assets | 115,214 | 106,510 |
| Financial institutions | 50,032 | - |
| Liability in respect of securitization transactions | 32,368 | 79,619 |
| Others | 418,921 | 412,245 |
| 1,468,569 | 1,610,532 |
29. Non-Current Liabilities Due Within One Year
Non-current liabilities due within one year by category are as follows:
| December 31 | December 31 | |
| 2023 | 2022 | |
| Long-term loans due within one year | 1,552,217 | 1,539,496 |
| Debentures payable due within one year | 576,638 | 565,658 |
| Lease liabilities due within one year | 169,033 | 156,977 |
| 2,297,888 | 2,262,131 |
- 225 -
V. Notes to the consolidated financial statements - (cont'd)
30. Other Current Liabilities
| December 31 | December 31 | |
| 2023 | 2022 | |
| Put options to holders of non-controlling interests | 468,514 | 507,483 |
| Provision in respect of returns | 271,629 | 158,173 |
| Provision in respect of claims | 13,294 | 37,769 |
| Others | 390 | 369 |
| 753,827 | 703,794 |
31. Long-Term Loans
Long-term loans by category
| December 31 | December 31 | |||
| 2023 | Interest range | 2022 | Interest range | |
| Long term loans | ||||
| Guaranteed loans | 383,795 | 3.55%-3.75% | 404,841 | 2.92%-3.75% |
| Unsecured loans | 4,054,361 | 1.73%-9.28% | 4,797,525 | 1.73%-7.67% |
| Total Long term loans | 4,438,156 | 5,202,366 | ||
| Less: Long term loans from banks due within 1 year | (1,552,217) | (1,539,496 ) | ||
| Long term loans, net | 2,885,939 | 3,662,870 | ||
* For more detailes regarding the guaranteed loans – see note X. related parties and related parties transac-tions.For the maturity analysis, see note VIII.C - Liquidity risk.
32. Debentures Payable
| December 31 | December 31 | |
| 2023 | 2022 | |
| Debentures Series B | 7,496,061 | 7,919,169 |
| Current maturities | (576,638) | (565,658) |
| 6,919,423 | 7,353,511 |
| December 31 | |
| 2023 | |
| First year (current maturities) | 576,638 |
| Second year | 576,638 |
| Third year | 576,638 |
| Fourth year | 576,638 |
| Fifth year and thereafter | 5,189,509 |
| 7,496,061 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 226 -
V. Notes to the consolidated financial statements - (cont'd)
32. Debentures Payable - (cont'd)
Movements of debentures payable:
For the year ended December 31, 2023:
| Maturity period | Face value in RMB | Face value NIS | Issuance date | Maturity period | Issuance amount | Balance at January 1, 2023 | Amortization of discounts or premium | CPI and exchange rate effect | Repayment during the period | Currency translation adjustment | Balance at December 31, 2023 |
| Debentures Series B | 2,673,640 | 1,650,000 | 4.12.2006 | November 2020-2036 | 3,043,742 | 3,321,071 | 232 | 10,116 | (240,845) | 54,627 | 3,145,201 |
| Debentures Series B | 843,846 | 513,527 | 16.1.2012 | November 2020-2036 | 842,579 | 996,237 | 10,698 | 2,632 | (78,794) | 16,559 | 947,332 |
| Debentures Series B | 995,516 | 600,000 | 7.1.2013 | November 2020-2036 | 1,120,339 | 1,231,947 | 4,634 | 3,320 | (92,066) | 20,421 | 1,168,256 |
| Debentures Series B | 832,778 | 533,330 | 1.2.2015 | November 2020-2036 | 1,047,439 | 1,151,945 | (2,852) | 3,163 | (81,840) | 19,024 | 1,089,440 |
| Debentures Series B | 418,172 | 266,665 | 1-6.2015 | November 2020-2036 | 556,941 | 625,358 | (7,719) | 1,768 | (40,916) | 10,258 | 588,749 |
| Debentures Series B | 497,989 | 246,499 | 5.5.2020 | November 2020-2036 | 692,896 | 592,611 | (9,106) | 1,689 | (37,821) | 9,710 | 557,083 |
| 7,919,169 | (4,113) | 22,688 | (572,282) | 130,599 | 7,496,061 | ||||||
Series B debentures, in amount of NIS 3,810 million par value (3,730 million par value, net of self-purchased), linked to the CPI and bear interest at the base annual rate of
5.15%. The debenture principal shall be repaid in 17 equal payments in the years 2020 through 2036.
- 227 -
V. Notes to the consolidated financial statements - (cont'd)
33. Lease liabilities
| December 31 | December 31 | |||
| 2023 | Interest range | 2022 | Interest range | |
| Lease liabilities | 664,492 | 1.1%-15.3% | 588,053 | 1.1%-9.1% |
| Less: Lease liabilities due within one year | (169,033) | (156,977) | ||
| Long term lease liabilities, net | 495,459 | 431,076 | ||
34. Long-Term Employee Benefits Payable
Post-employment benefit plans – defined benefit plan and early retirement
| December 31 | December 31 | |
| 2023 | 2022 | |
| Total present value of obligation | 525,316 | 566,550 |
| Less: fair value of plan's assets | (59,884) | (70,001) |
| Net liability related to Post-employment benefits | 465,432 | 496,549 |
| Termination benefits | 67,853 | 65,782 |
| Total recognized liability for defined benefit plan, net (1) | 533,285 | 562,331 |
| Other long-term employee benefits | 205,369 | 258,079 |
| Total long-term employee benefits, net | 738,654 | 820,410 |
| Including: Long-term employee benefits payable due within one year | 67,124 | 28,257 |
| 671,530 | 792,153 |
(1) Movement in the net liability and assets in respect of defined benefit plans, early retirement and
their components
| Defined benefit obli-gation and early re-tirement | Fair value of plan's assets | Total | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| Balance as at January 1, 2023 | 632,332 | 779,671 | 70,001 | 86,282 | 562,331 | 693,389 |
| Expense/income recognized | ||||||
| in profit and loss: | ||||||
| Current service cost | 24,914 | 25,954 | - | - | 24,914 | 25,954 |
| Past service cost | 1,782 | - | 1,782 | - | - | - |
| Interest costs | 22,214 | 16,684 | 2,761 | 1,949 | 19,453 | 14,735 |
| Losses on curtailments and settlements | 27,611 | 6,098 | - | - | 27,611 | 6,098 |
| Changes in exchange rates | (13,025) | (74,599) | (2,000) | (10,222) | (11,025) | (64,377) |
| Actuarial losses due to early retirement | 662 | (1,087) | - | 662 | (1,087) | |
| Included in other comprehensive income: | ||||||
| Actuarial gain (losses) as a result of changes in actu-arial assumptions | (9,337) | (97,666) | (880) | (5,672) | (8,457) | (91,994) |
| Foreign currency translation differences in respect of foreign operations | 10,760 | 57,646 | 1,107 | 6,776 | 9,653 | 50,870 |
| Additional movements: | ||||||
| Benefits paid | (96,850) | (80,369) | (15,993) | (12,587) | (80,857) | (67,782) |
| Classification to termination | (7,894) | - | - | - | (7,894) | - |
| Contributions paid by the Group | - | - | 3,106 | 3,475 | (3,106) | (3,475) |
| Balance as at December 31, 2023 | 593,169 | 632,332 | 59,884 | 70,001 | 533,285 | 562,331 |
- 228 -
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
| December 31 | December 31 | |
| 2023 | 2022 | |
| Discount rate (%)* | 2.6%-2.8% | 1.7%-3.0% |
* 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 December 31, 2023 | ||
| Increase of 1% | Decrease of 1% | |
| Change in defined benefit obligation | (43,840) | 53,027 |
35. Provisions
| December 31 | December 31 | |
| 2023 | 2022 | |
| Liabilities in respect of contingencies* | 182,172 | 149,187 |
| Provision in respect of site restoration | 62,889 | 65,291 |
| Long-term liability in respect of business combinations | 52,929 | 5,182 |
| Other | 1,261 | 2,521 |
| 299,251 | 222,181 |
* Liabilities in respect of contingencies includes obligations of pending litigations, where an outflow of re-
sources had been reliably estimated.
- 229 -
V. Notes to the consolidated financial statements - (cont'd)
36. Other Non-Current Liabilities
| December 31 | December 31 | |
| 2023 | 2022 | |
| Put options to holders of non- controlling interests | 566,433 | 907,644 |
| Long term loans – others | 2,354,133 | 348,231 |
| 2,920,566 | 1,255,875 | |
| Current maturities | - | - |
| 2,920,566 | 1,255,875 |
37. Share Capital
| Balance at Janu-ary 1, 2023 | Issuance of new shares | Buyback of shares | Balance at December 31, 2023 | |
| Share capital | 2,329,812 | - | - | 2,329,812 |
38. Capital Reserve
| Balance at Janu-ary 1, 2023 | Additions during the period | Reductions during the period | Balance at December 31, 2023 | |
| Share premiums | 12,606,562 | - | - | 12,606,562 |
| Other capital reserve | 379,771 | - | (35,869) | 343,902 |
| 12,986,333 | - | (35,869) | 12,950,464 | |
- 230 -
V. Notes to the consolidated financial statements - (cont'd)
39. Other Comprehensive Income, net of tax
| Attributable to shareholders of the company | ||||||
| Balance at January 1, 2023 | Before tax amount | Less: transfer to profit or loss | Less: In-come tax expenses | Net-of-tax amount | Balance at Decem-ber 31, 2023 | |
| Items that will not be re-classified to profit or loss | 101,370 | (21,964) | - | (3,539) | (18,425) | 82,945 |
| Re-measurement of changes in liabilities under defined benefit plans | 46,838 | 8,457 | - | 1,025 | 7,432 | 54,270 |
| Changes in fair value of other equity investment | 54,532 | (30,421) | - | (4,564) | (25,857) | 28,675 |
| Items that may be reclassi-fied to profit or loss | 979,220 | 553,331 | (65,494) | 5,094 | 613,731 | 1,592,951 |
| Effective portion of gain or loss of cash flow hedge | (41,369) | (20,670) | (65,494) | 5,094 | 39,730 | (1,639) |
| Translation difference of for-eign financial statements | 1,020,589 | 574,001 | - | - | 574,001 | 1,594,590 |
| 1,080,590 | 531,367 | (65,494) | 1,555 | 595,306 | 1,675,896 | |
40. Surplus reserve
| Balance at January 1, 2023 | Additions during the period | Reductions during the period | Balance at December 31, 2023 | |
| Statutory surplus reserve | 238,684 | 31,119 | - | 269,803 |
| Discretional surplus reserve | 3,814 | - | - | 3,814 |
| 242,498 | 31,119 | - | 273,617 |
- 231 -
V. Notes to the consolidated financial statements - (cont'd)
41. Retained Earnings
| 2023 | 2022 | |
| Retained earnings as at January 1 | 6,469,604 | 5,940,465 |
| Net profits (loss) for the period attributable to shareholders of the Com-pany | (1,605,887) | 609,391 |
| Appropriation to statutory surplus reserve | (31,119) | (2,336) |
| Dividends to non-controlling Interest | (91,602) | (59,278) |
| Dividend to the shareholders of the company (Note 1 & 2) | (62,905) | (18,638) |
| Retained earnings as at December 31 | 4,678,091 | 6,469,604 |
Note 1:
On March 29, 2022, after obtaining the approval of the 9th meeting of the Company's 9th Board of Directors,the Company declared RMB 0.08 (before tax) per 10 shares as cash dividend to all shareholders, resulting in atotal cash dividend of 18,638 thousand RMB (before tax). No shares were distributed as share dividend and noreserve was transferred to equity capital.
Note 2:
On March 19, 2023, after obtaining the approval of the 19th meeting of the Company's 9th Board of Directors,the Company declared RMB 0.27 (before tax) per 10 shares as cash dividend to all shareholders, resulting in atotal cash dividend of 62,905 thousand RMB (before tax). No shares were distributed as share dividend and noreserve was transferred to equity capital.
- 232 -
V. Notes to the consolidated financial statements - (cont'd)
42. Operating Income and Cost of Sales
| Year ended December 31 | Year ended December 31 | |||
| 2023 | 2022 | |||
| Income | Cost of sales | Income | Cost of sales | |
| Principal activities | 32,730,388 | 25,962,899 | 37,305,373 | 27,948,254 |
| Other businesses | 49,068 | 21,209 | 76,542 | 36,712 |
| 32,779,456 | 25,984,108 | 37,381,915 | 27,984,966 | |
43. Taxes and Surcharges
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Tax on turnover | 40,979 | 36,202 | |
| Others | 68,031 | 74,212 | |
| 109,010 | 110,414 | ||
44. Selling and Distribution Expenses
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Salaries and related expense | 1,858,970 | 1,991,542 | |
| Depreciation and amortization | 950,863 | 1,012,132 | |
| Advertising and sales promotion | 341,620 | 356,079 | |
| Warehouse expenses | 184,531 | 155,427 | |
| Registration | 152,301 | 158,590 | |
| Travel expenses | 138,072 | 144,917 | |
| Professional services | 117,064 | 115,163 | |
| Insurance | 109,577 | 114,650 | |
| Others | 355,110 | 347,779 | |
| 4,208,108 | 4,396,279 | ||
- 233 -
V. Notes to the consolidated financial statements - (cont'd)
45. General and Administrative Expenses
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Salaries and related expenses | 455,343 | 807,438 | |
| IT systems | 134,787 | 126,803 | |
| Professional services | 129,064 | 124,159 | |
| Depreciation and amortization | 114,722 | 103,209 | |
| Cost contribution arrangement | 72,858 | 74,845 | |
| Office rent, maintenance and expenses | 44,799 | 48,307 | |
| Other | 105,837 | 122,067 | |
| 1,057,410 | 1,406,828 | ||
46. Research and development expenses
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Salaries and related expenses | 230,748 | 256,060 | |
| Depreciation and amortization | 79,173 | 78,647 | |
| Professional services | 38,598 | 47,293 | |
| Materials | 35,575 | 82,750 | |
| Field trial | 35,124 | 45,326 | |
| Office rent, maintenance and expenses | 13,025 | 12,738 | |
| Other | 50,511 | 55,045 | |
| 482,754 | 577,859 | ||
47. Financial expenses (incomes), net
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Interest expenses on debentures and loans and other charges | 1,147,484 | 782,812 | |
| Loss in respect of sale of trade receivables | 283,076 | 226,575 | |
| CPI expenses in respect of debentures | 260,063 | 409,078 | |
| Revaluation of put option, net | (313,216) | (121,172) | |
| Interest income from customers, banks and others | (368,990) | (180,619) | |
| Exchange rate differences, net | 55,459 | (881,634) | |
| Interest expense on lease liabilities | 34,909 | 25,755 | |
| Interest expense in respect of post-employment benefits and early retire-ment, net | 22,462 | 18,141 | |
| Others | 61,871 | 46,860 | |
| 1,183,118 | 325,796 | ||
- 234 -
V. Notes to the consolidated financial statements - (cont'd)
48. Investment income, net
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Income from long-term equity investments accounted for using the equity method | 6,336 | 10,358 | |
| Other | 12,742 | 2,325 | |
| 19,078 | 12,683 | ||
49. Gain (loss) from Changes in Fair Value
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Loss from changes in fair value of derivative financial | |||
| Instruments | (804,818) | (1,504,067) | |
| Others | 154,444 | (765) | |
| (650,374) | (1,504,832) | ||
50. Credit impairment reversal (losses)
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Bills receivable and accounts receivable | (60,375) | (60,978) | |
| Other receivables | 5,922 | (30,689) | |
| (54,453) | (91,667) | ||
51. Asset impairment losses
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Inventories | (256,893) | (156,392) | |
| Fixed assets | (58,832) | (69,758) | |
| Construction in progress | (203,245) | (88,617) | |
| Intangible asset | (30,923) | (10,619) | |
| (549,893) | (325,386) | ||
- 235 -
V. Notes to the consolidated financial statements - (cont'd)
52. Gain from Disposal of Assets
| Year ended December 31 | Included in non-recurring items | |||
| 2023 | 2022 | |||
| Gain from disposal of fixed assets | 29,294 | 62,443 | 29,294 | |
| Loss from disposal of intangible assets | (9,615) | (2,847) | (9,615) | |
| 19,679 | 59,596 | 19,679 | ||
53. Income Tax Expenses
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Current year | 422,601 | 690,601 | |
| Deferred tax expenses (income) | (267,749) | (633,071) | |
| Adjustments for previous years, net | 46,125 | 89,912 | |
| 200,977 | 147,442 | ||
(1) Reconciliation between income tax expense and accounting profit is as follows:
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Profit before taxes (loss) | (1,404,910) | 756,833 | |
| Statutory tax in china | 25% | 25% | |
| Tax calculated according to statutory tax in china | (351,228) | 189,208 | |
| Tax benefits from Approved Enterprises | (33,487) | (85,909 ) | |
| Difference between measurement basis of income for financial statement and for tax purposes | (1,148) | 32,110 | |
| Taxable income (loss) and temporary differences at other tax rate | 11,082 | (92,093 ) | |
| Taxes in respect of prior years | 46,125 | 89,912 | |
| Utilization of tax losses prior years for which deferred taxes were not created | (42,896) | (43,008 ) | |
| Temporary differences and losses in the report year for which de-ferred taxes were not created | 302,002 | 62,664 | |
| Non-deductible expenses, non-taxable income and other difference, net | (19,402) | (16,474 ) | |
| Neutralization of tax calculated in respect of the Company’s share in results of equity accounted investees | (2,051) | (3,495 ) | |
| Effect of change in tax rate in respect of deferred taxes | 200,538 | 25,480 | |
| Creation and reversal of deferred taxes for tax losses and temporary differences from previous years | 91,442 | (10,953 ) | |
| Income tax expenses | 200,977 | 147,442 | |
54. Other comprehensive income
Details of the Other comprehensive income are set out in Note V.39
- 236 -
V. Notes to the consolidated financial statements - (cont'd)
55. Government grants
| Amount recognized in the profit and loss statements during the year ended December 31 | |||
| Category | Presentation accounts | 2023 | 2022 |
| Government grants related to income | Non-Operating income | 20,743 | 17,772 |
| Government grants related to assets | Fixed assets, Intangible assets | 14,805 | 18,611 |
56. Notes to items in the cash flow statements
(1) Cash received relating to other operating activities
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Derivatives transactions | 63,167 | 324,320 | |
| Financial institutions | 124,993 | 272,770 | |
| Interest income | 255,440 | 103,779 | |
| Government subsidies | 30,526 | 20,430 | |
| Others | 216,555 | 83,278 | |
| 690,681 | 804,577 | ||
(2) Cash paid relating to other operating activities
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Derivatives transactions | 430,629 | 535,277 | |
| Financial institutions | 121,234 | 307,717 | |
| Advertising and sales promotion | 323,675 | 333,890 | |
| Professional services | 305,555 | 242,072 | |
| Commissions and Warehouse | 232,285 | 161,142 | |
| IT and Communication | 228,792 | 232,517 | |
| Registration and Field trials | 164,877 | 178,793 | |
| Insurance | 176,239 | 145,518 | |
| Travel | 125,173 | 151,335 | |
| Others | 900,331 | 847,780 | |
| 3,008,790 | 3,136,041 | ||
(3) Cash received relating to other investing activities
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Investment grant | 35,659 | - | |
| Dividend received from other equity investment | 2,325 | 2,325 | |
| 37,984 | 2,325 | ||
- 237 -
V. Notes to the consolidated financial statements - (cont'd)
56. Notes to items in the cash flow statements - (cont'd)
(4) Cash paid relating to other investing activities
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Increase in short and long term investments | 123,484 | 78,008 | |
| Increase in securitization facility | - | 51,936 | |
| 123,484 | 129,944 | ||
(5) Cash received from other financing activities
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Borrowing from related party * | 3,393,370 | 685,150 | |
| Deposit for issuing bills payables | 97,625 | 164,586 | |
| 3,490,995 | 849,736 | ||
* For more detailes regarding the borrowing from related party – see note X. related parties and related par-
ties transactions.
(6) Cash paid relating to other financing activities
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Payment in respect of hedging transactions on debentures | 922,137 | 1,073,463 | |
| Repayment of lease liability | 175,761 | 162,190 | |
| Realization of Call option | 116,938 | - | |
| Deposit for issuing bills payable | 55,887 | 170,939 | |
| 1,270,723 | 1,406,592 | ||
- 238 -
V. Notes to the consolidated financial statements - (cont'd)
57. Supplementary Information on Cash Flow Statement
(1) Supplementary information on Cash Flow Statement
a. Reconciliation of net profit to cash flows from operating activities:
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Net profit (loss) | (1,605,887) | 609,391 | |
| Add: Impairment provisions for assets | 549,893 | 325,386 | |
| Credit impairment losses | 54,453 | 91,667 | |
| Depreciation of fixed assets and investment property | 992,670 | 1,007,191 | |
| Depreciation of right-of-use asset | 198,267 | 174,796 | |
| Amortization of intangible asset | 896,718 | 954,686 | |
| Gains on disposal of fixed assets, intangible assets, and other long-term assets, net | (19,679) | (59,596) | |
| Losses from changes in fair value | 650,374 | 1,504,832 | |
| Financial expenses | 797,390 | 69,669 | |
| Investment income, net | (19,078) | (12,683) | |
| Increase in deferred tax assets, net | (222,426) | (558,878) | |
| Decrease in deferred tax liabilities, net | (45,323) | (74,193) | |
| Decrease (increase) in inventories, net | 4,136,612 | (4,203,112) | |
| Decrease (increase) in operating receivables, net | 442,429 | (975,103) | |
| Increase (decrease) in operating payables, net | (4,171,065) | 2,133,585 | |
| Others | (17,471) | (46,893) | |
| Net cash flow from operating activities | 2,617,877 | 940,745 | |
b. Net increase (decrease) in cash and cash equivalents
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Closing balance of cash and cash equivalents | 4,857,358 | 4,225,253 | |
| Less: Opening balance of cash and cash equivalents | 4,225,253 | 5,759,480 | |
| Increase (decrease) in cash and cash equivalents | 632,105 | (1,534,227) | |
- 239 -
V. Notes to the consolidated financial statements - (cont'd)
57. Supplementary Information on Cash Flow Statement - (cont'd)
(2) Details of cash and cash equivalents
| December 31 | December 31 | ||
| 2023 | 2022 | ||
| Cash on hand | 820 | 785 | |
| Bank deposits available on demand without restrictions | 4,856,538 | 4,224,468 | |
| 4,857,358 | 4,225,253 |
58. Assets with Restricted Ownership or Right of Use
| December 31 | ||
| 2023 | Reason | |
| Cash | 23,970 | Pledged |
| Other non-current assets | 207,027 | Guarantees |
| 230,997 |
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items
(1) Foreign currencies denominated items
| As at December 31, 2023 | |||
| Foreign currency at the end of the pe-riod | Exchange rate | RMB at the end of the period | |
| Cash and bank balances | |||
| BRL | 518,456 | 1.463 | 758,501 |
| CNY | 351,628 | 1.000 | 351,628 |
| EUR | 43,800 | 7.834 | 343,129 |
| ILS | 65,734 | 1.953 | 128,378 |
| PLN | 64,683 | 1.800 | 116,429 |
| USD | 10,325 | 7.083 | 73,130 |
| ARS | 7,432,900 | 0.009 | 66,896 |
| TRY | 244,985 | 0.241 | 59,041 |
| ZAR | 149,316 | 0.382 | 57,039 |
| GBP | 5,547 | 9.024 | 50,054 |
| RON | 30,215 | 1.575 | 47,589 |
| RUB | 472,300 | 0.079 | 37,312 |
| Other | 173,789 | ||
| Total | 2,262,915 | ||
| Bills and Accounts receivable | |||
| BRL | 668,015 | 1.463 | 977,306 |
| EUR | 72,897 | 7.834 | 571,079 |
| TRY | 1,085,652 | 0.241 | 261,642 |
| RON | 119,668 | 1.575 | 188,478 |
| CAD | 34,792 | 5.349 | 186,105 |
| ZAR | 485,017 | 0.382 | 185,276 |
| USD | 21,838 | 7.083 | 154,669 |
| THB | 445,834 | 0.207 | 92,288 |
| IDR | 202,068 | 0.4567 | 92,288 |
| PLN | 34,765 | 1.800 | 62,576 |
| RUB | 789,049 | 0.079 | 62,335 |
| HUF | 2,622,016 | 0.020 | 52,440 |
| GBP | 33,14 | 9.024 | 29,906 |
| CZK | 62,113 | 0.317 | 19,690 |
| ILS | 24,80 | 1.953 | 4,844 |
| Other | 228,947 | ||
| Total | 3,169,869 | ||
| Other receivables | |||
| EUR | 33,279 | 7.834 | 260,704 |
| GBP | 14,769 | 9.024 | 133,279 |
| ILS | 37,194 | 1.953 | 72,639 |
| BRL | 26,554 | 1.463 | 38,849 |
| Other | 13,572 | ||
| Total | 519,043 | ||
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
| As at December 31, 2023 | |||
| Foreign currency at the end of the period | Exchange rate | RMB at the end of the period | |
| Other current assets | |||
| BRL | 125,174 | 1.463 | 183,130 |
| ARS | 17,622,545 | 0.009 | 158,603 |
| ILS | 31,019 | 1.953 | 60,581 |
| EUR | 7,650 | 7.834 | 59,931 |
| Other | 193,083 | ||
| Total | 655,328 | ||
| Long-term receivables | |||
| BRL | 46,994 | 1.463 | 68,752 |
| Total | 68,752 | ||
| Other non-current assets | |||
| BRL | 186,668 | 1.463 | 273,095 |
| Other | 19,445 | ||
| Total | 292,540 | ||
| Short-term loans | |||
| TRY | 207,456 | 0.241 | 49,997 |
| ARS | 3,824,658 | 0.009 | 34,422 |
| UAH | 60,165 | 0.186 | 11,191 |
| Other | 2,020 | ||
| Total | 97,630 | ||
| Bills and Accounts payable | |||
| ILS | 655,382 | 1.953 | 1,279,961 |
| EUR | 52,622 | 7.834 | 412,238 |
| BRL | 166,799 | 1.463 | 244,027 |
| USD | 10,137 | 7.083 | 71,795 |
| Other | 228,047 | ||
| Total | 2,236,068 | ||
| Other payables | |||
| ILS | 75,297 | 1.953 | 147,055 |
| BRL | 89,795 | 1.463 | 131,370 |
| EUR | 11,445 | 7.834 | 89,660 |
| ILS CPI | 16,407 | 1.953 | 32,042 |
| Other | 125,760 | ||
| Total | 525,887 | ||
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
| As at December 31, 2023 | |||
| Foreign currency at the end of the period | Exchange rate | RMB at the end of the period | |
| Contract liabilities | |||
| EUR | 46,457 | 7.834 | 363,945 |
| BRL | 56,676 | 1.463 | 82,917 |
| Other | 222,170 | ||
| Total | 669,032 | ||
| Non-current liabilities due within one year | |||
| ILS CPI | 305,793 | 1.953 | 597,213 |
| EUR | 58,196 | 7.834 | 455,910 |
| Other | 69,028 | ||
| Total | 1,122,151 | ||
| Other current liabilities | |||
| EUR | 5,696 | 7.834 | 44,624 |
| BRL | 10,511 | 1.463 | 15,377 |
| Other | 2,954 | ||
| Total | 62,955 | ||
| Long-term loan | |||
| EUR | 3,000 | 7.834 | 23,501 |
| Total | 23,501 | ||
| Debentures payable | |||
| ILS CPI | 3,542,971 | 1.953 | 6,919,423 |
| Total | 6,919,423 | ||
| Provision and Long-term payables | |||
| BRL | 110,830 | 1.463 | 162,144 |
| NZD | 11,174 | 4.456 | 49,791 |
| EUR | 372 | 7.834 | 2,918 |
| Total | 214,853 | ||
| Other non-current liabilities and lease liabilities | |||
| CNY | 2,000,000 | 1.000 | 2,000,000 |
| USD | 9,286 | 7.083 | 65,770 |
| ILS CPI | 30,844 | 1.953 | 60,238 |
| EUR | 6,565 | 7.834 | 51,427 |
| Other | 60,394 | ||
| Total | 2,237,829 | ||
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(2) Major foreign operations
| Name of the Subsidiary | Registration & Principal place of business | Business nature | Functional currency |
| ADAMA France S.A.S | France | Distribution | USD |
| ADAMA Brasil S/A | Brazil | Manufacturing; Distribution; Regis-tration | USD |
| ADAMA Deutschland GmbH | Germany | Distribution; Registration | USD |
| ADAMA India Private Ltd. | India | Manufacturing Distribution; Registration | INR |
| Makhteshim Agan of North America Inc. | United States | Manufacturing; Distribution; Regis-tration | USD |
| Control Solutions Inc. | United States | Manufacturing; Distribution; Regis-tration | USD |
| ADAMA Agan Ltd. | Israel | Manufacturing; Distribution; Regis-tration | USD |
| ADAMA Makhteshim Ltd. | Israel | Manufacturing; Distribution; Regis-tration | USD |
| ADAMA Australia Pty Limited | Australia | Distribution | AUD |
| ADAMA Italia SRL | Italy | Distribution | USD |
| ADAMA Northern Europe B.V. | Netherlands | Distribution | USD |
| Alligare LLC | United States | Manufacturing; Distribution; Registration | USD |
The functional currency of the subsidiaries above is the main currency that represent the principal economicenvironment.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 of the Com-pany | Acquisition date | Total consideration of equity investment | Proportion of equity investment | Acquisition method | Basis of ac-quisition date determination | From acquisition date till pe-riod end | ||
| Revenue | Net profit | Cash flow | ||||||
| AgriNova New Zea-land Ltd | 05.01.2023 | 214,476 | 100% | Stock pur-chase | Obtained con-trol | 106,820 | 24,075 | 12,585 |
(2) Acquisition cost and goodwill
| Acquisition costs | Total of AgriNova New Zea-land Ltd |
| Total acquisition cost in cash | 170,155 |
| Contingent consideration | 44,321 |
| Less: share of the fair value of the identifiable net assets acquired | 101,401 |
| Goodwill | 113,075 |
(3) Identifiable assets and liabilities of the acquiree, at acquisition date
| AgriNova New Zealand Ltd | |||
| Fair value at acquisition date 05.01.2023 | Book value at ac-quisition date 05.01.2023 | ||
| Assets: | |||
| Cash and bank balances | 21,695 | 21,695 | |
| Bills and Accounts receivable | 8,066 | 8,066 | |
| Prepayments | 903 | 903 | |
| Inventories | 21,898 | 21,898 | |
| Fixed assets | 1,350 | 1,350 | |
| Intangible assets | 88,670 | - | |
| Deferred tax assets | 2,354 | 2,354 | |
| Liabilities: | |||
| Bills and Accounts payable | 7,601 | 7,601 | |
| Employee benefits payable | 1,273 | 1,273 | |
| Taxes payable | 8,573 | 8,573 | |
| Other payables | 452 | 452 | |
| Contract liabilities | 807 | 807 | |
| Deferred tax liabilities | 24,829 | - | |
| Net assets | 101,401 | 37,560 | |
| Less: Non-controlling interests | - | - | |
| Net assets acquired | 101,401 | 37,560 | |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 of ob-taining the sub-sidiary |
| ADAMA France S.A.S | France | Distribution | 100% | Established | |
| ADAMA Brasil S/A | Brazil | Manufacturing; Distribution; Registration | 100% | Purchased | |
| ADAMA Deutschland GmbH | Germany | Distribution; Registration; | 100% | Established | |
| ADAMA India Private Ltd. | India | Manufacturing; Distribution; Registration | 100% | Established | |
| Makhteshim Agan of North America Inc. | United States | Manufacturing; Distribution; Registration | 100% | Established | |
| Control Solutions Inc. | United States | Manufacturing; Distribution; Registration | 67% | Purchased | |
| ADAMA Agan Ltd. | Israel | Manufacturing; Distribution; Registration | 100% | Restructure | |
| ADAMA Makhteshim Ltd. | Israel | Manufacturing; Distribution; Registration | 100% | Restructure | |
| ADAMA Australia Pty Limited | Australis | Distribution | 100% | Purchased | |
| ADAMA 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 | |
| Adama Huifeng (Jiangsu) Co. Ltd. | China | Manufacturing; Distribution | 51% | Purchased |
2. Interests in joint ventures or associates
| December 31 | December 31 | ||
| 2023 | 2022 | ||
| Joint venture | 1,437 | 2,110 | |
| Associate | 30,037 | 24,258 | |
| 31,474 | 26,368 | ||
3. Summarized financial information of joint ventures and associates
| December 31, 2023 and twelve months then ended | December 31, 2022 and twelve months then ended | |
| Joint venture: | ||
| Total carrying amount | 1,437 | 2,110 |
| The Group's share of the following items: | ||
| Net profit | 176 | 531 |
| Other comprehensive income | 6 | 237 |
| Total comprehensive income | 182 | 768 |
| Associate: | ||
| Total carrying amount | 30,037 | 24,258 |
| The Group's share of the following items: | ||
| Net profit | 6,160 | 9,827 |
| Other comprehensive income | 2,412 | 2,456 |
| Total comprehensive income | 8,572 | 12,283 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 (here-inafter - “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 quantitative dis-closure 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 a disci-plined and constructive control environment in which all the employees understand their roles and obligations.
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, agricul-turists, agents and agrochemical manufacturers who purchase the products either as finished goods or as in-termediate 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. and f.
In June 2022, 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 90%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 the indus-try and geographic region in which the customer operates.
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. The exami-nation made by the Group includes an outside credit rating, if any, and in many cases, receipt of documentsfrom an insurance company. A credit limit is prescribed for each customer, outstanding amount of the accountsreceivable balance. These limits are examined annually. Customers that do not meet the Group’s criteria forcredit quality may do business with the Group on the basis of a prepayment or against furnishing of appropriatecollateral.
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 equip-ment) against execution of the sales, the value of which is examined on a current ongoing basis by the Com-pany. In these countries, in a case of expected credit risk, the Company records a provision for the amount ofthe debt less the value of the collaterals provided and acts to realize the collaterals.
The Group closely monitors the economic situation in Eastern Europe and in South America on an ongoingbasis.
The Group recognizes an impairment provision, which reflects its assessment regarding the credit risk of ac-count 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:
| December 31, 2023 | |
| Past due by less than 90 days | 467,844 |
| Past due by more than 90 days | 535,904 |
| 1,003,748 |
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 the observ-able 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 7,872,238 thousand relate tocategory of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 660,966thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has creditrisk exposures for other receivables amounted to RMB 38,808 thousand related to category of "Lifetime ex-pected 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 ongoing op-erations, is invested in short-term interest-bearing investment channels.
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 December 31, 2023 | ||||||||||||
| Third- | Fifth year | Contractual | Carrying | |||||||||
| First year | Second year | Fourth year | and above | Cash flow | amount | |||||||
| Non-derivative financial liabili-ties | ||||||||||||
| Short-term loans | 5,830,123 | - | - | - | 5,830,123 | 5,733,522 | ||||||
| Bills payables | 613,507 | - | - | - | 613,507 | 613,507 | ||||||
| Accounts payables | 4,649,733 | - | - | - | 4,649,733 | 4,649,733 | ||||||
| Other payables | 1,469,319 | - | - | - | 1,469,319 | 1,469,319 | ||||||
| Other current liabilities | 468,514 | - | - | - | 468,514 | 468,514 | ||||||
| Debentures payable | 928,776 | 931,184 | 1,773,444 | 6,512,245 | 10,145,649 | 7,496,061 | ||||||
| Long-term loans | 1,606,445 | 1,323,831 | 1,338,591 | 405,478 | 4,674,345 | 4,438,156 | ||||||
| Long-term payables | 7,023 | 12,993 | 24,742 | 98,165 | 142,923 | 97,840 | ||||||
| Lease Liabilities | 203,140 | 157,867 | 163,078 | 435,806 | 959,891 | 664,492 | ||||||
| Long-term liability in respect of business combinations | - | 59,880 | 2,709 | - | 62,589 | 52,929 | ||||||
| Other non-current liabilities | 65,562 | 737,418 | 2,465,991 | - | 3,268,971 | 2,920,566 | ||||||
| Derivative financial liabilities | ||||||||||||
| Foreign currency derivatives | 586,552 | - | - | - | 586,552 | 586,552 | ||||||
| CPI/shekel forward transactions | 21,235 | - | - | - | 21,235 | 21,235 | ||||||
| 16,449,929 | 3,223,173 | 5,768,555 | 7,451,694 | 32,893,351 | 29,212,426 | |||||||
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 financial in-struments. 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 financial lia-bilities 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 and pur-chases, which may be affected by exchange rate fluctuations.
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 the subse-quent year. Likewise, the Group hedges most of its monetary assets and liabilities denominated in a non- U.S.dollar currency. The Group uses foreign currency derivatives to hedge its currency risk, mostly with maturitydates 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 is as follows:
| December 31, 2023 | ||
| Total assets | Total liabilities | |
| In US Dollar | 2,381,653 | 1,604,729 |
| In Euro | 1,310,808 | 1,467,095 |
| In Brazilian real | 2,299,633 | 473,705 |
| CPI-linked NIS | 1,098 | 7,588,341 |
| In New Israeli Shekel | 268,375 | 1,455,269 |
| Denominated in or linked to other foreign currency | 4,243,366 | 2,905,766 |
| 10,504,933 | 15,494,905 | |
(B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows:
| December 31, 2023 | ||||||
| Cur-rency/linkage receiv-able | Cur-rency/linkage paya-ble | Average expiration date | USD thou-sands Par value | RMB thousands Par value | Fair value | |
| Forward foreign currency | USD | EUR | 10/05/2024 | 121,443 | 860,141 | (195,093) |
| Contracts and call options | USD | PLN | 17/01/2024 | 15,129 | 107,157 | 8,529 |
| USD | BRL | 12/02/2024 | 196,599 | 1,392,453 | (51,112) | |
| USD | GBP | 16/01/2024 | 16,686 | 118,179 | (3,361) | |
| USD | ZAR | 21/01/2024 | 33,188 | 235,060 | (4,039) | |
| ILS | USD | 13/01/2024 | 1,227,827 | 8,696,329 | 639,786 | |
| USD | OTHER | 767,570 | 5,436,465 | (137,063) | ||
| CPI forward contracts | CPI | ILS | 04/07/2024 | 537,634 | 3,807,903 | (15,297) |
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, 2023and 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.
| December 31, 2023 | ||||
| Decrease of 5% | Increase of 5% | |||
| Equity | Profit (loss) | Equity | Profit (loss) | |
| New Israeli shekel | 38,567 | 26,144 | 4,027 | 16,136 |
| British pound | 15,020 | 15,020 | (15,020) | (15,020) |
| Euro | (48,674) | (3,768) | 45,754 | 4,125 |
| Brazilian real | 17,092 | 17,092 | (24,131) | (24,131) |
| Polish zloty | (1,604) | (1,604) | 2,180 | 2,180 |
| South African Rand | (1,370) | 414 | 182 | (1,432) |
| Chinese Yuan Renminbi | 170,097 | 166,891 | (150,753) | (147,826) |
| CPI-linked NIS | 311,378 | 311,378 | (311,378) | (311,378) |
(2) Interest rate risks
The Group has exposure to changes in the variable interest rate. The Group has different assets and liabil-ities in different countries which bear interest according to the economic environment in each country.Most of the loans, other than the debentures, bear Dollar SOFR and Euro ESTER interest. As a result,most of the variable interest exposure of those loans is to the SOFR interest.
The Company prepares a quarterly summary of exposure to a change in the SOFR 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:
| December 31, 2023 | |
| Fixed-rate instruments – unlinked to the CPI | |
| Financial assets | |
| Other non-current assets | 75,969 |
| Financial liabilities | |
| Long-term loans (1) | 3,358,574 |
| Long-term payables | 26,164 |
| Other non-current liabilities | 2,354,133 |
| (5,662,902) | |
| Fixed-rate instruments – linked to the CPI | |
| Financial liabilities | |
| Debentures payable (1) | 7,496,061 |
| Variable-rate instruments | |
| Financial assets | |
| Cash at banks | 1,065,918 |
| Financial assets at fair value through profit or loss | 1,912 |
| Other current assets | 158,603 |
| Financial liabilities | |
| Short-term loans and credit from banks | 5,733,522 |
| Long-term loans (1) | 1,079,582 |
| Long-term payables | 66,400 |
| (5,653,071) |
(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 others ex-change rates, remained fixed.
| Profit or loss | Equity | |||
| Increase in interest | Decrease in interest | Increase in interest | Decrease in interest | |
| As at December 31, 2023 | 1,255 | (1,269) | 1,255 | (1,269) |
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:
| December 31, 2023 | ||
| Carrying amount | Fair value | |
| Financial assets | ||
| Other non-current assets (a – Level 2) | 106,765 | 93,918 |
| Financial liabilities | ||
| Long-term loans and others (b – Level 2) | 7,555,884 | 7,283,639 |
| Debentures (c – Level 1) | 7,496,061 | 8,521,198 |
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 acceptableinterest 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:
| December 31, 2023 | |
| % | |
| U.S. dollar interest | 6.90-8.21 |
| Chinese Yuan Renminbi | 3.92-4.36 |
| Euro | 5.00-6.62 |
- 254 -
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 financial instru-ments 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.
| December 31 | |
| 2023 | |
| Forward contracts and options used for hedging the cash flow (Level 2) | (608) |
| Forward contracts and options used for economic hedging (Level 2) | 242,958 |
| Other equity investment (Level 2) | 132,018 |
| Receivables financing (Level 2) | 123,050 |
| Other non-current assets (Level 2) | 81,423 |
| Other (Level 2) | 1,912 |
| Financial Instrument | Fair value |
| Forward contracts | Fair value measured on the basis of discounting the difference between the stated forward price in the contract and the current forward price for the residual 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions
1. Information on parent Company
| Company name | Registered place | Business nature | Registered capital (Thousand RMB) | Shareholding percentage | Percentage of voting rights |
| Syngenta Group | Shanghai, China | Production and sales of agro-chemicals, fertiliz-ers and GM seeds | 11,144,545 | 78.47% | 78.47% |
The Company’s ultimate controlling shareholder is Sinochem Holdings .
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 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties
| Name of other related parties | Related party relationship |
| Beijing Guangyuan Yinong Chemical Co., LTD | Common control |
| Beijing Junmao Real Estate Co. Ltd. | Common control |
| Zhonglan Lianhai Design and Research Institute | Common control |
| Bluestar (Beijing) Chemical Machinery Co. Ltd. | Common control |
| Bluestar Engineering Co. Ltd. | Common control |
| China Chemical Information Center | Common control |
| China National Bluestar (Group) Co. Ltd. | Common control |
| China National Chemical Agrochemical Corporation | Common control |
| Dipagro LTDA | Common control |
| Elkem Silicones Brasil Ltd. | Common control |
| Elkem Silicones Hong Kong Co. Ltd. | Common control |
| Hangzhou (torch) Xidou door Film Industry Co., LTD | Common control |
| Henan Junhua Development Co. Ltd. | Common control |
| Jiangsu Huaihe Chemical Co. Ltd. | Common control |
| Jiangsu Ruixiang Chemical Co., LTD | Common control |
| Jiangsu Yangnong Chemical Co. Ltd. | Common control |
| Jiangsu Youjia Plant protection Co., LTD | Common control |
| Jiangsu Youshi Chemical Co., LTD | Common control |
| Jingzhou Sanonda Holdings Co. Ltd. | Common control |
| (MAP) Sinochem Modern Agriculture Co.LTD Xinjiang Branch | Common control |
| (MAP) Sinochem Modern Agriculture Co.LTD Yichang Branch | Common control |
| OOO Syngenta | Common control |
| P.T. Syngenta Indonesia | Common control |
| PT Syngenta Seed Indonesia | Common control |
| Shandong Dacheng Agrochemical Company Limited | Common control |
| Shenyang Chemical Co., Ltd. | Common control |
| Shenyang Shenhua Institute Testing Technology Co. Ltd. | Common control |
| Sinochem (Hainan) Agroecology Co. | Common control |
| Sinochem (Linyi) Crop Nutrition Co. Ltd | Common control |
| Sinochem Agriculture (Xinjiang) Biotechnology Co. Ltd. | Common control |
| Sino MAP | Common control |
| Sinochem Agro Co. Ltd. | Common control |
| Sinochem Chemical Science and Technology Research Institute Co., LTD | Common control |
| Sinochem Crop Protection Products Co. LTD | Common control |
| Sinochem Fertilizer Company Limited | Common control |
| Sinochem Fertilizer Company Limited Fujian Branch | Common control |
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 Fertilizer Company Limited Guangxi Branch | Common control |
| Sinochem Fertilizer Company Limited Hebei Branch | Common control |
| Sinochem Fertilizer Company Limited Jiangsu Branch | Common control |
| Sinochem Fertilizer Company Limited Jilin Branch | Common control |
| Sinochem Fertilizer Company Limited Northwest Branch | Common control |
| Sinochem Fertilizer Company Limited Shandong Branch | Common control |
| Sinochem Fertilizer Company Limited Southwest Branch | Common control |
| Sinochem Information Technology Co. Ltd. | Common control |
| Sinochem International Crop Care (Overseas) Pte. Ltd. | Common control |
| Sinochem Innovation (Beijing) Technology Research Institute Co., Ltd. | Common control |
| Sinochem Lantian Fluorine Materials Co. Ltd. | Common control |
| Sinochem Modern Agriculture (Gansu) Co. LTD | Common control |
| Sinochem Modern Agriculture (Guangxi) Co. LTD | Common control |
| Sinochem Modern Agriculture (Hunan) Co. LTD | Common control |
| Sinochem Modern Agriculture (Inner Mongolia) Co. LTD | Common control |
| Sinochem Modern Agriculture (Jiangsu) Co. LTD | Common control |
| Sinochem Modern Agriculture (Xinjiang) Co. LTD | Common control |
| Sinochem Modern Agriculture Anhui Co. LTD | Common control |
| Sinochem Modern Agriculture Sichuan Co. LTD | Common control |
| Syngenta (China) Investment Company Ltd | Common control |
| Syngenta Agro (Argentina) S.A. | Common control |
| Syngenta Agro AG | Common control |
| Syngenta Agro d.o.o. | Common control |
| Syngenta Agro GmbH | Common control |
| Syngenta Agro SA de CV | Common control |
| Syngenta Australia Pty Ltd | Common control |
| Syngenta Canada Inc | Common control |
| Syngenta Comercial Agricola | Common control |
| Syngenta Crop Protection AG | Common control |
| Syngenta Crop Protection BV | Common control |
| Syngenta Crop Protection LLC | Common control |
| Syngenta Crop Protection Ltd. | Common control |
| Syngenta Crop Protection SA | Common control |
| Syngenta Czech s.r.o. | Common control |
| Syngenta Espa?a S.A. | Common control |
| Syngenta France S.A.S | Common control |
| Syngenta A.G. | Common control |
| Syngenta Group Saturn (NL) B.V. | Common control |
| Syngenta Hellas AEBE | Common control |
| Syngenta India Ltd | Common control |
| Syngenta Italia SpA | Common control |
| Syngenta Protecao de Cultivos Ltda | Common control |
| Syngenta S.A. | Common control |
| Syngenta Seeds LTDA | Common control |
| Syngenta Slovakia s.r.o. | Common control |
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 |
| Syngenta Tarim Sanay ve Ticaret AS | Common control |
| Syngenta Vietnam Limited | Common control |
| Syngenta Zambia Limited | Common control |
| Tov Syngenta | Common control |
| Valagro S.p.A. | Common control |
| Syngenta Nantong Crop Protection Co.,LTD | Common control |
| China Bluestar Chengrand Research Institute Chemical Industry | Common control |
| Zhonglan International Chemical Co. Ltd. | Common control |
| Ningxia Ruitai Technology Co. Ltd. | Common control |
| Shenyang Sciencreat Chemicals Co. Ltd. | Common control |
| Shenyang Sinochem Agrochemicals R&D Co.,Ltd. | Common control |
| Sinochem Finance Corporation | Common control |
| Luxi Group Co.Ltd. | Common control |
| Sinochem Zhoushan Hazardous Chemicals Emergency Rescue Base Co. Ltd. | Common control |
| Liaocheng Luxi Polyol New Material Technology Co. Ltd. | Common control |
| Liaocheng Luxi Methylamine Chemical Co. Ltd. | Common control |
| Jiangsu Huifeng Biological Agriculture Co., Ltd | Minority shareholder |
| Nongyi Net (Yangling) e-commerce Co., Ltd. | Minority shareholder and its subsidiary |
| Shanghai focus supply chain Co., Ltd | Minority shareholder and its subsidiary |
| Shanghai nengjianyuan Biological Agriculture Co., Ltd | Minority shareholder and its subsidiary |
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties
(1) Transactions with related parties
| Year ended December 31 | |||
| Type of purchase | Related Party Relationship | 2023 | 2022 |
| Summary of purchase of goods/services: | |||
| Purchase of goods/services received | Common control under Si-nochem Holdings | 1,663,662 | 2,673,892 |
| Minority shareholder and its subsidiary | 23,470 | 3,155 | |
| Purchase of fixed assets and other assets | Common control under Si-nochem Holdings | 2,652 | 9,780 |
| Lease expenses | Common control under Si-nochem Holdings | 662 | 242 |
| Minority shareholder and its subsidiary | 5,381 | 795 | |
| Summary of Sales of goods: | |||
| Sale of goods/ Service rendered | Common control under Si-nochem Holdings | 1,580,123 | 2,177,322 |
| Joint venture | 77,422 | 104,563 | |
| Minority shareholder and its subsidiary | 76,714 | 54,424 | |
| Lease income | Minority shareholder | 1,175 | - |
(2) Guarantees
The Group as the guarantee receiver
| Guarantee provider | Amount of guaranteed loan | Inception date of guaranty | Maturity date of guaranty | Guaranty com-pleted (Y / N) |
| Parent company | 313,000 | 21/04/2021 | 20/04/2028 | N |
| 70,795 | 01/06/2021 | 31/05/2028 | N |
* During the reporting period, the Company paid a guarantee fee amounting to 434 thousand RMB(2022: 451 thousand RMB) to the parent company.
(3) Remuneration of key management personnel and directors
| Periods ended December 31 | ||
| 2023 | 2022 | |
| Remuneration of key management personnel and directors | 28,212 | 114,806 |
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)
Receivable Items
| December 31 | December 31 | ||||
| 2023 | 2022 | ||||
| Items | Related Party Relation-ship | Book Balance | Expected credit losses | Book Balance | Expected credit losses |
| Trade receivables | Common control under Sinochem Holdings | 150,942 | - | 356,708 | - |
| Joint venture | 23,507 | - | 25,727 | - | |
| Minority shareholder and its subsidiary | 22,361 | - | 13,172 | - | |
| Other receivables | Common control under Sinochem Holdings | - | - | 17 | - |
| Other Non-Current assets | Common control under Sinochem Holdings | 21 | - | 52 | - |
| Prepayments | Common control under Sinochem Holdings | 19,208 | - | 34,393 | - |
| Minority shareholder and its subsidiary | 1,530 | - | - | - | |
Payable Items
| December 31 | December 31 | ||
| Items | Related Party Relationship | 2023 | 2022 |
| Trade payables | Common control under Sinochem Hold-ings | 272,928 | 426,454 |
| Minority shareholder and its subsidiary | 63 | - | |
| Other payables | Common control under Sinochem Hold-ings | 32,122 | 24,974 |
| Minority shareholder and its subsidiary | 1,826 | ||
| Contractual liability | Common control under Sinochem Hold-ings | 75,903 | 35,675 |
| Short-term loans * | Common control under Sinochem Hold-ings | 2,124,810 | 696,459 |
| Other non-current li-abilities * | Common control under Sinochem Hold-ings | 2,354,133 | 348,231 |
* Include liabilities are loans from a related party, the interest expenses for the year ended December 31,2023 is 139,457 thousand RMB (twelve months ended December 31, 2022: 19,688 thousand RMB ).
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)
On October 27, 2021, the Board of Directors first approved (following the approval of the Company’s AuditCommittee dated October 25, 2021) the Company, through one of its subsidiaries, entering into committedcredit facilities agreements in the aggregate amount of $100 million (RMB 708 million) on market termswith Syngenta Group, or any of its subsidiaries. Following the approvals of the Company’s requisite organs,these facilities were amended and further increased in December 2022 and in April 2023, to an aggregateamount of $400 million (RMB 2,833 million). As of December 31 2023, a total of $350 million (RMB 2,479million) was utilized.On August 28, 2023, the Board of Directors approved (following the approval of the Company’s AuditCommittee dated August 22, 2023) the Company, through one of its subsidiaries, entering into an additionalcommitted credit facility agreement in the amount of RMB 2,000 million with Syngenta Group, or any of itssubsidiaries. As of December 31, 2023, a total of RMB 2,000 million was utilized.
(5) Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was nil thousand RMB (31.12.22:
nil). Interest income of bank deposit for the current period was nil thousand RMB (amount for twelve monthsended December 31, 2022 was 90 thousand RMB).The closing balance of bank deposit in Sinochem Finance Corporation was 565,624 thousand RMB(31.12.22: 417,661) Interest income of bank deposit for the current period was 4,287 thousand RMB (amountfor twelve months ended December , 2022 was 3,372 thousand RMB ).The closing balance of a loan received from Sinochem Finance Corporation was nil thousand RMB(31.12.22: nil). The loan and the repayment during the year was 50,561 thousand RMB respectively. Inter-est expenses in the current period was 561 thousand RMB (amount for twelve months ended December ,2022 was nil thousand RMB).
XI. Commitments and contingencies
1. Significant commitments
| December 31 | December 31 | |
| 2023 | 2022 | |
| Investment in Fixed assets | 308,875 | 429,862 |
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 senior of-ficers of the Company (“D&O Liability Insurance) as originally approved by the 22nd meeting of the 7th sessionof Board of Directors and the 4th Interim Shareholders Meeting in 2017, and authorized the management toannually deal with all matters relating to renewal/extension of the customary D&O Liability Insurance policies,with up to 20% flexibility in the relevant terms of the original policy. On December 26, 2018 the 3rd InterimShareholders Meeting approved the above resolution. The current D&O Liability Insurance expires on April 30,2024.
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 the ap-plicable environmental laws and attempts to prevent or minimize the environmental risks that could occur as aresult 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.
Claims against subsidiariesIn the ordinary course of business, legal claims were filed against subsidiaries, including claims for patent in-fringement. 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 first place. In the opinion of the Company’s management, which is based, inter alia,on the opinions of its legal advisors regarding the prospects of the proceedings, the financial statements includeadequate provisions where necessary to cover the exposure resulting from the claims.
On October 20, 2020, a claim and a motion for its approval as a class action (the “Motion”) was filed againstMonsanto Company and Bayer AG (the “Manufacturers”) as well as against ADAMA Agan Ltd., a wholly-owned subsidiary of Solutions, with respect to an herbicide bearing the brand name Roundup, which is producedby the Manufacturers and distributed in Israel in small quantities by Solutions’ subsidiary. The applicants arguethat the product allegedly poses a risk to users or those who have been exposed to it. Solutions and its subsidiaryreject the allegations against the subsidiary in the Motion and in the statement of claim. Based on the opinionof Solutions’ external counsels given this preliminary stage, as of the date of the financial statements the Motionand claim are not expected to have any non-negligible effect on the Company’s financial results. In addition,and as Solutions is an authorized distributor of the Manufactures, the Manufactures undertook to fully indemnify,defend and hold harmless ADAMA Agan Ltd., for any monetary compensation or any other remedy it will haveto make in connection with the Motion.
XI. Commitments and contingencies - (cont’d)
2. Commitments and Contingent Liabilities - (cont’d)
Claims against subsidiaries (cont’d)In June 2021, a lawsuit was filed against a subsidiary of the Company, alleging two patents owned by a largecompetitor of the Company, have been infringed by such subsidiary. Among the claims, the plaintiff seekspreliminary and permanent injunctions to prevent the subsidiary from manufacturing, using or commercializinga product that allegedly infringes the plaintiff’s patents, and seeks actual damages and profits loss. The saidpreliminary injunctions were granted by the court in favor of the plaintiff. The subsidiary has filed appealsagainst such preliminary injunctions, which were rejected. Prior to such claims, and on-going, the subsidiaryfiled several lawsuits against the said plaintiff seeking to declare the said patents are invalid and the subsidiarydoes not infringe them. In May 2023, an additional lawsuit (including a preliminary injunction) was filed by thesame large competitor against said subsidiary, alleging infringement of the same two patents for a differentproduct. The said preliminary injunction was rejected by the court, and plaintiff’s appeals with respect theretoare pending. All these lawsuits are pending as of the approval date of the financial statements. At this stage, theclaims filed by the plaintiff are not expected to have a material effect on the Company.
Certain claims relating to alleged product liability damages were issued to a Company’s subsidiary. Based onthe opinion of the Company's external counsel, given their current stage, it is too early to assess these claims.
Various immaterial claims have been filed against Group companies in courts throughout the world, in imma-terial amounts, for causes of action primarily involving employee-employer relations and various civil claims,for which the Company did not record a provision in the financial statements. The claims that in the estimationof Company’s management, based on its legal advisors’ opinion, have lower chances of succeeding than beingrejected, amount to a negligible amount. Furthermore, claims were filed against the Company for product lia-bility damages, for which the Company has adequate insurance coverage, such that the Company’s exposure inrespect thereof is limited to the deductible amount or the amount thereof does not exceed the deductible amount.
Performance commitmentsWhen the Company acquired the equity interest in Adama Huifeng (shanghai) Agricultural Technology Co.,Ltd (“Adama Huifeng (Shanghai)”) and Adama Hiufeng (Jiangsu) Co. Ltd.(“Adama Huifeng (Jiangsu)") fromJiangsu Huifeng Biological Agriculture Co., Ltd (“Jiangsu Huifeng”) during 2020 and 2021, there were perfor-mance commitments made by Jiangsu Huifeng regarding specific business operations of the acquired subsidi-aries. If the performance commitments is not met, Jiangsu Huifeng shall make a price adjustment paymentcalculated based on a method as agreed. By the end of 2023 when the commitment period ended, the perfor-mance commitments has not been fulfilled. As of the date of this report, the Company has not received anyconfirmation from Jiangsu Huifeng for the price adjustment payment, nor has it received the correspondingprice adjustment payment. There are currently disputes between the Company and Jiangsu Huifeng regardingthe price adjustment payment, and there is uncertainty about the final realization of the above-mentioned priceadjustment payment. Therefore, it is not yet possible to make a reliable estimate of the amount and recoverabilityof the price adjustment payment.
XII. Events subsequent to the balance sheet date
The Company is not aware of any events subsequent to the balance sheet date.XIII. Share-based Payments
1. In February 2019, the remuneration committee and Solutions Board of Directors (as well as the General Meet-
ing with respect to theformer CEO and Vice President who also serves as a director) approved the allocationof 77,864,910 phantom warrants to officers and employees in accordance with the long-term phantom com-pensation plan (hereinafter - "the 2019 Plan"), out of which 75,814,897 phantom warrants were granted at thegrant date of February 21, 2019. During 2019, 1,206,081 additional Phantom warrants were granted.
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 | 30,196,487 |
| Total number of Phantom warrants granted in current period | - |
| Total number of Phantom warrants exercised in current period | (198,228) |
| Total number of Phantom warrants forfeited in current period | (938,250) |
| Total number of Phantom warrants at the end of the period | 29,060,009 |
| The exercise prices and the remainder of the contractual period for Phantom warrants outstanding at the end of period | RMB 9.87 – 10.85 2 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, 2019 (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 pay-ments (in thousands RMB) | 11,274 |
| Expenses arising from cash-settled share-based payments in current period (in thousands RMB) | (41,959) |
XIII. Share-based Payments - (cont’d)
2. In September 2019, the remuneration committee and Solutions Board of Directors (and the General Meeting
with 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 was deter-mined under the plan.
The fair value of the total granted alternative warrants at the allocated date is equal to the fair value of the totalwarrants 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 the bino-mial option pricing model and by the vesting period from the original grant date of the 2017 plan to the endof the service period determined by the alternative plan, taking into account the extent of the service that theemployees provided until that date and the stock price at the reporting date.
Statement of share based payments in the period
| Phantom warrants | |
| Changes in the number of 2017 Plan: | |
| Total number of Phantom warrants at the beginning of the period | 12,172,969 |
| Total number of Phantom warrants granted in current period | - |
| Total number of Phantom warrants exercised in current period | (82,738) |
| Total number of Phantom warrants forfeited in current period | (908,227) |
| Total number of Phantom warrants at the end of the period | 11,182,004 |
| The range of the exercise prices and the remainder of the contractual period for Phantom warrants outstanding at the end of period | RMB 9.37 – 9.43 2.75 years |
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 the alternative plan | The binomial pricing model |
| Accumulated amount of liabilities arising from cash-settled share-based pay-ments related to the alternative plan (in thousands RMB) | 7,127 |
| Expenses (income) arising from cash-settled share-based payments in cur-rent period related to the alternative plan (in thousands RMB) | (17,727) |
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 of conven-tional 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 equity in-vestments. 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
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 | |||||
| Year ended December 31 | Year ended December 31 | Year ended December 31 | Year ended December 31 | |||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| Operating income from external customers | 30,014,657 | 33,768,587 | 2,764,799 | 3,613,328 | - | - | 32,779,456 | 37,381,915 |
| Inter-segment operating income | - | - | 1,152 | 1,886 | (1,152) | (1,886) | - | - |
| Interest in the profit or loss of associates and joint ventures | - | - | 66,33 | 10,358 | - | - | 66,33 | 10,358 |
| Segment's results | 525,631 | 2,159,175 | 13,524 | 425,961 | - | - | 539,155 | 2,585,136 |
| Financial expenses | 1,183,118 | 325,796 | ||||||
| Loss from changes in fair value | (650,374) | (1,504,832) | ||||||
| Investment income | 742,21 | 2,325 | ||||||
| Profit (loss) before tax | (1,404,910) | 756,833 | ||||||
| Income tax expenses (income) | 200,977 | 147,442 | ||||||
| Net profit (loss) | (1,605,887) | 609,391 | ||||||
| Crop Protection | Intermediates and ingredients | Unallocated assets and liabilities | Total | |||||||||
| December 31 | December 31 | December 31 | December 31 | December 31 | December 31 | December 31 | December 31 | |||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||
| Total assets | 43,609,235 | 47,113,346 | 2,322,873 | 2,520,000 | 9,473,695 | 8,347,143 | 55,405,803 | 57,980,489 | ||||
| Total liabilities | 6,574,117 | 8,689,479 | 321,614 | 383,640 | 26,585,597 | 25,782,715 | 33,481,328 | 34,855,834 | ||||
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 mainly fixedassets, right-of-use assets, construction in progress, investment properties intangible assets and goodwill). Inthe case of investment property, fixed assets, right of used assets and construction in progress, the geographicallocation of the assets is based on its physical location. In case of intangible assets and goodwill, the geograph-ical location of the company which owns the assets.
| Operating income from external custom-ers | ||
| Year ended December 31 | ||
| 2023 | 2022 | |
| Europe, Africa and Middle East | 8,691,499 | 9,030,951 |
| North America | 5,770,415 | 6,895,702 |
| Latin America | 9,122,996 | 10,792,733 |
| Asia Pacific | 9,194,546 | 10,662,529 |
| 32,779,456 | 37,381,915 | |
| Specified non-current assets | ||
| December 31 | December 31 | |
| 2023 | 2022 | |
| Europe, Africa and Middle East | 14,258,655 | 13,365,820 |
| North America | 1,303,868 | 1,184,067 |
| Latin America | 2,303,208 | 2,482,569 |
| Asia Pacific | 5,747,484 | 5,862,043 |
| 23,613,215 | 22,894,499 | |
* As of 2023, the India, Middle East & Africa (IMA) region has been reorganized such that the countriesformerly included in this region are now included in the Europe region (renamed EAME) or in the Asia Pacificregion. The information for 2022 was re-classified accordingly.
2. 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
XIV. Other significant items - (cont'd)
3. Calculation of Earnings per share and Diluted earnings per share
| Amount for the current period | Amount for the prior period | |
| Net profit (loss) from continuing operations attributable to ordi-nary shareholders | (1,605,887) | 609,391 |
| Shares | Amount for the current period | Amount for the prior period |
| Number of ordinary shares outstanding at the beginning of the year | 2,329,811,766 | 2,329,811,766 |
| 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 | 2,329,811,766 |
| Amount for the current period | Amount for the prior pe-riod | |
| Calculated based on net profit attributable to ordinary shareholders | ||
| Basic earnings per share | (0.69) | 0.26 |
| Diluted earnings per share | N/A | N/A |
| Calculated based on net profit from continuing operations attributa-ble to ordinary shareholders: | ||
| Basic earnings per share | (0.69) | 0.26 |
| Diluted earnings per share | N/A | N/A |
| Calculated based on net profit from discontinued operations attribut-able to ordinary shareholders: | ||
| Basic earnings per share | N/A | N/A |
| Diluted earnings per share | N/A | N/A |
XV. Notes to major items in the Company's financial statements
1. Cash at bank and on hand
| December 31 | December 31 | |
| 2023 | 2022 | |
| Deposits in banks | 157,186 | 258,330 |
| Other cash and bank balances | 6,460 | 12,750 |
| 163,646 | 271,080 |
As at December 31, 2023, restricted cash and bank balances was 6,460 thousand RMB (as at December 31,2022: 12,750 thousand RMB).
2. Accounts receivable
a. By category
| December 31, 2023 | |||||||
| Book value | Provision for expected credit losses | ||||||
| Amount | Percentage (%) | Amount | Percentage (%) | Carrying amount | |||
| Account receivables assessed individually for impairment | 13,893 | 1 | 13,893 | 100 | - | ||
| Account receivables assessed collectively for impairment | 1,141,839 | 99 | - | - | 1,141,839 | ||
| 1,155,732 | 100 | 13,893 | 1 | 1,141,839 | |||
| December 31, 2022 | |||||
| Book value | Provision for expected credit losses | ||||
| Amount | Percentage (%) | Amount | Percentage (%) | Carrying amount | |
| Account receivables assessed individually for impairment | 13,893 | 2 | 13,893 | 100 | - |
| Account receivables assessed collectively for impairment | 758,471 | 98 | 9 | - | 758,462 |
| 772,364 | 100 | 13,902 | 2 | 758,462 | |
b. Aging analysis
| December 31, 2023 | |
| Within 1 year (inclusive) | 938,408 |
| Over 1 year but within 2 years | 203,431 |
| Over 2 years but within 3 years | - |
| Over 3 years but within 4 years | 15 |
| Over 4 years but within 5 years | 1 |
| Over 5 years | 13,877 |
| 1,155,732 |
XV. Notes to major items in the Company's financial statements - (cont'd)
2. Accounts receivable - (cont'd)
c. Addition, written-back and written-off of provision for expected credit losses during the period
| Year ended December 31, 2023 | |
| Balance as of January 1 | 13,902 |
| Addition during the year, net | - |
| Write back during the year | (9) |
| Write-off during the year | - |
| Exchange rate effect | - |
| Balance as of June 30 | 13,893 |
d. Five largest accounts receivable at December 31, 2023:
| Name | Closing balance | Proportion of Accounts re-ceivable (%) | Allowance of expected credit losses |
| Party 1 | 1,008,201 | 87 | - |
| Party 2 | 99,037 | 8 | - |
| Party 3 | 14,393 | 1 | - |
| Party 4 | 6,913 | 1 | - |
| Party 5 | 4,377 | 1 | - |
| 1,132,921 | 98 | - |
3. Receivable financing
| December 31 | December 31 | ||
| 2023 | 2022 | ||
| Bank acceptance draft | ,9297 | 2,596 | |
| ,9297 | 2,596 |
As at December 31, 2023, bank acceptance endorsed but not yet due amounts to 204,109 thousand RMB.
4. Other Receivables
| December 31 | December 31 | |
| 2023 | 2022 | |
| Other receivables | 11,611 | 11,611 |
| 11,611 | 11,611 |
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables - (cont'd)
(1) Other receivables
a. Other receivables by categories
| December 31 | December 31 | |
| 2023 | 2022 | |
| Other | 16,987 | 17,633 |
| Provision for expected credit losses | (5,376) | (6,022) |
| 11,611 | 11,611 |
b. Other receivables by aging
| December 31, 2023 | |
| Within 1 year (inclusive) | - |
| Over 1 year but within 2 years | 113 |
| Over 2 years but within 3 years | 91 |
| Over 3 years but within 4 years* | 11,830 |
| Over 4 years but within 5 years | - |
| Over 5 years | 4,953 |
| 16,987 |
* Include intergroup balance with Anpon
c. Additions, recovery or reversal and written-off of provision for expected credit losses during the
period:
| Year ended December 31, 2023 | ||
| Balance as of January 1, 2023 | 6,022 | |
| Addition during the period | - | |
| Written back during the period | (646) | |
| Write-off during the period | - | |
| Balance as of December 31, 2023 | 5,376 |
d. Five largest other receivables at December 31 2023:
| Name | Closing balance | Proportion of other re-ceivables (%) | Credit loss provision |
| Party 1* | 11,611 | 68 | - |
| Party 2 | 3,125 | 19 | 3,125 |
| Party 3 | 548 | 3 | 548 |
| Party 4 | 237 | 1 | 237 |
| Party 5 | 221 | 1 | 221 |
| 15,742 | 92 | 4,131 |
* Include intergroup balance with Anpon
XV. Notes to major items in the Company's financial statements - (cont'd)
5. Long-term equity investments
| December 31, 2023 | December 31, 2022 | |||||
| Amount balance | Impairment loss | Book value | Amount balance | Impairment loss | Book value | |
| Invest in subsidiaries | 17,511,352 | 80,636 | 17,430,716 | 17,511,352 | - | 17,511,352 |
| 17,511,352 | 80,636 | 17,430,716 | 17,511,352 | - | 17,511,352 | |
Investments in subsidiaries
| Invested unit | Opening balance | Increase | Decrease | Provision of impairment loss | Closing bal-ance | Balance of Impairment 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 | - | - | (59,024) | 789,116 | (59,024) |
| Hubei Sanonda Foreign Trade Co. Ltd. | 11,993 | - | - | - | 11,993 | - |
| Adama Huifeng (shanghai) Agricul-tural Technology Co., Ltd | 310,557 | - | - | (21,612) | 288,945 | (21,612) |
| 17,511,352 | - | - | (80,636) | 17,430,716 | (80,636) |
6. Operating Income and operating costs
| Year ended December 31, 2023 | Year ended December 31, 2022 | |||
| Revenue | Operating costs | Revenue | Operating costs | |
| Main operations | ,968,6171 | ,661,6221 | 2,255,382 | 1,756,979 |
| Other operations | 9,9573 | 6,4751 | 42,516 | 20,086 |
| ,008,5742 | ,678,0971 | 2,297,898 | 1,777,065 | |
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
| Year ended Decem-ber 31, 2023 | Year ended De-cember 31, 2022 | |
| Interest income | ,5848 | 8,605 |
| Government subsidies | 0,5241 | 13,409 |
| Other | 0,0552 | 92,257 |
| 9,1633 | 114,271 |
(2) Other cash paid relevant to operating activities
| Year ended De-cember 31, 2023 | Year ended De-cember 31, 2022 | |
| Professional services | 0,0498 | 57,109 |
| Transportation and Commissions | 46,924 | 47,140 |
| Other | 29,749 | 20,654 |
| 156,722 | 124,903 |
(3) Other cash received relevant to investing activities
| Year ended De-cember 31, 2023 | Year ended De-cember 31, 2022 | |
| Loans | 125,000 | 150,000 |
| Other | 6,042 | - |
| 131,042 | 150,000 |
(4) Other cash paid relevant to investing activities
| Year ended De-cember 31, 2023 | Year ended De-cember 31, 2022 | |
| Loans | 125,000 | 250,000 |
| 125,000 | 250,000 |
(5) Other cash received relevant to financing activities
| Year ended De-cember 31, 2023 | Year ended De-cember 31, 2022 | |
| Deposit for issuing bills payables | 15,960 | 24,865 |
| 15,960 | 24,865 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
(6) Other cash paid relevant to financing activities:
| Year ended De-cember 31, 2023 | Year ended De-cember 31, 2022 | |
| Deposit for issuing bills payable | 9,670 | 31,491 |
| Other | 276 | - |
| 0,2971 | 31,491 |
8. Supplementary information to cash flow statement
(1) Reconciliation of net profit to net cash flows generated from operating activities:
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Net profit | 311,196 | 23,354 | |
| Add: Asset Impairment reversal (losses) | 91,574 | (2,816 ) | |
| Credit impairment reversal (losses) | (655) | 48 | |
| Depreciation of fixed assets and investment property | 229,740 | 209,319 | |
| Depreciation of-right-of use assets | 2,588 | 2,611 | |
| Amortization of intangible assets | 12,091 | 11,638 | |
| Gain (losses) on disposal of fixed assets, intangible assets and other long-term assets | 1,509 | (57,735 ) | |
| Losses (gains) from changes in fair value | (230,135 ) | 314,670 | |
| Financial expenses | 37,478 | 54,209 | |
| Investment income | (29,818) | (13,811 ) | |
| Increase in deferred income tax assets | (295 ) | (14,715 ) | |
| Decrease (increase) in inventory | 30,107 | (32,857 ) | |
| Increase in accounts receivable from operating activities | (395,607 ) | (468,030 ) | |
| Increase (decrease) in payables from operating activities | (21,569 ) | 115,250 | |
| Net cash flows generated from operating activities | 38,204 | 141,135 | |
(2) Net increase in cash and cash equivalents
| Year ended December 31 | ||
| 0232 | 2022 | |
| Closing balance of cash | 57,1861 | 258,330 |
| Less: Opening balance of cash | 58,3302 | 259,434 |
| Net increase in cash and cash equivalents | 101,144)( | (1,104 ) |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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
| Company name | Registered place | Business nature | Registered capital (Thou-sand RMB) | Shareholding percentage | Percentage of voting rights |
| Syngenta Group | Shanghai, China | Production and sales of agrochemicals, fer-tilizers and GM seeds | 11,144,545 | 78.47% | 78.47% |
The ultimate controlling shareholder is Sinochem Holdings .
(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
| Year ended December 31 | |||
| 2023 | 2022 | ||
| Summary of Purchase of goods/services received: | Related Party Relationship | ||
| Purchase of goods/services received | Common control un-der Sinochem Holdings | 93,784 | 167,796 |
| Subsidiary | 96,774 | 112,665 | |
| Purchase of fixed assets and other assets | Common control un-der Sinochem Hold-ings | 1,273 | 4,150 |
| Summary of Sales of goods: | |||
| Sale of goods | Common control under Sinochem Holdings | 5,742 | 25,030 |
| Subsidiary | 833,826 | 981,757 | |
| Rendering of services | Subsidiary | 385 | 1,487 |
XV. Notes to major items in the Company's financial statements - (cont'd)
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
b. Guarantees
The Company as the guarantor
| Amount of guaranteed loan | Inception date of guar-anty | Maturity date of guar-anty | Guaranty completed (Y/ N) | ||||
| Subsidiary | 20,000 | 2022.12.16 | 2023.12.12 | Y | |||
| 40,000 | 2022.01.18 | 2023.01.17 | Y | ||||
| 30,000 | 2022.03.30 | 2023.03.29 | Y | ||||
| 36,000 | 2021.12.01 | 2024.12.28 | N | ||||
| 35,000 | 2022.01.01 | 2025.11.28 | N | ||||
| 21,000 | 2022.02.28 | 2027.11.28 | N | ||||
| 14,000 | 2022.03.28 | 2027.11.28 | N | ||||
| 7,500 | 2022.05.20 | 2027.11.28 | N | ||||
| 23,500 | 2022.06.26 | 2027.11.28 | N | ||||
| 10,000 | 2022.10.31 | 2027.11.28 | N | ||||
| 11,000 | 2022.11.30 | 2027.11.28 | N | ||||
| 40,000 | 2023.08.10 | 2024.08.08 | N | ||||
| 10,000 | 2023.01.12 | 2025.06.20 | N | ||||
| 20,000 | 2022.11.17 | 2024.12.20 | N | ||||
| 12,000 | 2023.04.03 | 2025.06.20 | N | ||||
| 3,000 | 2023.07.28 | 2027.11.10 | N | ||||
| 5,000 | 2023.10.17 | 2027.11.10 | N | ||||
| 4,000 | 2022.01.25 | 2026.09.28 | N | ||||
| 3,900 | 2022.02.28 | 2026.09.28 | N | ||||
| 8,100 | 2022.07.12 | 2026.09.28 | N | ||||
| 2,000 | 2023.04.13 | 2026.09.28 | N | ||||
| 10,000 | 2022.08.11 | 2028.06.22 | N | ||||
| 10,000 | 2022.08.31 | 2028.06.22 | N | ||||
| 11,000 | 2022.10.28 | 2027.06.22 | N | ||||
| 25,000 | 2022.11.23 | 2026.12.22 | N | ||||
| 10,000 | 2023.01.16 | 2026.06.22 | N | ||||
| 14,000 | 2023.04.04 | 2026.06.22 | N | ||||
| 2,000 | 2023.04.26 | 2028.05.05 | N |
XV. Notes to major items in the Company's financial statements - (cont'd)
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
b. Guarantees - (cont'd)
The Company as the guarantee receiver
| Guarantee provider | Amount of guaranteed loan | Inception date of guaranty | Maturity date of guaranty | Guaranty com-pleted (Y / N) |
| Parent company | 313,000 | 21/04/2021 | 20/04/2028 | N |
| 70,795 | 01/06/2021 | 31/05/2028 | N |
During the reporting period, the Company paid a guarantee fee amounting to 434 thousand RMB(2022: 451) to the parent company.
c. Intercompany borrowings/lending
| Related party | Borrowing/ Lending amount | Commencement date | Termination date | Balance at year end | Note |
| Lending | |||||
| Subsidiary | 50,000 | 2022.5 | 2023.12 | - | Fixed rate at 2.4% |
| Subsidiary | 40,000 | 2022.6 | 2023.12 | - | Fixed rate at 2.4% |
| Subsidiary | 35,000 | 2022.6 | 2023.12 | - | Fixed rate at 2.4% |
| Subsidiary | 125,000 | 2022.6 | 2024.05 | 125,000 | Fixed rate at 2.4% |
| Subsidiary | 125,000 | 2023.12 | 2025.12 | 125,000 | Fixed rate at 2.4% |
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)
d. Receivables from and payables to related parties (including loans)
Receivable Items
| December 31 | December 31 | ||||
| 2023 | 2022 | ||||
| Items | Related Party Relation-ship | Book Balance | Ex-pected credit losses | Book Balance | Expected credit losses |
| Trade receivables | Subsidiary | 1,008,497 | 548,601 | - | |
| Non-current as-sets within one year | Subsidiary | 125,000 | 125,000 | - | |
| Other non-current assets | Subsidiary | 125,000 | 125,000 | - | |
| Other receivables | Subsidiary | 11,611 | 11,611 | - | |
| Trade receivables | Common control under Sinochem Holding | - | 304 | - | |
| Prepayments | Common control under Sinochem Holding | 497 | 537 | - | |
| Other non-current assets | Common control under Sinochem Holding | 21 | 52 | - | |
Payable Items
| December 31 | December 31 | ||
| Items | Related Party Relationship | 2023 | 2022 |
| Trade payables | Subsidiary | 1,383 | 5,686 |
| Trade payables | Common control under Sinochem Holdings | 9,493 | 46,152 |
| Other payables | Subsidiary | 436,815 | 395,152 |
| Common control under Sinochem Holdings | 507 | 700 |
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)
e. Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was nil (231.12.2: nil). Inter-est income of bank deposit for the current period was nil (amount for period ended December 31, 2022was 67 thousand RMB).
The closing balance of bank deposit in SinoChem Finance Corporation was 26,552 thousand RMB(231.12.2: 202,615 thousand RMB) Interest income of bank deposit for the current period was 1,960thousand RMB (amount for period ended December 31, 2022 was 1,617 thousand RMB).
ADAMA Ltd. Annual Report 2023
Supplementary information(Expressed in RMB '000)
1. Extraordinary Gain and Loss
| Year ended | |
| December 31, 2023 | |
| Disposal of non-current assets | 19,679 |
| Government grants recognized through profit or loss | 20,743 |
| Recovery or reversal of expected credit losses which is assessed individually during the years | 57,422 |
| Post vesting fair value revaluation of cash-settled share based payment | 41,959 |
| Gains or losses arising from the holding or disposal of financial assets or financial lia-bilities by non financial corporations, except for effective hedging related to the nor-mal operating of the Company | 123,315 |
| Other non-operating income or expenses other than the above | 31,747 |
| Tax effect | (49,261) |
| 245,604 |
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 for Infor-mation Disclosure by Companies Offering Securities to the Public No. 9 – Calculation and Disclosure ofReturn on net assets and Earnings per share (2010 Amendment) issued by China Securities RegulatoryCommission.
| 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 | (7.13) | (0.69) | N/A | ||
| Net profit after deduction of extraordinary gains/losses attributable to ordinary shareholders of the Company | (8.26) | (0.79) | N/A | ||
| ADAMA Ltd. Legal Representative: Steven Hawkins March 25th, 2024 |