ADAMA Reports Fourth Quarter and Full Year 2023 ResultsManagement focus led to a significant improvement in cash flow despite
challenging market conditions negatively impacting sales and profit
Fourth Quarter 2023 Highlights:
? Sales down 13% to $1,136 million (-13% in RMB terms; -14% in CER
terms), mainly reflecting a15% decrease in prices and a 1% increase in volumes? Adjusted EBITDA amounted to $95 million vs. $129 million in Q4 2022? Adjusted net loss of $101 million; Reported net loss of $79 million? Operating Cash Flow of $293 million vs $352 million in Q4 2022? Free Cash Flow of $130 million vs $204 million in Q4 2022Full Year 2023 Highlights:
? Sales down 16% to $4,661 million (-12% in RMB terms; -15% in CER terms), mainly reflecting a8% decrease in prices and a 7% decrease in volumes? Adjusted EBITDA amounted to $407 million vs. $740 million in the full year of 2022? Adjusted net loss of $236 million; Reported net loss of $225 million? Operating Cash Flow of $356 million vs $106 million in 2022? Free Cash Flow of -$147 million vs -$417 million in 2022
BEIJING, CHINA and TEL AVIV, ISRAEL, March 26, 2024 – ADAMA Ltd. (the “Company”) (SZSE000553), today reported its financial results for the fourth quarter and full year ended December 31,2023.Steve Hawkins, President and CEO of ADAMA, said, "The crop protection industry as a whole facedchallenging market conditions throughout 2023, resulting from high channel inventory and ongoingdestocking at the distributor level. In response, ADAMA took immediate steps that supported asignificant improvement in cashflow in 2023, highlighting our strong execution ability."In addition to the significant improvement in cashflow, we improved the sales mix of higher marginproducts, reduced operating expenses and inventory. These, however, are only the first steps toensure the Company is fully prepared to take advantage of anticipated market opportunities in 2024and onwards. To fully respond to the long-term as well as short-term market challenges, we launchedan intensive transformation plan aimed at improving the quality of the business and revaluing ADAMA.We will focus on winning in the largest growing segment of the market – the value innovation segment– with our outstanding pipeline of differentiated products powered by our proprietary formulationtechnologies. Coupled with resolute focus on improving our cost base and leveraging our strongcommercial engine and customer driven culture, I am confident that we will succeed to revalue theCompany going forward. I expect to share key milestones as the year progresses."
CER – Constant Exchange Rates
Table 1. Financial Performance Summary
| USD (m) | As Reported | Adjustments | Adjusted | ||||||||
| Q4 2023 | Q4 2022 | % Change | Q4 2023 | Q4 2022 | Q4 2023 | Q4 2022 | % Change | ||||
Revenues
| Revenues | 1,136 | 1,312 | (13%) | - | - | 1,136 | 1,312 | (13%) | |||
| Gross profit | 220 | 304 | (28%) | 24 | 36 | 245 | 341 | (28%) | |||
| % of sales | 19.4% | 23.2% | 21.5% | 26.0% | |||||||
| Operating income (loss) (EBIT) | (27) | 26 | 51 | 28 | 24 | 55 | (56%) | ||||
| % of sales | (2.4%) | 2.0% | 2.1% | 4.2% | |||||||
| Loss before taxes | (42) | (20) | (23) | (18) | (65) | (39) | |||||
| % of sales | (3.7%) | (1.6%) | (5.7%) | (2.9%) | |||||||
| Net income (loss) | (79) | (22) | (22) | (19) | (101) | (42) | |||||
| % of sales | (6.9%) | (1.7%) | (8.9%) | (3.2%) | |||||||
| EPS | |||||||||||
| - USD | (0.0338) | (0.0096) | (0.0434) | (0.0178) | |||||||
| - RMB | (0.2418) | (0.0681) | (0.3099) | (0.1265) | |||||||
| EBITDA | 86 | 127 | (32%) | 9 | 2 | 95 | 129 | (27%) | |||
| % of sales | 7.5% | 9.6% | 8.3% | 9.8% |
| USD (m) | As Reported | Adjustments | Adjusted | ||||||||
| FY 2023 | FY 2022 | % Change | FY 2023 | FY 2022 | FY 2023 | FY 2022 | % Change | ||||
Revenues
| Revenues | 4,661 | 5,570 | (16%) | - | - | 4,661 | 5,570 | (16%) | |||
| Gross profit | 968 | 1,403 | (31%) | 91 | 162 | 1,060 | 1,565 | (32%) | |||
| % of sales | 20.8% | 25.1% | 22.7% | 28.1% | |||||||
| Operating income (EBIT) | 62 | 389 | (84%) | 79 | 68 | 141 | 458 | (69%) | |||
| % of sales | 1.3% | 7.0% | 3.0% | 8.2% | |||||||
| Income (loss) before taxes | (197) | 118 | (10) | 25 | (207) | 144 | |||||
| % of sales | (4.2%) | 2.1% | (4.4%) | 2.6% | |||||||
| Net income (loss) | (225) | 96 | (11) | 21 | (236) | 118 | |||||
| % of sales | (4.8%) | 1.7% | (5.1%) | 2.1% | |||||||
| EPS | |||||||||||
| - USD | (0.0964) | 0.0413 | (0.1013) | 0.0505 | |||||||
| - RMB | (0.6893) | 0.2616 | (0.7260) | 0.3177 | |||||||
| EBITDA | 400 | 731 | (45%) | 7 | 9 | 407 | 740 | (45%) | |||
| % of sales | 8.6% | 13.1% | 8.7% | 13.3% |
Notes:
? “As Reported” denotes the Company’s financial statements according to the Accounting Standards for Business Enterprises and the
implementation guidance, interpretations and other relevant provisions issued or revised subsequently by the Chinese Ministry ofFinance (the “MoF) (collectively referred to as “ASBE”). Note that in the reported financial statements, according to the ASBE guidelines[IAS 37], certain items (specifically certain transportation costs and certain idleness charges) are classified under COGS. Please seethe appendix to this release for further information.? Relevant income statement items contained in this release are also presented on an “Adjusted” basis, which exclude items that are ofa transitory or non-cash/non-operational nature that do not impact the ongoing performance of the business, and reflect the way theCompany’s management and the Board of Directors view the performance of the Company internally. The Company believes thatexcluding the effects of these items from its operating results allows management and investors to effectively compare the trueunderlying financial performance of its business from period to period and against its global peers. A detailed summary of theseadjustments appears in the appendix below.? The number of shares used to calculate both basic and diluted earnings per share in both Q4 & FY 2023 and 2022 is 2,329.8 millionshares.? In this table and all tables in this release numbers may not sum due to rounding.
The General Crop Protection (CP) Market Environment
Key commodity crop prices declined substantially during 2023 as weather conditions normalized andthe global crop supply situation improved. However, key commodity crop prices were still relativelyhigh through 2023, supporting planted area and investment in crops, leading to healthy demand, atthe farmer level, of crop inputs, including crop protection products. However, due to very high channelinventory across all geographies, channel demand was weak during 2023. The high interest rateenvironment 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 sharplyacross the entire industry. Going into 2024, channel inventories have improved across mostgeographies but they have still not normalized everywhere. The cost environment further improved in2023 as active ingredient prices in China continued to decline all through 2023 reaching low levels.Update on the War Situation in IsraelADAMA is headquartered in Israel and has three manufacturing sites in the country. Following October
th, 2023, the Company continued the production in its global manufacturing sites and in Israel, withcertain non-significant restrictions (which have been lifted in February 2024). This situation did nothave a material impact on the Company's ability to support its markets or on ADAMA’s consolidatedfinancial results.Update on Impact of Shipping ObstructionsIn January 2024 some major shipping lines announced that they will suspend shipping to Israelthrough Israeli ports and through the Suez Canal due to tensions in the Red Sea. This has led tolonger transportation times, with shipping lines being diverted around Africa.As of the date of publication of this report, shipping time and costs have increased significantly, mainlyin the Asia-Pacific Israel route in comparison to before January 2024. These cost increases impactonly a small portion of the Company's overall shipping costs and ADAMA has been ordering relevantmaterials ahead of time to ensure timely supply. Currently, the Company does not anticipate this tohave a significant impact on its financial results or on the ongoing supply of materials to its productionfacilities, although this situation might impact the company's ability to respond quickly to changingmarket demand.
Sources: Agbio Investor preliminary 2023 market estimation, CCPIA (China Crop Protection Industry Association), peer quarterly
financial reports, internal sources
Turnaround Plan
As a result of the challenges in the crop protection industry in 2023, as described above, the Companyhas initiated a plan to revalue ADAMA through improving the quality of the business to turnaround theCompany.This turnaround plan has three main pillars:
(i) Market repositioning - focusing on Value Innovation, the market space where innovation is
served not through new active ingredients but by innovation at the product level using existingactive ingredients enhanced by proprietary formulations;(ii) Optimizing ADAMA's product portfolio to focus on quality of business through strategic crop
segments within the customer market segment of Value Innovation;(iii) Improving ADAMA’s cost of goods and operating expenses.As part of this plan, the Company has initiated organizational changes to improve efficiencies that alsoinclude adjusting the workforce. These have begun with streamlining the Company's seniormanagement team to ensure efficient decision making, while changes have also been made in theCompany's R&D, marketing commercial and operations, all in order to support the Company incapturing the opportunity of Value Innovation.SustainabilityIn ADAMA's 2022 Environmental, Social, and Corporate Governance (ESG) report, published July2023, it set a target of reducing scope 1 and 2 carbon emissions by 5% on average every year until2030, in order to support the 1.5°C Paris Agreement.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'sproprietary formulation technology platform for high-load and other challenging formulations,enabling less use of co-formulants, transport and packaging materials per acre treated with aresulting improved product sustainability profile. The product launched was the herbicideFullScript?, launched in the US.? During 2023 ADAMA continued to register and launch products based on its proprietaryAsorbital
?
formulation technology platform a unique formulation that improves the leafpenetration and systemic movement of the Active Ingredient in the plant, while minimizingenvironmental impact. This technology provides greater efficacy and sustainability and can beused to reduce application rates.? Expanded use of containers with reduced environmental impact – Containers that havebeen redesigned to a rectangular shape from a cylinder allow for product to be placed moredensely on pallets and trucks, enabling a 45% increase in product packed, reducingtransportation 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
geographies bringing a reduction of 17.2% in GHG emissions, eliminating the release of up to340 metric tons of CO2e into the atmosphere annually.Sustainability in manufacturing:
? Shift of Company vehicles to electrical – during 2023 52% of ADAMA's forklifts at itsmanufacturing sites in Israel and 42% of its private cars in Israel transitioned to electrical. Thistrend will continue in 2024, aiming to double the number of electrical forklifts and increase by20% the number of electrical private cars. The electrical forklifts saved 160,000 liters of dieselin 2023.? Recycling hazardous waste back to raw materials – ADAMA collaborates with inhouse or
external recycling companies to reuse/recycle 13,817 tons of hazardous wastes back to rawmaterials utilizing by its own operations or other industries. In Israel, ADAMA operates twoplastic recycling centers at its largest formulation sites, Agan and Beer Sheva. These centersclean contaminated plastic packing products, allowing the use of the plastic to produce pipesin the construction and communication sectors.Portfolio Development Update
Product Launches, Registrations & Formulation Mastery Update:
During 2023 ADAMA continued to register and launch multiple new products in markets across theglobe, adding on to its differentiated product portfolio. New Product Introductions (NPI) percentageout of the full year sales of 2023 reached 22%, referring to products launched over the past 5 years.Differentiated products include products that are based on recently off-patented active ingredients(AI's) that have been classified as high commercial potential - "Core Leap" AI's, and products that arebased on unique proprietary formulations, products with more than one mode of action, and biologicals.Launch of 11 new differentiated products during 2023 in select countries including the followingproducts during the fourth quarter:
? Continued roll out in Europe of ADAMA's prothioconazole products based on Asorbital
?
formulation mastery technology platform, including Maganic
?
and Forapro
?
in Sweden? Launch in India of Trassid
TM
, a unique insecticide designed to offer a superior control in highvalue crops. Trassid
TM
represents ADAMA's first active ingredient Spinetoram basedsolution? Launch in Peru of Actavan
?
, a bio- fungicide for use in fruits. Actavan
?
was developed incollaboration with the New Zealand company Waikaitu Ltd. Actavan
?is an addition toADAMA's biological product portfolio in LATAMRegistration of 20 new differentiated products during 2023 in select countries including the followingproducts during the fourth quarter:
? Registration of prothioconazole based products, part of ADAMA's comprehensive portfolio ofinnovative solutions for cereal fungicides in Europe, including:
o Forapro
?
in Poland, powered by ADAMA’s proprietary Asorbital
?FormulationTechnologyo Soratel
?
in Latvia, powered by ADAMA’s proprietary Asorbital
?Formulation Technologyo Maxentis
?
in Ireland, a dual mode broad spectrum fungicide
? Registration of two insecticides based on "Core Leap" AI, Chlorantraniliprole (CTPR), RYNO-
A
?
in Canada and Cosayr
?
in South Korea? Registration in Hungary of Actavan
?, a bio- fungicide for use in fruits. Actavan
?
wasdeveloped in collaboration with the New Zealand company Waikaitu Ltd.? Registration in Canada of Outshine All In? and ForceFighter All In?, two triple mode-of-action herbicidesSelect patent granted during the fourth quarter of 2023 includes:
? Patent granted in India for ADAMA's unique Granular Formulation of the product Barroz
?
adual mode insecticide for use in rice.Financial Highlights
Revenues in the fourth quarter declined by approximately 13% (-13% in RMB terms; -14% in CERterms) 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 of high channel inventories, last-minute purchasingfollowing channel destocking in light of high interest rates and pressure on crop protection productpricing due to the lower channel demand and lower active ingredient pricing.These results brought the revenues in the full year of 2023 to $4,661 million, a decline of approximately16% (-12% in RMB terms; -15% in CER terms), reflecting a decrease of 8% in prices and a decreaseof 7% in volumes. This is in comparison to the record sales the Company achieved in 2022, whichreflected the high demand due to supply uncertainty in the market.
Table 2. Regional Sales Performance
Notes:
CER: Constant Exchange RatesNumbers may not sum due to rounding
* 2022 denote proforma sales. As of 2023, the India, Middle East & Africa (IMA) region has beenreorganized such that the countries formerly included in this region are now included in the Europeregion (renamed EAME – Europe, Africa & Middle East) or in the Asia Pacific region.Europe, Africa & Middle East (EAME): Sales in EAME decreased in the fourth quarter and fullyear of 2023 impacted by high channel inventories, erratic weather patterns and channeldestocking, leading to lower volumes and pressure on prices. While the Company maintainedpricing in the first half of 2023, pricing pressure was more notable in the second half of the yearwith increased market competition. In Central Eastern Europe demand was particularly impacted
| Q4 2023 $m | Q4 2022 $m | Change USD | Change CER | FY 2023 $m | FY 2022 $m | Change USD | Change CER |
Europe, Africa & Middle East*
| Europe, Africa & Middle East* | 241 | 301 | (20%) | (20%) | 1,240 | 1,352 | (8%) | (5%) |
North America
| North America | 252 | 291 | (14%) | (14%) | 820 | 1,027 | (20%) | (20%) |
Latin America
| Latin America | 379 | 431 | (12%) | (15%) | 1,292 | 1,592 | (19%) | (22%) |
Asia Pacific*
| Asia Pacific* | 264 | 288 | (8%) | (8%) | 1,308 | 1,598 | (18%) | (14%) |
Of which China
| Of which China | 97 | 130 | (25%) | (24%) | 550 | 735 | (25%) | (21%) |
Total
| Total | 1,136 | 1,312 | (13%) | (14%) | 4,661 | 5,570 | (16%) | (15%) |
by lower grain market prices and negative weather impacted the cereal season in the North.Despite this, the Company focused on quality of the business, with sales in the UK increasing inthe full year supported by new product introductions.North America: Consumer & Professional Solutions – Sales in the fourth quarter and twelve-month period were lower than the corresponding periods. In the consumer market demand wasimpacted by a decline in disposable income, an outcome of inflationary pressures and highinterest rates, while in the professional market this was due to demand being supplied from thechannel inventories. Despite this, the professional market has begun showing signs ofnormalization returning to pre-COVID channel inventory levels for branded products, whilecommoditized products are still being held at and lower levels reflecting just-in-time purchasingpatterns.In the US Ag market sales in the fourth quarter and the twelve-month period reflected low demand,weak pricing and strong competition due to high inventory levels at manufactures. While inventorylevels in the channel are steadily declining, manufactures are still holding high inventory levelsleading to strong competition, thus pricing is still not presenting a recovery with the market leaninginto just-in-time purchasing patterns.ADAMA reached record sales in Canada in the fourth quarter following expansion to newbusiness segments as well as renewed demand with the restocking in certain segments whereinventories had normalized coming out of the 2023 application season. Despite this, sales in thefull year of 2023 remained mostly flat, also impacted by soft pricing for commoditized productsand dry weather conditions in western Canada.Latin America: Brazil – the Company's sales in the fourth quarter and full year declined followingcontraction of the overall crop protection market due to drought conditions leading to a weaksoybean crop season, channel destocking and softer pricing. ADAMA focused on improving thequality of the business with differentiated products and reducing the share of highly generic sales.Such differentiated products included Almada
?
(fungicide against soybean rust), Forasteiro
?
(herbicide for pasture) and Araddo
?(herbicide for soybean and cotton).In the rest of LATAM the sales in the fourth quarter recovered and increased with thenormalization of channel inventories in most countries while sales remained flat in the full year of2023, mainly impacted by pricing of commoditized products. It is noteworthy that the Companygained market share in key countries Argentina, Paraguay, Columbia and Mexico, while focusingon improving the quality of the business. Additionally, the Company's biologicals portfoliocontinued to be well received in specialty export countries. El Ni?o was a positive impact on thesouthern part of the region, with very good rains and was challenging for the Northern part of theregion.Asia-Pacific (APAC):
In China, the market is still experiencing high channel inventories and pricing pressure especiallyin commodities impacting both the branded formulation and non-ag sales. Sales were supportedby the branded business, driven by recent and new launches of differentiated products, andADAMA's active ingredient business which recovered substantially, benefiting from the SanondaJingzhou site reaching high utilization after relocation.In the Pacific region, sales in the full year and fourth quarter were impacted by high channelinventories and pricing pressure, combined with just in time purchasing patterns. In Australia,dryer weather also impacted sales. Despite this, sales benefited from the launch of thedifferentiated product Grindstone
?
and the Company's biologicals portfolio.Sales in India declined over the full year period following high channel inventory, creatingpressure on pricing in the market. Moreover, the erratic weather did not support the consumption
of such inventory. Despite this, it is noteworthy that differentiated product Trassid
TMwas wellaccepted in the market and along with increased focus on farmer demand generation, theCompany's sales increase in Q4.Sales in the wider APAC region continued to experience pricing pressure, particularly fromcommoditized products. Despite this, particularly noteworthy was the performance of theCompany's sales in South Korea resulting in market share gain, supported by positive weatherconditions.Gross Profit reported in the fourth quarter reached $220 million (gross margin of 19.4%) comparedto $304 million (gross margin of 23.2%) in the same quarter last year and reached $968 million (grossmargin of 20.8%) in the full year compared to $1,403 million (gross margin of 25.2%) last year.
Adjustments to reported results: The adjusted gross profit includes reclassification of allinventory impairment, taxes and surcharge and excludes certain transportation costs(classified under operating expenses).Adjusted gross profit in the fourth quarter reached $245 million (gross margin of 21.5%) comparedto $341 million (gross margin of 26.0%) in the same quarter last year and reached $1,060 million(gross margin of 22.7%) in the full year compared to $1,565 million (gross margin of 28.1%) last year.The decline in the gross profit in the fourth quarter and full year of 2023 was mainly due to the weakpricing, as described above, moderated by the positive impact of new inventory sold, priced at marketlevels and an improvement in the sales mix of higher margin products, following management focuson the quality of business. Exchange rates had an adverse impact in the full year and a positive impactin the fourth quarter, in comparison to the same periods in 2022.Operating expenses reported in the fourth quarter and full year of 2023 were $247 million (21.8% ofsales) and $906 million (19.4% of sales), compared to $278 million (21.2% of sales) and $1,013 million(18.2% of sales) in the corresponding periods last year, respectively.Adjustments to reported results: please refer to the explanation regarding adjustments to the grossprofit in respect to certain transportation costs, taxes and surcharges and inventory impairment.
Additionally, the Company recorded certain non-operational items within its reportedoperating expenses amounting to $49 million in Q4 2023 in comparison to $26 million inQ4 2022 and $75 in FY 2023 in comparison to $57 in FY 2022. These include mainly (i)fixed asset impairment, (ii) non-cash amortization charges in respect of Transfer Assetsreceived from Syngenta related to the 2017 ChemChina-Syngenta acquisition, (iii)charges related to the non-cash amortization of intangible assets created as part of thePurchase Price Allocation (PPA) on acquisitions, with no impact on the ongoingperformance of the companies acquired, (iv) measures to improve efficiencies and (v)incentive plans - share-based compensation. For further details on these non-operationalitems, please see the appendix to this release.Adjusted operating expenses in the fourth quarter and full year were $220 million (19.4% of sales)and $918 million (19.7% of sales), compared to $286 million (21.8% of sales) and $1,107 million (19.9%of sales) in the corresponding periods last year, respectively.The operating expenses were lower in the fourth quarter and full year of 2023 mainly due to OPEXmanagement measures taken by the Company to address the market conditions, a reduction inperformance-based compensation, lower transportation and logistics costs and the positive impact ofexchange rates. Additionally, in the full year of 2022 the Company recorded a provision for doubtfuldebts in Ukraine.Operating income (loss) reported in the fourth quarter reached a loss of $27 million (-2.4% of sales)compared to an income of $26 million (2.0% of sales) in the same quarter last year and amounted to
an income of $62 million (1.3% of sales) in the full year compared to an income of $389 million (7.0%of sales) last year.Adjusted operating income in the fourth quarter reached $24 million (2.1% of sales) compared to$55 million (4.2% of sales) in the same quarter last year and amounted to an income of $141 million(3.0% of sales) in the full year compared to an income of $458 million (8.2% of sales) in the sameperiod last year. The lower operating income during the fourth quarter and for the full year of 2023was due to the low gross profit and despite lower operating expenses.EBITDA reported in the fourth quarter amounted to $86 million (7.5% of sales) compared to $127million (9.6% of sales) in the same quarter last year and amounted to $400 million (8.6% of sales) inthe full year compared to $731 million (13.1% of sales) last year.Excluding the impact of the abovementioned non-operational items, adjusted EBITDA in the fourthquarter amounted to $95 million (8.3% of sales) compared to $129 million (9.8% of sales) in the samequarter last year and amounted to $407 million (8.7% of sales) in the full year compared to $740 million(13.3% of sales) last year.Adjusted financial expenses amounted to $89 million in the fourth quarter and $348 million in thefull year, compared to $94 million and $314 million in the corresponding periods last year, respectively.The lower financial expenses in the quarter were due to lower bond interest following the installmentpayment of bond principal in November 2023, lower hedging costs on exchange rates and the neteffect of lower Israeli CPI on the ILS-denominated, CPI-linked bonds. These impacts were moderatedby higher bank interest expenses due to the increase in interest rates and an increase in short-termloans. For the full year, the higher financial expenses were mainly due to higher bank interestexpenses as stated above partially offset by lower bond interest and CPI.Adjusted taxes on income in the fourth quarter amounted to tax expenses of $36 million and $30million in the full year, compared to tax expenses of $3 million and $26 million in the correspondingperiods last year.Despite reaching losses before tax, the Company recorded tax expenses in the fourth quarter and inthe full year of 2023 mainly because the losses were primarily incurred by subsidiaries with relativelylower tax rates, while some of them did not create deferred tax assets on the losses. On the otherhand, the subsidiaries that generated profit have a higher tax rate. In comparison, in 2022, theCompany recognized a high deferred tax asset, related to inter-group sales and one-time tax expenseelecting to apply for temporary relief available in 2022 and in order to reduce tax exposure in Israelgoing forward.Net loss reported in the fourth quarter was $79 million and $225 million in the full year, compared toa net loss of $22 million and a net income of $96 million in the corresponding periods last year,respectively.After reflecting the impact of the abovementioned extraordinary and non-operational charges,adjusted net loss in the fourth quarter was $101 million, and $236 million in the full year, comparedto a net loss of $42 million, and a net income of $118 million in the corresponding periods last year,respectively.Trade working capital as of December 31, 2023, was $2,421 million compared to $2,634 million asof December 31, 2022. Inventory held by the Company reached $1,848 million as of December 31,2023, in comparison to $2,430 million as of December 31, 2022. The decrease in working capital wasfollowing the Company's implementation of selective procurement practices, which led to lower tradepayables and a decrease in the level of inventory held by the Company. The decrease in receivablesreflected the intensive collections as well as the lower sales.Cash Flow: Operating cash flow of $293 million was generated in the fourth quarter and $356 milliongenerated in the full year of 2023, compared to $352 million and $106 million in the fourth quarter and
full year period of 2022, respectively. Despite lower sales, the significantly higher cash flow generatedin the full year of 2023 was primarily due to a decrease in the procurement of goods as well as intensivecollection.Net cash used in investing activities was $108 million in the fourth quarter and $339 million in the fullyear of 2023, compared to $96 million and $396 million in the corresponding periods last year,respectively. The cash used in investing activities in the fourth quarter and full year of 2023 reflectedthe prioritization of investments, part of the actions taken by the Company to improve its cash flow.The Company invested in fixed assets including its new production facilities in ADAMA Anpon andmanufacturing capabilities in Israel and investments in intangible assets relating to ADAMA's globalregistrations of the Company's products described in the Product Registration section, integration ofan ERP system as well as the acquisition of AgriNova New Zealand in Q1 2023.Free cash flow of $130 million was generated in the fourth quarter and $147 million consumed in thefull year of 2023 compared to $204 million generated in the fourth quarter and $417 million consumedin the corresponding periods in 2022, respectively, reflecting the aforementioned operating andinvesting cash flow dynamics.
Table 3. Revenues by operating segmentSales by segment
| Q4 2023 USD (m) | % | Q4 2022 USD (m) | % | FY 2023 USD (m) | % | FY 2022 USD (m) | % |
Crop Protection
| Crop Protection | 1,035 | 91% | 1,207 | 92% | 4,268 | 92% | 5,032 | 90% |
Intermediates andIngredients
| Intermediates and Ingredients | 102 | 9% | 105 | 8% | 393 | 8% | 538 | 10% |
Total
| Total | 1,136 | 100% | 1,312 | 100% | 4,661 | 100% | 5,570 | 100% |
Sales by product category
| Q4 2023 USD (m) | % | Q4 2022 USD (m) | % | FY 2023 USD (m) | % | FY 2022 USD (m) | % |
Herbicides
| Herbicides | 438 | 39% | 546 | 42% | 1,969 | 42% | 2,479 | 45% |
Insecticides
| Insecticides | 345 | 30% | 382 | 29% | 1,334 | 29% | 1,505 | 27% |
Fungicides
| Fungicides | 251 | 22% | 279 | 21% | 965 | 21% | 1,048 | 19% |
Intermediates andIngredients
| Intermediates and Ingredients | 102 | 9% | 105 | 8% | 393 | 8% | 538 | 10% |
Total
| Total | 1,136 | 100% | 1,312 | 100% | 4,661 | 100% | 5,570 | 100% |
Notes:
? The sales split by product category is provided for convenience purposes only and is not representative of the way the Companyis managed or in which it makes its operational decisions.? Numbers may not sum due to rounding.
Further Information
All filings of the Company, together with a presentation of the key financial highlights of the period,can be accessed through the Company website at www.adama.com.About ADAMAADAMA Ltd. is a global leader in crop protection, providing practical solutions to farmers across theworld to combat weeds, insects and disease. Our culture empowers ADAMA's people to actively listento farmers and ideate from the field. ADAMA's diverse portfolio of existing active ingredients, coupledwith its leading formulation capabilities and proprietary formulation technology platforms, uniquelyposition the company to develop high-quality, innovative and sustainable products, to address themany challenges farmers and customers face today. ADAMA serves customers in over 100 countriesglobally. For more information, visit us at www.ADAMA.com and follow us on Twitter? at@ADAMAAgri.
ContactRivka Neufeld Zhujun WangGlobal Investor Relations China Investor RelationsEmail: ir@adama.com Email: irchina@adama.com
Abridged Adjusted Consolidated Financial StatementsThe following abridged consolidated financial statements and notes have been prepared as described in Note 1 in thisappendix. While prepared based on the principles of Chinese Accounting Standards (ASBE), they do not contain all of theinformation which either ASBE or IFRS would require for a complete set of financial statements, and should be read inconjunction with the consolidated financial statements of both ADAMA Ltd. and Adama Agricultural Solutions Ltd. as filedwith the Shenzhen and Tel Aviv Stock Exchanges, respectively.Relevant income statement items contained in this release are also presented on an “Adjusted” basis, which exclude itemsthat are of a one-time or non-cash/non-operational nature that do not impact the ongoing performance of the business, andreflect the way the Company’s management and the Board of Directors view the performance of the Company internally.The Company believes that excluding the effects of these items from its operating results allows management and investorsto effectively compare the true underlying financial performance of its business from period to period and against its globalpeers.Abridged Consolidated Income Statement for the Fourth Quarter
| Adjusted3 | Q4 2023 USD (m) | Q4 2022 USD (m) | Q4 2023 RMB (m) | Q4 2022 RMB (m) |
Revenues
| Revenues | 1,136 | 1,312 | 8,119 | 9,304 |
Cost of Sales
| Cost of Sales | 882 | 962 | 6,304 | 6,823 |
Other costs
| Other costs | 9 | 9 | 67 | 66 |
Gross profit
| Gross profit | 245 | 341 | 1,748 | 2,415 |
% of revenue
| % of revenue | 21.5% | 26.0% | 21.5% | 26.0% |
Selling & Distribution expenses
| Selling & Distribution expenses | 160 | 198 | 1,145 | 1,402 |
General & Administrative expenses
| General & Administrative expenses | 40 | 60 | 283 | 426 |
Research & Development expenses
| Research & Development expenses | 15 | 23 | 110 | 162 |
Other operating expenses
| Other operating expenses | 5 | 5 | 35 | 36 |
Total operating expenses
| Total operating expenses | 220 | 286 | 1,574 | 2,026 |
% of revenue
| % of revenue | 19.4% | 21.8% | 19.4% | 21.8% |
Operating income (EBIT)
| Operating income (EBIT) | 24 | 55 | 174 | 389 |
% of revenue
| % of revenue | 2.1% | 4.2% | 2.1% | 4.2% |
Financial expenses
| Financial expenses | 89 | 94 | 636 | 664 |
Loss before taxes
| Loss before taxes | (65) | (39) | (462) | (274) |
Taxes on Income
| Taxes on Income | 36 | 3 | 260 | 21 |
Net Income
| Net Income | (101) | (42) | (722) | (295) |
% of revenue
| % of revenue | (8.9%) | (3.2%) | (8.9%) | (3.2%) |
Adjustments
| Adjustments | (22) | (19) | (159) | (136) |
Reported Net income
| Reported Net income | (79) | (22) | (563) | (159) |
% of revenue
| % of revenue | (6.9%) | (1.7%) | (6.9%) | (1.7%) |
Adjusted EBITDA
| Adjusted EBITDA | 95 | 129 | 676 | 913 |
% of revenue
| % of revenue | 8.3% | 9.8% | 8.3% | 9.8% |
Adjusted EPS
– Basic
| Adjusted EPS4 – Basic | (0.0434) | (0.0178) | (0.3099) | (0.1265) |
– Diluted
| – Diluted | (0.0434) | (0.0178) | (0.3099) | (0.1265) |
Reported EPS
– Basic
| Reported EPS5 – Basic | (0.0338) | (0.0096) | (0.2418) | (0.0681) |
– Diluted
| – Diluted | (0.0338) | (0.0096) | (0.2418) | (0.0681) |
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the financial
statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
The number of shares used to calculate both basic and diluted earnings per share in both Q4 2023 and 2022 is 2,329.8 million shares.
Abridged Consolidated Income Statement for the Full Year
| Adjusted5 | FY 2023 USD (m) | FY 2022 USD (m) | FY 2023 RMB (m) | FY 2022 RMB (m) |
Revenues
| Revenues | 4,661 | 5,570 | 32,779 | 37,382 |
Cost of Sales
| Cost of Sales | 3,549 | 3,966 | 24,977 | 26,633 |
Other costs
| Other costs | 52 | 40 | 366 | 267 |
Gross profit
| Gross profit | 1,060 | 1,565 | 7,436 | 10,482 |
% of revenue
| % of revenue | 22.7% | 28.1% | 22.7% | 28.0% |
Selling & Distribution expenses
| Selling & Distribution expenses | 700 | 805 | 4,928 | 5,409 |
General & Administrative expenses
| General & Administrative expenses | 145 | 206 | 1,018 | 1,388 |
Research & Development expenses
| Research & Development expenses | 69 | 86 | 483 | 578 |
Other operating expenses
| Other operating expenses | 5 | 11 | 35 | 68 |
Total operating expenses
| Total operating expenses | 918 | 1,107 | 6,464 | 7,442 |
% of revenue
| % of revenue | 19.7% | 19.9% | 19.7% | 19.9% |
Operating income (EBIT)
| Operating income (EBIT) | 141 | 458 | 973 | 3,040 |
% of revenue
| % of revenue | 3.0% | 8.2% | 3.0% | 8.1% |
Financial expenses
| Financial expenses | 348 | 314 | 2,451 | 2,126 |
Income before taxes
| Income before taxes | (207) | 144 | (1,479) | 914 |
Taxes on Income
| Taxes on Income | 30 | 26 | 213 | 174 |
Net Income
| Net Income | (236) | 118 | (1,691) | 740 |
% of revenue
| % of revenue | (5.1%) | 2.1% | (5.2%) | 2.0% |
Adjustments
| Adjustments | (11) | 21 | (85) | 131 |
Reported Net income
| Reported Net income | (225) | 96 | (1,606) | 609 |
% of revenue
| % of revenue | (4.8%) | 1.7% | (4.9%) | 1.6% |
Adjusted EBITDA
| Adjusted EBITDA | 407 | 740 | 2,844 | 4,940 |
% of revenue
| % of revenue | 8.7% | 13.3% | 8.7% | 13.2% |
Adjusted EPS
– Basic
| Adjusted EPS6 – Basic | (0.1013) | 0.0505 | (0.7260) | 0.3177 |
– Diluted
| – Diluted | (0.1013) | 0.0505 | (0.7260) | 0.3177 |
Reported EPS
– Basic
| Reported EPS7 – Basic | (0.0964) | 0.0413 | (0.6893) | 0.2616 |
– Diluted
| – Diluted | (0.0964) | 0.0413 | (0.6893) | 0.2616 |
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the financial
statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
The number of shares used to calculate both basic and diluted earnings per share in FY 2023 and 2022 is 2,329.8 million shares.
Abridged Consolidated Balance Sheet
| December 31 2023 USD (m) | December 31 2022 USD (m) | December 31 2023 RMB (m) | December 31 2022 RMB (m) |
Assets
| Assets |
Current assets:
| Current assets: |
Cash at bank and on hand
| Cash at bank and on hand | 689 | 616 | 4,881 | 4,291 |
Bills and accounts receivable
| Bills and accounts receivable | 1,306 | 1,433 | 9,251 | 9,980 |
Inventories
| Inventories | 1,848 | 2,430 | 13,089 | 16,927 |
Other current assets, receivables andprepaid expenses
| Other current assets, receivables and prepaid expenses | 339 | 279 | 2,401 | 1,943 |
Total current assets
| Total current assets | 4,182 | 4,758 | 29,622 | 33,141 |
Non-current assets:
| Non-current assets: |
Fixed assets, net
| Fixed assets, net | 1,772 | 1,711 | 12,547 | 11,914 |
Rights of use assets
| Rights of use assets | 88 | 80 | 625 | 556 |
Intangible assets, net
| Intangible assets, net | 1,457 | 1,457 | 10,320 | 10,148 |
Deferred tax assets
| Deferred tax assets | 226 | 193 | 1,602 | 1,347 |
Other non-current assets
| Other non-current assets | 97 | 126 | 690 | 875 |
Total non-current assets
| Total non-current assets | 3,640 | 3,567 | 25,784 | 24,840 |
Total assets
| Total assets | 7,823 | 8,325 | 55,406 | 57,980 |
Liabilities
| Liabilities |
Current liabilities:
| Current liabilities: |
Loans and credit from banks and otherlenders
| Loans and credit from banks and other lenders | 1,134 | 805 | 8,031 | 5,605 |
Bills and accounts payable
| Bills and accounts payable | 743 | 1,241 | 5,263 | 8,642 |
Other current liabilities
| Other current liabilities | 791 | 929 | 5,600 | 6,468 |
Total current liabilities
| Total current liabilities | 2,668 | 2,974 | 18,894 | 20,715 |
Long-term liabilities:
| Long-term liabilities: |
Loans and credit from banks and otherlenders
| Loans and credit from banks and other lenders | 407 | 526 | 2,886 | 3,663 |
Debentures
| Debentures | 977 | 1,056 | 6,919 | 7,354 |
Deferred tax liabilities
| Deferred tax liabilities | 42 | 45 | 297 | 316 |
Employee benefits
| Employee benefits | 95 | 114 | 672 | 792 |
Other long-term liabilities
| Other long-term liabilities | 538 | 290 | 3,813 | 2,017 |
Total long-term liabilities
| Total long-term liabilities | 2,060 | 2,030 | 14,587 | 14,141 |
Total liabilities
| Total liabilities | 4,727 | 5,005 | 33,481 | 34,856 |
Equity
| Equity |
Total equity
| Total equity | 3,096 | 3,320 | 21,924 | 23,125 |
Total liabilities and equity
| Total liabilities and equity | 7,823 | 8,325 | 55,406 | 57,980 |
Abridged Consolidated Cash Flow Statement for the Fourth Quarter
| Q4 2023 USD (m) | Q4 2022 USD (m) | Q4 2023 RMB (m) | Q4 2022 RMB (m) | |
| Cash flow from operating activities: | ||||
| Cash flow from operating activities | 293 | 352 | 2,092 | 2,499 |
| Cash flow from operating activities | 293 | 352 | 2,092 | 2,499 |
| Investing activities: | ||||
| Acquisitions of fixed and intangible assets | (93) | (99) | (663) | (699) |
| Net cash received from disposal of fixed assets, intangible assets and others | 0 | 2 | 3 | 13 |
| Other investing activities | (16) | 0 | (115) | 2 |
| Cash flow used for investing activities | (108) | (96) | (775) | (684) |
| Financing activities: | ||||
| Receipt of loans from banks and other lenders | 203 | 79 | 1,473 | 559 |
| Repayment of loans from banks and other lenders | (308) | (142) | (2,202) | (1,006) |
| Interest payment and other | (55) | (53) | (392) | (379) |
| Other financing activities | (76) | (48) | (541) | (336) |
| Cash flow used for financing activities | (235) | (164) | (1,662) | (1,163) |
| Effects of exchange rate movement on cash and cash equivalents | 1 | 2 | (79) | (70) |
| Net change in cash and cash equivalents | (50) | 94 | (423) | 582 |
| Cash and cash equivalents at the beginning of the period | 736 | 513 | 5,281 | 3,643 |
| Cash and cash equivalents at the end of the period | 686 | 607 | 4,857 | 4,225 |
| Free Cash Flow | 130 | 204 | 989 | 1,445 |
Abridged Consolidated Cash Flow Statement for the Full Year
| FY 2023 USD (m) | FY 2022 USD (m) | FY 2023 RMB (m) | FY 2022 RMB (m) | |
| Cash flow from operating activities: | ||||
| Cash flow from operating activities | 356 | 106 | 2,618 | 941 |
| Cash flow from operating activities | 356 | 106 | 2,618 | 941 |
| Investing activities: | ||||
| Acquisitions of fixed and intangible assets | (337) | (397) | (2,370) | (2,667) |
| Net cash received from disposal of fixed assets, intangible assets and others | 6 | 13 | 40 | 85 |
| Acquisition of subsidiaries | (22) | 0 | (148) | 0 |
| Other investing activities | 13 | (12) | 90 | (78) |
| Cash flow used for investing activities | (339) | (396) | (2,388) | (2,660) |
| Financing activities: | ||||
| Receipt of loans from banks and other lenders | 1,004 | 669 | 7,030 | 4,468 |
| Repayment of loans from banks and other lenders | (589) | (342) | (4,176) | (2,331) |
| Interest payment and other | (176) | (137 | (1,244) | (933) |
| Dividends to shareholders | (9) | (3) | (63) | (19) |
| Other financing activities | (167) | (187) | (1,173) | (1,242) |
| Cash flow used for financing activities | 63 | (0) | 374 | (56) |
| Effects of exchange rate movement on cash and cash equivalents | 0 | (7) | 28 | 241 |
| Net change in cash and cash equivalents | 79 | (297) | 632 | (1,534) |
| Cash and cash equivalents at the beginning of the period | 607 | 903 | 4,225 | 5,759 |
| Cash and cash equivalents at the end of the period | 686 | 607 | 4,857 | 4,225 |
| Free Cash Flow | (147) | (417) | (923) | (2,593) |
Notes to Abridged Consolidated Financial StatementsNote 1: Basis of preparationBasis of presentation and accounting policies: The abridged consolidated financial statements for thequarters ended December 31, 2023 and 2022 incorporate the financial statements of ADAMA Ltd. and of all ofits subsidiaries (the “Company”), including Adama Agricultural Solutions Ltd. (“Solutions”) and its subsidiaries.The Company has adopted the Accounting Standards for Business Enterprises (ASBE) issued by the Ministryof Finance (the "MoF") and the implementation guidance, interpretations and other relevant provisions issuedor revised subsequently by the MoF (collectively referred to as “ASBE”).The abridged consolidated financial statements contained in this release are presented in both ChineseRenminbi (RMB), as the Company’s shares are traded on the Shenzhen Stock Exchange, as well as in UnitedStates dollars ($) as this is the major currency in which the Company’s business is conducted. For the purposesof this release, a customary convenience translation has been used for the translation from RMB to US dollars,with Income Statement and Cash Flow items being translated using the quarterly average exchange rate, andBalance Sheet items being translated using the exchange rate at the end of the period.The preparation of financial statements requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements, and the reported amounts of revenues and expenses during the reporting period. Actualresults could differ from those estimated.Note 2: Abridged Financial StatementsFor ease of use, the financial statements shown in this release have been abridged as follows:
Abridged Consolidated Income Statement:
? “Gross profit” in this release is revenue less costs of goods sold, taxes and surcharges, inventory
impairment and other idleness charges (in addition to those already included in costs of goods sold);part of the idleness charges is removed in the Adjusted financial statements? “Other operating expenses” includes impairment losses (not including inventory impairment); gain (loss)from disposal of assets and non-operating income and expenses? “Operating expenses” in this release differ from those in the formally reported financial statements inthat certain transportation costs have been reclassified from COGS to Operating Expenses.? “Financial expenses” includes net financing expenses and gains/losses from changes in fair value.
Abridged Consolidated Balance Sheet:
? “Other current assets, receivables and prepaid expenses” includes financial assets held for trading;
financial assets in respect of derivatives; prepayments; other receivables; and other current assets? “Fixed assets, net” includes fixed assets and construction in progress? “Intangible assets, net” includes intangible assets and goodwill? “Other non-current assets” includes other equity investments; long-term equity investments; long-termreceivables; investment property; and other non-current assets? “Loans and credit from banks and other lenders” includes short-term loans and non-current liabilities
due within one year? “Other current liabilities” includes financial liabilities in respect of derivatives; payables for employee
benefits, taxes, interest, dividends and others; advances from customers and other current liabilities? “Other long-term liabilities” includes long-term payables, provisions, deferred income and other non-
current liabilities
Income Statement Adjustments
| Q4 2023 USD (m) | Q4 2022 USD (m) | Q4 2023 RMB (m) | Q4 2022 RMB (m) |
Reported Net Income (Loss)
| Reported Net Income (Loss) | (79) | (22) | (563) | (159) |
Adjustments to COGS & Operating Expenses:
| Adjustments to COGS & Operating Expenses: |
1. Amortization of acquisition-related PPA and other acquisition related costs
| 1. Amortization of acquisition-related PPA and other acquisition related costs | 4 | 5 | 28 | 33 |
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
Syngenta transaction (non-cash)
| 2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash) | 5 | 6 | 35 | 42 |
3. Upgrade & Relocation related costs
| 3. Upgrade & Relocation related costs | 1 | 2 | 6 | 13 |
4. Incentive plans
| 4. Incentive plans | (1) | 1 | (4) | 8 |
5. ASBEs classifications COGS impact
| 5. ASBEs classifications COGS impact | (22) | (34) | (158) | (239) |
6. ASBEs classifications OPEX impact
| 6. ASBEs classifications OPEX impact | 22 | 34 | 158 | 239 |
7. Measures to improve efficiencies
| 7. Measures to improve efficiencies | 9 | 0 | 66 | 0 |
8. Fixed asset impairment in subsidiaries
| 8. Fixed asset impairment in subsidiaries | 33 | 15 | 237 | 106 |
Total Adjustments to Operating Income (EBIT)
| Total Adjustments to Operating Income (EBIT) | 51 | 28 | 367 | 202 |
Total Adjustments to EBITDA
| Total Adjustments to EBITDA | 9 | 2 | 63 | 16 |
Adjustments to Financing Expenses:
| Adjustments to Financing Expenses: |
9. Non-cash adjustment related to put option revaluation
| 9. Non-cash adjustment related to put option revaluation | (54) | (47) | (387) | (335) |
10. Release of holdback due to subsidiary
| 10. Release of holdback due to subsidiary | (17) | 0 | (123) | 0 |
Other financing expenses
| Other financing expenses | (3) | 1 | (19) | 4 |
Adjustments to Taxes:
| Adjustments to Taxes: |
Taxes impact
| Taxes impact | (0) | 1 | (3) | 6 |
Total adjustments to Net Income
| Total adjustments to Net Income | (22) | (19) | (159) | (136) |
Adjusted Net Income (Loss)
| Adjusted Net Income (Loss) | (101) | (42) | (722) | (295) |
| FY 2023 USD (m) | FY 2022 USD (m) | FY 2023 RMB (m) | FY 2022 RMB (m) |
Reported Net Income (Loss)
| Reported Net Income (Loss) | (225) | 96 | (1,606) | 609 |
Adjustments to COGS & Operating Expenses:
| Adjustments to COGS & Operating Expenses: |
1. Amortization of acquisition-related PPA and other acquisition related costs
| 1. Amortization of acquisition-related PPA and other acquisition related costs | 17 | 20 | 116 | 137 |
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
Syngenta transaction (non-cash)
| 2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash) | 20 | 23 | 143 | 154 |
3. Upgrade & Relocation related costs
| 3. Upgrade & Relocation related costs | 3 | 7 | 22 | 49 |
4. Incentive plans
| 4. Incentive plans | (3) | 3 | (21) | 18 |
5. ASBEs classifications COGS impact
| 5. ASBEs classifications COGS impact | (87) | (150) | (610) | (1,005) |
6. ASBEs classifications OPEX impact
| 6. ASBEs classifications OPEX impact | 87 | 150 | 610 | 1,005 |
7. Measures to improve efficiencies
| 7. Measures to improve efficiencies | 9 | 0 | 66 | 0 |
8. Fixed asset impairment in subsidiaries
| 8. Fixed asset impairment in subsidiaries | 33 | 15 | 237 | 106 |
Total Adjustments to Operating Income (EBIT)
| Total Adjustments to Operating Income (EBIT) | 79 | 68 | 562 | 465 |
Total Adjustments to EBITDA
| Total Adjustments to EBITDA | 7 | 9 | 53 | 59 |
Adjustments to Financing Expenses:
| Adjustments to Financing Expenses: |
9. Non-cash adjustment related to put option revaluation
| 9. Non-cash adjustment related to put option revaluation | (61) | (47) | (438) | (335) |
10. Release of holdback due to subsidiary
| 10. Release of holdback due to subsidiary | (17) | 0 | (123) | 0 |
Other financing expenses
| Other financing expenses | (11) | 4 | (75) | 27 |
Adjustments to Taxes
| Adjustments to Taxes |
Taxes impact
| Taxes impact | 2 | 4 | 12 | 26 |
Total adjustments to Net Income
| Total adjustments to Net Income | (11) | 21 | (85) | 131 |
Adjusted Net Income (Loss)
| Adjusted Net Income (Loss) | (236) | 118 | (1,691) | 740 |
Notes:
1. Amortization of acquisition-related PPA and other acquisition related costs:
a. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash): Under ASBE, since the third combined reporting for Q3 2017,
the Company has inherited the historical “legacy” amortization charge that ChemChina previously was incurring in respect of its acquisitionof Solutions in 2011. This amortization is done in a linear manner on a quarterly basis, most of which will have been completed by the endof 2020.b. Amortization of acquisition-related PPA (non-cash) and other acquisition-related costs: Related mainly to the non-cash amortizationof intangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions, with no impact on the ongoing performance ofthe companies acquired, as well as other M&A-related costs.
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash): The proceeds from
the Divestment of crop protection products in connection with the approval by the EU Commission of the acquisition of Syngenta by ChemChina,net of taxes and transaction expenses, were paid to Syngenta in return for the transfer of a portfolio of products in Europe of similar nature andeconomic value. Since the products acquired from Syngenta are of the same nature and with the same net economic value as those divested,and since in 2018 the Company adjusted for the one-time gain that it made on the divested products, the additional amortization charge incurreddue to the written-up value of the acquired assets is also adjusted to present a consistent view of Divestment and Transfer transactions, whichhad no net impact on the underlying economic performance of the Company. These additional amortization charges will continue until 2032 butat a reducing rate, yet will still be at a meaningful level until 2028.
3. Upgrade & manufacturing facilities relocation-related costs: These charges relate to Upgrade & Relocation programs in China and Israel.As part of these programs, production assets located in the old production sites in Huai’An and Beer-Sheva were in a relocation process to newsites in 2022, 2023 and in the coming years. Since some of the older production assets may not be able to be relocated, some of these assetswhich are no longer operational were written off (or impaired), while for others, their economic life has been shortened and therefore will bedepreciated over a shorter period. Since these are older assets that were built many years ago and will be replaced by newer production facilitiesat the new sites, and since the ongoing operations of the business will not be impacted thereby, the Company adjusts for the impact of all chargesrelated to the Upgrade & Relocated programs, which include mainly accelerate depreciation.
4. Incentive plans: ADAMA granted certain of its employees, a long-term incentive (LTI) in the form of 'phantom' awards linked to the Company’sshare price. As such, the Company records an expense, or recognizes income, depending on the fluctuation in the Company’s share price,regardless of award exercises. To neutralize the impact of such share price movements on the measurement of the Company’s performance andexpected employee compensation and to reflect the existing phantom awards, in the Company’s adjusted financial performance, the LTI ispresented on an equity-settled basis in accordance with the value of the existing plan at the grant date.
5. ASBEs classifications COGS impact: according to the ASBE guidelines [IAS 37], certain items (specifically certain transportation costs) are
classified under COGS.
6. ASBEs classifications OPEX impact: according to the ASBE guidelines [IAS 37], certain items (specifically certain transportation costs) are
classified under COGS.
7. Measures to improve efficiencies – ADAMA recorded costs due to certain measures initiated to improve efficiencies mainly personnel changes.
8.9.10. Non-cash, non-recurring provision for asset impairment and income due to revaluation of put option attributed to minority stake in a subsidiary
and holdback release related to the original acquisition.
Exchange Rate Data for the Company's Principal Functional Currencies
| December 31 | Q4 Average | FY Average | |||||||||
| 2023 | 2022 | Change | 2023 | 2022 | Change | 2023 | 2022 | Change | |||
| EUR/USD | 1.106 | 1.067 | 3.7% | 1.076 | 1.019 | 5.6% | 1.081 | 1.052 | 2.8% | ||
| USD/BRL | 4.841 | 5.218 | 7.2% | 4.953 | 5.256 | 5.8% | 4.995 | 5.165 | 3.3% | ||
| USD/PLN | 3.935 | 4.402 | 10.6% | 4.107 | 4.646 | 11.6% | 4.204 | 4.458 | 5.7% | ||
| USD/ZAR | 18.563 | 16.949 | (9.5%) | 18.744 | 17.618 | (6.4%) | 18.446 | 16.367 | (12.7%) | ||
| AUD/USD | 0.682 | 0.680 | 0.4% | 0.651 | 0.657 | (0.9%) | 0.664 | 0.694 | (4.3%) | ||
| GBP/USD | 1.274 | 1.204 | 5.8% | 1.240 | 1.171 | 5.9% | 1.243 | 1.234 | 0.7% | ||
| USD/ILS | 3.627 | 3.519 | (3.1%) | 3.819 | 3.493 | (9.3%) | 3.687 | 3.358 | (9.8%) | ||
| USD L 3M | 5.33% | 4.77% | 0.56 bp | 5.38% | 4.51% | 0.87 bp | 5.38% | 2.41% | 2.97 bp | ||
| December 31 | Q4 Average | FY Average | |||||||||
| 2023 | 2022 | Change | 2023 | 2022 | Change | 2023 | 2022 | Change | |||
| USD/RMB | 7.083 | 6.965 | 1.7% | 7.146 | 7.092 | 0.8% | 7.042 | 6.721 | 4.8% | ||
| EUR/RMB | 7.834 | 7.428 | 5.5% | 7.686 | 7.225 | 6.4% | 7.614 | 7.071 | 7.7% | ||
| RMB/BRL | 0.684 | 0.749 | 8.8% | 0.693 | 0.741 | 6.5% | 0.709 | 0.768 | 7.7% | ||
| RMB/PLN | 0.556 | 0.632 | 12.1% | 0.575 | 0.655 | 12.3% | 0.597 | 0.663 | 10.0% | ||
| RMB/ZAR | 2.621 | 2.434 | (7.7%) | 2.623 | 2.484 | (5.6%) | 0.597 | 2.435 | 75.5% | ||
| AUD/RMB | 4.834 | 4.733 | 2.1% | 4.650 | 4.656 | (0.1%) | 4.677 | 4.663 | 0.3% | ||
| GBP/RMB | 9.024 | 8.387 | 7.6% | 8.864 | 8.307 | 6.7% | 8.752 | 8.292 | 5.6% | ||
| RMB/ILS | 0.512 | 0.505 | (1.3%) | 0.534 | 0.492 | (8.5%) | 0.524 | 0.500 | (4.8%) | ||
| RMB L 3M | 2.53% | 2.42% | 0.11 bp | 2.46% | 2.03% | 0.43 bp | 2.32% | 2.07% | 0.25 bp | ||