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安道麦B:2020年第一季度报告全文(英文版) 下载公告
公告日期:2020-04-28

ADAMA LTD.FIRST QUARTER REPORT 2020

ADAMA Ltd. (hereinafter referred to as “the Company”) is a global leader in crop protection,providing solutions to farmers across the world to combat weeds, insects and disease.ADAMA has one of the widest and most diverse portfolios of active ingredients in the world,state-of-the art R&D, manufacturing and formulation facilities, together with a culture thatempowers our people in markets around the world to listen to farmers and ideate from thefield. This uniquely positions ADAMA to offer a vast array of distinctive mixtures, formulationsand high-quality differentiated products, delivering solutions that meet local farmer andcustomer needs in over 100 countries globally.Please see important additional information and further details included in the Annex.

April 2020

Section I - Important NoticeThe Company’s Board of Directors, Board of Supervisors, directors, supervisors andsenior managers confirm that the content of the Report is true, accurate and completeand contains no false statements, misleading presentations or material omissions,and assume joint and several legal liability arising therefrom.Ignacio Dominguez, the person leading the Company (President and Chief ExecutiveOfficer) as well as its legal representative, and Aviram Lahav, the person leading theaccounting function (Chief Financial Officer & Deputy Chief Executive Officer), herebyassert and confirm the truthfulness, accuracy and completeness of the FinancialReport.All of the Company’s directors attended the board meeting for the review of thisReport.This Report and its abstract have been prepared in both Chinese and English. Shouldthere be any discrepancy between the two versions, the Chinese version shall prevail.

Section II - Financial Highlights & Shareholder Changes

1. Main accounting and financial results

Whether the Company performs any retroactive adjustments to, or restatements of, its accounting data of last year due tochange in accounting policies or correction of accounting errors

□ Yes√ No

January - March 2020January - March 2019YoY +/- (%)
Operating revenues (RMB’000)6,782,2436,787,751-0.08%
Net profit attributable to shareholders of the Company (RMB’000)(16,707)366,756-104.56%
Net profit attributable to shareholders of the Company excluding non-recurring profit and loss (RMB’000)16,813285,087-94.10%
Net cash flow from operating activities (RMB’000)(384,708)(1,289,484)-70.17%
Basic EPS (RMB/share)(0.007)0.150-104. 67%
Diluted EPS (RMB/share)NANANA
Weighted average return on net assets-0.07%1.61%-1.68%
End of Reporting PeriodEnd of last year+/- (%)
Total assets (RMB’000)47,780,24045,288, 9405.50%
Net assets attributable to shareholders (RMB’000)22,500,14322,371,6650.57%
ItemJanuary-March 2020Notes
Gains/losses on the disposal of non-current assets (including the write-off of asset impairment provisions accrued during the period)7,692
Government grants recognized in profit or loss (other than grants which are closely related to the Company's business and are either in fixed amounts or determined under quantitative methods in accordance with the national standard)10,794
Reversal of provision for receivables and contract assets, that are subject to specific provision9,871
Other non-operating income and expenses other than the above2,176
Other profit or loss that meets the definition of non-recurring profit or loss(59,752)Employee early retirement plan expenses
Less: Income tax effects4,301
Total(33,520)

I. Total number of shareholders and shareholdings of top 10 shareholders at the

period-end

1. Total number of ordinary shareholders and preference shareholders who had resumed their voting

right and shareholdings of top 10 shareholders at the period-end

Unit: share

Total number of ordinary shareholders at the end of the Reporting Period51,151 (the number of ordinary A share shareholders is 35,706; the number of B share shareholders is 15,445)Total number of preference shareholders who had resumed their voting right at the end of the Reporting Period (if any)0
Shareholdings of top 10 shareholders
Name of shareholderNature of shareholderShareholding percentageNumber of shares heldNumber of restricted shares heldPledged or frozen shares
StatusNumber
China National Agrochemical Co., Ltd.State-owned legal person74.02%1,810,883,0391,810,883,039----
Jingzhou Sanonda Holding Co., Ltd.State-owned legal person4.89%119,687,202------
China Cinda Asset Management Co., Ltd.State-owned legal person1.37%33,557,046------
China Structural Reform Fund Co., Ltd.State-owned legal person1.37%33,557,046------
Portfolio No.503 of National Social Security FundOthers0.92%22,500,052------
UBS AGOverseas legal person0.58%14,264,374------
CCB Principal-ICBC-Avic Trust, Trust Plan of Pooled Funds of CCB Principal Private Placement Investment, Tianqi (2016) No. 293 of Avic TrustOthers0.53%12,885,906------
Caitong Fund Fuchun Chuangyi Private Placement No.3 Asset Management PlanOthers0.19%4,697,986------
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITEDOverseas legal person0.18%4,309,872------
State-owned Assets Administration Bureau of Qichun CountyState0.17%4,169,266------
Shareholdings of top 10 non-restricted shareholders
Name of shareholderNumber of non-restricted shares held at the period-endType of shares
TypeNumber
Jingzhou Sanonda Holding Co., Ltd.119,687,202RMB ordinary share119,687,202
China Cinda Asset Management Co., Ltd.33,557,046RMB ordinary share33,557,046
China Structural Reform Fund Co., Ltd.33,557,046RMB ordinary share33,557,046
Portfolio No.503 of National Social Security Fund22,500,052RMB ordinary share22,500,052
UBS AG14,264,374RMB ordinary share14,264,374
CCB Principal-ICBC-Avic Trust, Trust Plan of Pooled Funds of CCB Principal Private Placement Investment, Tianqi (2016) No. 293 of Avic Trust12,885,906RMB ordinary share12,885,906
Caitong Fund Fuchun Chuangyi Private Placement No.3 Asset4,697,986RMB ordinary share4,697,986
Management Plan
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED4,309,872Domestically listed foreign share4,309,872
State-owned Assets Administration Bureau of Qichun County4,169,266RMB ordinary share4,169,266
China Agricultural Bank-CSI 500 Trading Open Index Investment Funds4,030,584RMB ordinary share4,030,584
Related or act-in-concert parties among the shareholders aboveJingzhou Sanonda Holdings Co., Ltd. and CNAC are related parties, and are acting-in-concert parties as prescribed in the Administrative Methods for Acquisition of Listed Companies. Sanonda Holding is a wholly-controlled subsidiary of CNAC. It is unknown to the Company whether the other shareholders are related parties or acting-in-concert parties as prescribed in the Administrative Methods for Acquisition of Listed Companies.
Top 10 ordinary shareholders conducting securities margin trading (if any)No suc h issue.

Section III - Significant Events

I. Changes in main accounting statement items and financial indicators in the Reporting

Period, as well as reasons for the changes

√ Applicable □ Not applicable

During the first quarter of 2020, the global agrochemical market, amongst many others, was impacted by theunprecedented Coronavirus pandemic, COVID-19 ("COVID-19"). The pandemic, which started early in the quarter andnow continues to rage throughout the rest of the world, has had a number of adverse effects on the Company’s performancein the first quarter, compared to the corresponding period last year, the most significant of which were:

? In China, while operations at the Company’s Huai’An, Jiangsu site have continued without material interruption,operations at the Jingzhou site in Hubei province were temporarily suspended from late January until the end ofFebruary due to the COVID-19 in the province. Although operations at the site recommenced at the beginning of March,restrictions on logistics remained, impacting the free transport of goods to and from the sites and to the ports;? Renewed tightening in supply of raw materials and intermediates sourced from third parties in China and around theworld;? Restrictions on international trading and sales through the Company’s global channels, as well as increased costs of

global shipping, airfreight and other logistics;? Lower demand in the Company’s US Consumer & Professional (non-crop) businesses, as retailers slowed their

restocking of products;? Significant impacts on global currency markets, which have seen the rapid depreciation of many currencies against the

US dollar, most notably the Brazilian Real, Australian dollar, Turkish Lira and Indian Rupee, as well as increased

volatility in the Euro. These movements have negatively impacted the Company’s performance in the first quarter

compared to the corresponding period last year.The ongoing spread of the pandemic is expected to continue to negatively impact the performance of the Company in thesecond quarter, and potentially beyond.The Company is actively managing its response to the outbreak in order to ensure the safety of its employees and limit theimpact on the Company’s performance. Actions being taken include extending and strengthening distribution channels,use of expedited transport options where possible, working collaboratively with supply chain partners, and raising priceswherever possible to accommodate the weaker currencies and increased logistics costs.

* Total operating expenses includes Sales and Marketing, General and Administrative and Research and DevelopmentexpensesNote: As the Company’s functional currency is USD, following explanations and analysis are based on USD-denominatednumbers as listed above.Analysis of Financial Highlights

(1) Revenues

Revenues in the first quarter were $973 million, up 2% at constant exchange rates, with continued business growth in theface of the COVID-19 pandemic. Constant currency sales were constrained by an estimated $47 million due to COVID-19.In addition, sales were heavily impacted by the depreciation of global currencies, resulting in sales in US dollar terms being3% below those of the same period last year.The Company delivered solid business growth in Europe, driven by a strong performance in Eastern European countries,as well as throughout the India, Middle East & Africa region supported by favorable weather conditions in key areas. InLatin America, the Company was strengthened by its recent acquisition in Peru, but sales were impacted by thedepreciation of regional currencies, most notably the Brazilian Real. Sales in North America were lower largely due to theimpact of the COVID-19 on demand for the Company’s Consumer & Professional products. In Asia-Pacific (excludingChina), a strong performance in Australia, which has begun to see a recovery from the extreme drought conditions of thepast few years, largely compensated for a COVID-19-driven slowdown in East-Asian markets and the depreciation of localcurrencies.In China, despite seeing continued growth in the sales of the Company’s branded, formulated products, overall sales inthe country were impacted by lower sales of intermediates and unformulated products, mainly those produced at theJingzhou site which was temporarily suspended during the quarter.

Q1 2020 (000’RMB)Q1 2019 (000’RMB)+/-%Q1 2020 (000’USD)Q1 2019 (000’USD)+/-%
Operating income (Revenues)6,782,2436,787,751-0.08%972,5311,006,421-3.37%
Cost of goods sold4,757,4134,449,2366.93%682,181659,6913.41%
Gross Profits2,024,8302,338,515-13.41%290,350346,730-16.26%
% of Sales29.85%34.45%-29.85%34.45%-
*Total Operating Expenses1,647,1081,682,833-2.12%240,055249,511-3.79%
Financial Expenses411,620479,381-14.14%59,02271,082-16.97%
Gain (loss) from Changes in Fair Value323,813794,180-59.23%46,433117,753-60.57%
Investment Income (loss)-129,323-550,462-76.51%-18,544-81,617-77.28%
Total Net Financial Expenses and Investment Income217,130235,663-7,86%31,13334,946-10.91%
Total profits136,632415,111-67.09%19,60161,547-68.15%
% of Sales2.02%6.12%-2.02%6.12%-
Income tax expenses153,33948,355217.11%21,9887,171206.62%
Net income(16,707)366,756-104.56%-2,38754,376-104.39%
% of Sales-0.25%5.4%--0.25%5.4%-
EBITDA927,8881,232,110-24.69%133,058182,689-27.17%
% of Sales13.68%18.15%-13.68%18.15%-

Regional Sales Performance

Europe: Sales increased by 2.7% in the first quarter at constant exchange rates, compared with the corresponding periodlast year, driven by continued business growth, partially offset by lower prices resulting from high inventory levels in theindustry’s distribution channels.In Northern Europe, the Company saw pleasing business growth in the quarter, partially recovering from supplyconstraints seen in 2019 that affected key products. The Company delivered robust growth in most Eastern Europeancountries supported by favorable weather conditions, with noteworthy performances recorded in Russia and Ukraine,where the Company is seeing continued market share gains, as well as Hungary and Romania, which benefited from anearly start to the 2020 season. In addition, the Company grew in the key western European markets of France and Italy.In US dollar terms, sales in Europe were lower by 1.0% in the quarter, compared to the corresponding period last year,reflecting the net impact of weaker currencies, largely due to the COVID-19.North America: Sales in the quarter were lower by 6.0%, at constant exchange rates, compared to the correspondingperiod last year, largely due to the impact of the COVID-19, which reduced demand for the Company’s Consumer &Professional (non-crop) products.The Company recorded strong business growth in Canada with solid demand for crop protection products, as well asfavorable weather conditions. In the US, the Company obtained two new rice herbicide registrations in the quarter,enhancing its portfolio of solutions for conventional rice and complementing the Company’s Preface? and Postscript?herbicides for the FullPage? Rice Cropping Solution, furthering the Company’s offering to rice farmers.In US dollar terms, sales in North America were lower by 6.7% in the quarter, compared to the corresponding period lastyear, reflecting the COVID-19-related weakening of the Canadian Dollar.Latin America: Sales grew by 12.5% in the first quarter, at constant exchange rates, compared to the correspondingperiod last year. The robust performance was driven by strong business growth, bolstered by the Company’s recentacquisition in Peru, alongside continued price increases.The Company saw continued constant-currency business growth in Brazil in the quarter, despite drought conditions whichdelayed the planting season in key crops including soybean and reduced application of fungicides. Noteworthyperformances were also recorded in the quarter in Mexico, benefiting from good weather conditions particularly in thePacific region, as well as Colombia and Ecuador, driven by a good harvest season in key crops.The Company continues to expand its differentiated product offering in the region with the launch during the quarter ofEMINENT

?

, a dual mode broad-spectrum insecticide, in Argentina. The Company also obtained the registration ofUBERTOP

?

, an insecticide used mainly for the control of a wide range of pests in tomato and cabbage, in Mexico.In US dollar terms, sales in Latin America were lower by 0.3% in the quarter, compared to the corresponding period last

Q1 2020 $mQ1 2019 $mChange USD
Europe357360-1.0%
North America168180-6.7%
Latin America159159-0.3%
Asia Pacific158186-14.9%
Of which China6894-27.1%
India, Middle East & Africa131121+8.3%
Total9731,006-3.4%

year, reflecting the significant depreciation of regional currencies, most notably the Brazilian Real, as a result of theCOVID-19outbreak.Asia Pacific: Sales were lower by 9.8% in the quarter, at constant exchange rates, compared to the correspondingperiod last year, due largely to the outbreak of the COVID-19, which started early in the quarter.In Asia-Pacific (excluding China), a strong performance in Australia, which has begun to see a recovery from the extremedrought conditions of the past few years, largely compensated for a COVID-19-driven slowdown in East-Asian markets.In China, despite seeing continued growth in the sales of the Company’s branded, formulated products, overall sales inthe country were impacted by the COVID-19 which resulted in logistics and supply challenges, and reduced sales ofintermediates and unformulated products from the temporarily suspended Jingzhou site.During the quarter, the Company launched new products including QUALIPRO ENCLAVE?, a quadruple-mode of actionfungicide mixture for use in turf in Australia, and obtained multiple new product registrations in the region, includingBALORIC

? and SOLITO

?

, an early post-emergence rice herbicide, in Thailand and Indonesia.In US dollar terms, sales in Asia-Pacific were lower by 14.9% in the quarter, compared to the corresponding period lastyear, reflecting the impact of weaker currencies following the COVID-19.India, Middle East and Africa: Sales in the first quarter grew by 12.5%, at constant exchange rates, compared to thecorresponding period last year. The Company recorded robust business growth in all major markets throughout the region,alongside increased prices, despite the impact of the missing sales of Jingzhou old site products resulting from thetemporary suspension of operations there due to the COVID-19.The Company delivered solid business growth in India combined with higher pricing, in spite of a countrywide lockdownenforced by the Indian government that commenced towards the end of the quarter. The Company also grew strongly inSouth Africa and Israel, benefiting from favorable weather conditions, and delivered pleasing results in Turkey from wherethe Company is also expanding its presence into surrounding countries in the region.In US dollar terms, sales in the region grew by 8.3% in the quarter, compared to the corresponding period last year,reflecting the impact of softer currencies, which were adversely affected by the COVID-19, most notably the Turkish Liraand the Indian Rupee.

(2) Gross Profit:

Gross margin was lower mainly a result of the material depreciation of global currencies, alongside some pricing pressure,mainly in Europe and China, and sustained high procurement costs, all of which were only partially offset by the businessgrowth achieved in the quarter.

(3) Operating Expenses:

Operating expenses include Sales and Marketing, General and Administration and R&D - The Company continues toexercise tight control of its operating expenses, assisted by the beneficial impact of the strengthening of the US dollaragainst global currencies, achieving significant savings even while including companies acquired during 2019. The firstquarter this year also saw the recording of Jingzhou-related idleness costs resulting from the temporary suspension ofoperations there due to the COVID-19 in an amount similar to those recorded also during Q1 2019 when the sites weresimilarly suspended.In recent years, the Company recorded various one-time or non-cash or non-operational items affecting its reportednumbers, including as a result of mergers and acquisitions, which resulted in the inclusion within its operating expenses

of, mainly, the following items:

? Amortization of legacy Purchase Price Allocation (PPA) of 2011 acquisition of Adama Agricultural SolutionsLtd., a wholly-owned subsidiary of the Company (hereinafter: “Solutions”) (non-cash): Under PRC GAAP, sincethe first combined reporting in Q3 2017 following the combination, the Company has inherited the historical “legacy”amortization charge that ChemChina previously was incurring in respect of its acquisition of Solutions in 2011. Thisamortization is done in a linear manner on a quarterly basis, most of which will be fully amortized by the end of 2020.Its reported financial impact (affecting the Sales & Marketing expenses) in the first quarter of 2020 is RMB 66.3 million(USD 9.6 million), net of tax, compared with RMB 64.1 million (USD 9.6 million) in the corresponding period in 2019.? 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 EUCommission of the acquisition of Syngenta by ChemChina, net of taxes and transaction expenses, were paid toSyngenta in return for the transfer of a portfolio of products in Europe of similar nature and economic value. Since theproducts acquired from Syngenta are of the same nature, and with the same net economic value as those divested,the Divestment and Transfer transactions had no net impact on the underlying economic performance of the Company.Its reported financial impact (affecting the Sales & Marketing expenses) in the first quarter of 2020 is RMB 54.9 million(USD 7.9 million), net of tax, compared with RMB 71.7 million (USD 10.6 million) in the corresponding period in 2019.? Employee early retirement plan expenses: a one-time provision for the early retirement plan of employees at theCompany’s Israeli manufacturing facilities. Its reported financial impact (affecting the General & Administrativeexpenses) in the first quarter of 2020 is RMB 59.8 million (USD 8.6 million), net of tax.

(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 412 million (USD 59 million) for the first three months of 2020compared with RMB 479 million (USD 71 million) for the corresponding period in 2019.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. Net gains/lossesfrom hedging of those positions, are recorded in “Gains/Losses from Changes in Fair Value”, and are then transferredto “Investment Income” upon realization. The combined impact of Gains/Losses from Changes in Fair Value andInvestment Income is a net gain of RMB 194 million (USD 28 million) in the first three months of 2020 compared withRMB 244 million (USD 36 million) in the corresponding period in 2019.The aggregate of Financial Expenses, Gains/Losses from Changes in Fair Value and Investment Income (hereinafteras “Total Net Financial Expenses and Investment Income”), which more comprehensively reflects the financialexpenses of the Company in supporting its main business and protecting its monetary assets/liabilities, amounts to RMB217 million (USD 31 million) in the first three months of 2020 compared with RMB 236 million (USD 35 million) in thecorresponding period in 2019.The lower level in the first quarter compared with the same period last year reflects mainly financial income earned due tothe effect of the appreciation of the US dollar against the RMB on the value of US dollar-denominated monetary assets inChina, while the higher expenses in the prior year resulted from the opposite. This financial income in the quarter morethan offset the slightly increased interest costs on higher net debt levels.

(5) Income Tax Expenses

The net tax expense in the quarter was higher largely due to the impact of weakening of currencies, against the US dollar,most notably that of the Brazilian Real, driving higher non-cash tax expenses due to differences between the functional(US dollar) and tax (local) currencies regarding the value of non-monetary assets.

Changes in main assets and liabilities

Unit: RMB’000

Assets and liabilitiesMarch 31, 2020December 31, 2019% changeExplanation for any major change
Derivative financial assets*1,829,988490,113273.38%Realization and revaluation of derivatives
Accounts receivable8,577,7838,004,1577.17%Due to the Company's strong growth in regions with generally longer credit terms, especially Brazil and Latin America
Derivative financial liabilities1,687,360691,475144.02%Realization and revaluation of derivatives.
Taxes payable515,575369,03839.71%Seasonality increase mainly due to VAT
Contractual liability888,232664,22833.72%Seasonality increase mainly due to rebates
Deferred tax liability447,499323,30438.41%Increase mainly due to tax basis revaluation of non-monetary assets in Brazil

Solutions’ CEO (on top of his role as Solution’s CFO).Additionally, on April 9, 2020, the shareholders meeting approved the nomination of Mr. Erik Fyrwald, the CEO of SyngentaGroup and CEO and Executive Director of Syngenta AG, as director and Chairman of the Board of Directors of theCompany, replacing Mr. Yang Xingqiang, and the continuous nomination of Mr. Chen Lichtenstein, CFO of the SyngentaGroup and Syngenta AG, as a director of the Board of Directors of the Company. Concurrently, Mr. Ignacio Dominguezwas nominated as the Chairman of the board of directors of Solutions, replacing Mr. Yang Xingqiang.

3. Within the context of the 2017 combination between the Company and Solutions, the Company entered into aPerformance Compensation Agreement with CNAC, then the 100% owner of Solutions and the controlling shareholder ofthe Company, according to which, CNAC made a commitment regarding Solutions’ aggregate net profit in the years 2017,2018 and 2019. In case of failure to meet such commitment, CNAC committed to compensate the Company either throughshares or cash according to a predetermined formula. Despite Solutions’ strong performance during the three-year period,due to exogenous reasons, the calculated net profit of Solutions for this period implies a certain shortfall. This shortfall wascaused entirely by the impact of the Divestment & Transfer of several products that Solutions implemented to facilitate theapproval by the EU Commission of the acquisition of Syngenta by ChemChina, which caused an incremental non-cashamortization charges related to the written-up value of the assets received from Syngenta. Absent these non-cashamortization charges, Solutions would have exceeded the profit commitment.As a result, CNAC shall return to the Company a certain number of shares of the Company it received in exchange for thetransfer of 100% of Solutions to the Company, and return an additional amount in dividends it received in respect of suchshares. Following their receipt, these shares will be canceled by the Company. As a result, the total number of shares inissue will be reduced, and CNAC’s ownership (directly and indirectly) in the Company will go from 78.9% to 78.0%.Additionally, according to the Impairment Test Report of Solutions due to the Expiration of the Compensation Period ofMajor Assets Restructuring Project issued by Deloitte, there was no impairment of Solutions on December 31, 2019.In view of CNAC transferring the shares directly held by it in the Company to the Syngenta Group, CNAC and SyngentaGroup will compensate the Company. For details, please refer to the Announcement on the Overall Achievement of theCommitted Performance in the Major Assets Restructuring and the Planned Compensations to the Company by theObligors disclosed by the Company on April 28, 2020 on the website www.cninfo.com.cn.For details on the aforesaid compensation, please refer to Item II of Section V of the 2019 Annual Report.

Significant EventsDate of DisclosureIndex of the Disclosed Announcements
CNAC is transferring its direct ownership in the Company to Syngenta GroupJanuary 6, 2020Announcement on the Transfer of State-owned Shares of Controlling Shareholders (Announcement No. 2020-1)
January 23, 2020Announcement-SinoChem Group and ChemChina Planning for Strategic Restructuring (Announcement No. 2020-4)
March 14, 2020Announcement on Approval from China Securities Regulatory Commission for the Application of Offeror and its Person Acting in Concert for Waiving of the Obligation of a Mandatory Tender Offer for the Transfer (Announcement No. 2020-12)
Replacement of directors and senior executivesFebruary 27, 2020Announcement on the Resolutions of the 21st meeting of the 8th Session of the Board (Announcement No. 2020-7)
March 26, 2020Announcement on the Resolutions of the 23rd meeting of the 8th Session of the Board (Announcement No. 2020-15)
April 10,2020Announcement on the Resolutions of the 2nd Interim Shareholders Meeting in 2020 (Announcement No. 2020-20)

□Applicable √Not applicable

III. None completion of Commitments that should have been completed in the reporting

period by the Company, actual controller, shareholders, related parties, acquirer, andother committed parties

□ Applicable √ Not applicable

IV. Securities investment

□ Applicable √ Not applicable

No such cases in the Reporting Period.

V. Wealth management entrustment

□ Applicable √ Not applicable

No such cases in the Reporting Period.

VI. Investment in derivative financial instruments

√ Applicable □ Not applicable

Unit: RMB’000

The party that operates the investmentRelation with the CompanyRelated party transaction or not?TypeInitial investment amountStarting dateExpiring dateInvestment amount at beginning of the periodAmount purchased during the reporting periodAmount sold during the reporting periodImpairment accrued (if any)Investment amount at end of the periodPercentage of investment amount divided by net asset at end of the periodGain/loss during the reporting period
BanksNoNoOption2,078,90817/02/202026/05/20202,078,9083,703,626-3,671,174No2,111,3609.38%73,918
BanksNoNoForward19,122,64029/11/201904/08/202019,122,64037,826,042-37,527,533No19,421,14986.32%172,474
Total21,201,548----21,201,54841,529,668-41,198,70721,532,50995.70%246,392
Source of fund for the investmentInternal
litigation-related situations (if applicable)N/A
Date of disclosure of Board approval (if any)December 30, 2017
Date of disclosure of Shareholders’ approval (if any)N/A
Risk and control analysis for the reporting period (including 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 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 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 assumptions should be disclosed in the analysis of fair value of the investmentsThe aforesaid refers to short time hedging currency transactions made by the relevant subsidiary with banks. Segregation of duties as follows: For the fair value evaluation, the relevant subsidiary is usually using external experts. The relevant subsidiary hedges currencies only; the relevant transactions are simple (Options and forwards) for short terms. For fair value methodology see section XI of the annual 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.
Explanation for any significant changes in accounting policies and principles, compared with last reporting periodN/A
Independent Directors’ opinion on the investment in derivative financial instruments and related risk controlsThe 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.

VII. Information regarding communication with investors

√ Applicable □ Not applicable

Date of visitWay of visitType of visitorAbout
March 30th, 2020Tele-conferenceInstitutionalDebriefing of 2019 Annual Financial Preview

Section IV Financial Statements

II. Financial statements

1. Consolidated balance sheet

Prepared by ADAMA Ltd.

31 March 2020

Unit: RMB’000

ItemMarch 31, 2020December 31, 2019ItemMarch 31, 2020December 31, 20109
Current assets:Current liabilities:
Cash at bank and on hand4,264,4504,348,588Short-term loans2,515,6222,009,882
Financial assets held for trading26,83129,510Derivative financial liabilities1,687,360691,475
Derivative financial assets1,829,988490,113Bills payable379,381321,674
Bills receivable31,20326,000Accounts payable4,434,6314,205,901
Accounts receivable8,577,7838,004,157Contract liabilities888,232664,228
Receivables financing35,62478,948Employee benefits payable1,127,4861,211,713
Prepayments388,841377,808Taxes payable515,575369,038
Other receivables1,752,9591,195,253Other payables1,237,4071,049,594
Inventories10,091,3159,932,654Non-current liabilities due within one year1,079,6711,066,243
Other current assets639,603659,195Other current liabilities303,740355,243
Total current assets27,638,59725,142,226Total current liabilities14,169,10511,944,991
Non-current assets:Non-current liabilities:
Long-term receivables135,332170,896Long-term loans1,181,250927,159
Long-term equity investments141,184133,098Debentures payable7,804,4867,965,942
Other equity investments156,148155,062Lease liabilities406,109406,358
Investment properties3,6903,771Long-term accounts payable26,57029,021
Fixed assets6,926,0846,939,610Long-term employee benefits payables686,505738,854
Construction in progress859,769788,386Provisions164,473176,822
Right-of-use assets533,749536,034Deferred tax liabilities447,499323,304
Intangible assets5,698,5525,835,785Other non-current liabilities394,100404,824
Goodwill4,609,0544,511,193Total non-current liabilities11,110,99210,972,284
Deferred tax assets833,511826,696Total liabilities25,280,09722,917,275
Other non-current assets244,570246,183Shareholders’ equity:
Total non-current assets20,141,64320,146,714Share capital2,446,5542,446,554
Total assets47,780,24045,288,940Capital reserves12,903,16812,903,168
Other comprehensive income1,336,9151,192,681
Special reserves15,88814,927
Surplus reserves240,162240,162
Retained earnings5,557,4565,574,173
Total shareholders’ equity22,500,14322,371,665
Total liabilities and shareholders’ equity47,780,24045,288,940
Ignacio Dominguez Legal representativeAviram Lahav Chief of the accounting workAviram Lahav Chief of the accounting organ

2. Balance sheet of the Company

Unit: RMB’000

ItemMarch 31, 2020December 31, 2019ItemMarch 31, 2020December 31, 20109
Current assets:Current liabilities:
Cash at bank and on hand1,464,2481,423,051Short-term loans122,000150,000
Accounts receivable192,541349,109Bills payable83,02090,190
Receivables financing11,09111,722Accounts payable125,030124,228
Prepayments38,4186,055Contract liabilities7,2306,748
Other receivables28,96414,051Employee benefits payable176,567204,238
Inventories89,95697,861Taxes payable2,7103,614
Other current assets7,16419,117Other payables239,224237,266
Total current assets1,832,3821,920,966Non-current liabilities due within one year11,339454
Non-current assets:Total current liabilities767,120816,738
Long-term equity investments16,371,41116,371,411Non-current liabilities:
Other equity investments85,49585,495Long-term loans173,210141,960
Investment properties3,6903,771Lease liabilities-21
Fixed assets738,208777,476Long-term employee benefits payables95,96196,826
Construction in progress532,564504,936Provisions43,37943,238
Right-of-use assets369486Other non-current liabilities171,770171,770
Intangible assets168,942170,053Total non-current liabilities484,320453,815
Deferred tax assets86,35384,950Total liabilities1,251,4401,270,553
Other non-current assets77,24773,668Shareholders’ equity:
Total non-current assets18,064,27918,072,246Share capital2,446,5542,446,554
Total assets19,896,66119,993,212Capital reserves15,449,87815,449,878
Other comprehensive income41,30841,308
Special reserves13,93312,973
Surplus reserves240,162240,162
Retained earnings453,386531,784
Total shareholders’ equity18,645,22118,722,659
Total liabilities and shareholders’ equity19,896,66119,993,212

3. Consolidated income statement

Unit: RMB’000

ItemJanuary-March, 2020January-March, 2019
1. Total operating Income6,782,2436,787,751
Less: Cost of sales4,757,4134,449,236
Taxes and surcharges18,94324,541
Selling and Distribution expenses1,256,8711,268,966
General and Administrative expenses325,229317,514
Research and Development expenses92,00896,353
Financial expenses411,620479,381
Including: Interest expense165,243163,299
Interest income10,53020,227
Add: Investment income, net(129,323)(550,462)
Including: Income from investment in associates and joint ventures9,1285,773
Gain (loss) from changes in fair value323,813794,180
Credit impairment loss13,886(8,580)
Asset impairment loss(1,923)(8,777)
Gain (loss) from disposal of assets7,69240,479
2. Operating profit134,304418,600
Add: Non-operating income17,3905,707
Less: Non-operating expense15,0629,196
3. Total profit136,632415,111
Less: income tax expense153,33948,355
4. Net profit(16,707)366,756
5.1 Classified by nature of operations
5.1.1 Continuing operations(16,707)366,756
5.2 Classified by ownership
5.2.1 Shareholders of the Company(16,707)366,756
5. Other comprehensive income net of tax
Other comprehensive income net of tax attributable to shareholders of the Company144,207(390,043)
5.1 Items that will not be reclassified into profit/loss34,218(4,152)
5.1.1 Re-measurement of defined benefit plan liability34,218(9,202)
5.1.2 FV changes in other equity investment-5,050
5.2 Items that were or will be reclassified to profit or loss109,989(385,891)
5.2.1 Effective portion of gains or loss of cash flow hedge45,885(40,304)
5.2.2 Translation differences of foreign financial statements64,104(345,587)
6. Total comprehensive income for the period127,500(23,287)
7. Earnings per share
7.1 Basic earnings per share (RMB/ share)(0.007)0.150
7.2 Diluted earnings per share (RMB/ share)N/AN/A
Ignacio Dominguez Legal representativeAviram Lahav Chief of the accounting workAviram Lahav Chief of the accounting organ

4. Income statement of the Company

Unit: RMB’000

ItemJanuary-March, 2020January-March, 2019
1. Operating income170,951416,354
Less: Cost of sales149,890292,548
Taxes and surcharges1,6956,241
Selling and Distribution expenses2,93819,482
General and Administrative expenses98,87896,492
Research and Development expenses1,9611,470
Financial expenses (income)(3,725)8,886
Including: Interest expense1,4151,077
Interest income4,0336,901
Add: Credit impairment loss(1,266)(577)
Asset Impairment loss(1,587)(69)
2. Operating profit(83,539)(9,411)
Add: Non-operating income4,100710
Less: Non-operating expense3631,857
3. Total profit(79,802)(10,558)
Less: Income tax expense(1,404)(2,828)
4. Net profit(78,398)(7,730)
4.1 Continuing operations(78,398)(7,730)
5. Other comprehensive income net of tax-5,050
5.1 Items that will not be reclassified into profit/loss-5,050
5.1.1 FV changes in other equity investment-5,050
6. Total comprehensive income for the period(78,398)(2,680)

5. Consolidated cash flow statement

Unit: RMB’000

ItemJanuary-March, 2020January-March, 2019
1. Cash flows from operating activities:
Cash received from sale of goods and rendering of services5,144,8465,006,120
Refund of taxes and surcharges26,57930,497
Cash received relating to other operating activities167,605109,616
Sub-total of cash inflows from operating activities5,339,0305,146,233
Cash paid for goods and services4,028,0094,604,831
Cash paid to and on behalf of employees905,294829,857
Payments of taxes and surcharges75,043264,648
Cash paid relating to other operating activities715,392736,381
Sub-total of cash outflows from operating activities5,723,7386,435,717
Net cash flows from operating activities(384,708)(1,289,484)
2. Cash flows from investing activities:
Cash received from disposal of investments2,2188,148
Cash received from returns of investments-3,372
Net cash received from disposal of fixed assets, intangible assets and other long-term assets9,42930,843
Sub-total of cash inflows from investing activities11,64742,363
Cash paid to acquire fixed assets, intangible assets and other long-term assets357,353287,509
Net cash paid to acquire subsidiaries or other business units-824,583
Cash paid for other investing activities27,393-
Sub-total of cash outflows from investing activities384,7461,112,092
Net cash flows from investing activities(373,099)(1,069,729)
3. Cash flows from financing activities:
Cash received from borrowings1,194,2401,537,197
Sub-total of cash inflows from financing activities1,194,2401,537,197
Cash repayment of borrowings428,544258,676
Cash payment for dividends, profit distributions or interest46,21064,551
Including: dividends paid to non-controlling interest-23,830
Cash paid relating to other financing activities90,259380,425
Sub-total of cash outflows from financing activities565,013703,652
Net cash flows from financing activities629,227833,545
4. Effect of foreign exchange rate changes on cash and cash equivalents46,592(81,844)
5. Net increase (decrease) in cash and cash equivalents(81,988)(1,607,512)
Add: Cash and cash equivalents at the beginning of the period4,319,9076,346,196
6. Cash and cash equivalents at the end of the period4,237,9194,738,684

6. Cash flow statement of the Company

Unit: RMB’000

ItemJanuary-March, 2020January-March, 2019
1. Cash flows from operating activities:
Cash received from sale of goods and rendering of services309,170633,069
Refund of taxes and surcharges17,30615,759
Cash received relating to other operating activities8,1997,737
Sub-total of cash inflows from operating activities334,675656,565
Cash paid for goods and services169,917290,452
Cash paid to and on behalf of employees59,62555,606
Payments of taxes and surcharges2,72320,779
Cash paid relating to other operating activities43,06751,452
Sub-total of cash outflows from operating activities275,332418,289
Net cash flows from operating activities59,343238,276
2. Cash flows from investing activities:
Cash received relating to other investing activities-1,808
Sub-total of cash inflows from investing activities-1,808
Cash paid to acquire fixed assets, intangible assets and other long-term assets32,86125,850
Sub-total of cash outflows from investing activities32,86125,850
Net cash flows from investing activities(32,861)(24,042)
3. Cash flows from financing activities:
Cash received from borrowings114,500-
Cash received relating to other financing activities2,151-
Sub-total of cash inflows from financing activities116,651-
Cash repayment of borrowings100,000-
Cash payment for dividends, profit distributions or interest3,3811,077
Cash paid relating to other financing activities-8,610
Sub-total of cash outflows from financing activities103,3819,687
Net cash flows from financing activities13,270(9,687)
4. Effect of foreign exchange rate changes on cash and cash equivalents3,596(4,777)
5. Net increase (decrease) in cash and cash equivalents43,348199,770
Add: cash and cash equivalents at the beginning of the period1,395,9942,005,313
6. Cash and cash equivalents at the end of the period1,439,3422,205,083

III. Adjustments of the financial statements

1. Opening balance adjustments due to adoption of new accounting standards for financial instruments,

revenue and leases

□ Applicable√ Not applicable

2. Retrospective adjustments due to adoption of new accounting standards for financial instruments and

leases

□ Applicable √ Not applicable

IV. Auditor’s report

Is this Report audited?

□ Yes √ No

This Report is unaudited.

ADAMA Ltd.

April 27, 2020


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