ADAMA LTD.
THIRD 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.
October 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 ChangesMain accounting and financial resultsWhether 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
| End of Reporting Period | End of last year | +/- (%) | |
| Total assets (RMB’000) | 48,292,712 | 45,288,940 | 6.63% |
| Net assets attributable to shareholders (RMB’000) | 21,964,107 | 22,371,665 | -1.82% |
| July - September 2020 | YoY +/- (%) | January - September 2020 | YoY +/- (%) | |
| Operating revenues (RMB’000) | 6,768,583 | 1.54% | 20,889,623 | 3.00% |
| Net profit attributable to shareholders of the Company (RMB’000) | 20,409 | -90.10% | 225,058 | -71.68% |
| Net profit attributable to shareholders of the Company excluding non-recurring profit and loss (RMB’000) | 9,876 | -94.86% | 229,648 | -63.11% |
| Net cash flow from operating activities (RMB’000) | 157,469 | -60.55% | 1,392,000 | 1376.75% |
| Basic EPS (RMB/share) | 0.0086 | -89.79% | 0.0929 | -71.40% |
| Diluted EPS (RMB/share) | N/A | N/A | N/A | N/A |
| Weighted average return on net assets | 0.10% | -0.77% | 1.01% | -2.45% |
| Item | January - September 2020 | Note |
| Gains/losses on the disposal of non-current assets (including the offset part of asset impairment provisions) | 7,535 | - |
| Government grants recognized through profit or loss (excluding government grants closely related to business of the Company and given at a fixed quota or amount in accordance with government’s uniform standards) | 25,556 | - |
| Recovery or reversal of provision for bad debts which is assessed individually during the years | 22,777 | - |
| Other non-operating income and expenses other than the above | 23,309 | - |
| Other profit or loss that meets the definition of non-recurring profit or loss | (70,032) | Employee early retirement plan expenses |
| Less: Income tax effects | 13,735 | - |
| Total | (4,590) | - |
Explanation of why the Company classified an item as non-recurring profit/loss according to the definition in the FirstExplanatory Announcement on Information Disclosure for Companies Offering their Securities to the Public.Non-recurring Profit and Loss, and reclassified any non-recurring profit/loss items are given as examples in the saidexplanatory announcement to recurrent profit/loss
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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
rights, and shareholdings of top 10 shareholders at the period-end
Unit: share
| Total number of ordinary shareholders at the end of the Reporting Period | 49,443 (the number of ordinary A share shareholders is 34,867; the number of B share shareholders is 14,576) | Total number of preference shareholders who had resumed their voting right at the end of the Reporting Period (if any) | 0 | |||
| Shareholdings of top 10 shareholders | ||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Number of shares held | Number of restricted shares held | Pledged or frozen shares | |
| Status | Number | |||||
| Syngenta Group Co., Ltd. | State-owned legal person | 72.88% | 1,708,450,759 | -- | -- | -- |
| Jingzhou Sanonda Holding Co., Ltd. | State-owned legal person | 5.11% | 119,687,202 | -- | -- | -- |
| China Structural Reform Fund Co., Ltd. | State-owned legal person | 1.43% | 33,557,046 | -- | -- | -- |
| China Cinda Asset Management Co., Ltd. | State-owned legal person | 1.33% | 31,115,916 | -- | -- | -- | |
| Portfolio No.503 of National Social Security Fund | Others | 0.98% | 23,000,052 | -- | -- | -- | |
| CCB Principal-ICBC-Avic Trust, Trust Plan of Pooled Funds of CCB Principal Private Placement Investment, Tianqi (2016) No. 293 of Avic Trust | Others | 0.55% | 12,885,906 | -- | -- | -- |
| Hong Kong Securities Clearing Company Limited | Overseas legal person | 0.25% | 5,890,633 | ||||
| GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED | Overseas legal person | 0.19% | 4,477,972 | -- | -- | -- |
| State-owned Assets Administration Bureau of Qichun County | State | 0.18% | 4,169,266 | -- | -- | -- | ||||
| Wu Feng | Domestic natural person | 0.17% | 4,035,169 | -- | -- | -- | ||||
| Shareholdings of top 10 non-restricted shareholders | ||||||||||
| Name of shareholder | Number of non-restricted shares held at the period-end | Type of shares | ||||||||
| Type | Number | |||||||||
| Syngenta Group Co., Ltd. | 1,708,450,759 | RMB ordinary share | 1,708,450,759 | |||||||
| Jingzhou Sanonda Holding Co., Ltd. | 119,687,202 | RMB ordinary share | 119,687,202 | |||||||
| China Structural Reform Fund Co., Ltd. | 33,557,046 | RMB ordinary share | 33,557,046 | |||||||
| China Cinda Asset Management Co., Ltd. | 31,115,916 | RMB ordinary share | 31,115,916 | |||||||
| Portfolio No.503 of National Social Security Fund | 23,000,052 | RMB ordinary share | 23,000,052 |
| CCB Principal-ICBC-Avic Trust, Trust Plan of Pooled Funds of CCB Principal Private Placement Investment, Tianqi (2016) No. 293 of Avic Trust | 12,885,906 | RMB ordinary share | 12,885,906 |
| Hong Kong Securities Clearing Company Limited | 5,890,633 | RMB ordinary share | 5,890,633 |
| GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED | 4,477,972 | Domestically listed foreign share | 4,477,972 |
| State-owned Assets Administration | 4,169,266 | RMB ordinary share | 4,169,266 |
| Bureau of Qichun County | |||
| Wu Feng | 4,035,169 | RMB ordinary share | 4,035,169 |
| Related or act-in-concert parties among the shareholders above | Syngenta Group Co., Ltd. and Jingzhou Sanonda Holdings Co., Ltd. are related parties, and are acting-in-concert parties as prescribed in the Administrative Methods for Acquisition of Listed Companies. Both of them are controlled subsidiaries 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) | Shareholder Wu Feng held 1,423,126 shares of the Company through a credit collateral securities trading account and 2,612,043 shares of the Company through a common securities account, totaling 4,035,169 shares of the Company. | ||
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 third quarter of 2020, the global agrochemical market is expected to have seen moderate growth, as the residualimpact from COVID-19 continues to linger in many markets. Crop prices have recovered in many key crops, however forsome such as cotton, planted acreage was lower due to the lower crop prices at the time of planting during the first half ofthe year, impacting sales in this segment markets such as the US, Brazil and Turkey. Governments across the worldcontinue to include farmers in extensive support programs, partially offsetting lost income due to the COVID-19 pandemic.While global currencies recovered somewhat against the US Dollar during the third quarter, they generally remainedsignificantly weaker when compared to the third quarter and first nine months of 2019, especially in the emerging marketswhere the Company is seeing its strongest growth.Following an extended period of industry-wide supply constraints in recent years due to the increasingly stringentenvironmental regulations imposed on Chinese producers, during the first half of the year procurement costs of chemicalraw materials and intermediates started to decline as general levels of production and supply increased. This increase inproduction and supply was seen despite some disruptions due to the initial COVID-19 outbreak in the first quarter.The Company started to benefit from this trend in the third quarter as these lower procurement costs have migrated throughthe Company’s inventory cycle. However, the lower prices have also had a negative impact on the Company’s sales ofchemical raw materials and intermediates, which form part of its Ingredients & Intermediates business in both China andIsrael.Acquisition of HuifengOn October 29, 2020, the Company announced the acquisition of a majority stake in a newly established company thatwill hold the vast majority of the crop protection synthesis and formulation facilities of Jiangsu Huifeng Bio Agriculture Co.,Ltd (“Huifeng”), a leading Chinese crop protection producer and key player in the Chinese crop protection market.For further details, please refer to “Progress on significant events, as well as the impact and solutions” section herein.
| January - September 2020 (000’RMB) | Same period last year (000’RMB) | +/-% | January - September 2020 (000’USD) | Same period last year (000’USD) | +/-% |
| Operating income (Revenues) | 20,889,623 | 20,282,075 | 3.00% | 2,986,609 | 2,961,572 | 0.85% |
| Cost of goods sold | 14,757,406 | 13,607,433 | 8.45% | 2,110,039 | 1,986,377 | 6.23% |
| Sales & Marketing expenses | 3,681,011 | 3,664,412 | 0.45% | 526,484 | 535,288 | -1.65% |
| General & Administrative expenses | 768,156 | 902,506 | -14.89% | 109,877 | 131,885 | 16.68% - |
| R&D expenses | 280,212 | 317,642 | -11.78% | 40,069 | 46,357 | -13.57% |
| January - September 2020 (000’RMB) | Same period last year (000’RMB) | +/-% | January - September 2020 (000’USD) | Same period last year (000’USD) | +/-% |
| Financial Expenses | 1,191,155 | 1,503,130 | -20.75% | 170,242 | 219,199 | -22.33% |
| Gain (loss) from Changes in Fair Value | 228,849 | 1,157,695 | -80.23% | 32,905 | 170,076 | -80.65% |
| Investment Income (loss) | 171,333 | (467,057) | -136.68% | 24,295 | (69,534) | -134.94% |
| Total Net Financial Expenses and Investment Income | 790,973 | 812,492 | -2.65% | 113,042 | 118,657 | -4.73% |
| Total profits | 465,547 | 962,140 | -51.61% | 66,070 | 140,951 | -53.12% |
| Income tax expenses | 240,489 | 167,407 | 43.66% | 34,277 | 24,537 | 39.70% |
| Net income | 225,058 | 794,733 | -71.68% | 31,793 | 116,414 | -72.69% |
| EBITDA | 3,068,857 | 3,524,465 | -12.93% | 438,459 | 515,069 | -14.87% |
| Q3 2020 (000’RMB) | Q3 2019 (000’RMB) | +/-% | Q3 2020 (000’USD) | Q3 2019 (000’USD) | +/-% |
| Operating income (Revenues) | 6,768,583 | 6,666,043 | 1.54% | 978,205 | 953,422 | 2.60% |
| Cost of goods sold | 4,852,936 | 4,584,191 | 5.86% | 701,346 | 655,666 | 6.97% |
| Sales & Marketing expenses | 1,212,443 | 1,164,638 | 4.10% | 175,224 | 166,573 | 5.19% |
| General & Administrative expenses | 214,970 | 274,247 | 21.61% - | 31,067 | 39,224 | 20.79% - |
| R&D expenses | 92,027 | 106,943 | -13.95% | 13,300 | 15,295 | -13.05% |
| Financial Expenses | 348,363 | 564,934 | -38.33% | 50,348 | 80,798 | -37.69% |
| Gain (loss) from Changes in Fair Value | (36,661) | 273,560 | -113.40% | (5,298) | 39,126 | -113.54% |
| Investment Income (loss) | 119,204 | 47,386 | 151.56% | 17,227 | 6,777 | 154.20% |
| Total Net Financial Expenses and Investment income | 265,820 | 243,988 | 8.95% | 38,419 | 34,895 | 10.10% |
| Total profits | 16,700 | 232,965 | -92.83% | 2,418 | 33,320 | -92.73% |
| Q3 2020 (000’RMB) | Q3 2019 (000’RMB) | +/-% | Q3 2020 (000’USD) | Q3 2019 (000’USD) | +/-% |
| Income tax expenses | (3,709) | 26,870 | -113.80% | (534) | 3,845 | -113.89% |
| Net income | 20,409 | 206,095 | -90.09% | 2,952 | 29,475 | -89.97% |
| EBITDA | 949,586 | 1,063,546 | -10.71% | 137,242 | 152,113 | -9.77% |
| Q3 2020 $m | Q3 2019 $m | Change USD | 9M 2020 $m | 9M 2019 $m | Change USD |
| Europe | 181 | 188 | -4.0% | 790 | 816 | -3.2% |
| North America | 145 | 160 | -9.3% | 518 | 560 | -7.6% |
| Latin America | 335 | 302 | 10.9% | 714 | 657 | 8.6% |
| Asia Pacific | 148 | 138 | 7.0% | 497 | 497 | 0.2% |
| Of which China | 82 | 76 | 9.0% | 250 | 255 | -1.9% |
| India, Middle East & Africa | 170 | 166 | 2.8% | 468 | 432 | 8.3% |
| Total | 978 | 953 | 2.6% | 2,987 | 2,962 | 0.8% |
high inventories in distribution channels. During the quarter, the Company completed the acquisition of the remaining 51%of Alfa in Greece, bolstering its activities in this important market.During the quarter, the Company obtained multiple new product registrations in the region, including COLT
?, a herbicidefor the control of broadleaf weeds in winter cereals and pasture, and FOLPAN GOLD
?, a systemic fungicide to combatgrapevine mildew, both registered in Bulgaria.In US dollar terms, sales were lower by 4.0% in the quarter and by 3.2% in the nine-month period, compared to thecorresponding periods last year, reflecting the net impact of the relative strengthening of European currencies againstthe US dollar in the quarter, contrasted with their relative weakness over the nine-month period.North America: Sales were lower by 9.3% in the third quarter and by 7.1% in the nine-month period, in CER terms,compared with the corresponding periods last year.Crop protection sales were markedly lower, largely due to disruptive weather conditions in the US which saw windstormsdamage corn fields in the mid-west, fires raging in the orchards and vineyards of California and Oregon, and a heatwavechallenging cotton farmers in Texas already contending with reduced demand due to the COVID-19 impact on the apparelindustry, alongside low insect pressure impacting sales of insecticides. This was partially mitigated by the robustperformance of the Company’s Consumer and Professional Solutions business, which continues its strong recovery fromthe COVID-19 related challenges seen earlier in the year.The Company continued to expand its differentiated product offering in the region, following the earlier launches in Canadaof CUSTODIA
?, a combination fungicide controlling a wide range of diseases in corn, soybeans and wheat, as well asORIUS
?, a broad-spectrum fungicide for wheat, barley and oat crops.In US dollar terms, sales were lower by 9.3% in the quarter and by 7.6% in the nine-month period, compared to thecorresponding periods last year, reflecting the moderate weakening of the Canadian Dollar seen in the first half of theyear.Latin America: Sales grew by a robust 38.7% in the third quarter and by 32.7% in the nine-month period, in CER terms,compared to the corresponding periods last year, driven by significant volume growth in key countries and continued priceincreases to partially compensate for the material weakness of the currencies in the region, and despite widespreadCOVID-19 related restrictions.The Company saw significant volume growth in Brazil, driven by strong performances from its differentiated productportfolio including flagship product CRONNOS
?
, the triple-action fungicide for soybean rust, GALIL
?
, a differentiatedcombination insecticide and TRIVOR
?
, a dual-action insecticide for rapid and extended control of sucking pests, followingits successful 2019 launch.Noteworthy performances were also recorded in Argentina, Colombia, Mexico and Paraguay, as well as in Peru, bolsteredby the Company’s recent acquisition in the country.On October 14, 2020, the Company acquired a majority stake in FNV S.A., its key crop protection distributor in Paraguay,strengthening the Company’s commercial presence in this important market and providing the Company with direct marketaccess, ensuring the sustainability and growth of its key distribution platform.During the quarter, the Company obtained multiple new product registrations in the region, including ARADDO
?
, a completesolution for the management of a wide range of glyphosate-resistant weeds in soybean, corn and wheat crops in Brazil.In US dollar terms, sales in the region grew by 10.9% in the quarter and 8.6% in the nine month period, compared to thecorresponding periods last year, as the robust business growth was heavily impacted by weaker currencies in the region,in particular the significant decline in the Brazilian Real against the US dollar.
Asia Pacific: Sales grew by 5.3% in the quarter and by 3.4% in the nine-month period, in CER terms, compared to thecorresponding periods last year, driven by continued volume growth.In Asia-Pacific (outside of China), the Company saw strong performance from Australia and New Zealand, benefiting fromfavorable weather, and more than offsetting challenging seasonal conditions in South East Asia.During the quarter, the Company obtained multiple new product registrations in the region, including ULTRO
?
(Carbetamide), a herbicide for the control of grasses in all pulse crops. This is a new active ingredient in Australia forbroadacre cropping, the country’s largest cropping segment.In China, the Company delivered moderate growth in the quarter, with a strong performance from its branded, formulatedsales being partially offset by lower prices received for its raw materials and intermediates due to increased supplygenerally from Chinese producers. The growth in the formulated products was supported by new product launchesincluding AN GUO XUAN
?, a protective fungicide for tomatoes, and XIN TUO LONG
?, an effective growth regulatingsolution for cotton harvesting in the Xinjiang region.In US dollar terms, sales in the region grew by 7.0% in the third quarter were flat over the nine-month period, comparedto the corresponding periods last year, reflecting the strengthening of the Chinese Renminbi against the US dollar in Q3,contrasted with the generally weaker currencies over the nine month period.India, Middle East and Africa: Sales grew by 7.5% in the quarter and by 14.2% in the nine-month period, in CER terms,compared to the corresponding periods last year, driven by robust volume growth.The growth in the region was driven mainly by a strong performance in India, which benefited from above-average monsoonrains and good cropping conditions.During the quarter, the Company continued to expand its hybrid product offering in the region, launching TRIGUS
?
, aninsecticide for use on sucking pests, in India.In US dollar terms, sales in the region grew by 2.8% in the quarter and by 8.3% in the nine month period, compared tothe corresponding periods last year, reflecting the impact of softer currencies, most notably the Turkish Lira, the IndianRupee and the South African Rand.
(2) Gross Profit:
The third quarter saw the Company start to benefit from a marked drop in procurement costs which began earlierin the year and which are now migrating through the Company’s inventory cycle. This was partially offset bysomewhat higher manufacturing costs related to the stronger Israel shekel. However, in both the third quarter andnine-month periods, the strong volume growth and lower procurement costs were more than offset by the materialdepreciation of global currencies, which constrained gross profit by an estimated $75 million and $184 million,respectively.
(3) Operating Expenses:
Operating expenses include Sales and Marketing, General and Administration and R&D. Total operating expensesin the third quarter were $220 million (22.5% of sales) and $676 million (22.6% of sales) in the nine-month period,compared to $221 million (23.2% of sales) and $714 million (24.1% of sales) in the corresponding periods last year,respectively. The Company continues to maintain tight control of its operating expenses, which were also naturallyconstrained by the impact of COVID-19, and saw a marked decrease in expenses in both the quarter and nine-month periods, despite the inclusion of recent acquisitions. Operating expenses in the 2020 periods also benefitedfrom the global currency weakness against the US dollar when compared to prior periods, while operating expensesin the 2019 nine-month period were net of income related to expropriation of land recorded then.
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 operatingexpenses of, mainly, the following items:
? Amortization of legacy Purchase Price Allocation (PPA) of 2011 acquisition of Adama AgriculturalSolutions Ltd., a wholly-owned subsidiary of the Company (hereinafter: “Solutions”) (non-cash): UnderPRC GAAP, since the first combined reporting in Q3 2017 following the combination, the Company has inheritedthe 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 be fullyamortized by the end of 2020. Its reported financial impact (affecting the Sales & Marketing expenses) in both thethird quarter and the first nine months of 2020 is RMB 66 million (USD 10 million) and RMB 199 million (USD 29million), net of tax, respectively, compared with RMB 66 million (USD 10 million) and RMB 195 million (USD 29million) in the corresponding periods 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 bythe EU Commission of the acquisition of Syngenta by ChemChina, net of taxes and transaction expenses, werepaid to Syngenta in return for the transfer of a portfolio of products in Europe of similar nature and economic value.Since the products acquired from Syngenta are of the same nature, and with the same net economic value asthose divested, the Divestment and Transfer transactions had no net impact on the underlying economicperformance of the Company. Its reported financial impact (affecting the Sales & Marketing expenses) in both thethird quarter and the first nine months of 2020 is RMB 53 million (USD 8 million) and RMB 160 million (USD 23million), net of tax, respectively, compared with RMB 54 million (USD 8 million) and RMB 188 million (USD 27million) in the corresponding periods in 2019.? Employee early retirement plan expenses: a one-time provision for the early retirement plan of employees atthe Company’s Israeli manufacturing facilities. Its reported financial impact (affecting the General & Administrativeexpenses) in both the third quarter and the first nine months of 2020 is RMB 4.2 million (USD 0.6 million) andRMB 70 million (USD 10 million), net of tax, respectively, most of which was recorded in the first quarter of 2020.
(4) Financial Expenses
“Financial Expenses” alone mainly reflect interest payments on corporate bonds and bank loans as well as foreignexchange gains/losses on the bonds and other monetary assets and liabilities before the Company carries out anyhedging. The impact of Financial Expenses (before hedging) is RMB 1,191 million and RMB 348 million (USD 170million and USD 50 million) for the three and first nine months of 2020, respectively, compared with RMB 1,503million and RMB 565 million (USD 219 million and USD 81 million) for the corresponding periods in 2019.Given the global nature of its operational activities and the composition of its assets and liabilities, the Company, inthe ordinary course of its business, uses foreign currency derivatives (forwards and options) to hedge the cash flowrisks associated with existing monetary assets and liabilities that may be affected by exchange rate fluctuations.Net gains/losses from hedging of those positions, are recorded in “Gains/Losses from Changes in Fair Value”, andare then transferred to “Investment Income” upon realization. The combined impact of the hedging transactions onGains/Losses from Changes in Fair Value and Investment Income is a net gain of RMB 324 million and RMB 21million (USD 46 million and USD 3 million) in the three and first nine months of 2020, respectively, compared withRMB 665 million and RMB 317 million (USD 97 million and USD 45 million) in the corresponding period in 2019.In addition, Investment Income also mainly includes an amount of RMB 15 million (USD 2 million) in respect ofequity accounted investees in the first nine months of 2020 compared with RMB 23 million (USD 3 million) in thecorresponding period in 2019 and RMB 59 million (USD 9 million) capital gain from gaining control over an equity
investee, bringing the total Gains/Losses from Changes in Fair Value and Investment Income to RMB 400 million(USD 57 million) in the first nine months of 2020 compared with RMB 691 million (USD 101 million) in thecorresponding period in 2019.The aggregate of Financial Expenses, Gains/Losses from Changes in Fair Value and Investment Income(hereinafter as “Total Net Financial Expenses and Investment Income”), which more comprehensively reflects thefinancial expenses of the Company in supporting its main business and protecting its monetary assets/liabilities,amounts to RMB 867 million and RMB 328 million (USD 124 million and USD 47 million) in the three and first ninemonths of 2020, respectively, compared with RMB 838 million and RMB 248 million (USD 122 million and USD 35million) in the corresponding period in 2019.The higher financial expenses in the quarter were due to an increase in financing costs on the NIS-denominated,CPI-linked bonds due to a higher CPI in Israel, as well as the effect on balance sheet positions of the strengtheningof the RMB when compared to 2019.
(5) Income Tax Expenses
The lower tax expenses in the quarter were driven by the lower operating income, while the comparative quarter in2019 saw higher tax expenses due to the devaluation of the Brazilian Real in that quarter, which resulted in non-cash tax expenses due to differences between the functional currency (US dollar) and tax currency (BRL) withrespect to the value of non-monetary assets. The higher tax expenses in the nine-month period are largely due tothe first-quarter impact of the weakening of the Brazilian Real against the US dollar, which resulted once again inan increase in non-cash tax expenses.
Changes in main assets and liabilities
Unit: RMB’000
| Assets and liabilities | September 30, 2020 | December 31, 2019 | % change | Explanation for any major change |
| Cash at bank and on hand | 5,733,413 | 4,348,588 | 31.85% | Additional loans mainly to support the relocation projects |
| Accounts receivable | 8,156,741 | 8,004,157 | 1.91% | No Significant change |
| Inventories | 11,109,614 | 9,932,654 | 11.85% | No Significant change |
| Investment property | 3,528 | 3,771 | -6.44% | No Significant change |
| Long term equity investments | 13,353 | 133,098 | -89.97% | Gaining control over an equity investee and impairment of an equity investee. |
| Fixed assets | 6,758,241 | 6,939,610 | -2.61% | No Significant change |
| Construction in progress | 1,085,781 | 788,386 | 37.72% | Changes are mainly due to investments as part of China relocation and CIP transferred to fixed assets. |
| Short-term loans | 2,026,051 | 2,009,882 | 0.80% | No Significant change |
| Long-term loans | 2,169,444 | 927,159 | 133.99% | Additional loans mainly to support the relocation and working capital |
| Financial assets at fair value through profit or loss | 3,044 | 29,510 | -89.68% | Mainly as a result of realization of assets. |
| Derivative financial assets | 879,374 | 490,113 | 79.42% | Revaluation and realization of derivatives. |
| Bills receivable | 128,050 | 26,000 | 392.50% | Increase from inclusion of a newly consolidated company |
| Assets and liabilities | September 30, 2020 | December 31, 2019 | % change | Explanation for any major change |
| Other receivables | 1,708,941 | 1,195,253 | 42.98% | Mainly increase in receivables included in the securitization program |
| Derivative financial liabilities | 1,004,517 | 691,475 | 45.27% | Realization and revaluation of derivatives. |
| Other payables | 1,468,951 | 1,049,594 | 39.95% | Mainly increase in liabilities in respect of securitization transaction |
| Contract liabilities | 1,078,082 | 664,228 | 62.31% | Seasonality increase mainly due to rebates |
| Other comprehensive income | 623,522 | 1,192,681 | -47.72% | Mainly from strengthening of the RMB in relation to the USD which decreased the investment in ADAMA solutions |
| Treasury shares | 28,200 | - | 100.00% | Due to the B-Shares repurchase |
a price that shall not exceed 5.70 HKD/share, such that the total funds to be used for the repurchase shall notexceed RMB 132.562 million (including foreign exchange fees, transaction fees and other related fees).Within the period starting at September 16, 2020 and ending on September 30, 2020, the Company repurchased6,255,343 B-Shares by means of centralized price bidding transactions through a B-Shares repurchase account,which account for 0.27% of the Company’s total share capital. Within this period, the highest transaction price was
5.22 HKD/share, the lowest transaction price was 4.93 HKD/share, and the total amount paid amounted to HKD31,835,349 (excluding transaction fees).
Whether the Company sold out the shares which were bought back by means of centralized price bidding
□ 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
No such cases in the Reporting Period.
IV. Investments on Finance Assets
1. Securities investment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Investment in derivative financial instruments
√ Applicable □ Not applicable
Unit: RMB’000
| The party that operates the investment | Relation with the Company | Related party transaction or not? | Type | Initial investment amount | Starting date | Expiring date | Investment amount at beginning of the period | Amount purchased during the reporting period | Amount sold during the reporting period | Impairment accrued (if any) | Investment amount at end of the period | Percentage of investment amount divided by net asset at end of the period | Gain/loss during the reporting period |
| Banks | No | No | Option | 2,078,908 | 04/07/2020 | 14/12/2020 | 2,078,908 | 2,833,227 | -3,393,207 | No | 1,518,928 | 6.92% | 111,428 |
| Banks | No | No | Forward | 19,122,640 | 22/04/2020 | 19/01/2021 | 19,122,640 | 35,613,098 | -35,220,935 | No | 19,514,803 | 88.85% | 259,998 |
| Total | 21,201,548 | - | - | 21,201,548 | 38,446,325 | -38,614,142 | No | 21,033,731 | 95.77% | 371,426 | |||
| Source of fund for the investment | Internal | ||||||||||||
| 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 investments | The aforesaid refers to short time hedging currency transactions made by the relevant subsidiary with banks. Segregation of duties as follows: For the fair value evaluation, the relevant subsidiary is usually using external experts. The relevant subsidiary hedges currencies only; the relevant 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 period | N/A | ||||||||||||
| Independent Directors’ opinion on the investment in derivative financial instruments and related risk controls | The derivative investments carried by the Company are for hedging and narrowing down the risk of market fluctuations. The investments respond to the Company’s routine business demands and are in accordance with the relevant laws and regulations. Additionally, the Company has adopted Currency Risk Hedging Policy to strengthen the risk management and control which benefit the Company’s ability to protect against market risk. The derivative investments do not harm the interests of the Company and its shareholders. | ||||||||||||
V. Progress on the designated projects used the raised funds
√ Applicable □ Not applicable
With the approval of China Securities Regulatory Commission for the issuance of shares to China NationalAgrochemical Co., Ltd. to acquire assets and raise supporting funds (CSRC Permits [2017] No.1096), the Companyissued 104,697,982 ordinary A shares in December 2017, at an issue price of RMB 14.90 per share, raising a totalamount of RMB1,559,999,931.80 (“Raised Funds”). After deducting the underwriting fees of RMB 28, 079,998.78,the net amount received by the Company on 27 December 2017 was RMB 1, 531,919,933.02. Deloitte ToucheTohmatsu Certified Public Accountant LLP verified the amount and issued a capital verification report (De Shi Bao(Yan) Zi (17) No.00540).As of the disclosure date of this Report, the Company has used RMB 400.08 million of the Raised Funds for theacquisition of Anpon; RMB 131.03 million in the product development and registration project; RMB 59.13 million inthe fixed asset investment project; and RMB 127.13 million in the transaction cost, taxes and fees.As of September 30, 2020, the balance of the Raised Funds is RMB 893,731,302.67. The Company intends to usethe above balance (including interest income, and subject to the bank settlement balance on the date oftransfer),with the approval of the shareholders meeting to be held on November 16, 2020, for the payment for the51% equity stake in Shanghai Dibai Plant Protection Co., Ltd. and the 51% equity stake in Jiangsu KelinongAgrochemical Co., Ltd. from Jiangsu Huifeng Agrochemical Co., Ltd.For details, please refer to the Announcement on the Use of the Raised Funds for the Acquisition of the 51% EquityStake in Jiangsu Kelinong Agrochemical Co., Ltd. as well as that in Shanghai Dibai Plant Protection Co., Ltd.(announcement no. 2020-61), Announcement on the Termination of the Use of Raised Funds for Certain DesignatedProjects(announcement no. 2020-26), Announcement on the Change of Certain Designated Projects(announcement no. 2019-17) separately published by the Company on October 29, 2020, April 28, 2020, and March21, 2019.VI. Performance forecast for January-December 2020
Warning of possible loss or considerable YoY change in the accumulative net profit made during the period-beginning to the end of the next reporting period, as well as the reasons:
□ Applicable √ Not applicable
VII. Significant contract in the routine business
□ Applicable √ Not applicable
VIII. Wealth management entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IX. Illegal provision of guarantees for external parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
X. Inadequate use of Company’s capital by the controlling shareholder or its related
parties for non-operating purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XI. Information regarding communication with investors
√ Applicable □ Not applicable
| Date | Place | Reception mode | Type of visitor | Name of the visitor | About | Index |
| April 27, 2020 | Not applicable | Phone call | Institutional investors | Everbright Securities, CITIC Securities, CICC, Industrial Securities, TF Securities, Shenwan Hongyuan Securities, North East Securities, Haitong Securities, Dongxing Securities, CMS, Zhongtai Securities | Introduction on the Q1 performance. Corresponding slides was published on the website of the Company. | Record of the Communications between the Company and the Investors (record number-2020-1) published by the Company on April 29, 2020. |
| August 20, 2020 | Not applicable | Phone call | Institutional investors | Everbright Securities, CICC, Industrial Securities, TF Securities, Haitong Securities, Dongxing Securities, CMS, Zhongtai Securities, BOC International, Nanjing Securities, HSBC Qianhai Securities, Banc of America Securities | Introduction on the Q2 performance. Corresponding slides was published on the website of the Company. | Record of the Communications between the Company and the Investors (record number-2020-2) published by the Company on August 23, 2020. |
| August 21, 2020 | Not applicable | Webcasting | Institutional investors and natural person investors | Not applicable | Introduction on the H1 and Q2 performance. Corresponding slides was published on the website of the Company. | Record of the Communications between the Company and the Investors (record number-2020-3) published by the Company on August 25, 2020. |
Section IV - Financial StatementsI. Financial statements
1. Consolidated balance sheet
Prepared by Adama Ltd.
30 September 2020
Unit: RMB’000
| Item | September 30, 2020 | December 31, 2019 | Item | September 30, 2020 | December 31, 2019 |
| Current assets: | Current liabilities: | ||||
| Cash at bank and on hand | 5,733,413 | 4,348,588 | Short-term loans | 2,026,051 | 2,009,882 |
| Financial assets held for trading | 3,044 | 29,510 | Derivative financial liabilities | 1,004,517 | 691,475 |
| Derivative financial assets | 879,374 | 490,113 | Bills payable | 349,629 | 321,674 |
| Notes receivable | 128,050 | 26,000 | Accounts payable | 4,681,994 | 4,205,901 |
| Accounts receivable | 8,156,741 | 8,004,157 | Contract liabilities | 1,078,082 | 664,228 |
| Receivables financing | 37,979 | 78,948 | Employee benefits payable | 1,044,840 | 1,211,713 |
| Prepayments | 283,840 | 377,808 | Taxes payable | 410,166 | 369,038 |
| Other receivables | 1,708,941 | 1,195,253 | Other payables | 1,468,951 | 1,049,594 |
| Inventories | 11,109,614 | 9,932,654 | Non-current liabilities due within one year | 1,288,081 | 1,066,243 |
| Other current assets | 670,500 | 659,195 | Other current liabilities | 319,299 | 355,243 |
| Total current assets | 28,711,496 | 25,142,226 | Total current liabilities | 13,671,610 | 11,944,991 |
| Non-current assets: | Non-current liabilities: | ||||
| Long-term accounts receivable | 132,511 | 170,896 | Long-term loans | 2,169,444 | 927,159 |
| Long-term equity investments | 13,353 | 133,098 | Debentures payable | 8,402,478 | 7,965,942 |
| Other equity investments | 153,405 | 155,062 | Lease liabilities | 385,813 | 406,358 |
| Investment property | 3,528 | 3,771 | Long-term accounts payable | 27,438 | 29,021 |
| Fixed assets | 6,758,241 | 6,939,610 | Long-term employee benefits payables | 693,492 | 738,854 |
| Construction in progress | 1,085,781 | 788,386 | Provisions | 158,451 | 176,822 |
| Right-of-use assets | 503,899 | 536,034 | Deferred tax liabilities | 387,133 | 323,304 |
| Intangible assets | 5,282,656 | 5,835,785 | Other non-current liabilities | 432,746 | 404,824 |
| Goodwill | 4,532,836 | 4,511,193 | Total non-current liabilities | 12,656,995 | 10,972,284 |
| Deferred tax assets | 883,283 | 826,696 | Total liabilities | 26,328,605 | 22,917,275 |
| Other non-current assets | 231,723 | 246,183 | Owners’ equity: | ||
| Total non-current assets | 19,581,216 | 20,146,714 | Share capital | 2,344,121 | 2,446,554 |
| Total assets | 48,292,712 | 45,288,940 | Capital reserve | 13,023,218 | 12,903,168 |
| Less: Treasury share | 28,200 | - | |||
| Other comprehensive income | 623,522 | 1,192,681 | |||
| Special reserves | 18,284 | 14,927 | |||
| Surplus reserve | 240,162 | 240,162 | |||
| Retained earnings | 5,743,000 | 5,574,173 | |||
| Total shareholders’ equity | 21,964,107 | 22,371,665 | |||
| Total liabilities and shareholders’ equity | 48,292,712 | 45,288,940 |
| Ignacio Dominguez Legal representative | Aviram Lahav Chief of the accounting work | Aviram Lahav Chief of the accounting organ |
2. Balance sheet of the Company
Unit: RMB’000
| Item | September 30, 2020 | December 31, 2019 |
| Current Assets: | ||
| Cash at bank and on hand | 1,506,708 | 1,423,051 |
| Accounts receivable | 319,014 | 349,109 |
| Receivables financing | 11,969 | 11,722 |
| Prepayments | 6,480 | 6,055 |
| Other receivables | 39,694 | 14,051 |
| Inventories | 120,461 | 97,861 |
| Other current assets | 34,657 | 19,117 |
| Total current assets | 2,038,983 | 1,920,966 |
| Non-current assets: | ||
| Long-term equity investments | 16,371,411 | 16,371,411 |
| Other equity investments | 85,495 | 85,495 |
| Investment property | 3,528 | 3,771 |
| Fixed assets | 762,383 | 777,476 |
| Construction in progress | 746,809 | 504,936 |
| Right-of-use assets | 144 | 486 |
| Intangible assets | 222,374 | 170,053 |
| Deferred tax assets | 57,322 | 84,950 |
| Other non-current assets | 39,068 | 73,668 |
| Total non-current assets | 18,288,534 | 18,072,246 |
| Total assets | 20,327,517 | 19,993,212 |
| Current liabilities: | ||
| Short-term loans | 150,000 | 150,000 |
| Bills payables | 70,460 | 90,190 |
| Accounts payables | 215,144 | 124,228 |
| Contract liabilities | 10,261 | 6,748 |
| Employee benefits payable | 144,864 | 204,238 |
| Taxes payable | 2,327 | 3,614 |
| Other payables | 220,997 | 237,266 |
| Non-current liabilities due within one year | 24,500 | 454 |
| Total current liabilities | 838,553 | 816,738 |
| Non-current liabilities: | ||
| Long-term loans | 526,500 | 141,960 |
| Lease liabilities | - | 21 |
| Long-term employee benefits payables | 96,161 | 96,826 |
| Provisions | 43,851 | 43,238 |
| Other non-current liabilities | 171,770 | 171,770 |
| Total non-current liabilities | 838,282 | 453,815 |
| Total liabilities | 1,676,835 | 1,270,553 |
| Owners’ equity: | ||
| Share capital | 2,344,121 | 2,446,554 |
| Capital reserves | 15,569,929 | 15,449,878 |
| Less: Treasury share | 28,200 | - |
| Other comprehensive income | 37,267 | 41,308 |
| Special reserves | 16,343 | 12,973 |
| Surplus reserves | 240,162 | 240,162 |
| Retained earnings | 471,060 | 531,784 |
| Total owners’ equity | 18,650,682 | 18,722,659 |
| Total liabilities and owners’ equity | 20,327,517 | 19,993,212 |
3. Consolidated income statement for the Reporting Period
Unit: RMB’000
| Item | July-September, 2020 | July-September, 2019 |
| 1. Total operating Income | 6,768,583 | 6,666,043 |
| Less: Cost of sales | 4,852,936 | 4,584,191 |
| Taxes and surcharges | 21,330 | 18,495 |
| Selling and Distribution expenses | 1,212,443 | 1,164,638 |
| General and Administrative expenses | 214,970 | 274,247 |
| Research and Development expenses | 92,027 | 106,943 |
| Financial expenses | 348,363 | 564,934 |
| Including: Interest expense | 172,212 | 196,172 |
| Interest income | 17,246 | 23,000 |
| Add: Investment income, net | 119,204 | 47,386 |
| Including: Income from investment in associates and joint ventures | 299 | 944 |
| Gain (loss) from changes in fair value | (36,661) | 273,560 |
| Credit impairment loss | (14,460) | (23,376) |
| Asset impairment loss | (82,152) | (16,626) |
| Gain (loss) from disposal of assets | (173) | 5,890 |
| 2. Operating profit | 12,272 | 239,429 |
| Add: Non-operating income | 9,308 | 3,022 |
| Less: Non-operating expense | 4,880 | 9,486 |
| 3. Total profit | 16,700 | 232,965 |
| Less: income tax expense | (3,709) | 26,870 |
| 4. Net profit | 20,409 | 206,095 |
| 4.1 Classified by nature of operations | ||
| 4.1.1 Continuing operations | 20,409 | 206,095 |
| 4.1.2 Discontinued operations | - | - |
| 4.2 Classified by ownership | ||
| 4.2.1 Shareholders of the Company | 20,409 | 206,095 |
| 4.2.2 Non-controlling interests | - | - |
| 5. Other comprehensive income net of tax | ||
| Other comprehensive income net of tax attributable to shareholders of the Company | (716,531) | 535,389 |
| 5.1 Items that will not be reclassified into profit/loss | (19,483) | (29,628) |
| 5.1.1 Re-measurement of defined benefit plan liability | (19,483) | (23,079) |
| 5.1.2 FV changes in other equity investment | - | (6,549) |
| 5.2 Items that were or will be reclassified to profit or loss | (697,048) | 565,017 |
| 5.2.1 Effective portion of gains or loss of cash flow hedge | (27,290) | 120,790 |
| 5.2.2 Translation differences of foreign financial statements | (669,758) | 444,227 |
| 6. Total comprehensive income for the period Attributable to shareholders of the Company | (696,122) | 741,484 |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share (RMB/ share) | 0.0086 | 0.0842 |
| 7.2 Diluted earnings per share (RMB/ share) | N/A | N/A |
| Ignacio Dominguez Legal representative | Aviram Lahav Chief of the accounting work | Aviram Lahav Chief of the accounting organ |
4. Income statement of the Company for the Reporting Period
Unit: RMB’000
| Item | July-September, 2020 | July-September, 2019 |
| 1. Operating income | 431,956 | 395,343 |
| Less: Cost of sales | 354,584 | 286,894 |
| Taxes and surcharges | 1,411 | 1,625 |
| Selling and Distribution expenses | 14,132 | 12,885 |
| General and Administrative expenses | 38,969 | 97,658 |
| Research and Development expenses | 2,668 | 16,362 |
| Financial expenses (income) | 13,977 | (13,275) |
| Including: Interest expense | 2,478 | 583 |
| Interest income | 4,458 | 6,439 |
| Add: Investment income, net | 2,583 | 2,583 |
| Credit impairment reversal | 4,457 | 376 |
| Asset Impairment loss | (2,581) | (3,990) |
| 2. Operating profit | 10,674 | (7,837) |
| Add: Non-operating income | 828 | 25 |
| Less: Non-operating expense | 347 | 50 |
| 3. Total profit | 11,155 | (7,862) |
| Less: Income tax expense | (244) | (50,591) |
| 4. Net profit | 11,399 | 42,729 |
| 4.1 Continuing operations | 11,399 | 42,729 |
| 4.2 Discontinued operations | - | - |
| 5. Other comprehensive income net of tax | - | (6,549) |
| 5.1 Items that will not be reclassified into profit/loss | - | (6,549) |
| 5.1.1 Re-measurement of defined benefit plan liability | - | - |
| 5.1.2 FV changes in other equity investment | - | (6,549) |
| 5.2 Items that were or will be reclassified to profit or loss | - | - |
| 6. Total comprehensive income for the period | 11,399 | 36,180 |
5. Consolidated income statement for the period from the year-beginning to the end of the Reporting
Period
Unit: RMB’000
| Item | January-September, 2020 | January-September, 2019 |
| 1. Total operating Income | 20,889,623 | 20,282,075 |
| Less: Cost of sales | 14,757,406 | 13,607,433 |
| Taxes and surcharges | 67,447 | 64,721 |
| Selling and Distribution expenses | 3,681,011 | 3,664,412 |
| General and Administrative expenses | 768,156 | 902,506 |
| Research and Development expenses | 280,212 | 317,642 |
| Financial expenses: | 1,191,155 | 1,503,130 |
| Including: Interest expense | 522,253 | 521,310 |
| Interest income | 46,871 | 64,534 |
| Add: Investment income (loss), net | 171,333 | (467,057) |
| Including: Income from investment in associates and joint ventures | 14,691 | 22,668 |
| Gain (loss) from changes in fair value | 228,849 | 1,157,695 |
| Credit impairment loss | (8,871) | (20,029) |
| Asset impairment loss | (107,528) | (40,435) |
| Gain from disposal of assets | 7,521 | 121,404 |
| 2. Operating profit | 435,540 | 973,809 |
| Add: Non-operating income | 48,328 | 13,833 |
| Less: Non-operating expense | 18,321 | 25,502 |
| 3. Total profit | 465,547 | 962,140 |
| Less: income tax expense | 240,489 | 167,407 |
| 4. Net profit | 225,058 | 794,733 |
| 4.1 Classified by nature of operations | ||
| 4.1.1 Continuing operations | 225,058 | 794,733 |
| 4.1.2 Discontinued operations | - | - |
| 4.2 Classified by ownership | ||
| 4.2.1 Shareholders of the Company | 225,058 | 794,733 |
| 4.2.2 Non-controlling interests | - | - |
| 5. Other comprehensive income net of tax | ||
| Other comprehensive income net of tax attributable to shareholders of the Company | (569,158) | 421,918 |
| 5.1 Items that will not be reclassified into profit/loss | 19,890 | (34,045) |
| 5.1.1 Re-measurement of defined benefit plan liability | 19,890 | (37,057) |
| 5.1.2 FV changes in other equity investment | - | 3,012 |
| 5.2 Items that were or will be reclassified to profit or loss | (589,048) | 455,963 |
| 5.2.1 Effective portion of gains or loss of cash flow hedge | (105,575) | (31,203) |
| 5.2.2 Translation differences of foreign financial statements | (483,473) | 487,166 |
| 6. Total comprehensive income for the period Attributable to shareholders of the Company | (344,100) | 1,216,651 |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share (RMB/ share) | 0.0929 | 0.3248 |
| 7.2 Diluted earnings per share (RMB/ share) | N/A | N/A |
| Ignacio Dominguez Legal representative | Aviram Lahav Chief of the accounting work | Aviram Lahav Chief of the accounting organ |
6. Income statement of the Company for the period from the year-beginning to the end of the Reporting
Period
Unit: RMB’000
| Item | January-September, 2020 | January-September, 2019 |
| 1. Operating income | 1,105,602 | 1,130,769 |
| Less: Cost of sale | 891,898 | 805,455 |
| Taxes and surcharges | 4,232 | 10,535 |
| Selling and Distribution expenses | 31,204 | 55,939 |
| General and Administrative expenses | 172,307 | 288,608 |
| Research and Development expenses | 7,227 | 40,826 |
| Financial expenses : | 9,151 | (14,529) |
| Including: Interest expense | 5,621 | 2,642 |
| Interest income | 12,965 | 20,772 |
| Add: Investment income (loss), net | 2,583 | 2,583 |
| Credit impairment loss | 3,783 | (1,257) |
| Asset Impairment loss | (5,445) | (4,262) |
| Gain from disposal of assets | 101 | - |
| 2. Operating profit | (9,395) | (59,001) |
| Add: Non-operating income | 6,425 | 4,455 |
| Less: Non-operating expense | 767 | 1,946 |
| 3. Total profit | (3,737) | (56,492) |
| Less: Income tax expense | 27,628 | (61,432) |
| 4. Net profit | (31,365) | 4,940 |
| 4.1 Continuing operations | (31,365) | 4,940 |
| 4.2 Discontinued operations | - | - |
| 5. Other comprehensive income net of tax | (4,041) | (1,499) |
| 5.1 Items that will not be reclassified into profit/loss | (4,041) | (1,499) |
| 5.1.1 Re-measurement of defined benefit plan liability | (4,041) | (1,499) |
| 5.2 Items that were or will be reclassified to profit or loss | - | - |
| 6. Total comprehensive income for the period | (35,406) | 3,441 |
7. Consolidated cash flow statement for the period from the year-beginning to the end of the Reporting
Period
Unit: RMB’000
| Item | January-September, 2020 | January-September, 2019 |
| 1. Cash flows from operating activities: | ||
| Cash received from sale of goods and rendering of services | 19,666,330 | 18,678,554 |
| Refund of taxes and surcharges | 156,475 | 50,825 |
| Cash received relating to other operating activities | 653,446 | 385,343 |
| Sub-total of cash inflows from operating activities | 20,476,251 | 19,114,722 |
| Cash paid for goods and services | 13,839,037 | 13,819,496 |
| Cash paid to and on behalf of employees | 2,751,086 | 2,589,280 |
| Payments of taxes and surcharges | 289,260 | 579,208 |
| Cash paid relating to other operating activities | 2,204,868 | 2,032,477 |
| Sub-total of cash outflows from operating activities | 19,084,251 | 19,020,461 |
| Net cash flows from operating activities | 1,392,000 | 94,261 |
| 2. Cash flows from investing activities: | ||
| Cash received from disposal of investments | 27,994 | 20,173 |
| Cash received from returns of investments | 54,304 | 7,763 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 17,615 | 182,089 |
| Cash received from other investing activities | 2,673 | 59,687 |
| Sub-total of cash inflows from investing activities | 102,586 | 269,712 |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 1,301,309 | 1,090,047 |
| Cash paid for acquisition of investments | 51,435 | - |
| Net cash paid to acquire subsidiaries or other business units | 96,207 | 826,805 |
| Cash paid for other investing activities | 47,739 | 15,177 |
| Sub-total of cash outflows from investing activities | 1,496,690 | 1,932,029 |
| Net cash flows from investing activities | (1,394,104) | (1,662,317) |
| 3. Cash flows from financing activities: | ||
| Cash received from borrowings | 3,852,354 | 2,668,024 |
| Cash received relating to other financing activities | 74,843 | 132,216 |
| Sub-total of cash inflows from financing activities | 3,927,197 | 2,800,240 |
| Cash repayment of borrowings | 1,671,913 | 1,483,578 |
| Cash payment for dividends, profit distributions or interest | 411,063 | 706,890 |
| Including: dividends paid to non-controlling interest | 26,176 | 29,209 |
| Cash paid relating to other financing activities | 320,160 | 894,617 |
| Sub-total of cash outflows from financing activities | 2,403,136 | 3,085,085 |
| Net cash flows from financing activities | 1,524,061 | (284,845) |
| 4. Effect of foreign exchange rate changes on cash and cash Equivalents | (147,850) | 61,806 |
| 5. Net increase (decrease) in cash and cash equivalents | 1,374,107 | (1,791,095) |
| Add: Cash and cash equivalents at the beginning of the period | 4,319,907 | 6,346,196 |
| 6. Cash and cash equivalents at the end of the period | 5,694,014 | 4,555,101 |
8. Cash flow statement of the Company for the period from the year-beginning to the end of the
Reporting Period
Unit: RMB’000
| Item | January-September, 2020 | January-September, 2019 |
| 1. Cash flows from operating activities: | ||
| Cash received from sale of goods and rendering of services | 1,043,838 | 1,357,646 |
| Refund of taxes and surcharges | 55,557 | 25,691 |
| Cash received relating to other operating activities | 21,070 | 26,770 |
| Sub-total of cash inflows from operating activities | 1,120,465 | 1,410,107 |
| Cash paid for goods and services | 764,441 | 843,164 |
| Cash paid to and on behalf of employees | 163,232 | 138,028 |
| Payments of taxes and surcharges | 7,211 | 76,174 |
| Cash paid relating to other operating activities | 140,369 | 133,914 |
| Sub-total of cash outflows from operating activities | 1,075,253 | 1,191,280 |
| Net cash flows from operating activities | 45,212 | 218,827 |
| 2. Cash flows from investing activities: | ||
| Cash received from returns of investments | 2,583 | 4,391 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 114 | - |
| Sub-total of cash inflows from investing activities | 2,697 | 4,391 |
| Cash paid for acquisition of investments | - | 415,000 |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 311,234 | 214,548 |
| Sub-total of cash outflows from investing activities | 311,234 | 629,548 |
| Net cash flows from investing activities | (308,537) | (625,157) |
| 3. Cash flows from financing activities: | ||
| Cash received from borrowings | 601,500 | 190,000 |
| Cash received relating to other financing activities | 5,919 | 39,886 |
| Sub-total of cash inflows from financing activities | 607,419 | 229,886 |
| Cash repayment of borrowings | 192,500 | 92,000 |
| Cash payment for dividends, profit distributions or interest | 25,221 | 240,028 |
| Cash paid relating to other financing activities | 28,400 | 8,836 |
| Sub-total of cash outflows from financing activities | 246,121 | 340,864 |
| Net cash flows from financing activities | 361,298 | (110,978) |
| 4. Effect of foreign exchange rate changes on cash and cash Equivalents | (8,397) | (184) |
| 5. Net increase (decrease) in cash and cash equivalents | 89,576 | (517,492) |
| Add: cash and cash equivalents at the beginning of the period | 1,395,994 | 2,005,313 |
| 6. Cash and cash equivalents at the end of the period | 1,485,570 | 1,487,821 |
II. 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,
revenue and leases
□ Applicable √ Not applicable
III. Auditor’s reportIs this Report audited?
□ Yes √ NoThis Report is unaudited.
ADAMA Ltd.October 29, 2020