ADAMA LTD.
THIRD QUARTER REPORT 2021
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,formulations and high-quality differentiated products, delivering solutions that meet localfarmer and customer needs in over 100 countries globally.Please see important additional information and further details included in theAnnex.
October 2021
Stock Code: 000553(200553) Stock Abbreviation: ADAMA A(B) Announcement No.2021-45
The Company and all members of its board of directors hereby confirm that allinformation disclosed herein is true, accurate and complete with no false or misleadingstatement or material omission.
Important NoticeThe Company’s Board of Directors, Board of Supervisors, directors, supervisors andsenior managers confirm that the content of the Report is true, accurate andcomplete and contains no false statements, misleading presentations or materialomissions, 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 the person leading the accountingfunction (acting Chief Financial Officer), hereby assert and confirms the truthfulness,accuracy and completeness of the Financial Report.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.Should there be any discrepancy between the two versions, the Chinese versionshall prevail.
I. Main accounting and financial results
1. Whether the Company performs any retroactive adjustments to, or restatements of, its accounting data of last year dueto change in accounting policies or correction of accounting errors
□ Yes√ No
| End of Reporting Period | End of last year | +/- (%) | |
| Total assets (RMB’000) | 49,513,607 | 46,801,034 | 5.80% |
| Net assets attributable to shareholders (RMB’000) | 21,154,363 | 21,353,752 | -0.93% |
| July - September 2021 | YoY +/- (%) | January - September 2021 | YoY +/- (%) | |
| Operating revenues (RMB’000) | 7,424,584 | 9.69% | 22,488,364 | 7.65% |
| Net profit attributable to shareholders of the Company (RMB’000) | (370,952) | -1917.59% | (3,916) | -101.74% |
| Net profit attributable to shareholders of the Company excluding non-recurring profit and loss (RMB’000) | (384,112) | -3989.35% | (61,989) | -126.99% |
| Net cash flow from operating activities (RMB’000) | 690,694 | 338.62% | 2,181,987 | 56.75% |
| Basic EPS (RMB/share) | (0.1592) | -1951.39% | (0.0017) | -101.83% |
| Diluted EPS (RMB/share) | N/A | N/A | N/A | N/A |
| Weighted average return on net assets | -1.73% | -1.83% | -0.02% | -1.03% |
Please see key additional information and further details included in the Annex
2. Non-Recurring profit/loss
√ Applicable □ Not applicable
Unit: RMB’000
| Item | July - September 2021 | January - September 2021 | Note |
| Gains/losses on the disposal of non-current assets (including the offset part of asset impairment provisions) | (6,813) | 8,051 | |
| 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) | 11,138 | 31,768 | |
| Recovery or reversal of provision for bad debts which is assessed individually during the years | 14,604 | 27,077 | |
| Other non-operating income and expenses other than the above | (1,852) | 4,897 | |
| Less: Income tax effects | 3,917 | 13,720 | |
| Total | 13,160 | 58,073 |
Explanation of other profit or loss that meets the definition of non-recurring profit or loss
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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.
3. Changes in main accounting statement items and financial indicators in the Reporting Period, as well as reasons for thechanges
√ Applicable □ Not applicable
During the third quarter of 2021, crop prices of most of the major commodity crops remained elevated, supporting strongcrop protection demand in most regions. Demand was further aided by positive weather conditions in various regions,including Australia, Europe and most of China. Dry conditions in the US, Brazil and Canada restrained production of somecrops and posed challenges for farmers in those regions.Farmer incomes are generally expected to continue to improve as a result of high crop prices. However, farmers areexperiencing broad inflationary pressures across most of their inputs, including seeds, fertilizers, crop protection, fuel andmachinery.During the quarter, availability of intermediates and active ingredients sourced from China was further constrained,contributing further to the already high procurement prices amid strong global demand. Beginning in mid-September,production of active ingredients and intermediates in China was more disrupted as a result of production suspensions dueto power rationing for industrial customers due to a power shortage in the country, as well as the "Dual Control" policymeasures to ensure the country’s energy reduction targets are met. Energy prices have been increasing outside of Chinaas well, with prices of natural gas, coal and oil all rising considerably.Global freight and logistics costs remained significantly elevated during the third quarter of 2021, as COVID-19 continuesto disrupt port activity, resulting in container shortages, while demand for container shipping remains high. Similarly,in-land logistics remain challenged as pandemic-related restrictions continue to create frictions in domestic supply lines.Taken together, these constraints have impacted both availability of shipping and transportation resources, as well assignificantly increased their costs, a dynamic widely observed across all international trade-related industries.The Company continues to actively manage its procurement and supply chain activities in order to mitigate these higherprocurement and logistics costs. It also endeavors to adjust its pricing wherever market conditions allow, to compensatefor these increased costs. Although intense competition in certain key markets continues to restrain the Company's abilityto do so in an effective and timely manner, the Company is starting to see positive price movements in certain regions,most notably in China, as well as in North America and Latin America.China Operations UpdateThe Company's manufacturing site in Jingzhou, Hubei (ADAMA Sanonda) continues on its path of gradually ramping upproduction following the completion of the Relocation & Upgrade program at the site. This return to production at Sanondawill progressively reduce the need for incurring additional procurement costs which the Company had endured while theplant was previously suspended, and is expected to gradually reduce idleness charges as production and utilization levelssteadily rise over the coming months.As a result of the recent institution of China's "Dual Control" energy restrictions, the Company's manufacturing facilities in
Huai'An (ADAMA Anpon) and in Dafeng (ADAMA Huifeng), both in Jiangsu province, were suspended for a number ofweeks in September and October 2021 in advance of the Chinese Golden Week festival. As the restrictions have startedto be loosened in recent weeks, operations at these sites have since resumed, albeit at a more limited capacity. Thistemporary suspension caused an increase in idleness costs during the quarter, and is expected to contribute to furtheridleness charges in the coming quarters, until the power restrictions are lifted and production is able to resume fully.The energy restrictions and resulting widespread production suspensions have contributed to a significant increase inprocurement costs of raw materials and intermediates, on top of the already high costs seen in recent months in the faceof strong underlying demand and relatively constrained supply. These costs are expected to remain elevated, and willcontinue to impact the Company's profitability in the coming months. The Company endeavors, wherever possible andsupported by market conditions, to increase prices in order to mitigate the impact of the higher costs. In China, althoughindustry-wide supply shortages are causing increased procurement costs and posing challenges for the Company'smargins, the Company is also benefiting to some extent from the generally higher pricing environment in the sales of itsraw materials and intermediates, where it is seeing strong demand.
| January - September 2021 (000’RMB) | Same period last year (000’RMB) | +/-% | January - September 2021 (000’USD) | Same period last year (000’USD) | +/-% |
| Operating income (Revenues) | 22,488,364 | 20,889,623 | 7.65% | 3,475,992 | 2,986,609 | 16.39% |
| Cost of goods sold | 16,143,819 | 14,757,406 | 9.39% | 2,495,316 | 2,110,039 | 18.26% |
| Sales & Marketing expenses | 3,725,486 | 3,681,011 | 1.21% | 575,816 | 526,484 | 9.37% |
| General & Administrative expenses | 1,020,945 | 768,156 | 32.91% | 157,812 | 109,877 | 43.63% |
| R&D expenses | 340,888 | 280,212 | 21.65% | 52,692 | 40,069 | 31.50% |
| Financial Expenses | 1,107,975 | 1,191,155 | -6.98% | 171,273 | 170,242 | 0.61% |
| Gain (loss) from Changes in Fair Value | (328,167) | 228,849 | -243.40% | (50,878) | 32,905 | -254.62% |
| Investment Income (loss) | 506,381 | 171,333 | 195.55% | 78,409 | 24,295 | 222.74% |
| Total Net Financial Expenses and Investment Income | 929,761 | 790,973 | 17.55% | 143,742 | 113,042 | 27.16% |
| Total profits | 244,550 | 465,547 | -47.47% | 37,797 | 66,070 | -42.79% |
| Income tax expenses | 246,269 | 240,489 | 2.40% | 38,054 | 34,277 | 11.02% |
| Net profit attributable to shareholders of the Company | (3,916) | 225,058 | -101.74% | -595 | 31,793 | -.8.101% |
| EBITDA | 2,619,409 | 3,068,857 | -14.65% | 404,900 | 438,459 | -7.65% |
| Q3 2021 (000’RMB) | Q3 2020 (000’RMB) | +/-% | Q3 2021 (000’USD) | Q3 2020 (000’USD) | +/-% |
| Operating income (Revenues) | 7,424,584 | 6,768,583 | 9.69% | 1,147,469 | 978,205 | 17.30% |
| Cost of goods sold | 5,437,109 | 4,852,936 | 12.04% | 840,308 | 701,346 | 19.81% |
| Sales & Marketing expenses | 1,219,050 | 1,212,443 | 0.54% | 188,399 | 175,224 | 7.52% |
| General & Administrative expenses | 449,138 | 214,970 | 108.93% | 69,421 | 31,067 | 123.46% |
| R&D expenses | 113,948 | 92,027 | 23.82% | 17,612 | 13,300 | 32.42% |
| Financial Expenses | 659,185 | 348,363 | 89.22% | 101,884 | 50,348 | 102.36% |
| Gain (loss) from Changes in Fair Value | 336,415 | (36,661) | -1017.64% | 51,993 | -5,298 | -1081.37% |
| Investment Income (loss) | (21,375) | 119,204 | -117.93% | (3,304) | 17,227 | -119.18% |
| Total Net Financial Expenses and Investment income | 344,145 | 265,820 | 29.47% | 53,195 | 38,419 | 38.46% |
| Total profits | (175,764) | 16,700 | -1152.48% | -27,178 | 2,418 | -1223.99% |
| Income tax expenses | 195,188 | (3,709) | -5362.55% | 30,164 | -534 | -5748.69% |
| Net profit attributable to shareholders of the Company | (370,952) | 20,409 | -1917.59% | -57,342 | 2,952 | -2042.48% |
| EBITDA | 666,988 | 949,586 | -29.76% | 103,080 | 137,242 | -24.89% |
Note: Since the functional currency of main overseas subsidiaries is the USD, and the Company’s management review ofthe Company’s performance is based on the USD results, following explanations and analysis are based onUSD-denominated numbers as listed above.
Analysis of Financial Highlights
(1) Revenues
Revenues in the third quarter grew by 17% (+10% in RMB terms) to $1,147 million, driven by a combination ofcontinued robust 14% volume growth, including the contribution of newly acquired companies, as well asmoderately higher prices and favorable exchange rate movements.In the quarter, the Company delivered significant growth in Europe, with strong demand driven by high crop pricesbeing aided by supportive weather conditions in certain areas. The Company continues to grow strongly in China,where sales of its branded, formulated portfolio were supported by new product launches and further bolstered by
the contribution of newly acquired companies. The Company also benefited from strong demand and higher pricesfor the sales of its raw materials and intermediates in the country. The Company delivered a strong performance inNorth America, driven by a combination of significant volume growth and higher prices, as well as in Latin America,led by Brazil, which saw robust demand and higher prices.The accelerated growth in the quarter brought nine-month sales to a record-high of $3,476 million, an increase of16% (+8% in RMB terms).
Regional Sales Performance
Europe: Sales were up by 20.3% in the third quarter and by 2.9% in the first nine months of the year, in constantexchange rates (CER), compared with the corresponding periods last year.In the third quarter, the Company saw significant growth across most of Europe, with strong demand driven by continuedhigh crop prices. Noteworthy performances were delivered in most markets of Central, Eastern and Northern Europe,where supportive weather later in the quarter ensured a positive start to the autumn season, especially in oilseed rape,winter cereals and sunflower.In US dollar terms, sales were higher by 21.8% in the quarter and by 4.5% in the first nine months, compared to thecorresponding periods last year, reflecting the net impact of the strengthening of regional currencies.North America: Sales were up by 26.0% in the third quarter and by 20.6% in the first nine months of the year, in CERterms, compared with the corresponding periods last year.The especially strong performance in the third quarter was driven by a combination of significant volume growth andhigher prices, as the Company sees robust demand in both the Agriculture as well as Consumer & Professional arms.This pleasing result was achieved despite supply concerns in certain products. In Canada, the Company delivered apleasing performance, as higher insecticide applications compensated for reduced fungicide usage as a result ofdrought in the prairies.In US dollar terms, sales were higher by 26.3% in the quarter and by 21.4% in the first nine months, compared to thecorresponding periods last year, reflecting the strengthening of the Canadian Dollar.Latin America: Sales grew by 9.2% in the third quarter and by 15.8% in the first nine months of the year, in CER terms,compared to the corresponding periods last year.The pleasing performance in the quarter was led by strong growth in Brazil, driven by robust demand and higher prices,and benefiting from strong performance of newly launched products, as the country starts to reopen after the recentimprovement in the COVID situation in the country allowing resumption of normal commercial activities.
| Q3 2021 $m | Q3 2020 $m | Change USD | 9M 2021 $m | 9M 2020 $m | Change USD |
| Europe | 220 | 181 | 21.8% | 825 | 790 | 4.5% |
| North America | 183 | 145 | 26.3% | 628 | 518 | 21.4% |
| Latin America | 372 | 335 | 11.1% | 820 | 714 | 14.8% |
| Asia Pacific | 194 | 148 | 31.6% | 677 | 497 | 36.3% |
| Of which China | 121 | 82 | 46.6% | 380 | 250 | 52.0% |
| India, Middle East & Africa | 178 | 170 | 4.6% | 525 | 468 | 12.2% |
| Total | 1,147 | 978 | 17.3% | 3,476 | 2,987 | 16.4% |
In US dollar terms, sales in the region grew by 11.1% in the quarter, reflecting a strengthening in regional currenciesduring the quarter compared to the parallel quarter in 2020. In the nine-month period, sales in the region grew by 14.8%in US dollar terms, compared to the corresponding period last year, reflecting the somewhat weaker average currencylevels that prevailed during the first quarter of 2021 compared to the parallel quarter in 2020, which saw currencyweakness against the USD only late in the quarter at the outbreak of COVID-19.Asia Pacific: Sales grew by 26.7% in the quarter and by 26.0% in the first nine months of the year, in CER terms,compared to the corresponding periods last year.The Company is growing strongly in Asia Pacific, led by China where the Company continues to grow sales of itsbranded, formulated portfolio, supported by new product launches and bolstered by the acquisition of Huifeng’sdomestic commercial arm at the end of 2020. In China, although industry-wide supply shortages are causing increasedprocurement costs and posing challenges for the Company's margins, the Company is also benefiting to some extentfrom the generally higher pricing environment in the sales of its raw materials and intermediates where it is seeingstrong demand.In the rest of APAC, the Company delivered a noteworthy performance in the Pacific region, enjoying positive seasonalconditions and healthy demand as farmers benefit from the high crop prices. This more than offset somewhat softerperformance in South East Asian countries, where ongoing COVID restrictions continued to impact commercial activities,and were further exacerbated by poor seasonal conditions in many countries, including floods in parts of Thailand.In US dollar terms, sales in the region grew by 31.6% in the third quarter and by 36.3% in the first nine months of theyear, compared to the corresponding periods last year, reflecting the impact of the strengthening of regional currencies,most notably the Australian Dollar and Chinese Renminbi.India, Middle East and Africa: Sales grew by 2.9% in the quarter and by 10.9% in the first nine months of the year, inCER terms, compared to the corresponding periods last year.The moderate growth in the region in the quarter was led by a noteworthy performance in South Africa, where theCompany is benefiting from favorable cropping conditions and new product launches. However, growth in India isslowing as farmers missed some applications due to volatile weather conditions following a previously strong start to themonsoon season.In US dollar terms, sales in the region grew by 4.6% in the quarter and by 12.2% in the first nine months of the year,compared to the corresponding periods last year, reflecting the impact of the strengthening of regional currenciescompared to the USD, most notably the Israeli Shekel.
(2) Cost of Goods
Cost of Goods Sold in the third quarter was $840 million (RMB 5,437 million) (73.2 % of sales), compared to $701million (RMB 4,853 million) (71.7 % of sales) reported in the corresponding quarter last year. In the first nine months,Cost of Goods sold was $2,495 million (RMB 16,144 million) (71.8 % of sales), compared to $2,110 million (RMB14,757 million) (70.6 % of sales) reported in the corresponding period last year.The Company recorded certain extraordinary charges within its reported cost of goods sold, totaling approximately$11 million (RMB 71 million) in the third quarter (Q3 2020: $ 10 million (RMB 68 million)) and $36 million (RMB 235million) in the first nine months (9M 2020: $28 million (RMB 193 million)). These charges were largely related to itscontinuing Relocation & Upgrade program, and include mainly excess procurement costs, both in quantity and costterms, incurred as the Company continued to fulfill demand for its products in order to protect its market positionthrough replacement sourcing at significantly higher costs from third-party suppliers.Excluding the impact of the abovementioned extraordinary charges, the higher Cost of Goods sold, both in the
quarter and in the first nine months, were driven by the impacts of higher logistics, procurement and productioncosts as well as the effect of the strong RMB and ILS, the Company's main production currencies. The recenttemporary plant suspensions in China resulting from the country's Dual Control policy have further challengedsupply of raw materials, intermediates and active ingredients, serving to further exacerbate the impact of alreadyhigh procurement costs.
(3) Operating Expenses:
Operating expenses include Sales and Marketing, General and Administration and R&D.Operating expenses in the third quarter were $275 million (RMB 1,782 million) (24% of sales) and $786 million(RMB 5,087 million) (23% of sales) in the nine-month period, compared to $220 million (RMB 1,519 million) (22%of sales) and $676 million (RMB 4,729 million) (23% of sales) in the nine-month period reported in thecorresponding periods last year.The Company recorded certain non-operational, mostly non-cash, charges within its reported operating expenses,mainly as follows:
(i) $4 million (RMB 28 million) in Q3 2021 (Q3 2020: $8 million (RMB 53 million)) and $19 million (RMB 122
million) in 9M 2021 (9M 2020: $23 million (RMB 160 million)) in non-cash amortization charges in respect ofTransfer assets received and written-up related to the 2017 ChemChina-Syngenta acquisition. Theproceeds 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, werepaid to Syngenta in return for the transfer of a portfolio of products in Europe of similar nature and economicvalue. Since the products acquired from Syngenta are of the same nature, and with the same net economicvalue as those divested, the Divestment and Transfer transactions had no net impact on the underlyingeconomic performance of the Company. These additional amortization charges will continue until 2032 butat a reducing rate, yet will still be at a meaningful level until 2028;(ii) $4 million (RMB 25 million) in Q3 2021 (Q3 2020: $3 million (RMB 19 million)) and $11 million (RMB 73
million) in 9M 2021 (9M 2020: $8 million (RMB 55 million)) in charges related mainly to the non-cashamortization of intangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions,with no impact on the ongoing performance of the companies acquired, as well as other M&A-related costs.(iii) $16 million (RMB 101 million) in Q3 2021 (Q3 2020: $1 million (RMB 9 million)) and $31 million (RMB 198
million) in 9M 2021 (9M 2020: $14 million (RMB 97 million)) in idleness charges largely related tosuspensions at the facilities being relocated as well as to the temporary suspension of the Jingzhou site inQ1 2020 at the outbreak of COVID-19 in Hubei Province.The higher aggregate amount of non-operational charges in Q3 and 9M 2020 then also included $11 million (RMB79 million) and $34 million (RMB 240 million), respectively, in non-cash amortization charges related to the legacyPPA of the 2011 acquisition of Adama Agricultural Solutions, which have now largely finished, and $1 million (RMB4 million) and $10 million (RMB 70 million), respectively, in early retirement expenses. For further details on thesenon-operational charges, please see the appendix to this report.Excluding the impact of the abovementioned non-operational charges, the higher operating expenses in thequarter and the nine-month period largely reflect the strong volume-driven growth of the business and theadditional operating expenses of the newly acquired companies, together with significantly higher global logistics
and shipping costs, as well as the impact of generally stronger global currencies against the US dollar. In addition,alongside the many benefits the Company enjoys from the collaboration with other companies in the SyngentaGroup, most notably in commercial cross-sales as well as in the areas of procurement and operations, ADAMArecorded certain related expenses and charges.
(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 659 million and RMB 1,108 million ($102million and $171 million) for the three and first nine months of 2021, respectively, compared with RMB 348 millionand RMB 1,191 million ($50 million and $170 million) for the corresponding periods in 2020.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 314 million and RMB 174million ($49 million and $27 million) in the three and first nine months of 2021, respectively, compared with RMB 22million and RMB 326 million ($3 million and $46 million) in the corresponding period in 2020.
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 344 million and RMB 930 million ($53 million and $144 million) in the three and first nine monthsof 2021, respectively, compared with RMB 266 million and RMB 791 million ($38 million and $113 million) in thecorresponding period in 2020.
The higher financial expenses in the quarter and the nine-month period were mainly driven by the net effect of theincrease in the Israeli CPI on the ILS-denominated, CPI-linked bonds, as well as higher non-cash charges relatedto put options in respect of minority interests. These increases were partially offset by benefits on hedges inrespect of the RMB.
In addition, Investment Income also mainly includes an amount of RMB 4 million ($1 million) in respect of equityaccounted investees in the first nine months of 2021 compared with RMB 15 million ($2 million) and RMB 59million ($9 million) capital gain from gaining control over an equity investee in the corresponding period in 2020,bringing the total Gains/Losses from Changes in Fair Value and Investment Income to RMB 178 million ($28 million)in the first nine months of 2021 compared with RMB 400 million ($57 million) in the corresponding period in 2020.
(5) Income Tax Expenses
The significantly higher tax expenses in the third quarter, and the resulting increase over the nine-month period,reflects the incurring of higher taxes by the Company's high-growth selling entities in end-markets, as well as thelargely non-cash impact on the value of non-monetary tax assets of the more significant weakening of the BRL inthe third quarter of 2021 when compared to the same quarter in 2020. By contrast, over the nine-month period, thedeterioration of the BRL in 2020 was more significant than in 2021, resulting in a relatively lower impact over thenine-month period in 2021.
Changes in main assets and liabilities
Unit: RMB’000
| Assets and liabilities | September 30, 2021 | December 31, 2020 | % change | Explanation for any major change |
| Cash at bank and on hand | 4,956,080 | 3,863,886 | 28.27% | Additional long-term loans and better collection |
| Accounts receivable | 9,005,729 | 8,766,869 | 2.72% | No Significant change |
| Inventories | 11,345,025 | 10,338,273 | 9.74% | Higher inventory levels due mainly to a shift in geographic and portfolio sales mix, the anticipation of further volume growth in coming quarters in the face of uncertain supply conditions, the increase in procurement and production costs, as well as the inclusion of recent acquisitions |
| Fixed assets | 8,084,760 | 6,576,116 | 22.94% | Increase is mainly due to transfer of China relocation projects from CIP |
| Construction in progress | 1,670,689 | 1,405,328 | 18.88% | Changes are mainly due to investments as part of upgrade and relocation projects |
| Long term receivables | 58,745 | 95,329 | -38.38% | Decrease is mainly due to collection of long-term receivables |
| Short-term loans | 1,146,246 | 1,205,498 | -4.92% | Additional long-term loans and better collection |
| Long-term loans | 3,608,563 | 2,387,628 | 51.14% | No Significant change |
| Derivative financial assets | 282,478 | 1,560,788 | -81.90% | Realization and revaluation of derivatives |
| Derivative financial liabilities | 240,459 | 1,463,614 | -83.57% | Realization and revaluation of derivatives |
| Other payables | 1,672,441 | 1,075,721 | 55.47% | Mainly increase in liabilities in respect of securitization transaction and acquisition of subsidiaries |
| Contractual liabilities | 1,349,014 | 1,092,253 | 23.51% | Seasonality increase mainly due to rebates |
| Non-current liabilities due within one year | 1,746,360 | 1,272,581 | 37.23% | Increase due to long-term loan expected repayment in the coming twelve months |
| Long term payable | 98,435 | 27,327 | 260.21% | Increase due to new plan in one of the group subsidiaries |
| Other non-current liabilities | 1,367,666 | 434,030 | 215.11% | Increase due to a put option in respect of minority interests. |
| Treasury shares | - | 60,357 | 100.00% | Due to the B-Shares repurchase and cancellation |
II. Information regarding the Shareholders
1. Total number of ordinary shareholders and preference shareholders who had resumed their voting
rights, and shareholdings of top 10 shareholders at the period-end
Unit: share
| Total number of ordinary shareholders at the end of the Reporting Period | 43,849 (the number of ordinary A share shareholders is 29,959; the number of B share shareholders is 13,890) | Total number of preference shareholders who had resumed their voting right at the end of the Reporting Period (if any) | 0 | ||||
| Shareholdings of top 10 shareholders | |||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Number of shares held | Number of restricted shares held | Pledged or frozen shares | ||
| Status | Number | ||||||
| Syngenta Group Co., Ltd. | State-owned legal person | 78.47% | 1,828,137,961 | -- | -- | -- | |
| China Cinda Asset Management Co., Ltd. | State-owned legal person | 1.34% | 31,115,916 | -- | -- | -- | ||
| Portfolio No.503 of National Social Security Fund | Others | 0.77% | 18,000,000 | -- | -- | -- | ||
| Huarong Ruitong Equity Investment Management Co., Ltd. | State-owned legal person | 0.55% | 12,885,906 | -- | -- | -- | ||
| Hong Kong Securities Clearing Company Limited | Overseas legal person | 0.36% | 8,275,503 | -- | -- | -- |
| Bosera Funds-China Merchants Bank- Bosera Funds Xincheng No.2 Collective Asset Management Plan | Others | 0.28% | 6,500,000 | -- | -- | -- | |||||
| Bosera Funds-Postal Savings Bank- Bosera Funds Xincheng No.3 Collective Asset Management Plan | Others | 0.26% | 6,000,000 | -- | -- | -- | |||||
| China Universal Fund-Industrial Bank-China Universal-Strategic Enhancement No.3 Collective Asset Management Plan | Others | 0.19% | 4,400,000 | -- | -- | -- | |||||
| State-owned Assets Administration Bureau of Qichun County | State-owned legal person | 0.18% | 4,169,266 | -- | -- | -- | |||||
| Zhu Shenglan | Domestic natural person | 0.18% | 4,100,000 | -- | -- | -- | |||||
| Shareholdings of top 10 non-restricted shareholders | |||||||||||
| Name of shareholder | Number of non-restricted shares held at the period-end | Type of shares | |||||||||
| Type | Number | ||||||||||
| Syngenta Group Co., Ltd. | 1,828,137,961 | RMB ordinary share | 1,828,137,961 | ||||||||
| China Cinda Asset Management Co., Ltd. | 31,115,916 | RMB ordinary share | 31,115,916 | ||||||||
| Portfolio No.503 of National Social Security Fund | 18,000,000 | RMB ordinary share | 18,000,000 | ||||||||
| Huarong Ruitong Equity Investment Management Co., Ltd. | 12,885,906 | RMB ordinary share | 12,885,906 | ||||||||
| Hong Kong Securities Clearing Company Limited | 8,275,503 | RMB ordinary share | 8,275,503 | ||||||||
| Bosera Funds-China Merchants Bank- Bosera Funds Xincheng No.2 Collective Asset Management Plan | 6,500,000 | RMB ordinary share | 6,500,000 | ||||||||
| Bosera Funds-Postal Savings Bank- | 6,000,000 | RMB ordinary share | 6,000,000 | ||||||||
| Bosera Funds Xincheng No.3 Collective Asset Management Plan | |||
| China Universal Fund-Industrial Bank-China Universal-Strategic Enhancement No.3 Collective Asset Management Plan | 4,400,000 | RMB ordinary share | 4,400,000 |
| State-owned Assets Administration Bureau of Qichun County | 4,169,266 | RMB ordinary share | 4,169,266 |
| Zhu Shenglan | 4,100,000 | RMB ordinary share | 4,100,000 |
| Related or act-in-concert parties among the shareholders above | Syngenta Group Co., Ltd. is not related party or acting-in-concert party as prescribed in the Administrative Methods for Acquisition of Listed Companies to other shareholders. It is unknown to the Company whether shareholders above are related parties or acting-in-concert parties as prescribed in the Administrative Methods for Acquisition of Listed Companies. | ||
| Top 10 ordinary shareholders conducting securities margin trading (if any) | Shareholder Zhu Shenglan held 4,100,000 shares of the Company through a credit collateral securities trading account. |
2. Total number of preference shareholders and shareholdings of the top 10 of such at the period-end
□ Applicable √ Not applicable
III. Other Significant Events
√Applicable □Not applicable
1. On August 30, 2021, the Company received the Notice of Sinochem Holdings Corporation Ltd. (“Sinochem Holdings”)on the Initiation of Joint Restructuring Procedure released by Sinochem Holdings stating, that the latter decided toinitiate, starting from the date of the notice, the acquisition procedure for the listed companies associated withSinochem Group and ChemChina in accordance with the relevant provisions. On September 16, 2021, the Companyreceived a letter from Sinochem Holdings, stating that the industrial and commercial change registration on thetransfer of equity in ChemChina to Sinochem Holdings has been completed. After the completion of such transfer, thecontrolling shareholder and the actual controller of the Company remained unchanged.
2. On September 28, 2021, the Company received the Shares Registration Confirmation Letter issued by China
Securities Depository and Clearing Corporation Limited forwarded by its controlling shareholder Syngenta Group,approving that the registration procedures for the transfer of the 5.14% of the Company’s total share capital held bySanonda Holdings Co., Ltd. were completed, and the corresponding shares were transferred to Syngenta Group. Afterthe completion of such transfer, Syngenta Group holds 1,828,137,961 shares (accounting for 78.47% of theCompany’s total share capital). The controlling shareholder and the actual controller of the Company remainedunchanged.The following are the relevant announcements disclosed on the website www.cninfo.com.cn.:
IV. Financial Statementsi. Financial Statements
1. Consolidated balance sheet
Prepared by ADAMA Ltd.
30 September 2021
Unit: RMB’000
| Item | September 30, 2021 | December 31, 2020 | Item | September 30, 2021 | December 31, 2020 |
| Current assets: | Current liabilities: | ||||
| Cash at bank and on hand | 4,956,080 | 3,863,886 | Short-term loans | 1,146,246 | 1,205,498 |
| Financial assets held for trading | 1,446 | 1,253 | Derivative financial liabilities | 240,459 | 1,463,614 |
| Derivative financial assets | 282,478 | 1,560,788 | Bills payable | 247,466 | 369,791 |
| Bills receivable | 111,821 | 102,082 | Accounts payable | 5,083,736 | 4,557,006 |
| Accounts receivable | 9,005,729 | 8,766,869 | Contract liabilities | 1,349,014 | 1,092,253 |
| Receivables financing | 67,021 | 109,483 | Employee benefits payable | 1,143,946 | 1,208,834 |
| Prepayments | 407,672 | 406,008 | Taxes payable | 450,303 | 358,988 |
| Other receivables | 1,060,436 | 1,310,029 | Other payables | 1,672,441 | 1,075,721 |
| Inventories | 11,345,025 | 10,338,273 | Non-current liabilities due within one year | 1,746,360 | 1,272,581 |
| Other current assets | 857,157 | 769,641 | Other current liabilities | 390,713 | 315,597 |
| Total current assets | 28,094,865 | 27,228,312 | Total current liabilities | 13,470,684 | 12,919,883 |
| Non-current assets: | Non-current liabilities: | ||||
| Long-term receivables | 58,745 | 95,329 | Long-term loans | 3,608,563 | 2,387,628 |
| Long-term equity investments | 16,019 | 14,081 | Debentures payable | 8,167,298 | 8,078,113 |
| Other equity investments | 151,795 | 152,200 | Lease liabilities | 368,110 | 379,190 |
| Investment properties | 3,088 | 4,364 | Long-term accounts payable | 98,435 | 27,327 |
| Fixed assets | 8,084,760 | 6,576,116 | Long-term employee benefits payables | 751,494 | 645,755 |
| Construction in progress | 1,670,689 | 1,405,328 | Provisions | 192,076 | 163,251 |
| Right-of-use assets | 472,092 | 483,618 | Deferred tax liabilities | 334,918 | 331,942 |
| Intangible assets | 5,102,403 | 5,226,455 | Other non-current liabilities | 1,367,666 | 434,030 |
| Goodwill | 4,610,484 | 4,584,226 | Total non-current liabilities | 14,888,560 | 12,447,236 |
| Deferred tax assets | 838,513 | 773,673 | Total liabilities | 28,359,244 | 25,367,119 |
| Other non-current assets | 410,154 | 257,332 | Shareholders’ equity: | ||
| Total non-current assets | 21,418,742 | 19,572,722 | Share capital | 2,329,812 | 2,344,121 |
| Total assets | 49,513,607 | 46,801,034 | Capital reserves | 12,882,324 | 13,023,219 |
| Less: Treasury shares | - | 60,357 | |||
| Other comprehensive income | (102,905) | (72,055) | |||
| Special reserves | 19,368 | 15,960 | |||
| Surplus reserves | 240,162 | 240,162 | |||
| Retained earnings | 5,785,602 | 5,862,702 | |||
| Total equity attributed to the shareholders of the company | 21,154,363 | 21,353,752 | |||
| Non-controlling interests | - | 80,163 | |||
| Total equity | 21,154,363 | 21,433,915 | |||
| Total liabilities and equity | 49,513,607 | 46,801,034 |
| Announcements | Disclosure date |
| Announcement on Equity Transfer of China National Chemical Corporation Ltd. at Nil Consideration (Announcement No. 2021-38) | Aug 31, 2021 |
| Abstract of Acquisition Report of ADAMA Ltd. | Aug 31, 2021 |
| Acquisition Report of ADAMA Ltd. | Sep 4, 2021 |
| Legal Opinions of Tian Yuan Law Firm on Acquisition Report of ADAMA Ltd. | Sep 4, 2021 |
| Legal Opinions of Tian Yuan Law Firm on Exemption of Sinochem Holdings Corporation Ltd. from Making a Tender Offer for the Acquisition of ADAMA Ltd. | Sep 4, 2021 |
| Announcement on Completion of Industrial and Commercial Registration of Changes on Equity Transfer of China National Chemical Corporation Ltd. at Nil Consideration (Announcement No. 2021-39) | Sep 17, 2021 |
| Announcement on the Completion of the Registration of the Transfer of State-owned Shares held by the Controlling Shareholder (Announcement No. 2021-40) | Sep 29, 2021 |
| Ignacio Dominguez Legal representative Chief of the accounting work and Chief of the accounting organ |
2. Consolidated income statement for the period from the year-beginning to the end of the Reporting Period
Unit: RMB’000
| Item | January-September, 2021 | January-September, 2020 |
| 1. Total operating Income | 22,488,364 | 20,889,623 |
| Less: Cost of sales | 16,143,819 | 14,757,406 |
| Taxes and surcharges | 82,359 | 67,447 |
| Selling and Distribution expenses | 3,725,486 | 3,681,011 |
| General and Administrative expenses | 1,020,945 | 768,156 |
| Research and Development expenses | 340,888 | 280,212 |
| Financial expenses: | 1,107,975 | 1,191,155 |
| Including: Interest expense | 462,725 | 522,253 |
| Interest income | 45,487 | 46,871 |
| Add: Investment income (loss), net | 506,381 | 171,333 |
| Including: Income from investment in associates and joint ventures | 4,408 | 14,691 |
| Gain (loss) from changes in fair value | (328,167) | 228,849 |
| Credit impairment reversal (losses) | 9,685 | (8,871) |
| Asset Impairment losses | (39,358) | (107,528) |
| Gain from disposal of assets | 9,246 | 7,521 |
| 2. Operating profit | 224,679 | 435,540 |
| Add: Non-operating income | 46,564 | 48,328 |
| Less: Non-operating expense | 26,693 | 18,321 |
| 3. Total profit | 244,550 | 465,547 |
| Less: income tax expense | 246,269 | 240,489 |
| 4. Net profit | (1,719) | 225,058 |
| 5.1 Classified by nature of operations | ||
| 5.1.1 Continuing operations | (1,719) | 225,058 |
| 5.1.2 Discontinued operations | - | - |
| 5.2 Classified by ownership | ||
| 5.2.1 Shareholders of the Company | (3,916) | 225,058 |
| 5.2.2 Non-controlling interests | 2,197 | - |
| 5. Other comprehensive income, net of tax | (30,850) | (569,158) |
| Other comprehensive income, net of tax attributable to shareholders of the Company | (30,850) | (569,158) |
| 5.1 Items that will not be reclassified into profit/loss | (5,474) | 19,890 |
| 5.1.1 Re-measurement of defined benefit plan liability | (5,474) | 19,890 |
| 5.1.2 FV changes in other equity investment | - | - |
| 5.2 Items that were or will be reclassified to profit or loss | (25,376) | (589,048) |
| 5.2.1 Effective portion of gains or loss of cash flow hedge | 237,449 | (105,575) |
| 5.2.2 Translation differences of foreign financial statements | (262,825) | (483,473) |
| Other comprehensive income, net of tax attributable to non-controlling interests | - | - |
| 6. Total comprehensive income for the period | (32,569) | (344,100) |
| 6.1 Total comprehensive income for the period attributable to shareholders of the Company | (34,766) | (344,100) |
| 6.2 Total comprehensive income for the period attributable to non-controlling interests | 2,197 | - |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share (RMB/ share) | (0.0017) | 0.0929 |
| 7.2 Diluted earnings per share (RMB/ share) | N/A | N/A |
| Ignacio Dominguez Legal representative Chief of the accounting work and Chief of the accounting organ |
3. Consolidated cash flow statement for the period from the year-beginning to the end of the Reporting
Period
Unit: RMB’000
| Item | January-September, 2021 | January-September, 2020 |
| 1. Cash flows from operating activities: | ||
| Cash received from sale of goods and rendering of services | 21,454,588 | 19,666,330 |
| Refund of taxes and surcharges | 133,814 | 156,475 |
| Cash received relating to other operating activities | 563,811 | 653,446 |
| Sub-total of cash inflows from operating activities | 22,152,213 | 20,476,251 |
| Cash paid for goods and services | 14,368,965 | 13,839,037 |
| Cash paid to and on behalf of employees | 2,789,320 | 2,751,086 |
| Payments of taxes and surcharges | 344,129 | 289,260 |
| Cash paid relating to other operating activities | 2,467,812 | 2,204,868 |
| Sub-total of cash outflows from operating activities | 19,970,226 | 19,084,251 |
| Net cash flows from operating activities | 2,181,987 | 1,392,000 |
| 2. Cash flows from investing activities: | ||
| Cash received from disposal of investments | 3,864 | 27,994 |
| Cash received from returns of investments | 867 | 54,304 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 19,964 | 17,615 |
| Cash received from other investing activities | 8,562 | 2,673 |
| Sub-total of cash inflows from investing activities | 33,257 | 102,586 |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 1,803,236 | 1,301,309 |
| Net cash paid to acquire subsidiaries or other business units | 655,039 | 96,207 |
| Cash paid for acquisition of investments | - | 51,435 |
| Cash paid for other investing activities | 86,228 | 47,739 |
| Sub-total of cash outflows from investing activities | 2,544,503 | 1,496,690 |
| Net cash flows from investing activities | (2,511,246) | (1,394,104) |
| 3. Cash flows from financing activities: | ||
| Cash received from borrowings | 4,369,565 | 3,852,354 |
| Cash received relating to other financing activities | 522,649 | 74,843 |
| Sub-total of cash inflows from financing activities | 4,892,214 | 3,927,197 |
| Cash repayment of borrowings | 2,655,257 | 1,671,913 |
| Cash payment for dividends, profit distributions or interest | 490,113 | 411,063 |
| Including: dividends paid to non-controlling interest | 35,904 | 26,176 |
| Cash paid relating to other financing activities | 300,907 | 320,160 |
| Sub-total of cash outflows from financing activities | 3,446,277 | 2,403,136 |
| Net cash flows from financing activities | 1,445,937 | 1,524,061 |
| 4. Effect of foreign exchange rate changes on cash and cash equivalents | (11,381) | (147,850) |
| 5. Net increase (decrease) in cash and cash equivalents | 1,105,297 | 1,374,107 |
| Add: Cash and cash equivalents at the beginning of the period | 3,835,071 | 4,319,907 |
| 6. Cash and cash equivalents at the end of the period | 4,940,368 | 5,694,014 |
ii. Adjustments of the financial statements
1. Opening balance adjustments due to adoption of new accounting standards for leases
□ Applicable √ Not applicable
2. Retrospective adjustments due to adoption of new accounting standards for leases
□ Applicable √ Not applicable
iii. Auditor’s reportIs this Report audited?
□ Yes √ NoThis Report is unaudited.
Board of DirectorsADAMA Ltd.October 28, 2021