ADAMA Ltd. Annual Report 2022
ADAMA LTD.ANNUAL REPORT 2022
ADAMA Ltd. is a global leader in crop protection, providing solutions to farmers across theworld to combat weeds, insects and disease. ADAMA has one of the widest and mostdiverse portfolios of active ingredients in the world, state-of-the art R&D, manufacturing andformulation facilities, together with a culture that empowers our people in markets aroundthe world to listen to farmers and ideate from the field. This uniquely positions ADAMA tooffer a vast array of distinctive mixtures, formulations and high-quality differentiated products,delivering solutions that meet local farmer and customer needs in over 100 countries globally.For further important additional information and details, please refer to the Annex.
March 2023
ADAMA Ltd. Annual Report 2022
Section I - Important Notice, Table of Contents and Definitions
? The Company’s Board of Directors, Board of Supervisors, directors, supervisors and senior managers confirmthat the content of the Report is true, accurate and complete and contains no false statements, misleadingpresentations or material omissions, and assume joint and several legal liability arising therefrom.
? Ignacio Dominguez, the person leading the Company (President and Chief Executive Officer) as well as its legal
representative, and Efrat Nagar - the person leading the accounting function (Chief Financial Officer), herebyassert and confirm the truthfulness, accuracy and completeness of the Financial Report.
? All of the Company’s directors attended the board meeting for the review of this Report.
? The forward looking information described in the Report, such as future plans, development strategy etc., doesnot constitute, in any manner whatsoever, a substantial commitment of the Company to investors. Investors andother relevant people are cautioned to be sufficiently mindful of investment risks as well as the difference betweenplans, forecasts and commitments.
? The Company has described its future development strategies, work plan for 2023 and possible risks in “VIII.Outlook of the Company’s future development” in Section III. The major risks of the Company include, amongothers, exchange rate fluctuations; exposure to interest rate, Israel CPI and NIS exchange rate fluctuations;fluctuations in raw material inputs and prices, and in sales. Investors and other relevant people are cautioned tobe sufficiently mindful of investment risks. For the complete “Risk factors and countermeasures” of the Company,please see the relevant section below.
? The pre-plan of the dividend distribution approved by the meeting of the Board of Directors on March 19, 2023refers to the total outstanding 2,329,811,766 shares of the Company on February 28, 2023 as the basis for thedistribution as cash dividend of RMB 0.27 (before tax) per 10 shares, to all the shareholders of the Company. Noshares will be distributed as share dividend, and no reserve will be transferred to equity capital.
? This Report and its abstract have been prepared in both Chinese and English. Should there be any discrepanciesbetween the two versions, the Chinese version shall prevail.
ADAMA Ltd. Annual Report 2022
Table of Contents
Section I - Important Notice, Table of Contents and Definitions ...... 2
Section II - Corporate Profile and Financial Results ...... 6
Section III - Performance Discussion and Analysis ...... 12
Section IV - Corporate Governance ...... 54
Section V - Environment and Social Responsibilities ...... 79
Section VI - Significant Events ...... 91
Section VII - Change in Shares & Shareholders ...... 136
Section VIII - Preferred Stock ...... 148
Section IX - Corporate Bonds ...... 149
Section X - Financial Report ...... 150
ADAMA Ltd. Annual Report 2022
Contents of Documents Available for Reference
(I) Duly signed Financial Statements by the Legal Representative and Accounting Principal as well as Head of theAccounting Organ.(II) Duly signed Auditor’s Report and seals the certified public accountants.(III) Originals of all Company’s documents previously disclosed in media designated by the CSRC as well as the originalsof all the public notices, were deposited in the Company’s office.
ADAMA Ltd. Annual Report 2022
DefinitionsIn this Report, the following terms have the meaning appearing alongside them, unless otherwise specified:
General Terms
DefinitionCompany, the Company
ADAMA Ltd.Adama Solutions
Adama Agricultural Solutions Ltd., a wholly-owned subsidiary of the Company,
incorporated in Israel according to its lawsAnpon, ADAMA Anpon ADAMA Anpon (Jiangsu) Ltd., a wholly-owned subsidiary of the CompanyBoard of Directors/Board The Board of Directors of the CompanyBoard of Supervisors The Board of Supervisors of the CompanyArticles of Association / AOA The Articles of Association of the CompanyGroup, the Group, ADAMA The Company, including all its subsidiaries, unless expressly stated otherwiseChemChina
China National Chemical Co., Ltd.CNAC
China National Agrochemical Co., Ltd.CSRC China Securities Regulatory CommissionSZSE Shenzhen Stock ExchangeSASAC State Assets Supervision and Administration Commission of ChinaSyngenta Group
Syngenta Group Co., Ltd.
, the controlling shareholder of the Company as of June
15, 2020, a wholly-owned subsidiary of CNACSinochem Holdings Sinochem Holdings Corporation Ltd.Sinochem Group
, the controlling shareholder of the Company as of JuneSinochem Holdings including all its subsidiaries unless otherwise indicated or the
context otherwise requiresReport This 2022 Annual ReportFinancial Report The Financial Reports for the year 2022, as contained in this ReportReporting Period, this Period,Current Year
Year 2022Company Law Company Law of the People’s Republic of ChinaSecurities Law Securities Law of the People’s Republic of ChinaListing Rules Listing Rules of the SZSE
ADAMA Ltd. Annual Report 2022
Section II - Corporate Profile and Financial ResultsI. Corporate Information
Stock name ADAMA A, ADAMA B Stock code 000553, 200553Stock exchange Shenzhen Stock ExchangeCompany name in Chinese 安道麦股份有限公司Abbr. 安道麦Company name in English
ADAMA Ltd.Abbr. (if any) ADAMALegal representative Ignacio DominguezRegistered address No. 93, East Beijing Road, Jingzhou, HubeiZip code 434001Office address No. 93, East Beijing Road, Jingzhou, HubeiZip code 434001Company website www.adama.comEmail irchina@adama.com
II. Contact Information
Board Secretary
Securities Affairs Representative
Investor Relations ManagerName Guo Zhi Wang ZhujunAddress 6/F, No.7 Office Building, No.10 Courtyard, Chaoyang Park South Road, Chaoyang District, BeijingTel. 010-56718110 010-56718110Fax 010-59246173 010-59246173E-mail irchina@adama.com
(if any)
irchina@adama.com
ADAMA Ltd. Annual Report 2022
III. Information Disclosure
Website of the Stock Exchange on which the Company Disclosesits Annual Report
China Securities JournalSecurities TimesMedia and Website on which the Company Discloses its AnnualReport
http://www.cninfo.com.cnLocation on which this Report is kept Securities office of the Company
IV. Company Registration and Alteration
Credibility code 91420000706962287QChanges in mainbusiness activities ofthe Company aftergoing public (if any)
None in the reporting period.
Historic Changes of
(if any)
The Company was reorganized as Hubei Sanonda Co., Ltd. in 1992
controlling shareholderafter being approved by
after being approved bydepartments of Commission for Reorganization of Hubei Province. The largest shareholder of
the Company was Shashi State-Owned Assets Administration Bureau.In 1994, the original Shashi State-Owned Assets Administration Bureau and Jiangling State-owned Assets Administration Bureau were classified as Jingsha State-
departments of Commission for Reorganization of Hubei Province. The largest shareholder ofOwned Assets
Administration Bureau. Therefore, the shares of the Company held by Shashi State-
Owned AssetsOwned
Assets Administration Bureau and Jiangling State-Owned Assets Administrat
Ownedion Bureau were
all held by Jingsha State-Owned Assets Administration Bureau, and Jingsha State-
ion Bureau wereOwned
Assets Administration Bureau became the controlling shareholder of the Company.In 1996, according to the Reply of Hubei Provincial People's Government on
OwnedAuthorization of
Sanonda Group Co., Ltd. Operating the State-
Authorization ofOwned Assets (EZBH[1995] No.92), Jingsha
State-Owned Assets Administration Bureau set up Sanonda Group Co., Ltd.
Owned Assets (EZBH[1995] No.92), Jingsha(renamed
“Jingzhou Sanonda Holdings Co., Ltd.”). On March 20, 2005, Jingzhou State-
(renamedOwned Assets
Owned AssetsAdministration Bureau and China Mingda Chemical and Mining Corporation (later renamed
"China National Agrochemical Co., Ltd.,
Administration Bureau and China Mingda Chemical and Mining Corporation (later renamedCNAC") signed the Asset Transfer Agreement of
Sanonda Group Co., Ltd, and CNAC received 100% equity of Sanonda Grou
CNAC") signed the Asset Transfer Agreement ofp Co., Ltd, from
Jingzhou State-
p Co., Ltd, fromOwned Assets Administration Bureau. After the completion of the above
transfer, the actual controller of the Company was changed from Jingzhou State-
Owned Assets Administration Bureau. After the completion of the aboveOwned
Assets Administration Bureau to SASAC.
In July, 2017, the Company re
Ownedceived the Approval on Issuing Shares by Hubei Sanonda Co.,
ceived the Approval on Issuing Shares by Hubei Sanonda Co.,Ltd. to China National Agrochemical Corporation for Acquiring Assets and Raising Supporting
Ltd. to China National Agrochemical Corporation for Acquiring Assets and Raising SupportingFunds (CSRC license No. [2017]1096). CSRC approved of the Company’s issuance of
1,810,883,039 shares to
Funds (CSRC license No. [2017]1096). CSRC approved of the Company’s issuance ofChina National Agrochemical Corporation for the purchase of 100%
China National Agrochemical Corporation for the purchase of 100%equity of ADAMA Solutions held by it. After the completion of the major assets restructuring,
equity of ADAMA Solutions held by it. After the completion of the major assets restructuring,the controlling shareholder of the Company was changed from Jingzhou Sanonda Holdings
ADAMA Ltd. Annual Report 2022
Co., Ltd. to CNAC.
In June, 2020, CNAC transferred 1,810,883,039 shares of the Company held by it to SyngentaGroup free of charge and completed the registration procedures for the above transferred
shares. After the completion of the share transfer, Syngenta Group h
Group free of charge and completed the registration procedures for the above transferredas become the direct
controlling shareholder of the Company.During the reporting period, the controlling shareholder of the Company did not change.
V. Other Information
The Accounting Firm Engaged by the CompanyCompany’sAuditors
Name Deloitte Touche Tohmatsu Certified Public Accountants LLPOffice address 30/F, Bund Center, 222 Yan An Road East, Shanghai PRCSigning Certified Public Accountant
as become the direct
Ji Yuting and Zhao JingyuanSponsor engaged by the Company to continuously perform its supervisory function during the Reporting Period
□ Applicable √ Not applicable
Financial advisor engaged by the Company to continuously perform its supervisory function during the Reporting Period
□ Applicable √ Not applicable
ADAMA Ltd. Annual Report 2022
VI. Main Accounting and Financial ResultsWhether the Company performed any retroactive adjustments to or restatement of its accounting data
√ Yes □ No
Reasons for Retroactive Adjustments or Restatement of the Accounting Data: Changes to the Accounting Policies
Unit: RMB’0002022
2021
+/- (%)
2020Beforeadjustment
Afteradjustment
Beforeadjustment
Afteradjustment
Operating revenue (RMB’000) 37,381,915
31,038,605
31,038,605
20.44%
28,444,833
28,444,833
Net profit attributable to theshareholders (RMB’000)
609,391
157,397
157,397
287.17%
352,753
352,753
Net profit attributable to theshareholders, excludingnon-recurring profit and loss(RMB’000)
490,428
77,853
77,853
529.94%
287,724
287,724
Net cash flows from operatingactivities (RMB’000)
940,745
4,561,875
4,561,875
-79.38%
2,023,015
2,023,015
Basic EPS (RMB/share) 0.2616
0.0676
0.0676
286.98%
0.1505
0.1505
Diluted EPS (RMB/share) N/A
N/A
N/A
N/A
N/A
N/A
Weighted average return onequity
2.76%
0.74%
0.74%
2.02%
1.61%
1.61%
31.12.2022
31.12.2021
+/- (%)
31.12.2020
Beforeadjustment
Afteradjustment
Beforeadjustment
Afteradjustment
Total assets (RMB’000) 57,980,489
50,235,308
50,235,308
15.42%
46,801,034
46,801,034
Net assets attributable to theshareholders (RMB’000)
23,124,655
21,075,083
21,075,083
9.73%
21,353,752
21,353,752
Reason for retroactive adjustments: According to ASBE 22 - Financial Instruments Recognition and Measurement, startingfrom 2022, when disposing derivative instruments, the Group recorded the accumulated gain or loss of derivative instru-ments in the “Gain (loss) from Changes in Fair Value”. Before 2022, the Group recorded the abovementioned gain or lossin the “Investment income, net”. The Company reclassified the “Gain(loss) from Changes in Fair Value” and the “Investmentincome, net” in the corresponding period in 2021. Such change did not impact the operating results or net assets of thereporting period.
The net income before or after deduction of non-recurring profit or loss for the last three fiscal years is negative no matterwhich amount is less and the audit report for the most recent year shows that there is uncertainty about the company'sability to continue its operation.
□ Yes √ No
The less amount of the net income before and after extraordinary gain or loss is negative
□ Yes √ No
ADAMA Ltd. Annual Report 2022
VII. Differences in Accounting Data under Domestic and Foreign Accounting
Standards
1. Differences in the net profit and the net assets disclosed in the financial reports preparedunder Chinese and international accounting standards
□ Applicable √ Not applicable
None during the Reporting Period.
2. Differences in the net profit and the net assets disclosed in the financial reports preparedunder Chinese and foreign accounting standards
□ Applicable √ Not applicable
None during the Reporting Period.
3. Explanation on the differences in accounting data
□ Applicable √ Not applicable
VIII. Main Financial Results by Quarter
Unit: RMB’000Q1 2022 Q2 2022 Q3 2022 Q4 2022Operating revenue 9,015,991
9,779,837
9,281,986
9,304,101Net profit attributable to the shareholders 427,652 304,446 36,046 (158,753)Net profit attributable to the shareholders excluding non-recurring profit and loss
413,345 241,678 4,353 (168,948)Net cash flows from operating activities (1,813,846)
467,985 (212,839) 2,499,445Any material differences between the financial indicators above or their summations and those which have been disclosedin quarterly or semi-annual reports
□ Yes √ No
ADAMA Ltd. Annual Report 2022
IX. Non-Recurring profit/loss
√ Applicable □ Not applicable
Unit: RMB’000Item 2022 2021 2020 NoteGains/losses on the disposal of non-currentassets (including the offset part of assetimpairment provisions)
67,525
69,710
Government grants charged to the profit/loss forthe Reporting Period (except for the governmentgrants closely related to the regular operation ofthe Company and continuously given at a fixedquota or amount in accordance with certainstandards)
36,383
38,543
41,871
Custodian fees earned from entrusted operation3,280
-
-
Recovery or reversal of provision for bad debtswhich is assessed individually during the years
46,530
32,487
26,102
Other non-operating income and expenses otherthan the above
2,468
12,503
19,989
Other profit or loss that meets the definition ofnon-recurring profit or loss
(6,128)
13,191
(62,855)
Mainly provision for earlyretirement plan of employeesat the Company’s Israelimanufacturing facilities.Less: Income tax effects
31,095
18,026
29,788
NCI (after tax)-
-
Total118,963
79,544
65,029
Details of other profit and loss items that meet the definition of non-recurring profit or loss.
√ Applicable □ Not applicable
Mainly provision for early retirement plan of employees at the Company’s Israeli manufacturing facilities as explained abovein the note.
Explanation of non-recurring items of profit or loss listed in "Explanatory Announcement No. 1 on Information Disclosurefor Companies Offering their Securities to the Public-Non-Recurring Profit and Loss" reclassified as recurring items of profitor loss
□ Applicable √ Not applicable
No such cases during the Reporting Period.
ADAMA Ltd. Annual Report 2022
Section III - Performance Discussion and AnalysisI. Industry in which the Company Operates during the Reporting PeriodThe company is required to comply with the “Self-regulatory Guidelines for Listed Companies on Shen-zhen Stock Exchange: No. 3 - Disclosure of Industry Information”.
General Environment and the Effect of External Factors on the Company’s OperationsAs a global leader in the crop protection industry, major trends, events and key developments in the Group's macro-economic environment may materially impact the Group’s business results and development. The impact of these factorsmay differ by geographic region and the different products of the Group. Since the Group offers one of the widest and mostdiverse product portfolios of crop protection products and since it operates in many geographic regions, the aggregateeffect of these factors in any given year, and during the course thereof, is not uniform and may sometimes be mitigated byoffsetting effects. The activities and results of the Group are further subject to, and affected by, certain global, localizedand other factors, such as: demographic changes; economic growth and rising standards of living; agricultural commodityprices; significant fluctuations in raw material costs and global energy prices; development of new crop protectiontechnologies; patent expiries and growth in volumes of off-patent products; the global agricultural markets and volatileweather conditions; regulatory changes; government policies; world ports, international monetary policies and the financialmarkets.Crop prices reached record levels in May 2022, driven by tight stocks, adverse weather conditions and the Ukraine-Russiaconflict which disrupted the supply of commodities. Prices have since declined but are expected to remain above pre-pandemic levels. The high crop prices drove strong farmer income, despite the higher cost environment (fertilizer,chemicals, labor, energy) faced by farmers. As a result, crop protection demand stayed strong in 2022 and farmers wereable to absorb crop protection price increases. Going into 2023, crop protection channel inventories in some regions areabove average, which may dampen demand in the near future.The cost environment has improved throughout the second half of 2022, as raw material and active ingredient prices inChina continued to decline, logistic prices normalized and energy prices eased. However, costs are still higher than pre-pandemic levels, with some areas still experiencing especially high costs, like European co-formulants and inlandtransportation.The Company continues to actively manage its procurement and supply chain activities. It also endeavors to adjust itspricing wherever market conditions allow, to compensate for these increased costs, the results of which were apparentthroughout the year.
ADAMA Ltd. Annual Report 2022
II. Main business of the Company during the Reporting PeriodThe company is required to comply with the “Self-regulatory Guidelines for Listed Companies on Shen-zhen Stock Exchange: No. 3 - Disclosure of Industry Information”.The Company is a corporation incorporated in the People's Republic of China.The Group is a global leader in crop protection, engaging in the development, manufacturing and commercialization of awide range of crop protection products, that are largely off-patent. The Group provides solutions to farmers to combatweeds, insects and disease, and sells its products in over 100 countries, through approximately 60 subsidiaries worldwide.The Group's business model integrates end-customer access, regulatory expertise, state-of-the art global R&D, productionand formulation facilities, thereby providing the Group a significant competitive edge and allowing it to launch new anddifferentiated products that meet local farmers and customer needs in key markets.The Group's primary operations are global, spanning activities in Europe, North America, Latin America, Asia-Pacific(including China) and India, the Middle East and Africa
.The Group also utilizes its expertise to adapt such products also for the development, manufacturing and commercializationof similar products for non-agricultural purposes (Consumer and Professional Solutions).In addition, the Group leverages its core capabilities in the agricultural and chemical fields and operates in several othernon-agricultural areas, none of which, individually, is material for the Group. These activities, collectively reported asIntermediates and Ingredients, include primarily, (a) the manufacturing and marketing of dietary supplements, food colors,texture and flavor enhancers, and food fortification ingredients; (b) fragrance products for the perfume, cosmetics, bodycare and detergents industries; (c) the manufacturing of industrial products and (d) other non-material activities.Syngenta GroupAs of June 2020, the Group is a distinctive member of Syngenta Group, a world leader in agricultural inputs, spanning cropprotection, seeds, fertilizers, additional agricultural and digital technologies, as well as an advanced distribution network inChina. As of August 2021, following the combination between ChemChina and Sinochem Group, Syngenta Group, andsubsequently the Group, are ultimately controlled by Sinochem Holdings - parent of both ChemChina and Sinochem Group,subordinated to SASAC.
Crop Protection ProductsThe Group is focused on the development, manufacturing and commercialization of largely off-patent crop protectionproducts, which are generally herbicides, insecticides and fungicides, which protect agricultural and other crops againstweeds, insects and disease, respectively.Herbicides - During cultivation, crops are exposed to various weeds that grow in their environment and compete for water,light and nutrients. Herbicides are designed to prevent or stunt the development of such weeds to allow the cultivated cropto develop optimally throughout the different stages of its growth, and therefore to reach optimum yield. The herbicidessold by the Company are both selective (do not affect or harm the crop itself) and non-selective. The best-selling herbicidesare those designed to protect soy, corn, cereals, rice and cotton.
As of 2023, the India, Middle East & Africa (IMA) region has been reorganized such that the countries formerly included in this region
will now be included in the Europe region (renamed EAME) or in the Asia Pacific region.
ADAMA Ltd. Annual Report 2022
Insecticides - Insecticides are designed to control various types of insects and pests in a selective manner (without harmingthe crop itself). The best-selling insecticides are designed to protect fruits and vegetables, corn, cotton and soy.Fungicides - Fungicides are designed to combat various diseases and parasitical fungi. In general, when weatherconditions in the agricultural season are dry, the prevalence of crop diseases is much smaller, reducing demand for suchproducts. Fungicides are used most frequently in crops such as cereals, fruit, vegetables, soy, grapevines and rice.
Main production processes, and upstream and downstream elementsProduction - The Group's manufacturing sites house two types of facilities: (1) dedicated facilities designed to produce asingle product or product family; and (2) multi-purpose facilities - comprising the majority of the Group's facilities whereseveral kinds of products may be manufactured. The latter provide the Group with manufacturing flexibility and enable it toprepare for the manufacturing of new products, subject to maintaining and ensuring quality standards.Value chain - Generally, the value chain between the Group and the end customer who ultimately purchases its productsaround the world may be characterized as follows: Importer / Formulator -> Distributor -> Retailer -> Farmer. Due to theexpansion of the Company's activities and the acquisition and establishment of subsidiary companies in different regionsof the world in recent years, in most cases companies owned by the Group carry out the role of the formulator and/or theimporter, and occasionally also the role of the distributor and sometimes the retailer. In the past, farmers stored theinventory in their own warehouses, but this trend has changed and today most of inventories are stored either in theimporters' or the distributors’ warehouses.Raw materials and suppliers - The Group procures and manufactures a large variety of raw materials, which may not beuniformly characterized, together with complementary raw materials or intermediates required to produce the finishedproducts and/or their formulations. The most significant element of the Group's cost of sales is the cost of raw materialsused in its production processes, which is primarily influenced by global changes in the supply of raw materials, and, to acertain extent, extreme fluctuations in international oil prices. Similarly, the cost of purchasing finished products for sale tothird parties is also significant. The Group purchases its raw materials from various suppliers, primarily in China, Europe,the U.S.A., and South America. The Group's supplier network has not changed significantly over the past few years, whilesuppliers from China are still a main source for raw material, due to the wide range of products and competitive pricesoffered by them, together with the improved quality of the products that are examined by the Group through product qualitytesting.Customers - The Company’s customers are numerous and are distributed across many countries throughout the world,while in some countries, sales are made to a relatively small number of customers. Generally, the Group's products areprimarily sold to regional and local distributors in the different countries, who in turn market them to end customers in thatcountry, some of whom are large cooperatives. The Group also sells, inter alia, to multinational companies and to otherproducers that manufacture end-use products based on active ingredients sourced from the Group's. The vast majority ofsales are made to returning customers, typically without long-term supply contracts, as is customary in the industry. Inmost countries, purchases are made without long-term advance orders, while in some areas they are made based on (non-binding) rolling sales forecasts and actual orders. The Group's actual production is based on these forecasts.Distribution and marketing - The Group's marketing operations are global and designed to consistently increase profits andmarket share. The Group markets its products directly through local representation in all of the largest agricultural marketsworldwide by means of local salespeople and commercial activities directed at the distributors, agricultural consultants andfarmers.For further important additional information and details, please refer to the Annex.
ADAMA Ltd. Annual Report 2022
Procurement model of major raw materials
Main raw materials
Procurementmodel
Proportion out of total
purchase amount
Significantchange inthesettlementmethod
Proportion out of totalAverage price
in H1(RMB/Kg)*
Average pricein H2(RMB/Kg)*AI Tech
Average pricePurchase through
multiple channels
Purchase through
38.9% No 75.62 72.87Raw Materials 20.0% No 8.23 8.98Co-Formulants 6.0% No 19.57 23.46Formulated Products 21.4% No 35.45 35.36Packaging 4.9% No 1.56 1.88Other 8.7% No 2.01 4.45* Prices in RMB are based on average exchange rates for the relevant period.
Reasons for significant changes in raw material prices compared with the previous reporting period
□ Applicable √ Not applicable
Whether the Company spends more than 30% of its total production cost on energy supply
□ Applicable √ Not applicable
Reasons that there is material change to the main energy types during the reporting period
□ Applicable √ Not applicable
Production Technologies of Main ProductsMain Products
Stage of ProductionTechnologies of MainProducts
Key Technical Experts
Patents R&D advantagesHerbicides Industrialized production Employed by the Group
| Some are patent |
protected
Off-
differentiated mixtures andformulations, in combinationwith new formulation anddelivery technologies thatprovide more efficient waysto deliver the products intothe plantsFungicides Industrialized production Employed by the Group
patent AIs developed into
| Some are patent |
protected
Off-
differentiated mixtures andformulations, in combinationwith new formulation anddelivery technologies thatprovide more efficient waysto deliver the products intothe plantsInsecticides Industrialized production Employed by the Group
patent AIs developed into
| Some are patent |
protected
Off-
differentiated mixtures andformulations, in combinationwith new formulation anddelivery technologies
patent AIs developed into
that
ADAMA Ltd. Annual Report 2022
Main Products
Stage of ProductionTechnologies of Main
Products
Key Technical Experts
Patents R&D advantages
provide more efficient waysto deliver the products intothe plants
Capacity of main productsMain Products
Normal Capacity(tons/year)
Capacity Utilization (%)
Capacity
UnderConstruction(tons/year)
ConstructionInvestment in theproduction of MainProductsHerbicides
56,198 79% 13,000 OngoingFungicides
18,161 68% 5,500 OngoingInsecticides
74,724 54% 5,500 OngoingNote: Capacity figures in the above table is the synthesis capacity of the Group. In addition, the Group has approximately590,000 tons of formulation capacity globally.
ADAMA Ltd. Annual Report 2022
Products Produced in Major Chemical Industry Parks
Major Chemical Industry Parks ProductsNeot Hovav, Israel Plant for production of insecticides and fungicides active ingredients
as well as formulations, R&D center and Non-Agro activityAshdod, Israel
Non-Agro activity as wellAnpon, China Plant for the manufacturing of insecticides and herbicides active
ingredients, formulations, Flame Retardants and Non-Agro activitySanonda, China Plant for the manufacturing of insecticides active ingredients as well
as number of formulations and Non-Agro activityADAMA Huifeng, China Plant for production of Herbicides and Fungicides AIs, as well as
number of formulations, alongside a packaging plant
Taquari, Brazil Plant for the manufacturing of active ingredients as well as number
of
Manufacturing of the herbicides’ active ingredients, formulations andformulations used for the manufacturing of insecticides, fungicides
and herbicides
EIA approval status that is being applied or newly obtained during the reporting period
√ Applicable □ Not applicable
During the reporting period, the Company didn’t newly receive approval:
ADAMA Anpon, a subsidiary of the Company, received the following EIA approval:
? “Reply to the Environmental Impact Report of Expansion of Utilities and Auxiliary Facilities: 110v Transformer Stationand Power Lines”
Abnormal production suspension during the reporting period
□ Applicable √ Not applicable
Relevant approvals, permits and qualifications
√ Applicable □ Not applicable
formulations used for the manufacturing of insecticides, fungicidesEntity in
China
Name of the
Certificate
Number Expiration
ADAMALtd.
PesticideProduction Permit
Entity in
Pesticide Production Permit (E)
0010
August 7
th
, 2027
Pesticide Production Permit (E)Safety Production
Permit
（E）WH [2022] No. 1139
November 6
th, 2025
Safety ProductionSafety Production
Permit
（E）FM [2021] No.050781
| Safety Production |
August 13
th, 2024
certificate of non-pharmaceuticalprecursorchemicals
（E）3J42100111328
July 2nd
, 2024
Business recordSpecial Permit for
Special Permit forthe Manufacturing
the Manufacturingof Monitored
Chemicals
HW-D42I0001
April 3
rd
, 2024
of MonitoredNational Industrial
Production Permit
National Industrial
XK13-008-00019 of Hubei
November 13
th, 2023
Business License
Business Licensefor Hazardous
No. [2021]
for Hazardous980014 of Safety
Operation of Hubei D
July 5th
, 2024
ADAMA Ltd. Annual Report 2022
China
Name of the
Certificate
Number Expiration
Chemicals
Entity inPort Operation
Permit
No.（0045）
| Port Operation | for Port Operation of |
Jingzhou of Hubei
January 20
th, 2025Port
Permit
| Shoreline Use | No. 5, 2015 for Use of Port |
Shoreline
August 7
th, 2061
Permit
| Water Extraction | No. 3, 2020 for Water Extraction |
of Jingzhou of Hubei
August 13
th
, 2025Registration
HazardousChemicals
421012001
December 9
th, 2024
Certificate ofPollutant Emission
Permit
91420000706962287Q001P
December 25
th, 2025
ADAMAAnpon(Jiangsu)Ltd.
Pollutant EmissionSafety Production
Permit
| Safety Production | WH No. [H00029] for Safety |
Production of Jiangsu
January 17
th, 2025
Business Licensefor Hazardous
Chemicals
for HazardousNo. 00394 for Business of
No. 00394 for Business ofHazardous Chemicals of
Huai’an of Jiangsu
October 11
th, 2024
Hazardous Chemicals ofPesticide Business
License
No. 32080020026 for
| Pesticide Business | Pesticide |
Business of Jiangsu
December 26
th, 2024PesticideProduction Permit
No. 0014 for Pesticide
Production of Jiangsu
December 6
th, 2027
No. 0014 for PesticidePollutant Emission
Permit
91320800139433337K001P
May 31
th,2025
Pollutant EmissionNational Industrial
Production Permit
National Industrial
XK13-010-00189 of Jiangsu
January 12
th, 2024
National Industrial
Production Permit
National Industrial
XK13-008-00007 of Jiangsu
September 23
rd, 2023
National Industrial
Production Permit
National Industrial
XK13-014-00235 of Jiangsu
July 11th, 2024Mining License C3200002009096120039192 September 30
th
, 2025
Water Extraction
Permit
D320812G2021-0016 December 22
nd
, 2027
Water ExtractionWater Extraction
Permit
D320812S2021-0014 December 31
st, 2027
Water ExtractionSpecial Permit for
Special Permit forthe Manufacturing
the Manufacturingof Monitored
Chemicals
HW-32I0001 November 29
th, 2027
of MonitoredSafety Production
Permit
FM No. [2021]0818 of Jiangsu
| Safety Production |
November 9
th, 2024Maidao,
ADAMAAnpon(Jiangsu)Ltd.
Branch ofBusiness License
Business Licensefor Hazardous
Chemicals
for HazardousNo. 00641 for Business of
No. 00641 for Business ofHazardous Chemicals of
Jiangsu
December 11
th
, 2025
Hazardous Chemicals ofSafety Production
Permit
| Safety Production | WH No. [H00015] for Safety |
Production of Jiangsu
July 22
nd, 2024
Permit
91320800MA1NX3QW56001P
| Pollutant Emission |
December 19
th
, 2026HubeiSanondaTrading
License
No. 42000010083 for
Pesticide BusinessPesticide
Business of Hubei September 3
rd
, 2023
ADAMA Ltd. Annual Report 2022
China
Name of theCertificate
Number ExpirationCo., Ltd.ADAMA(Beijing)
Entity inAgricultural
AgriculturalTechnology
CompanyLimited
TechnologyPesticide Business
License
Pesticide BusinessNo. 11000010005 for Pesticide
Business of Beijing
April 11
th
, 2028ADAMAHuifeng
No. 11000010005 for Pesticide(Shanghai)
(Shanghai)Agricultural
AgriculturalTechnology
Co., Ltd.
TechnologyPesticide Business
License
| Pesticide Business | No. 31011420006 for Pesticide |
Business of Shanghai
September 3
rd, 2023
Business Licensefor Hazardous
Chemicals
for HazardousNo. [2020]203153 of Shanghai
No. [2020]203153 of Shanghaifor Business of Hazardous
Chemicals
August 25
th
, 2023
ADAMAHuifeng(Jiangsu)Ltd.
for Business of HazardousSafety Production
Permit
（Su）WH No. [J00138]
February 10
th, 2024
Safety ProductionPesticide Business
License
| Pesticide Business | No. 32090420577 for Pesticide |
Business of Jiangsu
January 6
th, 2026PesticideProduction Permit
Pesticide Production Permit
(Su) 0199
May 13
th
, 2026Registration
Pesticide Production PermitCertificate of
HazardousChemicals
320912188
March 8
th
, 2024
Certificate ofPollutant Emission
Permit
91320982MA1WNXWQX6001P
| Pollutant Emission | |
December 20
th
,2025
certificate of non-pharmaceuticalprecursorchemicals
（Su）3S32090000086
February 9
th, 2024
Business recordExport Enterprise
Registration Form
Export Enterprise
04136730
--
Company focused on oil processing and trade
□ Applicable √ Not applicable
Company focused on fertilizer
□ Applicable √ Not applicable
Company focused on agrochemicals
√ Applicable □ Not applicable
Market share - As mentioned herein, ADAMA is a leading company among the crop-protection companies that focus onoff-patent crop protection solutions. The Group’s global crop protection market share was approximately 6.5% in 2022,based on preliminary estimation made by AgBio Investor regarding total sales in the agrochemical industry, and 6.0% in2021.Registration - The materials and products marketed by the Group require, at various stages of their development production
ADAMA Ltd. Annual Report 2022
and marketing, registration in every country where the Company intends to market them. The Company has developmentand registration centers, located in Europe, Israel, Latin America, Brazil, North America, India and Asia. Further, its globalregistration network, providing local registration capabilities in over 100 countries, enables the Group to efficiently introducenew products in all major markets and provide farmers with a comprehensive portfolio of crop protection solutions. In thelast three years, the Group’s registration network of highly-skilled professionals has obtained approximately 1,300 newproduct registrations. These capabilities are increasingly important as regulatory requirements continue to increase globally.Tax policies - The Group develops, purchases, manufactures and markets its products through many companies worldwide,and as such operates through approximately 60 subsidiaries. To the best of the Group’s knowledge, it is in materialcompliance with applicable tax laws.
Company focused on chlorine alkali and caustic soda business
□ Applicable √ Not applicable
Company focused on chemical fiber industry
□ Applicable √ Not applicable
Company focused on plastic and rubber making
□Applicable √ Not applicable
III. Core Competitiveness AnalysisAs a leading off-patent crop protection provider in the global crop protection market, the Group believes that the followingstrengths provide it with sustainable competitive advantages and the foundation to capitalize on favorable underlyingagriculture and crop protection industry trends:
? Off-patent Industry Leader. The Group’s success as one of the world’s leading off-patent companies has given it
a deep understanding of the industry and enabled it to build one of the most extensive off-patent product offerings,giving it the ability to provide efficient, value-added solutions to farmers of every major crop around the world.Moreover, the breadth of the Group’s product portfolio, with no single active ingredient constituting more than 5%of its sales in 2022, combined with its extensive geographic reach, provide effective diversification and enhancedstability. The Group strives to continue to gain market share, building on its leading role in the market, farmer-centricfocus and broad product portfolio. Furthermore, the Group’s addressable market continues to expand as the cropprotection market globally continues to shift towards off-patent products, the segment of the market on which theGroup focuses. This shift is the result of significant increases in the costs and risks of discovering and developingnovel and effective Active Ingredients (AIs), which over time has led to fewer introductions of new molecules eachyear by the Company’s Research-Based Company (RBC) competitors. The Group believes that its strength in theoff-patent market provides it with a certain competitive advantage relative to RBCs, as it is able, with its research,technology and know-how, to access off-patent crop protection products developed by all of the various major RBCs.This allows the Group to enhance existing crop protection products and introduce unique mixtures and formulations.In parallel, the Group’s global scale, registration expertise and manufacturing footprint are competitive advantagesin comparison to many of its off-patent peers.? Global Reach and Strength in Emerging Markets. The Group has an industry leading global footprint with
extensive market presence. The Group enjoys broad geographic diversification by selling in over 100 countries with
ADAMA Ltd. Annual Report 2022
a balanced regional split, as evidenced by its 2022 revenue breakdown of approximately 20% in Europe, 29% inLatin America, 18% in North America, 21% in Asia Pacific, and 12% in India, the Middle East and Africa. Thisregional balance enhances the Group’s growth profile and provides diversification across different countries,climates, crops and planting seasons. The Group has a particularly strong presence in emerging markets, wheregrowth is expected to outpace developed markets, and from which it derived more than half of its 2022 sales.? Unique Positioning and Access to China. The Group believes that the foundation provided by the integration of
Adama Solutions with the operational and commercial infrastructure of the Company in China, together with itsunique relationship with its ultimate controlling shareholder, Sinochem Holdings, provides it with a clear advantagein penetrating the Chinese market, one of the largest and fastest growing agricultural markets in the world. TheGroup is one of the only global crop protection providers with a significant integrated commercial and operationalinfrastructure within China. The Group intends to leverage this infrastructure to pursue a leading position in theChinese crop protection market and capitalize on the growing importance of high-quality global brands in China.With its activities in China also forming part of Syngenta Group China, the Group believes it is uniquely positionedto capitalize on the trend toward consolidation within the high-growth, highly fragmented Chinese crop protectionmarket. In addition to helping it become a leader in the Chinese crop protection market, the integration of theCompany’s China-based manufacturing facilities into the Group’s global manufacturing operations provides it withthe ability to more effectively develop and commercialize advanced, differentiated products, as well as benefit fromimproved cost positions in key molecules, enhance the optimization of its global supply chain over time, drive greaterefficiency throughout the organization, and secure both revenue growth as well as increased profitability.? Collaborations with members of the Syngenta Group. The Group is working together with the other companies
within the Syngenta Group to create value for itself and the Syngenta Group through increasing the Group’s sales,reducing costs and improving processes. Such efforts include various collaboration initiatives for the sale anddistribution of finished products, raw materials supply and procurement, logistics and supply chain, as well as in theR&D and products’ registration fields.? Vertically Integrated Business with Global Scale. The Group is one of the few off-patent crop protection providers
that is active across virtually the entire value chain, from worldwide marketing, sales and distribution, to registration,production and R&D. As a result, the Group is able to efficiently manage its product portfolio and operations inresponse to the dynamic needs of farmers, changing weather conditions, government policies and regulations, andcapture value at each point in the value chain. Approximately 85% of the Group’s products are synthesized and/orformulated or both in its world-class, well-invested facilities across the globe. Having deep knowledge, expertiseand experience in all aspects of the development process, integrated chemical synthesis and formulation productionand control over the entire supply chain, provides the Group with cost and control advantages, and the agility toaddress market challenges and capture value. Further, its global registration network, providing local registrationcapabilities in over 100 countries, enables the Group to efficiently introduce new products in all major markets andprovide farmers with a comprehensive portfolio of crop protection solutions. In the three years, the Group’sregistration network of highly-skilled professionals has obtained approximately 1,300 new product registrations.These capabilities are increasingly important as regulatory requirements continue to increase globally. The Group’ssales and marketing infrastructure is characterized by its local sales forces in each of its strategic markets, whobuild strong relationships with local distributors and with the end users, the farmers, to better understand their needs.This drives demand at the wholesale, retail and farmer level and provides the Group with valuable market insightand understanding.? Extensive, Differentiated Offering. The Group offers farmers a hybrid portfolio of increasingly differentiated
products and solutions that are tailored to the specific needs of each geographic region and each type of crop. The
ADAMA Ltd. Annual Report 2022
Group utilizes an integrated, solutions-based approach to its entire offering in order to meet the unique demands ofits global customer base. The Group strives to offer farmers a branded portfolio that is comprised of both high-valuedifferentiated products as well as high-volume off-patent products, alongside an increasing number of uniquemixtures and formulations and novel, innovative products and services, aimed to provide solutions to farmers innearly every region, and for all major crops. The Group’s extensive portfolio is composed of over 300 centrallymanaged AIs and over 1,650 mixtures and formulations.? Experienced and Empowered Management Team. With a deep understanding of the crop protection industry and
firm focus on sustaining the Group’s leadership and financial strength, its management team is a cohesive andintegrated team that has the knowledge, skills and experience required to guide the Group on its path to achievingits ambition of global leadership. The Group believes in empowering its teams and creating leaders from itsstrongest performers, with the result that its management team is composed of the people who have successfullymanaged its business, and developed and executed its strategy over the last few years, continuing its track recordof consistent, profitable growth.
ADAMA Ltd. Annual Report 2022
IV. Main Business Analysis
1. Overview
For general crop protection market environment, please refer to I. Main business of the Company during the ReportingPeriod of Section III above.
Item
Fourth Quarterof the Reporting Period(000’RMB)
Same period of last year aspreviously reported(000’RMB)
+/-%Revenues 9,304,101
8,550,241
8.8%
Pre-Tax Profits (144,277)
299,252
-148.2%
Pre-tax profit margin -1.6%
3.5%
-
Net income (158,753)
165,032
-196.2%
Net income margin -1.7%
1.9%
-
EBITDA
897,224
1,201,894
| 897,224 | |
-25.4%
EBITDA margin 9.6%
14.1%
-
Item
Fourth Quarterof the Reporting Period
(000’USD)
Same period of last year aspreviously reported(000’USD)
+/-%Revenues 1,311,992
1,337,049
-1.9%
Pre-Tax Profits (20,383)
46,767
-143.6%
Pre-tax profit margin -1.6%
3.5%
Net income (22,425)
25,197
-189.0%
Net income margin -1.7%
1.9%
EBITDA
187,946
| 126,520 | |
-32.7%
EBITDA margin 9.6%
14.1%
Item
Reporting Period(000’RMB)
Same period of last year aspreviously reported
(000’RMB)
+/-%Revenues 37,381,915
31,038,605
20.4%
Pre-Tax Profits 756,833
543,802
39.2%
Pre-tax profit margin 2.0%
1.8%
-
Net income
609,391
163,313
| 609,391 | |
273.1%
Net income margin 1.6%
0.5%
-
EBITDA
4,880,445
3,821,303
| 4,880,445 | |
27.7%
EBITDA margin 13.1%
12.3%
-
Item
Reporting Period
(000’USD)
Same period of last year aspreviously reported(000’USD)
+/-%Revenues 5,569,989
4,813,041
15.7%
Pre-Tax Profits 118,470
84,564
40.1%
Pre-tax profit margin 2.1%
1.8%
-
Net income 96,
25,518
| 307 | |
277.4%
Net income margin 1.7%
0.5%
-
EBITDA
731,118
592,846
| 731,118 | |
23.3%
EBITDA margin 13.1%
12.3%
-
ADAMA Ltd. Annual Report 2022
Note: Since the functional currency of main overseas subsidiaries is the USD, and the Company’s management review ofthe Company’s performance is based on the USD results, following explanations and analysis are based on USD-denominated numbers.
2. Revenues and costs
RevenuesRevenues in the fourth quarter declined by approximately 2% (+9% in RMB terms; +1% in CER terms) to $1,312 million,reflecting an increase of 6% in prices and a decrease of 6% in volumes mainly due to advancement of sales in Brazil fromthe fourth quarter in 2022 to the third quarter, a decline in raw material, fine chemicals and intermediates sales in Chinaand the depreciation of the Euro in comparison to the US Dollar. Despite the shift of sales in Brazil from the fourth quarterto the third quarter, the Company's sales grew in constant exchange rates across most regions.In the full year 2022, sales reached a record-high of $5,570 million, an increase of 16% (+20% in RMB terms; +19% inCER terms), driven by a 16% increase in prices and a 4% growth in volume. The increase in sales in the full year periodreflected the strong demand in the market for crop protection products, led by sales in Brazil and China.
(1) Operating revenues
Unit: RMB’000
2022 2021
YoY +/-%
Amount
Ratio of theoperating
revenue
Amount
Ratio of theoperatingrevenueTotal operating revenue37,381,915
100%
| 31,038,605 |
100% 20.4%Classified by industriesManufacture of chemical raw materialsand chemical products
37,381,915
100%
| 31,038,605 |
100% 20.4%Classified by productsHerbicides16,597,770
44.4% 12,716,458
41.0% 30.5%
Fungicides 7,050,530
18.9% 6,137,712
19.8% 14.9%
Insecticides 10,120,287
27.1% 9,192,554
29.6% 10.1%
Ingredients and Intermediates (Formerlyreferred to as Non-Agro)
3,613,328
9.7% 2,991,881
9.6% 20.8%
Classified by regions
Europe 7,449,462
19.9% 6,920,884
22.3% 7.6%
North America 6,895,702
18.4% 5,907,944
19.0% 16.7%
Latin America 10,792,733
28.9% 8,217,586
26.5% 31.3%
Asia-Pacific 7,761,487
20.8% 5,793,987
18.7% 34.0%
India, Middle East and Africa 4,482,531
12.0% 4,198,204
13.5% 6.8%
Classified by Sales Channel
Direct Sales 1,992,450
5.3% 1,300,368
4.1% 53.2%
Dealership 31,782,088
85.0% 26,746,356
86.2% 18.8%
Others 3,607,377
9.7% 2,991,881
9.6% 20.6%
ADAMA Ltd. Annual Report 2022
Unit: USD’000
2022 2021
YoY +/-%
Amount
Ratio of theoperatingrevenue
Amount
Ratio of theoperatingrevenueTotal operating revenue 5,569,989
100% 4,813,041
100% 15.7%
Classified by industriesManufacture of chemical raw materialsand chemical products
5,569,989
100% 4,813,041
100% 15.7%Classified by products
Herbicides 2,478,957
44.5% 1,971,982
41.0% 25.7%
Fungicides 1,048,303
18.8% 951,654
19.8% 10.2%
Insecticides 1,505,222
27.0% 1,425,106
29.6% 5.6%
Ingredients and Intermediates (Non-Agro)
537,507
9.7% 464,299
9.6% 15.8%
Classified by regionsEurope 1,115,384
20.0% 1,072,415
22.3% 4.0%
North America 1,027,291
18.5% 916,603
19.0% 12.1%
Latin America 1,592,287
28.6% 1,275,558
26.5% 24.8%
Asia-Pacific 1,166,262
20.9% 898,084
18.7% 29.9%
India, Middle East and Africa 668,765
12.0% 650,381
13.5% 2.8%
Classified by Sales ChannelDirect Sales
5.3% 203,364
| 296,880 |
4.2% 46.0%
Dealership
85.0% 4,145,906
| 4,735,602 |
86.1% 14.2%
Others
9.7% 463,771
| 537,507 |
9.6% 15.9%
Notes: (1) the sales split per product category is provided for convenience purposes only, and is not representative of theway the Company is managed or in which it makes its operational decisions; (2) The discrepancies between the ‘ratio ofthe operating revenue’ in RMB and USD detailed in the tables above derive mainly from exchange rates recorded at theend of each quarter.
Regional Performance ReviewEurope: Excluding Ukraine based sales, the sales in Europe grew by a double-digit percentage in the fourth quarter andfull year period. This growth was achieved by gaining market share over the year in some key countries such as France,Italy, Romania and Greece and was also supported by the introduction of the product Soratel?, which includes ADAMA’sproprietary Asorbital formulation technology. The growth was achieved despite drought mainly in the south of Europe,supply challenges and high channel inventories in some countries.North America: In the US Ag market, sales increased in the full year period despite adverse weather conditions mainly inthe second half of the year, impacting the California Fruit & Vegetable market and the Cotton market across Texas and thesouthwest regions, both important markets for the Company.Very strong growth in sales achieved in Canada in the full year period and fourth quarter in all categories: herbicides,fungicides and insecticides. The Company's new in-house production at Huifeng of cereal herbicides supported salesagainst the backdrop of supply shortages in the market, while broadening of the fungicide portfolio and increased insectpressure drove fungicide and insecticide sales, respectively.The Consumer & Professional business grew nicely over the full year period following robust demand, while in the secondhalf of the year there was a slowdown in this growth due to inflationary pressure on consumer demand and a slowdown inthe professional market mostly due high levels of inventory in the channel and expectation for price decreases.
ADAMA Ltd. Annual Report 2022
Latin America: In the full year period the Company achieved very strong growth in sales in Brazil, driven by prices, volumeand new innovative formulation product launches, such as fungicide ARMERO? and herbicide ARADDO?. Slowdown insales in Brazil in the fourth quarter was due to advancement of sales from the fourth quarter in 2022 to the third quarter.In other LATAM countries higher sales were achieved in the full year period despite adverse weather conditions. In thefourth quarter the sales remained stable. During 2022 the Company continued with the rollout of biological products in thisregion, which is a key market for Fruit & Vegetable crops for export.Asia-Pacific: During the full year period of 2022 the Company’s significant growth in Asia Pacific was led by the strongsales of raw material, intermediates and fine chemicals in China. In the fourth quarter, a decline was recorded in such salesfollowing the softening of demand in the Chinese market and an overall decline in market prices. The sales in China ofADAMA's branded portfolio also continued to grow nicely during the full year period despite the strong competition in themarket, and also included the contribution of a company acquired in 2021.In the wider APAC region growth in sales in the full year period was supported by the positive impact of a rare 3rdconsecutive year of La Ni?a and despite strong competition from China. In the fourth quarter, sales were negativelyimpacted by excessive rain and flooding in some key areas of the region. The slowdown in sales in the fourth quarter inthe Pacific region was also due to advancement of sales from the fourth quarter in 2022 to the third quarter.India, Middle East & Africa: Sales grew moderately in USD terms and nicely in constant exchange rates in 2022 and inthe fourth quarter. In the full year period the growth was led by Middle Eastern countries, as 2021 was a very strong yearin India. In the fourth quarter the sales in India also grew nicely due to positive weather conditions.
(2) List of the industries, products, regions and distribution models exceed 10% of the operatingrevenues or operating profits of the Company
√ Applicable □ Not applicable
The company is required to comply with the “Self-regulatory Guidelines for Listed Companies on Shen-zhen Stock Exchange: No. 3 - Disclosure of Industry Information”.
Unit: RMB’000
Operatingrevenues
Cost ofgoods sold
Gross
Margin
(%)
YoY
increase/decrease
of the operating
revenues
YoYincrease/decrease
increase/decreaseof the cost of goods
sold
YoYincrease/decrea
| of the cost of goods | se of the gross |
marginClassified by industriesManufacturingchemical rawmaterials andchemical products
37,381,915
27,984,966
25.1%
20.4% 19.5% 0.6%Classified by ProductsCrop Protection 33,768,587
25,259,667
25.2%
20.4% 20.0% 0.2%Ingredients andIntermediates
3,613,328
2,725,299
24.6%
20.8% 15.1% 3.6%
In the event that the statistical manner of the Company's main business data is adjusted during the reporting period, theCompany's main business data for the most recent year adjusted to the manner at the end of the reporting period
□ Applicable √ Not applicable
ADAMA Ltd. Annual Report 2022
Production
Volume(Ton)
SalesVolume(Ton)
Sales(RMB’000)
Pricing Trend during
reporting period
Reasons to change
Crop Protection529,135 690,015 33,768,587 YoY up
price of raw materialsincreased, combinedwith inflation andcurrency impact inseveral marketsIngredients andIntermediates
492,188 1,558,390
3,613,328 YoY up High demand in market
Whether the Company generates more than 10% revenue or net profit from its overseas business against the auditedannual revenue and net profit for the most recent accounting year
√ Applicable □ Not applicable
Overseas Business How it operates in foreign
markets
Whether the tax policyinfluences the business
overseas
measures it takes duringthe reporting period
Adama Solutions
The Group develops,purchases, manufactures and
purchases, manufactures andmarkets its products through
markets its products throughmany companies worldwide.
As such, the Group
many companies worldwide.operates
operatesthrough approximately 60
through approximately 60subsidiaries, with each of the
subsidiaries, with each of theGroup companies being
Group companies beingindependent and fulfilling a
independent and fulfilling adifferent role and making a
different role and making adifferent contribution to the
different contribution to theGroup's operations, and
Group's operations, andbeing assessed according to
the tax laws in their specifi
being assessed according toc
localities.
No material influence exists.
c
| The Group’s services or |
products are priced based on
products are priced based ontransfer pricing studies
transfer pricing studiesconducted to reflect the
conducted to reflect themarket price that would have
market price that would havebeen determined for these
been determined for theseservices or products were
they to be provided to non-
services or products weregroup members. Such
group members. Suchtransfer prices are reviewed
on a quarterly basis.
(3) Whether the Company’s revenue from sale of goods exceed the revenue from services
√ Yes □ No
Industries Items Units 2022 2021 YoY +/-%Crop Protection
Sales volume Ton690,015638,873 8%Production Ton 529,135 501,242 6%Inventory Ton241,095220,5479%Subsidiaries acquired during recent years have undergone IT system alignment during 2022, and as a result of which thevolume of the Group in 2021 have been technically reclassified to the figures presented above tons.
Reasons for any over -30% YoY movement of the data above:
□ Applicable √ Not applicable
ADAMA Ltd. Annual Report 2022
(4) Execution of the significant sales and procurement contracts signed by the Company up tothe Reporting Period
□ Applicable √ Not applicable
(5) Composition of Operating Costs
Category of the industries
Unit: RMB’000Industries Items
2022 2021
YoY +/-%
Amount
Ratio of theoperating costs
Amount
Ratio of theoperating costs
Industry of
raw materials andchemical products
Cost ofmaterials
manufacturing chemical(procurement
costs)
(procurement26,200,706
93.6% 17,995,565
| 26,200,706 |
76.9% 45.6%
Industry of
raw materials andchemical products
Labor cost
manufacturing chemical1,303,087
4.7% 1,201,040
| 1,303,087 |
5.1% 8.5%
Industry of
raw materials andchemical products
Depreciationexpense
manufacturing chemical793,086
2.8% 679,590
| 793,086 |
2.9% 16.7%
Explanations:
Over the full-year period, the Company saw higher logistic, procurement and production costs as well as the negativeimpact of exchange rates. Despite that, the higher gross profit was mainly driven by the markedly higher pricescomplemented by volume growth.Additionally, in the full year of 2021 certain extraordinary charges related largely to a temporary disruption of the productionof certain products occurred. These charges have significantly declined since the first quarter of 2022, as the relocationand upgrade of the manufacturing Jingzhou site in China has been completed and is now at a high level of operation.
(6) Has the consolidated scope changed during the Reporting Period
□Yes√ No
(7) List of significant changes or adjustment of the industries, products or services of theCompany during the reporting period
□ Applicable √ Not applicable
ADAMA Ltd. Annual Report 2022
(8) List of major trade debtors and major suppliersList of the major trade debtors of the CompanyTotal sales to top 5 customers (RMB’000)
3,237,835
Ratio of total sales to top 5 customers to annual total sales
8.35%
Ratio of total sales to related parties (within top 5 customers) to annual total sales
4.32%
Information of the Top 5 Customers
Customers Sales Amount
(RMB’000)
Ratio of the sales to this customer to
the annual total sales1 A
1,676,644
4.32%
2 B
457,588
1.18%
3 C
456,244
1.18%
4 D
334,558
0.86%
5 E
312,801
0.81%
Aggregated
3,237,835
8.35%
Notes of other situation of the major customers
□ Applicable √ Not applicable
List of the major suppliers of the CompanyTotal purchase from top 5 suppliers (RMB’000)4,399,324
Ratio of total purchase from top 5 suppliers to annual total purchase
18.58%
Ratio of total purchase from related parties (within top 5 suppliers) to annual total purchase
9.55%
Information of the Top 5 SuppliersSuppliers Purchase Amount
(RMB’000)
Ratio to the annual total sales1 A1,295,586
5.47%
2 B1,073,592
4.53%
3 C965,861
4.08%
4 D565,859
2.39%
5 E498,426
2.10%
Aggregated
4,399,324
18.58%
Notes of the other situation of the major suppliers
□ Applicable √ Not applicable
ADAMA Ltd. Annual Report 2022
3. Expenses
In RMB ’000 In USD ’000 2022 2021 YoY +/-%
2022 2021 YoY +/-%
Sales and Marketing expenses
4,019,257
| 4,396,279 |
9.38%
623,076
| 653,982 |
5.0%
General and Administrative expenses
| 1,406,828 |
1,089,599
29.11%
| 208,444 |
168,937
23.39%
R&D expenses
501,377
| 577,859 |
15.25%
77,787
| 85,874 |
10.40%
Financial (income) / expenses
325,796
1,939,422
| 325,796 |
-83.20% 42,
301,307
| 854 |
-85.78%
Profit or Loss from Changes of FairValue
(1,504,832)
597,685
-351.78%
(229,774)
| 93,138 |
-346.70%
Total Net Financial Expenses
1,830,628
| 1,830,628 | 1,341,737 |
36.44% 272,
| 628 | 208,169 |
30.96%
Tax expenses
147,442
380,489
| 147,442 |
-61.25%
59,044
| 22,163 |
-62.46%
Explanations for the change of above expenses:
Note: As noted above and since functional currency of main overseas subsidiaries is the USD, and the Company’smanagement review of the Company’s performance is based on the USD results, following explanations and analysis arebased on USD-denominated numbers.
(1) Sales and Marketing Expenses
In recent years, the Company conducted various corporate development activities, including mergers and acquisitions,which resulted in the inclusion within its sales and marketing expenses of various non-operational, mostly non-cashcharges affecting the Company’s reported numbers amounting to RMB 250 million ($37 million) in the full year of 2022 incomparison to RMB 233 million ($36 million) in 2021. These charges include mainly:
(i) Non-cash amortization charges in respect of Transfer Assets received and written-up related to the 2017ChemChina-Syngenta acquisition. The proceeds from the Divestment of crop protection products in connection withthe approval by the EU Commission of the acquisition of Syngenta by ChemChina, net of taxes and transactionexpenses, were paid to Syngenta in return for the transfer of a portfolio of products in Europe of similar nature andeconomic value. Since the products acquired from Syngenta are of the same nature, and with the same neteconomic value as those divested, the Divestment and Transfer transactions had no net impact on the underlyingeconomic performance of the Company. These additional amortization charges will continue until 2032 but at areducing rate, yet will still be at a meaningful level until 2028; (ii) charges related to the non-cash amortization ofintangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions, with no impact on theongoing performance of the companies acquired.Excluding the abovementioned non-operational charges, the level of selling and marketing expenses reflected the stronggrowth of the business and the contribution of a company acquired in 2021 moderated by the positive impact of exchangerates.
(2) General and Administrative Expenses
The Company continues to maintain strong operating cost discipline. Nevertheless, the higher general and administrativeexpenses are affected by an increase in expenses attributed to company success-based employee compensation andshare-based compensation, as well as the contribution of a company acquired in 2021, moderated by the positive impactof exchange rates.In addition, alongside the many benefits the Company enjoys from the collaboration with other companies in the Syngenta
ADAMA Ltd. Annual Report 2022
Group, most notably in commercial cross-sales as well as in the areas of procurement and operations, ADAMA recordedcertain related expenses.
(3) R&D Expenses
In order to capitalize on future opportunities in the agrochemical market, the Company has intensified its efforts in recentyears to develop a leading pipeline of crop protection products aimed at providing value-added solutions to farmers aroundthe world and build significant positions in a number of strategic market segments, under the strategic plans named “CoreLeap” and “Formulation Mastery” targeted at AIs and formulation technologies respectively. During 2022, Adama launched18 new differentiated products and registered 10 new differentiated products in select countries. The R&D expensesreflected part of the Company’s inputs in innovation, development and registration activities.
(4) Financial Expenses:
“Financial Expenses” alone mainly reflect interest payments on corporate bonds and bank loans as well as foreignexchange gains/losses on the bonds and other monetary assets and liabilities before the Company carries out any hedging.The impact of Financial Expenses (before hedging) is RMB 326 million ($43 million) for 2022 compared with RMB 1,939million ($301 million) for 2021.Given the global nature of its operational activities and the composition of its assets and liabilities, the Company, in theordinary course of its business, uses foreign currency derivatives (forwards and options) to hedge the cash flow risksassociated with existing monetary assets and liabilities that may be affected by exchange rate fluctuations. The impact ofthe hedging transactions which is recorded in “Gains/Losses from Changes in Fair Value” is a net loss of RMB 1,505 million($230 million) in 2022 compared with a net gain of RMB 598 million ($93 million) in 2021.
The aggregate of Financial Expenses and Gains/Losses from Changes in Fair Value (hereinafter as “Total NetFinancial Expenses”), which more comprehensively reflects the financial expenses of the Company in supporting its mainbusiness and protecting its monetary assets/liabilities, amounts to RMB 1,831 million ($273 million) in 2022 compared withRMB 1,342 million ($208 million) in 2021.The higher Total Net Financial Expenses in the full year period were mainly driven by (i) the net effect of the high IsraeliCPI on the ILS-denominated, CPI-linked bonds and (ii) higher hedging costs on exchange rates mainly due to volatility inthe ILS/Dollar exchange rate, partially offset by a non-recurring, non-cash income due to revaluation of the put optionsattributed to minority stakes acquired in 2021.
(5) Income Tax expenses:
In the full year of 2022, the Company recognized a higher deferred tax asset, related to inter-group sales, that led to adecline in the income tax expenses.
ADAMA Ltd. Annual Report 2022
4. R&D Investment
√ Applicable □ Not applicable
Name of Major
R&D Projects
Purpose Progress
Objectivesto be Achieved
Expected Impact onthe FutureDevelopment of theCompanyFungicide project A
AI Production toachieve pipelineincrease andresistancemanagement
In launch phase Process improvement
To increase theCompany’s pipelineand expand futureportfolioFungicide project B
AI Production of afungicide for broadspectrum diseasecontrol
Advanceddevelopment
Tech Transfer
To expand theCompany’s futureportfolioHerbicide project C
AI Production of aselective broadspectrum herbicide
Pre-launch phase Process validation
To expand theCompany’s futureportfolioInsecticide project D
AI Production of abroad spectruminsecticide
In launch phase Process improvement
To expand theCompany’s futureportfolioInsecticide project E
AI Production for cross
spectrum insect control
AI Production for cross
Advanceddevelopment
Tech Transfer
To expand theCompany’s futureportfolio
R&D Personnel
2022 2021 Change (%)
R&D Headcount 277 263 5.32%Ratio to the Total Headcount 3.01% 2.86% 0.15%Composition of Educational Background —— —— ——B.A. 17 11 54.55%M.A. 16 11 45.45%Doctor 5 3 66.67%College 5 1 400.00%
Composition of Age —— ——Under 30 Years Old 5 4 25.00%30 to 40 Years Old 29 18 61.11%Over 40 Years Old 9 4 125.00%Note: The figures under “Composition of Educational Background” and “Composition of Age” represent those of theCompany and the domestic subsidiaries held by it and do not cover the Group’s overseas R&D employees.
ADAMA Ltd. Annual Report 2022
R&D Investment of the Company
2022 2021 Change (%)
R&D Investment (RMB’000) 577,859
501,377
15.25%
Ratio of R&D investment to operating income 1.55%
1.62%
-0.07%
Amount of capitalized R&D investment (RMB’000) -
-
-
Ratio of capitalized R&D investment to total R&D investment -
-
-
Reasons for and effects of significant changes to the composition of the Company's R&D personnel
□ Applicable √ Not applicable
Reason of notable changes over the last year in the ratio of total R&D investment amount to operating income
□ Applicable√ Not applicable
Reason of notable change in the ratio of R&D investment capitalization and its reasonable explanation
□ Applicable √ Not applicable
5. Cash flow
Unit: RMB’000Item 2022 2021 YoY +/-%Subtotal of cash inflows from operating activities
36,575,473
31,178,654
| 36,575,473 |
17.31%
Subtotal of cash outflows from operating activities
35,634,728
26,616,779
| 35,634,728 |
33.88%
Net cash flows from operating activities
940,745
4,561,875
| 940,745 |
-79.38%
Subtotal of cash inflows from investing activities
136,738
40,749
| 136,738 |
235.56%
Subtotal of cash outflows from investing activities
2,797,180
3,424,200
| 2,797,180 |
-18.31%
Net cash flows from investing activities (2,660,442)
(3,383,451)
-21.37%
Subtotal of cash inflows from financing activities
4,632,633
5,690,509
| 4,632,633 |
-18.59%
Subtotal of cash outflows from financing activities
4,688,423
4,853,346
| 4,688,423 |
-3.40%
Net cash flows from financing activities (55,790)
837,163
-106.66%
Net increase in cash and cash equivalents (1,534,227)
1,924,409
-179.72%
Notes of the major effects on the YoY significant changes occurred of the data above
√ Applicable □ Not applicable
Cash flow from Operating Activities: The lower cash flow generated in the full year of 2022 was primarily due to higherpayments to suppliers to support the procurement of inventory.Cash flow from Investing Activities: The cash used in investing activities in the full year of 2022 largely related toinvestments in new production facilities at ADAMA Anpon, investments in intangible assets relating to ADAMA's globalregistrations and cash used for investing in "Core Leap" manufacturing capabilities in Israel and Brazil (Multi-PurposeProduction Site).Cash flow from Financing Activities: The Company has seen an outflow of funds in 2022 due to the realization of loseon hedging positions in respect of the Company's Israeli ILS-denominated bonds, as a result of the weakening of theShekel against the US dollar, which was set off by an increase in loan borrowing to support the high level of purchases.
Notes to the reason of the significant differences between the net cash flow from the operating activities and the net profits
ADAMA Ltd. Annual Report 2022
of 2022 of the Company during the Reporting Period
√ Applicable □ Not applicable
Please refer to the notes provided above under this item.V. Analysis of the non-core business
√ Applicable □ Not applicable
Unit: RMB’000
Amount % of total profit
Explanation Recurrence
Investment income12,683 1.68%NoGain/loss from change of FV(1,504,832) -198.83%
Mainly foreign currency effect onfinancial assets and liabilities(refer to explanation to Financialexpenses above).
NoImpairment of asset325,386 42.99%
on Asset Impairment(Announcement No. 2023-3).
NoCredit impairment loss91,667 12.11%
Please refer to the AnnouncementPlease refer to the Announcement
on Asset Impairment(Announcement No. 2023-3).
NoGain from disposal of assets
Please refer to the Announcement
59,596 7.87%NoNon-operating income58,395 7.72%NoNon-operating loss31,729 4.19%No
VI. List and Analysis of the assets and liabilities
1. List of significant changes of assets
Unit: RMB’000Item
As at 31 Dec. 2022 As at 31 Dec. 2021
% change
Explanation for any major
changeAmount
% change
% of totalassets
Amount
% of total
assets
| % of total | |
Cash at bank and on
hand
4,290,961
Cash at bank and on
7.40% 5,818,835 11.58% -4.18%
Increasing payments forprocurement andinvestments in CIP projects.
Accounts receivable
9,018,375
15.55% 8,362,493 16.65% -1.10%
Inventories 16,927,241
29.19% 11,750,162
23.39% 5.80%
Higher inventory levelsmainly to support expectedfuture sales, in light of
logistic challenges andinventory costs increases.
Investment property
anticipated supply shortages,
3,168 0.01% 3,716 0.01% 0.00%Long term equityinvestments
26,368 0.05% 15,335 0.03% 0.02%
The change is mainly due tothe investment income fromjoint venture and associates.
Fixed assets 8,952,184
15.44% 8,048,389 16.02% -0.58%
Construction inprogress
2,961,401
5.11% 2,143,400 4.27% 0.84%
The change is mainly due toinvestments as part ofupgrade projects.
ADAMA Ltd. Annual Report 2022
Oversea assets account for a higher proportion
√ Applicable □ Not Applicable
Specificcontentsof theassets
Reason
Scale
(Amount) of
the assets
| (Amount) of | |
(RMB’000)
Location
Operation/Management mode
Controlmeasurestoguaranteesafety ofthe assets
Net Profitof theassets(RMB’000)
Proportion ofoversea
s assets
out of
s assetstotal net
assets(%)
Significantimpairm
total netent
risk?
| ent |
Equityinvestmen
Solutions
t in Adama
Acquired
throughMajorAssetsRestructuring
19,853,226
Acquired
Israelandglobally
CorporateGovernance
CorporateGovernance
(18,031) 86% NoOther explanations
N/A
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB’000Item
Openingbalance
Fair valuechange
recognized in
| recognized in | |||
| P&L | |||
Fair value
change
| recognized in | |||
| equity | |||
Purchase
Sale
Otherchange
Closingbalance
Financial asset
| Financial asset | s |
1. Financial assets
measured at FVTPL
financial assets)
1,479
(excluding derivative
-
-
-
-
1,685
2. Derivative financial
assets
243,310
(1,200,368)
(79,497)
| 1,608,741 |
(338,377)
-
233,809
3. Other equity
investments
152,118
-
6,223
-
-
-
158,341
Total financial assets
| Total financial assets |
396,907
(1,200,368)
(73,274)
| 1,608,947 |
(338,377)
393,835
Others 199,815
46,304
-
10,386
(66,904)
-
189,601
| Total of above | |||
596,722
(1,154,064)
(73,274)
| 1,619,333 |
(405,281)
-
583,436
| Financial liabilities | |||
176,206
369,310
-
-
-
-
545,516
Significant changes in the measurement attributes of the main assets in the Reporting Period
□ Yes √ No
Item
As at 31 Dec. 2022 As at 31 Dec. 2021
% change
Explanation for any major
changeAmount
% change
% of totalassets
Amount
% of total
assets
| % of total | |
Rights of use assets
555,889 0.96% 463,915 0.92% 0.04%
Short-term loans 3,342,921
5.77% 874,755 1.74% 4.03%
Additional short-termfinancing.Contract Liabilities 1,776,573
3.06% 1,381,311 2.75% 0.31%
Long-term loans 3,662,870
6.32% 3,498,912 6.97% -0.65%
Lease liabilities 431,076 0.74% 362,086 0.72% 0.02%
ADAMA Ltd. Annual Report 2022
3. Restriction / limitation on asset rights
At the end of the Reporting Period, restricted assets including Company’s bank balance of RMB 65,708,000 as cashdeposit for bills receivable; and other non-current assets of RMB 154,273,000 as deposit for asset securitization and legalsuits.VII. List and Analysis of the investment
1. Overall condition
√ Applicable □ Not applicable
Investment during the Reporting
Period (RMB'000)
Investment during the SamePeriod Last Year (RMB'000)
+/-% YoY15,361,143 18,088,184 -15.1%
2. List of the significant equity investment during the Reporting Period
□Applicable √ Not applicable
3. List of the significant non-equity investments executed during the Reporting Period
□ Applicable √ Not applicable
4. Investment on the financial assets
(1) List investments in securities
□ Applicable √ Not applicable
No such investments were executed during the Reporting Period.
ADAMA Ltd. Annual Report 2022
(2) Investment in derivative financial instruments
√ Applicable □ Not applicable
(1) Investment in Derivative Financial Instruments for Hedging during the Reporting Period
√ Applicable □ Not Applicable
Unit: 000 RMBInvestment Type
Opening
Balance
Profit/loss on fair
Profit/loss on fairvalue changes in
the ReportingPeriod
Cumulative fairvalue changescharged to equity
value changes in
Purchased inthe ReportingPeriod
Sold in theReportingPeriod
Closing
Balance
Percentage of
| investment amount |
divided by net asset
at end of the period
divided by net asset
Option 2,561,394 (470,903) (492,901) 1,908,844 (979,528) 3,490,710 15.10%Forward 14,820,514
(1,098,775) (1,150,101) 13,452,299 (5,408,886) 22,863,927
98.87%
Total 17,381,908
(1,569,678) (1,643,002) 15,361,143 (6,388,414) 26,354,637
113.97%
Explanation of accounting policies andprinciples for
changes compared with last reporting pe-riod
Please refer to section X of this Report, note III. 28.1 for the disclosure of the accounting policies for hedging. There is no change in the ac-counting policies for hedging during the reporting period.Explanations about gain/loss during theReporting Period
The loss during the year was RMB 1,643,002,000 compared to a gain of RMB 413,170,000 last year. The loss was mainly due to ILS devalua-tion of 13% against the USD and the BRL appreciation of 6.5% against USD
Explanations for hedging effect
Despite of the loss incurred from the hedging transactions, the Group has effectively mitigated the impact from the exchange rate fluctuationsduring the year.
Source of fund for the investment Internal.
Risk and control analysis for the Report-ing Period (including but not limited tomarket risk, liquidity risk, credit risk, op-erational 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 applicablebank 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 ISDAagreements.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:
ADAMA Ltd. Annual Report 2022
? The relevant subsidiaries have specific guidelines, under the Group’s policy, which were approved by the subsidiaries' financial statementscommittee of the board, which specifies, in
ranges etc. The only subsidiary that has hedging positions in the Group in the period was Adama Solutions and its subsidiaries.? The relevant subsidiaries apply management designed procedures and controls, which among other things, monitor the working processand 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 ofinvestments during the Reporting Period.
ter alia, the hedging policy, the persons that have the authorization to deal with hedging, the tools,
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 rele-vant transactions are simple (Options and forwards) for short terms. For fair value methodology see section X of this Report, note IX. Fair Value.The exchange rates are provided by the accounting department of the relevant subsidiary and all other parameters are provided by the experts.
should be disclosed in the analysis of fair
Litigation-related situations (if applicable)
N/ADate of disclosure of Board approval (ifany)
December 30, 2017
Date of disclosure of Shareholders’ ap-proval (if any)
N/A
Independent Directors’ opinion on the in-vestment in derivative financial instru-ments and related risk controls
The derivative investments carried by the Company are for hedging and narrowing down the risk of market fluctuations. The inv
estments respond
to the Company’s routine business demands and are in accordance with the relevant laws and regulations. Additional
estments respondly, the Company has adopted
Currency Risk Hedging Policy to strengthen the risk management and control which benefit the Company’s ability to protect aga
ly, the Company has adoptedinst market risk.
The derivative investments do not harm the interests of the Company and its shareholders.
ADAMA Ltd. Annual Report 2022
The company is required to comply with the “Self-regulatory Guidelines for Listed Companies on Shen-zhen Stock Exchange: No. 3 - Disclosure of Industry Information”.The derivative transactions carried out by the Group were mainly through options and forward in order to mitigate thecurrency exposure and the fluctuation in Israeli CPI. For more details, please refer to the section above.
(2) Investment in Derivative Financial Instruments for Speculation during the Reporting Pe-riod
□ Applicable √ Not Applicable
No such situation occurred during the Reporting Period.
5. Use of raised funds
□Applicable √Not applicable
VIII. Sale of significant assets and equities
1. Sale of significant assets
□ Applicable √ Not applicable
No selling of significant assets occurred during the reporting period.
2. Sale of significant equities
□ Applicable √ Not applicable
I. Analysis of major controlling and stock-participating companies
√ Applicable □ Not applicable
List of stock-participating companies responsible for over 10% of the net profits of the Company:
Unit: RMB’000Name
Type
Main services
Registered
capital
| Registered | |
Totalassets
Net assets
Net assetsOperating
revenues
| Operating |
Operating
profit
| Operating | |
Net profit
AdamaSolutions
Net profit
Subsidiary
Development,manufacturing andmarketing ofagrochemicals,intermediatematerials for otherindustries, food
additives and synthetic
aromatic products,mainly for export.
720,085
additives and synthetic
| 48,124,396 | 17,072,777 | 33,110,290 | 165,094 | 15,019 |
Subsidiaries acquired or disposed during the Reporting Period
□Applicable√ Not applicable
ADAMA Ltd. Annual Report 2022
Description of major holding and equity participating companiesDuring the Reporting Period, total sales of Solutions, a wholly-owned subsidiary of the Company, amounted to USD4,925 million, an increase of 12%, driven by 16% higher prices, and further aided somewhat by stronger currencies.Solutions’ full-year net income was USD 8 million in the full year period, lower than the corresponding period last year.For detailed explanation of the performance movement, see above explanation of the Section.
X. List of the structured main entities controlled by the Company
□ Applicable √ Not applicable
XI. Outlook of the Company’s future development
(I) Industry structure and trends
1. The competitive structure of crop protection industry
(1) The competitive structure of the global crop protection industryThe global crop protection market is dominated by seven multinational companies, including the Group, five of whichare originator companies. In the past decade, a number of mergers and acquisitions were completed among the largestplayers in the crop protection industry. Nonetheless, the crop protection industry as a whole is relatively decentralized, witha number of local manufacturers competing in each country against the global multinational companies. The Groupbelieves that entry barriers for the crop protection market are relatively high, although they vary from region to region.ADAMA is a leading company among the crop-protection companies that focus on off-patent crop protection solutions.The Group’s global crop protection market share was approximately 6.5% in 2022, based on preliminary estimation madeby AgBio Investor regarding total sales in the agrochemical industry, and 6.0% in 2021.The Group's competitors are multinational Originator Companies that continue producing and marketing their originalproducts after their patent expiry (“Originator Companies”), as well as other crop protection companies. In the Group'sexperience, in most cases the Originator Company’s market share in a particular product fall to approximately 30% - 70%within a number of years following the expiry of the relevant patent, leaving the remaining market share open to competitionamong off-patent crop protection companies, in addition to their competition with the Originator Company (which continuesmanufacturing the product and even leads its market prices and sales terms).The Group competes with Originator Companies and other international off-patent crop protection companies in allthe markets in which it operates, as these companies generally also have global marketing and distribution networks. Inaddition, there are several smaller Originator Companies that also compete with the Group. As a rule, other off-patent cropprotection companies that do not have international marketing and distribution networks compete with the Group locally inthose geographical markets in which they operate.
(2) The competitive structure of the crop-protection industry in ChinaThe chemicals industry in China, which the Company understands to be the largest in the world, as well as theagrochemicals industry in the country, includes thousands of companies which have invested in manufacturinginfrastructure, most of whose production capacity is currently aimed at exports, intended for sale through small and largecompanies across the world, including companies like the Group and its competitors. The growth in production capacity,on one hand, and the price levels and competitiveness of the products produced in China on the other, affect the structureof competition in the entire industry. However, price levels of the products manufactured in China have risen in recentyears, mainly stemming from the increase of costs relating to environment protection and regulation in China, including byway of limited granting of production permits, shutting down of plants, fines, etc. Active Ingredient prices in China began
ADAMA Ltd. Annual Report 2022
to increase at the end of 2020 due to the recovery of oil prices together with reduced capacities of chemical manufacturescaused by higher raw material costs - a dynamic that has continued throughout 2021. In the beginning of 2022 the pricesof AI peaked, and have since been declining, though maintaining historically elevated levels.
2. The development trends of the crop-protection industryIn the last few years, some new emerging trends that may affect the nature of competition in this sector can beidentified: (1) The market share of products whose patents have expired continues to rise relative to that of patented originalproducts, primarily due to the fact that the rate of patent expiry exceeds that of the launching of new patent-protectedproducts; (2) a trend of some off-patent companies expanding and becoming stronger (inter alia, as a result of corporatemergers and acquisitions as well as product acquisitions), which may lead to them competing with the Group in geographicmarkets in which they have not operated up to now; (3) smaller companies have begun operating, in limited scale, in certainmarkets with relatively low entry barriers; (4) improvement of the agrochemicals industry in China inter alia, increasingmarket entry barriers; (5) price competition in certain markets by multinational Originator Companies and/or increasing thecredit days to its customers; and (6) large mergers and acquisitions among leading companies in the sector.The Group believes that in view of the industry's development trends, the following are critical success factors: (i)reputation, branding, expertise and accumulated knowledge in the sector in the various countries and among customersand suppliers; (ii) financial strength and resilience combined with consistent growth, allowing the Group to realize acorporate development strategy including the potential for mergers and acquisitions with other companies in the sphere,and being able to respond efficiently to attractive business opportunities in order to expand its product portfolio and thescale of its operations; and (iii) access to funding sources and reasonable funding terms allowing the Group to makeinvestments that earn a positive return.(II) Development strategy of the CompanyThe Group strives to be a global leader in the Crop Protection industry, and intends to achieve this aim by executionof the following strategies:
? Utilize the Group’s Differentiated Offering to Strengthen and Grow its Market Position. The Group intends tocontinue to drive the growth of its business through effective commercialization of differentiated, high quality productsthat meet farmers’ needs efficiently. To that end, the Group will leverage its extensive R&D and registration capabilitiesto continue to provide unique yet simple solutions to farmers. In addition, the Group adds value by enhancing thefunctionality and efficacy of the industry’s most successful and commercially proven molecules, by developing new andunique mixtures and advanced formulations. These innovative products are designed to provide farmers with bettersolutions to the challenges they face, including weeds, insects and disease, increasing resistance and insufficient pestcontrol related to the use of genetically modified seeds.Aiming to provide distinct benefit to farmers and enhance the sustainability of the business, in addition to the ongoingefforts to expand existing product registrations to additional crops and regions, a key portion of the Group’s strategyinvolves the deliberate shift of its product offering towards more innovative and value-added solutions. Such solutionsinclude higher-margin, higher-value complex off-patent products, unique mixtures and formulations as well as innovative,novel products that are protected by patents and other intellectual property rights. As evidence of this effort, the Grouphas significantly increased the proportion of unique mixtures and formulations in its R&D pipeline over the last severalyears. Over the coming years, as this shift in the pipeline towards more differentiated and innovative solutions starts tobe reflected in the Group’s commercial offering, it is expected to be a significant driver of growth, both in revenues andin profitability. In this respect, and in order to capitalize on future opportunities in the agrochemical market, the Grouphas intensified its efforts to develop a leading pipeline of crop protection products aimed at providing value-addedsolutions to farmers around the world, based on AIs that are expected to come off-patent in the coming years. Thesenewly off-patent AIs will be developed into new mixtures and formulations, in combination with new formulation anddelivery technologies that provide more efficient ways to deliver the products into the plants, thereby creating truly unique
ADAMA Ltd. Annual Report 2022
and differentiated, value-added solutions to farmers. In this way, the Group strives to achieve a double competitiveadvantage – to be the first to market launching new products after the expiry of the patent on the AI, and to capitalize oncost leadership through increased backward integration through the Group’s global operations capabilities.? Bridge China and the World. The Group is striving to become a leading global crop protection company in China, both
commercially and operationally, and in so doing, to drive its global growth in the future.China is currently the third largest, and one of the fastest growing, agricultural markets in the world. Furthermore, theGroup believes that, over the long term, China has the potential to grow into the world’s largest crop protection market.Also, as the Chinese domestic market is highly fragmented, with limited penetration by the global agrochemicalcompanies, the Group believes that there is a unique opportunity for it to capitalize on the significant untapped potentialof the Chinese market and to gain market share. Moreover, in recent decades, China has become the leadingmanufacturing center for the global crop protection industry - from the sourcing of raw materials and chemicalintermediates to the synthesizing of active ingredients and the formulation of finished products.The Group intends to capitalize on its status in China and its relationship with ChemChina, as well as close collaborationSyngenta Group, to increase its commercial activity in the country, where it is already building additional infrastructure.The Group’s commercial teams are working closely together. Through the commercial collaborations, the Group has anoperational infrastructure and commercial foundation upon which a leading Chinese domestic distribution network hasbeen built, and which the Group believes will make it one of the only global crop protection providers with significantintegrated commercial and operational infrastructures both within and outside of China.Through the combination with Solutions and the collaboration with the Syngenta Group Companies, the Group intendsto achieve cost savings and improved margins and efficiencies through the vertical integration of manufacturing andformulation together with the Group’s global supply chain and logistics capabilities. In addition, the Group’s global R&Defforts are being complemented by a new R&D center in Nanjing to service the Group’s expanded product developmentneeds and enable the introduction of advanced technologies into China and globally. The Group expects to drivesignificant demand for its products by launching new and advanced active ingredients and intermediates with higher R&Dcontent. In addition, the advanced formulation center in Jiangsu Province will serve as a platform to introduce cost-advantaged crop protection solutions into China and globally.The Group expects that its unique positioning and profile in China, including the relationship with Syngenta group andSinochem, should establish it as a partner of choice for companies outside China seeking to access its domestic market,as well as for Chinese companies looking to expand their global footprint. In addition to the combination and thecommercial collaboration, the Group is assessing strategic joint ventures and selected acquisitions to further bolster itscommercial and operational platform in China.? Collaboration of the Company with Syngenta and Sinochem as members of the Syngenta Group. The Companyengaged with Syngenta in collaboration agreements for sale and distribution of finished products, raw materials supply,joint ventures in the fields of procurement, logistics, production and supply chain as well as in the R&D and products’registration fields, in order to reduce costs, to improve processes and to increase the Company’s sales. Suchcollaborations have and are expected to continue to generate additional revenues, accelerate growth and increaseproductivity, for the Group as well as Syngenta Group.? Continue to Strengthen Position in Emerging Markets. In addition to developing its China platform, the Group enjoysstrong and leading positions in key emerging agricultural markets such as Latin America, India, Asia and Eastern Europe,with around half of its global sales achieved in these emerging markets. Over the last several years, in order to establishdirect market access and distribution capabilities in these markets, the Group has successfully integrated acquisitions inColombia, Chile, Poland, Serbia, Romania, the Czech Republic, Slovakia, and South Korea. Similarly, the Group has adirect go-to-market strategy in many high-growth markets around the world, leveraging a direct sales force and drivingdemand at the retail and farmer level. The Group intends to continue to invest in its growth in the key emerging markets
ADAMA Ltd. Annual Report 2022
with high growth potential. The Group’s strong global platform and leading commercial infrastructure in such markets willallow it to capitalize on worldwide growth opportunities, and continue to drive its profitable growth.? Grow Revenues and Increase Profitability. The Group believes that it has the capacity and operational leverage toincrease profitability through focused execution of its strategy within the framework of prudent working capitalmanagement. The Group is aiming to increase its revenues and margins consistently over time as it shifts to a moredifferentiated, higher-margin product portfolio and continues to strengthen its product pipeline with significant number ofhigher-value products, based on AIs which patent protection has just expired, unique mixtures and formulations, as wellas innovative and, in some cases, patent-protected products. Similarly, the Group intends to drive revenue growththrough increased penetration of high-growth markets including China, Brazil and other key markets in Latin America,Asia-Pacific and eastern Europe. The Group believes that its investment in developing an operational footprint in Chinawill lower costs and improve manufacturing efficiency and distribution logistics and reduce inventory requirements inmany markets worldwide.In recent years, the Group has focused on growing and improving its business, infrastructure and brand. Other thaninvestments in the further development of its China operations, the Group believes that its existing global infrastructureis largely of sufficient scale to support higher revenues, allowing it to enjoy economies of scale and continually improveprofitability over time.? Continue to Capitalize on the Global Portfolio Integration and Rebranding Initiative. In 2014 the ADAMA brandwas launched, integrating dozens of legacy brands across the globe to form a single, streamlined sales and distributionentity under a unified brand name. In 2019, following extensive farmer and customer research in 13 major markets, theCompany further evolved its brand, creating a unique and compelling brand story that elevates ADAMA’s distinctentrepreneurial and agile culture; increases its relevance to its customers (channel partners and growers); and furtherdifferentiates the Company from key competitors. The evolved brand positioning, known as “Listen, Learn, Deliver”,focuses on a process of listening to customer needs, bringing insights from the field and combining them with theextensive know-how and experience in the Company; and delivering solutions that meet local farmer and customer painpoints. The Core Leap strategy discussed above provides the platform needed to create distinct mixtures andformulations based on farmer needs. With this new brand positioning the Company is investing in platforms to ensureongoing and intimate farmer and customer interactions which will provide the source for future product and solutionideation.? Strategically Pursue Acquisitions to Enhance Market Access and Strengthen the Product Portfolio. Throughoutits history, the Group has successfully completed and integrated several add-on acquisitions across the globe. The Groupintends to continue to pursue acquisitions, in-licensing agreements and joint ventures that offer attractive opportunitiesto enhance its market access and position, as well as strengthen and further differentiate its product portfolio. The Groupplans to focus these efforts largely in high-growth geographies, particularly in emerging markets where it aims to gainmarket share, as well as access to selected sources of innovation. The Group continues with its track record of makingand integrating selective.(III) 2023 Business planIn 2023, the Company anticipates the global crop protection market to gradually return to normalization. Commodityprices remain elevated, despite declining somewhat, sustaining historically elevated farmer profitability. Despite this, highinventory accumulated in the market, might dampen demand in the first half of the year, until these inventories aredepleted. Overall, the Group is expecting to see moderate revenue growth driven by volume growth and the continuedlaunch of new products. The overall pricing environment is expected to be neutral. However, the extent to which this willmaterialize will be determined by weather conditions, competition in the market and other unforeseeable dynamics.Raw material and Active Ingredient (AI) procurement costs are expected to remain relatively high despite resenteasing in these prices as logistic and supply bottlenecks have elevated.
ADAMA Ltd. Annual Report 2022
The Group aims to continue to exercise discipline in management of its operating expenses, while focusing onimprovement in working capital efficiency and quality of business.In 2023, the Group strives to expand its differentiated offering, specifically with the registrations and launch of productswith proprietary formulations. This will be driven by investment in Innovation, Research and Development, and focusingon all aspects of development of its portfolio – product development, obtaining of registrations, development of advancedformulations and innovative delivery technologies, as well as differentiated mixtures, alongside further investments inchemical R&D.Furthermore, following the completion of the Relocation & Upgrade program in Jingzhou, in the coming year theGroup will continue to focus on the upgrading and relocation of the production facilities in Huai’An, as well as thecontinued build-up of its commercial and operational presence in China.Note: The business plan described above does not constitute a commitment to investors on the Company’sperformance, and the Company suggests that investors should maintain adequate risk awareness therefor, andunderstand the difference between the Company’s business plan and a performance commitment.(IV) Company’s financing and creditThe Group finances its business activities by means of its equity as well as credit from external sources. The primaryexternal financing is by means of long-term bonds issued by Solutions.The Group has additional sources of external funding from: (1) long-term credit from banks and related parties; (2)short-term bank credit as well as non-tradable commercial securities; and (3) supplier credit. In addition, the Group hassignificant cash balances as well as unused set bank credit lines.(V) Risk factors and countermeasures
The Group is exposed to several major risk factors, resulting from its economic environment, the industry and theGroup's unique characteristics, as follows (the order below does not indicate priority):
Exchange rate fluctuationsAlthough the Company reports its consolidated financial statements in RMB, the Company’s material subsidiary Solutionsreports its consolidated financial statements in US dollars, which is its functional currency, while its operations, sales andpurchases of raw materials are carried out in various currencies. Therefore, fluctuations in the exchange rate of the sellingcurrency against the purchasing currency impact the Company’s results. The Group's most significant exposures are tothe Euro, the Israeli Shekel and the Brazilian Real. The Group has lesser exposures to other currencies. The strengtheningof the US dollar against other currencies in which the Company operates reduces the dollar value of such sales and viceversa.On an annual basis, approximately 22% of the Group’s sales are to the European market and therefore the impact of long-term trends on the Euro may affect the Company's results and profitability.Analyses of currency exposure from foreign currency exchange rate fluctuations against assets, liabilities and cash flowdenominated in foreign currencies are done constantly. High volatility of the exchange rates of these currencies couldincrease the costs of transactions to hedge against currency exposure, thereby increasing the Company's financing costs.The Group uses commonly accepted financial instruments to hedge most of its substantial net balance sheet exposure toany particular currency. Nonetheless, since as part of these operations the Group hedges against most of its balance sheetexposure and only against part of its economic exposure, exchange rate volatility might impact the Group’s results andprofitability. As of the date of publication of this Report, the Group has hedged most of its balance sheet exposure.In addition, as the Company’s product sales depend directly on the cyclical nature of the agricultural seasons, thereforethe Company’s income and its exposure to the various currencies is not evenly distributed over the year. Countries in thenorthern hemisphere have similar agricultural seasons and therefore, in these countries, the highest sales are usuallyduring the first half of the calendar year. During this period, the Company is most exposed to the Euro. In the southern
ADAMA Ltd. Annual Report 2022
hemisphere, the seasons are opposite and most of the local sales are carried out during the second half of the year. Duringthese months, most of the Company's exposure pertains to the Brazilian Real.Exposure to Interest rate, Israel CPI and NIS exchange rate fluctuationsThe debentures issued by Solutions, the material subsidiary of the Company, are Israeli Shekel based and linked to theIsrael Consumer Price Index “CPI” and therefore an increase in the CPI and an appreciation of the shekel rate against thedollar might lead to a significant increase in its financing expenses. In addition, high volatility of the exchange rate ofUSD/NIS and expectations of material changes in the inflation rate, may increase the costs of hedging transactions oncurrency exposure, and as a result, may lead to a further increase in the company's financing costs. As of the date ofapproval of the financial statements, Solutions hedged most of its exposure to these risks on an ongoing basis, throughCPI hedging and USD-ILS exchange rate hedging transactions.In addition, inflation in several global markets has a cross effect on the business results of the Group, since on one hand,it contributes to the Group's ability to increase the sale price of its products, but on the other hand, it may increase theGroup's production costs and operating expenses. As of the date of the Report, the Group is unable to isolate the influenceof inflation on its sale prices and its costs. The Group estimates that the cumulative cross influence of inflation does nothave a material effect on to its financial results.Since December 31, 2021, the Group have had dollar denominated liabilities bearing variable London Interbank OfferedRates (LIBOR) interest. As a result, the Group was exposed to changes in the US dollar LIBOR interest rate. The Groupprepares a quarterly summary of its exposure to changes in the relevant interest rate benchmarks (which replaced theLIBOR interest rate) and periodically examines hedging the variable interest rate by converting it to a fixed rate. As part ofthe global reform in interest rate benchmarks, the phasing out of LIBOR (the so-called LIBOR fallback) was scheduled forthe end of 2021. As of January 1, 2022 three global interest rate benchmarks has transitioned to alternative risk-free rateswhile replacing the former benchmark LIBOR: SOFR (USD), ESTR (EUR) and SONIA (GBP). As of the date of publicationof this Report, the Group has not carried out hedging for such exposure, since US dollar interest rates have been relativelystable.In addition, the effect of interest changes on the debt that serves the Group’s working capital is seasonal. Such debt bearsa variable interest, but has no material effect on the Group’s financing expenses. As a result, the net increase in interestrate does not have a material effect on the Group’s business.Business operations in emerging marketsThe Group conducts business - mainly product sales and raw material procurement – inter alia, in emerging markets suchas Latin America (particularly in Brazil, the largest market, country wise, in which the Group operates), Eastern Europe,Southeast Asia and Africa. The Group's activity in emerging markets is exposed to risks typical of those markets, including:
political and regulatory instability; volatile exchange rates; economic and fiscal instability and frequent revisions ofeconomic legislation; relatively high inflation and interest rates; terrorism or war; restrictions on import and trade; differingbusiness cultures; uncertainty as to the ability to enforce contractual and intellectual property rights; foreign currencycontrols; governmental price controls; restrictions on the withdrawal of money from the country; barter deals and potentialentry of international competitors and accelerated consolidations by large-scale competitors in these markets.Developments in these regions may have a significant effect on the Group's operations. Distress to the economies of thesemarkets could impair the ability of the Group's customers to purchase its products or the ability to market them atinternational market prices, as well as harm the Group's ability to collect customer debts, in a way that could have asignificant adverse effect on the Group's operating results.The Group’s operations in multiple regions allows for the diversification of such risks and for the reduction of its dependencyon particular economies. In addition, changes in registration requirements or customers' preferences in developed westerncountries, which may limit the use of raw materials purchased from emerging economies, may require redeployment of the
ADAMA Ltd. Annual Report 2022
Group's procurement organization, which might negatively affect its profitability for a certain period.Operating in a competitive marketThe crop protection products industry is highly competitive. Currently, seven multinational companies, including theCompany, lead the global industry. Five of these, Bayer, Syngenta, Corteva, BASF and FMC, are Originator Companies,which develop, manufacture and market both patent-protected as well as off-patent products. The Group competes withthe original products with the aim of maintaining and increasing its market share.The Originator Companies possess resources enabling them to compete aggressively, in the short-to-medium term, onprice and profit margins, so as to protect their market share. Loss of market share or inability to acquire additional marketshare from the Originator Companies can affect the Group's position in the market and adversely affect its financial results.For details regarding the Group’s competitive advantages see section III - subsection III. Core competitiveness analysisabove.Similarly, the Group also competes in the more decentralized off-patent segment of the market, against other off-patentcompanies and smaller-scale Originator Companies, which have significantly grown in number in recent years and arematerially changing the face of the crop protection industry, the majority of whom have not yet deployed global distributionnetworks, and are only active locally. These companies often price their products aggressively and at times have lowerprofit margins than the Group, which may adversely impact the Group's sales and product prices. The Group's ability tomaintain its revenues and profitability from a specific product in the long term is affected by the number of companiesproducing and selling comparable off-patent products and the timing of their entrance to the relevant market.Any delay in developing or obtaining registrations for products and/or delayed penetration into markets and/or growth ofcompetitors that focus on off-patent active ingredients (whether by the expansion of their product portfolio, grantingregistrations to other manufacturers (including manufacturers in China and India) to operate in additional markets,transforming their distribution network to a global scale or increasing the competition for distribution access), and/ordifficulty in purchasing low cost raw materials, may harm the Group’s sales, affect its global position and lead to priceerosion.Decline in scope of agricultural activities; Climate change and exceptional changes in weather conditionsThe scope of general agricultural activities worldwide may be negatively affected by many exogenous factors, someresulting from climate change, including but not limited to extreme weather conditions, natural disasters, a decrease inagricultural commodity prices, government policies and the economic condition of farmers. A material decline in the scopeof agricultural activities would by necessary implication cause a decline in the demand for the Group’s products, erosionof its prices and collection difficulties, which may have a significant adverse effect on the Group's results. Extreme weatherconditions, both chronic and acute, as well as other damages caused by nature may have an impact on the demand forthe Group's products, as well as to price thereof. For example, drought may reduce the need for fungicides, which couldresult in fewer sales and greater unsold inventories in the market, whereas excessive rain could lead to increased plantdisease or weed growth requiring growers to purchase and use more crop protection products. Drought and/or increasedtemperatures may change insect pest pressures, requiring growers to use more, less, or different insecticides. Climatechange may increase the frequency or intensity of extreme weather such as storms, floods, heat waves, droughts andother events that could affect the demand for the Company’s products. The Group believes, that should extreme weatherconditions or a number of such bad seasons occur in succession, without favorable seasons in the interim, its results maysustain significant harm.Environmental, health and safety legislation, standards, regulation and exposureMany aspects of the Group's operations are strictly regulated, including in relation to production and trading, and particularlyin relation to the storage, treatment, manufacturing, transport, usage and disposal of its products, their ingredients andbyproducts, some of which are considered hazardous. The Group's activities involve hazardous materials. Defective
ADAMA Ltd. Annual Report 2022
storage or handling of hazardous materials may cause harm to human life or to the environment in which the Groupoperates. The regulatory requirements regarding the environment, health and safety could, inter alia, include soil andgroundwater clean-up requirements; as well as restrictions on the volume and type of emissions the Group is permitted todischarge into the air, water and soil.The regulatory requirements applicable to the Group vary from product to product and from market to market, and tend tobecome stricter with time. In recent years, both government authorities and environmental protection organizations havebeen applying increasing pressure, including through investigations and indictments as well as increasingly stricterlegislative proposals and class action suits related to companies and products that may potentially pollute the environment.Compliance with these legislative and regulatory requirements and protection against such legal actions requires the Groupto commit considerable human and financial resources (both in terms of substantial ongoing costs and in terms of materialone-time investments) to meet mandatory environmental standards. In some instances, this may result in delaying theintroduction of products into new markets or in adverse effects on the Group’s profitability. In addition, the toughening,material alteration or revocation of environmental licenses or permits, or their stipulations, or the inability to obtain suchlicenses and permits, may significantly affect the Group's ability to operate its production facilities, which in turn may havea material adverse effect on the financial and business results of the Group. The Group may be required to bear significantcivil liabilities (including due to class actions) or criminal liabilities (including high penalties and/or high compensationpayments and/or costs of environmental monitoring and rehabilitation), resulting from violation of environmental, healthand safety regulations, while some of the existing legislation may impose “strict liability” regime on the Group, i.e. the Groupwill be held liable, regardless of proof of negligence or malice.While the Group invests material sums in adapting its facilities and in constructing special facilities in accordance withenvironmental requirements, it is currently unable to assess with any certainty whether these investments (current andfuture) and their outcomes may satisfy current or future requirements, should these be significantly increased or changed.In addition, the Group is unable to predict with any certainty the extent of future costs and investments it may incur in orderto meet the requirements of the environmental authorities in the relevant countries in which it operates since, inter alia, theGroup is unable to estimate the extent of potential pollutions, their duration, the extent of the measures required to betaken by the Group in handling them, the division of responsibility among other parties and the amounts recoverable fromthird parties.Furthermore, the Group may be the target of bodily injury claims and property damage claims caused by exposure tohazardous materials, which are largely covered under the Group’s insurance policies.
Legislative, standard and regulatory changes in product registrationThe majority of the substances and products marketed by the Group require registration at various stages of theirdevelopment, production, import, utilization and marketing, and are also subject to strict regulatory supervision by theregulatory authorities in each country. Compliance with the regulatory requirements that vary from country to country andwhich are becoming more stringent with time, involves significant time and costs, and rigorous compliance with individualregistration requirements for each product. Noncompliance with these regulatory requirements might materially adverselyaffect the Group’s expenses, cost structure and profit margins, as well as penetration of its products in the relevant market,and may even lead to suspension of sales of the relevant product, and recall of those products already sold, or to legalaction. Moreover, to the extent new regulatory requirements are imposed on existing registered products (requiringadditional investment or leading to the existing registration's revocation) and/or the Group is required to compensateanother company for its use of the latter's product registration data, these might amount to significant sums, considerablyincreasing the Group's costs and adversely affecting its results and reputation. In recent years the industry has beensuffering from revocation of registration for many products around the world. This trend is particularly evident in Europeancountries as well as in many other countries worldwide.
ADAMA Ltd. Annual Report 2022
Nevertheless, the Group believes that, in countries where the Group maintains a competitive edge, any toughening ofregistration requirements may actually increase this edge, since this will make it difficult for its competitors to penetrate thesame market, whereas in countries in which the Group possesses a small market share, if any, such toughening may makefurther penetration of the Group's products into that market more difficult.Product liabilityProduct and producer liability are a risk for the Group. Regardless of their prospects or actual results, product liabilitylawsuits might involve considerable costs as well as tarnish the Group's reputation, thus potentially impacting its profits.The Group has a third-party and defective product liability insurance cover. However, there is no certainty that the scopeof insurance cover is sufficient. Any future product liability lawsuit or series of lawsuits could materially affect the Group’soperations and results, should the Group lose the lawsuit or should its insurance cover not suffice or apply in a particularinstance. In addition, while the Group has not currently encountered any difficulty renewing such insurance policy, it ispossible that it will encounter future difficulties in renewing an insurance policy for third party liability and defective productson terms acceptable to the Group.Successful market penetration and product diversificationThe Group’s growth and profit margins are affected, inter alia, by the extent of its success in developing differentiatedproducts and obtaining registrations for them, so as to enable it to gain market share at the expense of its competitors.Usually, being the first to launch a certain off-patent product affords the Group continuing advantage, even after othercompetitors penetrate the same market. As such, the Group's revenues and profit margins from a certain new off-patentproduct could be materially affected by its ability to launch such product ahead of the launch of a comparable product byits competitors.Should new products fail to meet registration requirements in the different countries or should it take a long period of timeto obtain such registrations, the Group's ability to successfully introduce a new product to the relevant market in the futuremay be affected, since entry into the market prior to other competitors is important for successful market penetration.Furthermore, successful market penetration involves, inter alia, product diversification in order to suit each market'schanging needs. Therefore, if the Group fails to adapt its product mix by developing new products and obtaining therequired regulatory approvals, its future ability to penetrate that market and to maintain its existing market share could beaffected. Failure to introduce new products to given markets and meet Group objectives (given the considerable time andresources invested in their development and registration) might affect the sales of the product in question in the relevantmarket, the Group’s results and margins.Intellectual property rights of the Group and of third partiesThe Group's ability to develop off-patent products is dependent, inter alia, on its ability to oppose patents or patentapplication of Originator Companies or other third parties, or to develop products that do not otherwise infringe intellectualproperty rights in a manner that may involve significant legal and other costs. Originator Companies tend to vigorouslydefend their products and may attempt to delay the launch of competing off-patent products by registering patents onslightly different versions of products for which the original patent protection is about to expire or has expired, with the aimof competing against the off-patent versions of the original product. The Originator Companies may also change thebranding and marketing of their products. Such actions may increase the Group's costs and the risk it entails, and harm oreven prevent its ability to launch new products.The Group is also exposed to legal claims that its products or production processes infringe on third-party intellectualproperty rights. Such claims may involve time, costs, substantial damages and management resources, impair the valueof the Group's brands and its sales and adversely affect its results. Such lawsuits that were concluded involved non-material amounts.Furthermore, although the Group protects its brands and trade secrets with patents, trademarks and other methods of
ADAMA Ltd. Annual Report 2022
intellectual property protection, these protective means may not be sufficient for fully safeguarding its intellectual property.Any unlawful or other unauthorized use of the Group's intellectual property rights could adversely affect the value of itsintellectual property and goodwill. In addition, the Group may be required to take legal actions involving financial costs andresources to safeguard its intellectual property rights.Fluctuations in raw material inputs and prices, and in sales costsSignificant percentage of the Groups’ cost of sales derives from raw material costs. Hence, significant increases ordecreases in raw material costs affect the cost of goods sold, and are, due to the length of the Company’s inventory cycle,generally reflected in the Company’s financials. Most of the Group's raw materials are distant derivatives of oil prices andtherefore, extreme changes or decrease in oil prices may affect the costs of raw materials, although only partially.To reduce exposure to fluctuations in the prices of raw materials, the Group customarily engages in long-term purchasecontracts for key raw materials, wherever possible. Similarly, the Group acts to adjust its sales prices, wherever possible,to reflect the changes in the costs of raw materials.As of the date of approval of the financial statements, the Group has not engaged in any hedging transactions againstincreases in oil and other raw material costs.Exposure due to recent developments in the genetically modified seeds marketAny significant development in the market of genetically modified seeds for agricultural crops, including as a result ofregulatory changes in certain countries currently prohibiting the use of genetically modified seeds, and/or any significantincrease in the sales of genetically modified seeds and/or to the extent new crop protection products are developed forfurther crops that would be widely used (substituting traditional products), will affect demand for crop protection products,requiring the Group to respond by adapting its product portfolio to the new demand structure. Consequently, to the extentthat the Group fails to adapt its product mix accordingly, this may reduce demand for its products, erode their sales priceand by implication affect the Group’s results and market share.Nevertheless, the fact that the Group itself markets some of the products for which herbicide tolerance traits have beendeveloped, acts to mitigate this exposure (albeit only in terms of marketing margins).In addition, natural and/or biological substances that attack weeds, pests and diseases are potential alternatives for theCompany’s products, though as of the date of the report, their efficiency is relatively limited, and they are commercializedin a relatively small volumes.Operational risksThe Group’s operations, including its manufacturing activities, rely, inter alia, on state-of-the-art computer systems. TheGroup continually invests in upgrading and protecting these systems from malfunctions and attack. Any unexpected failureof these systems, as well as the integration of new systems, could involve substantial costs and adversely affect theGroup's operations until completion of the repair or integration. The potential occurrence of a substantial failure that cannotbe repaired within a reasonable time frame may also affect the Group's operations and its results. Currently, the Grouphas a property and loss-of-profit insurance policy.The Group's production capacity is affected, among others, by its facilities’ output and individual area and time allocationat full capacity. The Group's Multi-purpose facilities provide manufacturing flexibility and enable the Group to prepare forthe manufacturing of new products. Although the Group believes that its existing sites have sufficient facilities and landareas to expand its production capacity, if necessary, in the case of immediate or short-term increases in demand for newproducts supply may be delayed due to lack of capacity to meet demand for such new products.Data protection and cyber securityDuring its activity, the Group may be exposed to risks and threats, related to the stability of its information technologiessystems, data protection and cyber security, which could appear in many different forms (such as service denial, misleadingemployees, malfunction, encryption or data erasing and other cyber-attacks via E-mail or malicious software). An attack
ADAMA Ltd. Annual Report 2022
on such computerized systems, mainly network based systems may cause the group material damages and expenses andeven partial suspension and disruption of their proper functioning. In order to minimize the abovementioned risks, the groupinvests resources in its technological resilience and in proper protection of its systems.Raw material supply and/or shipping, port service disruptions and inventoryLack of raw materials or other inputs utilized in the manufacture of the Group’s products may prevent the Group fromsupplying its products or significantly increase production costs. Moreover, the Group imports raw materials to itsproduction facilities worldwide, from where it then exports the technical or formulated products to its subsidiaries aroundthe world for formulation and/or commercialization purposes. Disruptions in the supply of raw materials from regularsuppliers may adversely affect operations until an alternative supplier is engaged. If any of the Group's suppliers are unableto supply raw materials for a prolonged period, including due to ongoing disruptions and/or prolonged strikes and/orinfrastructure defects in the operating of a relevant port, and if the Group is unable to engage with an alternative supplierat similar terms and in accordance with the relevant product registration requirements, this may adversely affect the Group'sresults, significantly affect its ability to obtain raw materials in general, or obtain them at reasonable prices, as well as limitits ability to supply products and/or meet customer supply deadlines. These might negatively affect the Group, its financesand operating results. In order to reduce this risk, it is the Group's practice to occasionally adjust the volume of its productinventories or in certain scenarios, to increase the levels of inventory held by the Company to overcome possible supplyshortages, logistic challenges and increases in cost of inventory, as mentioned above, in order to support expected futuresales. Additionally, in the case of fluctuations in the market prices for inventory held by the Company, this may affect itsfinances and operating results.Failed mergers and acquisitions; difficulties in integrating acquired operationsThe Group's strategy includes growth through mergers, acquisitions, investments and collaborations designed to expandits product portfolio and deepen its presence in certain geographical markets.Growth through mergers and acquisitions requires assimilation of acquired operations and their effective integration in theGroup, including realization of certain forecasts, profitability, market conditions and competition.Failure to successfully implement the above and/or non-realization of the relevant forecasts may result in not achieving theincremental value forecasted, loss of customers, exposure to unexpected liabilities, reduced value of the intangible assetsincluded in the merger or acquisition as well as the loss of professional and skilled human resources.Production concentration in limited plantsA large portion of the Group’s production operations is concentrated in a relatively small number of locations. Naturaldisasters, hostilities, labor disputes, substantial operational malfunction or any other material damage might significantlyaffect Group operations, as a result of the difficulty, the time and investment required for relocating the production operationor any other activity.International taxationMost of the Group’s sales are global, through its consolidated subsidiaries worldwide. These individual companies areassessed in accordance with the tax laws effective in each respective location. The Group’s effective tax rate could besignificantly affected by different classification or attribution of the profits arising from the proportional value of thecomponents of each of the companies in the Group in the various countries, as is recognized in each tax jurisdiction;changes in the characteristics (including regarding the location of control and management) of these companies; changesin the breakdown of the Group's profits into regions where differing tax rates apply; changes in statutory tax rates and otherlegislative changes; changes in assessment of the Group's deferred tax assets or deferred tax liabilities; changes indetermining the areas in which the Group is taxed; and potential changes in the Group's organizational structure.Changes in tax regulations and the manner of their implementation, including with regard to the implementation of BEPS,may lead to a substantial increase in the Group's applicable tax rates and have a material adverse effect on its financial
ADAMA Ltd. Annual Report 2022
position, results and cash flows.The Group’s Financial Statements do not include a material provision for exposure for international taxation, as statedabove.Risks arising from the Group’s debtThe Group finances its business operations by means of its own equity and loans from external sources (primarily tradeddebentures issued by Solutions and bank credit). The Group's main source for servicing the debt and its operatingexpenses is by means of the profits from the Group companies’ operations. Restrictions applying to the Group companiesregarding distribution of dividends to the Group, or the tax rate applicable on these dividends, may affect the Group's abilityto finance its operations and service its debt.In addition, the Group's Finance Documents, as contained in the bank credit agreements, require meeting certain FinancialCovenants. Failure to meet these covenants due to an exogenous event or non-materialization of Group forecasts, andinsofar as the financing parties refuse to extend or update these Financial Covenants as per the Group’s capabilities, maylead the financing parties to demand the immediate payment of these liabilities (or part thereof).Exposure to customer credit risksThe Group’s sales to customers worldwide usually involve customer credit as is customary in each market. A portion ofthese credit lines is insured, while the remainder are exposed to risk, particularly during economic slowdowns in therelevant markets. The Group’s aggregate credit, however, is diversified among many customers in dozens of countries,mitigating this risk. In addition, in certain regions, particularly in South America, credit days are particularly long (comparedto those extended to customers in regions such as Europe), and on occasion, inter alia, owing to agricultural seasons oreconomic downturns in those countries, the Group may encounter difficulty in timely collection of customer debts, with thecollection period being extended over several years.Generally, such issues arise more often in developing countries where the Group may be less familiar with its customers,the collaterals might be in double until actual repayment and the insurance cover of these customers is likely to be limited.Credit default by any of the customers may negatively impact the Group's cash flow and financial results.The Group’s working capital and cash flow needsSimilar to other companies operating in the crop protection industry, the Group has substantial cash flow and workingcapital requirements in the ordinary course of operations. In view of the Group's growth and considering its primary growthregions, the Group’s broad product portfolio and the Group’s investments in manufacturing infrastructures, the Group hassignificant financing and investment needs. The Group acts continually to improve the state and management of its workingcapital. While currently the Group is in compliance with all its financial covenants, significant deterioration of its operatingresults may in the future lead the Group to fail to comply with its financial covenants and fail to meet its financial needs. Asa result, the Group's ability to meet its goals and growth plans, as well as its ability to meet its financial obligations, maybe harmed.Contagious disease outbreakOutbreak of a contagious disease and pandemics, or other adverse public health developments, in territories wheresignificant production activity is taking place or from which raw materials are supplied to a significant extent, may have amaterial adverse effect on the Company’s activity, such that the Company may encounter difficulties with procurement ofraw materials and intermediates, experience a certain decrease of activity within its production facilities due togovernmental instructions, and be constrained with respect to its logistics and supply lines. In addition, the Company salescould be potentially impacted by a temporary decrease in demand for its products, as well as by temporary disruption ofthe Company’s ability to sell and distribute products as mentioned above.
ADAMA Ltd. Annual Report 2022
XII. Information regarding communication with investors during the Reporting Period
√ Applicable □ Not applicable
Date
Place
Receptionmode
Type ofvisitor
Name of the visitor About IndexMarch
th,2022
NotApplicable
Phone CallOthers(Sell-sideanalysts)
CICC, TF Securities,Everbright Securities,West Securities, CITICSecurities, HaitongSecurities, BOCInternational Securities,Guolian Securities,Founders Securities,Dongxing Securities,Sealand Securities,Soochow Securities,Northwest Securities, etc.
Introduction on 2022Q4 and FYperformance. Thecorrespondingpresentation waspublished on thewebsite of theCompany(theInvestors’ RelationsSection onwww.adamaltd.com.cn).
Record of theCommunicationsbetween theCompany and theInvestors (No.2022-01) waspublished by theCompany on April1st, 2022 atwww.cninfo.com.cn
.
March
st,2022
NotApplicable
.
Webcasting
| Institutional |
andindividualinvestors
investors
Introduction on 2022Q4 and FYperformance. Thecorrespondingpresentation waspublished on thewebsite of theCompany (theInvestors’ RelationsSection onwww.adamaltd.com.cn)
Institutional and individual
Record of theCommunicationsbetween theCompany and theInvestors (No.2022-02) waspublished by theCompany on April6th, 2022 at
www.cninfo.com.cn
.
April 28
th
.,
2022
NotApplicable
,
Phone Call Others
(Sell-sideanalysts)
CICC, TF Securities,Everbright Securities,
CITIC Securities, Haitong
Securities, North EastSecurities, OrientSecurities, ChinaSecurities, IndustriesSecurities, HuataiSecurities, SWHYSecurities, and GuolianSecurities, etc.
Introduction on 2022Q1 performance. Thecorrespondingpresentation waspublished on thewebsite of theCompany (theInvestors’ RelationsSection onwww.adamaltd.com.cn)
CITIC Securities, Haitong
Record of theCommunicationsbetween theCompany and theInvestors (No.2022-03) waspublished by theCompany on May5th, 2022 at
www.cninfo.com.cn.
August
th
,2022
NotApplicable
Phone CallOthers(Sell-sideanalysts)
CICC, TF Securities,Everbright Securities,
CITIC Securities, Haitong
Securities, ChinaSecurities, IndustriesSecurities, SWHYSecurities, DongxingSecurities, ZhongtaiSecurities, BOCInternational Securities,GF Securities, andGuosheng Securities, etc.
CITIC Securities, Haitong
Introduction on 2022Q2 and Half-yearperformance.Correspondingpresentation waspublished on thewebsite of theCompany (theInvestors’ RelationsSection onwww.adamaltd.com.cn)
Record of theCommunicationsbetween theCompany and theInvestors (No.2022-04) waspublished by theCompany onSeptember 1st,2022 at
www.cninfo.com.cn.
August
st
,2022
NotApplicable
Webcasting
| Institutional |
andindividual
investors
Introduction on 2022Q2 and Half-yearperformance.
Record of theCommunicationsbetween the
ADAMA Ltd. Annual Report 2022
Date
Place
Receptionmode
Type ofvisitor
Name of the visitor About Indexinvestors Corresponding
presentation waspublished on thewebsite of theCompany (theInvestors’ RelationsSection onwww.adamaltd.com.cn)
Company and theInvestors (No.2022-05) waspublished by theCompany onSeptember 2nd,2022 atwww.cninfo.com.cn.
October
th,2022
NotApplicable
Phone Call Others
(Sell-sideanalysts)
CICC, TF Securities,Everbright Securities,CITIC Securities, ChinaSecurities, IndustriesSecurities, DongxingSecurities, HuataiSecurities, BOCInternational Securities,North East Securities,Orient Securities, HSBCQianhai Securities andGuosen Securities, etc.
Introduction on 2022Q3 and 9Mperformance.Correspondingpresentation waspublished on thewebsite of theCompany (theInvestors’ RelationsSection onwww.adamaltd.com.cn)
Record of theCommunicationsbetween theCompany and theInvestors (No.2022-06) waspublished by theCompany onOctober 31st, 2022atwww.cninfo.com.cn
| . |
October
th,2022
NotApplicable
Webcasting
| Institutional |
andindividualinvestors
Institutional a
investors
Introduction on 2022Q3 and 9Mperformance.Correspondingpresentation waspublished on thewebsite of theCompany (theInvestors’ RelationsSection onwww.adamaltd.com.cn.
nd individual
Record of theCommunicationsbetween theCompany and theInvestors (No.2022-07) waspublished by theCompany onNovember 1st,2022 at
www.cninfo.com.cn.
ADAMA Ltd. Annual Report 2022
Section IV - Corporate GovernanceI. Basic details of corporate governance
During the Reporting Period, the Company continuously improved the awareness of corporate governance and corporategovernance structure and perfected the corporate system as well as standardized the operation of the Company, promotedinternal control activities, and constantly improve the Company's management levels stringently according to requirementsof relevant laws and regulations, such as the Company Law, Securities Law, and Corporate Governance Principle of ListedCompany, as well as Rules for Listing Shares in Shenzhen Stock Exchange.
1. About Shareholders and the Shareholders’ meeting
During the Reporting Period, the Company has ensured that all shareholders, especially small and medium shareholders,are treated equal and able to fully exercise their rights. It held one annual general meeting of shareholders and one interimshareholders meeting, during which 10 proposals in total were reviewed and approved. Lawyers were invited to attend allthe meetings mentioned above for testimony and issuing legal opinions. Online voting has been applied during all above-mentioned meetings to ensure that all shareholders, especially small and medium shareholders, enjoy equal status andfully exercise their rights. Notices of shareholders' meeting, meeting proposals, discussion procedures, voting on proposalsand information disclosure all meet the requirements. Every major decision of the Company has been decided by theshareholders' meeting according to laws and regulations with lawyers as the witness to ensure that the right to know, toparticipate and vote on major issues of all shareholders, especially the small and medium shareholders are properlyprotected.
2. About Directors and the Board of Directors
During the Reporting Period, the number, composition and qualifications of the board of directors were in compliance withthe laws and regulations as well as the Articles of Association of the Company. All board members are diligent andresponsible for attending the board and shareholders’ meetings in accordance with the relevant provisions of the CompanyLaw and the Articles of Association. During the Reporting Period, the Company held 10 board meetings during which 27proposals were reviewed. The organizing, convening and formation of resolutions were carried out in accordance withrelevant provisions of the Articles of Association and the Rules of Procedure for the Board of Directors. The Company hasestablished an independent director system in accordance with relevant regulations. Each of the independent directorshave expressed independent opinions on important business of the Company during the Reporting Period. The Company'sboard of directors consists of one strategy committee, one nomination committee, one audit committee and oneremuneration and appraisal committee, all of which are functioning with respective implementation rules to ensure thescientific and compliant decision-making by the board of directors.
3. About Supervisors and the Board of Supervisors
During the Reporting Period, the board of supervisors of the Company consisted of three supervisors. The number,composition and qualifications of the Board of Supervisors were in compliance with laws and regulations as well as theArticles of Association of the Company. During the Reporting Period, four meetings were held and 10 proposals werereviewed. All meetings were organized and convened in accordance with the procedures of the Articles of Association andthe Rules of Procedure for the Board of Supervisors. All supervisors have earnestly performed their duties by reviewingthe company's periodic reports and other matters and issuing verification opinions with a strong sense of responsibilitiesto the shareholders. All of them have effectively fulfilled their duties and safeguarded the legitimate rights and interests ofthe Company and its shareholders.
4. About Investors’ Relations
ADAMA Ltd. Annual Report 2022
The Company communicates with investors through public announcements, consultations by telephone, interactiveplatforms, e-mails and other multiple media to enhance opinion exchange. It has been making various efforts on deepeningthe understanding of investors about the Company's operation and development outlook and also maintaining goodrelations with them. Meanwhile, it has been serious to receive investors' opinions and suggestions and encouraged theinteraction between investors and itself. During the Reporting Period, the Company has been patient to respond investorsby answering calls and questions through all interactive platforms, which has guaranteed a sound and fair access forinvestors to obtain information.Whether there is any difference between the actual corporate governance situation of the Company and the provisions ofthe laws, administrative regulations and relevant rules of CSRC or not?
□ Yes √ No
There is no difference between the actual corporate governance situation of the Company and the provisions of the relevantrules of CSRC.II. Particulars about the Company’s independence from the controlling shareholder
and the actual controller in ensuring the company’s assets, personnel, financials,institutions and business, etc.
1. In respect of assets: The assets relationship between the Company and the controlling shareholder is clear. Thecompany has complete control over all its assets. There is no such thing as a free possession or usage by the controllingshareholder.
2. In respect of personnel: The Company and controlling shareholder are mutually independent in the labor, personnel andsalary management, the Company CEO and other senior management personnel get the salary in the Company, and notperform administrative work in the controlling shareholder unit.
3. In respect of financing, the Company owned independent financial department, established independent accountingsystem and financial management system, opened independent bank account, paid tax in line with laws.
4. In respect of organization, the Company has set up the organization that was independent from the controllingshareholder completely, the Board of Directors, the Supervisory Committee and internal organization could operateindependently.
5. In respect of business: the Company had a complete business system and independent operation, and conducts itsindependent and complete business with self-management ability.
ADAMA Ltd. Annual Report 2022
III. Horizontal competition
√ Applicable □ Not applicable
Type Type of
Affiliationwith theCompany
Name oftheCompany
Nature of theCompany
Cause of theproblem
Solutions Work-
scheduleand follow-up planHorizontalcompetitionand relatedpartytransactions
ultimatecontrollingparty oftheCompany’scontrolling
shareholder
SinochemHoldingsCorporationLtd.
Centralenterprise
Thesubsidiariescontrolled bySinochemHoldings arein similar orthe samebusiness asthe Companyor thesupplier orthe client ofthe Company.
Sinochem Holdingscommits itself to takeappropriate actions tosolve the horizontalcompetition and relatedparty transactionsbetween its subsidiariesand the Company. Fordetails, please refer to IPerformance ofcommitments of SectionVI of the Annual Report.
In process/performance.
IV. Particulars regarding the annual shareholders’ general meeting and special
shareholders’ general meetings held during the Reporting Period
1. Particulars regarding the shareholders’ general meeting during Reporting Period
Session Type
Proportion of
investors'participation
Convening date
Disclosuredate
Resolution
1st InterimShareholdersMeeting in 2022
InterimShareholders
Meeting
1.66%
January 10,
2022
January 11,
2022
Announcement on theResolutions of 1st InterimShareholders Meeting in 2022
(Announcement Number:
2022-3).Disclosed at the websiteCNINFO www.cninfo.com.cn
2021 AnnualShareholdersMeeting
AnnualShareholders
Meeting
82.06% April 21, 2022
April 22, 2022
Announcement on theResolutions of 2021 Annual
General Meeting(Announcement Number:
2022-17).Disclosed at the websiteCNINFO www.cninfo.com.cn
2. Special Shareholders’ General Meeting applied by the preferred stockholder with restitution ofvoting right
□ Applicable √ Not applicable
ADAMA Ltd. Annual Report 2022
V. Directors, Members of the Supervisory Board, Senior Management Staff &
Employees
1. Basic Information
ADAMA Ltd. Annual Report 2022
Name Position
OfficeStatus
Gender
Age
Beginningdate ofoffice term
Ending
date ofofficeterm
Shares
Endingheld at the
year-begin(share)
held at the
Amount of
shares
increased at
theReporting
Period(share)
Amount of
sharesdecreased at
increased atthe Reporting
Period (share)
the Reporting
Otherchangesincrease/
decrease
(share)
Shares held
Shares heldat the end of
theReportingPeriod(share)
Reasons fortheShareholdingChangesErik Fyrwald
at the end of
Chairman
of the BOD
In Office Male 64
April 9, 2020
0 0 0 0 0
N/AChenLichtenstein
Director In Office Male 55
Sep 29,2017
0 0 0 0 0
N/AAn Liru Director In Office Male 53
Apr 29, 2015
0 0 0 0 0 N/AXi Zhen
IndependentDirector
In Office Male 59
Dec 25,2017
0 0 0 0 0
N/AGe Ming
IndependentDirector
In Office Male 71
Nov 16,2020
0 0 0 0 0
N/AIgnacioDominguez
President &CEO
In Office Male 63
March 1,2020
0 0 0 0 0
N/AEfrat Nagar
Chief Financial
Officer
In Office Female
| Chief Financial | ||
Feb 16,
2023
0 0 0 0 0
N/AJiangChenggang
Chairman of
theSupervisory
Board
In Office Male 48
Jan 6, 2013
6,000 0 0 0 6,000
N/A
Liu Jianhua
Member of the
Supervisory
Board
In Office Male 44
Member of the
May 21,
2021
0 0 0 0 0
N/A
Yuan Yuan
Member of the
Supervisory
In Office Male 42
Member of the
May 21,
2021
0 0 0 0 0
N/A
ADAMA Ltd. Annual Report 2022
Name Position
OfficeStatus
Gender
Age
Beginningdate ofoffice term
Ending
date ofofficeterm
Shares
Endingheld at the
year-begin(share)
held at the
Amount ofshares
increased at
theReportingPeriod(share)
Amount ofsharesdecreased at
increased atthe Reporting
Period (share)
the Reporting
Otherchangesincrease/
decrease
(share)
Shares held
Shares heldat the end of
theReportingPeriod(share)
Reasons fortheShareholdingChangesBoardGuo Zhi
Secretary ofthe BOD
In Office Male 45
at the end of
Nov 27,2020
0 0 0 0 0
N/AShaharFlorentz
Chief Financial
Officer
Demission
| Chief Financial | ||
Male 58
May 1, 2022
Feb 15,
2023
0 0 0 0 0
N/AMichalArlosoroff
Feb 15,General Legal
Counsel
Demission
| General Legal | ||
Female
Sep 29,2017
Jan 1,2023
0 0 0 0 0
N/ATotal -- -- --
-- -- 6,000 0 0 0 6,000 --
ADAMA Ltd. Annual Report 2022
VI. Whether there was any departure of directors and supervisors and dismissal of
senior management during the reporting period
√ Yes □ No
1. Ms. Michal Arlosoroff resigned as the General Legal Counsel of the Company, effective from January 1st, 2023, due toretirement.
2. On February 15, 2023, the Board received notice from Mr. Shahar Florentz informing the Company of his resignation asthe Chief Financial Officer (“CFO”) due to personal reasons. Mr. Shahar Florentz’s resignation came into effect upon thereceiving of the above notice by the Board. Following his resignation, Mr. Shahar Florentz ceased to hold any position inthe Company and its wholly-owned subsidiary, ADAMA Solutions. For details, please refer to the Announcement on theChange of the Chief Financial Officer (Announcement No. 2023-5).
VII. Particulars regarding changes of Directors, Supervisors and Senior Executives
√ Applicable □ Not applicable
Name Position Type Date ReasonShaharFlorentz
Chief Financial Officer
Left the position Feb 15, 2023
Resignation for personal reasonsMichalArlosoroff
General Legal Counsel
Left the position Jan 1, 2023 RetirementEfrat Nagar Chief Financial Officer
Accepted the position
Feb 16, 2023
--
2. Resumes of important personnel
Professional background, main working experience and main responsibilities of current directors, supervisors and seniormanagement staff
Mr. Erik Fyrwald, American, serves as the Chairman of the Board of Directors of the Company. He is currently the CEOof Syngenta Group, CEO and Executive Director of Syngenta A.G. and Chairman of Syngenta Foundation for SustainableAgriculture. He currently also serves on the board of directors of CropLife International, the Swiss-American Chamber ofCommerce and the listed entities Bunge Limited and Eli Lilly & Company. Previously served as President and CEO ofUnivar, a leading distributor of chemistry and related services, President of Ecolab, a cleaning and sanitation, watertreatment, and oil and gas products and services provider, and Chairman, President and CEO of Nalco, a water treatmentand oil and gas products and services company, and Group Vice President of the Agriculture and Nutrition Division of theDuPont Company. He graduated from the University of Delaware with a bachelor's degree in Chemical Engineering andcompleted the Advanced Management Program at Harvard Business School.
Mr. Chen Lichtenstein, Israeli, serves as a Director of the Company and its wholly-owned subsidiary, Adama Solutions,CFO of the Syngenta Group (with responsibility also for Strategy, Integration and Productivity), and its wholly-ownedsubsidiary - Syngenta AG and a member of the Board of directors of the Israeli Democracy Institute, and Member of theBoard of Trustees of Tel Aviv University. He holds joint doctoral degrees from Stanford University's Graduate School of
ADAMA Ltd. Annual Report 2022
Business and School of Law, and B.Sc. (Physics) and LL.B. from the Hebrew University of Jerusalem. He previously servedas the President & CEO of the Company and its wholly-owned subsidiary, Adama Solutions, after holding several executivepositions in the Company (Deputy CEO, running global operations and heading corporate development and capital marketactivities) and serving as the President & CEO of China National Agrochemical Corporation (CNAC), Syngenta Group’sparent.
Mr. An Liru, serves as a Director of the Company. He holds a master degree of chemical engineering and MBA, seniorengineering, senior economist. He used to be the Assistant of General Manager, Vice General Manager, General Manager,Deputy Party Secretary of Jiangsu Anpon Electrochemical Co., Ltd., Chairman of Directors, Party Secretary of JiangsuHuaihe Chemicals Co., Ltd., Executive Director and CEO of Jiangsu Maidao Agrochemical Co., Ltd., the Chairman of theBoard of Directors of the Company, Executive Director of Jiangsu Anpon Electrochemical Co., Ltd., Chairman of Directorsand Party Secretary of China National Agrochemical Co., Ltd. Currently, he serves also as a Director and the Senior VicePresident of Solutions, Executive Director and General Manager of Adama (China) Investment Co., Ltd., Vice president ofSyngenta Group Modern Agricultural Technology Co., Ltd.
Mr. Ge Ming, serves as an independent director of the Company. He holds a master’s degree in western accounting, andhe is a senior accountant, a certified Chinese public accountant as well as an Australian certified public accountant. Hepreviously served as the chairman and chief accountant of Ernst & Young Hua Ming Certified Public Accountants Firm, andas the managing partner, chief accountant and senior advisor of Ernst & Young Hua Ming Certified Public Accountants(special general partnership). Mr. Ge currently serves as an independent director on the boards of AsiaInfo and ChinaTourism Group Duty Free Corporation Limited. He currently also serves on the supervisory boards of the Bank of Shanghai,Tencent Foundation, and serves as the executive director and general manager of Beijing Huaming Fulong AccountingConsulting Co., Ltd.
Mr. Xi Zhen, serves as an independent director of the Company. He holds a professor degree and a doctor of BioorganicChemistry degree. Mr. Xi was Assistant Professor in Hubei Medical School which is currently the Wuhan University Schoolof Medicine from 1983 to 1985, was Engineer in Beijing Institute of Chemical Reagents from 1988 to 1990, was a ResearchAssociate in Department of Biological Chemistry and Molecular Pharmacology of Harvard Medical School from 1997 to2001. Mr. Xi is currently Cheung Kong Scholar of Pesticide Science of the Ministry of Education of the PRC, Chairman ofDepartment of Chemical Biology, Professor of Chemistry and Chemical Biology, Fellow of the University Committee ofNankai University in China, and Director of National Pesticide Engineering Research Center (Tianjin). Mr. Xi is also aCommittee Member of Chinese Chemical Society and Deputy Director of its Division of Chemical Biology, Deputy Directorof the Pesticide Science Division of Chinese Chemical Industry and Engineering Society. In addition, he is a director ofSuzhou Ribo Life Science Co., Ltd.
Mr. Ignacio Dominguez, Spanish, serves as the President & Chief Executive Officer of both the Company and AdamaSolutions, concurrent with his position as Chairman of the Board of Directors of Adama Solutions. He was the CCO ofSolutions and has been with Solutions for more than a decade. Prior to joining Solutions, Ignacio held various managementpositions in companies such as Syngenta and American Cyanamid, boasting more than 20 years of experience in theagrochemical industry. He holds a master's degree in physics from Complutense University of Madrid.
Ms. Efrat Nagar, Israeli, serves as the Chief Financial Officer. She holds master’s degree in business administration (focusin Finance) from Bar Ilan University, Israel and bachelor's degree in Economics and Accounting from Bar Ilan University,Israel. She previously served as Regional CFO of India, Middle East and Africa, Executive Corporate Business Director
ADAMA Ltd. Annual Report 2022
(serving as the Chief of Staff for ADAMA’s CEO) and VP Finance in ADAMA.
Mr. Jiang Chenggang, serves as the Chairman of the Supervisory Board of the Company. He served as a Deputy Directorof the Office and Deputy Secretaries of the Discipline Inspection Commission of the Company; acted as the Chairman ofthe Labor Union, Supervisor, Deputy Director of the Office and Deputy Secretaries of the Discipline Inspection Commissionof the Company from Jun. 2012 to Dec. 2012; has been acting as the Deputy Party Committee Secretary of JingzhouSanonda Holdings Co., Ltd. and Secretary of the Discipline Inspection Commission of the company since January 2017;and he has been the Chairman of the Labor Union, Supervisor and Secretaries of the Discipline Inspection Commission ofthe Company since Jan. 2013.
Mr. Liu Jianhua, Doctor of Engineering, serves as a member of the Supervisory Board of the Company and as the NonAg Business Manager of ADAMA China. He previously served as the GM Assistant of Hubei Sanonda Co. Ltd., as theCOO of Jiangsu Anpon Electrochemical Co., Ltd., and as the member of CPC Committee of China National AgrochemicalCorporation.
Ms. Yuan Yuan, serves as a member of the Supervisory Board of the Company and as Strategy & Business Manager ofADAMA China. She obtained a bachelor’s degree of international trade from Zhongnan University of Economics and Lawand a master degree of business administration from University of International Business and Economics. Before joiningADAMA，she served as Deputy and Executing Director of Commerce Dept. in China National Agrochemical Corporation.
Mr. Guo Zhi, serves as the secretary of the Board of Directors and the legal head of ADAMA China. Mr. Guo got hisMaster of Laws severally from Peking University and Melbourne University. From 2004 to 2017, he practiced law inCommerce & Finance Law Offices (“C&F”) and had been a partner of C&F for eight years. His practicing area coversIPO, M&A, and Foreign Investment. From March 19, 2018 to November 16, 2020, he was a member of the SupervisoryBoard of the Company.
Positions in shareholder units
√ Applicable □ Not applicable
personholding anypost in any
Name of theshareholder
unit
Name of theshareholder unit
Position in theshareholder unit
shareholderBeginning date
of office term
| Beginning date | |
Ending date
of office term
Receivespayment from
| the shareholder |
unit?ErikFyrwald
Syngenta Group CEO January 2020 -- NoSyngenta AG
CEO and ExecutiveDirector
June 2016 -- YesChenLichtenstein
Syngenta Group CFO March, 2020 -- YesSyngenta AG CFO March, 2020 -- Yes
aboutPositions inShareholderUnits
N/A
ADAMA Ltd. Annual Report 2022
Positions in other units
√ Applicable □ Not applicable
Name of the
personholding anypost in anyshareholderunit
Name of other unit
Position in otherunit
Beginningdate of office
term
Ending dateof office term
Receivespayment fromthe other unit?
Erik Fyrwald
CropLife International
Director of theBoard
2016
-
NoSwiss-American Chamber ofCommerce
Director of theBoard
2016
-
NoBunge Limited
Director of theBoard
2018
-
YesEli Lilly & Co.
Director of theBoard
2005
-
YesChenLichtenstein
Solutions Director October 2017
-
Yes (as ofMarch 1, 2020)
ChenLichtenstein
The Israeli democracy institute
Director of theBoard
- NoChenLichtenstein
Friends of Tel Aviv University
Member of theBoard of Trustees
- NoAn Liru Solutions Director February 2014
- YesAn Liru Solutions
Head of ChinaCluster
September2017
- YesAn Liru
Adama (China) Investment Co.,Ltd.
General Manager November 2018
- NoAn Liru
Adama (China) Investment Co.,Ltd.
Executive Director
December 2022
- NoAn Liru
Adama (China) Investment Co.,Ltd.
Director November 2018
December2022
NoAn Liru
Adama (Beijing) AgriculturalTechnology Co., Ltd.
Chairman ofDirectors
November 2018
September2022
NoAn Liru
Adama Agrochemical (Jiangsu)Co., Ltd.
Chairman ofDirectors
June 2017
September
2022
NoAn Liru
Syngenta Group ModernAgricultural Technology Co., Ltd.
Vice President August 2022
- NoEfrat Nagar
Solutions
EVP, ChiefFinancial Officer
February 2023
-
Yes
Agan Aroma and Fine Chemicals
Ltd.
Director May 2022
-
NoGe Ming
China Tourism Group Duty FreeCorporation Limited
IndependentDirector
August 2022
Agan Aroma and Fine Chemicals
-- YesGe Ming AsiaInfo
IndependentDirector
December 2018
-- YesGe Ming Bank of Shanghai Supervisor June 2017 -- YesGe Ming Bank of Suzhou Supervisor July 2017
December
2022
YesGe Ming Tencent Foundation Supervisor Jan 2019 -- NoGe Ming
Beijing Huaming FulongAccounting Consulting Co., Ltd.
Executive Directorand GeneralManager
December 2001
-- NoXi Zhen Nankai University
Professor,Chairman of
August 2002
-
Yes
ADAMA Ltd. Annual Report 2022
Name of thepersonholding anypost in anyshareholder
unit
Name of other unit
Position in otherunit
Beginningdate of officeterm
Ending dateof office term
Receivespayment fromthe other unit?
Department ofChemical Biology,Fellow of theUniversityCommitteeXi Zhen
National AgrochemicalEngineering Research Center(Tianjin)
Director May 2014
-
NoXi Zhen
Division of Chemical Biology ofChinese Chemical Society
Deputy Director January 2015
-
NoXi Zhen
Agrochemical Science Divisionof Chinese Chemical Industryand Engineering Society
Deputy Director November 2014
-
NoXi Zhen
Suzhou Ribo Life Science Co.,Ltd.
Director January 2007
-
NoJiangChenggang
Jingzhou Sanonda Holdings Co.,
Ltd.
Deputy PartySecretary,Secretary of theDisciplineInspectionCommission
January 2017
Jingzhou Sanonda Holdings Co.,
-
NoLiu Jianhua
Hubei Sanonda Foreign TradeCo., Ltd.
Executive Director
June 2021
-
NoLiu Jianhua
Jiangsu Anpon InternationalTrading Co., Ltd.
Executive Director
April 2021
-
NoExplanationsaboutPositions inOther Units
N/AParticulars regarding the Company's current directors, supervisors and senior managers who received punishments, if any,from Securities Regulatory Institution during the recent three years (including the Reporting Period)
□ Applicable √ Not applicable
3.Remuneration of directors, supervisors and senior managementDecision-making procedures, basis for determination and actual payment of the remuneration to directors,supervisors and senior executivesRemuneration of office holders is decided by the authorized organs of the Company according to the Remuneration Policy.In addition, global professional benchmarks, implementations of performance at the Company level, and the actualperformance of the respective person are also taken into account in the resolutions regarding remuneration.Independent directors are entitled to receive annual allowance and would not receive salary by the Company. TheCompany also adopted a remuneration plan of the non-independent directors. A non-independent director who holds amanagement position in the Company and/or any of its subsidiaries, shall receive the remuneration set for such position
ADAMA Ltd. Annual Report 2022
and will not be entitled to any additional remuneration for serving as a director; A non-independent director who doesn’thold a management position in the Company or any of its subsidiaries, may receive a monthly remuneration. For details,please see the Announcement of the Resolutions of 25
th
meeting of the 7
thSession of the Board of Directors(Announcement no. 2018-5) and the Announcement of the Resolutions of 21
st meeting of the 8
thSession of the Board ofDirectors (Announcement no. 2020-7).Internal supervisors, who are full-time employees of the Company (or any of its subsidiaries), will be entitled to receive aremuneration set for their posts and will not be entitled to any additional remuneration for serving as supervisors.External supervisors, who are not employees of the Company (or any of its subsidiaries), will be entitled to receive annualallowance and would not receive salary by the Company.For details, please see the Announcement of the Resolutions of 4
th meeting of the 8
thSession of the Board of Supervisors(Announcement no. 2018-25).Total remuneration of the directors, supervisors and senior management of the Company during the Reporting Period isas follow:
Unit RMB’0000
Name Position Gender
Age
Current/Former
Total before-taxremunerationgained fromthe Company
Whether gainedremunerationfrom the relatedparties of theCompanyErik Fyrwald Chairman of the BOD Male 64 Current YesChenLichtenstein
Director Male 55 Current YesAn Liru Director Male 53 Current NoGe Ming Independent Director Male 71 Current NoXi Zhen Independent Director Male 59 Current NoIgnacioDominguez
President & CEO Male 63 Current NoJiangChenggang
Chairman of the
Supervisory Board
Male 48 Current NoLiu Jianhua
Member of theSupervisory Board
Male 44 Current NoYuan Yuan
Member of theSupervisory Board
Female
42 Current NoGuo Zhi Secretary of the BOD
Male 45 Current NoShaharFlorentz
Chief Financial Officer Male 58 Former NoMichalArlosoroff
General Legal Counsel
Female
64 Former NoTotal 11,806
ADAMA Ltd. Annual Report 2022
VIII. Performance of Directors of the Board during the Reporting Period
1. Particulars regarding the Board meeting during Reporting PeriodSession Convening date
Disclosure date
Resolutions of the Meetingthe 8th Meeting of
the 9th Session of
the Board ofDirectors
March 23, 2022
--
The Board discussed the 2021 annual report and relatedmatters. No resolution was made.
the 9th Meeting of
the 9th Session of
the Board ofDirectors
March 29, 2022
March 31, 2022
The following resolutions were deliberated and adopted:
1. Proposal on the 2021 Annual Report and its Abstract
2. Proposal on the 2021 Financial Statements
3. Proposal on the Pre-Plan of the 2021 Dividend Distribution
4. Proposal on the Self-Assessment report on the 202
1 Internal
Control of the Company
1 Internal
5. Proposal on the 2021 Working Report of the Board of
Directors
5. Proposal on the 2021 Working Report of the Board of
6. Proposal on the 2021 Risk Appraisal Report of ChemChina
6. Proposal on the 2021 Risk Appraisal Report of ChemChinaFinance Co., Ltd. and the 2021 Risk Appraisal Report of
Sinochem Finance Co., Ltd.
7. Proposal on the Remuneration of Senior Executives
Finance Co., Ltd. and the 2021 Risk Appraisal Report of
8. Proposal on the Engagement with an Audit Firm for the Audit
8. Proposal on the Engagement with an Audit Firm for the Audit
of the Financial Statements and Internal Control of the
Company for 2022
of the Financial Statements and Internal Control of the
9. Proposal on Bank Loans for the Working Capital of Jingzhou
Site
10. Proposal on
9. Proposal on Bank Loans for the Working Capital of Jingzhou
Providing Guarantees in Favor of the
Company’s Subsidiaries
Providing Guarantees in Favor of the
11. Proposal on the Expected Related Party Transactions in the
Ordinary Course of Business in 2022
11. Proposal on the Expected Related Party Transactions in the
12. Proposal on the Special Report on the Deposit and Actual
Use of the Raised Funds in 2021
13. Proposal on Calling for the 2021 Annual General Meeting
12. Proposal on the Special Report on the Deposit and Actual
14. Proposal on Revisions to the Information Disclosure
Management Rules of ADAMA Ltd.
14. Proposal on Revisions to the Information Disclosure
15. Proposal on Revisions to the Insider Registration
Management Rules of ADAMA Ltd.
16. Proposal on Revisions to the Related-
15. Proposal on Revisions to the Insider Registrationparty Transactions
Management Rules of ADAMA Ltd.
party Transactions
17. Proposal on the Disposal of Assets located at the
Company’s Huai’an SiteAfter the review of the above proposals, 2021 Working Reports
17. Proposal on the Disposal of Assets located at the
of the Independent Directors were presented to the meeting.the 10th Meetingof the 9th Sessionof the Board ofDirectors
April 11, 2022 April 12, 2022
The following resolution was deliberated and adopted:
| 1. Proposal on the Appointment of the Company’s Chief |
Financial Officer
the 9th Session ofthe Board ofDirectors
April 25, 2022 --
The Board discussed the Q1 2022 report and related matters.
No resolution was made.the 12th Meetingof the 9th Sessionof the Board ofDirectors
April 27, 2022 April 28, 2022
the 11th Meeting of
The following resolutions were deliberated and adopted:
1. Proposal on the Q1 2022 Report
2. Proposal on the Management Measures for the Delegation
2. Proposal on the Management Measures for the Delegationof Certain Powers of the Board of Directors to the Chief
ADAMA Ltd. Annual Report 2022
Session Convening date
Disclosure date
Resolutions of the MeetingExecutive Officer of ADAMA Ltd.the 13th Meetingof the 9th Sessionof the Board ofDirectors
August 22, 2022
--
The Board discussed the 2022 semi-annual report and related
matters. No resolution was made.the 14th Meetingof the 9th Sessionof the Board ofDirectors
August 29, 2022
August 30, 2022
The following resolutions were deliberated and adopted:
1. Proposal on the 2022 Semi-Annual Report and its Abstract
2. Proposal on the Risk Appraisal Report of Sinochem Finance
Co., Ltd.
2. Proposal on the Risk Appraisal Report of Sinochem Finance
3. Proposal on ADAMA’s 2021 Environmental, Social, and
Governance (ESG) Reportthe 15th Meetingof the 9th Sessionof the Board ofDirectors
October 26, 2022
3. Proposal on ADAMA’s 2021 Environmental, Social, and
October 27,2022
The following resolution was deliberated and adopted:
1. Proposal on the Q3 2022 Report
| 2. Proposal on the Arrangement for the Retirement of the | ||
General Legal Counselthe 16th Meetingof the 9th Sessionof the Board ofDirectors
December 14,2022
December 16,2022
The following resolution was deliberated and adopted:
Related Partythe 17th Meetingof the 9th Sessionof the Board ofDirectors
December 22,2022
December 23,2022
The following resolution was deliberated and adopted:
1. Proposal on the 2023 Work Plan
2. Particulars regarding directors’ attendance to board sessions and shareholders’general meetings
Details of directors’ attendance to board sessions and shareholders’ meetings
1. Proposal on Credit Facilities of USD 50 million from theName of the
Directors
Name of the
Sessionsrequired to
attend during
attend duringthe Reporting
Period
On-Site
the ReportingAttendance
Attendance by
way ofcommunication
| Attendance | ||
Entrusted
presence
(times)
EntrustedAbsence
rate
Non-attendance in
| Absence | ||
| person for two |
consecutive
times
shareholder
meetings
Erik Fyrwald
Attendance to
10 0 9 1 0 No 1ChenLichtenstein
10 0
10 0 0 No 1An Liru 10 0 10 0 0 No 2Ge Ming 10 0 10 0 0 No 2Xi Zhen 10 0 10 0 0 No 2Note: As two directors are abroad, the Company’s board meetings in 2022 were all conducted by means of communication,including video conference.Explanation of failure to attend two consecutive board meetings in personNo such cases during the reporting period.
ADAMA Ltd. Annual Report 2022
3. Particulars regarding directors’ objections
Whether directors objected to various events
□ Yes √ No
During the Reporting Period, no directors proposed any objection on relevant events of the Company.
4. Other explanations regarding the directors’ duty performanceWhether directors’ advice were adopted
√ Yes □ No
Explanation regarding advices of directors:
According to the Company Law, the Listed Corporate Governance Standards, and "Articles of Association", the directors,in general, during the Reporting Period, focus actively over Company’s operation, and earnestly performs their duties,render professional suggestions to the Company's information disclosure and daily management decision-making, etc.The directors play a proper role in improving the supervision, and safeguard the legitimate rights and interests of theCompany and its shareholders. The directors especially pay attention (and paid attention - during the Reporting Period) tothe Company’s operation state, dynamic state of the industry, public opinion and dynamic state report of the Company.They actively and effectively perform the duties of directors and well maintained overall benefits of the Company and thelegal interests of all shareholders, especially the middle and small shareholders. Their roll is required for positive, normal,stable and healthy development of the Company.
ADAMA Ltd. Annual Report 2022
IX. Performance of the Special Committees under the Board during the Reporting
Period
Committees
Name of the
Member ofCommittees
Number
of
NumberMeetings
Held
MeetingsConvening
Date
Themes of Meetings
ConveningImportant
ImportantComments
and
CommentsProposals
Made
Other
ProposalsPerformance
of Duties
SpecificsofObjection
PerformanceMatters (if
any)
AuditCommittee
Ge Ming
Matters (if(Chairperson),
Xi Zhen,An Liru
(Chairperson),March 21,
2022
1. Proposal on the
| March 21, | 2021 |
Financial Report
2. Proposal on the Pre-
Planof the 2021 Dividend
Distribution
of the 2021 Dividend
3. Proposal on the
3. Proposal on the
Engagement with an Audit
Engagement with an AuditFirm for the Audit of the
Firm for the Audit of theFinancial Statements and
Financial Statements andInternal Control of the
Company for 2022
Internal Control of the
4. Proposal on the
Expected Related
4. Proposal on the
Party
PartyTransactions in the
Transactions in theOrdinary Course of
Business in 2022
5. Proposal on the Self-
Ordinary Course ofAssessment Report on the
Assessment Report on the2021 Internal Control of the
Company6.
2021 Internal Control of theProposal on the 2021
Proposal on the 2021Risk Appraisal Report of
Risk Appraisal Report ofChemChina Finance Co.,
ChemChina Finance Co.,Ltd. and the 2021 Risk
Appraisal Rep
Ltd. and the 2021 Riskort of
ort ofSinochem Finance Co.,
Ltd.7.
Sinochem Finance Co.,Proposal on the
Proposal on theSpecial Report on the
Special Report on theDeposit and Actual Use of
the Raised Funds in 2021
Deposit and Actual Use of
8.
Proposal on the
Proposal on theAppointment of the Head of
Appointment of the Head ofthe Internal Auditing
the Internal AuditingDepartment of the
Company9.
Department of theProposal on the 2021
Internal Aud
Proposal on the 2021it Working
it WorkingReports and the 2022
Internal Audit Work Plan
Approved -- --
Reports and the 2022April 24,
2022
| April 24, | 1. Proposal on the Q1 |
2022 Report
Approved -- --
2022
| August 18, | 1. Proposal on the 2022 |
Semi-
Abstract2.
Annual Report and itsProposal on the Risk
Proposal on the RiskAppraisal Report of
Approved -- --
ADAMA Ltd. Annual Report 2022
Committees
Name of the
Member ofCommittees
Number
of
NumberMeetings
Held
MeetingsConvening
Date
Themes of Meetings
ConveningImportant
ImportantComments
and
CommentsProposals
Made
Other
ProposalsPerformance
of Duties
SpecificsofObjection
PerformanceMatters (if
any)
Matters (ifSinochem Finance Co.,
Ltd.
3. Proposal on the Semi-
Sinochem Finance Co.,annual Internal Audit
annual Internal AuditWorking Report and the
Working Report and theInternal Audit Work Plan for
the Second Half of 2022
Internal Audit Work Plan forOctober 24,
2022
| October 24, | 1. Proposal on the Q3 |
2022 Report2.
Proposal on the Q3Internal Audit Working
Report
Approved -- --
December14, 2022
1.
Internal Audit WorkingProposal on Credit
Proposal on CreditFacilities of USD50 million
from the Related Party
Approved -- --
Facilities of USD50 millionRemuneration
Remunerationand Appraisal
Committee
Xi Zhen
and Appraisal(Chairperson),
(Chairperson),Ge Ming, An
Liru
Ge Ming, AnMarch 21,
2022
1.
| March 21, | Proposal on the |
Remuneration of Senior
Executives
Approved -- --
Remuneration of SeniorOctober 24,
2022
1.
| October 24, | Proposal on the |
Arrangement for the
Arrangement for theRetirement of the General
Legal Counsel
Approved -- --
NominationCommittee
Xi Zhen
Retirement of the General(Chairperson),
Ge Ming,
(Chairperson),
An Liru
March 21,
2022
1.
| March 21, | Proposal on the |
Appointment of the
Appointment of theCompany’s Chief Financial
Officer
Approved -- --
StrategyCommittee
Erik Fyrwald
Company’s Chief Financial(Chairperson),
Chen
(Chairperson),Lichtenstein,
An Liru,Ge Ming
Lichtenstein,
Xi Zhen
-- -- -- -- --
X. Performance of the Supervisory CommitteeHas the Supervisory Committee, during the Reporting Period, found a risk in the Company within its supervisory activity
□ Yes √ No
The Supervisory Committee had no objection on the supervised events during the Reporting Period.
ADAMA Ltd. Annual Report 2022
XI. Particulars regarding Group’s employees
1. Number of employees, professional composition and educational background
The number of on-duty employees in ADAMA Ltd. (person) 751
The number of on-duty employees in main subsidiarycompanies (person)
8,457
The total number of on-duty employees of the Group (person)
9,208
The total number of employees of the Group who received
salaries in the period (person)
9,208
| The total number of employees of the Group who received | ||
The number of retired employees for whom ADAMA Ltd. andmain subsidiary companies need to pay retirement expense.
3,105
Professional CompositionCategory Number
Production personnel 5,223
Sales personnel 2,268
Technicians 646
Financial personnel 498
Administrative personnel* 573
Total 9,208
Educational BackgroundCategory Number
Doctor 8
Master 172
Bachelor 806
College 795
Others 1,848
Total 3,629
Note: The figures under “Educational Background” represent those of the Company and the domestic subsidiaries held byit and do not cover the Group’s 5,579 overseas employees.*Administrative personnel include employees of all the functional departments.
ADAMA Ltd. Annual Report 2022
2. Employee’s remuneration policy
The Company's remuneration policy in 2022 is the same as in 2021. It is still a salary structure that integrates post salary,quarterly performance bonus and annual performance bonus.The Company established an online and offline assessment model. Online assessment is carried out by SF system.Individual goals are set at the beginning of the year and are assessed at the end of the year.
3. Employee’s training plan
The Group usually conducts seminars, trainings, exercises and refresh of procedures (including with respect to increasingsafety awareness) to its various employees in its various entities, as needed and/or required under its applicableprocedures.
4. Labor outsourcing
√ Applicable □ Not applicable
Details of ADAMA Ltd. on labor sourcing are as follows.Total number of hours of service outsourcing (hours) 920,972
Total remuneration paid for service outsourcing (RMB)
| 33,028,191 |
X. Situations for dividend distribution and turning capital reserve into share capital Dividend distribution policies,especially the formulation, execution or the adjustment of the cash dividend policies during the Reporting Period
√ Applicable □ Not applicable
The Company did not revise its dividend distribution policy over the Reporting Period. The 2021 Annual General Meetingwhich was held on April 21, 2022 approved the dividend distribution plan for the year 2021. The Company accordinglypublished the Announcement of Dividend Distribution for the Year 2021 on May 31, 2022 (announcement No. 2022-21).
Special explanation of the cash dividend policy
of association or the requirements of the resolutionsof the shareholders’ meeting:
YesWhether the dividend standard and the proportionwere definite and clear:
Yes
Whether the relevant decision-
Whether conformed with the regulations of the Articlesmaking process and the
system were complete:
YesWhether the independent director acted dutifully andexerted the proper function:
YesWhether the medium and small shareholders had thechances to fully express their suggestions andappeals, of which their legal interest had gained fullyprotection:
YesWhether the conditions and the process met theregulations and was transparent of the adjustment oraltered of the cash dividend policy:
Not ApplicableThe Company (including its subsidiaries) made profit in the reporting period and the profits distribution of the common
ADAMA Ltd. Annual Report 2022
shares held by the shareholders of the Company (without subsidiaries) was positive, but it did not put forward a preplanfor cash dividend distribution of the common shares:
□ Applicable √ Not applicable
Situations for dividend distribution and turning capital reserve into share capital for the Reporting Period
√ Applicable □ Not applicable
The Company plans to distribute cash dividends for the year 2022, and does not intend to issue bonus shares or transfercapital reserve to share capital.Bonus shares for every 10-share (Share)
Not Applicable.Dividends for every 10-share (RMB) (Tax included)
0.27
Every 10-share increased the shares’ number
Equity base of distribution plan (Share)
On the basis of 2,329,811,766 shares
on February 28, 2023
Cash dividend (RMB) (Tax included)
62,904,917.68Amount of the cash dividend by other methods (e.g. share buyback)
Total cash dividend (RMB) (Tax included)
62,904,917.68Distributable profits (RMB)
607,055,000Ratio of the Cash dividend (including the amount to be distributed inother ways) accounting in the total amount of the distributeddividend
100%Cash dividends of This Time
If the development phase of the Company was the mature period with significant funds expenditures arrangement, theproportion of the cash dividend should at least reach 40% of the total profit distribution.Detailed Description on the Pre-Plan for Profit Allocation or Turning Capital Reserve into Share Capital
As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, the net profit attributable to shareholdersof the Company is RMB 609,391 thousand. As transfer to statutory surplus reserve (10% of the net profit on astandalone basis of the Reporting Period is RMB 2,336 thousand) was made, profit available for distribution for theyear 2022 is RMB 607,055 thousand.
The proposal for profit distribution for the year 2022 is a distribution of 10% of the total profit available for distribution,calculated as follows with no transfer of reserves into equity:
On the basis of 2,329,811,766 shares on February 28, 2023, the Company plans to declare a cash dividend of RMB
0.27 (before tax) for every 10 shares to all shareholders, resulting in a total cash dividend of RMB 62,904,917.68(before tax). No share will be distributed as share dividend, and no reserve shall be transferred to equity capital.XII. Stock incentive plans, ESOPs or other employee incentives
□ Applicable √ Not applicable
To the date of the report, the Company does not have stock incentive plans, ESOP or other staff incentives. It shall benoted, that Adama Solutions currently has several long-term incentive plans according to which it has granted long-termcash rewards to executive officers and employees. These long-term incentive plans are based either on the performanceof the Company's shares (phantom cash incentives) and/or the Company's performance.. Adama Solutions has further
ADAMA Ltd. Annual Report 2022
adopted an incentive plan linked to the increase in the Syngenta Group EBITDA.
XIII. System Establishment and Implementation for Internal Control during the
Reporting Period
1. System Establishment and Implementation
The Group's existing internal control system adapts to the management requirements. It also provides a reasonable basisfor the preparation of true and fair financial statements, and ensures the healthy operation of the Group's various businessactivities, as well as the implementation and compliance of relevant laws and regulations and the Group's own internalrules. With the changes in the external environment and the development of the Group's business, the Company plans totake the following measures to further improve the internal control system:
(1) Further improve the internal control system by strengthening the research and implementation of internal controlmanagement and risk management. Based on the risk assessment result and the needs of the Group, adjust and improvethe relevant business processes in a timely manner to establish effective internal control system which would improve workefficiency.
(2) Emphasizing on the importance of the internal control system within the Group. Providing training to managerialpersonnel on the related laws and regulations regarding internal controls. This would enhance the awareness and level ofstandardization of operation, which could further improve the corporate governance structure.
(3) Regularly evaluating key controls in the business processes. Through the rectification of issues identified, themanagement and operation risks would be reduced which could lead to a better operation.
(4) Continuously improving the execution of internal controls. Constructing the internal control systems including internalenvironment, risk assessment, control activities, information and communication, and internal supervision in accordancewith the requirements by the "Basic Standards for Enterprise Internal Control", in order to improve the systematization andeffectiveness of the internal control.
(5) Strengthening the management and control of high-risk areas through effective integration with the internal controlevaluation system to ensure that the Group's major risks are under control. At the same time, the existing internal controlsystem is continuously reviewed and improved along with the optimization of management processes, which is to minimizebusiness risks and ensure the Group's sustainable, stable and healthy development.For details, please refer to the "2022 Annual Internal Control Self-Assessment Report" published by the Company onwww.cninfo.com.cn on March 21, 2023.
2. Details of the Material deficiencies in internal control identified during the reporting period
□ Yes √ No
XIV. Management control over subsidiaries during the reporting period
□ Applicable √ Not applicable
The Company has completed integration of the subsidiary acquired in 2021. During the reporting period, the Companydidn't add new subsidiary through acquisition.
ADAMA Ltd. Annual Report 2022
XV. Self-assessment Report or Audit Report on Internal Control
1. Self-assessment report on internal control
Date of disclosure of self-assessmentreport on internal control
March 21, 2023Reference website of self-assessmentreport on internal control
www.cninfo.com.cnRate of total Assets of Units within theAssessment Scope Compared to TotalAssets in the Consolidated Statements ofthe Company
74.4%
Rate of total Operating Income of Unitswithin the Assessment Scope Comparedto Total Operating Income in theConsolidated Statements of the Company
74.0%
Criteria of DeficiencyCategories Internal control over financial reporting
Internal control not related to financial
reporting
Qualitativecriteria
Material Deficiency: Resulting in an adverseopinion or disclaimer of opinion, by a CPA, on theCompany’s financial statements; or resulting in amaterial correction of the Company’s publiclyannounced financial statements.Significant Deficiency: Resulting in a qualifiedopinion, by a CPA, on the Company’s financialstatements; or resulting in an adverse opinion or
disclaimer of opinion, by a CPA, on the Company’s
material subsidiaries’ (i.e. Solutions) financialstatements; or resulting in a significant correctionof the Company’s material subsidiaries’ (i.e.Solutions) publicly announced financialstatements. In addition, where no internal controlor no relevant compensatio
disclaimer of opinion, by a CPA, on the Company’sn control is established
or implemented for the accounting treatment forunusual or special transactions.General Deficiency: Resulting in an unqualified
n control is establishedopinion, with an explanatory paragraph, by a CPA,
on the Company’s financial statements; orresulting in a qualified opinion, or unqualifiedopinion with an explanatory paragraph, by a CPA,on the Company’s subsidiaries’ financialstatements.
Material Deficiency:
1) Fraud committed in the Company by any of its
directors, supervisors and senior managementpersonnel;
2) The Company materially violates material laws
and regulations, resulting in a material effect onthe Company's business;
3) Material design deficiencies in the Company's
relevant management system;
4) The Company materially violates the decision-
making process thereby causing a materialnegative impact on the Company's business(generally related to matters that need to beapproved by the shareholders meeting or theboard of directors).
5) Material impact to the Company’s reputation.
Significant Deficiency:
1) Significant fraud committed by any department
head of the Company;
opinion, with an explanatory paragraph, by a CPA,
2) Significant fraud committed by a head of any of
the Company’s material subsidiaries;
3) The Company violates significant laws and
regulations,
2) Significant fraud committed by a head of any of
resulting in significant fines as well as
a significant effect on the Company's business;
4) Significant design deficiencies found in the
Company's relevant management system;Material design deficiencies are found in therelevant management systems of subsidiaries;
5) The Company violates material decision-
ADAMA Ltd. Annual Report 2022
on the Company's business (generally referred tomatters subject to senior management'sdecision);
6) Material Subsidiaries violate decision-making
process, thereby causing a material negativeimpact on the Company's business (generally
making procedures, resulting in a significant effectreferred to matters that need to be decided by the
shareholders’ meeting or the board of directors).
7) Significant impact to the Company’s reputation.
referred to matters that need to be decided by the
General Deficiency:
1) Fraud committed by any other personnel in the
Company;
2) Fraud committed by any other personnel in
material subsidiaries;
3) The Company materially violates material
internal regulations or non-materially violatesmaterial laws and regulations, resulting innegative feedback from regulatory authorities;
4) There are other violations of laws and
regulations or internal regulations found inmaterial subsidiaries.
5) There are general design deficiencies in the
relevant management system of the Company;other design deficiencies exist in the relevantmanagement system of the material subsidiaries;
6) The Company violates the decision-making
process, resulting in a negative impact on theCompany's business;
7) Material Subsidiaries violate decision-making
process, resulting in a negative impact on theCompany's business.
Quantitativecriteria
Material Deficiency:
The misstatement in financial report relates to anamount that is greater than or equal to RMB 100million.Significant Deficiency:
The misstatement in financial report relates to anamount that is greater than or equal to RMB 50million, but less than RMB 100 million.General Deficiency: Resulting in othermisstatement related amounts.
Material Deficiency: Asset Loss ≥ RMB 150millionSignificant Deficiency: RMB 80 million ≤ AssetLoss < 150 million RMBGeneral Deficiency: Asset Loss < 80 millionRMB
Number ofmaterialdeficiencies ininternal controlover financialreporting
Number of 0
ADAMA Ltd. Annual Report 2022
materialdeficiencies ininternal controlnot related tofinancialreportingNumber ofsignificantdeficiencies ininternal controlover financialreporting
Number ofsignificantdeficiencies ininternal controlnot related tofinancialreporting
2. Audit report on internal control
√ Applicable □ Not applicable
| Audit opinion paragraph in the internal control audit report |
Disclosure of internal control
| audit report |
Disclose
Date of disclosure of internal
| control audit report |
March 21, 2023
Reference website of internal
| control audit report |
www.cninfo.com.cnType of audit opinion in the
| internal control audit report |
Unqualified opinion.Is there any material
not related to financial
deficiencies in internal controlreporting
| reporting |
No.Does the accounting firm issue non-standard audit opinion on internal control?
□ Yes √ No
Is the opinion issued by accounting firm consistent with the opinion in the self-assessment report by the Board?
√ Yes □ No
ADAMA Ltd. Annual Report 2022
XVI. Rectification of Problems Identified during the Self-examination Action
Dedicated for Corporate Governance of Listed CompaniesAccording to the self-inspection results on special actions of corporate governance of listed companies in 2021, theCompany should carry out actions on a long-term basis to continuously enhance corporate governance in the followingaspects:
? Update relevant policies and procedures of corporate governance and internal control according to latest laws,regulations and regulatory requirements and in combination with the actual situation of the Company;? Further strengthen training of the Company's directors, supervisors and senior management of relevant laws andregulations, and further standardize their work and raise self-discipline awareness;In the year of 2022, the Company carried out the following accordingly:
? As approved by the 9
th meeting of the 9
thBoard of Directors on March 29, 2022, the Company updated the ManagementPolicy of Related-Party Transactions, the Management Policy of Registration of Insiders Information and theManagement Policy of Information Disclosure.? As approved by the 12th meeting of the 9th Board of Directors on April 27, 2022, the Company launched theManagement Measures for the Delegation of Certain Powers of the Board of Directors to the Chief Executive Officer,to intensify reform of state-owned enterprises and improve decision-making efficiency.The Company actively organized the directors, supervisors and senior management participate in the relevant trainingsorganized by the dispatched organs of CSRC and Shenzhen Stock Exchange, including annual report regulatory meetingand trainings on anti-bribery practices, the quality of listed companies, and corporate governance. As some directors andmost of the senior management of the Company are foreigners, the Company regularly compiled training material, latestdevelopment of China's capital market laws, regulations and cased studies into Chinese and English regulatory newsletters,which are sent to directors, supervisors and senior management, to enhance their awareness of China's policies andpromote the implementation in the Company‘s global business.
ADAMA Ltd. Annual Report 2022
Section V - Environment and Social ResponsibilitiesI. Major Environmental Protection IssuesIs the Company listed as key polluting entities by environmental protection agencies?
√ Yes □ No
Policies and Sector Standards related to Environmental ProtectionThe Group complies with the following laws, regulations and sector standards related to environmental protection in the process of production and operation:
1. Laws and Regulations
1) Environmental Protection Law of the People's Republic of China;
2) Law of the People's Republic of China on the Prevention and Control of Air Pollution;
3) Law of the People's Republic of China on the Prevention and Control of Water Pollution;
4) Law of the People's Republic of China on the Prevention and Control of Environmental Pollution by Solid Waste;
5) Law of the People's Republic of China on the Prevention and Control of Environmental Noise Pollution;
6) Law of the People's Republic of China on the Prevention and Control of Soil Pollution;
7) Water Law of the People's Republic of China;
8) Cleaner Production Promotion Law of the People's Republic of China;
9) Yangtze River Protection Law of the People's Republic of China;10) Regulations on the Administration of Pesticides;
11) Regulations on the Administration of Environmental Protection of Construction Projects;
2. Sector Standards
1) Discharge Standard of Pollutants for Urban Sewage Treatment Plant (GB18918-2002);
2) Water Quality Standard for Sewage Discharged into Urban Sewers (GB/T 31962-2015);
3) Emission Standard of Air Pollutants for Pesticide Manufacturing Industry (GB 39727-2020);
4) Standard for Pollution Control of Hazardous Waste Incineration GB18484-2020;
5) Emission Standard of Air Pollutants for Thermal Power Plants (GB 13223-2011);
ADAMA Ltd. Annual Report 2022
6) Emission Standard of Air Pollutants for Pesticide Manufacturing Industry (GB 39727-2020);
7) Standard for fugitive emission control of volatile organic compounds (GB37822-2019);
8) Emission Standard for Volatile Organic Compounds in Chemical Industry (DB 32/3151-2016);
9) Emission Standard for Odor Pollutants (GB 14554-93);
10) Emission Standard of Pollutants for Caustic Soda and PVC Industry (GB 15581-2016);
11) Emission Standard for Industrial Enterprises Noise at Boundary GB12348-2008;
12) Standard for Pollution Control of Storage and Landfill of General Industrial Solid Waste GB18599-2020;
13) Standard for Pollution Control of Hazardous Waste Storage GB18597-2023.
Environmental Protection Administrative Permits
1. EIA Approval
During the reporting period, the Company and its subsidiary ADAMA Huifeng didn’t newly receive EIA approval. ADAMA Anpon, a subsidiary of the Company, received thefollowing EIA approval: “Reply to the Environmental Impact Report of Expansion of Utilities and Auxiliary Facilities: 110v Transformer Station and Power Lines”
2. Waste Discharge Permits
The Company renewed waste discharge license on December 28, 2021 and the license has been valid during 2022. Of the two sites of ADAMA Anpon, a subsidiary of theCompany, Anpon site updated its waste discharge license on December 1, 2022 and Maidao site renewed its waste discharge license on December 21, 2021. The licenses ofthe two sites have been valid during 2022. ADAMA Huifeng, a subsidiary of the Company, updated its waste discharge permit on October 9, 2022, and the license has been valid.
Sector Discharge/Emission Standards and Pollutant Discharge and Emission during Operational Activities
name
CompanyCategory
ofPollutants
Category
Mainpollutants
| and special |
pollutants
Way ofemission
No. of
| emission | |
points
Layout ofemissionpoints
Concentration
Pollution standards applied
Total amountemitted/Discharged
(ton)
Total amount
Approved
(ton)
limit
ADAMALtd.
Wastewater
COD Continuous
Exceeding
GeneralDischargePort
The new site:
21.558mg/L
For the new site:
Discharge
| Discharge | |
| Standards for Pollutants from | |
| Urban Sewage Treatment | |
Plant (GB 18918 –
<50mg/L
84.19 173.2104 NoneWastewater
Ammonianitrogen
Continuous
2002), COD
GeneralDischargePort
The new site:
1.0885mg/L
For the new site: DischargeStandards for Pollutants fromUrban Sewage Treatment
4.25 17.321 None
ADAMA Ltd. Annual Report 2022
name
CompanyCategory
ofPollutants
Category
Mainpollutants
| and special |
pollutants
Way ofemission
No. of
| emission | |
points
Layout ofemissionpoints
Concentration
Pollution standards applied
Total amountemitted/Discharged(ton)
Total amountApproved(ton)
limit
Plant (GB 18918 – 2002),ammonia nitrogen<8mg/L;Wastewater
TotalPhosphorous
Exceeding
Continuous
GeneralDischargePort
The new site:
0.318 mg/L.
For the new site: DischargeStandards for Pollutants fromUrban Sewage TreatmentPlant (GB 18918 –
2002), total
phosphorous <0.5mg/L
1.242 1.722 NoneWaste gas
2002), total
NOx Continuous
Power plant,
HazardouswasteincineratorandRTO
Power plant:
24.138 mg/m
Hazardous waste
Power plant,incinerator: 56.658
mg/m
Acephate RTO:
8.2536 mg/m
ww RTO: 2.7716mg/m
(1) The power plant complies
with the ultra-low limit of thestandard range for pollutantemission, which is NOx <50mg/m
;
(2) Hazardous waste
incinerator: Table 3 in the"Standards for the Control of
| incinerator: 56.658 | Hazardous Waste Incineration |
Pollution " (GB18484-2020),which is NOx <300mg/m
;
(3) RTO: Table 1 and 2 and
specifically the air pollutantemission limits in Table 2 ofthe "Standards for the AirPollutant Emission of thePesticide manufacturingIndustry" (GB 39727-2020),which is NOx <200mg/m
;
39.069 260.27 None
Waste gas
SO
Continuous
Power plant,
HazardouswasteincineratorandRTO
Power plant,Power plant: 2.537
mg/m
Hazardous waste
Power plant: 2.537incinerator: 3.6528
mg/m
Acephate RTO:
5.8791 mg/m
ww RTO: 2.6437mg/m
(1) The power plant complies
with the ultra-low limit of thestandard range for pollutantemission, which is SO
< 35mg/m
;
(2) Hazardous waste
incinerator: Table 3 in the"Standards for the Control ofHazar
incinerator: 3.6528dous Waste Incineration
6.941 116.48 None
ADAMA Ltd. Annual Report 2022
name
CompanyCategory
ofPollutants
Category
Mainpollutants
| and special |
pollutants
Way ofemission
No. of
| emission | |
points
Layout ofemissionpoints
Concentration
Pollution standards applied
Total amount
emitted/Discharged(ton)
Total amountApproved(ton)
limitPollution " (GB18484-2020),which is SO
<100mg/m
;
(3) RTO: Table 1 and 2 and
specifically the air pollutantemission limits in Table 2 ofthe "Standards for the AirPollutant Emission of thePesticide manufacturingIndustry" (GB 39727-2020),which is SO
<200mg/m
;Waste gas
Exceeding
Fume anddust
Continuous
Power plant,
HazardouswasteincineratorandRTO
Power plant:
0.6473 mg/m
Hazardous wasteincinerator: 3.719mg/m
Acephate RTO:
9.085 mg/m
ww RTO: 5.8778mg/m
(1) The power plant complies
with the ultra-low limit of thestandard range for pollutantemission, which is fume anddust < 10 mg/m
;
(2) Hazardous waste
incinerator: Table 3 in the"Standards for the Control ofHazardous Waste Incinera
Power plant,tion
Pollution " (GB18484-2020),which is fume and dust <30mg/m
;
(3) RTO: Table 1 and 2 and
specifically the air pollutantemission limits in the " theEmission Standards for AirPollutants of the PesticideManufacturing Industry" (GB39727-2020), which is fumeand dust < 30 mg/m
;
10.535 44.8824 None
Waste gas
tion
VOCs Continuous
1 RTO
Acephate RTO:
3.1942 mg/m
ww RTO: 3.6411mg/m
Table 1 and 2 and specifically,
the emission limits of airpollutants in Table 2 of the
Table 1 and 2 and specifically,the
Emission Standards for AirPollutants of the Pesticide
3.81 6.941 t/a None
ADAMA Ltd. Annual Report 2022
name
CompanyCategory
ofPollutants
Category
Mainpollutants
| and special |
pollutants
Way ofemission
No. of
| emission | |
points
Layout ofemission
points
Concentration
Pollution standards applied
Total amount
emitted/Discharged(ton)
Total amountApproved
(ton)
limitManufacturing Industry (GB39727-2020), which is VOCs<100mg/m3
ADAMAAnpon
Exceeding(Jiangsu)
Co., Ltd.
| (Jiangsu) | |
Wastewater
COD Continuous
GeneralDischargePort
Maidao: 137.9mg/L
Anpon: 69.52mg/L
Maidao: 137.9mg/L
Comprehensive Standard onDischarge of Waste Water(GB8978-2002)，COD< 500mg/l; Maidao site: industrypark’s waste water dischargeagreement, COD<500mg/L
124.142
Maidao:182.755Anpon: 265.69
NoneWastewater
AmmoniaNitrogen
Continuous
124.142
GeneralDischargePort
Maidao: 5.3mg/L;Anpon: 5.04mg/L
Water Quality Standard forSewage Discharged intoUrban Sewerage (GBT 31962-
2015), Ammonia Nitrogen <45
mg/l; Maidao site: industrypark’s waste water discharge
2015), Ammonia Nitrogen <45agreement, Ammonia Nitrogen
<35 mg/l
3.831
Maidao: 26.39Anpon: 28.348
None
Wastewater
TotalPhosphorous
agreement, Ammonia Nitrogen
Continuous
GeneralDischargePort
Maidao: 1.23mg/L;
Anpon: 0.57mg/L
For Anpon: Water QualityStandard for SewageDischarged into UrbanSewerage （GBT 31962-2015）
| Maidao: 1.23mg/L; | , total phosphorous < 8 |
mg/l;For Anpon’s branch Maidao:
Agreement on WastewaterDischarge, total phosphorous< 3 mg/l;
0.525
Maidao: 0.327Anpon: 20.273
None
Waste gas
NOx Continuous
1 Power Plant
/
Standard on Air Pollution ofThermal Power Plants（GB13223-2011）
mg/m
/
Maidao: 1,966Anpon: 181.516
None
The power
plant has
been
deactivated.
NOx < 100
Waste gas
SO
Continuous
1 Power Plant
/
Standard on Air Pollution ofThermal Power Plants（GB13223-2011）SO
< 50
/
Maidao: 1.673Anpon: 396.902
None
The power
plant has
ADAMA Ltd. Annual Report 2022
name
CompanyCategory
ofPollutants
Category
Mainpollutants
| and special |
pollutants
Way ofemission
No. of
| emission | |
points
Layout ofemissionpoints
Concentration
Pollution standards applied
Total amountemitted/Discharged
(ton)
Total amountApproved(ton)
limit
mg/m
been
deactivated.
Exceeding
Waste gas
Particles Continuous
Pymetrozine
dryer tailgas
2.09 mg/L
Jiangsu ComprehensiveStandard on Air PollutantsEmission (DB32/4041-2021)
0.0888
Maidao: 3.095Anpon: 67.515
NoneWaste gas
Pymetrozine
VOCs Continuous
19 in Anpon
19 in AnponSite and 4 in
Maidao
Maidao: 6.5mg/m
Site and 4 in;
Anpon:14.57mg/m
;
Standards for the VolatileOrganic Compound Emissionof the Chemical Industry, DB32/3151-2016
2.35
Maidao: 2.017Anpon: 47.313
None
ADAMAHuifeng
(Jiangsu)
Co., Ltd.
| (Jiangsu) | |
Wastewater COD Continuous
GeneralDischargePort
210.03 mg/l
Standards of the IndustrialPark
101.8847 247.6378 NoneWastewater
AmmoniaNitrogen
Continuous
GeneralDischargePort
6.69 mg/l
Standards of the IndustrialPark
2.9667 19.3783 NoneWastewater
TotalPhosphorous
Continuous
GeneralDischargePort
0.6 mg/l
Standards of the IndustrialPark
0.2867 0.9285 NoneWastewater total nitrogen
Continuous
GeneralDischargePort
27.08 mg/l
Standards of the IndustrialPark
12.81297
46.77204 None
Waste gas
NOx Continuous
RTO andtheDischargePorts atVariousWorkshops
9.78 mg/m?
Jiangsu ComprehensiveStandard on Air PollutantsEmission (DB32/4041-2021)
11.7045 147.7072 NoneWaste gas
SO
Continuous
RTO andtheDischargePorts atVariousWorkshops
6.05 mg/m?
Jiangsu ComprehensiveStandard on Air PollutantsEmission (DB32/4041-2021)
10.5735 47.1958 NoneWaste gas
Particles Continuous
RTO andthe
2.33 mg/m?
Jiangsu ComprehensiveStandard on Air Pollutants
2.9770 22.7146 None
ADAMA Ltd. Annual Report 2022
name
CompanyCategory
ofPollutants
Category
Mainpollutants
| and special |
pollutants
Way ofemission
No. of
| emission | |
points
Layout ofemission
points
Concentration
Pollution standards applied
Total amount
emitted/Discharged(ton)
Total amountApproved(ton)
limitDischargePorts atVariousWorkshops
Exceeding
Emission (DB32/4041-2021)Waste gas
non-
methane
hydrocarbon
methane
Continuous
RTO andtheDischargePorts atVariousWorkshops
9.03 mg/m?
Jiangsu Comprehensive
Standard on Air Pollutants
Emission (DB32/4041-2021)
25.45539 62.92994 None
ADAMA Ltd Annual Report 2022
Treatment of Pollutants
(1) Development and Operation of Waste Water FacilitiesThe Company has a 20,000 tons/ D wastewater treatment station, adopting the process of "two-layer A / O + MBR + ozonesynergistic oxidation + MBBR + calcium removal of phosphorus". The wastewater treatment facilities are running normally.After treatment, the COD, ammonia nitrogen and total phosphorus in the discharged wastewater are within the limit.ADAMA Anpon, the subsidiary of the Company, has a 11,000 tons/ D wastewater treatment station. As all its facilities areoperating well, COD, ammonia nitrogen, and total phosphorous discharged after the treatment are within the limit.ADAMA Hufieng, the subsidiary of the Company has a 5000 tons/D wastewater treatment station. As all its facilities areoperating well, COD, ammonia nitrogen, total nitrogen and total phosphorous discharged after the treatment are within thelimit.
(2) Development and Operation of Waste Gas Facilities
The Company's coal-fired thermal power plant was carried out ultra-low emission transformation. After the transformation,the environmental protection facilities of the power plant operate normally. Sulfur dioxide, nitrogen oxides and dust in fluegas all meet the ultra-low emission standards.The incinerator of hazardous waste of the Company adopt the process of "SNCR + semi dry (quench) deacidification +activated carbon injection + bag dust removal + SCR" for the tail gas. Sulfur dioxide, nitrogen oxides and fume and dust intail gas all meet the standard.The RTO of the Company adopts treatment process of VOCs using "acid washing and absorption + alkali washing andabsorption + three-chamber RTO incineration + quench tower + alkali absorption”. Sulfur dioxide, nitrogen oxide, fume anddust, and VOCs in the tail gas all meet the standard.ADAMA Anpon, the subsidiary of the Company, is equipped with RTO, TO, resin adsorption and other tail gas treatmentfacilities. Under the condition of meeting the emission standard, operation management is strengthened to further reducethe total VOCs emission.ADAMA Huifeng, the subsidiary of the Company, has RTO, alkali washing facilities and acid washing facilities, which arerespectively used to treat process waste gas containing volatile organic compounds, acid washing waste gas and alkaliwashing waste gas. The main emission indicators of waste gas, such as sulfur dioxide, nitrogen oxides, fume and dust,and NMHC in tail gas all meet the standard.ADAMA (Nanjing) Agricultural Technology Co., Ltd，an indirectly owned subsidiary of the Company, is equipped withblowers and vent piping, each of which has scrubber and active carbon filters. VOC and HCl in treated waste gas meet thestandards.
(3) The Company and its subsidiaries disclose production and pollution information according the Interim Measureson Environmental Information Disclosure and transfer information of main wastewater and air pollutants to the informationplatform of the local environmental bureaus on a daily basis.
Contingency Plan of Environmental AccidentsThe Company and its relevant subsidiaries have formulated the Contingency Plan for Environmental Emergenciesaccording to their production facilities and industry features, and then submitted files to the local environmental protectionauthorities as record.
Environment self-monitoring planADAMA attributes great importance to protecting the environment, out of a sense of responsibility to society and theenvironment and strives to meet the relevant regulatory requirements and to even go beyond mere compliance, engagingin constant dialogue with stakeholders, including the authorities and the community.In order to improve the environmental management, track the discharge of various pollutants, evaluate the impact on the
ADAMA Ltd Annual Report 2022
surrounding environment, strengthen the discharge management of pollutants in the production process, accept thesupervision and inspection of environmental authorities and provide reference for pollution prevention and control, thecompany and its subsidiaries Anpon and Huifeng have formulated a self-monitoring plan, which conducts regular tests instrict accordance with the requirements.The major monitored indicators and frequency are as the following:
1. Monitored Indicators
Waste water: COD, NH3-N, PH, SS, Petroleum, TP.Air Pollutant: SO2, Nitrogen oxide, Fume and Dust, Non Methane HydrocarbonNoise: Noise at the Site Border
2. Frequency
Fume and dust and NMHC in boiler emission, SO2, NOx, fume and dust of RTO, and wastewater discharged from thecentralized point (COD, Ammonia Nitrogen and total phosphorous): continuous auto monitoringManual sampling: particles from certain air emissions, suspended particles from wastewater and Petroleum once a month.Noise: once a quarter.ADAMA continually examines the implications of the environmental laws, takes actions to prevent or mitigate theenvironmental risks and to reduce the environmental effects that may result from its activities, and invests extensiveresources to fulfill those legal provisions that are, and are anticipated to, affect it. ADAMA’s plants are subject toatmospheric emissions regulations, whether by virtue of the stipulations provided in the business licenses or under theapplicable law. Hazardous materials are stored and utilized in the Company's plants, together with infrastructures andfacilities containing fuels and hazardous materials. ADAMA takes actions to prevent soil and water pollution by thesematerials and treats them, if revealed. ADAMA’s plants conduct various soil surveys, risk surveys and tests with regard totreatment of the soil or ground water at the plants.ADAMA intends to continue investing in environmental protection, to the extent required and beyond this, whether on itsown volition or in compliance with contractual commitments, regulatory or legal standards relating to environmentalprotection, so as to realize its best available policy and comply with any legal requirements.As part of its policy of ecological process improvement, ADAMA also invests in remediation, changes in productionprocesses, establishment of sewage facilities, as well as in byproduct storage and recycling.
ADAMA Ltd Annual Report 2022
Inputs in Environmental Protection and Treatment and Payment of Environmental Tax
Company Name
Inputs in EnvironmentalProtection and Treatmentduring 2022 (0,000RMB)
Payment of EnvironmentalTax in 2022 (0,000RMB)ADAMA Ltd. 7,904 42.1Adama Anpon (Jiangsu) Ltd.
1,760 3Adama Huifeng (Jiangsu) Ltd.
17,000 12.5
Measures taken to reduce its carbon emissions during the reporting period and their effects
√ Applicable □ Not applicable
During the reporting period, the Company established the working group on energy conservation and carbon reduction,formulated the indicators of energy conservation and carbon reduction in the future, completed carbon emission verificationand compliance, and carried out a number of energy conservation and emission reduction work, such as recovering thewaste heat of hydrogen brine by adding heat exchangers, saving steam consumption, and reasonably allocating resourcesthrough the combined transformation of utilities (refrigeration station and compressed air station), reducing energyconsumption and maintaining facilities, changing the model of water pumps and motors, adding frequency converter makewater pump motors better match the actual demand, optimizing the design of chlor-alkali brine process pipeline to reduceenergy consumption and CO2 emission, etc.
Administrative punishment for environmental problems during the reporting periodNone
Other environmental information that should be disclosedNone
Other environmental related informationNone
The Company is required to comply with the “Self-regulatory Guidelines for Listed Companies on Shenzhen StockExchange: No. 3 - Disclosure of Industry Information”, specifically for the chemical sector.
Occurrence of Environmental AccidentsDuring the reporting period, the Company and its subsidiaries didn’t have material environmental accidents.
ADAMA Ltd Annual Report 2022
II. Social Responsibilities
ADAMA is being engaged for more than a decade an ongoing commitment to accountability and transparency regardingits operations and business. In 2022, a new sustainability strategy was established by the Company and integrated into itsCompany’s long-term strategy. To oversee the process across ADAMA, a Chief Sustainability Officer was appointed, anda dedicated team at both global and regional levels was formed to promote sustainability throughout all divisions of theCompany.During 2022, ADAMA published its ESG report, reflecting its activities and improvements that are the outcome of a long-term investments. ESG report provides meaningful insights into the challenges and opportunities it faces in becoming notonly a global supplier of crop protection products, solutions, and services, but one that aims to bolster food security in aworld where populations are rising, resources are dwindling, and energy demands are increasing. ADAMA is committed inits efforts to further increase transparency broadening its disclosures and continuing working closely with all relevantstakeholders on reporting ESG performance. The Company shares how it integrates sustainability into its business andoperations to create long-term value for all the Company’s stakeholders: customers, people, communities, shareholders,and society at large. In this respect, the Company is periodically updating the Sustainability Report. The SustainabilityReports issued are in accordance with the Global Reporting Initiative (GRI) SRS framework at the “Core” level.In addition, the Company adheres to corporate governance principals to ensure checks and balances in the conduct of itsaffairs, among others, the Company enforces a code of conduct that applies to its people and stakeholders and has adoptedinternal enforcement programs in several relevant fields of activity.The Company is required to comply with the “Self-regulatory Guidelines for Listed Companies on Shenzhen StockExchange: No. 3 - Disclosure of Industry Information”, specifically for the chemical sector.The Company and its manufacturing subsidiaries have all passed the safety standardization audit for enterprises(hazardous chemicals). It integrates the safety standardization with Sinochem’s “FORUS” system and operates effectivelyand met the standards for level upgrade in Sinochem FORUS system during year-end evaluation.According to the structure and functions of each department, it has optimized the management organization, practicallyimplemented double responsibility for one post, revised the production safety responsibility system, improved the safetymanagement network and assigned dedicated personnel for production safety. It has also adjusted the composition of theworkforce for safety standardization according to the actual operation and differentiated the responsibilities and duties forvarious members. The Company successfully completed renewal of production permits and other compliance procedures.The Company’s safety performance has been maintained at a sound level with no material casualty occurred. During thereporting period, the Company improved the safety production process from multiple perspectives, such as resourcebudget, equipment process and safety management. The Company built a dual prevention mechanism and IT systemsintegrating material hazard source monitoring, personnel positioning, five-in-one, electronic work ticket and on-siteinspection.In terms of production processes, chemicals of less hazards replaced more hazardous ones, continuous reactions replacedthe batch-based ones, and the safety fundamentals were improved by reducing process temperature and pressure. HAZOPaction items have been continuously reduced, among which Jingzhou site passed internationally certified third-party reviewof process safety. In terms of project engineering, automation upgrading and improvement never stopped and varioussafety measures and devices for automatic control, alarm, interlock, safety instrumentation system, and emergencypressure relief were taken and equipped with. In terms of the management, process hazard analysis, change management,pre-drive safety inspection, mechanical integrity and other procedures related to safety elements were constantly promoted.Therefore, significant progress had been made on the quality of process safety. At the same time, the Company hasstrengthened safety investment in safety protection facilities, equipment maintenance and testing, daily monitoring andevaluation, training, and the promotion and application of new technologies.
ADAMA Ltd Annual Report 2022
In terms of safe production education and training, the Company has carried out HSE training for employees and provideda series of HSE IDP training for the management. This year, it will continue to promote the implementation of relevanttraining at the front line. The Company focuses on learning and implementing various regulatory requirements such asaccountability of hazardous chemical production enterprises. During the reporting period, the Company receivedinspections to its sites by government agencies and the shareholding group for more than 100 times and has basicallycompleted rectification according to the inspection results. In terms of emergency response, the Company organizesemergency drills and fire drills in various scenarios according to the laws and regulations to strengthen the emergencyresponse ability of front-line employees. In terms of occupational health, the Company has strengthened its employees'hazard identification ability, organized chemical protection knowledge assessment and IDP HSE ability examination, andpassed a series of special action plans to effectively enhance employees' safety protection awareness and improve thesafety production management level of the sites.
III. Enhancement of the results of poverty alleviation and rural revitalization
To assist in the smooth development of rural revitalization in the regions where the Company's operation sites are located,consolidate the achievements of poverty alleviation and continue to move forward, the Company's Jingzhou site activelyresponded to the call of the Hubei Provincial Federation of Trade Unions and the Jingzhou Municipal Federation of TradeUnions, and purchased poverty relief materials of 200,000 RMB from the designated counterpart poverty relief counties inJingzhou. Anpon site continued to appoint the vice chairman of its labor union to participate in Huai'an Municipal PartyCommittee's working team in Huai'an District. According to the arrangements of the municipal party committee and themunicipal government, Anpon site helped Sanhe Village, Shunhe Town of Huai'an District, a less economically developedvillage in the province, and actively explored the ways for assistance to ensure effective execution. In 2022, Anpon siteprovided 200,000 RMB special assistance funds for targeted villages and in order to increase the collective income of thevillage, it helped to purchase agricultural equipment and leased them to the village cooperatives. The collective income ofthe village in that year exceeded 300,000 RMB.
ADAMA Ltd Annual Report 2022
Section VI - Significant EventsI. Performance of commitments
1. Commitments completed by the Company, the shareholders, the actual controllers, the purchasers, or the other related parties during the ReportingPeriod and those hadn’t been completed execution up to the period-end
√ Applicable □ Not applicable
Commitment
Commitment
maker
Commitment
type
Contents
Time ofmakingcommitment
Period ofcommitment
FulfillmentCommitment onshare reform
- - - - - -
Commitment inthe acquisitionreport or thereport on equitychanges
ChemChina
Commitmentson the horizontalcompetition
1. The business of ChemChina’s subsidiaries -
Jiangsu Anpon Electrochemical Co., Ltd., AnhuiPetroleum Chemical Group Co., Ltd., ShangdongDacheng Agrochemical Co., Ltd., Jiamusi HeilongAgrochemicals Co., Ltd., and Hunan HaohuaChemical Co., Ltd. and its subsidiary are the sameor similar business as the main business ofADAMA. As for horizontal domestic competition,ChemChina committed to gradually eliminate suchkind of horizontal competition in the future and tofight for the internal assets reconstruction, toadjust the industrial plan and business structure,to transform technology and to upgrade products,to divide the market so as to make eachcorporation differ in the products and its ultimateusers according to the securities laws and
September 7,2013
Regardingcommitment 1,September 6,2020(According tothecommitmentsmade byChemChina onOctober 12,2016, the dateto eliminate thedomestichorizontalcompetitionbetween the
RegardingCommitment 1,completed.The committed partycomplies with thecommitments:(1)ChemChina hadtransferred its sharesin Anpon to ADAMA;
(2) ChemChina had
transferred its sharesin Jiamusi Heilong to athird party, such that.Jiangmusi Heilong isno longer a subsidiaryof ChemChina; (3)
ADAMA Ltd Annual Report 2022
Commitment
Commitment
maker
Commitment
type
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillmentregulations and industry policy within 7 years, thusto eliminate the current domestic horizontalcompetition between ChemChina’s controlledsubsidiaries and ADAMA.
2. Other than the existing and potential horizontal
competition stated in the acquisition report,ChemChina will take effective measures to avoidengagements by itself and its controlledsubsidiaries in new business that is in the same orsimilar business to ADAMA, within the territory infuture. 3. If ChemChina or its controlledsubsidiaries domestically conduct related businesswhich form horizontal competition with ADAMA,in the future, ChemChina will actively take steps,to gradually eliminate the competition, theconcrete measures including but not limited tointernal assets reorganization, (including puttingthe business into ADAMA or operated throughADAMA) to adjust the industrial plan and businessstructure, to modify technology and to upgradeproducts, to segment the market so as todistinguish each corporation in terms of productsand its end users, thus to avoid and eliminatedomestic horizontal competition betweenChemChina’s controlled subsidiaries and ADAMA.
Company andJiangsu AnponElectrochemicalCo., Ltd., AnhuiPetroleumChemicalGroup Co.,Ltd., andJiamusi HeilongAgrochemicalsCo., Ltd., isJanuary 4,2022).Regardingcommitments 2and 3, longterm.
Shangdong Dachengis not a subsidiary ofCNAC and doesn’tcarry out agrochemicalbusiness; (4)ChemChina is not theactual controller ofHaohua; (5) CNAC,the wholly-ownedsubsidiary ofChemChina, signed anEntrusted Operationand ManagementAgreement with theCompany, andentrusted theoperation andmanagement of AnhuiPetrochemical Co.,Ltd.to the Company.
Regardingcommitments 2 and 3,On-going.The committed partycomplies with thecommitments.ChemChina
Commitmentson theindependence of
ChemChina will comply with laws, regulations andother regulatory documents to avoid and reducerelated-party transactions with ADAMA. However,
September 7,2013 andJanuary 7, 2020
Long term
On-going.The committed partycomplies with the
ADAMA Ltd Annual Report 2022
Commitment
Commitment
maker
Commitmenttype
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillment
ADAMA andrelated- partytransactions
for related-party transactions that are inevitable orbased on reasonable grounds, ChemChina willfollow the market principles of just, fairness andopenness, and enter into agreement(s) legally andgo through lawful procedures. ChemChina willhonor its disclosure obligations and apply forrelevant approvals according to the AoA ofADAMA, rules regarding related-party transactionsand relevant regulations, not impairing the lawfulrights and interest of ADAMA and its shareholdersby related-party transactions.After completion of the acquisition transaction,ADAMA will continue to keep completeprocurement, production and sales systems and topossess independent intellectual properties.ChemChina and its affiliated parties will becompletely independent from ADAMA in terms ofstaff, assets, finance, business and organization.ADAMA will have full capacity of operation inChinese agricultural chemical market. ChemChinawill continue to follow the Company Law andSecurities Law so as to avoid any action that mayimpair the operating independence of ADAMA.
commitments.
ChemChina
Commitmentson horizontalcompetition
ChemChina will keep taking appropriate measuresto resolve the same issue between ADAMA andAnhui Petrochemical Co., Ltd. within four yearsafter ADAMA buys 100% shares of ADAMASolutions through the issuance of shares to CNACand finishes the raising of supporting finance inaccordance with the original commitments as well
January 7, 2020
January 4,2022
Completed.The committed partycomplies with thecommitments. CNAC,the wholly-ownedsubsidiary ofChemChina, signed an
ADAMA Ltd Annual Report 2022
Commitment
Commitmentmaker
Commitmenttype
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillmentas various the requirements of securities laws andregulations and industry policies.
Entrusted Operationand ManagementAgreement with theCompany, andentrusted theoperation andmanagement of AnhuiPetrochemical Co.,Ltd. to the Company.
Note: On January 4,2018, ADAMAcompleted thepurchase of the sharesof ADAMA AgriculturalSolutions Ltd. and theraising of supportingfinance.
Based on a preliminary review, ChemChinabelieves that Syngenta A.G. and ADAMA mayhave horizontal competition to some extent. It willfurther analyze, confirm and specify if the twocompanies share the same or similar businessesand products in terms of business content,suppliers and customers, product substitution,processes and core technologies and distributionchannels, etc. If the result will be positive,ChemChina will gradually solve the issue within 5years after the issuance of this Letter by taking
January 7, 2020
January 7,2025
On-going.The committed partycomplies with thecommitments.
ADAMA Ltd Annual Report 2022
Commitment
Commitmentmaker
Commitmenttype
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillmentappropriate measures, including but not limited tointernal asset restructuring, industrial planning andbusiness structure adjustment, technologytransformation and product upgrading, marketsegmentation or other feasible solutions inaccordance with the requirements of securitieslaws and regulations and industry policies.Once Sinofert and Sinochem Agriculture are thesubsidiaries of ChemChina, ChemChina willanalyze if there are same or similar businessesamong the three subsidiaries. If the result will bepositive, ChemChina will then proposecorresponding solutions for any business or productthat constitutes competition in accordance with therequirements of applicable laws, regulations andregulations to solve the issue of horizontalcompetition.
January 7, 2020
Long term
On-going.The committed partycomplies with thecommitments.
Other than the foregoing, none of the mainbusiness of ChemChina and other controlledsubsidiaries is the same or similar to that ofADAMA.
January 7, 2020
Long term
On-going.The committed partycomplies with thecommitments.ChemChina will continue to take effectivemeasures to prevent itself and its othersubsidiaries from adding new businesses in thefuture that are the same as or similar to those ofADAMA.
January 7, 2020
Long term
On-going.The committed partycomplies with thecommitments.
ADAMA Ltd Annual Report 2022
Commitment
Commitmentmaker
Commitmenttype
Contents
Time ofmakingcommitment
Period ofcommitment
FulfillmentIf ChemChina or any of its other subsidiariesdevelops related businesses that constituteshorizontal competition against the domesticbusiness of ADAMA in the future, it will activelytake relevant measures, including but not limitedto asset restructuring, adjustment of industrialplanning and business structure, technologicaltransformation and Product upgrades, marketsegmentation and other feasible solutions, so thateach enterprise will be different in their portfolioand end users and avoid and eliminate thehorizontal competition with ADAMA.From the effective date of the Commitment Letter,if ChemChina violates the above commitments, itshould compensate ADAMA for the losses orexpenses suffered or incurred by the violation.
January 7, 2020
Long termeffective
On-going.The committed partycomplies with thecommitments.
SinochemHoldings
Commitment tomaintain theindependence ofADAMA
This acquisition will not materially adversely affectthe independence of ADAMA in terms of staff,assets, finance, business and organization.After completion of the acquisition transaction,ADAMA will continue to keep completeprocurement, production and sales systems and topossess independent intellectual properties.Sinochem Holdings and its affiliated parties willstrictly abide by the relevant provisions on theindependence of listed companies in relevantlaws, regulations and normative documents andbe completely independent from ADAMA in termsof staff, assets, finance, business andorganization, so as to ensure ADAMA will have full
September 16,2021
continue to beeffective duringthe period thatSinochemHoldingscontrolsADAMA
On-going.The committed partycomplies with thecommitments.
ADAMA Ltd Annual Report 2022
Commitment
Commitment
maker
Commitment
type
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillmentcapacity of operation in Chinese agriculturalchemical market. Sinochem Holdings will followrelated regulations in Company Law andSecurities Law, and avoid engagement in anyaction that impairs the operating independence ofADAMA.
SinochemHoldings
Commitmentson the horizontalcompetition
With regard to the present or future possiblecompetition between the subsidiaries ofChemChina and ADAMA, Sinochem Holdings willearnestly urge ChemChina to fulfill itscommitments to ADAMA to avoid horizontalcompetition.
September 16,2021
continue to beeffective duringthe period thatSinochemHoldingscontrolsADAMA
On-going.The committed partycomplies with thecommitments.As for the horizontal competition betweenSinochem Holdings’ subsidiaries and ADAMAarising from this equity transfer, SinochemHoldings will, according to the requirements ofrelevant securities regulatory authorities, withinfive years from the effective date of this letter ofcommitment, comprehensively use entrustedmanagement, asset reorganization, equityreplacement/transfer, business merger/adjustmentor other legal means to steadily promote theintegration of related assets or businesses thatmeet the requirements of injection into ADAMA inline with the principle of benefiting thedevelopment of ADAMA and safeguardingshareholders' interests, especially those ofminority shareholders.
September 16,2021
September 16,2026
On-going.The committed partycomplies with thecommitments.
ADAMA Ltd Annual Report 2022
Commitment
Commitmentmaker
Commitment
type
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillment
Sinochem Holdings will strictly abide by therelevant laws, regulations and normativedocuments, AOA and other internal managementsystem of ADAMA, exercise the rights ofshareholders according to the law through theequity relationship, in line with the principle ofstate ownership and hierarchical management ofstate-owned assets, properly handle mattersinvolving ADAMA's interests, and shall not use thecontrol position to seek improper interests ortransfer interests.
September 16,2021
continue to beeffective duringthe period thatSinochemHoldingscontrolsADAMA
On-going.The committed partycomplies with thecommitments.
SinochemHoldings
Commitment tostandardizerelated-partytransactions
Sinochem Holdings and its controlled subsidiarieswill, as required by law, regulation and otherspecifications, avoid and reduce related partytransactions with ADAMA; however, for the relatedparty transactions that are inevitable or based onreasonable grounds, Sinochem Holdings and itscontrolled subsidiaries will strictly abide by therelevant laws, regulations and normativedocuments and relevant systems of ADAMA,legally enter into agreement(s) by law, go throughlawful procedures, ensure fair pricing and performits disclosure obligations. Sinochem Holdings andits controlled subsidiaries warrant that no relatedparty transaction will be done to impair lawfulrights and interest of ADAMA and its shareholders.
September 16,2021
continue to beeffective duringthe period thatSinochemHoldingscontrolsADAMA
On-going.The committed partycomplies with thecommitments.
Commitmentsmade at thetime of assetsreorganization
ChemChina
Commitmentson the horizontalcompetition
The subsidiaries controlled by ChemChina,namely Anpon, HH, Maidao, Anhui Petrochemicaland Heilong as well as their subsidiaries are insimilar or the same business as ADAMA. For the
October 12,2016
January 4,2022
The commitmentslisted in the left columnhave been completed.The committed party
ADAMA Ltd Annual Report 2022
Commitment
Commitmentmaker
Commitmenttype
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillmenthorizontal competition in China, ChemChinacommits to take appropriate actions to solve thehorizontal competition between its subsidiariesand ADAMA step-by-step in an appropriate waywithin 4 years after completion of thereorganization, in accordance with securities laws,regulations and sector/industrial policies.The means by which ChemChina addresses thehorizontal competition include but are not limitedto the following,ADAMA acquires crop protection-related assetsunder ChemChina. ADAMA holds or controls othercrop protection-related assets of ChemChina inline with national laws and by reasonablecommercial means such as entrusted operation.ChemChina divests other crop protection-relatedassets or transfers the control power of suchsubsidiaries to external parties. ChemChinareorganizes internal assets, adjusts sectorplanning and business structure, upgradestechnologies and products and makes marketsegmentation so that each company willdifferentiate its products and end users toeliminate horizontal competition between thesubsidiaries controlled by ChemChina andADAMA.
complies with thecommitments: (1) thereorganization, i.e. theissuance of shares toCNAC for purchasingassets andimplementation ofprivate placement,completed on January4, 2018; (2) Anponmerged with Maidaoand ChemChina’sshares in Anpon hadbeen transferred toADAMA; (3)ChemChina hadtransferred its sharesin Heilong to a thirdparty. Heilong is nolonger a subsidiary ofChemChina; (4) HHwithdrew from theagrochemicalbusiness;(5) CNAC,the wholly-ownedsubsidiary ofChemChina, signed anEntrusted Operationand ManagementAgreement with the
ADAMA Ltd Annual Report 2022
Commitment
Commitment
maker
Commitmenttype
Contents
Time ofmakingcommitment
Period ofcommitment
FulfillmentCompany, andentrusted theoperation andmanagement of AnhuiPetrochemical Co.,Ltd. to the Company.
ChemChina
Commitmentson PotentialHorizontalCompetition
ChemChina will take effective actions to avoid thatit or its controlled subsidiaries will add newbusiness in China same or similar to ADAMA.If ChemChina or its controlled subsidiaries will inthe future be engaged in business in China thatconstitutes horizontal competition with ADAMA,ChemChina will take active actions, including butnot limited to reorganizing internal assets,adjusting sector planning and business structure,upgrading technologies and products and makingmarket segmentation so that each company willdifferentiate its products and end users to avoidand eliminate horizontal competition between thesubsidiaries controlled by ChemChina andADAMA.
October 12,2016
Long term
On-going.The committed partycomplies with thecommitments.
ChemChina
Commitment toreduce andstandardizerelated-partytransactions
ChemChina will, as required by law, regulation andother specifications, avoid and reduce relatedparty transactions with ADAMA; however, for therelated party transactions that are inevitable orbased on reasonable grounds, ChemChina willfollow the just, fairness and open principles inmarket, legally enter into agreement(s) by law, gothrough lawful procedures, and perform itsdisclosure obligations and approving procedures
August 4, 2016 Long term
On-going.The committed partycomplies with thecommitments.
ADAMA Ltd Annual Report 2022
Commitment
Commitmentmaker
Commitmenttype
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillmentas required by related systems and regulations.ChemChina warrants that no related partytransaction will be done to impair lawful rights andinterest of ADAMA and its shareholders.
ChemChina
Commitment tomaintainindependence ofthe ADAMA
After completion of the acquisition transaction,ADAMA will continue to keep completeprocurement, production and sales systems and topossess independent intellectual properties, andChemChina and its affiliated parties will becompletely independent from ADAMA in terms ofstaff, assets, finance, business and organization,and ADAMA will have full capacity of operation inChinese agricultural chemical market. ChemChinawill follow related regulations in Company Law andSecurities Law, and avoid engagement in anyaction that impairs the operating independence ofADAMA.
August 4, 2016 Long term
On-going.The committed partycomplies with thecommitments.
Commitmentsmade at IPO orrefinancing
-- -- -- -- -- --Share incentivecommitments
-- -- -- -- -- --Othercommitments tothe company'sminorityshareholders
Syngenta
Group
Commitmentson HorizontalCompetition
I. Companies that are controlled by SyngentaGroup and have horizontal competition withADAMAAfter reviewing, as of the date of issuance of thecommitment letter, there is a small amount ofoverlap in the field of off-patent crop protectionproducts between SAG, a subsidiary of Syngenta
November 1,2021
January 7,2025
On-going.The committed partycomplies with thecommitments.
ADAMA Ltd Annual Report 2022
Commitment
Commitment
maker
Commitmenttype
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillment
Group, and the Company, and a small amount ofoverlap in the field of active ingredients andformulation products between Yangnong ChemicalCo., Ltd. (hereinafter referred to as "YNChemical") and the Company. In both cases, suchsmall overlap is not causing a negative impact onany of the subject companies.Except for the aforementioned scenarios, themajor business of Syngenta Group and othercompanies controlled by Syngenta Group does notoperate the same or similar business with theCompany.II. Commitment and timetable to address thehorizontal competitions mentioned aboveIn accordance with and in compliance with theapplicable laws, regulations and relevantregulatory requirements then in effectiveness,Syngenta Group will adopt appropriate measuresto gradually solve the horizontal competitionsamong SAG, YN Chemical and the Companywithin 5 years after the issuance of SupplementalCommitment Letter of China National ChemicalCorporation on Avoiding Horizontal Competitionwith ADAMA by ChemChina on January 7, 2020.The aforementioned solutions include but notlimited to:
(1) Asset restructuring: adopt different methods
permitted by relevant laws, regulations and
ADAMA Ltd Annual Report 2022
Commitment
Commitmentmaker
Commitmenttype
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillmentregulatory policies such as cash or issuance ofshares to purchase assets, asset replacement,asset transfer or other feasible restructuringmethods. Assets are sorted out and reorganized toeliminate the overlap of relevant businesses;
(2) Adjust industry planning and business
structure: sort out business boundaries, realizebusiness differentiation through asset transactions,business divisions and other different methods,including but not limited to business composition,product grades, application areas, and customergroups. Syngenta Group will try its best to achievedifferentiated business operations;
(3) Technological transformation and product
upgrade: achieve product differentiation throughappropriate technological transformation andproduct upgrade, and Syngenta Group will try itsbest to achieve differentiated operations;
(4) Market segmentation: signing agreements
while taking into consideration of the business andother factors to appropriately divide the market;
(5) Entrusted management: by signing an
entrustment agreement, one party will delegatethe decision-making and management involved inthe operation of the overlapped assets to the otherparty for unified management;
(6) Establish a joint venture company: jointly
establish a company in an appropriate way;
ADAMA Ltd Annual Report 2022
Commitment
Commitmentmaker
Commitmenttype
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillment
(7) Other feasible solutions within the scope
permitted by relevant laws, regulations andregulatory policies.The implementation of the above-mentionedresolution is based on the implementation of thenecessary review procedures for listed companies,the approval procedures of the securitiesregulatory authority and relevant authorities(including but not limited to the antitrust reviewthat may be applicable) in accordance withrelevant laws and regulations, and the informationdisclosure obligations should be fulfilled accordingto relevant laws and regulations.
III. Syngenta Group’s commitment to potentialhorizontal competition with the Company in thefutureSyngenta Group will continue to take effectivemeasures to prevent itself and its controlledcompanies from having new businesses that arethe same or similar to the Company’s domesticbusiness in the future. If Syngenta Group or acompany controlled by Syngenta Group developsrelated businesses that constitute horizontalcompetition with the Company’s domesticbusiness in the future, Syngenta Group willactively take relevant measures, including but notlimited to asset restructuring, adjustment ofindustry planning and business structure,technological transformation and product
November 1,2021
continue to bevalid during theperiod whenSyngentaGroup is thecontrollingshareholder ofthe Company
On-going.The committed partycomplies with thecommitments.
ADAMA Ltd Annual Report 2022
Commitment
Commitmentmaker
Commitmenttype
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillmentupgrades, market segmentation or other feasiblesolutions to differentiate between products andend users of each company, so as to avoid andeliminate horizontal competition betweenSyngenta Group or the company controlled by theSyngenta Group and the Company.If Syngenta Group breaches the aboveundertakings, it will bear the corresponding legalliabilities in accordance with the relevant laws andregulations, including the Guidelines for theSupervision of Listed Companies No. 4 -Undertakings and Performance by ActualControllers, Shareholders, Related Parties,Purchasers of Listed Companies and ListedCompanies.The letter of commitment will take effect on thedate of signing and will continue to be valid duringthe period when Syngenta Group is the controllingshareholder of the Company.Whether thecommitmentsare fulfilled ontime
YesIf thecommitment isoverdue, thespecific reasonsfor notcompleting the
--
ADAMA Ltd Annual Report 2022
Commitment
Commitmentmaker
Commitmenttype
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillmentperformance andthe next workplan should beexplained indetail.
ADAMA Ltd Annual Report 2022
2. Assets or projects with profit forecast, still relevant for forecast period
□ Applicable √ Not applicable
II. Inadequate use of Company’s capital by the controlling shareholder or by its
related parties for non-operating purposes
□ Applicable √ Not applicable
No such situation occurred during the Reporting Period.
III. Non-compliance with external guarantees
□ Applicable √ Not applicable
No such cases during the reporting period.
IV. Explanation by the board of directors on the latest "non-standard audit report"
□ Applicable √ Not applicable
V. Explanation by the Board of Directors, the Supervisory Board and independent
directors (if any) regarding “non-standard audit report” issued by Company’sauditor for the Reporting Period
□ Applicable √ Not applicable
VI. Changes in accounting standards, accounting estimates or corrections of
significant accounting errors compared to last financial report
√ Applicable □ Not applicable
On 30 December 2021, the Ministry of Finance issued "Accounting Standards for Business Enterprises Interpretation No.15” (hereinafter referred to as “Interpretation No. 15”) which clarified the accounting treatments for the sale of the productsor by-products produced before the assets being capable of operating in a predetermined manner or produced during theresearch and development process and clarified the costs a company should include as the cost of fulfilling a contractwhen assessing whether a contract is onerous.
According to the Interpretation No.15, the above clarifications were effective from 1 January 2022. Adoption of theinterpretations has no significant impact on the Group’s financial statements.
On 30 November 2022, the Ministry of Finance issued "Accounting Standards for Business Enterprises Interpretation No.16” (hereinafter referred to as “Interpretation No. 16”) which clarified the following accounting treatments:
(1) Deferred tax related to assets and liabilities arising from a single transaction;
(2) The income tax treatment of the dividend paid as the issuer of an equity instrument; and
ADAMA Ltd Annual Report 2022
(3) When an entity changes a cash-settled share-based payment to an equity-settled share-based payment.
According to the Interpretation No.16, the second and the third clarifications were effective from 30 November 2022. Adop-tion of the interpretations has no significant impact on the Group’s financial statements.
VII. Change of the consolidation scope as compared with the financial reporting of
last year
□Applicable √ Not applicable
VIII. Engagement of Company’s AuditorAuditor engaged at presentName of domestic Auditor Deloitte Touche Tohmatsu Certified Public Accountants LLPRemuneration for domestic Auditor for theReporting Period (RMB Ten Thousand Yuan)
Consecutive years of the audit servicesprovided by domestic Auditor
Name of domestic accountantsJi Yuting and Zhao JingyuanConsecutive years of the audit servicesprovided by the domestic accountants
Name of overseas Auditor Not applicableRemuneration for overseas Auditor for theReporting Period (RMB Ten Thousand Yuan)
--Consecutive years of the audit servicesprovided by overseas Auditor
--Name of overseas accountants --Consecutive years of the audit servicesprovided by the overseas accountants
--
Change of the Auditor at Reporting Period
□ Yes √ No
Engagement of the Auditor for internal control, financial adviser or sponsor
√ Applicable □ Not applicable
In the Reporting Period, the Company continued to engage Deloitte Touche Tohmatsu Certified Public Accountants LLP asthe auditor of the Company for 2022 annual financial reports and 2022 annual internal control of the Company. Totalremuneration for the Auditor was RMB 3.2 million.
ADAMA Ltd Annual Report 2022
IX. Trading termination of Company’s securities that the Company will face after the
disclosure of this annual report
□ Applicable √ Not applicable
X. Bankruptcy and reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.XI. Material Legal Claims/proceedings
□ Applicable √ Not applicable
No such cases in the Reporting Period.XII. Punishment and rectification
□ Applicable √ Not applicable
None during the Reporting Period.XIII. Credibility of the Company, its controlling shareholders and actual controller
√ Applicable □ Not applicable
The Company’s controlling shareholder and actual controller are in good credibility status. They are not in the situation thatthe effective judgment of the court was not executed and the large amount of debt was not repaid when due during thereporting period.
ADAMA Ltd Annual Report 2022
XIV. Significant related-party transactions
1. Related-party transactions in the ordinary course of business
√ Applicable □Not applicable
Relatedparty
Relationship
Type of re-
lated party
transac-tion
Content ofrelatedparty trans-action
Pricing
lated partyprinciple
of re-latedpartytransac-
tion
Price
Value(RMB‘0000)
Per-cent-age
principleagainst
trans-
againstactions
of thesamekind
actions
Ap-provedtransac-tionquota(RMB‘0000)
Whether
Whetherexceeds
the ap-provedquota
exceeds
Settlement
methods
Settlement
Marketprice ofsimilartransac-tions ifthe Com-panyknows
Date of an-nounce-ment
Index of the dis-
closure
Syngenta
A.G. and its
subsidiaries
A.G. and its
Under thesame controlof SinochemHoldings
Purchasing
raw materi-als andproductsfrom re-lated par-ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Marketprice
Marketprice
129,897
4.90%
145,104
No
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Bluestar(Beijing)ChemicalMachinery
Co., Ltd.
Under thesame controlof Sinochem
Holdings
Course of BusinessPurchasing
raw materi-
als andproductsfrom re-lated par-
ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Market
price
Market
price
113 0.00%
650 No
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)JiangsuHuaiheChemicalsCo., Ltd.
Under thesame controlof Sinochem
Holdings
Course of BusinessPurchasing
raw materi-
als andproductsfrom re-
lated
PurchasingPurchase of
raw materi-als/products
Purchase of
Market
price
Market
price
20,187
0.76%
19,830
Yes
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the OrdinaryCourse of
Party TransactionsBusiness
in 2022 (No.2022-
ADAMA Ltd Annual Report 2022
Relatedparty
Relationship
Type of re-
lated party
transac-
tion
Content ofrelatedparty trans-action
Pricing
lated partyprinciple
of re-latedpartytransac-tion
Price
Value(RMB‘0000)
Per-cent-age
principleagainst
trans-
againstactions
of thesamekind
actions
Ap-provedtransac-tionquota(RMB‘0000)
Whether
Whetherexceeds
the ap-provedquota
exceeds
Settlement
methods
Settlement
Marketprice ofsimilartransac-tions ifthe Com-panyknows
Date of an-nounce-ment
Index of the dis-closure
parties 10)Sinofert
Under thesame controlof SinochemHoldings
Purchasing
raw materi-als andproductsfrom re-lated par-ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Marketprice
Marketprice
414 0.02%
200 Yes
Cash Set-tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)JiangsuYangnongChemicalCo., Ltd.
Under thesame controlof SinochemHoldings
Course of BusinessPurchasing
raw materi-als andproductsfrom re-lated par-
ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Market
price
Market
price
55,760
2.11%
129,356
No
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)JiangsuYoushiChemicalCo., Ltd.
Under thesame controlof Sinochem
Holdings
Course of BusinessPurchasing
raw materi-
als andproductsfrom re-lated par-
ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Market
price
Market
price
2,646 0.10%
128 Yes
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)JiangsuRuixiangChemicalCo., Ltd.
Under thesame controlof Sinochem
Holdings
Course of BusinessPurchasing
raw materi-
als andproducts
PurchasingPurchase of
raw materi-als/products
Purchase of
Market
price
Market
price
0 0.00%
96 No - N/A
March31,2022
Announcement onExpected Related-
| Party Transactions |
in the Ordinary
ADAMA Ltd Annual Report 2022
Relatedparty
Relationship
Type of re-
lated party
transac-tion
Content ofrelatedparty trans-action
Pricing
lated partyprinciple
of re-latedpartytransac-tion
Price
Value(RMB‘0000)
Per-cent-age
principleagainst
trans-
againstactions
of thesamekind
actions
Ap-provedtransac-tionquota(RMB‘0000)
Whether
Whetherexceeds
the ap-provedquota
exceeds
Settlement
methods
Settlement
Marketprice ofsimilartransac-tions ifthe Com-panyknows
Date of an-nounce-ment
Index of the dis-closure
from re-lated par-ties
Course of Business
in 2022 (No.2022-
10)Jiangsu
Course of BusinessYoujia Plant
ProtectionCo., Ltd.
Under thesame controlof SinochemHoldings
Youjia PlantPurchasing
raw materi-als andproductsfrom re-lated par-ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Marketprice
Marketprice
25,516
0.96%
540 Yes
Cash Set-tlement
N/A
March31,2022
Announcement onExpected Related-Part
y Transactions
in the Ordinary
y TransactionsCourse of Business
in 2022 (No.2022-
10)Hangzhou
Course of Business(Torch) Xidou
Door Film In-
dustry Co.,
Ltd.
Under thesame controlof Sinochem
Holdings
(Torch) XidouPurchasing
raw materi-als andproductsfrom re-lated par-
ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Market
price
Market
price
11 0.00%
33 No
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Bluestar En-
gineeringCo.,Ltd.
Under thesame controlof Sinochem
Holdings
Course of BusinessPurchasing
raw materi-
als andproductsfrom re-lated par-
ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Market
price
Market
price
591 0.02%
10 Yes
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-Party Tr
ansactions
in the Ordinary
ansactionsCourse of Business
in 2022 (No.2022-
10)SinochemAgro Co.,Ltd.
Course of Business
Under thesame control
Purchasing
raw
| Purchasing | Purchase of |
raw
Market
price
Market
price
11,006
0.42%
17,329
No
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
ADAMA Ltd Annual Report 2022
Relatedparty
Relationship
Type of re-
lated party
transac-tion
Content ofrelatedparty trans-action
Pricing
lated partyprinciple
of re-latedpartytransac-tion
Price
Value(RMB‘0000)
Per-cent-age
principleagainst
trans-
againstactions
of thesamekind
actions
Ap-provedtransac-tionquota(RMB‘0000)
Whether
Whetherexceeds
the ap-provedquota
exceeds
Settlement
methods
Settlement
Marketprice ofsimilartransac-tions ifthe Com-panyknows
Date of an-nounce-ment
Index of the dis-closure
of SinochemHoldings
materialsand prod-ucts fromrelated par-ties
materi-als/products
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Zhonglan In-
ternationalChemicalCo., Ltd.
Under thesame controlof Sinochem
Holdings
Course of BusinessPurchasing
raw materi-
als andproductsfrom re-lated par-
ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Market
price
Market
price
16,647
0.63%
18,000
No
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-Pa
rty Transactions
in the Ordinary
rty TransactionsCourse of Business
in 2022 (No.2022-
10)ELKEM
Course of BusinessSILICONES
BRASIL
LTDA
Under thesame controlof Sinochem
Holdings
SILICONESPurchasing
raw materi-
als andproductsfrom re-lated par-
ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Market
price
Market
price
193 0.01%
- -
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)ShandongDacheng Ag-
rochemicalCompany
Limited
Under thesame controlof Sinochem
Holdings
Course of BusinessPurchasing
raw materi-
als andproductsfrom re-lated par-
ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Market
price
Market
price
2,551 0.10%
- -
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)
ADAMA Ltd Annual Report 2022
Related
party
Relationship
Type of re-
lated party
transac-tion
Content ofrelatedparty trans-action
Pricing
lated partyprinciple
of re-latedpartytransac-tion
Price
Value(RMB‘0000)
Per-cent-age
principleagainst
trans-
againstactions
of thesamekind
actions
Ap-provedtransac-tionquota(RMB‘0000)
Whether
Whetherexceeds
the ap-provedquota
exceeds
Settlement
methods
Settlement
Marketprice ofsimilartransac-tions ifthe Com-panyknows
Date of an-nounce-ment
Index of the dis-closure
ShenyangChemicalCo., Ltd.
Under thesame controlof SinochemHoldings
Receivingservicesfrom re-lated par-ties
Regular ser-vices
Marketprice
Marketprice
11 0.00%
- -
Cash Set-tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Sino MAP
Course of Business
Under thesame controlof SinochemHoldings
Receivingservicesfrom re-lated par-ties
Regular ser-vices
Market
price
Market
price
3 0.00%
- -
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)SinochemLantian Fluo-
rine Materi-als Co. Ltd.
Course of Business
Under thesame controlof Sinochem
Holdings
Purchasing
raw materi-
als andproductsfrom re-lated par-
ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Market
price
Market
price
181 0.01%
- -
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Bluestar En-
gineeringCo.,Ltd.
Under thesame controlof Sinochem
Holdings
Course of BusinessPurchasing
fixed as-sets fromrelated par-
ties
PurchasingPurchase of
fixed assets
Purchase of
Market
price
Market
price
390 0.01%
6,500 No
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
ADAMA Ltd Annual Report 2022
Relatedparty
Relationship
Type of re-
lated party
transac-
tion
Content of
relatedparty trans-action
Pricing
lated partyprinciple
of re-latedpartytransac-tion
Price
Value(RMB‘0000)
Per-cent-age
principleagainst
trans-
againstactions
of thesamekind
actions
Ap-provedtransac-tionquota(RMB‘0000)
Whether
Whetherexceeds
the ap-provedquota
exceeds
Settlement
methods
Settlement
Marketprice ofsimilartransac-tions ifthe Com-panyknows
Date of an-nounce-ment
Index of the dis-closure
in 2022 (No.2022-
10)ShandongDacheng Ag-rochemicalCompanyLimited
Under thesame controlof SinochemHoldings
Purchasing
fixed as-sets fromrelated par-ties
PurchasingPurchase of
fixed assets
Purchase of
Marketprice
Marketprice
169 0.01%
- -
Cash Set-tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)ChangshaHuaxing
Course of BusinessConstruction
ConstructionSupervision
Co., Ltd.
Under thesame controlof Sinochem
Holdings
SupervisionPurchasing
fixed as-sets fromrelated par-
ties
PurchasingPurchase of
fixed assets
Purchase of
Market
price
Market
price
25 0.00%
- -
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Syngenta
Course of BusinessA.G. and its
subsidiaries
A.G. and its
Under thesame controlof Sinochem
Holdings
Purchasing
fixed as-sets fromrelated par-
ties
PurchasingPurchase of
fixed assets
Purchase of
Market
price
Market
price
394 0.01%
- -
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)ChinaBluestarChengrand
Under thesame controlof Sinochem
Course of BusinessPurchasing
raw materi-
als and
| Purchasing | Purchase of |
raw materi-als/products
Market
price
Market
price
0.2 0.00%
- -
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
ADAMA Ltd Annual Report 2022
Relatedparty
Relationship
Type of re-
lated party
transac-tion
Content ofrelatedparty trans-
action
Pricing
lated partyprinciple
of re-latedpartytransac-tion
Price
Value(RMB‘0000)
Per-cent-age
principleagainst
trans-
againstactions
of thesamekind
actions
Ap-provedtransac-tionquota(RMB‘0000)
Whether
Whetherexceeds
the ap-provedquota
exceeds
Settlement
methods
Settlement
Marketprice ofsimilartransac-tions ifthe Com-panyknows
Date of an-nounce-ment
Index of the dis-closure
Research In-stitute Chem-ical Industry
Holdings products
from re-lated par-ties
in the Ordinary
Course of Business
in 2022 (No.2022-
10)ShenyangShenhua In-stitute Test-ing Technol-ogy Co., Ltd.
Course of Business
Under thesame controlof SinochemHoldings
Purchasing
raw materi-als andproductsfrom re-lated par-ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Marketprice
Marketprice
3 0.00%
- -
Cash Set-tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)ShenyangSciencreatChemicalsCo. Ltd.
Course of Business
Under thesame controlof Sinochem
Holdings
Purchasing
raw materi-
als andproductsfrom re-lated par-
ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Market
price
Market
price
110 0.00%
- -
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Sinochem In-
formationTechnology
Co. Ltd.
Under thesame controlof Sinochem
Holdings
Receiving
servicesfrom re-lated par-
ties
Value-
Course of Businessadded
OA services
added
Market
price
Market
price
31 0.00%
- -
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Syngenta Under the
Course of BusinessSelling raw
Selling Market Market 161,925
| Selling raw |
4.34%
127,343
Yes Cash N/A March Announcement on
ADAMA Ltd Annual Report 2022
Related
party
Relationship
Type of re-
lated party
transac-tion
Content ofrelatedparty trans-action
Pricing
lated partyprinciple
of re-latedpartytransac-
tion
Price
Value(RMB‘0000)
Per-cent-age
principleagainst
trans-
againstactions
of thesamekind
actions
Ap-provedtransac-tionquota(RMB‘0000)
Whether
Whetherexceeds
the ap-provedquota
exceeds
Settlement
methods
Settlement
Marketprice ofsimilartransac-tions ifthe Com-panyknows
Date of an-nounce-ment
Index of the dis-closure
A.G. and its
subsidiaries
A.G. and its
same controlof SinochemHoldings
materialsand prod-ucts to re-lated par-ties
products price price Settlement
31,2022
Expected Related-
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Syngenta
Course of BusinessA.G. and its
subsidiaries
A.G. and its
Under thesame controlof SinochemHoldings
Rendering
Renderingservices to
related par-ties
Regular ser-vices
Marketprice
Marketprice
975 0.03%
services to
- No
Cash Set-tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)JiangsuHuaiheChemicalsCo., Ltd.
Under thesame controlof Sinochem
Holdings
Course of BusinessSelling raw
materialsand prod-ucts to re-lated par-
ties
Selling prod-
ucts
Market
price
Market
price
24,716
Selling raw
0.66%
23,640
Yes
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Sinofert
Under thesame controlof Sinochem
Holdings
Course of BusinessSelling raw
materialsand prod-ucts to re-lated par-ties
Selling prod-
ucts
Market
price
Market
price
10,002
Selling raw
0.27%
10,280
No
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)
ADAMA Ltd Annual Report 2022
Relatedparty
Relationship
Type of re-
lated party
transac-tion
Content ofrelatedparty trans-action
Pricing
lated partyprinciple
of re-latedpartytransac-tion
Price
Value(RMB‘0000)
Per-cent-age
principleagainst
trans-
againstactions
of thesamekind
actions
Ap-provedtransac-tionquota(RMB‘0000)
Whether
Whetherexceeds
the ap-provedquota
exceeds
Settlement
methods
Settlement
Marketprice ofsimilartransac-tions ifthe Com-panyknows
Date of an-nounce-ment
Index of the dis-closure
Sino MAP
Under thesame controlof SinochemHoldings
Selling raw
materialsand prod-ucts to re-lated par-ties
Selling prod-ucts
Marketprice
Marketprice
849 0.02%
Selling raw
541 Yes
Cash Set-tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)JiangsuYangnongChemicalCo., Ltd.
Under thesame controlof SinochemHoldings
Course of BusinessSelling raw
materialsand prod-ucts to re-lated par-ties
Selling prod-ucts
Marketprice
Marketprice
6 0.00%
Selling raw
200 No
Cash Set-tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)JiangsuYoushiChemicalCo., Ltd.
Under thesame controlof Sinochem
Holdings
Course of BusinessSelling raw
materialsand prod-ucts to re-lated par-
ties
Selling prod-
ucts
Market
price
Market
price
12,344
Selling raw
0.33%
6,100 Yes
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-Party
Transactions
in the Ordinary
TransactionsCourse of Business
in 2022 (No.2022-
10)Zhonglan In-
ternationalChemicalCo., Ltd.
Under thesame controlof Sinochem
Holdings
Course of BusinessSelling raw
materialsand prod-ucts to re-
lated
Selling prod-
ucts
Market
price
Market
price
- 0.00%
Selling raw
300 No - N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
ADAMA Ltd Annual Report 2022
Relatedparty
Relationship
Type of re-
lated party
transac-tion
Content of
relatedparty trans-action
Pricing
lated partyprinciple
of re-latedpartytransac-tion
Price
Value(RMB‘0000)
Per-cent-age
principleagainst
trans-
againstactions
of thesamekind
actions
Ap-provedtransac-tionquota(RMB‘0000)
Whether
Whetherexceeds
the ap-provedquota
exceeds
Settlement
methods
Settlement
Marketprice ofsimilartransac-tions ifthe Com-panyknows
Date of an-nounce-ment
Index of the dis-
closure
parties in 2022 (No.2022-
10)Jiangsu
Youjia Plant
ProtectionCo., Ltd.
Under thesame controlof SinochemHoldings
Youjia PlantSelling raw
materialsand prod-ucts to re-lated par-ties
Selling prod-ucts
Marketprice
Marketprice
181 0.00%
Selling raw
240 No
Cash Set-tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)ShenyangSciencreatChemicalsCo. Ltd.
Course of Business
Under thesame controlof SinochemHoldings
Selling raw
materialsand prod-ucts to re-lated par-
ties
Selling prod-
ucts
Market
price
Market
price
5 0.00%
Selling raw
- -
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)SyngentaNantongCrop Protec-tion Co.,Ltd.
Course of Business
Under thesame controlof Sinochem
Holdings
Selling raw
materialsand prod-ucts to re-lated par-ties
Selling prod-
ucts
Market
price
Market
price
2,565 0.07%
Selling raw
4,500 No
Cash Set-tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)SinochemAgro Co.,Ltd.
Course of Business
Under thesame controlof Sinochem
Selling raw
materials
and
Selling prod-
ucts
Market
price
Market
price
209 0.01%
Selling raw
- -
Cash Set-tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
ADAMA Ltd Annual Report 2022
Relatedparty
Relationship
Type of re-
lated party
transac-tion
Content ofrelatedparty trans-action
Pricing
lated partyprinciple
of re-latedpartytransac-
tion
Price
Value(RMB‘0000)
Per-cent-age
principleagainst
trans-
againstactions
of thesamekind
actions
Ap-provedtransac-tionquota(RMB‘0000)
Whether
Whetherexceeds
the ap-provedquota
exceeds
Settlement
methods
Settlement
Marketprice ofsimilartransac-tions ifthe Com-panyknows
Date of an-nounce-ment
Index of the dis-closure
Holdings
products to
related par-ties
in the Ordinary
products toCourse of Business
in 2022 (No.2022-
10)Sinochem In-ternationalCrop CareCompanyLimited
Under thesame controlof SinochemHoldings
Course of BusinessSelling raw
materialsand prod-ucts to re-lated par-ties
Selling prod-ucts
Marketprice
Marketprice
3,956 0.11%
Selling raw
3,000 Yes
Cash Set-tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)China Na-tional Chemi-
cal Infor-mation Cen-ter Co. Ltd.
Course of Business
Under thesame controlof Sinochem
Holdings
Receiving
servicesfrom re-lated par-
ties
Value-
added
OA services
added
Market
price
Marketprice
137 0.01%
94 Yes
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)ZhonglanLianhai De-
Course of Businesssign Institute
Co., Ltd.
Under thesame controlof Sinochem
Holdings
Receiving
servicesfrom re-lated par-
ties
Design ser-
vices
Market
price
Market
price
- 0.00%
sign Institute
50 No - N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Syngenta Under the Receiving Regular Market Market 93 0.00%
Course of Business
45 Yes - N/A March Announcement on
ADAMA Ltd Annual Report 2022
Relatedparty
Relationship
Type of re-
lated party
transac-tion
Content ofrelatedparty trans-action
Pricing
lated partyprinciple
of re-latedpartytransac-tion
Price
Value(RMB‘0000)
Per-cent-age
principleagainst
trans-
againstactions
of thesamekind
actions
Ap-provedtransac-tionquota(RMB‘0000)
Whether
Whetherexceeds
the ap-provedquota
exceeds
Settlement
methods
Settlement
Marketprice ofsimilartransac-tions ifthe Com-panyknows
Date of an-nounce-ment
Index of the dis-closure
A.G. and its
subsidiaries
A.G. and its
same controlof SinochemHoldings
servicesfrom re-lated par-ties
services price price 31,2022
Expected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Bluestar(Beijing)ChemicalMachineryCo., Ltd.
Under thesame controlof SinochemHoldings
Receivingservicesfrom re-lated par-ties
Regular ser-vices
Marketprice
Marketprice
515 0.02%
Course of Business
- -
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Sinochem In-
novation(Beijing)TechnologyResearch In-
stitute Co.,
Ltd.
Under thesame controlof Sinochem
Holdings
Receiving
servicesfrom re-lated par-
ties
Regular ser-
vices
Market
price
Market
price
4.0 0.00%
Course of Business
- No
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)Sinochem In-ternationalCrop CareCompany
Limited
Under thesame controlof Sinochem
Holdings
Course of BusinessPurchasing
raw materi-
als andproductsfrom re-lated par-
ties
PurchasingPurchase of
raw materi-als/products
Purchase of
Market
price
Market
price
773 0.03%
- No
Cash Set-
tlement
N/A
March31,2022
Announcement onExpected Related-
Party Transactions
in the Ordinary
Party TransactionsCourse of Business
in 2022 (No.2022-
10)
ADAMA Ltd Annual Report 2022
Related
party
Relationship
Type of re-
lated party
transac-
tion
Content ofrelatedparty trans-action
Pricing
lated partyprinciple
of re-latedpartytransac-tion
Price
Value(RMB‘0000)
Per-cent-age
principleagainst
trans-
againstactions
of thesamekind
actions
Ap-provedtransac-tionquota(RMB‘0000)
Whether
Whetherexceeds
the ap-provedquota
exceeds
Settlement
methods
Settlement
Marketprice ofsimilartransac-tions ifthe Com-panyknows
Date of an-nounce-ment
Index of the dis-closure
Total -- -- 486,104
-- 514,109
-- -- -- -- --Details of large sales return -Execution of related-party transactions in the ordi-
by types during this reporting period (if any)
According to the Company's daily business operation
nary course of business whose value was expectedneeds, the Company estimates that the total amount of daily
needs, the Company estimates that the total amount of dailyrelated party transactions in 2022 will not exceed RMB 5,141 million. For details, please refer to Announcement on
Expected Related-Party Transactions in the Ordinary Course of Business in 2022 (No.: 2022-
related party transactions in 2022 will not exceed RMB 5,141 million. For details, please refer to Announcement on10). The Company’s actual
10). The Company’s actualamount of daily related party transactions defined in the listing rules incurred for the six months ended December
31,2022 is RMB 4,861 million, which does not exceed the expected amount.Reasons for large difference between transactionprice and market reference price (if applicable)
amount of daily related party transactions defined in the listing rules incurred for the six months ended DecemberThe Company’s related transactions with related party shall be carried out in accordance with the principle of voluntary,
equality and mutual benefit, fair, and will not harm the interests of the Company.
ADAMA Ltd Annual Report 2022
2. Related-party transactions arising from asset acquisition or sale
□ Applicable √ Not applicable
There were no related-party transactions arising from asset acquisition or sale in the Reporting Period.
3. Related-party transitions with joint investments
□ Applicable √ Not applicable
The Company was not involved in any significant related-party transaction with joint investments during the ReportingPeriod.
4. Credits and liabilities with related parties
√ Applicable □ Not applicable
Whether there was non-operating credit and liability with related parties
□ Yes √ No
The Company was not involved in any non-operating credit and liability with related parties.
5. Transactions with finance companies with related relationships
√ Applicable □ Not applicable
Deposit business
In RMB ’0000
RelatedParties
Relations
Maximum
Limit
Range ofInterest Rate
| Daily Deposit | ||
OpeningBalance
Transactions during theReporting Period
EndingBalance
Amount fortheReportingPeriod
TotalWithdrawalAmount fortheReportingPeriodSinochemFinance Co.,Ltd
Under the
Total Depositsame control
of SinochemHoldings
150,000 0.55%-1.9%
same control
- 97,997 56,231 41,766ChemChinaFinanceCorporation
Under the
same control
of SinochemHoldings
40,000 0.05%-1.3%
same control
35,888 9 35,897 -
ADAMA Ltd Annual Report 2022
Facilities and Other Financial Services
In RMB ’0000Related Party Relations Type of the Services
Total Amount
Actual AmountIncurredSinochem FinanceCo., Ltd
Under the same control
of Sinochem Holdings
Under the same control
Facilities 50,000 -
6. Transactions between the finance company controlled by the Company and related parties
□ Applicable √ Not applicable
The company does not hold any equity interest in any finance company.
7. Other material related-party transactions
√ Applicable □ Not applicable
(1) The 2021 Annual General Meeting approved the expected related-party transactions in the ordinary businesscourse of the Company in 2022. Please refer to Item 5 of Section X “in “Financial Report” for details of the related-party transactions in the ordinary business course.
(2) The 16
th Meeting of the 9
thSession of the Board of Directors approved the Proposal on Credit Facilities of $50mfrom the Related Party.
The website to disclose the interim announcements on significant related-party transactions:
Name of the interimannouncement
Disclosure date of the interim
announcement
Website to disclose the interim
announcementAnnouncement on ExpectedRelated-Party Transactions in theOrdinary Course of Business in2022（Announcement No.2022-10 ）
March 31, 2022 Juchao website www.cninfo.com.cn
Announcement on Credit Facility ofUSD 50 million from the RelatedParty（Announcement No.2022-32 ）
December 16, 2022 Juchao website www.cninfo.com.cn
XV. Particulars regarding material contracts and execution thereof
1. Particulars about trusteeship, contract and lease
(1) Trusteeship
□ Applicable √ Not applicable
There was no trusteeship of the Company in the reporting period.
(2) Contract Operation
□ Applicable √ Not applicable
ADAMA Ltd Annual Report 2022
There was no contract operation of the Company in the reporting period.
(3) Lease
□ Applicable √Not applicable
There is no major lease in the reporting period.
2. Significant guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unless otherwise specified, the unit hereunder is RMB ‘0000
Guarantees provided by the Company in favor of third parties (excluding subsidiaries)
party
GuaranteedDisclosure date
of the
Disclosure dateannouncement
Planned
announcementguarantee
amount
guarantee
Actual
occurrence
date
Actual
| occurrence | guarantee |
amount
Type ofguarantee
Collateral
(if any)
Collateral
Counter-
guarantee
(if any)
guarantee
Period of
guarantee
Period of
expired
or not
expired
Guarantee
for arelatedparty ornot-- -- -- -- -- -- -- -- -- -- --
Total guarantee lineapproved in favor of thirdparties (excludingsubsidiaries) during thereporting period (A1)
--
Total amount of theoccurred
Guaranteeguarantee in
favor of third parties(excluding
subsidiaries) during
the reporting period
(A2)
--
Aggregated guarantee linein favor of third parties(excluding subsidiaries)that has been approved bythe end of the reportingperiod (A3)
5,000
Total guarantee
balance in favor of
third parties(excluding
subsidiaries) by the
end of the reportingperiod (A4)
--
Guarantees provided by the Company in favor of its subsidiaries
guarantee inGuaranteed
party
Disclosuredate of the
Guaranteedannouncement
Plannedguaranteeamount
Actual
announcementoccurrence
date
Actual
| occurrence | guarantee |
amount
Type ofguarantee
Collateral
(if any)
Collateral
Counter-
guarantee
(if any)
guarantee
Period of
guarantee
Period of
expired
or not
expired
Guarantee
for arelatedparty or
notADAMAAnpon
December 22,
2020
125,800
February26, 2021
Guarantee
3,000
Jointliability
-- --
Three
| years after |
Yes No
ADAMA Ltd Annual Report 2022
(Jiangsu)Ltd.
April 29, 2021
October 28,2021
andseveralliability
the loanmatures
March 18,2021
4,000
Jointliability
andseveralliability
-- --
Three
years after
the loanmatures
years after
Yes No
April 27,2021
5,950
Jointliability
andseveralliability
-- --
Two years
after theloanmatures
Two years
Yes No
May 21,2021
4,500
Jointliability
andseveralliability
-- --
Two years
after theloanmatures
Two years
Yes No
June 25,2021
3,000
Jointliability
andseveralliability
-- --
Three
years after
the loanmatures
years after
Yes No
December16, 2021
3,300
Jointliabilityandseveralliability
-- --
Three
years after
the loanmatures
years after
Yes No
December1, 2021
4,000
Jointliability
andseveralliability
-- --
Three
years after
years afterthe project
loanmatures
the project
No No
January 1,2022
3,500
Jointliabilityandseveralliability
-- --
Three
years after
years afterthe project
loanmatures
the project
No No
February28, 2022
2,100
Jointliability
andseveral
-- --
Three
years after
years afterthe project
loan
No No
ADAMA Ltd Annual Report 2022
liability
matures
April 28,2022
1,400
Jointliabilityandseveralliability
-- --
Three
years after
years afterthe project
loanmatures
the project
No No
May 20,2022
Jointliability
andseveralliability
-- --
Three
years after
years afterthe project
loanmatures
the project
No No
June 26,
2022
2,350
Jointliabilityandseveralliability
-- --
Three
years after
years afterthe project
loanmatures
the project
No No
January 1,2022
4,000
Jointliabilityandseveralliability
-- --
Three
years after
the loanmatures
years after
Yes No
J
anuary 18,
2022
4,000
Jointliability
andseveralliability
anuary 18,
-- --
Three
years after
the loanmatures
years after
No No
J
anuary 25,
2022
Jointliability
andseveralliability
anuary 25,
-- --
Three
years after
years afterthe project
loanmatures
the project
No No
February28, 2022
Jointliabilityandseveralliability
-- --
Three
years after
years afterthe project
loanmatures
the project
No No
July 2, 2022
Jointliability
andseveralliability
-- --
Three
years after
years afterthe project
loanmatures
the project
No No
ADAMA Ltd Annual Report 2022
ADAMAAnpon(Jiangsu)Ltd.
March 31, 2022
104,100
February26, 2022
3,000
Jointliabilityandseveralliability
-- --
Three
years after
the loanmatures
years after
Yes No
M
arch 30,
2022
3,000
Jointliability
andseveralliability
arch 30,
-- --
Three
years after
the loanmatures
years after
No No
April 26,
2022
Jointliability
andseveralliability
-- --
Two
years
after theloanmatures
years
Yes No
August 11,2022
1,000
Jointliability
andseveralliability
-- --
Three
years after
years afterthe project
loanmatures
the project
No No
A
ugust 31,
2022
1,000
Jointliabilityandseveralliability
ugust 31,
-- --
Three
years after
years afterthe project
loanmatures
the project
No No
O
ctober 28,
2022
1,100
Jointliabilityandseveralliability
ctober 28,
-- --
Three
years after
the
years afterproject
loanmatures
project
No No
O
ctober 31,
2022
1,000
Jointliability
andseveralliability
ctober 31,
-- --
Three
years after
years afterthe project
loanmatures
the project
No No
N
ovember
17, 2022
ovember
2,000
Jointliability
andseveralliability
-- --
Three
years after
years afterthe project
loanmatures
the project
No No
November23, 2022
2,500
Jointliability
-- --
Three
| years after |
No No
ADAMA Ltd Annual Report 2022
andseveralliability
the project
loanmatures
the project
N
ovember
30, 2022
ovember
1,100
Jointliabilityandseveralliability
-- --
Three
years after
years afterthe project
loanmatures
the project
No No
December
17, 2022
December
2,000
Jointliabilityandseveralliability
-- --
Three
years after
the loanmatures
years after
No No
ADAMAHuifeng(Jiangsu)Ltd.
June 29, 2021
33,000
July 27,2021
10,000
Jointliability
andseveralliability
-- --
Three
years after
years afterthe project
loanmatures
the project
Yes No
November5, 2021
5,300
Jointliabilityandseveralliability
-- --
Two years
after the
Two yearsexpiration
expirationof the debt
period
Yes No
Total guarantee lineapproved in favor of thesubsidiaries during thereporting period (B1)
187,100
Total amount of the
of the debtoccurred guarantee in
favor of thesubsidiaries duringthe reporting period
(B2)
37,900
occurred guarantee inAggregated guarantee line
that has been approved in
Aggregated guarantee linefavor of the subsidiaries by
the end of the reporting
period (B3)
345,900
Total guaranteebalance in favor ofthe subsidiaries bythe end of thereporting period (B4)
favor of the subsidiaries by
34,400
Guarantees provided by subsidiaries in favor of subsidiaries (USD ’0000)
Guaranteed
party
Disclosuredate of the
Guaranteedannouncement
Planned
announcementguarantee
amount
guarantee
Actual
occurrence
date
Actual
| occurrence | guarantee |
amount
Type ofguarantee
Collateral
(if any)
Collateral
Counter-
guarantee
(if any)
guarantee
Period of
guarantee
Period of
expired
or not
expired
Guarantee
for arelatedparty or
notControlSolutions,
October 31,1,300
GuaranteeOctober 30,
joint andseveral
-- --
October 30,Generally
7 years
ADAMA Ltd Annual Report 2022
Inc. 2018 2018 liability
| (subject to |
theoverseaslaws)
No No
ControlSolutions,Inc.
January 10,2019
4,000
2019
1,250
joint andseveralliability
January 9,
-- --
The loan
The loanterm (5
term (5years) and
any
years) andapplicable
applicablestatute of
statute oflimitations
period(generally7 years).
limitations
No
No
ADAMA
Brazil
Not applicable
22,229.5
Relatedguaranteesexisted
companywas
before theconsolidated
consolidatedinto the
financialstatements
into theof the
Company.
7,740.28
of the
joint andseveralliability
-- --
Valid until
cancelled
Valid until
No No
ADAMA
Brazil
January 22,2022
December29, 2021
joint andseveralliability
-- --
December
31, 2025
December
No No
Adama
India Private
Ltd.
Not applicable
| India Private |
8,884.32
Relatedguarantees
existedbefore the
companywas
consolidated
into the
financialstatements
of theCompany.
consolidated
4,833.65
joint andseveralliability
-- --
Valid until
cancelled
Valid until
No No
ADAMA Ltd Annual Report 2022
ADAMATurkeyTar?mSanayi veTicaretLimited?irketi
Not applicable
7,150
Relatedguarantees
existedbefore the
companywas
consolidated
into the
financialstatements
of theCompany.
consolidated
983.24
joint andseveralliability
-- --
Valid until
cancelled
Valid until
No No
AdamaMakhteshim
Not applicable
unlimited
Relatedguarantees
existedbefore the
companywas
consolidated
into the
financialstatements
of theCompany.
consolidated
40,279.16
joint andseveralliability
-- --
Valid until
cancelled
Valid until
No No
AdamaAgan
Not applicable
unlimited
Relatedguarantees
existedbefore the
companywas
consolidated
into the
financialstatements
of theCompany.
consolidated
28,693.14
joint andseveralliability
-- --
Valid until
cancelled
Valid until
No No
ADAMA
Agricultural
SolutionsUK Ltd.
January 22,2022
399.23
| Agricultural | January 22, |
2022
121.73
joint andseveralliability
-- --
Valid until
cancelled
Valid until
No
No
ADAMA4,500November
joint and-- --
Valid until
ADAMA Ltd Annual Report 2022
CELSIUSBV,Curacaobranch, &ADAMAFahrenheitBV,CuracaoBranch
2022
24, 2022
| November 25, |
severalliability
cancelled
No No
ADAMACELSIUSBV,Curacaobranch, &ADAMA
Fahrenheit
BV,CuracaoBranch
January 22,2022
7,000
FahrenheitJanuary 22,
2022
6,779.12
| January 22, | ||
joint and
severalliability
/ /
| joint and | ||
| Valid until |
cancelled
No
No
ADAMAUkraine LLC
Not applicable
3,000
Relatedguarantees
existedbefore the
companywas
consolidated
into the
financialstatements
of theCompany.
consolidated
1,020
joint andseveralliability
-- --
Valid until
cancelled
Valid until
No
No
Makhteshim
Agan ofNorthAmercia Inc.
Makhteshim
Not applicable
4,000
Relatedguarantees
existedbefore the
companywas
consolidated
into the
financialstatements
of theCompany.
consolidated
2,000
joint andseveralliability
-- --
Valid until
cancelled
Valid until
No No
ADAMA Ltd Annual Report 2022
Total guarantee lineapproved in favor of thesubsidiaries during thereporting period (C1)
10,899.23(approximately RMB
725.53million)
Total amount of the guarantee in favor of thesubsidiaries occurred during the reporting
period (C2)
94,600.32
RMB 6,588.53 million)
(approximatelyAggregated guarantee line
that has been approved infavor of
Aggregated guarantee linethe subsidiaries by
the end of the reportingperiod (C3)
63,363.05(approximately RMB4,412.98million)(As for Adama
| the subsidiaries by | ||
| Makhteshim and Adama |
Agan, the plannedguarantee amount is
unlimited)
Total guarantee balance in favor of thesubsidiaries by the end of the reporting period
(C4)
94,600.32
RMB 6,588.53)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)Total guarantee lineapproved during thereporting period(A1+B1+C1)
259,653.45
Total actual occurred amount of guaranteeduring the reporting period (A2+B2+C2)
696,753.39Total guarantee line thathas been approved at theend of the reporting period
(approximately
(A3+B3+C3)
792,198.3
Total actual guarantee balance at the end of the
reporting period (A4+B4+C4)
693,253.39Proportion of total guarantee amount (A4+B4+C4)
to the net assets of the Company
29.98%
Of which:
The balance of the guarantee provided in favor ofthe controlling shareholder and related party.
Amount of debt guarantee provided for theguaranteed party whose asset-liability ratio is not
less than 70% directly or indirectly (E)
USD 530.44 million(approximately RMB 3,694.33 million)The amount of the guarantee that exceeds 50% of
the net assets
Total amount of the above three guarantees
(D+E+F)
USD 530.44 million(approximately RMB 3,694.33 million)
As for undue guarantee, liability to guarantee hashappened or there is evidence showing that jointliquidated liability may be undertaken during this
Reporting Period (if existing)
--
Regulated procedures are violated to offer
guarantee (if existing)
--
ADAMA Ltd Annual Report 2022
3. Cash assets management entrustment
(1) Wealth management entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Entrustment loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other significant contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
ADAMA Ltd Annual Report 2022
XVI. Other significant events
□ Applicable √ Not applicable
There were no other significant events during the Reporting Period.
XVII. Significant events of subsidiaries
□ Applicable √ Not applicable
ADAMA Ltd Annual Report 2022
Section VII - Change in Shares & ShareholdersI. Changes in shares
1. Change in Shares
Unit: share
Before the Change Increase/Decrease (+/-) After the ChangeAmount Proportion
NewlyIssuedshare
BonusShares
Capitalization of
Public reserves
Capitalization of
Other Subtotal Amount Proportion
I. Restricted shares 4,500
0.0002%
-- -- -- --
--
4,500
0.0002%
a) State-owned shares --
--
-- -- -- --
--
--
--
b) State-
shares
owned legal person’s
0.0000%
-- -- --
--
--
0.0000%
c)
investors
4,500
| Shares held by domestic | ||
0.0002%
-- -- -- --
--
4,500
0.0002%
i.
Shares held by domestic legal
person
Shares held by domestic legal
0.0000%
-- -- -- --
--
0.0000%
ii.
natural person
4,500
| Shares held by domestic | ||
0.0002%
-- -- -- --
--
4,500
0.0002%
II.
Shares not subject to trading
moratorium
2,329,807,266
Shares not subject to trading
99.9998%
-- -- -- --
--
2,329,807,266
99.9998%
a) RMB ordinary shares 2,177,067,461
93.4439%
-- -- -- --
--
2,177,067,461
93.4439%
b) Domestically listed foreign shares
152,739,805
6.5559%
-- -- -- --
--
152,739,805
6.5559%
III. Total shares 2,329,811,766
100.00%
-- -- -- --
--
2,329,811,766
100.00%
ADAMA Ltd Annual Report 2022
Reason for the change in shares
□ Applicable √ Not applicable
Approval of the change in shares
□ Applicable √ Not applicable
ADAMA Ltd Annual Report 2022
The registered status for the change in shares
□Applicable √ Not applicable
Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common shareholdersof the Company and other financial indexes over the last year and last period.
□ Applicable √ Not applicable
Other contents that the Company considered necessary or were required by the securities regulatory authorities todisclose
□ Applicable √ Not applicable
ADAMA Ltd Annual Report 2022
2. Changes in restricted shares
√ Applicable □ Not applicable
Unit: share
Shareholders Restricted shares at
the opening of theReporting Period
Shares released in theReporting Period
Restricted sharesincreased in theReporting Period
Ending sharesrestricted
Restricted reasons Date for
released
Jiang Chenggang 4,500 0 0 4,500
Shares held by asupervisor should belocked up.
six monthsafter theexpiration of
the termTotal 4,500 0 0 4,500 -- --
ADAMA Ltd Annual Report 2022
II. Issuance and listing of securities
1. Issuance of securities (excluding preferred stock) during the Reporting Period
□ Applicable √ Not applicable
2. Explanation on changes in share capital & the structure of shareholders, the structure of assetsand liabilities
□ Applicable √ Not applicable
3. Shares held by internal staffs of the Company as a measure of the reform of State-OwnedEnterprises
□ Applicable √ Not applicable
ADAMA Ltd Annual Report 2022
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholding
Unit: share
| Total number of |
| shareholders as |
| of the end of the |
ReportingPeriod
39,975(thenumber ofordinary A shareshareholders is26,705;the number of Bshareshareholders is13,270)
Total number ofshareholders on the 30thtrading day before thedisclosure date of theannual report
40,664
Total number of preferredstockholder with vote rightrestored (if any)
stockholder with vote
Total number of preferredright restored on the 30th
trading day before thedisclosure date of theannual report
Shareholding of shareholders holding more than 5% sharesName ofshareholder
Nature ofshareholder
right restored on the 30th
Holdingpercentage(%)
Number ofshareholding at theend of the Reporting
Period
Increase and
decrease of shares
during ReportingPeriod
Number ofshares heldsubject totradingmoratorium
decrease of sharesNumber of shares held
not subject to tradingmoratorium
Pledged or frozen shares
Number of shares held
Status ofshares
AmountSyngenta GroupCo., Ltd.
State-ownedlegal person
78.47% 1,828,137,961 -- -- 1,828,137,961 -- --China Cinda AssetManagement Co.,Ltd.
State-ownedlegal person
1.34% 31,115,916 --
-- 31,115,916 -- --Portfolio No.503 ofNational SocialSecurity Fund
Others 0.56% 13,000,000 -2,000,000 -- 13,000,000 -- --CITIC Securities -Huarong RuitongEquity InvestmentManagement Co.,Ltd. - CITICSecurities -Changfeng Single
Asset Management
Others 0.55% 12,885,900 12,885,900
Asset Management
-- 12,885,900 -- --
ADAMA Ltd Annual Report 2022
PlanHong KongSecurities ClearingCompany Ltd.(HKSCC)
Overseas legalperson
0.46% 10,606,080 3,121,003 -- 10,606,080 -- --Wang Xiuqin
DomesticIndividual
0.36% 8,487,715 8,487,715 -- 8,487,715 -- --Bosera Funds-China MerchantsBank- BoseraFunds XinchengNo.2 Collective
Plan
Others 0.28% 6,500,000 --
Asset Management
-- 6,500,000 -- --Bosera Funds-Postal SavingsBank- BoseraFunds XinchengNo.3 Collective
Asset Management
Plan
Others 0.26% 6,000,000 -- -- 6,000,000 -- --Wu Feng Domestic
Individual
0.24% 5,479,915 2,077,646 -- 5,479,915 -- --China UniversalFund-IndustrialBank-ChinaUniversal-
Asset ManagementStrategic
StrategicEnhancement No.3
Collective AssetManagement Plan
Enhancement No.3
Others 0.19% 4,400,000 4,400,000 -- 4,400,000 -- --Strategic investors or the generallegal person due to the placementof new shares become the top 10shareholders (if any)
Not applicable
Explanation on associated
relationship or/and persons
Syngenta Group Co., Ltd. is not related party or acting-in-
Explanation on associatedconcert 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.
concert party as prescribed in the Administrative Methods for Acquisition ofDescription of the above
| Description of the above |
| shareholders involved in |
Not applicable
ADAMA Ltd Annual Report 2022
abstention from voting rights
proxy/trustee voting rights andSpecial note on the existence of
| Special note on the existence of |
| dedicated accounts for repurchase |
amo
any)
Not applicableDetails of shares held by top 10 shareholders not subject to trading moratoriumName of shareholder
ng the top 10 shareholders (ifNumber of shares held not subject to
trading moratorium at the end of the
period
Type of shareType of share AmountSyngenta Group Co., Ltd. 1,828,137,961 RMB ordinary share
Number of shares held not subject to1,828,137,961
China Cinda Asset Management Co., Ltd. 31,115,916 RMB ordinary share 31,115,916
1,828,137,961
Portfolio No.503 of National Social Security Fund 13,000,000 RMB ordinary share 13,000,000
CITIC Securities - Huarong Ruitong Equity Investment Management Co., Ltd. -CITIC Securities - Changfeng Single Asset Management Plan
12,885,900 RMB ordinary share 12,885,900
Hong Kong Securities Clearing Company Ltd. (HKSCC) 10,606,080 RMB ordinary share 10,606,080
Wang Xiuqin 8,487,715 RMB ordinary share 8,487,715Bosera Funds-China Merchants Bank- Bosera Funds Xincheng No.2 CollectiveAsset Management Plan
6,500,000 RMB ordinary share 6,500,000
Bosera Funds-China Merchants Bank- Bosera Funds Xincheng No.3 CollectiveAsset Management Plan
6,000,000 RMB ordinary share 6,000,000
Wu Feng 5,479,915 RMB ordinary share 5,479,915
China Universal Fund-Industrial Bank-China Universal-Strategic EnhancementNo.3 Collective Asset Management Plan
4,400,000 RMB ordinary share 4,400,000
Explanation on associated relationship among the top ten shareholders oftradable share not subject to trading moratorium, as well as among the topten shareholders of tradable share not subject to trading moratorium andtop ten shareholders, or explanation on acting-in-concert
Syngenta Group Co., Ltd. is not a related party or acting-in-
concert party as prescribed in the
Administrative Method
concert party as prescribed in thes for Acquisition of Listed Companies to other shareholders. It is
unknown to the Company whether shareholders above are related parties or acting-in-
s for Acquisition of Listed Companies to other shareholders. It isconcert parties as prescribed in the Administrative Methods for Acquisition of Listed
Companies.Particular about shareholder participate in the securities lending andborrowing business (if any)
concert parties as prescribed in the Administrative Methods for Acquisition of ListedShareholder Wang Xiuqin held 616,261 shares through an ordinary securities trading account
and 7,871,454 shares through a credit collateral securities tradin
Shareholder Wang Xiuqin held 616,261 shares through an ordinary securities trading accountg account, thus holding a
g account, thus holding atotal of 8,487,715 shares of the Company. Shareholder Wu Feng held 3,967,889 shares
total of 8,487,715 shares of the Company. Shareholder Wu Feng held 3,967,889 sharesthrough an ordinary securities trading account and 1,512,026 shares through a credit
collateral securities trading account, thus holding a total of 5,479,915 shares of the Company.
through an ordinary securities trading account and 1,512,026 shares through a credit
ADAMA Ltd Annual Report 2022
Did any top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company carry out an agreed buy-back in the ReportingPeriod?
□ Yes √ No
The top 10 common shareholders or the top 10 common shareholders of the Company were not subject to trading moratorium of the Company carry out an agreedbuy-back in the reporting period.
ADAMA Ltd Annual Report 2022
2. Particulars about the controlling shareholder
Nature of controlling shareholder: The central state-ownedType of controlling shareholder: legal person
Name of
shareholder
controlling
Legal
representative
/ companyprincipal
Date ofestablishment
representative
Organization code Business scope
SyngentaGroup Co.,Ltd.
Li Fanrong June 27, 2019
91310000MA1FL6MN13
General projects: agricultural scientific research and
General projects: agricultural scientific research andexperimental development; Engineering and
experimental development; Engineering andtechnical research and experimental development;
Natural science research and experimenta
technical research and experimental development;l
ldevelopment; Research and development of
development; Research and development ofbiopesticide technology; Technology, information,
biopesticide technology; Technology, information,facility construction and operation and other services
facility construction and operation and other servicesrelated to agricultural production and operation;
related to agricultural production and operation;Agricultural specialty and auxiliary activities;
Informati
Agricultural specialty and auxiliary activities;on technology consulting services;
on technology consulting services;Technical services, technical development, technical
Technical services, technical development, technicalconsultation, technical exchange, technology
consultation, technical exchange, technologytransfer and technology promotion; Research and
transfer and technology promotion; Research anddevelopment of biochemical product technology;
Sales of chemical products (
development of biochemical product technology;excluding licensed
excluding licensedchemical products); Fertilizer sales; General cargo
chemical products); Fertilizer sales; General cargowarehousing services (excluding hazardous
warehousing services (excluding hazardouschemicals and other items requiring license); Low
chemicals and other items requiring license); Lowtemperature storage (excluding hazardous
temperature storage (excluding hazardouschemicals and other items requiring license); Socio
chemicals and other items requiring license); Socioeconomic advisory services; Import and export of
economic advisory services; Import and export ofgoods; Technology import and export. (except for the
goods; Technology import and export. (except for theprojects that must be approved according to law,
projects that must be approved according to law,business activities shall be carried out independently
business activities shall be carried out independentlyand legally according to the business license).
L
and legally according to the business license).icensed projects: seed production of main crops;
icensed projects: seed production of main crops;Crop seed business; Genetically modified crop seed
Crop seed business; Genetically modified crop seedproduction. (for projects that must be approved
production. (for projects that must be approvedaccording to law, business activities shall be carried
according to law, business activities shall be carriedout only with the approval of relevant departments.
T
out only with the approval of relevant departments.he specific business projects shall be subject to the
he specific business projects shall be subject to theapproval documents or licenses of relevant
departments).
approval documents or licenses of relevantShares held by the controlling
Shares held by the controllingshareholder in other listed companies by
shareholder in other listed companies byholding or shareholding during the
Reporting Period
holding or shareholding during theBy the end of the Reporting Period, Syngenta Group directly holds 36.17%
By the end of the Reporting Period, Syngenta Group directly holds 36.17%equity of Jiangsu Yangnong Chemical Co., Ltd., and indirectly holds 52.65%
equity of Jiangsu Yangnong Chemical Co., Ltd., and indirectly holds 52.65%equity of SinoFert Holdings Limited through Syngenta Group (HK) Holdings
Company Limited and 20.51% equity of Win-All High-
equity of SinoFert Holdings Limited through Syngenta Group (HK) Holdingstech Seed Co., Ltd.
through China National Seed Group Co., Ltd.
ADAMA Ltd Annual Report 2022
Change of the controlling shareholder during the Reporting Period
□ Applicable √ Not applicable
The controlling shareholder did not change during the Reporting Period.
3. Particulars regarding actual controller and the persons acting in concertNature of actual controller: State-owned Assets Supervision and Administration CommissionType of actual controller: Legal personName of the actual controller
Legal representati
company principal
Date ofestablishment
ve /
Organizationcode
BusinessscopeState-owned Assets Supervision and
Administration Commission of the State
Council
Zhang Yuzhuo March 16, 2003
| Administration Commission of the State |
- -Shares held by the actual controllerin other listed companies by holdingor shareholding during the reportingperiod
Not applicableChange of the actual controller during the Reporting Period
□ Applicable √ Not applicable
The actual controller did not change during the Reporting Period.Block diagram of equity and control relationship between the Company and actual controller:
ADAMA Ltd Annual Report 2022
The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Not applicable
4. The controlling shareholder or the largest shareholder of the Company and its concert partieshave pledged 80% of their shares in the Company
□ Applicable √ Not applicable
5. Particulars regarding other corporate shareholders with over 10% holdings
□ Applicable √ Not applicable
6. Particulars regarding restriction of reducing holding-shares of controlling shareholders, actualcontroller, restructuring parties and other commitment entities
□ Applicable √ Not applicable
IV. Specific implementation of share repurchases during the reporting period
□ Applicable √ Not applicable
Status of reducing holding of repurchased shares in the way of centralized bidding
□ Applicable √ Not applicable
ADAMA Ltd Annual Report 2022
Section VIII - Preferred stock
□ Applicable √ Not applicable
There was no preferred stock during Reporting Period.
ADAMA Ltd Annual Report 2022
Section IX - Corporate Bonds
□ Applicable √ Not applicable
ADAMA Ltd Annual Report 2022
Section X - Financial ReportType of auditor’s opinion Standard Unqualified OpinionAudit opinion signoff date March 19, 2023Name of the auditor Deloitte Touche Tohmatsu CPA LLPReference number of the audit report De Shi Bao (Shen) Zi (23) No P01721Name of CPA Ji Yuting and Zhao Jingyuan
ADAMA Ltd. Annual Report 2022
- 151 -
AUDITOR'S REPORT
De Shi Bao (Shen) Zi (23) No. P01721
(Page 1 of 6)
To the shareholders of ADAMA Ltd.:
I. Opinion
We have audited the financial statements of ADAMA Ltd. (hereinafter referred to as the "Company"), which comprisethe consolidated and the Company's balance sheets as at 31 December 2022, and the consolidated and the Company'sincome statements, the consolidated and the Company's statements of changes in shareholders' equity and the consol-idated and the Company's statements of cash flows for the year then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and theCompany's financial position as of 31 December 2022, and the consolidated and the Company's results of operationsand cash flows for the year then ended in accordance with Accounting Standards for Business Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities under those standardsare further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics for Chinese Certified Public Accountants(the "Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of thefinancial statements for the current year. These matters were addressed in the context of our audit of the financialstatements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.The followings are key audit matters that we have determined to communicate in the auditor's report.
ADAMA Ltd. Annual Report 2022
- 152 -
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (23) No. P01721
(Page 2 of 6)
III. Key Audit Matters - continued
(I) Cut-off of revenue recognition
Description
ADAMA's sale revenue is mainly contributed by the sales of goods in over 100 countries all over the world. As statedin Note (V), 42 operating income, ADAMA's consolidated principal activities revenue for 2022 was RMB37,305,373,000, which was significant to the financial statements. As stated in Note (III), 24, ADAMA recognizesrevenue when the customer obtains control over relevant commodities, and the Company has a risk of overstating therevenue by late cutoffs. Therefore, we considered the appropriateness of cutoffs and correctness of accounting periodsfor principal activities revenue recognition as a key audit matter.
Audit response
Our procedures in relation to this matter mainly include:
1. Testing and assessing the design, implementation and operating effectiveness of internal controls relating to thecut-off of principal activities revenue recognition;
2. Reviewing the contracts with key customers for the terms and conditions relating to the transfer of controls of
goods and services, and assessing whether the timing of principal activities revenue recognition complies with theAccounting Standards for Business Enterprises;
3. Performing cut-off test by selecting samples from sales of goods recorded in the current year, checking the sup-porting documents such as sales invoices and inventory transfer documents, and checking whether the income isrecorded in the correct accounting period;
4. Performing analytic procedures and comparing whether there is abnormal fluctuation in the sales of the majorsales regions in the current period and the previous period, and analyzing whether there is any abnormality in thesales return of the products.
ADAMA Ltd. Annual Report 2022
- 153 -
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (23) No. P01721
(Page 3 of 6)
III. Key Audit Matters - continued
(II) Provision for Impairment of Goodwill on Crop Protection Units
Description
As stated in Note (V), 18, the carrying amount of goodwill was RMB4,805,157,000 as of 31 December 2022, out ofwhich RMB4,735,000,000 was allocated to Crop Protection unit. As disclosed in Note III, 19 and 20, ADAMA’sgoodwill arising from business combination is measured at the cost less the accumulated impairment loss after initialrecognition, and should be entitled to impairment test at least at the end of each year. When performing impairmenttest of Crop Protection unit with goodwill allocated, the management determined the recoverable amount of relevantassets group of units based on the model of present value determined on future cash flows, which depend on thejudgement of the management, it requires the management to estimate the cash flows from relevant assets group ofunits and select an appropriate discount rate that reflects the time value of money in the current market and the specificrisk of the assets. As significant accounting estimates and judgments are involved and the goodwill allocated to CropProtection unit is significant in amount, we considered the provision for impairment of goodwill on Crop Protectionunit as a key audit matter.
Audit response
Our procedures in relation to this matter mainly include:
1. Testing and assessing the design, implementation and operating effectiveness of internal controls relating to the
provision for impairment of goodwill on Crop Protection unit;
2. Checking the basis on which the management allocated goodwill to Crop Protection unit and assessing the rea-sonableness;
3. Reviewing and assessing the reasonableness of the management's adoption of discount cash flow model for the
Crop Protection unit containing goodwill.
4. Analyzing and reviewing the significant accounting estimates and judgements used in estimation of future cashflows, including the key parameters such as discount rate and growth rate, etc., with assistance from internalvaluation specialist;
5. Checking the expected future cash flows to historical data and other supporting evidence, and assess the reasona-bleness;
6. Performing sensitivity analysis on possible changes in relevant key assumptions in impairment test models.
ADAMA Ltd. Annual Report 2022
- 154 -
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (23) No. P01721
(Page 4 of 6)
IV. Other Information
Management of the Company is responsible for the other information. The other information comprises the infor-mation included in the 2022 annual report, but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form ofassurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, indoing so, consider whether the other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information;we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of Management and Those Charged with Governance for the Financial Statements
The management of the Company is responsible for the preparation and fair presentation of the financial statementsin accordance with Accounting Standards for Business Enterprises, and designing, implementing and maintaininginternal control that is necessary to enable the financial statements that are free from material misstatement, whetherdue to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as agoing concern, disclosing, as applicable, matters related to going concern and using the going concern basis of ac-counting unless management either intends to liquidate the Company or to ceases operations, or has no realistic alter-native but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Rea-sonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ChinaStandards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if, individually or in the aggregate, they could reasonably be expected to influencethe economic decisions of users taken on the basis of these financial statements.
ADAMA Ltd. Annual Report 2022
- 155 -
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (23) No. P01721
(Page 5 of 6)
VI. Auditor's Responsibilities for the Audit of the Financial Statements - continued
As part of an audit in accordance with China Standards on Auditing, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control;
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are ap-propriate in the circumstances;
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by the management;
(4) Conclude on the appropriateness of the management' use of the going concern basis of accounting and, based onthe audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncer-tainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financialstatements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However, future events or conditions may cause theCompany to cease to continue as a going concern;
(5) Evaluate the overall presentation (including the disclosures), structure and content of the financial statements, andwhether the financial statements represent the underlying transactions and events in a manner that achieves fairpresentation;
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activi-ties within the Company to express an opinion on the financial statements. We are responsible for the direction,supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timingof the audit and significant audit findings, including any significant deficiencies in internal control that we identifyduring our audit.
ADAMA Ltd. Annual Report 2022
- 156 -
AUDITOR'S REPORT - continued
De Shi Bao (Shen) Zi (23) No. P01721
(Page 6 of 6)
VI. Auditor's Responsibilities for the Audit of the Financial Statements - continued
We also provide those charged with governance with a statement that we have complied with relevant ethical require-ments regarding independence, and to communicate with them all relationships and other matters that may reasonablybe thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of mostsignificance in the audit of the financial statements of the current year and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant
Shanghai China Ji Yuting(Engagement Partner)
Chinese Certified Public AccountantZhao Jingyuan
19 March 2023
This independent auditor's report of the financial statements and the accompanying financial statements are Englishtranslations of the independent auditor's report and the financial statements prepared under accounting principlesand practices generally accepted in the People's Republic of China. These financial statements are not intended topresent the balance sheet and results of operations and cash flows in accordance with accounting principles andpractices generally accepted in other countries and jurisdictions. In case the English version does not conform to theChinese version, the Chinese version prevails
ADAMA Ltd. Annual Report 2022
- 157 -
(Expressed in RMB '000)
Consolidated Balance Sheet
December 31 December 31Notes 2022 2021Current assets
| Cash at bank and on hand | V | .1 |
| 4,290,961 | 5,818,835 | ||||||||||||||||||||||||
| Financial assets held for trading | V | .2 | 1,6 | 85 | 1,479 | ||||||||||||||||||||
| Derivative financial assets | V | .3 | 233,809 | 243,316 | |||||||||||||||||||||
| Bills receivable | V | .4 | 112,297 | 81,992 | |||||||||||||||||||||
| Accounts receivable | V | .5 | |||||||||||||||||||||||
| 9,018,375 | 8,362,493 | ||||||||||||||||
| Receivables financing | V | .6 | 63,639 | 120,157 | |||||||||||||
| Prepayments | V | . | 7 | ||||||||||||||
| 3 | 41,102 | 379,788 | |||||||||||
| Other | receivables | V | . | 8 |
| 1,021,824 | 691,939 | |||||||||||||||||
| Inventories | V | .9 | 16,927,241 | 11,750,162 | ||||||||||||||
| Other current assets | V | . | 10 | |||||||||||||||
1,129,688
938,453
Total current assets
33,140,621
28,388,614
Non-current assets
| Long | - | term receivables | V.11 | |||||||
| 82,510 | 56,234 | ||||||||||
| Long | - | term equity investments | V.12 |
| 2 | 6,368 | 15,335 | ||||||||
| Other equity investments | V.13 |
| 15 | 8,341 | 152,118 | ||||||||||||||||||||
| Investment properties | 3, | 168 | 3,716 | |||||||||||||||||||
| Fixed assets | V.1 | 4 | 8, | 952 | 184 | 8,048,389 | ||||||||||||||||
| Construction in progress | V.1 | 5 | ||||||||||||||||||||
| 2 | 961 | 401 | 2,143,400 | ||||||||||||||||||
| Right | of | use | assets | V.16 | 555,889 | 463,915 | |||||||||||||||
| Intangible assets | V.1 | 7 | |||||||||||||||||||
| 5,34 | 2,754 | 5,326,288 | |||||||||
| Goodwill | V.1 | 8 |
| 4, | 805,157 | 4,40 | 9 | , | 599 | ||||||||||
| Deferred tax assets | V.1 | 9 |
| 1, | 347,263 | 723,075 |
Other non
| Other non | - | current assets | V.20 |
604,833
504,625
Total non-current assets24,839,868
21,846,694
Total assets
57,980,489
50,235,308
ADAMA Ltd. Annual Report 2022
- 158 -
(Expressed in RMB '000)Consolidated Balance Sheet (continued)
December 31 December 31
Notes 2022 2021
Current liabilities
| Short | term loans | V | .21 | 3,342,921 | 874,755 | |||||||||||||||||||||||
| Derivative financial liabilities | V | .22 | 545,5 | 16 | 176,206 | |||||||||||||||||||||||
| Bills payable | V | .23 | 1,114,775 | 493,376 | ||||||||||||||||||||||||
| Accounts payable | V | .24 | 7,527,269 | 6,294,163 | ||||||||||||||||||||||||
| Contract liabilities | V | .25 | 1,776,573 | 1,381,311 | ||||||||||||||||||||||||
| Employee benefits payable | V | . | 26 | |||||||||||||||||||||||||
| 1,370,786 | 1,247,979 | |||||||||||
| Taxes | payable | V | . | 27 |
| 459,574 | 368,682 | ||||||||||
| Other payables | V | . | 28 |
| 1,611,282 | 1,342,188 | |||||||||||||||||||
| Non | - | current liabilities due within one year | V | .29 | 2,262,131 | 1,79 | 5 | , | 754 | |||||||||||
| Other current liabilities | V | . | 30 | |||||||||||||||||
703,794
412,909
Total current liabilities20,714,621
14,387,323
Non-current liabilities
| Long | - | term loans | V. | 31 |
| 3,662,870 | 3,498,912 | ||||||||
| Debentures payable | V.32 |
| 7,353,511 | 7,797,131 | |||||||||
| Lease | iabilities | V.33 |
| 431,076 | 36 | 2 | , | 086 | |||||||||
| Long | - | term payables |
| 107,686 | 95,699 | |||||||||||
| Long | - | term employee benefits payable | V | .34 |
| 792,153 | 792,358 | |||||||||
| Provisions | V | .35 |
| 222,181 | 1 | 86 | 430 | |||||||||||
| Deferred tax liabilities | V | . | 19 |
| 315,861 | 380,138 |
Other non
| Other non | - | current liabilities | V | . | 36 |
1,255,875
1,660,148
Total non-current liabilities
14,141,213
14,772,902
Total liabilities
34,855,834
29,160,225
Shareholders' equity
| Share capital | V.3 | 7 |
| 2,329,812 | 2,329,812 | ||||||||||
| Capital reserve | V | . | 38 |
| 12,986,333 | 12,977,17 | 1 | |||||||||||||
| Less: Treasury shares | |||||||||||||||
| Other comprehensive income | V | 39 | |||||||||||||
| 1,080,590 | (432,38 | 4 | ) | |||||||||||||||||
| Special reserves | 15,818 | 19,857 | ||||||||||||||||||
| Surplus reserve | V | 40 | 242,498 | 240,162 | ||||||||||||||||
Retained earnings
| Retained earnings | V | . | 41 |
6,469,604
5,940,465
Total equity attributed to the shareholdersof the company
23,124,655
21,075,083
Non-controlling interests
-
-
Total Equity
23,124,655
21,075,083
Total liabilities and equity
57,980,489
50,235,308
Ignacio Dominguez
| Legal representative |
Efrat Nagar
| Chief Financial Officer |
These financial statements were approved by the Board of Directors of the Company on March 19 2023.
The notes form part of these financial statements.
ADAMA Ltd. Annual Report 2022
- 159 -
(Expressed in RMB '000)Company's Balance Sheet
December 31 December 31Notes 2022 2021Current assets
| Cash at bank and on hand | XV | .1 | 2 | 71 | 080 | 2 | 65 | 558 | |||||||||||||||||||||||||||||
| Accounts receivable | XV | .2 | 7 | 58,462 | 2 | 08,109 | |||||||||||||||||||||||||||||||
| Receivables financing | XV | .3 | 2 | ,596 | 1 | 1,752 | |||||||||||||||||||||||||||||||
| Prepayments | 7 | ,944 | 2 | 9,364 | |||||||||||||||||||||||||||||||||
| Other receivables | XV | .4 | 1 | 1,611 | 2 | 1,496 | |||||||||||||||||||||||||||||||
| Inventories | 2 | 56,001 | 2 | 20,329 | |||||||||||||||||||||||||||||||||
| Non | - | current assets due within one year | 125,000 | - | |||||||||||||||||||||||||||||||||
Other current assets2,312
44,221
Total current assets
1,435,006
800,829
Non-current assets
| Long | - | term equity investments | XV | .5 | 1 | 7,511,352 | 1 | 7,511,352 | ||||||||||||||||||||||||||
| Other equity investments | 8 | 4,720 | 8 | 4,720 | ||||||||||||||||||||||||||||||
| Investment properties | 3 | ,168 | 3 | ,716 | ||||||||||||||||||||||||||||||
| Fixed assets | 1 | ,822,134 | 1 | ,264,210 | ||||||||||||||||||||||||||||||
| Construction in progress | 9 | 0,074 | 7 | 28,742 | ||||||||||||||||||||||||||||||
| Right | of | - | use assets | 2 | ,842 | 5 | ,453 | |||||||||||||||||||||||||||
| Intangible assets | 2 | 58,997 | 2 | 65,510 | ||||||||||||||||||||||||||||||
| Deferred tax assets | 7 | 5,383 | 6 | 0,668 | ||||||||||||||||||||||||||||||
Other non-current assets269,574
560,982
Total non-current assets
20,118,244
20,485,353
Total assets
21,553,250
21,286,182
Current liabilities
| Short | - | term loans | 5 | 0,000 | - | |||||||||||
| Bills payables | 4 | 2,451 | 2 | 0,415 | ||||||||||||
| Accounts payables | ||||||||||||||||
| 2 | 05,767 | 2 | 05,985 | |||||||||||||
| Contract | liabilities | 1 | 5,116 | 1 | 0,145 | |||||||||||
| Employee benefits payable | ||||||||||||||||
| 1 | 4,699 | 2 | 8,880 | ||||||||||
| Taxes payable | 3 | ,529 | 2 | ,662 | |||||||||
| Other payables | |||||||||||||
| 7 | 30,901 | 5 | 60,098 |
Non-current liabilities due within one year671,454
612,666
Total current liabilities
1,733,917
1,440,851
Non-current liabilities
| Long | - | term loans |
| 8 | 36,795 | 9 | 05,840 | |||||||||||||||||||
| Lease liabilities | 7 | 01 | 2 | ,925 | ||||||||||||||||||
| Long | - | term employee benefits payable | 9 | 7,574 | 9 | 9,495 | ||||||||||||||||
| Provisions | 28,516 | 44,385 | ||||||||||||||||||||
Other non
| Other non | - | current liabilities |
374,360
312,130
Total non-current liabilities
1,337,946
1,364,775
Total liabilities
3,071,863
2,805,626
Shareholders’ equity
| Share capital | V.3 | 7 | 2 | ,329,812 | 2 | ,329,812 | ||||||||||||||||||||||
| Capital reserve | 1 | 5,523,881 | 1 | 5,523,881 | ||||||||||||||||||||||||
| Other comprehensive income | 3 | 0,822 | 3 | 0,668 | ||||||||||||||||||||||||
| Special | reserves | 1 | 6,509 | 2 | 0,548 | |||||||||||||||||||||||
| Surplus reserve | 2 | 42,498 | 2 | 40,162 | ||||||||||||||||||||||||
Retained earnings
| Retained earnings |
V.41337,865
335,485
Total shareholders’ equity
18,481,387
18,480,556
Total liabilities and shareholders’ equity
21,553,250
21,286,182
ADAMA Ltd. Annual Report 2022
- 160 -
(Expressed in RMB '000)
Consolidated Income Statement
Year ended December 31Notes 2022 2021
I. Operating income
| V. | 42 | 37,381,915 | 31,038,605 | ||||||
Less
| : | Cost of sales | V. | 42 | 27,984,966 | 23,412,519 | |||||||||||
| Taxes and surcharges |
| V.43 | 110,414 | 106,282 |
| Selling and Distribution expenses | V.44 | 4,396,279 | 4,019,257 | ||||||||||||||||||||||||||||||||
| General and administrative expenses | V. | 45 | 1,406,828 | 1,089,599 | |||||||||||||||||||||||||||||||
| Research and Development expenses | V. | 46 | 577,859 | 501,377 | |||||||||||||||||||||||||||||||
| Financial expenses | (incomes) | V.47 | 325,79 | 6 | 1,939,422 | ||||||||||||||||||||||||||||||
| Including: Interest expense | 777,827 | 659,690 | |||||||||||||||||||||||||||||||||
| Interest income | 180,619 | 65,059 | |||||||||||||||||||||||||||||||||
Add:
| Investment income | (loss) | , net | V.48 | 12,683 | 10,168 | ||||||||||||||||||||||||||||||||||||||||
| Including: Income from investment | |||||||||||||||||||||||||||||||||||||||||||||
| in associates and joint ventures | 1 | 0,358 | 5,923 | ||||||||||||||||||||||||||||||||||||||||||
| Gain | loss | ) | from changes in fair value | V.49 | (1,504,832) | 597,685 | |||||||||||||||||||||||||||||||||||||||
| Credit impairment | reversal ( | loss | es) | V.50 | (91,667) | 10,884 | |||||||||||||||||||||||||||||||||||||||
| Asset impairment loss | es | V.51 | (325,386) | (70,267) | |||||||||||||||||||||||||||||||||||||||||
| Gain from disposal of assets | V.52 | ||||||||||||||||||||||||||||||||||||||||||||
59,596
(2,604)
II. Operating profit
| 730,167 | 516,015 | ||||||||||
Add:
| Non | operating income |
| 58,395 | 65,240 |
Less:
| Non | - | operating expenses |
31,729
37,453
III. Total profit
| 756,833 | 543,802 | |||||||||
Less:
| Income tax expenses | ||
| V.5 | 3 |
147,442
380,489
IV. Net profit
609,391
163,313
| (1). | Classified by nature of operations |
| (1.1). Continuing operations | 609,391 | 163,313 | ||||||||||||||||||||||||||
| (2). | Classified by ownership | |||||||||||||||||||||||||||
| (2.1). Shareholders of the Company | 609,391 | 157, | 397 | |||||||||||||||||||||||||
| (2. | 2 | ). | Non | - | controlling interests | 5,916 | ||||||||||||||||||||||
V. Other comprehensive income, net of tax
| V. 39 | 1,512,974 | (360,3 | 29 |
Other comprehensive income (net of tax)
| attributable to shareholders of the Company |
| 1,512,974 | (360,3 | 29 | ) |
| (1) | Items that | will not be reclassified to profit or loss: | 82,699 | (31,262) |
| (1.1) | R | e | - | measurement of defined benefit plan | liability | 82,699 | (30,603) |
| (1.2) Fair Value changes in other equity investment |
| - | (659) |
| (2) | Items that | were or will be reclassified to profit or loss |
| 1,430,275 | (329,067) | ||||||||
| (2.1) | Effective portion of gains or loss of cash flow hedge | (73,324) | 252,674 | |||||||||||||||
| (2.2) | Translation differences of foreign financial | stateme | nts | 1,503,599 | (581,74 | 1 | ||||||||||||
VI. Total comprehensive income for the period attributable toShareholders of the Company
2,122,365
(197,016)
Total comprehensive income for the period
| attributable to shareholders of the Company |
| 2,122,365 |
| (202,932) |
Total comprehensive income for the period
| attributable to | Non | - | controlling interests |
| - |
| 5,916 | |||||||
VII. Earnings per share
| XIV.2 | ||||||||||||||
| (1) Basic earnings per share | (Yuan/share) | 0.26 | 0.07 | |||||||||||
| (2) Diluted earnings per share (Yuan/share) | ||||||||||||||
| N/A | N/A |
ADAMA Ltd. Annual Report 2022
- 161 -
(Expressed in RMB '000)Company's Income Statement
Year ended December 31
Notes 2022 2021
I. Operating income
| XV | .6 | 2 | ,297,898 | 1 | ,157,419 |
Less:
| Operating costs | XV | .6 | 1 | ,777,065 | 1,062,232 | |||||||
| Taxes and surcharges | ||||||||||||
| 8 | ,058 | 6 | ,637 | |||||||||||||||
| Selling and Distribution expenses | 4 | ,959 | 5 | ,897 | ||||||||||||||
| General | and | administrative expenses | 1 | 51,840 | 156,141 | |||||||||||||
| Research and Development expenses | ||||||||||||||||||
| 7 | 4,944 | 4 | 4,661 | ||||||||||||||||
| Financial expenses | (income) | 45,748 | 17,599 | ||||||||||||||||
| Including: Interest expense | 5 | 1,463 | 2 | 6,101 | |||||||||||||||
| Interest income | 8 | ,605 | 1 | 4,491 | |||||||||||||||
Add:
| Investment income, net | 1 | 3,811 | 1 | ,808 | |||||||||||||||||||||||||
| Gain from changes in fair value (“ | - | ” means loss) | ( | 314,670) | (6,070) | ||||||||||||||||||||||||
| Credit impairment losses | ( | 48) | ( | 301) | |||||||||||||||||||||||||
| Asset Impairment reversal ( | losses) | 2,816 | ( | 9,369) | |||||||||||||||||||||||||
| G | ain | from disposal of assets |
60,292
16,630
II. Operating Profit
| ( | 2 | 515 | (133,050) | ||||||||||
Add:
| Non | operating income | 1 | 3,749 | 1 | 5,647 |
Less:
| Non | - | operating expenses |
2,595
2,051
III. Total profit
| 8,639 | (119,454) | |||||||
Less:
| Income tax expense (income) |
(14,715)
5,484
IV. Net profit (loss)
23,354
(124,938)
V. Other comprehensive income, net of tax
(16,722)
| (1) |
| Items that will not be reclassified to profit or loss | 154 | ( | 16,722) | ||||||||||
| (1.1) Re | - | measurement of defined benefit plan liability | 154 | ( | 16,064) | ||||||||
(1.2) FV changes in other equity investment -
(658)
VI. Total comprehensive income (loss) for the period
23,508
(141,660)
ADAMA Ltd. Annual Report 2022
- 162 -
(Expressed in RMB '000)Consolidated Cash Flow Statement
Year ended December 31
Notes 2022 2021I. Cash flows from operating activities:
| Cash received from sale of goods and rendering of services | 35,47 | 0 | 804 | 30,128,925 |
| Refund of taxes and surcharges | 300,092 | 184,881 |
| Cash received relating to other operating activities | V | .56(1) |
804,577
864,848
| Sub | - | total of cash inflows from operating activities |
36,575,473
| 31,178,654 |
| Cash paid | for goods and services | 27, | 540,166 | 20,020,798 |
| Cash paid | to and on behalf of employees | 4,0 | 87,028 | 3,615,590 |
| Payments of taxes and | surcharges | 871,493 | 449,010 |
| Cash paid relating to other operating activities | V | .56(2) |
3,136,041
2,531,381
| Sub | - | total of cash outflows from operating activities |
35,634,728
26,616,779
Net cash flows from operating activities
| V | .57(1)a |
940,745
| 4,561,875 | |||||||
II. Cash flows from investing activities:
| Cash received from disposal of investments | 46,366 | 3,864 |
| Cash | received from returns of investments | 3,162 | 867 |
Net cash received from disposal of fixed assets, intangible
| assets and other long | - | term assets | 84,885 | 27,456 |
| Cash received relating to other investing activities | V | .5 | 6 | (3) |
2,325
8,562
| Sub | - | total of cash inflows from investing activities |
136,738
| 40,749 | |||||||
Cash paid to acquire fixed assets, intangible assets and
| other long | - | term assets |
| 2,667,23 | 6 | 2,589,460 | |||||||||
| Cash paid | for acquisition of investments |
-
| 2,225 |
| Net cash paid | to acquire subsidiaries or other business units | - | 655,039 |
| Cash paid relating to other investing activities |
| V | .5 | 6 | (4) |
129,944
| 177,476 |
| Sub | - | total of cash outflows from investing activities |
2,797,180
| 3,424,200 |
Net cash flows used in investing activities
(2,660,442)
(3,383,451)
III. Cash flows from financing activities:
| Cash received | from borrowings |
| 3,782,89 | 7 | 4,565,565 |
| Cash received from other financing activities | V | .56(5) |
849,736
1,124,944
| Sub | - | total of cash inflows | from financing activities |
4,632,633
5,690,509
| Cash | r | epayments of borrowings | 2,330,610 | 3,670,409 |
| Cash | payment | for dividends, profit distributions and interest | 951,22 | 1 | 791,993 |
| Including: Dividends paid to | non | - | controlling | interest | 59 | ,2 | 78 | 42,357 |
| Cash | paid relating to other financing activities | V | .56(6) |
1,406,592
390,944
| Sub | - | total of cash outflows from financing activities |
4,688,423
4,853,346
Net cash flow provided by (used in) financing activities
(55,790)
837,163
IV. Effects of foreign exchange rate changes on cash and cash equiva-
lents
| 241,260 | (91,178) | |||||||||
V. Net increase (decrease) in cash and cash equivalents
| V. | 57 | (1)b | (1,534,227) | 1,924,40 | 9 |
Add:
| Cash and cash | equivalents at the beginning of the year |
5,759,480
| 3,835,071 | ||||
VI. Cash and cash equivalents at the endof the period
| V. | 57 | 2 | ) |
4,225,253
5,759,480
ADAMA Ltd. Annual Report 2022
- 163 -
(Expressed in RMB '000)Company's Cash Flow Statement
Year ended December 31
Notes 2022 2021I. Cash flows from operating activities:
| Cash received from sale of goods and rendering of services |
| 1 | ,447,293 | 1,1 | 22,545 | |||||||
| Refund of taxes and surcharges |
| 7 | 8,753 | 6 | 5,104 |
| Cash received relating to other operating activities |
XV.7(1) 114,271
126,387
| Sub | - | total of cash inflows from operating activities |
1,640,317
1,314,036
| Cash paid for goods and services |
| 1 | ,230,277 | 9 | 23,676 |
| Cash paid | to and on behalf of employees |
| 1 | 35,760 | 1 | 85,037 |
| Payments of taxes and surcharges |
| 8 | ,242 | 1 | 0,936 |
| Cash paid relating to other operating activities |
XV.7(2) 124,903
108,015
| Sub | - | total of cash outflows | from operating activities |
1,499,182
1,227,664
Net cash flows from operating activitiesXV.8 141,135
86,372
II. Cash flows from investing activities:
Cash received from returns of investments
| Cash received from returns of investments |
| 13,811 | 1 | ,808 |
Net cash received from disposal of fixed assets, intangible assets and other
| long | - | term assets |
| 67,065 | 1 | 9,360 |
| Cash received relating to other investing activities |
XV.7.(3)
150,000
-
Sub
| Sub | - | total of cash inflows from investing activities |
230,876
21,168
Cash paid to acquire fixed assets, intangible assets and
| other long | - | term assets |
| 8 | 5,707 | 3 | 80,744 | |||||
| Cash paid for acquisition of investments |
| - | 6 | 97,909 |
Cash paid for other investing activities
XV.7.(4)
| Cash paid for other investing activities |
250,000
-
| Sub | - | total of cash outflows from investing activities |
335,707
1,078,653
Net cash flows used in investing activities (104,831)
(1,057,485)
III. Cash flows from financing activities:
| Cash received from borrowings |
650,000
758,200
| Cash received | relating to | other financing activities | XV | .7.(5) |
24,865
12,345
| Sub | - | total of cash inflows | from financing activities |
674,865
770,545
| Cash | r | epayments of | borrowings |
610,046
295,046
| Cash | payment | for dividends, profit distributions or interest |
71,290
86,524
| Cash paid relating to other financing activities |
XV.7.(6)
31,491
178,186
Sub
| Sub | - | total of cash outflows from financing activities |
712,827
559,756
Net cash flow provided by (used in) financing activities
(37,962)
210,789
IV. Effects of foreign exchange rate changes on cash and cash equivalents
(3,000)
V. Net decrease in cash and cash equivalents (1,104)
(763,324)
Add:
| Cash and cash equivalents at the beginning of the year |
XV.8(2) 259,434
1,022,758
VI. Cash and cash equivalents at the end of the period
XV.8(2) 258,330
259,434
ADAMA Ltd. Annual Report 2022
- 164 -
(Expressed in RMB '000)Consolidated Statement of Changes in Shareholders’ Equity
For the year ended December 31, 2022
Share capi-tal
Capital re-
serve
Other compre-hensive in-come
Special re-serves
Surplusreserve
Retained earn-ings Total
Non-controllinginterests
Total equity
I. Balance at January 1, 2022
| 2,329,812 | 12,977,171 |
(432,384)
| 19,857 |
| 240,162 | 5,940,465 |
-
| 21,075,083 |
21,075,083
| II. Changes in equity for the period | - | 9,162 | 1,512,974 | (4,039) | 2,336 | 529,139 | 2,049,572 | - | 2,049,572 | |||||||||||||||||||
| 1. | ||||||||||||||||||||||||||||
| Total comprehensive income | - | - | 1,512,974 | - | - | 609,39 | 1 | 2, | 122,365 | - | 2, | 122,365 | |||||||||||||||||||||
| 2. |
| Owner’s contributions and reduction | - | 9,162 | - | - | - | - | 9,162 | - | 9,162 |
2.1 Transactions with holders of
| non controlling interest |
-
9,162
-
-
-
-
9,162
-
9,162
3.
| 3. | Appropriation of profits | - | - | - | - | 2,336 | (80,252) | (77,916) | - | (77,916) | ||||||||||||||||||||||||||||||
| 3.1 | Transfer to surplus reserve | - | - | - | - | 2,336 | (2,336) | - | ||||||||||||||||||||||||||||||||
| 3. | 2 | Distribution to owners | - | - | - | - | - | (18,638) | (18,638) | - | (18,638) | |||||||||||||||||||||||||||||
3.3 Distribution to non-controlling
| interest |
-
-
-
-
-
(59,278)
(59,278)
-
(59,278)
4.
| 4. | Special reserve | - | - | - | (4,039) | - | - | (4,039) | - | (4,039) | |||||||||||||||||||||||||||
| 4.1 | Transfer to special reserve | - | - | - | 7,015 | - | - | 7,015 | - | 7,015 | |||||||||||||||||||||||||||
4.2 Amount utilized -
-
-
(11,054)
-
-
(11,054)
-
(11,054)
III. Balance at December 31, 2022 2,329,812
12,986,333
1,080,590
15,818
242,498
6,469,604
23,124,655
-
23,124,655
ADAMA Ltd. Annual Report 2022
- 165 -
(Expressed in RMB '000)Statement of Changes in Shareholders’ Equity
For the year ended December 31, 2021
Attributable to shareholders of the Company
Share capi-
tal *
Capital re-
serve *
Less: Treasury
shares *
Other compre-hensive in-come
Specialreserves
Surplus re-
serve
Retained earn-
ings Total
Non-controlling
interests
Total equity
I. Balance at January 1, 2021 2,344,121
13,023,219
60,357
(72,055)
15,960
240,162
5,862,702
21,353,752
80,163
21,433,915
| II. Changes in equity for the period | (14,309) | (46,048) | (60,357) | (360,329) | 3,897 | - | 77,763 | (278,669) | (80,163) | (358,832) | |||||||||||||||||||||||||||||||
| 1. | |||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | - | - | - | (360,329) | - | - | 157,397 | (202,932) | 5,916 | (197,016) | |||||||||||||||||||||||||||||||
| 2. |
| Owner’s contributions and reduction | (14,309) | (46,048) | (60,357) | - | - | - | - | - | (86,079) | (86,079) | ||||||||||||||||||||||||||||||||||||||||||
| 2. | 1 | Cancellation | of shares | (14,309) | (46,048) | (60,357) | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
2.2 Non-controlling interests in re-
| spect | of business combination |
-
-
-
-
-
-
-
-
(86,079)
(86,079)
3.
| 3. | Appropriation of profits | - | - | - | - | - | - | (79,634) | (79,634) | - | (79,634) | ||||||||||||||||||||||||||||||||||||
| 3.1 | Distribution to owners | - | - | - | - | - | - | (37,277) | (37,277) | - | (37,277) | ||||||||||||||||||||||||||||||||||||
3.2 Distribution to non-controlling
| interest |
| - |
| - |
| - |
| - |
| - |
| - |
| (42,357) |
| (42,357) |
| - |
| (42,357) | ||||||||||||||||||||||||||||||||||||||||||||||||
| 4 | . | Special reserve | - | - | - | - | 3,897 | - | - | 3,897 | - | 3,897 | ||||||||||||||||||||||||||||||||||||
| 4 | 1 | Transfer to special reserve | - | - | - | - | 7,733 | - | - | 7,733 | - | 7,733 | ||||||||||||||||||||||||||||||||||||
4.2 Amount utilized -
-
-
-
(3,836)
-
-
(3,836)
-
(3,836)
III. Balance at December 31, 2021
| 2,329,812 | 12,977,171 |
-
(432,384)
| 19,857 | 240,162 |
| 5,940,465 | 21,075,083 |
-
| 21,075,083 |
ADAMA Ltd. Annual Report 2022
- 166 -
(Expressed in RMB '000)Company's Statement of Changes in Shareholders’ Equity
For the year ended December 31, 2022
Sharecapital
Capital re-
serve
Other compre-hensive income
Specialreserves
Surplusreserve
Retainedearnings
Total
I. Balance at January 1, 20222,329,812
15,523,881
30,668
20,548
240,162
335,485
18,480,556
II. Changes in equity for the period
| - | - |
(4,039)
2,336
2,380
| 831 | |||||||
| 1. |
| Total comprehensive income | - | - |
| - |
-
23,354
| 23,508 | |||||||
| 2. |
| Owner’s | contributions and reduction | - | - | - | - |
-
-
| - | |||||||||||||||||||||||||||
| 2. | 1 | Repurchase | of | shares | - | - | - | - | |||||||||||||||||||
-
-
| - | |||||||||||||||||||||||||
| 2. | 2 | Other | - | - | - | - | |||||||||||||||||||
-
-
-
| 3. |
| Appropriation of profits | - | - | - | - |
2,336
(20,974)
(18,638)
| 3.1 | Appropriations to surplus reserves | - | - | - | - |
2,336
(2,336)
-
| 3. | 2 | Transfer to Distribution to shareholders | - | - | - | - |
-
(18,638)
(18,638)
| 4. |
| Special reserve | - | - | - |
(4,039)
-
-
(4,039)
| 4.1 |
| Transfer to special reserve | - | - | - |
7,015
-
-
7,015
| 4.2 | Amount utilized |
-
-
-
(11,054)
-
-
(11,054)
Ⅲ. Balance at December 31, 20222,329,812
15,523,881
30,822
16,509
242,498
337,865
18,481,387
For the year ended December 31, 2021
Attributable to shareholders of the Company
Sharecapital
Capital re-
serve
Less:
treasury
share
Other compre-hensive income
Specialreserves
Surplusreserve
Retainedearnings
Total
I. Balance at January 1, 20212,344,121
15,569,929
60,357
47,390
16,651
240,162
497,700
18,655,596
II. Changes in equity for the period(14,309)
(46,048)
(60,357)
(16,722)
3,897
| - |
(162,215)
(175,040)
| 1. |
| Total comprehensive income | - | - | - |
(16,722)
| - | - |
(124,938)
(141,660)
| 2. |
(14,309)
| Owner’s contributions and reduction |
(46,048)
(60,357)
| - | - | - | - | - | ||||||||||||||||||||||
| 2. | 1 | Cancellation | of | shares |
(14,309)
(46,048)
(60,357)
| - | - | - | - | - | |||||||||||||
| 3. |
| Appropriation of profits | - | - | - | - | - | - |
(37,277)
(37,277)
| 3.1 Transfer to Distribution to shareholders | - | - | - | - | - | - |
(37,277)
(37,277)
| 4. |
| Special reserve | - | - | - | - |
3,897
| - | - |
3,897
| 4.1 |
| Transfer to special reserve | - | - | - | - |
7,733
| - | - |
7,733
4.2
| 4.2 | Amount utilized |
-
-
-
-
(3,836)
-
-
(3,836)
Ⅲ. Balance at December 31, 2021
2,329,812
15,523,881
-
30,668
20,548
240,162
335,485
18,480,556
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 167 -
I BASIC CORPORATE INFORMATION
ADAMA Ltd. (hereinafter the “Company” or the “Group”) is a company limited by shares established inChina with its head office located in Hubei Jingzhou.
In June 2020, the controlling shareholder of the Company changed from China National Agrochemical Co,.Ltd. (hereinafter – “CNAC") to Syngenta Group Co., Ltd. (hereinafter “Syngenta Group”). As of August2021, following the combination between China National Chemical Co., Ltd. (hereinafter - “ChemChina”)and Sinochem Holdings Corporation Ltd. (hereinafter - “Sinochem Holdings”), Syngenta Group, and subse-quently the Company, are ultimately controlled by Sinochem Holdings - parent of both ChemChina andSinochem Group Co., Ltd. (hereinafter “Sinochem Holdings”), subordinated to SASAC.
The principal activities of the Company and its subsidiaries (together referred to as the “Group”) are engagedin development, manufacturing and marketing of agrochemicals, intermediate materials for other industries,food additives and synthetic aromatic products, mainly for export. For information about the largest subsid-iaries of the Company, refer to Note VII.
The Company’s consolidated financial statements had been approved by the Board of Directors of the Com-pany on March 19, 2023.
Details of the scope of consolidated financial statements are set out in Note VII "Interest in other entities",whereas the changes of the scope of consolidation are set out in Note VI "Changes in consolidation scope".
II BASIS OF PREPARATION
1. Basis of preparation
The Group has adopted the Accounting Standards for Business Enterprises issued by the Ministry of Finance(the "MoF"). In addition, the Group has disclosed relevant financial information in these financial statementsin accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to thePublic No. 15－General Provisions on Financial Reporting (revised by China Securities Regulatory Com-mission (hereinafter "CSRC”) in 2014).
2. Accrual basis and measurement principle
The Group has adopted the accrual basis of accounting. Except for certain financial instruments which aremeasured at fair value, deferred tax assets and liabilities, assets and liabilities relating to employee benefits,provisions, and investments in associated companies and joint ventures, the Group adopts the historical costas the principle of measurement in the financial statements. Where assets are impaired, provisions for assetimpairment are made in accordance with relevant requirements.
In the historical cost measurement, assets obtained shall be measured at the amount of cash or cash equiva-lents or fair value of the consideration paid. Liabilities shall be measured at the actual amount of cash orassets received, or the contractual amount in a present obligation, or the prospective amount of cash or cashequivalents paid to discharge the liabilities.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,willing market participants in an arm’s length transaction at the measurement date. Fair value measured anddisclosed in the financial statements are determined on this basis whether it is observable or estimated byvaluation techniques.
- 168 -
II BASIS OF PREPARATION - (cont’d)
2. Accrual basis and measurement principle - (cont’d)
The following table provides an analysis, grouped into Levels 1 to 3 based on the degree to which the fairvalue input is observable and significant to the fair value measurement as a whole:
Level 1 - based on quoted prices (unadjusted) in active markets;
Level 2 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is observable (other than quoted prices included within Level 1), either directly orindirectly;
Level 3 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
3. Going concern
The financial statements have been prepared on the going concern basis.
The Group has performed going concern assessment for the following 12 months and have not identifiedany significant doubtful matter or event on the going concern, as such the financial statement have beenprepared on the going concern basis.
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
1. Statement of compliance
These financial statements are in compliance with the Accounting Standards for Business Enterprises to trulyand completely reflect the Company's consolidated financial position as at December 31, 2022 and the Com-pany's consolidated operating results, changes in shareholders' equity and cash flows for the twelve monthsthen ended.
2. Accounting period
The Group has adopted the calendar year as its accounting year, i.e. from 1 January to 31 December.
3. Business cycle
The company takes the period from the acquisition of assets for processing to their realisation in cash or cashequivalents as a normal operating cycle. The operating cycle for the company is 12 months.
4. Reporting currency
The Company and its domestic subsidiaries choose Renminbi (hereinafter "RMB") as their functional cur-rency. Functional currencies of overseas subsidiaries are determined on the basis of the principal economicenvironment in which the overseas subsidiaries operate. The functional currency of the overseas subsidiariesis mainly the United States Dollar (hereinafter "USD"). The presentation currency of these financial state-ments is Renminbi.
- 169 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
5. Business combinations
5.1 Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which allof the combining enterprises are ultimately controlled by the same party or parties both before and after thecombination, and that control is not transitory. Assets and liabilities obtained shall be measured at theirrespective carrying amounts as recorded by the combining entities at the date of the combination. The dif-ference between the carrying amount of the net assets obtained and the carrying amount of the considerationpaid for the combination is adjusted to the share premium in capital reserve. If the share premium is notsufficient to absorb the difference, any excess shall be adjusted against retained earnings. Costs that aredirectly attributable to the combination are charged to profit or loss in the period in which they are incurred.
5.2 Business combinations not involving enterprises under common control and goodwill.
A business combination not involving enterprises under common control is a business combination in whichall of the combining enterprises are not ultimately controlled by the same party or parties before and afterthe combination.
The costs of business combination are the fair value of the assets paid, liabilities incurred or assumed andequity instruments issued by the acquirer for the purpose of achieving the control rights over the acquiree.
The intermediary costs such as audit, legal services and assessment consulting costs and other related man-agement costs that are directly attributable to the combination by the acquirer are charged to profit or loss inthe period in which they are incurred. Direct capital issuance costs incurred in respect of equity instrumentsor liabilities issued pursuant to the business combination should be charged to the respect equity instrumentsor liabilities upon initial recognition of the underlying equity instruments or liabilities.
The acquiree’s identifiable assets, liabilities and contingent liabilities acquired by the acquirer in a businesscombination, that meet the recognition criteria shall be measured at fair value at the acquisition date. Wherethe cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable netassets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on initialrecognition. Where the cost of combination is less than the acquirer’s interest in the fair value of the ac-quiree’s identifiable net assets, the remaining difference is recognized immediately in profit or loss for thecurrent year.
The goodwill raised because of the business combination should be separately disclosed in the consolidatedfinancial statement and measured by the initial amount less any accumulative impairment provision.
In a business combination achieved in stages, the Group remeasure its previously held equity interest in theacquiree at its acquisition-date fair value and recognise the resulting gain or loss, if any, in profit or loss.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
6. Basis for preparation of consolidated financial statements
The scope of consolidation in consolidated financial statements is determined on the basis of control. Controlis achieved when the Company has power over the investee; is exposed, or has rights, to variable returnsfrom its involvement with the investee; and has the ability to use its power to affect its returns.
For a subsidiary disposed of by the Group, the operating results and cash flows before the date of disposal(the date when control is lost) are included in consolidated income statement and consolidated statement ofcash flows.
For a subsidiary acquired through a business combination not involving enterprises under common control,the operating results and cash flows from the acquisition date (the date when control is obtained) are includedin consolidated income statement and consolidated statement of cash flows.
For a subsidiary acquired through a business combination involving enterprises under common control, itwill be fully consolidated into consolidated financial statements from the date on which the subsidiary wasultimately under common control by the same party or parties.
The significant accounting policies and accounting years adopted by the subsidiaries are determined basedon the uniform accounting policies and accounting years set out by the Company.
All significant intra-group balances, transactions and unrealized profits are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as non-controlling inter-ests and presented as "non-controlling interests" in the shareholders’ equity in consolidated balance sheet.The portion of net profits or losses of subsidiaries for the period attributable to non-controlling interests ispresented as "non-controlling interests" in consolidated income statement below the "net profit" line item.Total comprehensive income attributable to non-controlling shareholders is presented separately in the con-solidated income statement below the total comprehensive income line item.
When the amount of loss for the period attributable to the non-controlling shareholders of a subsidiary ex-ceeds the non-controlling shareholders' portion of the opening balance of owners' equity of the subsidiary,the excess amount is still allocated against non-controlling interests.
Acquisition of non-controlling interests or disposal of equity interest in a subsidiary that does not result inthe loss of control over the subsidiary is accounted for as equity transactions. The carrying amounts of theCompany's interests and non-controlling interests are adjusted to reflect the changes in their relative interestsin the subsidiary. The difference between the amount by which the non-controlling interests are adjusted andthe fair value of the consideration paid or received is adjusted to capital reserve under owners' equity. If thecapital reserve is not sufficient to absorb the difference, the excess is adjusted against retained earnings.Other comprehensive income attributed to the non-controlling interest is reattributed to the shareholders ofthe company.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
6. Basis for preparation of consolidated financial statements - (cont’d)
A put option issued by the Group to holders of non-controlling interests that is settled in cash or other finan-cial instrument is recognized as a liability at the present value of the exercise price (according to the "antic-ipated acquisition method"). The Group’s share of a subsidiary’s profits includes the share of the holders ofthe non-controlling interests to which the Group issued a put option.
In cases which the Group has a Call option in addition to the Put option above, due to the anticipated acqui-sition method implementation no value is given to the Call option in the consolidated financial statements.
When the Group loses control over a subsidiary due to disposal of certain equity interest or other reasons,any retained interest is re-measured at its fair value at the date when control is lost. The difference between(i) the aggregate of the consideration received on disposal and the fair value of any retained interest and (ii)the share of the former subsidiary's net assets cumulatively calculated from the acquisition date according tothe original proportion of ownership interest is recognized as investment income in the period in whichcontrol is lost. Other comprehensive income associated with the disposed subsidiary is reclassified to invest-ment income in the period in which control is lost.
7. Classification and accounting methods of joint arrangement
Joint arrangement involves by two or more parties jointly control. Joint control is the contractually agreedsharing of control over an economic activity, and exists only when the strategic financial and operatingdecisions relating to the activity require the unanimous consent of the parties sharing control (the ventures).
The Group makes the classification of the joint arrangements according to the rights and obligations in thejoint arrangements to either joint operations or joint ventures.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement haverights to the net assets of the joint arrangement. Joint ventures are accounted for using the equity method.
8. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents arethe Group's short-term, highly liquid investments that are readily convertible to known amounts of cash andwhich are subject to an insignificant risk of changes in value.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
9. Translation of transactions and financial statements denominated in foreign currencies
9.1 Transactions denominated in foreign currencies
On initial recognition, foreign currency transactions are translated into functional currency using the spotexchange rate prevailing at the date of transaction.
At the balance sheet date, foreign currency monetary items are translated into functional currency using thespot exchange rates at the balance sheet date. Exchange differences arising from the differences between thespot exchange rates prevailing at the balance sheet date and those on initial recognition or at the previousbalance sheet date are recognized in profit or loss for the period, except that (i) exchange differences relatedto a specific-purpose borrowing denominated in foreign currency that qualify for capitalization are capital-ized as part of the cost of the qualifying asset during the capitalization period. (ii) exchange differencesrelated to hedging instruments for the purpose of hedging against foreign currency risks are accounted forusing hedge accounting.
When preparing financial statements involving foreign operations, if there is any foreign currency monetaryitems, which in substance forms part of the net investment in the foreign operations, exchange differencesarising from the changes of foreign currency are recorded as other comprehensive income, and will be re-classified to profit or loss upon disposal of the foreign operations.
Foreign currency non-monetary items measured at historical cost are translated to the amounts in functionalcurrency at the spot exchange rates on the dates of the transactions and the amounts in functional currencyremain unchanged.
9.2 Translation of financial statements denominated in foreign currency
For the purpose of preparing consolidated financial statements, financial statements of a foreign operationare translated from the foreign currency into RMB using the following method: assets and liabilities on thebalance sheet are translated at spot exchange rate prevailing at the balance sheet date; shareholders' equityitems, except for retained earnings, are translated at the spot exchange rates at the dates on which such itemsarose; all items in the income statement as well as items reflecting the distribution of profits are translated ataverage rate or at spot exchange rates on the dates of the transactions; the retained earnings opening balanceis previous year's translated retained earnings closing balance; the closing balance of retained earnings iscalculated and presented on the basis of each translated income statement and profit distribution item. Thedifference between the translated assets and the aggregate of liabilities and shareholders' equity items isrecorded as other comprehensive income. Cash Flows arising from transaction in foreign currency and thecash flows of a foreign subsidiary are translated at the spot exchange rate on the date of the cash flow, theeffect of exchange rate changes on the cash and cash equivalents is regarded as a reconciling item and presentseparately in the statement “effect of foreign exchange rate changes on the cash and cash equivalents".
The opening balances and the comparative figures of prior year are presented at the translated amounts inthe prior year's financial statements.
On disposal of the Group's entire equity interest in a foreign operation, or upon a loss of control over aforeign operation due to disposal of certain equity interest in it or other reasons, the Group transfers theaccumulated translation differences, which are attributable to the owners' equity of the Company and pre-sented under other comprehensive income to profit or loss in the period in which the disposal occurs.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
9. Translation of transactions and financial statements denominated in foreign currencies - (cont’d)
9.2 Translation of financial statements denominated in foreign currency - (cont’d)
In case of a disposal or other reason that does not result in the Group losing control over a foreign operation,the proportionate share of accumulated translation differences are re-attributed to non-controlling interestsand are not recognized in profit and loss. For partial disposals of equity interest in foreign operations, whichare associates or joint ventures, the proportionate share of the accumulated translation differences are reclas-sified to profit or loss.
10. Financial instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to the contractualprovisions of the instrument. At initial recognition, the Group measures a financial asset or financial liabilityat its fair value plus or minus (which is not measured at fair value through profit or loss) transaction coststhat are directly attributable to the acquisition or issue of the financial asset or financial liability. Initialrecognition in trade receivables which do not contain a significant financing component, shall be made ac-cording to their transaction price.
10.1 Classification and measurement of financial assets
After initial recognition, an entity shall measure a financial asset at: (a) amortised cost; (b) fair value throughother comprehensive income (“FVTOCI”); or (c) fair value through profit or loss (“FVTPL”).
10.1.1 Financial assets at amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met: (a) the financialasset is held within a business model whose objective is to hold financial assets in order to collect contractualcash flows; and (b) the contractual terms of the financial asset give rise on specified dates to cash flows thatare solely payments of principal and interest on the principal amount outstanding.
Such financial assets are subsequently measured at amortised cost, using effective interest method. Gains orlosses upon impairment and derecognition are recognized in profit or loss.
10.1.1.1 Effective interest method and amortised cost
Effective interest method represents the method for calculating the amortized costs and interest income orexpense of each period in accordance with the effective interest rate of financial assets or financial liabilities(inclusive of a set of financial assets or financial liabilities). Effective interest rate represents the rate thatdiscounts the future cash flow over the expected subsisting period or shorter period, if appropriate, of thefinancial asset or financial liability to the current carrying value of such financial asset or financial liability.
When calculating the effective interest rate, the Group will consider the anticipated future cash flow (notconsidering the future credit loss) on the basis of all contract clauses of financial assets or financial liabilities,as well as consider all kinds of charges which are an integral part of the effective interest rate, includingtransaction fees and discount or premium paid or received between both parties of financial asset or financialliability contract.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.1 Classification and measurement of financial assets - (cont’d)
10.1.2 Financial assets at FVTOCI
A financial asset is measured at fair value through other comprehensive income if both of the followingconditions are met: (a) the financial asset is held within a business model whose objective is achieved byboth collecting contractual cash flows and selling financial assets and (b) the contractual terms of the finan-cial asset give rise on specified dates to cash flows that are solely payments of principal and interest on theprincipal amount outstanding.
A gain or loss on a financial asset measured at fair value through other comprehensive income is recognizedin other comprehensive income, except for impairment gains or losses, foreign exchange gains and lossesand interest calculated using the effective interest method, until the financial asset is derecognized or reclas-sified. When the financial asset is derecognized the cumulative gain or loss previously recognized in othercomprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
10.1.3 Financial assets at FVTPL
Financial assets at FVTPL are either those that are classified as financial assets at FVTPL or designated asfinancial assets at FVTPL.
A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVTOCI.
The Group may, at initial recognition, irrevocably designate a financial asset as measured at FVTPL if doingso eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to asan ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing thegains and losses on them on different bases.
A gain or loss on a financial asset that is measured at FVTPL is recognized in profit or loss unless it is partof a hedging relationship. Dividends are recognized in profit or loss.
10.1.4 Designated financial assets at FVTOCI
At initial recognition, the Group makes an irrevocable election to designate to FVTOCI an investment in anequity instrument that is not held for trading.
When a non-trading equity instrument investment is designated as a financial asset that is measured at fairvalue through other comprehensive income, the changes in the fair value of the financial asset are recognisedin other comprehensive income. Upon realization the accumulated gains or losses from other comprehensiveincome are transferred from other comprehensive income and included in retained earnings. During the pe-riod in which the Group holds these non-trading investment instruments, the right to receive dividends in theGroup has been established, and the economic benefits related to dividends are likely to flow into the Group,and when the amount of dividends can be reliably measured, the dividend income is recognized in the currentprofit and loss.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses on financial assets that are classified toamortised cost and FVTOCI.
The Group always measures the loss allowance at an amount equal to lifetime expected credit losses fortrade receivables.
For financial assets other than trade receivables, the Group initially measure the loss allowance for thatfinancial instrument at an amount equal to 12-month expected credit losses. At each balance sheet date, ifthe credit risk on that financial instrument has increased significantly since initial recognition, the Groupmeasures the loss allowance for a financial instrument at an amount equal to the lifetime expected creditlosses. The Group recognizes in profit or loss, as an impairment gain or loss, the amount of expected creditlosses (or reversal) that is required to adjust the loss allowance to the amount that is required to be recognized.
10.2.1 Significant increases in credit risk
At each balance sheet date, the Group assesses whether the credit risk on a financial instrument has in-creased significantly since initial recognition.
The Group mainly considers the following list of information in assessing changes in credit risk:
(a) significant changes in internal price indicators of credit risk as a result of a change in credit risk since
inception.(b) significant changes in external market indicators of credit risk for a particular financial instrumentor similar financial instruments with the same expected life.(c) a significant change in the debtors’ ability to meet its debt obligations.(d) an actual or expected significant change in the operating results of the debtor.(e) significant increases in credit risk on other financial instruments of the same debtor.(f) an actual or expected significant adverse change in the regulatory, economic, or technological envi-ronment of the debtor.(g) significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or credit enhancements, which are expected to reduce the debtor’s economicincentive to make scheduled contractual payments or to otherwise have an effect on the probabilityof a default occurring.(h) significant changes that are expected to reduce the receivable’s economic incentive to makescheduled contractual payments.(i) significant changes in the expected performance and behaviour of the debtor.(j) past due information.
The Group assumes that the credit risk on a financial instrument has not increased significantly since initialrecognition if the financial instrument is determined to have low credit risk at the reporting date.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets - (cont’d)
10.2.2 Credit-impaired financial asset
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimatedfuture cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impairedinclude observable data about the following events:
(a) significant financial difficulty of the issuer or the receivable;(b) a breach of contract, such as a default or past due event;(c) the lender(s) of the receivable, for economic or contractual reasons relating to the receivable’s finan-cial difficulty, having granted to the receivable a concession(s) that the lender(s) would not otherwiseconsider;(d) it is becoming probable that the receivable will enter bankruptcy or other financial reorganization;
10.2.3 Recognition of expected credit losses
For the purpose of determining significant increases in credit risk and recognizing a loss allowance on acollective basis, financial instruments are grouped on the basis of shared credit risk. Examples of sharedcredit risk characteristics may include, but are not limited to, the:(a) instrument type; (b) credit risk ratings;(c) collateral type; (d) industry; (e) geographical location of the debtor; and (f) the value of collateral rela-tive to the financial asset if it has an impact on the probability of a default occurring.
Expected credit losses of financial instruments are determined as the present value of the difference be-tween: (a) the contractual cash flows that are due to an entity under the contract; and (b) the cash flows thatthe entity expects to receive.
For a financial asset that is credit-impaired at the reporting date, an entity shall measure the expected creditlosses as the difference between the asset’s gross carrying amount and the present value of estimated futurecash flows discounted at the financial asset’s original effective interest rate. Any adjustment is recognizedin profit or loss as an impairment gain or loss.
The Group measures expected credit losses of a financial instrument in a way that reflects:
(a) an unbiased and probability-weighted amount that is determined by evaluating a range of possibleoutcomes;(b) the time value of money; and(c) reasonable and supportable information that is available without undue cost or effort at the reportingdate about past events, current conditions and forecasts of future economic conditions.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets - (cont’d)
10.2.4 Written-off of financial assets
The Group directly reduces the gross carrying amount of a financial asset when the entity has no reasonableexpectations of recovering a financial asset in its entirety or a portion thereof. A write-off constitutes aderecognition event.
10.3 Transfer of financial asset
The Group derecognizes a financial asset if one of the following conditions is satisfied: (i) the contractualrights to the cash flows from the financial asset expire; or (ii) the financial asset has been transferred andsubstantially all the risks and rewards of ownership of the financial asset transferred to the transferee; or (iii)although the financial asset has been transferred, the Group neither transfers nor retains substantially all therisks and rewards of ownership of the financial asset but has not retained control of the financial asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financialasset, and it retains control of the financial asset, it recognizes the financial asset to the extent of its contin-uing involvement in the transferred financial asset and recognizes an associated liability. The extent of theGroup’s continuing involvement in the transferred asset is the extent to which it is exposed to changes in thevalue of the transferred asset.
When the company is derecognizing a financial asset in its entirety, except for equity instrument designatedto FVTOCI, the difference between (i) the carrying amount of the financial asset transferred; and (ii) the sumof the consideration received from the transfer is recognized in profit or loss.
10.4 Classification and measurement of financial liabilities
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with thesubstance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
All financial liabilities are subsequently measured at FVTPL or other financial liabilities.
Financial liabilities are classified as at FVTPL when the financial liability is (i) held for trading or (ii) it isdesignated as at FVTPL. The financial liability other than derivative financial liabilities are stated as liabil-ities held for trading.
Other financial liabilities are subsequently measured at amortized cost by using effective interest method.Gain or loss arising from derecognition or amortization is recognized in current profit or loss.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.5 Derecognition of financial liabilities
Financial liabilities are derecognized in full or in part only when the present obligation is discharged in fullor in part. An agreement entered into force between the Group (debtor) and a creditor to replace the originalfinancial liabilities with new financial liabilities with substantially different terms, derecognize the originalfinancial liabilities as well as recognize the new financial liabilities. When financial liabilities is derecog-nized in full or in part, the difference between the carrying amount of the financial liabilities derecognizedand the consideration paid (including transferred non-cash assets or new financial liability) is recognized inprofit or loss for the current period.
10.6 Derivatives
Derivative financial instruments include forward exchange contracts, currency swaps and foreign exchangeoptions, etc. Derivatives are initially measured at fair value at the date when the derivative contracts areentered into and are subsequently re-measured at fair value. The resulting gain or loss is recognized in profitor loss unless the derivative is designated and highly effective as a hedging instrument, in which case thetiming of the recognition in profit or loss depends on the nature of the hedge relationship (Note III 28.1).
10.7 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the balance sheet and shall not beoffset, except for circumstances where the Group has a legal right that is currently enforceable to offset therecognized financial assets and financial liabilities, and intends either to settle on a net basis, or to realizethe financial asset and settle the financial liability simultaneously, a financial asset and a financial liabilityshall be offset and the net amount is presented in the balance sheet.
10.8 Equity instruments
The consideration received from the issuance of equity instruments net of transaction costs is recognized inshareholders’ equity. Consideration and transaction costs paid by the Company for repurchasing self-issuedequity instruments are deducted from shareholders’ equity.
When the Company repurchases its own shares, those shares are treated as treasury shares. All expendituresrelating to the repurchase are recorded in the cost of the treasury shares, with the transaction entering intothe share capital. Treasury shares are excluded from profit distributions and are stated as a deduction undershareholders’ equity in the balance sheet.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Receivables
Receivables are assessed for impairment on a collective group and/or on an individual basis as follows:
Expected credit losses in respect of a receivables is measured at an amount equal to lifetime expected creditlosses. The assessment is made collectively for account receivables, where receivables share similar creditrisk characteristics based on geographical location, using the expected credit losses model including inter-alia aging analysis, historical loss experiences adjusted by the observable factors reflecting current and ex-pected future economic conditions. The ratio of the account receivables collective provision for expectedcredit losses in which credit losses has not occurred is between 0%-4.36%.
When credit risk on a receivable has increased significantly since initial recognition, the group records spe-cific provision or collective provision, which is determined for groups of similar assets in countries in whichthere are large number of customers with immaterial balances.
In assessing whether the credit risk on a receivable has increased significantly since initial recognition, theGroup compares the risk of a default occurring on the receivable at the reporting date with the risk of adefault occurring on the receivable at the date of initial recognition and considers both quantitative andqualitative information that is reasonable and supportable, including observable data that comes to the atten-tion of the Group about loss events such as a significant decline in the solvency of an individual debtor orthe portfolio of debtors, and significant changes in the financial condition that have an adverse effect on thedebtor.
12. Inventories
12.1 Categories of inventories and initial measurement
The Group's inventories mainly include raw materials, work in progress, semi-finished goods, finished goodsand reusable materials. Reusable materials include low-value consumables, packaging materials and othermaterials, which can be used repeatedly but do not meet the definition of fixed assets.
Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of con-version and other expenditures incurred in bringing the inventories to their present location and conditionincluding direct labor costs and an appropriate allocation of production overheads.
12.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
12.3 Basis for determining net realizable value of inventories and provision methods for decline in value of in-
ventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the netrealizable value is below the cost of inventories, a provision for decline in value of inventories is made. Netrealizable value is the estimated selling price in the ordinary course of business less the estimated costs ofcompletion, the estimated costs necessary to make the sale and relevant taxes.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
12. Inventories - (cont’d)
After the provision for decline in value of inventories is made, if the circumstances that previously causedinventories to be written down below cost no longer exist so that the net realizable value of inventories ishigher than their carrying amount, the original provision for decline in value is reversed and the reversal isincluded in profit or loss for the period.
12.4 The perpetual inventory system is maintained for stock system.
13. Long-term equity investments
Long-term equity investments include investments in subsidiaries, joint ventures and associates.
Subsidiaries are the companies that are controlled by the Company. Associates are the companies over whichthe Group has significant influence. Joint ventures are joint arrangements over which the Group has jointcontrol along with other investors and has rights to the net assets of the joint arrangement.
The Company accounts for the investment in subsidiaries at historical cost in the Company's financial state-ments. Investments in associates and joint ventures are accounted for under equity method.
13.1 Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprises undercommon control, the investment cost of the long-term equity investment is the share of the carrying amountof the shareholders' equity of the acquiree attributable to the ultimate controlling party at the date of combi-nation. The difference between initial investment cost and cash paid, non-cash assets transferred and bookvalue of liabilities assumed, is adjusted in capital reserve. If the balance of capital reserve is not sufficient toabsorb the difference, any excess is adjusted to retained earnings.
For a long-term equity investment acquired through business combination not involving enterprises undercommon control, the investment cost of the long-term equity investment is the cost of acquisition. For abusiness combination not involving enterprises under common control achieved in stages that involves mul-tiple exchange transactions, the initial investment cost is carried at the aggregate of the carrying amount ofthe acquirer’s previously held equity interest in the acquiree and the new investment cost incurred on theacquisition date.
Regarding the long-term equity investment acquired otherwise than through a business combination, if thelong-term equity investment is acquired by cash, the historical cost is determined based on the amount ofcash paid and payable; if the long-term equity investment is acquired through the issuance of equity instru-ments, the historical cost is determined based on the fair value of the equity instruments issued.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
13. Long-term equity investments - (cont’d)
13.2 Subsequent measurement and recognition of profit or loss
If the long-term equity investment is accounted for at cost, it should be measured at historical cost lessaccumulated impairment losses. Dividend declared by the investee should be accounted for as investmentincome.
Under the equity method, where the long-term equity investment initial investment cost exceeds the Group’sshare of the fair value of the investee’s identifiable net assets at the time of acquisition, no adjustment ismade to the initial investment cost. Where the initial investment cost is less than the Group’s share of thefair value of the investee’s identifiable net assets at the time of acquisition, the difference is recognized inprofit or loss for the period, and the cost of the long-term equity investment is adjusted accordingly.
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensiveincome of the investee for the period as investment income or loss and other comprehensive income for theperiod. The Group recognizes its share of the investee’s net profit or loss based on the fair value of theinvestee’s individual separately identifiable assets, etc. at the acquisition date after making appropriate ad-justments to be confirmed with the Group's accounting policies and accounting period. The Group discon-tinues recognizing its share of net losses of the investee after the carrying amount of the long-term equityinvestment together with any long-term interests that in substance form part of its net investment in theinvestee is reduced to zero. If the Group has incurred obligations to assume additional losses of the investee,a provision is recognized according to the expected obligation, and recorded as investment loss for the period.
13.3 Basis for determining control, joint control and significant influence over investee
Control is achieved when the Company has power over the investee; is exposed, or has rights, to variablereturns from its involvement with the investee; and has the ability to use its power to affect its returns.
Joint control is the contractually agreed sharing of control over an economic activity, and exists only whenthe strategic financial and operating policy decisions relating to the activity require the unanimous consentof the parties sharing control.
Significant influence is the power to participate in the financial and operating policy decisions of the investeebut is not control or joint control over those policies.
When determining whether an investing enterprise is able to exercise control or significant influence overan investee, the effect of potential voting rights of the investee (for example, warrants and convertible debts)held by the investing enterprises or other parties that are currently exercisable or convertible shall be con-sidered.
13.4 Methods of impairment assessment and determining the provision for impairment loss
If the recoverable amounts of the investments to subsidiaries, joint ventures and associates are less than theircarrying amounts, an impairment loss should be recognized to reduce the carrying amounts to the recoverableamounts (Note III 20).
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
13. Long-term equity investments - (cont’d)
13.5 The disposal of long-term equity investment
On disposal of a long term equity investment, the difference between the proceeds actually received andreceivable and the carrying amount is recognized in profit or loss for the period.
14. Investment properties
Investment property refers to real estate held to earn rentals or for capital appreciation, or both, includingleased land use rights, land use rights held and provided for transferring after appreciation and leased con-structions, etc.
Investment property is initially measured at cost. Subsequent expenditures related to an investment propertyshall be included in cost of investment property only when the economic benefits associated with the assetwill likely flow to the Group and its cost can be measured reliably. All other subsequent expenditures oninvestment property shall be included in profit or loss for the current period when incurred.
The Group adopts cost method for subsequent measurement of investment property, which is depreciated oramortized using the same policy as that for buildings and land use rights.
When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal ofthe property net of the carrying amount and related taxes and surcharges is recognized in profit or loss forthe current period.
15. Fixed assets
15.1 Recognition criteria for fixed assets
Fixed assets include land owned by the Group and buildings, machinery and equipment, motor vehicles,office equipment and others.
Fixed assets are tangible assets that are held for use in the production or supply of goods or for administrativepurposes, and have useful lives of more than one accounting year. A fixed asset is recognized only when itis probable that economic benefits associated with the asset will flow to the Group and the cost of the assetcan be reliably measured. Purchased or constructed fixed assets are initially measured at cost when acquired.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it isprobable that economic benefits associated with the asset will flow to the Group and the subsequent expend-itures can be measured reliably. Other subsequent expenditures are recognized in profit or loss in the periodin which they are incurred.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
15. Fixed assets - (cont’d)
15.2 Depreciation of each category of fixed assets
Fixed asset is depreciated based on the cost of fixed asset recognized less expected net residual value overits useful life using the straight-line method since the month subsequent to the one in which it is ready forintended use. Depreciation is calculated based on the carrying amount of the fixed asset after impairmentover the estimated remaining useful life of the asset.
The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciationmethod applied at least once at each financial year-end, and account for any change as a change in an ac-counting estimate.
The estimated useful life, estimated net residual value and annual depreciation rate of each category of fixedassets are as follows:
Category Depreciation
Useful life
(years)
Residualvalue(%)
Annual deprecia-tion rate (%)Buildings the straight-line method 15-50 0-4 1.9-6.7Machinery and equipment the straight-line method 3-22 0-4 4.4-33.3Office and other equipment the straight-line method 3-17 0-4 5.6-33.3Motor vehicles the straight-line method 5-9 0-2 10.9-20.0
Overseas Land owned by the Group is not depreciated.
15.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use ordisposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, theamount of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognizedin profit or loss for the period.
The difference between recoverable amounts of the fixed assets under the carrying amount is referred to asimpairment loss (Note III 20).
16. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various construction, instal-lation costs, borrowing costs capitalized and other expenditures incurred until such time as the relevant assetsare completed and ready for its intended use. When the asset concerned is ready for its intended use, the costof the asset is transferred to fixed assets and depreciated starting from the following month.
The difference between recoverable amounts of the construction in progress under the carrying amount isreferred to as impairment loss (Note III 20).
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
17. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset arecapitalized when expenditures for such asset and borrowing costs are incurred and activities relating to theacquisition, construction or production of the asset that are necessary to prepare the asset for its intended useor sale have commenced. Capitalization of borrowing costs ceases when the qualifying asset being acquired,constructed or produced becomes ready for its intended use or sale. Borrowing costs incurred subsequentlyshould be charged to profit or loss. Capitalization of borrowing costs is suspended during periods in whichthe acquisition, construction or production of a qualifying asset is suspended abnormally and when the sus-pension is for a continuous period of more than 3 months. Capitalization is suspended until the acquisition,construction or production of the asset is resumed.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized isthe actual interest expenses incurred on that borrowing for the period less any bank interest earned fromdepositing the borrowed funds before being used on the asset or any investment income on the temporaryinvestment of those funds.
Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interestto be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excessof cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The capitalizationrate is the weighted average of the interest rates applicable to the general-purpose borrowings.
During the capitalization period, exchange differences on foreign currency specific-purpose borrowing arefully capitalized whereas exchange differences on foreign currency general-purpose borrowing, charged toprofit or loss.
18. Intangible assets
18.1 Valuation methods, useful life, impairment test
The Group’s intangible assets include product registration assets, intangible assets upon purchase of products,marketing rights and rights to use tradenames and trademarks, land use rights, software and customer rela-tions. Intangible assets are stated at cost less accumulated amortization and impairment losses.
When an intangible asset with a finite useful life is available for use, its original cost less any accumulatedimpairment losses is amortized over its estimated useful life using the straight-line method. An intangibleasset with an indefinite useful life is not amortized.
For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method atthe end of the year, and makes adjustments when necessary.The respective amortization periods for such intangible assets are as follows:
| Item | Amortization period | ( | years) | ||||||||||||||||||||||||||||
| Land use rights | 49 | 50 years | |||||||||||||||||||||||||||||
| Product registration | 8 | , 11 | years | ||||||||||||||||||||||||||||
| Intangible assets on purchase of products | 7 | - | 11, 20 years | ||||||||||||||||||||||||||||
| Marketing rights, tradename and trademarks | 4 | - | 10, 30 years | ||||||||||||||||||||||||||||
| Exclusivity agreement | 21 years | ||||||||||||||||||||||||||||||
| Software | 3 | - | 5 years | ||||||||||||||||||||||||||||
| Customer relations | 5 | - | 10, 13 | years | |||||||||||||||||||||||||||
The difference between recoverable amounts of the intangible assets under the carrying amount is referredto as impairment loss (see Note III 20).
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
18. Intangible assets - (cont’d)
18.2 Research and development expenditure
Internal research and development project expenditures were classified into research expenditures and de-velopment expenditures depending on its nature and the greater uncertainty whether the research activitiesbecoming to intangible assets.
Expenditure during the research phase is recognized as an expense in the period in which it is incurred.Expenditure during the development phase that meets all of the following conditions at the same time isrecognized as intangible asset:
- It is technically feasible to complete the intangible asset so that it will be available for use or sale;- The Group has the intention to complete the intangible asset and use or sell it;- The Group can demonstrate the ways in which the intangible asset will generate economic benefits;- The availability of adequate technical, financial and other resources to complete the development and theability to use or sell the intangible asset;- The expenditure attributable to the intangible asset during its development phase can be reliably meas-ured.Expenditures that do not meet all of the above conditions at the same time are recognized in profit or losswhen incurred. If the expenditures cannot be distinguished between the research phase and developmentphase, the Group recognizes all of them in profit or loss for the period. Expenditures that have previouslybeen recognized in the profit or loss would not be recognized as an asset in subsequent years. Those expend-itures capitalized during the development stage are recognized as development costs incurred and will betransferred to intangible asset when the underlying project is ready for an intended use.
19. Goodwill
The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’s interest in the fairvalue of the identifiable net assets of the acquiree under a business combination not involving enterprisesunder common control.
Goodwill is not amortized and is stated in the balance sheet at cost less accumulated impairment losses (seeNote III 20). On disposal of an asset group
or a set of asset groups, any attributable goodwill is written offand included in the calculation of the profit or loss on disposal.
20. Impairment of long-term assets
The Company assesses at each balance sheet date whether there is any indication that the fixed assets, con-struction in progress, right of use assets, intangible assets with finite useful lives, investment propertiesmeasured at historical cost, investments in subsidiaries, joint ventures and associates may be impaired. Ifthere is any indication that such assets may be impaired, recoverable amounts are estimated for such assets.The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value ofthe future cash flow estimated to be derived from the asset. The Group estimates the recoverable amount onan individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the Groupdetermines the recoverable amount of the asset group to which the asset belongs. Identification of an assetgroup is based on whether major cash inflows generated by the asset group are largely independent of thecash inflows from other assets or asset groups.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
20. Impairment of long-term assets - (cont’d)
Goodwill arising from a business combination is tested for impairment at least at each year end, irrespectiveof whether there is any indication that the asset may be impaired. For the purpose of impairment testing, thecarrying amount of goodwill acquired in a business combination is allocated from the acquisition date on areasonable basis to each of the related asset groups; if it is impossible to allocate to the related asset groups,it is allocated to each of the related set of asset groups. Each of the related asset groups or set of asset groupsis an asset group or set of asset group that is able to benefit from the synergies of the business combinationand shall not be larger than a reportable segment determined by the Group. If the carrying amount of theasset group or set of asset groups is higher than its recoverable amount, the amount of the impairment lossfirst reduced by the carrying amount of the goodwill allocated to the asset group or set of asset groups, andthen the carrying amount of other assets (other than the goodwill) within the asset group or set of asset groups,pro rata based on the carrying amount of each asset.
Once the impairment loss of such assets is recognized, it will not be reversed in any subsequent period.
21. Employee benefits
21.1 Short-term employee benefits
Employee wages or salaries, bonuses, social security contributions, measured on a non-discounted basis, andthe expense is recorded when the related service is provided. A provision for short-term employee benefitsin respect of cash bonuses is recognized in the amount expected to be paid where the Group has a currentlegal or constructive obligation to pay the said amount for services provided by the employee in the past andthe amount can be estimated reliably.
21.2 Post-employment benefits
Post-employment benefits are classified into defined contribution plans and defined benefit plans.
A defined contribution plan is a post-employment benefit plan under which the Group pays contributions toa separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contri-butions to defined contribution plans are recognized as an expense in profit or loss in the periods duringwhich related services are rendered by employees.
Defined benefit plans of the Group are post-employment benefit plans other than defined contribution plans.In accordance with the projected unit credit method, the Group measures the obligations under defined ben-efit plans using unbiased and mutually compatible actuarial assumptions to estimate related demographicvariables and financial variables, and discount obligations under the defined benefit plans to determine thepresent value of the defined benefit liability. The discount rate used is the yield on the reporting date onhighly-rated corporate debentures denominated in the same currency, that have maturity dates approximatingthe terms of the Group’s obligation.
The Group attributes benefit obligations under a defined benefit plan to periods of service provided by re-spective employees. Service cost and interest expense on the defined benefit liability are charged to profit orloss and remeasurements of the defined benefit liability are recognized in other comprehensive income.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
21. Employee benefits - (cont’d)
21.3 Termination benefits
When the Group terminates the employment with employees or provides compensation under an offer toencourage employees to accept voluntary redundancy, a provision is recognized with a corresponding ex-pense in profit or loss at the earlier of the following dates:
- When the Group cannot unilaterally withdraw the offer of termination benefits because of an employeetermination plan or a curtailment proposal.- When the Group has a formal detailed restructuring plan involving the payment of termination benefitsand has raised a valid expectation in those affected that it will carry out the restructuring by starting toimplement that plan or announcing its main features to those affected by it.If the benefits are payable more than 12 months after the end of the reporting period, they are discounted totheir present value. The discount rate used is the yield on the reporting date on highly-rated corporate de-bentures denominated in the same currency, that have maturity dates approximating the terms of the Group’sobligation.
21.4 Other long-term employee benefits
The Group’s net obligation for long-term employee benefits, which are not attributable to post-employmentbenefit plans, is for the amount of the future benefit to which employees are entitled for services that wereprovided during the current and prior periods.
The amount of these benefits is discounted to its present value and the fair value of the assets related to theseobligations is deducted therefrom. The discount rate used is the yield on the reporting date on highly-ratedcorporate debentures denominated in the same currency, that have maturity dates approximating the termsof the Group’s obligation.
22. Share-based payment
Share-based payment refers to the transaction in order to acquire the service offered by the employees orother parties that grants equity instruments or liabilities on the basis of the equity instruments. Share-basedpayment classified into equity-settled share-based payment and cash-settled share-based payment.
22.1 Cash-settled share-based payment
The cash-settled share-based payment should be measured according to the fair value of the liabilities rec-ognized based on the shares or other equity instrument undertaken by the Company. For cash-settled share-based payment made in return for the rendering of employee services that cannot be exercised until theservices are fully provided during the vesting period or specified performance targets are met, on each bal-ance sheet date within the vesting period, the services acquired in the current period shall, based on the bestestimate of the number of exercisable instruments, be recognized in relevant expenses and the correspondingliabilities at the fair value of the liability incurred by the Company.
On each balance sheet date and the settlement date before the settlement of the relevant liabilities, the Com-pany should re-measure the fair value of the liabilities and the changes should be included in the currentperiod profit and loss.
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23. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency, it is probablethat an outflow of economic benefits will be required to settle the obligation, and the amount of the obligationcan be measured reliably.
The amount recognized as a provision is the best estimate of the consideration required to settle the presentobligation at the settlement date, taking into account factors pertaining to a contingency such as the risks,uncertainties and time value of money. Where the effect of the time value of money is material, the amountof the provision is determined by discounting the related future cash outflows. The increase in the provisiondue to passage of time is recognized as interest expense.
If all or part of the provision settlements is reimbursed by third parties, when the realization of income isvirtually certain, then the related asset should be recognized. However, the amount of related asset recog-nized should not be exceeding the respective provision amount.
At the balance sheet date, the amount of provision should be re-assessed to reflect the best estimation then.
24. Revenue
Revenue of the Group is mainly from sale of goods.
The Group recognizes revenue when transferring goods to a customer, at the amount of the transaction price.Goods are considered transferred when the customer obtains control of the goods. Transaction price is theamount of consideration to which an entity expects to be entitled in exchange for transferring goods to acustomer, excluding amounts collected on behalf of third parties.
Significant financing component
For a contract with a significant financing component, the Group recognize revenue at an amount that reflectsthe price that a customer would have paid for the goods if the customer had paid cash for those goods atreceipt. The difference between the amount of consideration and the cash selling price of the goods, is amor-tized in the contract period using effective interest rate. The Group does not adjust the amount of consider-ation for the effects of a significant financing component if the Group expects, at contract inception, that theperiod between when the entity transfers a good to a customer and when the customer pays for that goodwill be one year or less.
Sale with a right of return
For sale with a right of return, the Group recognizes revenue at the amount of consideration to which theGroup expects to be entitled (ie excluding the products expected to be returned). For any amounts received(or receivable) for which an entity does not expect to be entitled, the entity shall not recognize revenue whenit transfers products to customers but shall recognize those amounts received (or receivable) as a refundliability. An asset recognized for the Group’s right to recover products from a customer on settling a refundliability shall initially be measured by reference to the former carrying amount of the product less any ex-pected costs to recover those products.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
25. Government grants
Government grants are transfer of monetary assets and non-monetary assets from the government to theGroup at no consideration, including tax returns, financial subsidies and so on. A government grant is rec-ognized only when the Group can comply with the conditions attached to the grant and the Group will receivethe grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount receivedor receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. Ifthe fair value cannot be reliably determined, it is measured at a nominal amount.
Government grants are either related to assets or income.
(1) The basis of judgment and accounting method of the government grants related to assets
Government grants obtained for acquiring long-term assets are government grants related to assets. A gov-ernment grant related to an asset is offset with the cost of the relevant asset.
(2) The basis of judgment and accounting method of the government grants related to income
For a government grant related to income, if the grant is a compensation for related expenses or losses to beincurred in subsequent periods, the grant is recognized as deferred income, and recognized in profit or lossover the periods in which the related costs are recognized. If the grant is a compensation for related expensesor losses already incurred, the grant is recognized immediately in profit or loss for the period.
Government grants related to the Group’s normal course of business are offset with related costs and ex-penses. Government grants related that are irrelevant with the Groups’s normal course of business are in-cluded in non-operating gains.
26. Current and deferred tax
The income tax expenses include current income tax and deferred income tax.
26.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are meas-ured at the amount expected to be paid (or recovered) according to the requirements of tax laws.
26.2 Deferred tax assets and deferred tax liabilities
Temporary differences are differences between the carrying amounts of certain assets or liabilities and theirtax base.
All taxable temporary differences are recognized as related deferred tax liabilities. Deferred tax assets arerecognized to the extent that it is probable that future taxable profits will be available against which thedeductible losses and tax credits can be utilized.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
26. Current and deferred tax - (cont’d)
26.2 Deferred tax assets and deferred tax liabilities - (cont’d)
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to theextent that it is probable that future taxable profits will be available against which the deductible losses andtax credits can be utilized. However, for deductible temporary differences associated with the initial recog-nition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a businesscombination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the timeof transaction, no deferred tax asset or liability is recognized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to taxlaws, that are expected to apply in the period in which the asset is realized or the liability is settled.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in sub-sidiaries and associates, and interests in joint ventures, except where the Group is able to control the timingof the reversal of the temporary difference and it is probable that the temporary difference will not reversein the foreseeable future.
The Group may be required to pay additional tax in case of distribution of dividends by the Group companies.This additional tax was not included in the financial statements, since the policy of the Group is not todistribute in the foreseeable future a dividend which creates a significant additional tax liability.
Except for those current income tax and deferred tax charged to comprehensive income or shareholders’equity in respect of transactions or events which have been directly recognized in other comprehensive in-come or shareholders’ equity, and deferred tax recognized on business combinations, all other current in-come tax and deferred tax items are charged to profit or loss in the current period.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longerprobable that sufficient taxable profits will be available in the future to allow the benefit of deferred taxassets to be utilized. Such reduction is reversed when it becomes probable that sufficient taxable profits willbe available.
26.3 Offset of income tax
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and tax assets andtax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entityor different taxable entities which intend to realize the assets and liabilities simultaneously, current tax assetsand liabilities are offset and presented on a net basis.
When the Group has a legal right to settle deferred tax assets and liabilities on a net basis which relates toincome taxes levied by the same taxation authority, on either the same taxable entity or different taxableentities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets andliabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabil-ities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on anet basis.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
27. Leases
Lease is a contract, that conveys the right to use an asset for a period of time in exchange for consideration.
27.1 Determining whether an arrangement contains a lease
On the inception date of the lease, the Group determines whether the arrangement is a lease or contains alease, while assessing if it conveys the right to control the use of an identified asset for a period of time inexchange for consideration. In its assessment of whether an arrangement conveys the right to control the useof an identified asset, the Group assesses whether it has the following two rights throughout the lease term:
(a) The right to obtain substantially all the economic benefits from use of the identified asset; and(b) The right to direct the identified asset’s use.An arrangement does not contain a lease if an asset is leased for a period of less than 12 months, or to lease ofasset with low economic value.
27.2 Initial recognition of leased assets and lease liabilities
Upon initial recognition, the Group recognizes a liability at the present value of future lease payments (ex-clude certain variable lease payments, as detailed in note III 27.4), and concurrently the Group recognizes aright-of-use asset at the same amount, adjusted for any prepaid lease payments paid at the lease date or before,plus initial direct costs incurred in respect of the lease.
When the interest rate implicit in the lease is not readily determinable, the incremental borrowing rate of thelessee is used.The Group presents right-of-use assets separately from other assets in the balance sheet.
27.3 The lease term
The lease term is the non-cancellable period of the lease plus periods covered by an extension or terminationoption, if it is reasonably certain that the lessee will exercise or not exercise the option, respectively.
If there is a change in the lease term, or in the assessment of an option to purchase the underlying asset, theGroup remeasures the lease liability, on the basis of the revised lease term and the revised discount rate andadjust the right-of-use assets accordingly.
27.4 Variable lease payments
Variable lease payments that depend on an index or a rate, are initially measured using the index or rateexisting at the commencement of the lease. When the cash flows of future lease payments change as theresult of a change in an index or a rate, the balance of the liability is adjusted with a correspondence changein the right-of-use asset.
Other variable lease payments that are not included in the measurement of the lease liability are recognizedin profit or loss in the period in which the condition that triggers payment occurs.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
27. Leases (cont’d)
27.5 Subsequent measurement
After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciationand accumulated impairment losses and is adjusted for re-measurements of the lease liability. The asset isdepreciated on a straight-line basis over the useful life or contractual lease period, whichever earlier.
The Group applies ASBE8 Impairment of Assets, to determine whether the right-of-use asset is impairedand to account for any impairment loss identified.
A lease liability is measured after the lease commencement date at amortized cost using the effective interestmethod.
28. Other significant accounting policies and accounting estimates
28.1 Hedging
The Group uses derivative financial instruments to hedge its risks related to foreign currency and inflationrisks and derivatives that are not used for hedging.
Hedge accounting
The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoingbasis, whether the hedge is expected to be effective in offsetting the changes in the fair value of cash flowsthat can be attributed to the hedged risk during the period for which the hedge is designated.
An effective hedge exists when all of the below conditions are met:
? There is an economic relationship between the hedged item and the hedging instrument;? the effect of credit risk does not dominate the value changes that result from that economic relation-ship;? the hedge ratio of the hedging relationship is the same as that resulting from the quantity of thehedged item that the entity actually hedges and the quantity of the hedging instrument that the entityactually uses to hedge that quantity of hedged item.
On the commencement date of the accounting hedge, the Group formally documents the relationship betweenthe hedging instrument and hedged item, including the Group’s risk management objectives and strategy inexecuting the hedge transaction, together with the methods that will be used by the Group to assess theeffectiveness of the hedging relationship.
With respect to a cash-flow hedge, a forecasted transaction that constitutes a hedged item must be highlyprobable and must give rise to exposure to changes in cash flows that could ultimately affect profit or loss.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.1 Hedging (cont’d)
Measurement of derivative financial instruments
Derivative financial instruments are recognized initially at fair value; attributable transaction costs are rec-ognized in profit or loss as incurred.
Cash-flow hedges
Subsequent to the initial recognition, changes in the fair value of derivatives used to hedge cash flows arerecognized through other comprehensive income directly in a hedging reserve, with respect to the part of thehedge that is effective. Regarding the portion of the hedge that is not effective, the changes in fair value arerecognized in profit and loss. The amount accumulated in the hedging reserve is reclassified to profit andloss in the period in which the hedged cash flows impact profit or loss and is presented in the same line itemin the statement of income as the hedged item.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated orexercised, the hedge accounting is discontinued. The cumulative gain or loss previously recognized in ahedging reserve through other comprehensive income remains in the reserve until the forecasted transactionoccurs or is no longer expected to occur. If the forecasted transaction is no longer expected to occur, thecumulative gain or loss in respect of the hedging instrument in the hedging reserve is reclassified to profitor loss.
Economic hedge
Hedge accounting is not applied with respect to derivative instruments used to economically hedge financialassets and liabilities denominated in foreign currency or CPI linked. Changes in the fair value of such deriv-atives are recognized in profit or loss as gain (loss) from changes in fair value.
Derivatives that are not used for hedging
Changes in the fair value of derivatives that are not used for hedging are recognized in profit or loss as gain(loss) from changes in fair value.
28.2 Securitization of assets
Details of the securitization of asset agreements and accounting policy are set out in Note V.5 - Accountreceivables.
28.3 Segment reporting
Reportable segments are identified based on operating segments which are determined based on the structureof the Group’s internal organization, management requirements and internal reporting system.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.3 Segment reporting - (cont’d)
Two or more operating segments may be aggregated into a single operating segment if the segments havesimilar economic characteristics and are same or similar in respect of the nature of each product and service,the nature of production processes, the type or class of customers for the products and services, the methodsused to distribute the products or provide the services, and the nature of the regulatory environment.
Inter-segment revenues are measured on the basis of actual transaction price for such transactions for seg-ment reporting. Segment accounting policies are consistent with those for the consolidated financial state-ments.
28.4 Profit distributions to shareholders
Dividends which are approved after the balance sheet date are not recognized as a liability at the balancesheet date but are disclosed in the notes separately.
29. Changes in significant accounting policies and accounting estimates
29.1 Changes in significant accounting policies
On 30 December 2021, the Ministry of Finance issued "Accounting Standards for Business Enterprises In-terpretation No. 15” (hereinafter referred to as “Interpretation No. 15”) which clarified the accounting treat-ments for the sale of the products or by-products produced before the assets being capable of operating in apredetermined manner or produced during the research and development process and clarified the costs acompany should include as the cost of fulfilling a contract when assessing whether a contract is onerous.
According to the Interpretation No.15, the above clarifications were effective from 1 January 2022. Adoptionof the interpretations has no significant impact on the Group’s financial statements.
On 30 November 2022, the Ministry of Finance issued "Accounting Standards for Business Enterprises In-terpretation No. 16” (hereinafter referred to as “Interpretation No. 16”) which clarified the following ac-counting treatments:
(1) Deferred tax related to assets and liabilities arising from a single transaction;
(2) The income tax treatment of the dividend paid as the issuer of an equity instrument; and
(3) When an entity changes a cash-settled share-based payment to an equity-settled share-based payment.
According to the Interpretation No.16, the second and the third clarifications were effective from 30 Novem-ber 2022. Adoption of the interpretations has no significant impact on the Group’s financial statements.
29.2 Changes in significant accounting estimates
There are no significant changes in accounting estimates in the reporting period.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments
The preparation of the financial statements requires management to make estimates and assumptions thataffect the application of accounting policies and the reported amounts of assets, liabilities, income and ex-penses. Actual results may differ from these estimates. Estimates as well as underlying assumptions anduncertainties involved are reviewed on an ongoing basis. Revisions to accounting estimates are recognizedin the period in which the estimate is revised and in any future periods affected.
Notes V.34, Note VIII, Note IX and Note XIII contain information about the assumptions and their riskfactors relating to post-employment benefits – defined benefit plans, fair value of financial instruments andshare-based payments. Other key sources of estimation uncertainty are as follows:
30.1 Expected credit loss of trade receivables
As described in Note III.11, trade receivables are reviewed at each balance sheet date to determine whethercredit risk on a receivable has increased significantly since initial recognition, lifetime expected losses isaccrued for impairment provision. Evidence of impairment includes observable data that comes to the atten-tion of the Group about loss events such as a significant decline in the solvency of an individual debtor orthe portfolio of debtors, and significant changes in the financial condition that have an adverse effect on thedebtor. If there is objective evidence of a recovery in the value of receivables which can be related objectivelyto an event occurring after the impairment was recognized, the previously recognized impairment loss isreversed .
30.2 Provision for impairment of inventories
As described in Note III.12, the net realisable value of inventories is under management’s regular review,and as a result, provision for impairment of inventories is recognized for the excess of inventories’ carryingamounts over their net realisable value. When making estimates of net realisable value, the Group takes intoconsideration the use of inventories held on hand and other information available to form the underlyingassumptions, including the inventories’ market prices and the Group’s historical operating costs. The actualselling price, the costs of completion and the costs necessary to make the sale and relevant taxes may varybased on the changes in market conditions and product saleability, manufacturing technology and the actualuse of the inventories, resulting in the changes in provision for impairment of inventories. The net profit orloss may then be affected in the period when the impairment of inventories is adjusted.
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III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments - (cont’d)
30.3 Impairment of assets other than inventories and financial assets
As described in Note III.20, if impairment indication exists, assets other than inventories and financial assetsare assessed at balance sheet date to determine whether the carrying amount exceeds the recoverable amountof the assets. If any such case exists, an impairment loss is recognized.
The recoverable amount of an asset (or an asset group) is the greater of its fair value less costs to sell and itspresent value of expected future cash flows. Since a market price of the asset (or the asset group) cannot beobtained reliably, the fair value of the asset cannot be estimated reliably, the recoverable amount is calculatedbased on the present value of estimated future cash flows. In assessing the present value of estimated futurecash flows, significant judgements are exercised over the asset’s production, selling price, related operatingexpenses and discount rate to calculate the present value. All relevant materials which can be obtained areused for estimation of the recoverable amount, including the estimation of the production, selling price andrelated operating expenses based on reasonable and supportable assumptions.
30.4 Depreciation and amortisation of assets such as fixed assets and intangible assets
As described in Note III.15 and III.18, assets such as fixed assets and intangible assets are depreciated andamortised over their useful lives after taking into account residual value. The estimated useful lives of theassets are regularly reviewed to determine the depreciation and amortisation costs charged in each reportingperiod. The useful lives of the assets are determined based on historical experience of similar assets and theestimated technical changes. If there have been significant changes in the factors used to determine the de-preciation or amortisation, the rate of depreciation or amortisation is revised prospectively.
30.5 Income taxes and deferred income tax
The Company and Group companies are assessed for income tax purposes in a large number of jurisdictionsand, therefore, Company management is required to use considerable judgment in determining the total pro-vision for taxes and attribution of income.
When assessing whether there will be sufficient future taxable profits available against which the deductibletemporary differences can be utilised, the Group recognizes deferred tax assets to the extent that it is probablethat future taxable profits will be available against which the deductible temporary differences can be utilised,using tax rates that would apply in the period when the asset would be utilised. In determining the amountof deferred tax assets, the Group makes reasonable judgements and estimates about the timing and amountof taxable profits to be utilised in the following periods, and of the tax rates applicable in the future accordingto the existing tax policies and other relevant regulations. If the actual timing and amount of future taxableprofits or the actual applicable tax rates differ from the estimates made by management, the differences affectthe amount of tax expenses.
- 197 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Significant accounting estimates and judgments - (cont’d)
30.6 Contingent liabilities
When assessing the possible outcomes of legal claims filed against the Company and its investee companies,the company positions are based on the opinions of their legal advisors. These assessments by the legaladvisors are based on their professional judgment, considering the stage of the proceedings and the legalexperience accumulated regarding the various matters. Since the results of the claims will be determined bythe courts, the outcomes could be different from the assessments.
In addition to the said claims, the Group is exposed to unasserted claims, inter alia, where there is doubt asto interpretation of the agreement and/or legal provision and/or the manner of their implementation. Thisexposure is brought to the Company’s attention in several ways, among others, by means of contacts madeto Company personnel. In assessing the risk deriving from the unasserted claims, the Company relies oninternal assessments by the parties dealing with these matters and by management, who weigh assessmentof the prospects of a claim being filed, and the chances of its success, if filed. The assessment is based onexperience gained with respect to the filing of claims and the analysis of the details of each claim. By theirnature, in view of the preliminary stage of the clarification of the legal claim, the actual outcome could bedifferent from the assessment made before the claim was filed.
30.7 Employee benefits
The Group’s liabilities for long-term post-employment and other benefits are calculated according to theestimated future amount of the benefit to which the employee will be entitled in consideration for his servicesduring the current period and prior periods. The benefit is stated at present value net of the fair value of theplan’s assets, based on actuarial assumptions. Changes in the actuarial assumptions could lead to materialchanges in the book value of the liabilities and in the operating results.
30.8 Derivative financial instruments
The Group enters into transactions in derivative financial instruments for the purpose of hedging risks relatedto foreign currency and inflationary risks. The derivatives are recorded at their fair value. The fair value ofderivative financial instruments is based on quotes from financial institutions. The reasonableness of thequotes is examined by discounting the future cash flows, based on the terms and length of the period tomaturity of each contract, while using market interest rates of a similar instrument as of the measurementdate. Changes in the assumptions and the calculation model could lead to material changes in the fair valueof the assets and liabilities and in the results.
- 198 -
IV. Taxation
1. Main types of taxes and corresponding tax rates
The income tax rate in China is 25% (2021: 25%). The subsidiaries outside of China are assessed based onthe tax laws in the country of their residence.
Set forth below are the tax rates outside China relevant to the subsidiaries with significant sales to third party:
Name of subsidiary
Location
2022
ADAMA agriculture solutions Ltd.
Israel
23.0%
ADAMA Makhteshim Ltd.
Israel
7.5%
ADAMA Agan Ltd.
Israel
7.5%
ADAMA Brasil S/A
Brazil
34.0%
Makhteshim Agan of North America Inc.
U.S.
24.3%
ADAMA India Private Ltd
India
25.2%
ADAMA Deutschland GmbH
Germany
32.5%
Control Solutions Inc.
U.S.
25.0%
Adama Australia Pty Ltd
Australia
30.0%
ADAMA Northern Europe B.V.
Netherlands
25.8%
ADAMA Italia SRL
Italy
27.9%
Alligare LLC
U.S.
28.6%
The VAT rate of the Group's subsidiaries is in the range between 2.5% to 27%.
- 199 -
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(1) Benefits from High-Tech Certificate
The Company, was jointly approved as new and high-tech enterprise, by the Hubei Provincial Departmentof Science and Technology, Department of Finance of Hubei Province and Hubei Provincial Office of theState Administration of Taxation. The applicable income tax rate from 2020 to 2022 is 15%.
Adama Anpon (Jiangsu) Ltd. (Formally know as Jiangsu Anpon Electrochemical Co. Ltd, hereinafter -“Anpon"), a subsidiary of the Company, was jointly approved as new and high-tech enterprise, by the JiangsuProvincial Department of Science and Technology, Department of Finance of Jiangsu Province and JiangsuProvincial Office of the State Administration of Taxation. The applicable income tax rate from 2021 to 2023is 15%.
(2) Benefits under the Law for the Encouragement of Capital Investments
Industrial enterprises of subsidiaries in Israel were granted “Approved Enterprise” or “Beneficiary Enterprise”status under the Israeli Law for the Encouragement of Capital Investments, 1959. Should a dividend bedistributed from the retained earning produced in which the company was considered as an “Approved En-terprise” or “Beneficiary Enterprise” from unreleased retained earnings, based on the temporary order asdescribed below, the company may be liable for tax at the time of distribution.
On December 29, 2010 the Knesset approved the Economic Policy Law for 2011-2012, which includes anamendment to the Law for the Encouragement of Capital Investments - 1959 (hereinafter - “the Amend-ment”). The Amendment is effective from January 1, 2011 and its provisions apply to preferred incomederived or accrued in 2011 and thereafter by a preferred company, per the definition of these terms in theAmendment.
The Amendment provides that only companies in Development Area A will be entitled to the grants trackand that they will be entitled to receive benefits under this track and under the tax benefits track at the sametime. The tax benefit tracks under the law constitute a preferred enterprise and a special preferred enterprise,which mainly provide a uniform and reduced tax rate for all the company’s income entitled to benefits. Taxrates on preferred income as from 2017 tax year are as follows: 7.5% for Development Area A and 16% forthe rest of the country.
The amendment further determined that no tax shall apply to dividend distributed out of preferred income toIsrael resident company shareholder.
As of the date of the report, all subsidiaries in Israel adopted the amendment and the deferred taxes werecalculated accordingly.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 200 -
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(2) Benefits under the Law for the Encouragement of Capital Investments - (cont’d)
On December 21, 2016 the Knesset plenum passed the second and third reading of the Economic EfficiencyLaw (Legislative Amendments for Achieving Budget Objectives in the Years 2017 and 2018) – 2016 inwhich the Encouragement Law was also amended (hereinafter: “the Amendment”). The Amendment is ef-fective as from January 1, 2017 and added new tax benefit tracks for a “preferred technological enterprise”and a “special preferred technological enterprise” which award reduced tax rates to a technological industrialenterprise for the purpose of encouraging activity relating to the development of qualifying intangible assets.
The benefits will be awarded to a “preferred company” that has a “preferred technological enterprise” or a“special preferred technological enterprise” with respect to taxable “preferred technological income” per itsdefinition in the Encouragement Law.
Income of a Preferred Technological Enterprise a Special Preferred Technological Enterprise will be subjectto a reduced corporate tax rate of 6% regardless of the development area in which the enterprise is located.
In addition, as part of the amendment, a temporary provision was enacted, valid until June 30, 2021, whichsettles tax benefits continuation on income that is eligible to the Preferred Enterprise tax benefits as at June30, 2016.
On May 16, 2017 the Knesset Finance Committee approved Encouragement of Capital Investment Regula-tions (Preferred Technological Income and Capital Gain of Technological Enterprise) – 2017 (hereinafter:
“the Regulations”), which provides rules for applying the “preferred technological enterprise” and “specialpreferred technological enterprise” tax benefit tracks including the Nexus formula that provides the mecha-nism for allocating the technological income eligible for the benefits.
On November 15, 2021 the Economic Efficiency Law (Legislative Amendments for the 2021 and 2022Budget Years) – 2021 was published as well as a Temporary Order to the Law for the Encouragement ofCapital Investments – 1959 (hereinafter: “the temporary order”), which offers a reduced tax rate arrangementto companies that received an exemption from corporate tax under the aforesaid law. The temporary orderprovided that companies that choose to apply the temporary order, which is effective until November 14,2022, will be entitled to a reduced tax rate on the “release” of exempt profits (hereinafter: “the beneficiarycorporate tax rate”). The release of exempt profits makes it possible to distribute them at a reduced rate ofcorporate tax at the company level based on the rate of the profits being distributed pursuant to the conditionsset forth in the Amendment.
During the fourth quarter of 2022, Solutions announced its choice to release the retained earnings in a numberof subsidiaries and committed to pay a reduced corporate tax in the amount of approximately 101 millionRMB, which was recorded as tax expenses in the financial statements of the fourth quarter of 2022.
- 201 -
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(3) Benefits under the Law for the Encouragement of Industry (Taxes), 1969
Under the Israeli Law for the Encouragement of Industry (Taxes) 1969, Solutions is an Industrial HoldingCompany and some of the subsidiaries in Israel are “Industrial Companies”. The main benefit under this lawis the filing of consolidated income tax returns (Solutions files a consolidated income tax return with AdamaMakhteshim and submission of a consolidated report together with Adama Agan as of 2017), amortizationof know-how over 8 years and higher rates of depreciation.
- 202 -
V. Notes to the consolidated financial statements
1. Cash at Bank and On Hand
December 31 December 31
2022 2021
| Cash on hand | 785 | 1,196 | |||||||||||||||||||
| Deposits in | banks | 4,224,468 | 5,758,28 | 4 | |||||||||||||||||
Other cash and bank65,708 59,355
4,290,961 5,818,835
| Including cash and bank placed outside China |
| 3,300,538 | 4,935,072 | ||||||||||
As at December 31, 2022 restricted cash and bank balances was 65,708 thousand RMB
(as at December 31, 2021 59,355 thousand RMB) mainly including deposits that guarantee bank acceptancedrafts.
2. Financial assets held for trading
December 31 December 31
2022 2021
| Bank deposits | ||||||||
1,685 1,479
1,685 1,479
3. Derivative financial assets
December 31 December 31
2022 2021
| Economic hedge | 224,128 | 198,775 |
Accounting hedge derivatives9,681 44,541
233,809 243,316
4. Bills Receivable
December 31 December 31
2022 2021
| Post | - | dated checks receivable | 112,297 | 79,996 | ||||||||||||
| Bank acceptance draft | ||||||||||||||||
- 1,996
112,297 81,992
All bills receivables are due within 1 year.
- 203 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable
a. By category
December 31, 2022
Book value
Provision for expectedcredit losses
Amount
Percentage
(%)
Amount
Percentage (%)
Carrying
amount
Account receivables assessed
| individually for impairment |
383,265
212,640
170,625
Account receivables assessed
| collectively for impairment |
8,945,138
97,388
8,847,750
9,328,403
310,028
9,018,375
December 31, 2021
Book value
Provision for expectedcredit losses
Amount
Percentage (%)
Amount
Percentage (%)
Carrying
amount
Account receivables assessed
| individually for impairment |
| 290,224 | |
| 3 |
| 143,827 | |
| 50 |
| 146,397 | |
Account receivables assessed
| collectively for impairment |
8,300,941
84,845
8,216,096
8,591,165 100
228,672 3
8,362,493
b. Aging analysis
December 31, 2022
Within 1 year (inclusive) 8,863,940
Over 1 year but within 2 years 245,816
Over 2 years but within 3 years 29,049
Over 3 years but within 4 years 59,095
Over 4 years but within 5 years 28,520
Over 5 years 101,983
9,328,403
- 204 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
Main groups of account receivables assessed collectively for impairment based on geographical loca-tion:
Geographical location A:
Account receivables in geographical location A are grouped based on similar credit risk:
December 31, 2022
Book value
Provision for expected
credit loss
Percentage (%)
| Credit group | A | 2,157,637 | 9,432 | 0. | 4 | |||||||||
| Credit group | B | 597,058 | 5,167 | 0.9 | ||||||||||
| Credit group | C | 213,109 | 9,297 | 4.4 | ||||||||||
| Credit group | D | |||||||||||||
37,549
2.1
3,005,353
24,679
0.8
Geographical location B:
Account receivables in geographical location B are grouped based on aging analysis:
December 31, 2022
Book value
Provision for expected
credit loss
Percentage (%)
| Accounts receivable that are not overdue | 586,149 | 5,041 | 0.9 | |||||||||||
| Debts overdue less than 60 | days | 114,981 | 3,448 | 3.0 | ||||||||||
Debts overdue less than 180 days but
| more than 60 days |
42,015
4,202
| 10 | .0 | ||||||||||||||
| Debts overdue above 180 days | 13,315 | 5,325 | 39.9 | ||||||||||||
| Legal Debtors | |||||||||||||||
40,402
40,402
100.0
796,862
58,418
7.3
Other geographical locations:
December 31, 2022
Book value
Provision for expected
credit loss
Percentage (%)
Other account receivables assessed
| collectively for impairment |
5,142,923
14,291
0.3
- 205 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
c. Addition, written-back and written-off of provision for expected credit losses during the period
Lifetime expectedcredit loss (creditlosses has not oc-curred)
Lifetime expectedcredit loss (creditlosses has occurred)
Total
January 1, 20
| January 1, 20 | 2 | 2 | 36,094 | 192,5 | 78 | 228,672 | ||||||||||||||||||||
| Addition | (write back) | during the period, net | 3,941 | 57,037 | 60,978 | |||||||||||||||||||||
| Exchange rate effect | ||||||||||||||||||||||||||
3,977
16,401
20,378
Balance as of
| Balance as of | December | 3 | 1 | , 20 | 22 |
44,012
266,016
310,028
d. Five largest accounts receivable at December 31, 2022:
Name Closing balance
Proportion of Accountsreceivable (%)
Allowance of expectedcredit losses (credit losseshas occurred)
Customer
| Customer | 1 | 358,001 | 3.8 | - | ||||||||
| Customer | 2 | 190,510 | 2.0 | - | ||||||||
| Customer | 3 | 139,424 | 1.5 | - | ||||||||
| Customer | 4 | 125,732 | 1.4 | - |
Customer 5122,222
1.3
-
Total935,889
10.0
-
e. Derecognition of accounts receivable due to transfer of financial assets
Certain subsidiaries of the group entered into a securitization transaction with Rabobank International forsale of trade receivables (hereinafter – “the Securitization Program” and/or “the Securitization Transaction”).
Pursuant to the Securitization Program, the companies will sell their trade receivables debts, in various dif-ferent currencies, to a foreign company that was set up for this purpose and that is not owned by the AdamaLtd. (hereinafter – “the Acquiring Company”). Acquisition of the trade receivables by the Acquiring Com-pany is financed by Cooperative Rabobank U.A..
The trade receivables included as part of the Securitization Transaction are trade receivables that meet thecriteria provided in the agreement.
Every year the credit facility is re approved in accordance with the Securitization Program. As at 31 Decem-ber 2022, the Securitization agreement was approved up to October 31, 2023.
- 206 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The maximum scope of the securitization is adjusted for the seasonal changes in the scope of the Company’sactivities, as follows: during the months March through June the maximum scope of the securitization is$350 million (as of December 31, 2022 – 2,438 million RMB), during the months July through Septemberthe maximum scope of the securitization is $300 million (as of December 31, 2022 – 2,089 million RMB)and during the months October through February the maximum scope of the securitization is $250 million(as of December 31, 2022– 1,741 million RMB). In addition the company has uncommitted facility of $50million (as of December 31, 2022- 348 million RMB) which will be applicable each period. The proceedsreceived from those customers whose debts were sold are used for acquisition of new trade receivables.
The price at which the trade receivables debts are sold is the amount of the debt sold less a discount calculatedbased on, among other things, the expected length of the period between the date of sale of the trade receiv-able and its anticipated repayment date. In the month following acquisition of the debt, the Acquiring Com-pany pays in cash most of the debt while the remainder is recorded as a subordinated note and as continuinginvolvement that is paid after collection of the debt sold. If the customer does not pay its debt on the antici-pated repayment date, the Company bears interest up to the earlier of the date on which the debt is actuallyrepaid or the date on which debt collection is transferred to the insurance company (the actual costs are notsignificant and are not expected to be significant).
The Acquiring Company bears 95% of the credit risk in respect of the customers whose debts were sold andwill not have a right of recourse to the Company in respect of the amounts paid in cash, except regardingdebts with respect to which a commercial dispute arises between the companies and their customers, that is,a dispute the source of which is a claim of non-fulfillment of an obligation of the seller in the supply agree-ment covering the product, such as: a failure to supply the correct product, a defect in the product, delin-quency in the supply date, and the like.
The Acquiring Company appointed a policy manager who will manage for it the credit risk involved withthe trade receivables sold, including an undertaking with an insurance company.
Pursuant to the Receivables Servicing Agreement, the Group subsidiaries handle collection of the trade re-ceivables as part of the Securitization Transaction for the benefit of the Acquiring Company.
As part of the agreement, Solutions is committed to comply with certain financial covenants, mainly the ratioof the liabilities to equity and profit ratios. As of December 31, 2022, Solutions was in compliance with thefinancial covenants.
The accounting treatment of sale of the trade receivables included as part of the Securitization Program is:
The Company is not controlling the Acquiring Company, therefore the Acquiring Company is not consoli-dated in the financial statements.
The Company continues to recognize the trade receivables included in the Securitization Program based onthe extent of its continuing involvement therein.
In respect of the part of the trade receivables included in the securitization Program with respect to whichcash proceeds were not yet received, however regarding which the Company has transferred the credit risk,a subordinated note is recorded.
The continuing involvement and subordinated note recorded in the balance sheet as part of the “other receiv-ables” line item.
- 207 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The loss from sale of the trade receivables is recorded at the time of sale in the statement of income in the“financing expenses”.
f. A subsidiary in Brazil (hereinafter - “the subsidiary”) entered into the following securitization agree-ments:
(1) Since 2016, a securitization transaction with Rabobank Brazil for sale of customer receivables (herein-after "FIDC-Donegal agreement"). Under the FIDC-Donegal agreement, the subsidiary will sell its receiva-bles to a securitization structure (hereinafter - “the entity”) that was formed for this purpose where the sub-sidiary has subordinate rights of 5% of the entity's capital.As at 31 December 2022, the FIDC-Donegal agreement was approved up to September 30, 2024.
The maximum securitization scope as of December 31, 2022 is BRL 350 million (as of December 31, 2022– 467 million RMB), with additional temporary securitization scope of BRL 150 million (as of December31, 2022 – 200 million RMB) until June 2023.
On the date of the sale of the customer receivables, the entity pays the full amount which is the debt amountsold net of discount calculated, among others, over the expected length of the period between the date of saleof the customer receivable and its anticipated repayment date.
The entity bears 95% of the credit risk in respect of the customers whose debts were sold such that the entityhas the right of recourse to 5% of the unpaid amount. The subsidiary has a pledged deposit with regards tothe entity’s right of recourse.
The subsidiary continues to recognize the trade receivables sold to the entity based on the extent of its con-tinuing involvement therein (5% right of recourse) and also recognizes an associated liability in the sameamount.
In "FIDC-Donegal agreement" the subsidiary handles the collection of receivables included in the securiti-zation for the entity.
(2) During 2021, the subsidiary has entered into an additional securitization agreement (hereinafter -“FIDC – Liverpool agreement”) with Itau Bank and Farm investments, for sale of customer receivables to asecuritization structure that was formed for this purpose where the subsidiary has mezzanine quotes of 10.5%of the entity's capital.As at 31 December 2022, the FIDC-Liverpool agreement was approved up to November 10, 2024.The maximum securitization scope as of December 31, 2022 is BRL 300 million (as of December 31, 2022– 400 million RMB), with additional temporary securitization scope of BRL 200 million (as of December31, 2022 – 267 million RMB), until June 2023.
The entity bears 100% of the credit risk in respect of the customers whose debts were sold (non-recourse),therefore the subsidiary has no continuing involvement in those account receivables sold.
In "FIDC-Liverpool agreement" the collection of receivables is being handled by the entity.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 208 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
f. A subsidiary in Brazil (hereinafter - “the subsidiary”) entered into the following securitization agree-ments:
(3) During 2022, the subsidiary has entered into an additional new securitization agreement (hereinafter -“The new agreement”) with Rabobank, for sale of customer receivables to a securitization.As at 31 December 2022, the new agreement was approved up to March 31, 2023. The maximum securiti-zation scope as of December 31, 2022 is BRL 100 million (as of December 31, 2022 – 133 million RMB).
On the date of the transaction, the bank pays the full amount which is the debt amount sold net of discountcalculated, among others, over the expected length of the period between the date of sale of the customerreceivable and its anticipated repayment date.
The bank bears 75% of the credit risk in respect of the customers whose debts were sold such that the bankhas the right of recourse to 25% of the unpaid amount.
The subsidiary continues to recognize the trade receivables sold to the bank based on the extent of its con-tinuing involvement therein (25% right of recourse) and also recognizes an associated liability in the sameamount.
In the new agreement the collection of receivables is being handled by the bank.
In all the agreements above, the subsidiary does not control the entities and therefore the entities are notconsolidated in the Group's financial statements.
The loss from the sale of the trade receivables is recorded at the time of sale in the statement of income inthe “financing expenses” category.
g. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
December 31
December 31
2022
2021
| Accounts receivables derecognized |
| 4 | ,039,429 | 2,962,111 | |||||||||||||
| Continuing involvement | 193,532 | 117,995 | |||||||||||||
| Subordinated note in respect of trade receivables | 591,998 | 388,631 | |||||||||||||
| Liability in respect of trade receivables | 79,619 | 98,836 | |||||||||||||
Year ended December 31
2022
2021
| Loss in respect of sale of trade receivables |
| 223,538 | 93,307 | |||||
- 209 -
V. Notes to the consolidated financial statements – (cont'd)
6. Receivables financing
December 31 December 31
2022 2021
Bank acceptance draft
| Bank acceptance draft |
63,639 120,157
63,639 120,157
As at December 31, 2022, bank acceptance endorsed but not yet due amounts to 596,299 thousands RMB.
7. Prepayments
(1) The aging analysis of prepayments is as follows:
December 31 December 31
2022 2021
Amount
Percentage (%)
Amount
Percentage (%)
| Within 1 year (inclusive) | 327,809 | 9 | 7 | 368,565 | 97 | ||||||||||||||||||||
| Over 1 year but within 2 years (inclusive) | 11,047 | 3 | 8,850 | 2 | |||||||||||||||||||||
| Over 2 years but within 3 years (inclusive) | 1,204 | - | 429 | - | |||||||||||||||||||||
| Over 3 years | |||||||||||||||||||||||||
1,042
-
1,944
341,102
379,788
(2) Total of five largest prepayments by debtor at the end of the period:
Amount
Percentage of prepayments
(%)
December
| December | 3 | 1 | , 20 | 22 |
93,930
28%
- 210 -
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables
(1) Other receivables by nature
December 31
| December 31 |
2022
2021
| Dividends receivable | - | 1,599 | |||||||||
| Others | 1,021,824 | 690,340 | |||||||||
1,021,824
| 691,939 |
a. Others breakdown by categories
December 31
| December 31 |
2022
| 2021 | |||||||||||||||||||||
| Trade receivables as part of securitization transactions | |||||||||||||||||||||
| not yet eliminated | 193,532 | 117,995 | |||||||||||||||||||
| Subordinated note in respect of trade receivables | 591,998 | 388,631 | |||||||||||||||||||
| Financial institutions | 38,354 | - | |||||||||||||||||||
| Receivables in respect of disposal of fixed assets | - | 19,940 | |||||||||||||||||||
| Other | |||||||||||||||||||||
242,688
| 174,624 | ||||||||||||||
| Sub total | 1,066,572 | 701,190 | ||||||||||||
| Provision for expected credit losses | - | other receivables | (44,748) | (10,850) | ||||||||||
1,021,824
| 690,340 |
b. Other receivables by aging
December 31
2022
Within 1 year (inclusive) 1,010,037
Over 1 year but within 2 years 39,914
Over 2 years but within 3 years 5,841
Over 3 years but within 4 years 2,575
Over 4 years but within 5 years 1,652
Over 5 years 6,553
1,066,572
(2) Additions, recovery or reversal and written-off of provision for expected credit losses during the
period:
| Year | ended |
| December | 3 | 1 | , 20 | 22 | |||||||||||||||||||
| Balance as of January 1 20 | 22 | , | 10,850 | ||||||||||||||||||||
| Addition (written back) during the period | 30,689 | ||||||||||||||||||||||
| Write | - | off during the period | - | ||||||||||||||||||||
| Exchange rate | effect | ||||||||||||||||||||||
3,209
Balance as of
| Balance as of | December 31 | , 2022 |
44,748
- 211 -
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables
(3) Five largest other receivables at December 31, 2022:
Name Closing balance
Proportion of other re-
ceivables (%)
Allowance of ex-pected creditlosses
| Party 1 | 591,998 | 55 | - | ||||||||||
| Party 2 | 38,354 | 4 | - | ||||||||||
| Party 3 | 15,733 | 1 | - | ||||||||||
| Party 4 | 6,905 | 1 | - | ||||||||||
Party 53,125
-
-
Total656,115
-
9. Inventories -
(1) Inventories by category:
| December 31 | , | 2022 | ||||
Book value
| Provision for | impair- |
ment Carrying amount
| Raw materials | 4,341,176 | 20,939 | 4,320,237 | |||||||||||||||||||
| Work in progress | 1,448,041 | 5,952 | 1,442,089 | |||||||||||||||||||
| Finished goods | 10,917,673 | 237,337 | 10,680,336 | |||||||||||||||||||
| Others | 495,125 | 10,546 | 484,579 | |||||||||||||||||||
| 17,202,015 | 274,774 | 16,927,241 | ||||||||||||||||||||
December 31, 2021
Book value
Provision for
| Provision for | impair- |
ment Carrying amount
| Raw materials | 4,217,049 | 26,514 | 4,190,535 | |||||||||||||||||||||||
| Work in progress | 766,650 | 16,647 | 750,003 | |||||||||||||||||||||||
| Finished goods | 6,545,536 | 139,307 | 6,406,229 | |||||||||||||||||||||||
| Others | 415,047 | 11,652 | 403,395 | |||||||||||||||||||||||
| 11,944,282 | 194,120 | 11,750,162 | ||||||||||||||||||||||||
- 212 -
V. Notes to the consolidated financial statements – (cont'd)
9. Inventories - (cont'd)
(2) Provision for impairment of inventories:
For the year ended December 31, 2022
January 1,
2022 Provision
| January 1, | ||
Reversal or
write-off
| Reversal or | |
Other
D
| D | ecember | 31 | , |
2022
| Raw material | 26,514 | 1 | 4,947 | (23,189) | 2,667 | 20,939 | ||||||||||||||||||||||||
| Work in progress | 16,647 | 2,144 | (17,770) | 4,931 | 5,952 | |||||||||||||||||||||||||
| Finished goods | 139,307 | 171,241 | (81,698) | 8,487 | 237,337 | |||||||||||||||||||||||||
| Others | 11,652 | 2,362 | (4,255) | 787 | 10,546 | |||||||||||||||||||||||||
| 194,120 | 190,694 | (126,912) | 16,872 | 274,774 | ||||||||||||||||||||||||||
10. Other Current Assets
December 31
December 31
2022
2021
| Deductible VAT | 679,428 | 615,406 | |||||||||||||
| Current tax assets | 219,057 | 158,440 | |||||||||||||
| Short term investments | 171,496 | 121,629 | |||||||||||||
| Others | |||||||||||||||
59,707
| 42,978 |
1,129,688
| 938,453 |
11. Long-Term Receivables
December 31
December 31
2022
2021
| Long term account receivables from sale of goods | 82,510 | 56,234 | ||||||||
82,510
56,234
- 213 -
V. Notes to the consolidated financial statements – (cont'd)
12. Long-Term Equity Investments
(1) Long-term equity investments by category:
December 31
December 31
2022
2021
| Joint venture | 2,110 | 2,227 | ||||||||
| Associate | ||||||||||
24,258
13,108
26,368
15,335
(2) Movements of long-term equity investments for the period are as follows:
January 1,2022
Investmentincome
Other Compre-hensive income
Declared dis-tribution ofcash dividend
Change inconsolidation
scope
Balance at theend of the period
Joint ven-ture
| Investee A | 2,227 | 531 | 237 | (885) | - | 2,110 |
Sub-total2,227
(885)
-
2,110
Associate
Investee B
13,108
9,827
2,456
(1,411)
24,258
Sub-total 13,108
9,827
2,456
(1,411)
24,258
Sub-total 15,335
10,358
2,693
(2,296)
26,368
13. Other equity investments
Dividend receivedduring 2022December 31,
2022
December 31,
2021
| Investment A |
| 84,720 | 84,720 | 2,32 | 5 | ||||||||
| Investment | B |
| 71,840 | 65,765 | - | |||||||||||
| Investment | C | 1,781 | 1,633 | - | |||||||||
158,341
152,118 52,32
Other equity investments are non-core businesses that are intended to be held in the foreseeable future.
- 214 -
V. Notes to the consolidated financial statements – (cont'd)
14. Fixed assets
Land &
Buildings
Machinery &equipment
Motor vehicles
Office & otherequipment
Total
Cost
| Balance as at January 1, 202 | 2 | 3,825,676 | 15,410,751 | 120,698 | 375,442 | 19,732,567 | ||||||||||||||||||||||||||||||||||||||||||
| Purchases | 45,009 | 16 | 8 | , | 439 | 26,654 | 42,239 | 2 | 82 | 341 | ||||||||||||||||||||||||||||||||||||||
| Transfer from construction in | progress | 399,633 | 1,0 | 74 | 545 | 33,053 | 7 | 363 | 1, | 514 | 594 | |||||||||||||||||||||||||||||||||||||
| Reclassification to construction in progress | - | (2 | 60 | 130 | ) | - | - | (2 | 60 | 130 | ) | |||||||||||||||||||||||||||||||||||||
| Disposals | (197,584) | (829, | 167 | ) | (24,342) | (1 | 9 | 036 | (1,0 | 70 | 129 | ) | ||||||||||||||||||||||||||||||||||||
Currency translation adjustment
| Currency translation adjustment |
167,924
951,868
10,524
32,534
1,162,850
Balance as at
| Balance as at | December | 3 | 1 | , 202 | 2 |
4,240,658
16,516,306
166,587
438,542
21,362,093
Accumulated depreciation
| Balance as at January 1, 202 | 2 | (1,734,850) | (9,079,08 | 4 | ) | (66,602) | (299,595) | (11,180,13 | 1 | ) | |||||||||||||||||||||||||||||||||||
| Charge for the period | (133,903) | (816,056) | (21,395) | (35,144) | (1,006,498) | ||||||||||||||||||||||||||||||||||||||||
| Disposals | 155,234 | 646, | 443 | 16,374 | 18,704 | 83 | 6 | 755 | |||||||||||||||||||||||||||||||||||||
| Reclassification to construction in progress | - | 2 | 2 | 327 | - | - | 2 | 2 | 327 | ||||||||||||||||||||||||||||||||||||
Currency translation adjustment
| Currency translation adjustment |
(77,854)
(589,489)
(2,825)
(26,164)
(696,332)
Balance as at
| Balance as at | December | 3 | 1 | , 202 | 2 |
(1,791,373)
(9,815,859)
(74,448)
(342,199)
(12,023,879)
Provision for impairment
| Balance as at January 1, 202 | 2 | (155,563) | (347,068) | (646) | (770) | (504,047) | |||||||||||||||||||||||||||||||||||
| Charge for the period | (17,025) | ( | 51 | ,9 | 89 | (451) | (293) | ( | 69 | ,7 | 58 | ||||||||||||||||||||||||||||||
| Disposals | 40,887 | 158,653 | 4 | 21 | 199,565 | ||||||||||||||||||||||||||||||||||||
| Transfer from construction in progress | - | (3,808) | - | - | (3,808) | ||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | |||||||||||||||||||||||||||||||||||||||||
(962)
(6,978)
(14)
(28)
(7,982)
| Balance as at | December | 3 | 1 | , 202 | 2 |
(132,663)
(251,190)
(1,107)
(1,070)
(386,030)
Carrying amounts
As at December 31, 2022
2,316,622
6,449,257
91,032
95,273
8,952,184
As at
January 1, 2022
1,935,263
5,984,599
53,450
75,077
8,048,389
The lands reported as fixed assets are owned by the group subsidiaries and are located outside of China.
- 215 -
V. Notes to the consolidated financial statements - (cont'd)
15. Construction in Progress
(1) Construction in progress
December 31 December 312022 2021Book value
Provision for im-pairment Carrying amount
Book value
Provision for im-pairment Carrying amount
3,079,882
(118,481)
2,961,401
2,164,394
(20,994)
2,143,400
(2) Details and Movements of major construction projects in progress during period ended December 31, 2022
Budget
January1, 2022 Additions
Including:
Interestcapitalized
Currencytranslationdifferences
Transferto fixedassets
December31, 2022
Actualcost tobudget(%)
Projectprogress
(%) Source of funds
| Project A | 1,509,420 | 332,722 | 26 | 86 | 8 | ||||||||||||||||||||||||
1,191
| - | (3 | 59 | 590 | - | 100 | % | 100 | % | Bank loan |
Project B
| Project B | 765,314 | 215 | , | 571 | 327 | 047 |
5,698
| - | - | 542 | , | 618 | 71 | % | 71 | % | Bank loan |
Project
| Project | C | 314 | , | 199 | 174,554 | 126 | 049 |
-
| 9 | 449 | (3 | 10 | 052 | - | 100 | % | 100 | % | Internal finance | |||||||||||||||||||||||||||||
| Project | D | 561 | , | 737 | 243,367 | 256,662 |
29,679
| 31,788 | - | 531,817 | 95% | 95% | Internal finance |
Project
| Project | E | 354 | , | 359 | 105,346 | 210,792 |
18,415
| 17,376 | - | 333,514 | 9 | 4 | % | 94% | Internal finance |
Project
| Project | F | 194,604 | 124 | , | 659 | 20,864 |
-
| - | (71,000) | 74,523 | 56% | 56% | Internal finance |
Project
| Project | G | 835 | , | 752 | 65,612 | 270,923 |
13,737
| 15,887 | - | 352,42 | 2 | 42% | 42% | Internal finance |
Project
| Project | H | 14 | 6 | , | 257 | 100,256 | 42,366 |
-
| 6,995 | (149,617) | - | 100% | 100% | Internal finance |
Project
| Project | 138,000 | 99,615 | 5,754 |
-
| - | (105,369) | - | 100% | 100% | Internal finance |
Project
| Project | J | 107 | , | 016 | 73,244 | 160 |
-
| - | (73,404) | - | 100% | 100% | Internal finance |
Project
| Project | K | 91 | ,2 | 93 | 81,131 | 10,867 |
-
| - | (91,998) | - | 100% | 100% | Internal finance |
Project
| Project | L |
Under re-
| evalution | 22,016 | 2 | 40 | 139 |
-
| - | - | - | 2 | 62 | 155 | - | - | Internal finance |
* As of December 31, 2022 Project B, Project F and Project L are include impairment of RMB 14 million, 35 million and 35 million , respectively.
- 216 -
V. Notes to the consolidated financial statements - (cont'd)
16. Right-of-use assets
Land & Build-
ings
Machinery &equipment
Motor vehicles
Office & otherequipment
Total
Cost
| Balance as at January 1, 202 | 2 | 493,032 | 44,259 | 258,111 | 4,188 | 799,590 | ||||||||||||||||||||||||||||
| Additions | 202,981 | 27 | 92,600 | 164 | 295,772 | |||||||||||||||||||||||||||||
| Disposals | ( | 127,150 | 1,938 | ) | 76,754 | ( | 830 | ( | 206,672 | ) | ||||||||||||||||||||||||
Currency translation adjustment
| Currency translation adjustment |
24,927
4,016
20,165
49,444
Balance as at December 31, 2022
| Balance as at December 31, 2022 |
593,790
46,364
294,122
3,858
938,134
Accumulated depreciation
| Balance as at January 1, 202 | 2 | ( | 201,150 | (17,393) | (115,455) | (1,677) | (335,675) | ||||||||||||||||||||||||||||||
| Charge for the period | ( | 86,282 | (5,949) | (81,812) | (753) | (174,796) | |||||||||||||||||||||||||||||||
| Disposals | 79,575 | 1,925 | 69,202 | 830 | 151,532 | ||||||||||||||||||||||||||||||||
| Currency translation | adjustment | ||||||||||||||||||||||||||||||||||||
(13,366)
(1,691)
(8,100)
(149)
(23,306)
Balance as at December 31, 2022
| Balance as at December 31, 2022 |
(221,223)
(23,108)
(136,165)
(1,749)
(382,245)
Provision for impairment
| Balance as at January 1, 202 | 2 |
-
-
-
-
-
Balance as at
| Balance as at | December 31, 2022 |
-
-
-
-
-
Carrying amounts
As at December 31, 2022
372,567
23,256
157,957
2,109
555,889
As at January 1, 2022
291,882
26,866
142,656
2,511
463,915
- 217 -
V. Notes to the consolidated financial statements - (cont'd)
17. Intangible Assets
(1) Include land parcel in Israel that has not yet been registered in the name of the Group subsidiaries at the Land Registry Office, mostly due to registration procedures or technical problems.
(2) Mainly non-compete and exclusivity agreements.
Product registra-tion
Intangible assets
on Purchase ofProducts Software
Marketingrights, trade-name and trade-marks
Customers rela-tions Land use rights
(1)
Others
(2)
Total
Costs
| Costs |
Balance as at
January 1, 2022
| 10, | 793,847 | 3,828,805 | 998,213 | 726,947 | 538,239 | 498,177 | 536,691 | 17,920,919 | ||||||||||||||||||||||||||||||||||||||||||||
| Purchases | 437,323 | - | 135,933 | 477 | - | 9,781 | 24,339 | 607,853 | ||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | 979,781 | 353,652 | 89,095 | 67,153 | 40,333 | 3,264 | 27,555 | 1,560,833 | ||||||||||||||||||||||||||||||||||||||||||||
Disposal
| Disposal |
(6,575)
-
(6,992)
-
-
(950)
-
(14,517)
Balance as at December 31, 2022 12,204,376
4,182,457
1,216,249
794,577
578,572
510,272
588,585
20,075,088
| Accumulated amortization | ||||||||||||||||||||
Balance as at January 1, 2022
| (8,214,576) | (2,649,128) | (596,197) | (457,479) | (249,305) | (82,720) | (215,008) | (12,464,413) | ||||||||||||||||||||||||||||||||||||||
| Charge for the period | (536,919) | (223,805) | (87,781) | (24,072) | (39,213) | (10,370) | (32,526) | (954,686) | |||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | (776,624) | (253,008) | (55,569) | (43,179) | (23,501) | (2,820) | (15,450) | (1,170,151) | |||||||||||||||||||||||||||||||||||||
Disposal 2,792
-
6,907
-
-
-
10,039
Balance as at December 31, 2022 (9,525,327)
(3,125,941)
(732,640)
(524,730)
(312,019)
(95,570)
(262,984)
(14,579,211)
| Provision for impairment | ||||||||||||||||||
Balance as at January 1, 2022
| (82,278) | (47,690) | - | - | - | - | (250) | (130,218) | |||||||||||||||||||||||||||||||
| Charge for the period | (6,014) | (4,278) | (50) | - | - | (277) | (10,619) | |||||||||||||||||||||||||||||||
Currency translation adjustment(7,659)
(4,633)
-
-
-
(12,286)
Balance as at December 31, 2022 (95,951)
(56,601)
(49)
-
-
(272)
(250)
(153,123)
| Carrying amount | ||||||||||||||||||
As at December 31, 20222,583,098
999,915
483,560
269,847
266,553
414,430
325,351
5,342,754
As at January 1, 20222,496,993
1,131,987
402,016
269,468
288,934
415,457
321,433
5,326,288
- 218 -
V. Notes to the consolidated financial statements - (cont'd)
18. Goodwill
Changes in goodwill
The Group allocates goodwill to two cash generating units ("CGU "), Crop Protection (Agro) and a non-core ac-tivity included in the Intermediates and ingredients segment. At the end of the year, or more frequently whetherindicators for impairment exists, the Group estimates the recoverable amount of each CGU for which goodwillhas been allocated to using the DCF model based on the Group business plan. The discount rate used in the DCFmodel is determined based on the company's cost of equity and cost of debt, taking into account the comprehensiverisk factors.
The carrying amount of goodwill is mainly allocated to Agro units. Total amount of goodwill allocated to theAgro units amounts to RMB 4,735 thousand. The goodwill allo-cated to non-core CGU is not significant.
As of December 31, 2022 the fair value of the cash generating units to which goodwill has been allocated toexceeds its carrying amount.
January 1,
2022
Change dur-ing the year
Currencytranslationadjustment
Balance at De-cember 31,
2022
| Book value | ||||||||||
| 4,409,599 | - | 395,558 | 4,805,157 | ||||||||||
| Impairment provision |
-
-
-
-
Carrying amount
| Carrying amount |
4,409,599
-
395,558
4,805,157
19. Deferred Tax Assets and Deferred Tax Liabilities
(1) Deferred tax assets without taking into consideration of the offsetting of balances within the same
tax jurisdiction
December 31 December 31
2022 2021
Deductibletemporary
differences
Deferred tax
assets
Deductibletemporarydifferences
Deferred tax
assets
| Deferred tax | |
Deferred tax assets
Deferred tax assets in respect of carry
| forward losses | 1,568,088 | 256,749 | 1,378,984 | 197,354 |
Deferred tax assets in respect of inven-
| tories | 2,402,900 | 689,062 | 1,117,094 | 294,043 |
Deferred tax assets in respect of em-
| ployee benefits | 1,005,874 | 166,264 | 1,009,387 | 150,742 | |||||||||||
| Other deferred tax asset | |||||||||||||||
2,030,651
545,937
1,375,455
331,258
7,007,513
1,658,012
4,880,920
973,397
- 219 -
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont’d)
(2) Deferred tax liabilities without taking into consideration of the offsetting of balances within thesame tax jurisdiction
December 31 December 31
2022 2021
Taxabletemporarydifferences
Deferred taxliabilities
Taxabletemporarydifferences
Deferred taxliabilities
Deferred tax liabilities
Deferred tax liabilities in respect of
| fixed assets and intangible assets |
3,430,096
626,610
3,392,987
630,460
3,430,096
626,610
3,392,987
630,460
(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting
December 31 December 31
2022 2021
The offsetamount ofdeferred taxassets and li-
abilities
Deferred taxassets or lia-bilities after
offset
The offsetamount of de-ferred tax as-sets and liabili-
ties
Deferred tax
assets or liabili-
ties after offset
Deferred tax
Presented as:
Deferred tax assets
| Deferred tax assets |
310,749
1,347,263
250,322
723,075
Deferred tax liabilities
| Deferred tax liabilities |
310,749
315,861
250,322
380,138
(4) Details of unrecognized deferred tax assets
December 31
December 31
2022
2021
| Deductible temporary differences | 518,542 | 496,972 | ||||||||
| Deductible losses | ||||||||||
| carry forward |
229,672
308,812
748,214
805,784
(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets
December 31
December 31
2022
2021
| 202 | 2 | - | 1,596 | ||||||||||||
| 2023 | 1,713 | 2,068 | |||||||||||||
| 202 | 4 | 33,646 | 19,063 | ||||||||||||
| 2025 | 6,282 | 5,751 | |||||||||||||
| 202 | 6 | 6,373 | 5,834 | ||||||||||||
| After 202 | 6 | ||||||||||||||
181,658
274,500
229,672
308,812
- 220 -
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont'd)
(6) Unrecognized deferred tax liabilities
When calculating the deferred taxes, taxes that would have applied in the event of realizing investmentsin subsidiaries were not taken into account since it is the Company’s intention to hold these investmentsand not realize them.
20. Other Non-Current Assets
December 31
December 31
2022
2021
| Judicial | deposits | 154,273 | 115,649 | |||||||||||||||||||
| Assets related to securitization | 112,388 | 74,169 | ||||||||||||||||||||
| Advances in respect of non | - | current assets | 174,035 | 165,555 | ||||||||||||||||||
| Others | 164,137 | 149,252 | ||||||||||||||||||||
604,833
504,625
21. Short-Term Loans
Short-term loans by category:
December 31
December 31
2022
| 2021 |
| Unsecured loans |
3,342,921
| 874,755 |
3,342,921
874,755
22. Derivative financial liabilities
874,755
December 31
December 31
2022
| 2021 |
| Economic hedge | 490,496 | 167,987 | |||||||||||
| Accounting hedge derivatives | 55,020 | 8,219 | |||||||||||
545,516
176,206
- 221 -
V. Notes to the consolidated financial statements - (cont'd)
23. Bills Payables
December 31
December 31
2022
2021
| Post | - | dated checks payables | 900,537 | 371,467 | ||||||||
| Note payables draft | ||||||||||||
214,238
| 121,909 |
1,114,775
| 493,376 |
As at December 31, 2022, none of the bills payable are overdue.
24. Accounts payable
December 31
December 31
2022
| 2021 |
| Within 1 year (including 1 year) | 7,447,355 | 6,238,230 | ||||||||||||||
| 1 | - | 2 years (including 2 years) | 59,671 | 30,707 | ||||||||||||
| 2 | - | 3 years (including 3 | years) | 2,048 | 3,181 | |||||||||||
Over 3 years18,195
22,045
7,527,269
| 6,294,163 |
There are no significant accounts payables aging over one year.
25. Contract liabilities
December 31
December 31
2022
| 2021 |
| Discount for customers | 904,615 | 763,964 | ||||||
Advances from customers871,958
| 617,347 |
1,776,573
| 1,381,311 |
26. Employee Benefits Payable
December 31
December 31
2022
| 2021 | |||
| Short | - | term employee benefits | ||||||
| 1,027,543 | 852,806 | |||||||||||||||||
| Post | - | employment benefits | 33,317 | 44,260 | ||||||||||||||
| Share based | payment (See note XIII) | 76, | 875 | 112,176 | ||||||||||||||
| Other benefits within one year | ||||||||||||||||||
204,794
| 205,562 |
1,
| 1, | 342,529 | 1,214,804 | |||||
Current maturities
| Current maturities |
28,257
175,33
1,370,786
1,247,979
- 222 -
V. Notes to the consolidated financial statements - (cont'd)
27. Taxes Payable
December 31
December 31
2022
2021
| Corporate income tax | 240,672 | 174,705 | ||||||||||||
| VAT | 187,066 | 153,336 | ||||||||||||
| Others | ||||||||||||||
31,836
| 40,641 |
459,574
| 368,682 |
28. Other Payables
December 31
December 31
2022
2021Dividends payables
| 750 | 750 |
Other payables1,610,532
1,341,438
1,611,282
1,342,188
(1) Other payables
December 31
December 31
2022
| 2021 | ||||||||||||||||||||||||||
| Accrued expenses | 758,158 | 621,024 | ||||||||||||||||||||||||
| Payables in respect of intangible assets | 106,510 | 115,987 | ||||||||||||||||||||||||
| Financial institutions | - | 6,127 | ||||||||||||||||||||||||
| Liability in respect of securitization transactions | 79,619 | 98,836 | ||||||||||||||||||||||||
| Hold | - | back payment due to acquistions | 254,000 | 254,000 | ||||||||||||||||||||||
| Others | ||||||||||||||||||||||||||
412,245
| 245,464 |
1,610,532
| 1,341,438 |
29. Non-Current Liabilities Due Within One Year
Non-current liabilities due within one year by category are as follows:
December 31
December 31
2022
2021
| Long | - | term loans due within one year | 1,539,49 | 6 | 1,099,643 | |||||||||||||
| Lease liabilities due within one year | 156,977 | 139,162 | ||||||||||||||||
| Debentures payable due within one year | ||||||||||||||||||
565,658
556,949
2,262,131
1,795,754
- 223 -
V. Notes to the consolidated financial statements - (cont'd)
30. Other Current Liabilities
December 31
December 31
2022
2021
| Put options to holders of non | - | controlling interests | 507,483 | 170,422 | ||||||||||||
| Provision in respect of returns | 158,173 | 196,831 | ||||||||||||||
| Provision in respect of claims | 37,769 | 45,293 | ||||||||||||||
Others
| Others |
| 363 |
703,794
31. Long-Term Loans
Long-term loans by category
412,909
December 31 December 31
2022
Interest range
2021
Interest range
Long term loans
| Guaranteed loans | 404,841 | 2 | 92 | % | - | 3 | 75 | % | 415,887 | 3.95% | - | 4.1% | ||||||||||||||||||||
| Unsecured loans | ||||||||||||||||||||||||||||||||
4,797,525
| 1 | .7 | 3 | % | - | 7 | 67 | % |
4,182,668
| 1.36% | - | 4.05% | |||||||||||||||
| Total Long term loans | 5,202,366 | 4,598,555 |
Less:
| Long term loans from banks due within 1 year |
)1,539,496 (
(1,099,643)
Long term loans, net
| Long term loans, net |
3,662,870
3,498,912
* For more detailes regarding the guaranteed loans – see note X. related parties and related parties transac-
tions.For the maturity analysis, see note VIII.C - Liquidity risk.
32. Debentures Payable
December 31
December 31
2022
| 2021 | |||||||||||||
| Debentures Series B | 7,919,169 | 8,354,080 | |||||||||||
| Current maturities | |||||||||||||
(565,658)
(556,949)
7,353,511
December 31
7,797,131
2022
| First year (current maturities) | 565,658 | ||||||||
| Second year | 565,658 | ||||||||
| Third year | 565,658 | ||||||||
| Fourth year | 565,658 | ||||||||
Fifth year and thereafter5,656,537
7,919,169
- 224 -
V. Notes to the consolidated financial statements - (cont'd)
32. Debentures Payable - (cont'd)
Movements of debentures payable:
For the year ended December 31, 2022:
Maturityperiod
Face valuein RMB
Face value
NIS
Issuancedate
Maturityperiod
Issuanceamount
Balance atJanuary 1,2022
Amortizationof discountsor premium
CPI andexchangerate effect
Repayment
during the
period
Currencytranslationadjustment
Balance atDecember31, 2022
Debentures
| Series B | 2,673,640 | 1,650,000 | 4.12.2006 |
November
| 2020 | - | 2036 | 3,043,742 | 3,502,632 | 221 | (243,148) | (249,277) | 310,643 | 3,321,071 |
Debentures
| Series B | 843,846 | 513,527 | 16.1.2012 |
November
| 2020 | - | 2036 | 842,579 | 1,046,335 | 10,570 | (72,493) | (81,559) | 93,384 | 996,237 |
Debentures
| Series B | 995,516 | 600,000 | 7.1.2013 |
November
| 2020 | - | 2036 | 1,120,339 | 1,296,951 | 4,607 | (89,637) | (95,290) | 115,316 | 1,231,947 |
Debentures
| Series B | 832,778 | 533,330 | 1.2.2015 |
November
| 2020 | - | 2036 | 1,047,439 | 1,215,910 | (2,847) | (84,140) | (84,704) | 107,726 | 1,151,945 |
Debentures
| Series B | 418,172 | 266,665 | 1 | - | 6.2015 |
November
| 2020 | - | 2036 | 556,941 | 662,990 | (7,750) | (45,947) | (42,349) | 58,414 | 625,358 |
Debentures
| Series B | 497,989 | 246,499 | 5.5.2020 |
November
| 2020 | - | 2036 | 692,896 |
629,262
(9,153)
(43,696)
(39,146)
55,344
592,611
8,354,080
(4,352)
(579,061)
(592,325)
740,827
7,919,169
Series B debentures, in amount of NIS 3,810 million par value (3,730 million par value, net of self-purchased), linked to the CPI and bear interest at the base annual rate of
5.15%. The debenture principal shall be repaid in 17 equal payments in the years 2020 through 2036.
- 225 -
V. Notes to the consolidated financial statements - (cont'd)
33. Lease liabilities
December 31
December 31
2022
Interest range
2021
Interest range
| Lease liabilities |
588,053
| 1. | 1 | % | - | 9.1% |
501,248
| 1. | 3 | % | - | 6. | 1 | % |
Less: Lease liabilities due within one year
| Less: Lease liabilities due within one year |
(156,977)
(139,162)
Long term lease liabilities, net
| Long term lease liabilities, net |
431,076
362,086
34. Long-Term Employee Benefits Payable
Post-employment benefit plans – defined benefit plan and early retirement
December 31
December 31
2022
2021
| Total present value of obligation | 566,550 | 687,759 | ||||||
Less: fair value of plan's assets(70,001)
(86,282)
| Net liability related to Post | - | employment benefits | 496,549 | 601,477 | ||||||||||
| Termination benefits | 65,782 | 91,912 | ||||||||||||
Total recognized liability for defined benefit plan, net (1)
| 562,331 | 693,389 |
| Share based payment (See | note | XIII) | - | 5,67 | 4 |
Other long-term employee benefits 258,079
123,826
| Total long | - | term employee benefits, net | 820,4 | 10 | 822,88 | 9 | ||||||
Including: Long-term employee benefits payable due within one year 28,257
30,531
792,153
| 792,358 |
(1) Movement in the net liability and assets in respect of defined benefit plans, early retirement andtheir components
Defined benefit obli-
gation and early re-tirement
Fair value of plan'sassets Total 2022
2021
2022
2021
2022
2021
Balance as at January 1
| Balance as at January 1 | , 2022 | 779,671 | 693,631 | 86,282 | 92,634 | 693,389 | 600,997 | ||||||||||||||
Expense/income recognized
in profit and loss:
| Current service cost | 25,954 | 31,070 | - | (1,310) | 25,954 | 32,380 | ||||||||||||||||||||||||||||||
| Interest costs | 16,684 | 17,836 | 1,949 | 2,077 | 14,735 | 15,759 | ||||||||||||||||||||||||||||||
| Losses on curtailments and settlements | 6,098 | 24,584 | - | - | 6,098 | 24,584 | ||||||||||||||||||||||||||||||
| Changes in exchange rates | (74,599) | 17,662 | (10,222) | 3,283 | (64,377) | 14,379 | ||||||||||||||||||||||||||||||
| Actuarial losses due to early retirement | (1,087) | (11,391) | - | - | (1,087) | (11,391) | ||||||||||||||||||||||||||||||
Included in other comprehensive income:
Actuarial gain (losses) as a result of changes in actu-
| arial assumptions | (97,666) | 39,638 | (5,672) | 6,077 | (91,994) | 33,561 |
Foreign currency translation differences in respect of
| foreign operations | 57,64 | 6 | (16,030) | 6,776 | (2,152) | 50,870 | (13,878) | ||||||||||||||
Additional movements:
| Benefits paid | (80,369) | (117,368) | (12,587) | (18,611) | (67,782) | (98,757) | ||||||||||||||||||||
| Classification from short term | - | 100,039 | - | - | - | 100,039 | ||||||||||||||||||||
Contributions paid by the Group -
-
3,475
4,284
(3,475)
(4,284)
Balance as at December 31, 2022 632,332
779,671
70,001
86,282
562,331
693,389
- 226 -
V. Notes to the consolidated financial statements - (cont'd)
34. Long-Term Employee Benefits Payable - (cont'd)
Post-employment benefit plans – defined benefit plan and early retirement - (cont'd)
(2) Actuarial assumptions and sensitivity analysis
The principal actuarial assumptions at the reporting date for defined benefit plan
December 31
December 31
2022
2021
| 2021 | |||||||
| Discount rate (%)* | |||||||
1.7%-3.0%
(0.8%)-3.0%
* According to the demographic and the benefit components.
The assumptions regarding the future mortality rate are based on published statistical data and acceptablemortality rates.
Possible reasonable changes as of the date of the report in the discount rate, assuming the other assumptionsremain unchanged, would have affected the defined benefit obligation as follows:
As of December 31, 2022
Increase of 1%
Decrease of 1%
Change in defined benefit obligation(45,464)
55,202
35. Provisions
December 31
December 31
2022
| 2021 |
Liabilities in respect of
| Liabilities in respect of | contingencies* | 149,187 | 104,220 |
Provision in respect of site restoration
| Provision in respect of site restoration | 65,291 | 62,370 |
Long
| Long | - | term | liability in respect of business combinations | 5,182 | 17,411 |
Other
| Other |
2,521
| 2,429 |
222,181
186,430
* Liabilities in respect of contingencies includes obligations of pending litigations, where an outflow of re-
sources had been reliably estimated.
- 227 -
V. Notes to the consolidated financial statements - (cont'd)
36. Other Non-Current Liabilities
December 31
December 31
2022
2021
| Put options to holders of non | - | controlling interests | 907,6 | 44 | 1,341,362 | ||||||||||||
| Long term loans | – | others | |||||||||||||||
348,231
318,786
| 1,255,875 | 1,660,148 | |||||||
| Current maturities | ||||||||
-
-
1,255,875
1,660,148
37. Share Capital
Balance at Janu-ary 1, 2022
Issuance of new
shares
Buyback
Balance at
of shares
December 31,
2022
Share capital
| Share capital |
2,329,812
-
-
2,329,812
38. Capital Reserve
Balance at Janu-
ary 1, 2022
Additions during
the period
Reductions during
the period
| Reductions during | |
Balance at
December 31,
2022
| Share premiums | 12,606,562 | - | - | 12,606,562 | |||||||||||
| Other capital reserve | |||||||||||||||
370,609
9,162
-
379,771
12,977,171
9,162
-
12,986,333
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 228 -
V. Notes to the consolidated financial statements - (cont'd)
39. Other Comprehensive Income, net of tax
Attributable to shareholders of the company
Balance atJanuary 1,2022
Before taxamount
Less:
transferto profitor loss
Less: In-come taxexpenses
Net-of-taxamount
Balance at Decem-ber 31, 2022
Items that will not be re-classified to profit or loss 18,671
91,994
-
9,295
82,699
101,370
Re-measurement of changesin liabilities under defined
| benefit plans | (35,861) | 91,994 | - | 9,295 | 82,699 | 46,838 |
Changes in fair value of
| other equity investment | 54,532 | - | - | - | - | 54,532 |
Items that may be reclassi-fied to profit or loss (451,055)
1,358,491
(65,611)
(6,173)
1,430,275
979,220
Effective portion of gain or
| loss of cash flow hedge | 31,955 | (145,108) | (65,611) | (6,173) | (73,324) | (41,369) |
Translation difference of for-
| eign financial statements |
(483,010)
1,503,599
-
-
1,503,599
1,020,589
(432,384)
1,450,485
(65,611)
3,122
1,512,974
1,080,590
40. Surplus reserve
Balance at
January 1, 2022
Additionsduring the
period
Reductions
during the
period
Balance at
December 31,
2022
| Statutory surplus reserve | 236,348 | 2,336 |
-
| 238,684 |
Discretional surplus reserve3,814
-
-
3,814
240,162
2,336
-
242,498
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 229 -
V. Notes to the consolidated financial statements - (cont'd)
41. Retained Earnings
2022
2021
| Retained earnings as at January 1 | 5,940,465 | 5,862,70 | 2 | |||||||||||||||||||||||
| Net profits for the period attributable to shareholders of the Company | 609,391 | 157,397 | ||||||||||||||||||||||||
| Appropriation to statutory surplus reserve | (2,336) | - | ||||||||||||||||||||||||
| Dividends to non | - | controlling Interest | (59, | 278 | ) | (42,357) | ||||||||||||||||||||
| Dividend to the shareholders of the company (Note | 1 & 2 | ) | ||||||||||||||||||||||||
(18,638)
(37,277)
Retained earnings as at
| Retained earnings as at | December | 3 | 1 |
6,469,604
5,940,465
Note 1:
On March 29, 2021, after obtaining the approval of the 31st meeting of the Company's 8th Board of Directors,the Company declared RMB 0.16 (before tax) per 10 shares as cash dividend to all shareholders, resulting in atotal cash dividend of 37,277 thousands RMB (before tax). No shares were distributed as share dividend and noreserve was transferred to equity capital. The proposal was approved by the 2020 Annual General Meeting of theCompany held on May 21, 2021 and was fully paid during the third quarter of 2021.
Note 2:
On March 29, 2022, after obtaining the approval of the 9th meeting of the Company's 9th Board of Directors,the Company declared RMB 0.08 (before tax) per 10 shares as cash dividend to all shareholders, resulting in atotal cash dividend of 18,638 thousand RMB (before tax). No shares were distributed as share dividend and noreserve was transferred to equity capital.
Note 3:
On March 19, 2023, after obtaining the approval of the 19th meeting of the Company's 9th Board of Directors,the Company declared RMB 0.27 (before tax) per 10 shares as cash dividend to all shareholders, resulting in atotal cash dividend of 62,905 thousand RMB (before tax). No shares were distributed as share dividend and noreserve was transferred to equity capital.
- 230 -
V. Notes to the consolidated financial statements - (cont'd)
42. Operating Income and Cost of Sales
Year ended December 31 Year ended December 31
2022 2021
Income
Cost of sales
Income
Cost of sales
| Principal | activities | 37,305,373 | 27,948,254 | 30,971,009 | 23,375,892 | ||||||||||||||||
| Other | businesses | ||||||||||||||||||||
76,542
36,712
67,596 36,627
37,381,915
27,984,966
31,038,605 23,412,519
43. Taxes and Surcharges
Year ended December 31
2022
2021
| Tax on turnover | 36,202 | 26,123 | ||||||||
Others74,212
80,159
110,414
106,282
44. Selling and Distribution Expenses
Year ended December 31
2022
2021
| Salaries and related expense | 1,991,542 | 1,772,447 | |||||||||||||||||||||||
| Depreciation and amortization | 1,012,132 | 1,012,691 | |||||||||||||||||||||||
| Advertising and sales promotion | 356,079 | 306,292 | |||||||||||||||||||||||
| Travel expenses | 144,917 | 87,212 | |||||||||||||||||||||||
| Warehouse expenses | 155,427 | 155,557 | |||||||||||||||||||||||
| Registration | 158,590 | 123,587 | |||||||||||||||||||||||
| Professional services | 115,163 | 101,275 | |||||||||||||||||||||||
| Insurance | 114,650 | 100,689 | |||||||||||||||||||||||
| Others | |||||||||||||||||||||||||
347,779
359,507
4,396,279
4,019,257
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 231 -
V. Notes to the consolidated financial statements - (cont'd)
45. General and Administrative Expenses
Year ended December 31
2022
2021
| Salaries | and related expenses | 807,438 | 657,074 | ||||||||||||||||||||||||||
| Professional services | 124,159 | 111,610 | |||||||||||||||||||||||||||
| Depreciation | and amortization | 103,209 | 89,949 | ||||||||||||||||||||||||||
| IT systems | 126,803 | 107,641 | |||||||||||||||||||||||||||
| Office rent, maintenance and expenses | 48,307 | 43,525 | |||||||||||||||||||||||||||
| Cost | c | ontribution | a | rrangemen | 74,845 | - | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||
122,067
79,800
1,406,828
1,089,599
46. Research and development expenses
Year ended December 31
2022
2021
| Salaries | and related expenses | ||||||||
| 256,060 | 227,261 | ||||||||||||||||||||
| Field trial | 45,326 | 45,303 | |||||||||||||||||||
| Professional services | 47,293 | 43,894 | |||||||||||||||||||
| Depreciation | and amortization | 78,647 | 55,086 | ||||||||||||||||||
| Materials | 82,750 | 65,950 | |||||||||||||||||||
| Office rent, maintenance and expenses | 12,738 | 10,739 | |||||||||||||||||||
| Other | |||||||||||||||||||||
55,045
53,144
577,859
501,377
47. Financial expenses (incomes), net
Year ended December 31
2022
2021
| Interest expenses on debentures and loans | and other charges | 782,812 | 682,919 | ||||||||||||||||
| CPI expense | s | in respect of debentures | 409,078 | 212,883 | |||||||||||||||
| Loss in respect of sale of trade receivables | 226,575 | 93,307 | |||||||||||||||||
Interest expense in respect of post-employment benefits and early retire-
| ment, net | 18,141 |
| 18,833 | ||||||||||||||||
| Revaluation of put option, net | (121,172) | 141,676 | ||||||||||||||
| Interest income from customers, banks and others | (180,619) | (65,059) | ||||||||||||||
| Exchange rate differences, net | (881,634) | 813,567 | ||||||||||||||
| Interest expense on lease liabilities | 25,755 | 25,500 | ||||||||||||||
| Others | ||||||||||||||||
46,860
| 15,796 |
325,796
1,939,422
- 232 -
V. Notes to the consolidated financial statements - (cont'd)
48. Investment income, net
Year ended December 31
2022
2021
Income from long-term equity investments accounted for using
| the equity method | 10,358 | 5,923 |
Other
| Other |
2,325
4,245
12,683
10,168
See note 49 below
49. Gain (loss) from Changes in Fair Value
Year ended December 31
2022
2021
| Gain (loss) from changes in fair value of derivative financial | |||||||||||||||
| Instruments * | (1,504,067) | 605,638 | |||||||||||||
| Others | |||||||||||||||
(765)
(7,953)
(1,504,832)
597,685
* According to ASBE 22 - Financial Instruments Recognition and Measurement, starting from 2022, whendisposing derivative instruments, the Group recorded the accumulated gain or loss of derivative instrumentsin the “Gain (loss) from Changes in Fair Value”. Before 2022, the Group recorded the abovementioned gainor loss in the “Investment income, net”. The Company reclassified the “Gain(loss) from Changes in FairValue” and the “Investment income, net” in the corresponding period in 2021. Such change did not impactthe operating results or net assets of the reporting period.
50. Credit impairment reversal (losses)
Year ended December 31
2022
2021
| Bills receivable and accounts receivable | (60, | 978 | ) | 5,613 | |||||||||
| Other receivables | |||||||||||||
(30,689)
5,271
(91,667)
| 10,884 |
51. Asset impairment losses
Year ended December 31
2022
2021
| Inventories | (156,392) | (66,838) | ||||||||||||||||
| Fixed assets | (69,758) | (932) | ||||||||||||||||
| Construction in progress | (88,617) | - | ||||||||||||||||
| Intangible asset | ||||||||||||||||||
(10,619)
(2,497)
(325,386)
(70,267)
- 233 -
V. Notes to the consolidated financial statements - (cont'd)
52. Gain from Disposal of Assets
Year ended December 31 Included in
non-recurring
items
2022
2021
Gain from disposal of fixed assets 62,443
5,69862,443
Loss
| Loss | from disposal of intangible assets |
(2,847)
(8,302)
(2,847)
59,596
(2,604)
59,596
53. Income Tax Expenses
Year ended December 31
2022
2021
| Current year | 690,601 | 380,504 | |||||||||||||||
| Deferred tax expenses (income) | (633,071) | (66) | |||||||||||||||
| Adjustments for previous years, net | |||||||||||||||||
89,912
147,442
380,489
(1) Reconciliation between income tax expense and accounting profit is as follows:
Year ended December 31
2022
2021
| Profit before taxes | 756,83 | 3 | 543,802 | ||||||||||||
| Statutory tax in china | |||||||||||||||
25%
25%
| Tax calculated according to statutory tax in china | 189,208 | 135,951 | ||||||||||||
| Tax benefits from Approved | Enterprises | 85,909 | ) | (32,837) | ||||||||||
Difference between measurement basis of income for financial
| statement and for tax purposes | 32,11 | 0 | 34,715 | |||||||||||||
| Taxable income and temporary differences at other tax rate | ( | 92,093 | ) | 91,431 | ||||||||||||
| Taxes in respect of prior years | 89,912 | 51 | ||||||||||||||
Utilization of tax losses prior years for which deferred taxes were
| not created | ( | 43,008 | ) | (52) |
Temporary differences and losses in the report year for which de-
| ferred taxes were not created | 62,664 | 38,527 |
Non-deductible expenses, non-taxable income and other difference,
| net | ( | 16,474 | ) | 48,139 |
Neutralization of tax calculated in respect of the Company’s share
| in results of equity accounted investees | ( | 3,495 | ) | (1,913) | |||||||||
| Effect of change in tax rate in respect of deferred taxes | 25,480 | 71,033 | |||||||||||
Creation and reversal of deferred taxes for tax losses and temporary
| differences from previous years |
)10,953 (
(4,556)
Income tax expenses
| Income tax expenses |
147,442
380,489
54. Other comprehensive income
Details of the Other comprehensive income are set out in Note V.39
- 234 -
V. Notes to the consolidated financial statements - (cont'd)
55. Government grants
Amount recognized in the profitand loss statements during theyear ended December 31
Category Presentation accounts
2022
2021
| Government grants related to income | Non | - | Operating income |
| 17,772 | 19,377 | |||||||||
| Government grants related to assets | Fixed assets, Intangible assets | 18,611 | 19,166 |
56. Notes to items in the cash flow statements
(1) Cash received relating to other operating activities
Year ended December 31
2022
2021
| Derivatives transactions | 324,320 | 191,485 | ||||||||||||||
| Financial institutions | 272,770 | 441,306 | ||||||||||||||
| Interest income | 103,779 | 39,316 | ||||||||||||||
| Government subsidies | 20,430 | 19,856 | ||||||||||||||
Others
| Others |
83,278
| 172,885 |
804,577
| 864,848 |
(2) Cash paid relating to other operating activities
Year ended December 31
2022
2021
| Commissions and Warehouse | 161,142 | 189,988 | ||||||||||||||||||||
| Advertising and sales promotion | 333,890 | 286,520 | ||||||||||||||||||||
| Professional services | 242,072 | 242,003 | ||||||||||||||||||||
| Financial institutions | 307,717 | 211,211 | ||||||||||||||||||||
| IT and Communication | 232,517 | 186,169 | ||||||||||||||||||||
| Registration and Field trials | 178,793 | 162,585 | ||||||||||||||||||||
| Derivatives transactions | 535,277 | 347,874 | ||||||||||||||||||||
| Travel | 151,335 | 91,581 | ||||||||||||||||||||
| Insurance | 145,518 | 120,444 | ||||||||||||||||||||
| Others | ||||||||||||||||||||||
847,780
693,006
3,136,041
2,531,381
(3) Cash received relating to other investing activities
Year ended December 31
2022
2021
| Dividend received from other equity investment | 2,325 | 1,808 | ||||||||||||
| Investment grant | ||||||||||||||
-
6,754
2,325
8,562
- 235 -
V. Notes to the consolidated financial statements - (cont'd)
56. Notes to items in the cash flow statements - (cont'd)
(4) Cash paid relating to other investing activities
Year ended December 31
2022
2021
| I | ncrease in | securitization facility | 51,936 | 51,121 | |||||||||||||
| Increase in short and long term investments | ,net | ||||||||||||||||
78,008
126,355
129,944
177,476
(5) Cash received from other financing activities
Year ended December 31
2022
2021
| Cash received in | respect of hedging transactions on debentures | - | 777,968 | |||||||||||||||
| Deposit for issuing bills payables | 164,586 | 27,234 | ||||||||||||||||
| Borrowing from related party * | ||||||||||||||||||
685,150
319,742
849,736
1,124,944
* For more detailes regarding the borrowing from related party – see note X. related parties and related par-
ties transactions.
(6) Cash paid relating to other financing activities
Year ended December 31
2022
2021
| Repayment of lease liability | 162,190 | 161,400 | ||||||||||||||||||
| Payment in respect of hedging transactions on debentures | 1,073,463 | - | ||||||||||||||||||
| Repayment of loan from others | - | 171,770 | ||||||||||||||||||
| Deposit for issuing bills payable | ||||||||||||||||||||
170,939
57,774
1,406,592
390,944
- 236 -
V. Notes to the consolidated financial statements - (cont'd)
57. Supplementary Information on Cash Flow Statement
(1) Supplementary information on Cash Flow Statement
a. Reconciliation of net profit to cash flows from operating activities:
Year ended December 31
2022
2021
| Net profit | 609 | ,391 | 163,313 | |||||||||||||||||||||||||
| Add: Impairment provisions for assets | 325,386 | 70,267 | ||||||||||||||||||||||||||
| Credit impairment | losses ( | gain | ) | 91,667 | (10,884) | |||||||||||||||||||||||
| Depreciation of fixed assets and investment property | 1,007,191 | 828,561 | ||||||||||||||||||||||||||
| Depreciation of right | - | of | use asset | 174,796 | 163,373 | |||||||||||||||||||||||
| Amortization of intangible asset | 954,686 | 950,576 | ||||||||||||||||||||||||||
Gains on disposal of fixed assets, intangible assets, and other long-
| term assets, net | (59,596) | 2,604 | ||||||||||||||||||||||||||||||||||||||||||||||
| Losses (g | ain | s) | from changes in fair value | 1,504,832 | (597,68 | 5 | ) | |||||||||||||||||||||||||||||||||||||||||
| Financial expenses | 69,669 | 1,193,967 | ||||||||||||||||||||||||||||||||||||||||||||||
| Investment income, net | (12,683) | ( | 10,1 | 68 | ) | |||||||||||||||||||||||||||||||||||||||||||
| De | crease | (i | ncrease | ) | in deferred tax assets | , net | (558,878) | 37,957 | ||||||||||||||||||||||||||||||||||||||||
| De | crease in deferred tax liabilities | , net | (74,193) | (38,023) | ||||||||||||||||||||||||||||||||||||||||||||
| I | ncrease in inventories, net | (4,203,112) | (1,456,207) | |||||||||||||||||||||||||||||||||||||||||||||
| De | crease | (i | ncrease | ) | in operating receivables | , net | (975,103) | 742,840 | ||||||||||||||||||||||||||||||||||||||||
| Increase in operating payables | , net | 2,133,5 | 85 | 2,507,50 | 1 | |||||||||||||||||||||||||||||||||||||||||||
| Others | ||||||||||||||||||||||||||||||||||||||||||||||||
(46,893)
13,883
Net cash flow from operating activities
| Net cash flow from operating activities |
940,745
4,561,875
b. Net increase (decrease) in cash and cash equivalents
Year ended December 31
2022
2021
| Closing balance of cash | and cash equivalents | 4,225,253 | 5,759,480 | |||||||||||
| Less: Opening balance of cash | and cash equivalents | |||||||||||||
5,759,480
| 3,835,071 | |||
Increase
| Increase | (de | crease | ) | in cash and cash equivalents |
(1,534,227)
1,924,409
- 237 -
V. Notes to the consolidated financial statements - (cont'd)
57. Supplementary Information on Cash Flow Statement - (cont'd)
(2) Details of cash and cash equivalents
December 31
December 31
2022
2021
| Cash on hand | 785 | 1,196 | |||||||||
| Bank deposits available on demand without restrictions | |||||||||||
4,224,468
5,758,284
4,225,253
5,759,480
58. Assets with Restricted Ownership or Right of Use
December 31
2022
Reason
| Cash | 65,708 | Pledged | |||||||||||||
| Other non | - | current assets | |||||||||||||
154,273
Guarantees
219,981
- 238 -
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items
(1) Foreign currencies denominated items
As at December 31, 2022Foreign currency at
the end of the pe-riod Exchange rate
RMB at the end of
the periodCash and bank balances
| EUR | 36,139 | 7.428 | 268,437 | |||||||||||||||
| BRL | 447,712 | 1.335 | 597,695 | |||||||||||||||
| ILS | 122,449 | 1.979 | 242,326 | |||||||||||||||
| USD | 26,178 | 6.965 | 182,327 | |||||||||||||||
| PLN | 19,261 | 1.582 | 30,470 | |||||||||||||||
| AUD | 6,436 | 4.733 | 30,463 | |||||||||||||||
| ZAR | 109,163 | 0.411 | 44,866 | |||||||||||||||
| ARS | 742,891 | 0.039 | 28,973 | |||||||||||||||
| RUB | 191,210 | 0.099 | 18,930 | |||||||||||||||
| GBP | 3,535 | 8.387 | 29,648 | |||||||||||||||
| TRY | 86,664 | 0.372 | 32,239 | |||||||||||||||
| NZD | 37,997 | 4.408 | 167,492 | |||||||||||||||
| RON | 26,973 | 1.503 | 40,541 | |||||||||||||||
Other
156,065
Total
1,870,472
Bills and Accounts receivable
| EUR | 99,344 | 7.428 | 737,927 | |||||||||||||||||||||
| BRL | 877,023 | 1.335 | 1,170,826 | |||||||||||||||||||||
| ILS | 26,669 | 1.979 | 52,778 | |||||||||||||||||||||
| USD | 18,124 | 6.965 | 126,234 | |||||||||||||||||||||
| PLN | 38,418 | 1.582 | 60,777 | |||||||||||||||||||||
| GBP | 2,795 | 8.387 | 23,444 | |||||||||||||||||||||
| CAD | 16,697 | 5.139 | 85,804 | |||||||||||||||||||||
| RUB | 1,179,831 | 0.099 | 116,803 | |||||||||||||||||||||
| TRY | 629,117 | 0.372 | 234,031 | |||||||||||||||||||||
| ZAR | 551,390 | 0.411 | 226,621 | |||||||||||||||||||||
| THB | 331,129 | 0.202 | 66,888 | |||||||||||||||||||||
| HUF | 1,400,984 | 0.019 | 26,619 | |||||||||||||||||||||
| RON | 129,237 | 1.503 | 194,243 | |||||||||||||||||||||
| JPY | 913,300 | 0.052 | 47,492 | |||||||||||||||||||||
| IDR | 97,664,867 | 0. | 001 | 43,236 | ||||||||||||||||||||
| CZK | 77,719 | 0.308 | 23,937 | |||||||||||||||||||||
Other
174,688
Total
3,412,348
Other receivables
| EUR | 32,959 | 7.428 | 244,817 | ||||||||||||||||
| ILS | 102,815 | 1.979 | 203,470 | ||||||||||||||||
| BRL | 57,276 | 1.335 | 76,464 | ||||||||||||||||
| GBP | 23,204 | 8.387 | 194,613 | ||||||||||||||||
Other
53,288
Total
772,652
- 239 -
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at December 31, 2022
Foreign currency at
the end of the period
Exchange rate
RMB at the end ofthe period
Other current assets
| ILS | 101,298 | 1.979 | 200,469 | ||||||||||||||||||
| BRL | 152,616 | 1.335 | 203,742 | ||||||||||||||||||
| EUR | 10,826 | 7.428 | 80,413 | ||||||||||||||||||
| ARS | 855,574 | 0.039 | 33,367 | ||||||||||||||||||
| UAH | 302,960 | 0.190 | 57,562 | ||||||||||||||||||
| CZK | 39,572 | 0.308 | 12,188 | ||||||||||||||||||
| Other | 80,77 | 7 | |||||||||||||||||||
Total
668,518
Long-term receivables
BRL 61,805
1.335
82,510
Total
82,510
Other non-current assets
| BRL | 158,960 | 1.335 | 212,211 | ||||||||||||
Other
17,649
Total
229,860
Short-term loans
| UAH | 373,889 | 0.190 | 71,039 | |||||||||||
| TRY | 226,743 | 0.372 | 84,348 | |||||||||||
| ARS | 515,916 | 0.039 | 20,121 | |||||||||||
| Other | 104 | |||||||||||||
Total
175,612
Bills and Accounts payable
| ILS | 1,059,193 | 1.979 | 2,096,143 | |||||||||||||||||||
| EUR | 82,667 | 7.428 | 614,048 | |||||||||||||||||||
| BRL | 276,800 | 1.335 | 369,528 | |||||||||||||||||||
| USD | 9,876 | 6.965 | 68,788 | |||||||||||||||||||
Other
96,492
Total
3,244,999
Other payables
| ILS | 154,740 | 1.979 | 306,231 | |||||||||||||||||||
| BRL | 132,975 | 1.335 | 177,521 | |||||||||||||||||||
| ILS CPI | 17,446 | 1.979 | 34,526 | |||||||||||||||||||
| Other | 9,540 | |||||||||||||||||||||
Total
527,818
- 240 -
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at December 31, 2022Foreign currency at
the end of the period
Exchange rate
RMB at the end ofthe period
Contract liabilities
| EUR | 49,724 | 7.428 | 369,347 | ||||||||||||||
| BRL | 55,701 | 1.335 | 74,361 | ||||||||||||||
| CAD | 14,280 | 5.139 | 73,386 | ||||||||||||||
| UAH | 181,410 | 0.190 | 34,468 | ||||||||||||||
| Other | 45,561 | ||||||||||||||||
Total
597,123
Non-current liabilities due within one year
| ILS CPI | 302,716 | 1.979 | 599,074 | ||||||||||||
| EUR | 55,106 | 7.428 | 409,330 | ||||||||||||
Other
45,020
Total
1,053,424
Other current liabilities
| EUR | 6,591 | 7.428 | 48,961 | |||||||||||||
| ILS | 1,175 | 1.979 | 2,326 | |||||||||||||
Other
Total
51,719
Long-term loan
| EUR | 59,498 | 7.428 | 441,953 | ||||||||||
Total
441,953
Debentures payable
ILS CPI 3,715,771
1.979
7,353,511
Total
7,353,511
Provision and Long-term payables
| BRL | 101,532 | 1.335 | 135,545 | ||||||||||||||||
| Other | 2,779 | ||||||||||||||||||
Total
138,324
Other non-current liabilities
| USD | 4,587 | 6.965 | 31,947 | ||||||||||||||
| EUR | 5,960 | 7.428 | 44,274 | ||||||||||||||
| ILS CPI | 52,201 | 1.979 | 103,306 | ||||||||||||||
Other
51,135
Total
230,662
- 241 -
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(2) Major foreign operations
Name of the Subsidiary
Registration &Principal place of
business Business nature
Functionalcurrency
| ADAMA France S.A.S | France | Distribution | USD |
ADAMA Brasil S/A Brazil Manufacturing; Distribution; Regis-
| tration |
USD
| ADAMA Deutschland GmbH | Germany | Distribution; Registration | USD |
ADAMA India Private Ltd. India Manufacturing
| Distribution; Registration |
INRMakhteshim Agan of North
| America Inc. |
United States Manufacturing; Distribution; Regis-
| tration |
USDControl Solutions Inc. United States Manufacturing; Distribution; Regis-
| tration |
USDADAMA Agan Ltd. Israel Manufacturing; Distribution; Regis-
| tration |
USDADAMA Makhteshim Ltd. Israel Manufacturing; Distribution; Regis-
| tration |
USDADAMA Australia Pty
| Limited |
Australia Distribution AUD
| ADAMA Italia SRL | Italy | Distribution | USD |
ADAMA Northern
| Europe B.V. |
Netherlands Distribution USDAlligare LLC United States Manufacturing; Distribution;
| Registration |
USD
The functional currency of the subsidiaries above is the main currency that represent the principal economicenvironment.
VI. Change in consolidation Scope
There is no change of consolidation scope during the period.
- 242 -
VII. Interest in Other Entities
1. Interests in subsidiaries
Composition of the largest subsidiaries of the Group in respect of assets and operating income
Name of the Subsidiary
Registration &Principal place ofbusiness Business nature Direct Indirect
Method of ob-taining the sub-
sidiary
| ADAMA France S.A.S | F | rance | Distribution | 100% | Established |
ADAMA Brasil S/A Brazil Manufacturing; Distribution;
| Registration |
100% Purchased
ADAMA Deutschland GmbH
| ADAMA Deutschland GmbH | Germany | Distribution; Registration; | 100% | Established |
ADAMA India Private Ltd. India Manufacturing;
| Distribution; Registration |
100% Established
Makhteshim Agan of North America
| Inc. |
United States Manufacturing; Distribution;
| Registration |
100% Established
Control Solutions Inc. United States Manufacturing; Distribution;
| Registration |
67% Purchased
ADAMA Agan Ltd. Israel Manufacturing; Distribution;
| Registration |
100% Restructure
ADAMA Makhteshim Ltd. Israel Manufacturing; Distribution;
Registration
| Registration |
100% Restructure
ADAMA Australia Pty Limited
| ADAMA Australia Pty Limited | Australis | Distribution | 100% | Purchased | |||||||||||||||||||||
| ADAM | A | Italia SRL | Italy | Distribution | 100% | Established | |||||||||||||||||||
| ADAMA Northern Europe B.V. | Netherlands | Distribution | 55% | Purchased | |||||||||||||||||||||
Alligare LLC United States
Manufacturing; Distribution;
| Registration |
100%
Purchased
Adama Anpon (Jiangsu) Ltd.
| Adama Anpon (Jiangsu) Ltd. | China | Manufacturing; Distribution | 100% | Purchased | ||||||||||||||
| Adama Huifeng (Jiangsu) Co. Ltd. | China | Manufacturing; Distribution | 51% | Purchased | ||||||||||||||
2. Interests in joint ventures or associates
December 31
December 31
2022
2021
Joint venture
| Joint venture |
| 2,110 | 2,227 | |||||||||
| Associate |
24,258
13,108
26,368
15,335
3. Summarized financial information of joint ventures and associates
December 31, 20
22 andtwelve months then
ended
December 31, 20
December 31, 202
1 andtwelve months then
ended
December 31, 202
| Joint venture: | |||||||||||||||
| Total carrying amount | 2,110 | 2,227 | |||||||||||||
| The Group's share of the following items: | |||||||||||||||
| Net profit | 531 | 1,010 | |||||||||||||
Other comprehensive income
(68)
| Total comprehensive income | 76 | 8 | 942 |
| Associate: | ||||||||||||||||||||
| Total carrying amount | 24,258 | 13,108 | ||||||||||||||||||
| The Group's share of the following items: | ||||||||||||||||||||
| Net profit | 9,827 | 4,913 | ||||||||||||||||||
| Other comprehensive income | 2,456 | 1 | , | 285 | ) | |||||||||||||||
Total comprehensive income
| 12,283 | 3,628 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 243 -
VIII. Risk Related to Financial Instruments
A. General
The Group has extensive international operations, and, therefore, it is exposed to credit risks, liquidity risksand market risks (including currency risk, interest risk and other price risk). In order to reduce the exposure tothese risks, the Group uses financial derivatives instruments, including forward transactions and options (here-inafter - “derivatives”).
Transactions in derivatives are undertaken with major financial institutions, and therefore, in the opinion ofGroup Management the credit risk in respect thereof is low.
This note provides information on the Group’s exposure to each of the above risks, the Group’s objectives,policies and processes regarding the measurement and management of the risk. Additional quantitative dis-closure is included throughout the consolidated financial statements.
The Board of Directors has overall responsibility for establishing and monitoring the framework of the Group'srisk management policy. The Finance Committee is responsible for establishing and monitoring the Group'sactual risk management policy. The Chief Financial Officer reports to the Finance Committee on a regularbasis regarding these risks.
The Group’s risk management policy, established to identify and analyze the risks facing the Group, to setappropriate risk limits and controls, and to monitor risks and adherence to limits. The policy and methods formanaging the risks are reviewed regularly, in order to reflect changes in market conditions and the Group'sactivities. The Group, through training, and management standards and procedures, aims to develop a disci-plined and constructive control environment in which all the employees understand their roles and obligations.
B. Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument failsto meet its contractual obligations, and derives mainly from trade receivables and other receivables as well asfrom cash and deposits in financial institutions.
Accounts and other receivables
The Group’s revenues are derived from a large number of widely dispersed customers in many countries.Customers include multi-national companies and manufacturing companies, as well as distributors, agricul-turists, agents and agrochemical manufacturers who purchase the products either as finished goods or as in-termediate products for their own requirements.
The Company entered into an agreement for the sale of trade receivables in a securitization transaction, fordetails see note V.5.e. and f.
In June 2022, a two-years agreement with an international insurance company was renewed. The amount ofthe insurance coverage was fixed at $150 million cumulative per year. The indemnification is limited to about90% of the debt.
The Group’s exposure to credit risk is influenced mainly by the personal characterization of each customer,and by the demographic characterization of the customer’s base, including the risk of insolvency of the indus-try and geographic region in which the customer operates. No single customer accounted for greater than 5%of total accounts receivable.
- 244 -
VIII. Risk Related to Financial Instruments - (cont’d)
B. Credit risk - (cont’d)
The Company management has prescribed a credit policy, whereby the Company performs current ongoingcredit evaluations of existing and new customers, and every new customer is examined thoroughly regardingthe quality of his credit, before offering him the Group’s customary shipping and payment terms. The exami-nation made by the Group includes an outside credit rating, if any, and in many cases, receipt of documentsfrom an insurance company. A credit limit is prescribed for each customer, outstanding amount of the accountsreceivable balance. These limits are examined annually. Customers that do not meet the Group’s criteria forcredit quality may do business with the Group on the basis of a prepayment or against furnishing of appropriatecollateral.
Most of the Group’s customers have been doing business with it for many years. In monitoring customer creditrisk, the customers were grouped according to a characterization of their credit, based on geographical location,industry, aging of receivables, maturity, and existence of past financial difficulties. Customers defined as “highrisk” are classified to the restricted customer list and are supervised by management. In certain countries,mainly, Brazil, customers are required to provide property collaterals (such as agricultural lands and equip-ment) against execution of the sales, the value of which is examined on a current ongoing basis by the Com-pany. In these countries, in a case of expected credit risk, the Company records a provision for the amount ofthe debt less the value of the collaterals provided and acts to realize the collaterals.
The Group closely monitors the economic situation in Eastern Europe, specifically in Ukraine due to theconflict and in South America on an ongoing basis.
The Group recognizes an impairment provision, which reflects its assessment regarding the credit risk of ac-count receivables, Other receivables and investments on a lifetime expected credit loss basis. Further to theconflict in Ukraine and the economic situation the company made an additional provision related to ADAMAUkraine account receivables. See also notes Ⅲ.10 – Financial instruments and Ⅲ.11 – Receivables.
Cash and deposits in banks
The Company holds cash and deposits in banks with a high credit rating. These banks are also required tocomply with capital adequacy or maintain a level of security based on different situations.
Guarantees
The Company’s policy is to provide financial guarantees only to investee companies.
Aging of receivables and expected credit risk
Presented below is the aging of the past due trade receivables:
December 31, 2022
| Past due by less than 90 days | 720,571 | ||||
Past due by more than 90 days429,057
1,149,628
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 245 -
VIII. Risk Related to Financial Instruments - (cont’d)
B. Credit risk - (cont’d)
The company measure the provision for credit losses on a collective group basis, where receivables sharesimilar credit risk characteristics based on geographical locations. The examination for expected credit lossesis performed using model including aging analysis and historical loss experiences, and adjusted by the observ-able factors reflecting current and expected future economic conditions.When credit risk on a receivable has increased significantly since initial recognition, the group records specificprovision or general provision which is determined for groups of similar assets in countries in which there arelarge number of customers with immaterial balances.The Group has credit risk exposures for accounts receivables amounted to RMB 8,734,425 thousand relate tocategory of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 593,978thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has creditrisk exposures for other receivables amounted to RMB 44,748 thousand related to category of "Lifetime ex-pected credit losses (credit losses occurred)". The credit risk exposures for all remaining balance of financialassets at amortised cost and financial assets at FVTOCI are related to "12-month expected credit losses".
C. Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligation when theycome due. The Group's approach to managing its liquidity risk is to assure, to the extent possible, an adequatedegree of liquidity for meeting its obligations timely, under ordinary conditions and under pressure conditions,without sustaining unwanted losses or hurting its reputation.
The cash-flow forecast is determined both at the level of the various entities as well as of the consolidatedlevel. The Company examines the current forecasts of its liquidity requirements in order to ascertain that thereis sufficient cash for the operating needs, including the amounts required in order to comply with the financialliabilities, while taking strict care that at all times there will be unused credit frameworks so that the Companywill not exceed the credit frameworks granted to it and the financial covenants with which it is required tocomply with. These forecasts take into consideration matters such as the Company’s plans to use debt forfinancing its activities, compliance with required financial covenants, compliance with certain liquidity ratiosand compliance with external requirements such as laws or regulation.
The surplus cash held by the Group subsidiaries, which is not required for financing the current ongoing op-erations, is invested in short-term interest-bearing investment channels.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 246 -
VIII. Risk Related to Financial Instruments - (cont’d)
C. Liquidity risk - (cont’d)
(1) Presented below are the contractual maturities of the financial liabilities at undiscounted amounts,
including estimated interest payments:
As at December 31, 2022
Third-
Fifth year
Contractual
Carrying
First year
Second year
Fourth year
and above
Cash flow
amount
Non-derivative financial liabili-ties
| Short | - | term loans | 3,395,070 | - | - | - | 3,395,070 | 3,342,921 | |||||||||||||||||||||||||||||||||||||||
| Bills payables | 1,114,775 | - | - | - | 1,114,775 | 1,114,775 | |||||||||||||||||||||||||||||||||||||||||
| Accounts payables | 7,527,269 | - | - | - | 7,527,269 | 7,527,269 | |||||||||||||||||||||||||||||||||||||||||
| Other payables | 1,611,28 | 2 | - | - | - | 1,611,28 | 2 | 1,611,28 | 2 | ||||||||||||||||||||||||||||||||||||||
| Other current liabilities | 507,48 | 3 | - | - | - | 507,48 | 3 | 507,48 | 3 | ||||||||||||||||||||||||||||||||||||||
| Debentures payable | 939,107 | 944,497 | 1,801,582 | 7,258,673 | 10,943,859 | 7,919,169 | |||||||||||||||||||||||||||||||||||||||||
| Long | - | term loans | 1,666,024 | 1,596,374 | 1,162,645 | 1,163,135 | 5,588,178 | 5,202,366 | |||||||||||||||||||||||||||||||||||||||
| Long | - | term payables | 6,006 | 11,877 | 22,849 | 86,022 | 126,754 | 107,686 | |||||||||||||||||||||||||||||||||||||||
| Lease Liabilities | 184,137 | 142,440 | 161,571 | 293,321 | 781,469 | 588,05 | 3 | ||||||||||||||||||||||||||||||||||||||||
Long-term liability in respect of
| business combinations | - | 3,709 | 2,664 | - | 6,373 | 5,182 | |||||||||||||||||||||||||
| Other non | - | current liabilities | 9,402 | 9,402 | 1,313,841 | 357,632 | 1,690,277 | 1,255,8 | 75 | ||||||||||||||||||||||
Derivative financial liabilities
| Foreign currency derivatives | 545,5 | 16 | - | - | - | 545,5 | 16 | 545,5 | 16 | ||||||||||||||||
17,506,071
2992,708,
4,465,152
9,158,783
33,838,305
7729,727,5
D. Market risks
Market risk is the risk that changes in market prices, such as foreign exchange rates, CPI, interest rates andprices of capital instruments, will affect the Group’s revenues or the value of its holdings in its financial in-struments. The objective of market risk management is to manage and monitor the exposure to market riskswithin acceptable parameters, while optimizing the return.
During the ordinary course of business, the Group purchases and sells derivatives and assumes financial lia-bilities for the purpose of managing market risks.
(1) CPI and foreign currency risks
Currency risk
The Group is exposed to currency risk from its sales, purchases, expenses and loans denominated in currenciesthat differ from the Group’s functional currency. The main exposure is in Euro, Brazilian real, USD and inNIS. In addition, there are smaller exposures to various currencies such as the British pound, Polish zloty,Australian dollar, Indian rupee, Argentine peso, Canadian dollar, South African Rand, Ukraine Hryunia, theTurkish lira and Chinese Yuan Renminbi.
The Group uses foreign currency derivatives – forward transactions and currency options – in order to hedgethe cash flows risk, which derive from existing monetary assets and liabilities and anticipated sales and pur-chases, which may be affected by exchange rate fluctuations.
- 247 -
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
The Group hedged a part of the estimated currency exposure to anticipate sales and purchases for the subse-quent year. Likewise, the Group hedges most of its monetary assets and liabilities denominated in a non- U.S.dollar currency. The Group uses foreign currency derivatives to hedge its currency risk, mostly with maturitydates of less than one year from the reporting date.
Solutions debentures are linked to the NIS-CPI and, therefore, an increase in the NIS-CPI, as well as changesin the NIS exchange rate, could cause significant exposure with respect to the subsidiary functional currency– the U.S. dollar. As of the approval date of the financial statements, the subsidiary had hedged most of itsexposure deriving from issuance of the debentures, in options and forward contracts.
(A) The Group’s exposure to NIS-CPI and foreign currency risk is as follows:
December 31, 2022
Total assets
Total liabilities
| In US Dollar |
2,385,954
2,417,829
| In Euro |
1,439,504
1,974,248
| In Brazilian real |
2,343,448
621,417
| CPI | - | linked NIS |
56,713
8,077,531
| In New Israeli Shekel |
699,043
2,429,334
| Denominated in or linked to other foreign currency |
3,082,004
507,108
10,006,666
16,027,467
(B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows:
December 31, 2022
Cur-rency/linkage receiv-
able
Cur-rency/linkage paya-
ble
Averageexpirationdate
USD thou-
sands Par
value
RMBthousandsPar value
Fair value
| Forward foreign currency |
USD
| EUR | 23/02/2023 | 130,560 | 909,296 | ( | 60,967 | ) | |||||||||||||||
| Contracts and call options |
USD
| PLN | 04/01/2023 | 33,131 | 230,747 | 18,599 | ||||||||||||||
USD
| BRL | 23/02/2023 | 223,146 | 1,554,120 | (55,288) | ||||||||||||||
USD
| GBP | 26/02/2023 | 43,358 | 301,970 | (5,632) | ||||||||||||||
USD
| ZAR | 18/01/2023 | 35,355 | 246,234 | (17,763) | ||||||||||||||
ILS
| USD | 22/03/2023 | 1,498,276 | 10,434,893 | ( | 98,394 | ) | ||||||||||||||
USD
| OTHER | 609,365 | 4,243,983 | (118,49 | 3 | ) | |||||||||||||||
| CPI forward contracts |
CPI
| ILS | 05/07/2023 | 682,012 | 4,749,940 | 26,231 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 248 -
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
(C) Sensitivity analysis
The appreciation or depreciation of the Dollar against the following currencies as of December 31, 2022and the increase or decrease in the CPI would increase (decrease) the equity and profit or loss by theamounts presented below. This analysis assumes that all the remaining variables, among others interestrates, remains constant.
December 31, 2022Decrease of 5% Increase of 5%Equity Profit (loss) Equity Profit (loss)
| New Israeli shekel |
47,820
13,996
(1,847)
33,998
| British pound | |||||
26,224
24,155
(26,247)
(24,177)
| Euro |
8,538
(54,024)
(8,944)
53,747
| Brazilian real | |||||
6,761
11,178
(14,671)
(18,242)
| Polish zloty |
6,716
6,716
(5,493)
(5,493)
| South African Rand |
(1,676)
(1,676)
| Chinese Yuan Renminbi | |||||
14,964
(2,662)
(1,541)
9,841
| CPI | - | linked NIS | |||||
243,768
243,768
(243,768)
(243,768)
(2) Interest rate risks
The Group has exposure to changes in the variable interest rate. The Group has different assets and liabil-ities in different countries which bear interest according to the economic environment in each country.Most of the loans, other than the debentures, bear Dollar and Euro Libor interest. As a result, most of thevariable interest exposure of those loans is to the Libor interest. Due to market conditions, the variableinterest rates on cash are relatively low.
The Company prepares a quarterly summary of exposure to a change in the Libor interest rate. As at theapproval date of the financial statements, the Company had not hedged this exposure.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(2) Interest rate risks - (cont’d)
(A) Type of interest
The interest rate profile of the Group’s interest-bearing financial instruments was as follows:
December 31,
2022
Fixed-rate instruments – unlinked to the CPI
Financial assets
| Other non | - | current assets | 55,215 | ||||
Financial liabilities
| Long | - | term loans (1) | 3,775,736 | |||||
| Long | - | term | payables | 25,650 | ||||
Other non-current liabilities348,231
(4,094,402)
Fixed-rate instruments – linked to the CPI
Financial liabilities
Debentures payable (1)
7,919,169
Variable-rate instruments
Financial assets
| Cash at banks | 881,043 | ||||||||||||||||
| Financial assets at fair value through profit or loss | 1,685 | ||||||||||||||||
| Other current assets | 171,496 | ||||||||||||||||
| Other non | - | current assets | 14,521 | ||||||||||||||
Financial liabilities
| Short | - | term loans and credit from banks | 3,342,921 | ||||||||
| Long | term loans | (1) | 1,426,63 | 0 | |||||||
Long-term payables71,102
(3,771,908)
(1) Including current maturities.
(B) Sensitivity analysis of cash flows regarding variable-interest instruments
A change of 5% in the interest rates on the reporting date would increase or reduce equity and profit or lossby the amounts presented below. This analysis assumes that all the remaining variables, among others ex-change rates, remained fixed.
Profit or loss Equity
Increase in
interest
| Increase in | |
Decrease in
interest
| Decrease in | |
Increase in
interest
| Increase in | |
Decrease in
interest
| Decrease in | |
As at December 31, 2022
(1,002)
(1,002)
IX. Fair Value
The fair value of forward contracts on foreign currency is based on their listed market price, if available. In theabsence of market prices, the fair value is estimated based on the discounted difference between the statedforward price in the contract and the current forward price for the residual period until redemption, using anappropriate interest rate.
The fair value of foreign currency options is based on bank quotes. The reasonableness of the quotes is evaluatedthrough discounting future cash flow estimates, based on the conditions and duration to maturity of each contract,using the market interest rates of a similar instrument at the measurement date and in accordance with the Black& Scholes model.
1. Financial instruments measured at fair value for disclosure purposes only
The carrying amount of certain financial assets and liabilities, including cash at bank and on hand, bills andaccounts receivable, receivables financing, other receivables, derivatives financial assets, short-term loans, billsand accounts payable and other payable, are the same or proximate to their fair value.
The following table details the carrying amount in the books and the fair value of groups of non-current financialinstruments presented in the financial statements not in accordance with their fair values:
December 31, 2022
Carrying amount
Fair value
Financial assets
Other non-current assets (a – Level 2)
| 83,457 | 72,969 |
Financial liabilities
Long-term loans and others (b – Level 2)
| 6,248,858 | 5,953,737 |
Debentures (c – Level 1)
| 7,919,16 | 9 | 9,169,296 |
a) The fair value of the other non-current assets is based on a discounted future cash flows, using the acceptableinterest rate for similar investment having similar characteristics (Level 2).b) The fair value of the long-term loans and others is based on a discounted future cash flows, using the acceptable
interest rate for similar loans having similar characteristics (Level 2).c) The fair value of the debentures is based on stock exchange quotes (Level 1).
2. The interest rates used in determining fair value
The interest rates used to discount the estimate of anticipated cash flows are:
December 31, 2022
%
| U.S. dollar interest | 4 | 8 | 6% | - | 5 | . | 37 | % | ||||||||||||||||
| Chinese Yuan Renminbi | 1.42 | % | 2.2 | 0 | % | |||||||||||||||||||
| Euro | 1.86% | 3 | 90 | % | ||||||||||||||||||||
- 251 -
IX. Fair Value - (cont’d)
3. Fair value hierarchy of financial instruments measured at fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants at the measurement date. The table below presents an analysis of financial instru-ments measured at fair value. The various levels have been defined as follows:
? Level 1: quoted prices (unadjusted) in active market for identical instrument.? Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.? Level 3: inputs that are not based on observable market data (unobservable inputs).
The Company’s forward contracts and options are carried at fair value and are evaluated by observable inputsand therefore are concurrent with the definition of level 2.
December 31
2022
| Forward contracts and options | used for hedging | the cash flow | (Level 2) | ( | 45,3 | 39 | ) | ||||||||||||||||||||||||||||
| Forward contracts and options | used for economic hedging | (Level 2) | ( | 266,3 | 68 | ) | |||||||||||||||||||||||||||||
| Other equity investment (Level 2) | 158,341 | ||||||||||||||||||||||||||||||||||
| Receivables financing | (Level 2) | 63,639 | |||||||||||||||||||||||||||||||||
| Other non | - | current asset | s | (Level 2) | 125,962 | ||||||||||||||||||||||||||||||
| Other | (Level 2) | 1,6 | 85 | ||||||||||||||||||||||||||||||||
Financial Instrument Fair valueForward contracts
Fair value measured on the basis of discounting the difference between thestated forward price in the contract and the current forward price for theresidual period until redemption using an appropriate interest rates.
Foreign currency options
| The | fair value is measured based on the Black | & | Scholes model. | ||
No transfer between any levels of the fair value hierarchy in the reporting period.
No change in the valuation techniques in the reporting period.
- 252 -
X. Related parties and related party transactions
1. Information on parent Company
Company
name
Registeredplace Business nature
Registered capital(Thousand RMB)
Shareholdingpercentage
Percentageof voting rights
Syngenta
| Group |
Shanghai,
| China |
Production andsales of agro-chemicals, fertiliz-
| ers and GM seeds | 11,144,545 | 78.47% | 78.47% |
The Company’s ultimate controlling shareholder is Sinochem Holdings .
2. Information on the largest subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
3. Information on largest joint ventures and associates of the Company
For information about the joint ventures and associates of the Company, refer to Note V.12.Other joint ventures and associates that have related party transactions with the Group during this period or theprevious periods are as follows:
Name of entity Relationship with the Company
| Innovaroma | SA | Joint venture of the Group |
- 253 -
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties
Name of other related parties Related party relationship
| Beijing Jiamao Real Estate Co. Ltd. | Common control | |||||||||||||||||||||||||||||||||
| Bluestar (Beijing )ChemicalMachinery co.,LTD ( consolidated) | Common control | |||||||||||||||||||||||||||||||||
| Bluestar Engineering co.,LTD . | Common control | |||||||||||||||||||||||||||||||||
| BluestarEngineeringCo.,Ltd. | Common control | |||||||||||||||||||||||||||||||||
| Changsha Huaxing Construction Supervision Co., Ltd. | Common control | |||||||||||||||||||||||||||||||||
| ChemChina AssetManagement co.,LTD .(Headquarter) | Common control | |||||||||||||||||||||||||||||||||
| ChemChina Finance | Corporation | Common control | ||||||||||||||||||||||||||||||||
| ChemChina | Information | Center | Co.,Ltd. | Common control | ||||||||||||||||||||||||||||||
| China Bluestar Chengrand Research Institute Chemical Industry | Common control | |||||||||||||||||||||||||||||||||
| China Blue Lianhai Design and Research Institute | Common control | |||||||||||||||||||||||||||||||||
| China National Bluestar | (Group) Co. Ltd. | Common control | ||||||||||||||||||||||||||||||||
| China National Chemical Agrochemical Corporation | Common control | |||||||||||||||||||||||||||||||||
| China National Chemical Information Center Co. LTD | Common control | |||||||||||||||||||||||||||||||||
| Elkem Silicones Brasil Ltd. | Common control | |||||||||||||||||||||||||||||||||
| Hangzhou (Torch)XidoumenMembraneIndustry co.,LT | D | Common control | ||||||||||||||||||||||||||||||||
| Jiangsu Huaihe Chemical Co. Ltd. | Common control | |||||||||||||||||||||||||||||||||
| Jiangsu Ruixiang Chemical co., LTD . | Common control | |||||||||||||||||||||||||||||||||
| Jiangsu Yangnong Chemical Co., Ltd. | Common control | |||||||||||||||||||||||||||||||||
| Jiangsu Youjia Plant Protection Co., Ltd. | Common control | |||||||||||||||||||||||||||||||||
| Jiangsu Youshi | Chemical Co., Ltd. | Common control | ||||||||||||||||||||||||||||||||
| Jiangsu Yushi Chemical Co., LTD | Common control | |||||||||||||||||||||||||||||||||
| Jingzhou Sanonda Holdings Co.,Ltd. | Common control | ||||||||
| (MAP) Sinochem Modern Agriculture Co.LTD Hunan Branch | Common control | ||||||||
| (MAP) Sinochem | Modern Agriculture Co.LTD Xinjiang Branch | Common control | |||||||
(MAP) Sinochem Modern Agriculture Co. Wusu Tech Service
| Cent | Common control | ||||||||||||||||||||||||||
| (MAP) Sinochem Modern Agriculture Co.LTD Yichang Branch | Common control | ||||||||||||||||||||||||||
| Sanbei Seeds Co. Ltd | Common control | ||||||||||||||||||||||||||
| OOO | Syngenta | Common control | |||||||||||||||||||||||||
| PT Syngenta Indonesia | Common control | ||||||||||||||||||||||||||
| PT Syngenta Seed Indonesia | Common control | ||||||||||||||||||||||||||
| Shandong Dacheng Agrochemical Company Limited | Common control | ||||||||||||||||||||||||||
| Shandong Dacheng Biochemical Co., Ltd. | Common control | ||||||||||||||||||||||||||
| Shenyang Chemical | Research Institute Co. LTD | Common control | |||||||||||||||||||||||||
| Shenyang Shenhua Institute Testing Technology Co. Ltd. | Common control | ||||||||||||||||||||||||||
| Shenyang Chemical Institute Testing Technology Co. Ltd | Common control | ||||||||||||||||||||||||||
| Sinochem (Hainan) Agroecology Co., LTD | Common control | ||||||||||||||||||||||||||
| Sinochem Agricul | tural Ecological Technology (Hubei) Co., Ltd. | Common control | |||||||||||||||||||||||||
Sinochem Agriculture (Xinjiang) Biotechnology Co., Ltd. Ma-
| nas Branch | Common control | |||||||||||||||||
| Sinochem Agriculture Co., Ltd | Common control | |||||||||||||||||
| Sinochem Agro Co. Ltd | Common control | |||||||||||||||||
| Sinochem Agro | Co., Ltd. | Common control | ||||||||||||||||
| Sinochem Crop Protection Products Co. LTD | Common control | |||||||||||||||||
| Sinochem Fertilizer Company Limited | Common control | |||||||||||||||||
| Sinochem Fertilizer Company Limited Fujian Branch | Common control | |||||||||||||||||
- 254 -
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties - (cont’d)
Name of other related parties
Related party relationship
| Sinochem Fertilizer Company Limited Guangxi Branch | ||||
| Common control | |||||
| Sinochem | Fertilizer Company Limited Hebei Branch |
| Common control | |||
| Sinochem Fertilizer Company Limited Hubei Branch |
| Common control | |||
| Sinochem Fertilizer Company Limited Jiangsu Branch |
| Common control | |||
| Sinochem Fertilizer Company Limited Jilin Branch |
| Common control | ||||
| Si | nochem Fertilizer Company Limited Northwest Branch |
| Common control | |||
| Sinochem Fertilizer Company Limited Shandong Branch |
| Common control | |||
| Sinochem Fertilizer Company Limited Southwest Branch |
| Common control | |||||||||||||||||||||||||||
| Sinochem Finance Corporation | Common control | ||||||||||||||||||||||||||
| Sinochem Information Technology Co. LTD | Common control | ||||||||||||||||||||||||||
| Sinochem Innovation (Beijing) Technology Research Institute Co., Ltd. | Common control | ||||||||||||||||||||||||||
| Sinochem International Crop Care (Overseas) Pte. Ltd. | Common control | ||||||||||||||||||||||||||
| Sinochem Lantian | Fluorine Materials Co. Ltd. | Common control | |||||||||||||||||||||||||
| Sinochem Modern Agriculture Hebei Co. LTD | Common control | ||||||||||||||||||||||||||
| Sinochem Modern Agriculture (Guangxi) Co. LTD | Common control | ||||||||||||||||||||||||||
| Sinochem Modern Agriculture (Hunan) Co. LTD | Common control | ||||||||||||||||||||||||||
| Sinochem | Modern Agriculture (Jiangsu) Co. LTD | Common control | |||||||||||||||||||||||||
| Sinochem Modern Agriculture (Shandong) Co. LTD | Common control | ||||||||||||||||||||||||||
| Sinochem Modern Agriculture (Xinjiang) Co. LTD | Common control | ||||||||||||||||||||||||||
| Sinochem Modern Agriculture (Zhejiang) Co. LTD | Common control | ||||||||||||||||||||||||||
| Sinochem Mode | rn Agriculture Anhui Co. LTD | Common control | |||||||||||||||||||||||||
| Sinochem Modern Agriculture Sichuan Co. LTD | Common control | ||||||||||||||||||||||||||
| Sinochem Shandong Fertilizer Co. Ltd. | Common control | ||||||||||||||||||||||||||
| Syngenta (China) Investment Company Ltd | Common control | ||||||||||||||||||||||||||
| Syngenta Agro AG | Common control | ||||||||||||||||||||||||||
| Syngenta Agro GmbH | Common control | ||||||||||||||||||||||||||
| Syngenta Agro S.A. | Common control | ||||||||||||||||||||||||||
| Syngenta Agro S.R.L. | |||||||||||||||||||||||||||
| Common control | |||
| Syngenta Australia Pty Limited |
| Common control | |||
| Syngenta Canada Inc. |
| Common control | |||||||||||||||||
| Syngenta coml agr ltda | Common control | ||||||||||||||||
| Syngenta Crop | Protection AG | Common control | |||||||||||||||
| Syngenta Crop Protection B.V. | Common control | ||||||||||||||||
| Syngenta Crop Protection LLC | Common control | ||||||||||||||||
| Syngenta Crop Protection Ltd | Common control | ||||||||||||||||
| Syngenta Crop Protection S.A. | Common control | ||||||||||||||||
| Syngenta Crop Protection, LLC | Common | control | |||||||||||||||
| Syngenta Czech s.r.o. | Common control | ||||||||||||||||
| Syngenta Espana S.A | Common control | ||||||||||||||||
| Syngenta France S.A.S. | Common control | ||||||||||||||||
| Syngenta Group Company Limited | Common control | ||||||||||||||||
| Syngenta Group(NL) B.V. | Common control | ||||||||||||||||
| Syngenta Hellas AEBE | Common control | ||||||||||||||||
| Syngenta India Limited | Common control | ||||||||||||||||
- 255 -
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties - (cont’d)
Name of other related parties
Related party relationship
| Syngenta Italia S.p.A | Common | control | ||||||||||||||||||
| Syngenta Korea Ltd. | Common control | |||||||||||||||||||
| Syngenta Nantong Crop Protection Company Limited | Common control | |||||||||||||||||||
| Syngenta Polska Sp.z.o.o. | Common control | |||||||||||||||||||
| Syngenta protecao cultivos ltda | Common control | |||||||||||||||||||
| Syngenta S.A(Chile) | Common control | |||||||||||||||||||
| Syngenta S.A. | (Panama) | Common control | ||||||||||||||||||
| SYNGENTA SEEDS LTDA | Common control | |||||||||||||||||||
| Syngenta Slovakia s.r.o | Common control | |||||||||||||||||||
| Syngenta South Africa (Pty) Ltd. | Common control | |||||||||||||||||||
| SyngentaTarimSanayiveTicaretA.S. | Common control | |||||||||||||||||||
Zhonglan Chenguang Chemical Research and Design Institute Co.,
| LTD. Xinjin branch | Common control | |||||||||||||||||||
| Zhonglan International Chemical Co. Ltd | Common control | |||||||||||||||||||
| Jiangsu Huifeng Agrochemical Co. Ltd. | Minority shareholder and its subsidiary | |||||||||||||||||||
| Jiangsu Huifeng | Biological Agriculture Co., Ltd | Minority shareholder and its subsidiary | ||||||||||||||||||
| Nongyi Net (Yangling) e | - | commerce Co., Ltd. | Minority shareholder and its subsidiary | |||||||||||||||||
| Shanghai focus supply chain Co., Ltd | Minority shareholder and its subsidiary | |||||||||||||||||||
| Shanghai | nengjianyuan Biological Agriculture Co., Ltd | Minority shareholder and its subsidiary | ||||||||||||||||||
- 256 -
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties
(1) Transactions with related parties
Year ended December 31Type of purchase Related Party Relationship
2022
2021
Summary of purchase of goods/services:
| Summary of purchase of goods/services: |
Purchase of goods/services received Common control under Si-
| nochem Holdings | 2,67 | 3 | , | 892 | 1,798,000 |
Minority shareholder and
| its subsidiary |
3,155
68,349
Purchase of fixed assets and other assets
Common control under Si-
| nochem Holdings |
9,780
51,121
Lease expenses Common control under Si-
| nochem Holdings |
Minority shareholder and
| its | subsidiary |
-
| Summary of Sales | of goods | : | |||||||||||
Sale of goods/ Service rendered Common control under Si-
| nochem Holdings | 2,177,322 | 1,300,066 | |||||||||||
| Joint venture | 104,563 | 93,388 | |||||||||||
Minority shareholder and
| its subsidiary | 54,424 | 217,444 |
(2) Guarantees
The Group as the guarantee receiver
Guarantee provider
Amount ofguaranteed loan
Inception date
of guaranty
Maturity date
of guaranty
Guaranty com-
pleted (Y / N)
| Parent company |
| 33 | 3 | ,000 | 2 | 1 | / | 04 | /20 | 21 | 20/ | 04 | /202 | 8 | N |
| 7 | 1 | 841 | 01/0 | 6 | /20 | 21 | 31 | / | 05 | /202 | 8 | N |
* During the reporting period, the Company paid a guarantee fee amounting to 451 thousand RMB(2021: 141 thousand RMB) to the parent company.
(3) Remuneration of key management personnel and directors
Periods ended December 31
2022
2021
| Remuneration of key management personnel | and directors | 114,806 | 99,000 |
- 257 -
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties - (cont'd)
(4) Receivables from and payables to related parties (including loans)
Receivable Items
December 31 December 31
2022 2021Items
Related Party Relation-ship
BookBalance
Expectedcreditlosses
BookBalance
Expectedcreditlosses
Trade receivables Common control under
| Sinochem Holdings |
356,708
- 200,954
-
| Joint venture | 25,727 | - | 23,150 | - |
Minority shareholder and
| its subsidiary |
13,172
- 32,953
-Other receivables Common control under
| Sinochem Holdings |
- 83
-Other Non-Current assets
Common control under
| Sinochem Holdings |
- 84
-Prepayments Common control under
| Sinochem Holdings |
34,393
- 33,069
-
Payable Items
December 31
December 31
Items Related Party Relationship 2022
2021
Trade payables Common control under Sinochem Hold-
| ings |
426,454
489,859
| Minority | shareholder and its subsidiary | - | 355 |
Other payables Common control under Sinochem Hold-
| ings |
24,974
30,006
Short-term loans * Common control under Sinochem Hold-
| ings |
696,459
-
Other non-current li-
| abilities | * |
Common control under Sinochem Hold-
| ings |
348,231
318,786
* The liabilities are loans from a related party, the interest expenses for the year ended December 31, 2022
is 19,688 thousand RMB (twelve months ended December 31, 2021: 3,897 thousand RMB).
On October 27, 2021, the Board of Directors approved (following the approval of the Company’s AuditCommittee dated October 25, 2021) the Company, through one of its subsidiaries, entering into commit-ted credit facilities agreements in the aggregate amount of $100 million (RMB 696 million) on marketterms with Syngenta Group, or any of its subsidiaries. On December 14, 2022, the Board of Directorsapproved (following the approval of the Company’s Audit Committee on the same date) an increase ofsuch facilities to an aggregate amount of $150 million (RMB 1,045 million). As of December 31, 2022,the full amount was utilized.
- 258 -
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties - (cont'd)
(5) Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was nil thousand RMB (31.12.21:
358,881 thousand RMB) Interest income of bank deposit for the current period was 90 thousand RMB(amount for twelve months ended December 31, 2021 was 2,725 thousand RMB).The closing balance of a loan received from ChemChina Finance corporation was nil (231.12.1: nil). Interestexpenses in the current period was nil (amount for twelve months ended December 31, 2021 was 1,571thousand RMB).
The closing balance of bank deposit in Sinochem Finance Corporation was 417,661 thousand RMB(31.12.21: nil) Interest income of bank deposit for the current period was 3,372 thousand RMB (amount fortwelve months ended December 31, 2021 was nil).According to the Entrusted Operation and Management Agreement signed between the Company and ChinaNational Agrochemical Co., Ltd. (“CNAC”), the Company shall be entrusted with the management rightsheld by CNAC over Anhui Petroleum & Chemical Group Co., Ltd during the entrustment period. The Com-pany received an entrustment fee of 3,280 thousand RMB from CNAC during 2022 (2021: nil).
- 259 -
XI. Commitments and contingencies
1. Significant commitments
December 31
December 31
2022
2021
Investment in Fixed assets
| Investment in Fixed assets |
429,862
623,156
2. Commitments and Contingent Liabilities
On December 10, 2018 the 9th meeting of the 8th session of the Board of Directors of the Company approvedthe extension of the engagement in annual liability insurance policies for directors, supervisors and senior of-ficers of the Company (“D&O Liability Insurance) as originally approved by the 22nd meeting of the 7th sessionof Board of Directors and the 4th Interim Shareholders Meeting in 2017, and authorized the management toannually deal with all matters relating to renewal/extension of the customary D&O Liability Insurance policies,with up to 20% flexibility in the relevant terms of the original policy. On December 26, 2018 the 3rd InterimShareholders Meeting approved the above resolution. The current D&O Liability Insurance was renewed for anadditional one-year term commencing November 15, 2022.
Environmental protectionThe manufacturing processes of the Company and the products it produces and market, entail environmentalrisks that impact the environment. The Company invests substantial resources in order to comply with the ap-plicable environmental laws and attempts to prevent or minimize the environmental risks that could occur as aresult of its activities. To the best of the Company’s knowledge, at the balance sheet date, there are no materialenvironmental issues relating to the Company, there are no material administrative penalties or investigationsrelated to environment, health and safety imposed or initiated by regulatory authorities, and none of the materialpermits and licenses regarding environmental issues required for the Company’s day to day operations havebeen revoked.
OtherFor two of the Company’s production sites in China that have been in the process of relocation, Jingzhou sitein Jingzhou, Hubei Province completed its relocation and upgrade program and is now at high level of opertionand Anpon old site in Huai’An, Jiangsu Province is in the process of relocating to the new site. As part of therelocation process, the Company executed in previous years a reduction plan to reduce the number of employeesduring the relocation period.
Claims against subsidiariesIn the ordinary course of business, legal claims were filed against subsidiaries, including claims for patent in-fringement. The Company, inter alia, like other companies operating in the crop protection market, is exposedto class actions for large amounts, which it must defend against while incurring considerable costs, even if theseclaims have no basis in the first place. In the opinion of the Company’s management, which is based, inter alia,on the opinions of its legal advisors regarding the prospects of the proceedings, the financial statements includeadequate provisions where necessary to cover the exposure resulting from the claims.
- 260 -
XI. Commitments and contingencies - (cont’d)
2. Commitments and Contingent Liabilities - (cont’d)
Claims against subsidiaries (cont’d)On October 20, 2020, a claim and a motion for its approval as a class action (the “Motion”) was filed againstMonsanto Company and Bayer AG (the “Manufacturers”) as well as against ADAMA Agan Ltd., a wholly-owned subsidiary of Solutions, with respect to an herbicide bearing the brand name Roundup, which is producedby the Manufacturers and distributed in Israel in small quantities by Solutions’ subsidiary. The applicants arguethat the product allegedly poses a risk to users or those who have been exposed to it. Solutions and its subsidiaryreject the allegations against the subsidiary in the Motion and in the statement of claim. Based on the opinionof Solutions’ external counsels given this preliminary stage, as of the date of the financial statements the Motionand claim are not expected to have any non-negligible effect on the Company’s financial results. In addition,and as Solutions is an authorized distributor of the Manufactures, the Manufactures undertook to fully indemnify,defend and hold harmless ADAMA Agan Ltd., for any monetary compensation or any other remedy it will haveto make in connection with the Motion.
In June 2021, a lawsuit was filed against a subsidiary of the Company, alleging two patents owned by a largecompetitor of the Company, have been infringed by such subsidiary. Among the claims, the plaintiff seekspreliminary and permanent injunctions to prevent the subsidiary from manufacturing, using or commercializingany product that infringes the plaintiff’s patents, and seeks actual damages and profits loss. The said preliminaryinjunctions were granted by the court in favor of the plaintiff. The subsidiary has filed appeals against suchpreliminary injunctions, which were rejected. Prior to such claims, and on-going, the subsidiary filed severallawsuits against the said plaintiff seeking to declare the said patents are invalid and the subsidiary does notinfringe them. All these lawsuits are pending as of the approval date of the financial statements. At this stage,the claims filed by the plaintiff are not expected to have a material effect on the Company.
Various immaterial claims have been filed against Group companies in courts throughout the world, in imma-terial amounts, for causes of action primarily involving employee-employer relations and various civil claims,for which the Company did not record a provision in the financial statements. The claims that in the estimationof Company’s management, based on its legal advisors’ opinion, have lower chances of succeeding than beingrejected, amount to a negligible amount. Furthermore, claims were filed against the Company for product lia-bility damages, for which the Company has adequate insurance coverage, such that the Company’s exposure inrespect thereof is limited to the deductible amount or the amount thereof does not exceed the deductible amount.
XII. Events subsequent to the balance sheet date
The Company is not aware of any events subsequent to the balance sheet date.
- 261 -
XIII. Share-based Payments
1. In February 2019, the remuneration committee and Solutions Board of Directors (as well as the General Meet-
ing with respect to theformer CEO and Vice President who also serves as a director) approved the allocationof 77,864,910 phantom warrants to officers and employees in accordance with the long-term phantom com-pensation plan (hereinafter - "the 2019 Plan"), out of which 75,814,897 phantom warrants were granted at thegrant date of February 21, 2019. During 2019, 1,206,081 additional Phantom warrants were granted.
The warrants will vest in four equal portions, where the first and second quarters are exercisable after twoyears, the third quarter after three years and the fourth quarter after four years from January 1, 2019. Thewarrants will be exercisable, in whole or in part, in accordance with the terms of the 2019 plan, and subject toachieving financial targets as determined in the plan. The warrants will be exercisable until the end of 2025.
Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the differencebetween the base price as determined at the time of the grant and the closing price of one share of the Companyon the Shenzhen Stock Exchange, as it will be on the exercise date up, to the ceiling that was determined underthe plan.
The fair value of the granted warrants as aforesaid was estimated using the binomial pricing model.
The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at thegrant date, amounted to a total of approximately 186 million RMB. The liability at the end of the reportingperiod was recorded according to the vesting period as determined in the plan, taking into account the extentof the service that the employees provided until that date and the Company’s share price at the end of thereporting period.
Statement of share based payments in the period
Phantom warrants
| Total number of Phantom warrants at the beginning of the period | 55,720,575 | |||||||||||||
| Total | number of Phantom warrants granted in current period | - | ||||||||||||
| Total number of Phantom warrants exercised in current period | ( | 20 | ,085,474) | |||||||||||
Total number of Phantom warrants forfeited in current period(5,438,614)
| Total number of Phantom warrants at the end of | the period | 30,196,487 |
The exercise prices and the remainder of the contractual period for Phantom
| warrants | outstanding at the end of period |
RMB 9.90 – 10.85
| 3 years |
The parameters used in implementing the model at the grant date are as follows:
| Stock price (RMB) | 10.85 | |||||||||
| Exercise increment (RMB) | 10.03/10.85 | |||||||||
| Expected volatility | 43.97% | |||||||||
Risk
| Risk | - | free interest rate | 3.06 | % | ||||||||||||||||
| Economic value as of | February | 21 | , 20 | 19 | (in thousands RMB) | 186,206 | ||||||||||||||
The methods for the determination of the fair value of liabilities arising from
| cash | - | settled share | - | based payments | The binomial pricing model |
Accumulated amount of liabilities arising from cash-settled share-based pay-
| ments (in thousands RMB) | 52,444 |
Expenses arising from cash-settled share-based payments in current period
| (in thousands RMB) | (2,303) |
- 262 -
XIII. Share-based Payments - (cont’d)
2. In September 2019, the remuneration committee and Solutions Board of Directors (and the General Meeting
with respect to the CEO and Vice President who also serves as a director) approved the cancellation of 2017Plan against the allocation of 28,258,248 warrants in accordance with the long-term phantom compensationplan (hereinafter - "The Alternative Warrants" and "The Alternative Plan"). The cancellation and allocationdate is September 26, 2019. During 2019, an additional 90,130 Alternative Phantom Warrants were granted.
The alternative warrants will vest in four equal portions, where the first quarter is exercisable after one year,the second quarter after two years, the third quarter after three years and the fourth quarter after four yearsfrom October 1, 2019. The warrants will be exercisable, in whole or in part, in accordance with the terms ofthe Alternative Plan, and subject to achieving financial targets as determined in the plan. The warrants will beexercisable until October 1, 2026.
Upon exercise of each warrant, the offeree will be entitled to receive cash payment equal to the differencebetween the base price as determined at the time of the grant and the closing price of one share of the parentcompany on the Shenzhen Stock Exchange, as it will be on the exercise date up to the ceiling that was deter-mined under the plan.
The fair value of the total granted alternative warrants at the allocated date is equal to the fair value of the totalwarrants canceled from the 2017 plan.
The cost of the benefit embodied in the warrants that were allocated as aforesaid, based on the fair value at thecancellation and allocation date, amounted to a total of approximately 69 million RMB. The liability in thefinancial statements at the end of the reporting period was recorded at the fair value estimated using the bino-mial option pricing model and by the vesting period from the original grant date of the 2017 plan to the endof the service period determined by the alternative plan, taking into account the extent of the service that theemployees provided until that date and the stock price at the reporting date.
Statement of share based payments in the period
Phantom warrantsChanges in the number of 2017 Plan:
| Total number of Phantom warrants at the beginning of the period | 18,710,787 | ||||||||
| Total number of Phantom warrants granted in current period | - | ||||||||
| Total number of Phantom warrants exercised in current period | (5,221,396) | ||||||||
Total number of Phantom warrants forfeited in current period(1,316,422)
| Total number of Phantom warrants at the end of the period | 12,172,969 | ||||
The range of the exercise prices and the remainder of the contractual period
| for Phantom warrants | outstanding at the end of period |
RMB 9.40 – 9.43
| 3.75 years | |||
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 263 -
XIII. Share-based Payments - (cont’d)The parameters used in implementing the model at the grant date are as follows:
| Stock price (RMB) | 9.23 | ||||||||
| Exercise increment (RMB) | 9.43 | ||||||||
| Expected volatility | 40.29% | ||||||||
Risk
| Risk | - | free interest rate | 3.14 | % | |||||||
| Economic value | as of September 26, 2019 | (in thousands RMB) | 68,836 | ||||||||
The methods for the determination of the fair value of liabilities arising from
| cash | - | settled share | - | based payments | related | to t | he alternative plan | The binomial pricing model |
Accumulated amount of liabilities arising from cash-settled share-based pay-
| ments related to | the alternative plan | (in thousands RMB) | 24,431 |
Expenses (income) arising from cash-settled share-based payments in cur-
| rent period related to | the alternative plan | (in thousands RMB) | 3,078 |
XIV. Other significant items
1. Segment reporting
The Company presents its segment reporting based on a format that is based on a breakdown by businesssegments:
? Crop Protection (Agro)
This is the main area of the Company’s operations and includes the manufacture and marketing of conven-tional agrochemical products.
? Intermediates and ingredients
This field of activity includes a large number of sub-fields, including: Lycopan (an oxidization retardant),aromatic products, and other chemicals. It combines all the Company’s activities not included in the CropProtection products segment.
Segment results reported to the chief operating decision maker include items directly attributable to a segmentas well as items that can be allocated on a reasonable basis. Unallocated items comprise mainly financingexpenses, net, gains from changes in fair value, investment income and tax expenses.
All assets and liabilities that can be attributed to a specific segment were allocated accordingly. Attributedassets include: accounts and bills receivables, receivables financing, inventory, fixed assets, right-of-use assets,construction in progress, intangible assets, goodwill, non-current trade receivables and long-term equity in-vestments. Attributed liabilities include account payables, bill payablesand lease liabilities. All other assetsand liabilities which are not attributable to a specific segment are presented as unallocated assets and liabilities.
- 264 -
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Information regarding the results and assets and liabilities of each reportable segment is included below:
Crop Protection Intermediates and ingredients Elimination among segments Total
Year endedDecember 31
Year endedDecember 31
Year endedDecember 31
Year endedDecember 31
2022
2021
2022
2021 2022
2021
2022
2021
Operating income from external
| customers | 33,768 | ,587 |
| 28,046,724 | 3,613,328 |
| 2,991,881 | - | - | 37,381,915 | 31,038,605 |
Inter
| Inter | - | segment operating income | - | - | 1,886 |
| 1,649 | ( | 1,886 | ) |
| (1,649) | - | - |
Interest in the profit or loss of
| associates and joint ventures |
-
-
10,358
5,923
-
-
10,358
5,923
| Segment's results | ||||||||||||||||||||||||||||||
| 2,159,17 | 5 | 1,527,239 | 425,961 | 354,055 | - | - | 2,585,13 | 6 | 1,881,294 | |||||||||||||||||||||
| Financial expenses | 325,79 | 6 | 1,939,422 | |||||||||||||||||||||||||||
Gain (loss) from changes in fair
| value | ( | 1,504,832 | ) | 597,685 | ||||||||||||||||||||||||||
| Investment income | 2,325 | 4,245 | ||||||||||||||||||||||||||||
| Profit before tax | 756,83 | 543,802 | ||||||||||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||||||||||||
147,442
| 380,489 |
Net profit
| Net profit |
609,391
163,313
Crop Protection Intermediates and ingredients Unallocated assets and liabilities Total
December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31
2022
2021
2022
2021
2022
2021
2022
2021
| Total assets | 47,113,346 | 39, | 213,516 | 2,520,000 | 2,071,074 | 8,347,143 | 8,950,718 | 57,980,4 | 89 | 50,235,308 | |||||||||||||||||||||||||||||||||
| Total liabilities | 8, | 689 | ,4 | 79 | 6,867,619 | 383 | ,6 | 40 | 282,006 | 25,782,715 | 22, | 010,600 | 34,855,83 | 4 | 29, | 160,225 | |||||||||||||||||||||||||||
- 265 -
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Geographic information
The following tables sets out information about the geographical segments of the Group’s operating incomebased on the location of customers (sales target) and the Group's non-current assets (including mainly fixedassets, right-of-use assets, construction in progress, investment properties intangible assets and goodwill). Inthe case of investment property, fixed assets, right of used assets and construction in progress, the geographicallocation of the assets is based on its physical location. In case of intangible assets and goodwill, the geograph-ical location of the company which owns the assets.
Operating income from external custom-
ers
Year ended December 31
2022 2021
| Europe | 7,449,462 | 6,920,884 | |||||||||||||||
| North America | 6,895,702 | 5,907,944 | |||||||||||||||
| Latin America | 10,792,733 | 8,217,586 | |||||||||||||||
| Asia Pacific | 7,761,487 | 5,793,987 | |||||||||||||||
| Africa, Middle East and India | |||||||||||||||||
4,482,531
4,198,204
37,381,915
31,038,605
Specified non-current assets
December 31
December 31
2022
2021
| Europe | 1,040,501 | 962,601 | |||||||||||||||||
| Latin America | 2,482,569 | 2,227,234 | |||||||||||||||||
| North America | 1,184,067 | 1,116,510 | |||||||||||||||||
| Asia Pacific | 5,601,067 | 5,609,749 | |||||||||||||||||
| Africa, Middle East and India | |||||||||||||||||||
12,586,295
10,713,739
22,894,499
20,629,833
2. The dependency on major customers
No single customer's proportion of the total amount of sales is over 10%.
- 266 -
XIV. Other significant items - (cont'd)
3. Calculation of Earnings per share and Diluted earnings per share
Amount for thecurrent period
Amount for theprior period
Net profit from continuing operations attributable to ordinary
| shareholders |
609,391
157,397
S
| S | hares |
Amount for thecurrent period
Amount for theprior period
Number of ordinary shares outstanding at the beginning of the
| year | 2,329,811,766 | 2,329,811,766 |
Add: weighted average number of ordinary shares issued during
| the year | - | - |
Less: weighted average number of ordinary shares repurchased
| during the year |
-
-
Weighted average number of ordinary shares outstanding at the
| end of the year |
2,329,811,766
2,329,811,766
Amount forthe currentperiod
Amount forthe prior pe-riod
Calculated based on net profit attributable to ordinary shareholders
| Basic earnings per share | 0.26 | 0.07 | ||||||
| Diluted earnings per share | N/A | N/A | ||||||
Calculated based on net profit from continuing operations attributa-ble to ordinary shareholders:
| Basic | earnings per share | 0.26 | 0.07 | ||||||
| Diluted earnings per share | N/A | N/A | |||||||
Calculated based on net profit from discontinued operations attribut-able to ordinary shareholders:
| Basic earnings per share | N/A | N/A | ||||||
| Diluted earnings per share | N/A | N/A | ||||||
- 267 -
XV. Notes to major items in the Company's financial statements
1. Cash at bank and on hand
December 31 December 31
2022
2021
| Deposits in banks | 2 | 58,330 | 2 | 59,434 |
Other cash and bank12,750
6,124
271,080
265,558
As at December 31, 2022, restricted cash and bank balances was 12,750 thousand RMB (as at December 31,2021: 6,124 thousand RMB).
2. Accounts receivable
a. By category
December 31, 2022
Book value
Provision for expectedcredit losses
Amount
Percentage (%)
Amount
Percentage (%)
Carrying
amount
Account receivables assessed
| individually for impairment | 1 | 3,893 | 2 | 1 | 3,893 | 1 | 00 | - |
Account receivables assessed
| collectively for impairment |
758,471
-
758,462
772,364
13,902
758,462
December 31, 2021
Book value
Provision for expectedcredit losses
Amount
Percentage (%)
Amount
Percentage (%)
Carrying
amount
Account receivables assessed
| individually for impairment | 1 | 3,879 | 6 | 1 | 3,879 | 1 | 00 | - |
Account receivables assessed
| collectively for impairment |
208,125
-
208,109
222,004
13,895
208,109
b. Aging analysis
December 31, 2022Within 1 year (inclusive) 758,471
Over 1 year but within 2 years-
Over 2 years but within 3 years 15
Over 3 years but within 4 years 1
Over 4 years but within 5 years 1
Over 5 years 13,876
772,364
- 268 -
XV. Notes to major items in the Company's financial statements - (cont'd)
2. Accounts receivable - (cont'd)
c. Addition, written-back and written-off of provision for expected credit losses during the period
Year ended December 31, 2022
| Balance as of January 1 | 1 | 3,895 | |||||||||||||||
| Addition during the year, net | 2 | 3 | |||||||||||||||
| Write back during the year | ( | 16) | |||||||||||||||
| Write | - | off during the year | |||||||||||||||
| - | |||
| Exchange rate effect |
-
Balance as of
| Balance as of | December 31 |
13,902
d. Five largest accounts receivable at December 31, 2022:
Name
Closing balance
Proportion ofAccounts re-ceivable (%)
Allowance ofexpectedcredit losses
| Party 1 | 5 | 36,648 | 6 | 9 | - | ||||||||
| Party 2 | 1 | 39,424 | 1 | 8 | - | ||||||||
| Party 3 | 2 | 7,223 | 4 | - | |||||||||
| Party 4 | 1 | 3,423 | 2 | - | |||||||||
Party 510,842
-
727,560
-
3. Receivable financing
December 31 December 31
2022 2021
| Bank acceptance draft |
,5962 11,752
,5962 11,752
As at December 31, 2022, bank acceptance endorsed but not yet due amounts to 186,322 thousand RMB.
- 269 -
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables
December 31
December 31
2022
2021
Other receivables11,611
21,496
11,611
21,496
(1) Other receivables
a. Other receivables by categories
December 31
December 31
2022
2021
| Other |
| 1 | 7,633 | 2 | 7,477 | ||||||
| Provision for expected credit losses |
(6,022)
(5,981)
11,611
21,496
b. Other receivables by aging
December 31, 2022Within 1 year (inclusive)
Over 1 year but within 2 years *
Over 2 years but within 3 years11,830
Over 3 years but within 4 years-
Over 4 years but within 5 years
Over 5 years4,964
17,633
* Include intergroup balance with Anpon.
- 270 -
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables - (cont'd)
(2) Other receivables - (cont'd)
c. Additions, recovery or reversal and written-off of provision for expected credit losses during theperiod:
| Year ended December 31 | , 20 | 22 | |||||||||||||||||
| Balance as of January 1, 20 | 22 | 5 | ,981 | ||||||||||||||||
| Addition during the period | 6 | 56 | |||||||||||||||||
| Written back during the period | ( | 615) | |||||||||||||||||
| Write | - | off during the period | |||||||||||||||||
-
Balance as of
| Balance as of | December 31 | , 20 | 22 |
6,022
d. Five largest other receivables at December 31 2022:
Name Closing balance
Proportion of other re-ceivables (%) Credit loss provision
Party 1
| Party 1 | 1 | 1,611 | 6 | 6 | - | ||||||||||||||||
| Party 2 | 3 | ,125 | 1 | 8 | 3 | ,125 | |||||||||||||||
| Party 3 | 5 | 48 | 3 | 5 | 48 | ||||||||||||||||
| Party 4 | 5 | 43 | 3 | 5 | 43 | ||||||||||||||||
Party 5
16,064 91 4,453
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 271 -
XV. Notes to major items in the Company's financial statements - (cont'd)
5. Long-term equity investments
December 31, 2022 December 31, 2021Amount balance
Impairment
loss Book value Amount balance
Impairmentloss Book value
Invest in
| subsidiaries |
17,511,352
-
17,511,352
17,511,352
-
17,511,352
17,511,352
-
17,511,352
17,511,352
-
17,511,352
Investments in subsidiaries
Invested unit
Openingbalance Increase
Decrease
Closing bal-ance
Current pro-vision Im-pairment loss
Balance pro-vision Im-pairment loss
| ADAMA Agricultural Solutions Ltd. | 15,890,213 | - | - | 15,890,213 | - | - | |||||||||||||||||||
| Adama Anpon | (Jiangsu) Ltd. | 450,449 | - | - | 450,449 | - | - | ||||||||||||||||||
| ADAMA Hiufeng (Jiangsu) Co. Ltd. | 848,140 | - | - | 848,140 | - | - | |||||||||||||||||||
Hubei Sanonda Foreign Trade Co.
| Ltd. | 11,993 | - | - | 11,993 | - | - |
Adama Huifeng (shanghai) Agricul-
| tural Technology Co., Ltd |
310,557
-
-
310,557
-
-
17,511,352
-
-
17,511,352
-
-
6. Operating Income and operating costs
Year ended December 31, 2022 Year ended December 31, 2021
Revenue
Operatingcosts Revenue
Operating
costs
| Main operations | 2 | ,255,382 | 1 | ,756,979 | 1 | ,113,595 | 1,033,996 | ||||||||||||||
| Other operations | |||||||||||||||||||||
2,5164 0,0862 43,824 28,236
,297,8982 ,777,0651 1,157,419 1,062,232
- 272 -
XV. Notes to major items in the Company's financial statements - (cont'd)
7. Notes to items in the cash flow statements
(1) Other cash received relevant to operating activities
Year ended Decem-
ber 31, 2022
Year ended De-cember 31, 2021
| Interest | income | 8 | ,605 | 1 | 4,491 | |||||||||||||
| Government subsidies | 1 | 3,409 | 1 | 5,470 | ||||||||||||||
Other
| Other |
2,2579 96,426
14,2711 126,387
(2) Other cash paid relevant to operating activities
Year ended De-cember 31, 2022
Year ended De-cember 31, 2021
| Professional services | 5 | 7,109 | 68,104 | ||||||||||
| Transportation and Commissions | 4 | 7,140 | 24,804 | ||||||||||
Other0,6542 15,107
24,9031 108,015
(3) Other cash received relevant to investing activities
Year ended De-cember 31, 2022
Year ended De-cember 31, 2021
Loans150,000 -
150,000 -
(4) Other cash paid relevant to investing activities
Year ended Decem-ber 31, 2022
Year ended Decem-ber 31, 2021
Loans250,000 -
250,000 -
(5) Other cash received relevant to financing activities
Year ended De-cember 31, 2022
Year ended De-cember 31, 2021
Deposit for issuing bills payables24,865 12,345
24,865 12,345
- 273 -
XV. Notes to major items in the Company's financial statements - (cont'd)
(6) Other cash paid relevant to financing activities:
Year ended De-cember 31, 2022
Year ended De-cember 31, 2021
| Deposit for issuing bills payables | 31,491 | 6,416 | |||||||||
Repayment of loan from others- 171,770
31,491 178,186
8. Supplementary information to cash flow statement
(1) Reconciliation of net profit to net cash flows generated from operating activities:
Year ended December 31
2022 2021
Net profit
| 23,354 | ( | 124,938 | ) |
Add: Assets impairment loss
| ( | 2,816 | ) | 9,369 |
Credit impairment loss
| 4 | 8 | 301 |
Depreciation of fixed assets and investment property
| 2 | 09,319 | 120,046 |
Depreciation of-right-of use assets
| 2 | ,611 | 754 |
Amortization of intangible assets
| 1 | 1,638 | 10,418 |
Gain on disposal of fixed assets, intangible assets and other long-
| term | |||||||||||
| assets | ( | 57,735 | ) | (14,965) |
Losses (gains) from changes in fair value
| 314,670 | 6,070 |
Financial expenses
| 54,209 | 31,974 |
Investment loss (income)
| ( | 13,811 | ) | (1,808) |
Decrease (increase) in deferred income tax assets
| ( | 14,715 | ) | 5,484 |
Decrease in inventory
| ( | 32,857 | ) | (88,462) |
Increase (decrease) in accounts receivable from operating activities
| ( | 468,030 | ) | 164,507 |
Increase in payables from operating activities15,2501(32,378)
Net cash flows generated from operating activities41,1351 86,372
(2) Net increase in cash and cash equivalents
Year ended December 31
2022 2021
| Closing balance of cash | 2 | 58,330 | 2 | 59,434 | ||||||||
Less: Opening balance of cash59,4342 1,022,758Net increase in cash and cash equivalents)1,104 ( )763,324 (
- 274 -
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Related parties and related parties transactions
(1) Information on parent Company
Companyname
Registeredplace Business nature
Registeredcapital (Thou-sand RMB)
Shareholdingpercentage
Percentageof voting rights
Syngenta
| Group |
Shanghai,
| China |
Production and salesof agrochemicals, fer-
| tilizers and GM seeds |
11,144,545
| 78.47% | 78.47% |
The ultimate controlling shareholder is Sinochem Holdings .
(2) Information on the subsidiaries of the Company
For information about the subsidiaries of the Company, refer to Note VII.1.
(3) Transactions with related parties
a. Transactions of goods and services
Year ended December 31
2022
2021
Summary of Purchase of goods/servicesreceived:
Related Party Relationship
Purchase of goods/services received
Common control un-der Sinochem Hold-ings 167,796
1,469
Subsidiary 112,665
136,070
Purchase of fixed assets and other assetsCommon control un-der Sinochem Hold-ings 4,150
51,044
Summary of Sales of goods:
Sale of goods Common control under
Sinochem Holdings 25,030
1,082
Subsidiary 981,757
552,023
Rendering of services Subsidiary 1,487
6,167
- 275 -
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
b. Guarantees
The Company as the guarantor
Amount ofguaranteed
loan
Inceptiondate ofguaranty
Maturity
date ofguaranty
Guarantycompleted(Y/ N)
59,500
2021.04.27
2022.04.26
Y
Subsidiary33,000
2021.12.16
2022.12.15
Y
30,000
2021.02.26
2022.02.24
Y
30,000
2021.06.25
2022.06.24
Y
45,000
2021.05.21
2022.05.18
Y
40,000
2021.03.18
2022.03.17
Y
100,000
2021.07.19
2022.07.10
Y
33,000
2021.11.05
2022.05.03
Y
20,000
2021.11.05
2022.05.04
Y
40,000
2021.12.01
2024.11.28
N
20,000
2022.12.16
2023.12.12
N
35,000
2022.01.01
2025.11.28
N
21,000
2022.02.28
2027.11.28
N
14,000
2022.03.28
2027.11.28
N
7,500
2022.05.20
2027.11.28
N
23,500
2022.06.26
2027.11.28
N
10,000
2022.10.31
2027.11.28
N
11,000
2022.11.30
2027.11.28
N
40,000
2022.01.18
2023.01.17
N
20,000
2022.11.17
2024.12.20
N
4,000
2022.01.25
2026.09.28
N
3,900
2022.02.28
2026.09.28
N
8,100
2022.07.12
2026.09.28
N
10,000
2022.08.11
2028.06.22
N
10,000
2022.08.31
2028.06.22
N
11,000
2022.10.28
2027.06.22
N
25,000
2022.11.23
2026.12.22
N
30,000
2022.03.30
2023.03.29
N
- 276 -
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
b. Guarantees - (cont'd)
The Company as the guarantee receiver
Guarantee provider
Amount ofguaranteed loan
Inception dateof guaranty
Maturity dateof guaranty
Guaranty com-pleted (Y / N)
Parent company333,000
21/04/2021
20/04/2028
N
71,841
01/06/2021
31/05/2028
N
During the reporting period, the Company paid a guarantee fee amounting to 451 thousand RMB(2021.1-12: 141) to the parent company.
c. Intercompany borrowings/lending
Related party
Borrowing/Lending amount
Commencementdate
Termination
date
Balance at
year end Note
Lending
| Lending |
Subsidiary 50,000
2022.5
2023.12
50,000
Fixed rate at 2.4%Subsidiary 40,000
2022.6
2023.12
40,000
Fixed rate at 2.4%Subsidiary 35,000
2022.6
2023.12
35,000
Fixed rate at 2.4%Subsidiary 125,000
2022.6
2024.5
125,000
Fixed rate at 2.4%
- 277 -
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
d. Receivables from and payables to related parties (including loans)
Receivable Items
December 31
December 31
2022
2021
Items
Related Party Relation-ship
BookBalance
Expectedcreditlosses
BookBalance
Expectedcreditlosses
Trade
| Trade | receivables |
Subsidiary 548,601
-
160,190
-
Non-current as-sets within one
| year |
Subsidiary 125,000
-
-
-
Other non-current
| assets |
Subsidiary 125,000
-
150,000
-
Other receivables Subsidiary 11,611
-
11,611
-
Trade receivables Common control under
Sinochem Holding 304
-
-
-
Prepayments Common control under
Sinochem Holding 537
-
10,000
-
Other non-currentassets
Common control underSinochem Holding 52
-
-
Payable ItemsDecember
December
Items Related Party Relationship 2022
2021
Trade payables
| Trade payables | Subsidiary |
5,686
Trade payables
Common control under SinochemHoldings 46,152
52,075
Other payables Subsidiary 395,152
241,049
Common control under SinochemHoldings 700
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 278 -
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
e. Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was nil (2131.12.: 189,978thousand RMB) Interest income of bank deposit for the current period was 67 thousand RMB (amountfor Year ended December 31, 2021 was 1,019 thousand RMB).
The closing balance of bank deposit in SinoChem Finance Corporation was 202,615 thousand RMB(2131.12.: nil) Interest income of bank deposit for the current period was 1,617 thousand RMB(amount for Year ended December 31, 2021 was nil).
According to the Entrusted Operation and Management Agreement signed between the Company andChina National Agrochemical Co., Ltd. (“CNAC”), the Company shall be entrusted with the manage-ment rights held by CNAC over Anhui Petroleum & Chemical Group Co., Ltd during the entrustmentperiod. The Company received an entrustment fee of 3,280 thousand RMB from CNAC during 2022(2021: nil).
ADAMA Ltd Annual Report 2022
- 279 -
Supplementary information(Expressed in RMB '000)
1. Extraordinary Gain and Loss
Year ended
December 31, 2022
Disposal of non-current assets 67,525
Government grants recognized through profit or loss 36,383
Recovery or reversal of expected credit losses which is assessed individually duringthe years 46,530
Custodian fees earned from entrusted operation 3,280
Other non-operating income or expenses other than the above 2,468
Other profit or loss that meets the definition of non-recurring profit or loss (6,128)
Tax effect(31,095)
118,963
2. Return on net assets and earnings per share (“EPS”)
The information of Return on net assets and EPS is in accordance with the Preparation Rules for Infor-mation Disclosure by Companies Offering Securities to the Public No. 9 – Calculation and Disclosure ofReturn on net assets and Earnings per share (2010 Amendment) issued by China Securities RegulatoryCommission.
Profit during the reporting period
| Weighted average | |
| rate of return on net | |
assets
Basic EPS
(RMB/share)
Diluted EPS
(RMB/share)
Net profit attributable to ordinary
| shareholders of the Company |
2.76
| 2.76 | 0.26 | N/A |
Net profit after deduction of extraordinarygains/losses attributable to ordinary
| shareholders of the Company |
2.23
| 2.23 | 0.21 | N/A |
ADAMA Ltd.
Legal Representative: Ignacio Dominguez
March 19, 2023