ADAMA Ltd. Semi-Annual Report 2023
ADAMA LTD.
SEMI-ANNUAL REPORT 2023
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.Please see important additional information and further details included in the Annex.
August 2023
ADAMA Ltd. Semi-Annual Report 2023
Section I - Important Notice, Table of Contents and Definitions
? The Company’s Board of Directors, Board of Supervisors, directors, supervisors and
senior managers confirm that the content of the Report is true, accurate and completeand contains no false statement, misleading presentations or material omissions, andassume joint and several legal liability arising therefrom.? Steve Hawkins, the person in charge of the Company (President and Chief Executive
Officer) as well as its legal representative, and Efrat Nagar, the person leading theaccounting function (Chief Financial Officer), hereby assert and confirm thetruthfulness, accuracy and completeness of the Financial Report.? All the Company’s directors attended the board meeting for the review of this Report.? The forward-looking information described in this Report, such as future plans,
development strategy, market trends and their effect etc., does not constitute, in anymanner whatsoever, a substantial commitment of the Company to investors. Investorsand other relevant people are cautioned to be sufficiently mindful of investment risksas well as the difference between plans, forecasts and commitments.? The Company has described its possible risks in “X - Risks Facing the Company and
Countermeasures” under Section III herein. The major risks of the Company include,among others, exchange rate fluctuations; exposure to interest rate, Israel CPI andNIS exchange rate fluctuations; fluctuations in raw material inputs and prices, and insales. Investors and other relevant people are cautioned to be sufficiently mindful ofinvestment risks. For the complete “Risks Facing the Company and Countermeasures”of the Company, please see the relevant section below.? For the Reporting Period, the Company does not plan to distribute cash dividends or
bonus shares or convert capital reserve into share capital.? This Report and its Abstract have been prepared in both Chinese and English. Should
there be any discrepancies between the two versions, the Chinese version shall prevail.
ADAMA Ltd. Semi-Annual Report 2023
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 ...... 9
Section IV – Corporate Governance ...... 36
Section V – Environmental and Social Responsibilities ...... 38
Section VI - Significant Events ...... 51
Section VII - Share Changes and Shareholders ...... 80
Section VIII - Preferred stock ...... 87
Section IX - Bonds ...... 88
Section X - Financial Report ...... 89
ADAMA Ltd. Semi-Annual Report 2023
Documents Available for Reference
(I) Duly signed Financial Statements by the Legal Representative and Accounting Principal as well as Head of theAccounting Organ;(II) 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. Semi-Annual Report 2023
Definitions
| General Terms | Definition |
Company, the Company
| Company, the Company | ADAMA Ltd. |
Adama Solutions
| Adama Solutions | Adama Agricultural Solutions Ltd., a wholly-owned subsidiary of the Company, incorporated in Israel according to its laws |
Anpon, ADAMA Anpon
| Anpon, ADAMA Anpon | ADAMA Anpon (Jiangsu) Ltd., a wholly-owned subsidiary of the Company, incorporated in China according to its laws |
ADAMA Huifeng
| ADAMA Huifeng | ADAMA Huifeng (Jiangsu) Ltd., a 51% owned subsidiary of the Company, incorporated in China according to its laws |
Board of Directors/Board
| Board of Directors/Board | The Board of Directors of the Company |
Board of Supervisors
| Board of Supervisors | The Board of Supervisors of the Company |
Group, the Group, ADAMA
| Group, the Group, ADAMA | The Company, including all its subsidiaries, unless expressly stated otherwise |
ChemChina
| ChemChina | China National Chemical Co., Ltd. |
ChemChina-SyngentaTransaction
| ChemChina-Syngenta Transaction | The acquisition of Syngenta AG by ChemChina in 2017 |
CNAC
| CNAC | China National Agrochemical Co., Ltd., the indirect controlling shareholder of the Company, a wholly-owned subsidiary of ChemChina |
CSRC
| CSRC | China Securities Regulatory Commission |
SZSE
| SZSE | Shenzhen Stock Exchange |
SASAC
| SASAC | State Assets Supervision and Administration Commission of China |
Syngenta Group
| Syngenta Group | Syngenta Group Co., Ltd, the controlling shareholder of the Company as of June 15, 2020, a wholly-owned subsidiary of CNAC |
Sinochem Holdings
| Sinochem Holdings | Sinochem Holdings Corporation Ltd. |
Sinochem Group
| Sinochem Group | Sinochem Holdings including all its subsidiaries unless otherwise indicated or the context otherwise requires |
Report
| Report | This 2023 Semi-Annual Report |
Reporting Period, this Period
| Reporting Period, this Period | January 1, 2023 - June 30, 2023 |
2022 Annual Report
| 2022 Annual Report | The Company’s 2022 Annual Report published on March 21, 2023 |
ADAMA Ltd. Semi-Annual Report 2023
Section II - Corporate Profile and Financial Results
I. Corporate Information
| Stock name | ADAMA A, ADAMA B | Stock code | 000553, 200553 |
| Stock exchange | Shenzhen Stock Exchange | ||
| Company name in Chinese | 安道麦股份有限公司 | ||
| Abbr. | 安道麦 | ||
| Company name in English (if any) | ADAMA Ltd. | ||
| Abbr. (if any) | ADAMA | ||
| Legal representative | Steve Hawkins | ||
II. Contact Information
III. Other Information
1. Ways to Contact the Company
Indicate by tick mark whether any changes occurred to the registered address, office address and theirpostal codes, website address and email address of the Company during the Reporting Period.
□ Applicable √ Not applicable
No changes occurred to the said information during the Reporting Period, which can be found in the 2022Annual Report.
2. Information Disclosure Media and Place where this Report is KeptIndicate by tick mark whether any changes occurred to the information disclosure media and the placewhere this Report is kept during the Reporting Period.
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by theCSRC for the publication of this Report and the location where this Report is kept did not change during
| Board Secretary | Securities Affairs Representative & Investor Relations Manager | ||
| Name | Guo Zhi | Wang Zhujun | |
| Address | 6/F, No.7 Office Building, No.10 Courtyard, Chaoyang Park South Road, Chaoyang District, Beijing | ||
| Tel. | 010-56718110 | 010-56718110 | |
| Fax | 010-59246173 | 010-59246173 | |
| irchina@adama.com | irchina@adama.com | ||
ADAMA Ltd. Semi-Annual Report 2023
the Reporting Period. Said information can be found in the 2022 Annual Report.
3. Other Relevant Documents
Indicate by tick mark whether any changes occurred to the relevant documents during the ReportingPeriod.
□ Applicable √ Not applicable
IV. Main Accounting Data and Financial Results
Indicate by tick mark whether the Company needs to retroactively adjust or restate any of its accountingdata.
□ Yes √ No
| January - June 2023 | January - June 2022 | YoY +/- (%) | |
| Operating revenues (RMB’000) | 17,253,201 | 18,795,828 | -8.21% |
| Net profit attributable to shareholders of the Company (RMB’000) | (242,156) | 732,098 | -133.08% |
| Net profit attributable to shareholders of the Company excluding non-recurring profit and loss (RMB’000) | (304,966) | 655,023 | -146.56% |
| Net cash flow from operating activities (RMB’000) | (64,876) | (1,345,861) | 95.18% |
| Basic EPS (RMB/share) | (0.1039) | 0.3142 | -133.07% |
| Diluted EPS (RMB/share) | NA | NA | NA |
| Weighted average return on net assets | -1.03% | 3.35% | -4.38% |
| End of Reporting Period | End of last year | +/- (%) | |
| Total assets (RMB’000) | 59,901,902 | 57,980,489 | 3.31% |
| Net assets attributable to shareholders (RMB’000) | 23,644,510 | 23,124,655 | 2.25% |
V. Differences in Accounting Data under Domestic and Foreign Accounting
Standards
1. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under
Chinese and International Accounting Standards
□ Applicable √ Not applicable
None during the Reporting Period.
2. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under
Chinese and Foreign Accounting Standards
□ Applicable √ Not applicable
None during the Reporting Period.
3. Reason for accounting data differences under Chinese and Foreign Accounting Standards
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2023
VI. Non-Recurring Profit/Loss
√ Applicable □ Not applicable
Unit: RMB’000
| Item | Reporting Period | Note |
| Gains/losses on the disposal of non-current assets (including the offset part of asset impairment provisions) | 23,402 | |
| Government grants recognized through profit or loss (excluding government grants closely related to regular operation of the Company and continuously given at a fixed quota or amount in accordance with certain standards) | 19,053 | |
| Recovery or reversal of provision for bad debts which is assessed individually during the years | 27,325 | |
| Other non-operating income and expenses other than the above | 13,569 | |
| Other profit or loss that meets the definition of non-recurring profit or loss | (2,751) | Mainly provision for early retirement plan of employees at the Company’s Israeli manufacturing facilities. |
| Less: Income tax effects | 17,788 | |
| Total | 62,810 |
Details of other profit and loss items that meet the definition of non-recurring profit or loss.
√ Applicable □ Not applicable
Mainly provisions for early retirement plan of employees at the Company’s Israeli manufacturing facilitiesas explained above in the note.
Explanation whether the Company has classified an item as non-recurring profit/loss according to thedefinition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering TheirSecurities to the Public - Non-Recurring Profit and Loss, and reclassified any non-recurring profit/lossitem given as an example in the said explanatory announcement to recurrent profit/loss
□ Applicable √ Not applicable
No such cases in the Reporting Period.
ADAMA Ltd. Semi-Annual Report 2023
Section III - Performance Discussion and AnalysisI. Main Business of the Company during the Reporting PeriodThe 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 andcommercialization of a wide range of crop protection products, that are largely off-patent. The Groupprovides solutions to farmers to combat weeds, insects and disease, and sells its products in over 100countries, through approximately 60 subsidiaries worldwide.The Group's business model integrates end-customer access, regulatory expertise, state-of-the art globalR&D, production and formulation facilities, thereby providing the Group a significant competitive edgeand allowing it to launch new and differentiated products that meet local farmers and customer needs inkey markets.The Group's primary operations are global, spanning activities in Europe, Africa & Middle East (EAME),North America, Latin America and Asia-Pacific (including China)
.The Group also utilizes its expertise to adapt such products also for the development, manufacturing andcommercialization of similar products for non-agricultural purposes (Consumer and ProfessionalSolutions).In addition, the Group leverages its core capabilities in the agricultural and chemical fields and operatesin several other non-agricultural areas, none of which, individually, is material for the Group. Theseactivities, collectively reported as Intermediates and Ingredients, include primarily, (a) the manufacturingand marketing of dietary supplements, food colors, texture and flavor enhancers, and food fortificationingredients; (b) fragrance products for the perfume, cosmetics, body care and detergents industries; (c)the manufacturing of industrial products and (d) other non-material activities.
ADAMA Group is a distinctive member of Syngenta Group, a world leader in agricultural inputs, spanningcrop protection, seeds, fertilizers, additional agricultural and digital technologies, as well as an advanceddistribution network in China.The General Crop Protection Market EnvironmentOver Q2 2023 the price trend of crop commodities was mixed, with corn, wheat and soybean pricescontinuing to decline while sugar and rice prices increased. Overall, crop commodity prices remain abovethe 10-yr average and global planted area remains high compared to previous years, supporting healthyinput demand from farmers.Despite relatively healthy farmer consumption, crop protection sales into the distribution channel haveslowed down significantly due to high channel inventory levels, following channel loading in 2022. Inaddition, the distribution channel across all geographies is opting to buy crop inputs on a "just in time"basis and striving to carry minimal inventory given wide high interest rate environment outside China andabundant supply of CP products. This trend, coupled with the ongoing decline in AI prices coming out ofChina, is putting pressure on crop protection prices.
As of 2023, the India, Middle East & Africa (IMA) region has been reorganized such that the countries formerly included in thisregion will now be included in the Europe region (renamed EAME) or in the Asia Pacific region.
ADAMA Ltd. Semi-Annual Report 2023
Crop Protection ProductsAs described within the Company’s 2022 annual report, the Group is focused on the development,manufacturing and commercialization of largely off-patent crop protection products, which are generallyherbicides, insecticides and fungicides, which protect agricultural and other crops against weeds, insectsand disease, respectively. Since the publication of the 2022 annual report, no major changes occurredwith that respect. For details, please refer to 2022 annual report.Please see important additional information and further details included in the Annex.
ADAMA Ltd. Semi-Annual Report 2023
II. Core Competitiveness Analysis
No significant changes occurred to the core competitiveness of the Company during the Reporting Period.III. Analysis of Main BusinessGeneral Description
Whether it is the same as main business of the Company during the Reporting Period disclosed or not?
√ Yes □ No
Please refer to the relevant information in section “I. Main Business of the Company during the ReportingPeriod” above.Year-on-year changes of main financial data:
| 2023 Apr-June (000’RMB) | Same period of last year (000’RMB) | +/-% | 2023 Apr-June (000’USD) | Same period of last year (000’USD) | +/-% | |
| Operating revenues | 8,642,625 | 9,779,837 | -11.63% | 1,233,158 | 1,479,232 | -16.64% |
| Cost of goods sold | 6,865,895 | 7,141,561 | -3.86% | 979,683 | 1,080,253 | -9.31% |
| Selling and Distribution expenses | 1,095,906 | 1,169,181 | -6.27% | 156,372 | 176,843 | -11.58% |
| General and administrative expenses | 194,777 | 359,487 | -45.82% | 27,779 | 54,349 | -48.89% |
| R&D expenses | 127,476 | 144,701 | -11.90% | 18,188 | 21,886 | -16.90% |
| Financial Expenses (income) | 249,143 | (179,893) | 238.50% | 35,505 | (27,312) | 230.00% |
| Gain (loss) from Changes in Fair Value | (430,092) | (744,824) | -42.26% | (61,367) | (112,657) | -45.53% |
| Total Net Financial Expenses | 679,235 | 564,931 | 20.23% | 96,872 | 85,345 | 13.51% |
| Profit (loss) before tax | (389,700) | 379,387 | -202.72% | (55,586) | 57,441 | -196.77% |
| Tax expenses (income) | (64,271) | 74,941 | -185.76% | (9,171) | 11,334 | -180.92% |
| Net income (loss) | (325,429) | 304,446 | -206.89% | (46,415) | 46,107 | -200.67% |
| EBITDA | 806,267 | 1,479,823 | -45.52% | 115,014 | 223,778 | -48.60% |
| Net cash flows from operating activities | 2,840,293 | 467,985 | 506.92% | 405,262 | 70,786 | 472.52% |
| Net cash flows used in investing activities | (481,744) | (705,151) | 31.68% | (68,737) | (106,656) | 35.55% |
| Net cash flows used in financing activities | (1,449,755) | (420,688) | -244.62% | (206,855) | (63,630) | -225.09% |
| Net increase in cash and cash equivalents | 1,091,971 | (483,583) | 325.81% | 126,311 | (103,376) | 222.19% |
ADAMA Ltd. Semi-Annual Report 2023
| Reporting Period (000’RMB) | Same period of last year (000’RMB) | +/-% | Reporting Period (000’USD) | Same period of last year (000’USD) | +/-% | |
| Operating revenues | 17,253,201 | 18,795,828 | -8.21% | 2,491,683 | 2,898,953 | -14.05% |
| Cost of goods sold | 13,358,727 | 13,822,755 | -3.36% | 1,928,680 | 2,132,317 | -9.55% |
| Selling and Distribution expenses | 2,161,199 | 2,159,089 | 0.10% | 312,074 | 332,721 | -6.21% |
| General and administrative expenses | 461,146 | 642,313 | -28.21% | 66,708 | 98,883 | -32.54% |
| R&D expenses | 262,378 | 274,738 | -4.50% | 37,905 | 42,363 | -10.52% |
| Financial Expenses (income) | 455,855 | (438,224) | 204.02% | 65,727 | (67,991) | 196.67% |
| Gain (loss) from Changes in Fair Value | (782,218) | (1,341,717) | -41.70% | (112,834) | (206,648) | -45.40% |
| Total Net Financial Expenses | 1,238,073 | 903,493 | 37.03% | 178,561 | 138,657 | 28.78% |
| Profit (loss) before tax | (318,589) | 833,374 | -138.23% | (45,200) | 128,935 | -135.06% |
| Tax expenses (income) | (76,433) | 101,276 | -175.47% | (10,948) | 15,482 | -170.71% |
| Net income | (242,156) | 732,098 | -133.08% | (34,252) | 113,453 | -130.19% |
| EBITDA | 1,940,990 | 2,772,062 | -29.98% | 280,866 | 427,274 | -34.27% |
| Net cash flows from (used in) operating activities | (64,876) | (1,345,861) | 95.18% | (19,357) | (214,835) | 90.99% |
| Net cash flows used in investing activities | (1,121,109) | (1,278,869) | 12.34% | (162,187) | (196,998) | 17.67% |
| Net cash flows provided by financing activities | 1,401,023 | (94,095) | 1588.98% | 209,817 | (12,203) | 1819.39% |
| Net increase (decrease) in cash and cash equivalents | 345,284 | (2,568,738) | 113.44% | 25,853 | (427,928) | 106.04% |
Major changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
None during the Reporting Period.
ADAMA Ltd. Semi-Annual Report 2023
Analysis of Financial Highlights
(1) Operating Revenues
Revenues in the second quarter declined by approximately 17% (-12% in RMB terms; -15% in CERterms) to $1,233 million, reflecting a decrease of 10% in volumes and a decrease of 5% in prices.The lower sales reflect market dynamics of channel destocking in light of high interest rates and a"wait and see" approach, given the market overstocking in 2022 and declining active ingredient andraw material costs impacting the crop protection market pricing. Additionally, sales were alsoimpacted by negative weather conditions in certain geographies.These results brought the revenues in the first half of 2023 to $2,492 million, a decline ofapproximately 14% (-8% in RMB terms; -11% in CER terms), reflecting a decrease of 9% in volumesand a decrease of 2% in prices. This is in comparison to the record sales the Company achieved in2022, which reflected the high demand due to supply uncertainty in the market.
Unit: RMB’000
| 2023H1 | 2022H1 | YoY +/-% | |||
| Amount | Ratio of the operating revenue | Amount | Ratio of the operating revenue | ||
| Total operating revenue | 17,253,201 | 100.0% | 18,795,828 | 100.0% | -8.2% |
| Classified by industries | |||||
| Manufacture of chemical raw materials and chemical products | 17,253,201 | 100.0% | 18,795,828 | 100.0% | -8.2% |
| Classified by products | |||||
| Herbicides | 7,630,195 | 44.2% | 8,829,597 | 47.0% | -13.6% |
| Fungicides | 3,475,688 | 20.1% | 3,193,019 | 17.0% | 8.9% |
| Insecticides | 4,749,282 | 27.5% | 4,820,001 | 25.6% | -1.5% |
| Ingredients and Intermediates (Formerly referred to as Non-Agro) | 1,398,036 | 8.1% | 1,953,211 | 10.4% | -28.4% |
| Classified by regions | |||||
| Europe, Africa & Middle East (EAME)* | 5,286,856 | 30.6% | 5,136,114 | 27.3% | 2.9% |
| North America | 3,018,617 | 17.5% | 3,639,600 | 19.4% | -17.1% |
| Latin America | 3,902,210 | 22.6% | 3,993,953 | 21.2% | -2.3% |
| Asia-Pacific* | 5,045,518 | 29.2% | 6,026,161 | 32.1% | -16.3% |
* 2022 denote proforma sales. As of 2023, the India, Middle East & Africa (IMA) region has been reorganized such thatthe countries formerly included in this region are now included in the Europe region (renamed EAME) or in the AsiaPacific region.Note: the sales split per product category is provided for convenience purposes only, and is not representative of the waythe Company is managed or in which it makes its operational decisions.
ADAMA Ltd. Semi-Annual Report 2023
Regional Sales Performance in USD
Note: the following analysis of regional sales performance is based on USD results, and the numbers in this table may notsum due to rounding.
Europe, Africa & Middle East (EAME): Sales in EAME in constant exchange rates were lower in thequarter due to a decrease in volumes exacerbated by negative weather conditions and high inventorylevels in the market, and higher in the half year period, reflecting generally higher prices in comparisonto the same periods in 2022. While prices were higher on a year-to-year basis, market prices are currentlypresenting a downward trend. The fungicide Soratel
? based on ADAMA’s Asorbital
?
formulation masterytechnology, continues to be well received in the UK.North America: Consumer & Professional Solutions - Sales were impacted by lower demand followinginflationary pressures and high channel inventories.In the US Ag market the channel is lowering inventory levels due to high interest rates with demandfocusing on "just-in-time" supply from producers. Sales were also impacted by drought in the Mid-Westand pressure on prices following channel destocking.Sales in Canada increased as the Company expanded its product portfolio during 2022, while pricing inthe market was more insulated with overall market inventories better controlled.Latin America: Brazil – strong competition and channel destocking put pressure on prices led to adecline in sales, while the Company is successfully consuming the high-cost inventory accumulated.In LATAM, sales are supported by the strong performance of the biologicals portfolio. Looking forward,El Ni?o is expected to have a positive effect on rainfall in the South of LATAM.Asia-Pacific: In China, the market is experiencing oversupply and pricing pressure impacting both thebranded and industrial sales, while the branded portfolio was significantly supported by the sales ofdifferentiated products.Sales in the wider APAC & Pacific region were negatively impacted by strong competition from Chinaand by the commencement and negative impact of El Ni?o.In India sales were impacted by the delayed Monsoon season.
| Q2 2023 $m | Q2 2022 $m | Change USD | H1 2023 $m | H1 2022 $m | Change USD |
Europe, Africa & Middle East (EAME)*
| Europe, Africa & Middle East (EAME)* | 334 | 365 | -8.4% | 765 | 794 | -3.7% |
North America
| North America | 225 | 278 | -19.1% | 436 | 562 | -22.4% |
Latin America
| Latin America | 329 | 379 | -13.1% | 562 | 613 | -8.3% |
Asia Pacific
| Asia Pacific | 345 | 458 | -24.6% | 729 | 930 | -21.6% |
Of which China
| Of which China | 141 | 213 | -33.6% | 323 | 449 | -28.1% |
Total
| Total | 1,233 | 1,479 | -16.6% | 2,492 | 2,899 | -14.0% |
ADAMA Ltd. Semi-Annual Report 2023
(2) Cost of Goods Sold:
List of the industries, products or regions which exceed 10% of the operating revenues oroperating profits of the Company as at the Reporting Period
Unit: RMB’000
| Operating revenues | Cost of goods sold | Gross Margin (%) | YoY increase/decrease of the operating revenues | YoY increase/decrease of the cost of goods sold | YoY increase/decrease of the gross margin | |
| Classified by industries | ||||||
| Manufacturing chemical raw materials and chemical products | 17,253,201 | 13,358,727 | 22.6% | -8.2% | -3.4% | -3.9% |
| Classified by products | ||||||
| Crop Protection | 15,855,165 | 12,109,321 | 23.6% | -5.9% | -1.9% | -3.1% |
| Ingredients and Intermediates | 1,398,036 | 1,249,406 | 10.6% | -28.4% | -15.7% | -13.5% |
If the scope of the Company's main business was adjusted during the Reporting Period, the Company's annual financialdata of main business according to the adjusted scope at the end of the year is disclosed as follows:
□ Applicable √ Not applicable
The cost of goods sold in the first half of the year reflected the decline in sales, high-cost inventory and the negative impactof exchange rates moderated by lower transportation and logistics costs. These impacts on the gross profit were slightlymoderated by the improvement in the Company's sales mix of higher margin products.
(3) Operating Expenses:
Operating expenses include Sales and Marketing, General and Administration and R&D.The Company recorded certain non-operational charges within its operating expenses amountingto RMB 39 million ($ 6 million) in Q2 2023 in comparison to RMB 146 million ($ 22 million) in Q22022, and RMB 104 million ($ 15 million) in H1 2023 in comparison to RMB 182 million ($ 28 million)in H1 2022, mainly as follows:
(i) Non-cash amortization charges in respect of Transfer assets received and written-up related tothe 2017 ChemChina-Syngenta acquisition. The proceeds from the Divestment of crop protectionproducts in connection with the approval by the EU Commission of the acquisition of Syngenta byChemChina, net of taxes and transaction expenses, were paid to Syngenta in return for the transferof a portfolio of products in Europe of similar nature and economic value. Since the productsacquired from Syngenta are of the same nature, and with the same net economic value as thosedivested, the Divestment and Transfer transactions had no net impact on the underlying economicperformance of the Company. These additional amortization charges will continue until 2032 but ata reducing rate, yet will still be at a meaningful level until 2028; (ii) Charges related to the non-cashamortization of intangible assets created as part of the Purchase Price Allocation (PPA) onacquisitions, with no impact on the ongoing performance of the companies acquired; and (iii)Incentive plans - share-based compensation.
ADAMA Ltd. Semi-Annual Report 2023
Excluding the impact of the abovementioned non-operational items, the lower operating expensesin the second quarter and half year period of 2023 were mainly due to Company OPEXmanagement measures, an adjustment of a provision for success-based compensation, and thepositive impact of exchange rates. Additionally, in the first half year of 2023 the company did notincrease the doubtful debt provision that was recorded for trade receivables in Ukraine during thefirst half year of 2022.
(4) Financial Expenses:
“Financial Expenses” alone mainly reflect interest payments on corporate bonds and bank loansas well as foreign exchange gains/losses on the bonds and other monetary assets and liabilitiesbefore the Company carries out any hedging. The impact of Financial Expenses (before hedging)is RMB 456 million ($66 million) for the first half of 2023 compared to an income of RMB 438 million($68 million) for the corresponding period in 2022.Given the global nature of its operational activities and the composition of its assets and liabilities,the Company, in the ordinary course of its business, uses foreign currency derivatives (forwardsand options) to hedge the cash flow risks associated with existing monetary assets and liabilitiesthat may be affected by exchange rate fluctuations. “Gains/Losses from Changes in Fair Value”amounted to a net loss of RMB 782 million ($113 million) in the first half of 2023, mainly due tohedging transactions, compared with a net loss of RMB 1,341 million ($207 million) in thecorresponding period in 2022.The aggregate of Financial Expenses and Gains/Losses from Changes in Fair Value(hereinafter as “Total Net Financial Expenses”), which more comprehensively reflects thefinancial expenses of the Company in supporting its main business and protecting its monetaryassets/liabilities, amounts to RMB 1,238 million ($179 million) in the first half of 2023 comparedwith RMB 903 million ($139 million) in the corresponding period in 2022.The higher financial expenses were mainly driven by higher bank interest expenses due to thesharp increase in interest rates and an increase in short-term loans as well as higher hedging costson exchange rates. These financial expenses were moderated by the net effect of lower Israeli CPIon the ILS-denominated, CPI-linked bonds.
(5) Cash Flow:
Net cash flows from (used in) operating activities: Operating cash flow of $405 million (RMB2,840 million) was generated in the quarter and $19 million (RMB 65 million) was used in the half-year period, compared to $71 million (RMB 468 million) generated in the quarter and $215 million(RMB 1,346 million) used in the corresponding periods last year, respectively. The higher cash flowgenerated in the quarter was primarily due to a decrease in the procurement of goods.Net cash used in investing activities was $69 million (RMB 482 million) in the quarter and $162million (RMB 1,121 million) in the half-year period, compared to $107 million (RMB 705 million) and$197 million (RMB 1,279 million) in the corresponding periods last year, respectively. The cashused in investing activities in the second quarter and first half period of 2023 included investmentsin new production facilities in ADAMA Anpon, investments in manufacturing capabilities in Israeland investments in intangible assets relating to ADAMA's global registrations as well as theacquisition of AgriNova New Zealand in Q1 2023.Free cash flow of $288 million (RMB 2,021 million) was generated in the second quarter and $254
ADAMA Ltd. Semi-Annual Report 2023
million (RMB 1,689 million) consumed in the half-year period compared to $83 million (RMB 551million) and $469 million (RMB 2,999 million) consumed in the corresponding periods last year,respectively, reflecting the aforementioned operating and investing cash flow dynamics.Cash Flow from Financing Activities was $207 million (RMB 1,450 million) consumed in thequarter and $210 million (RMB 1,401 million) generated in the half-year period, compared to $64million (RMB 421 million) and $12 million (RMB 94 million) consumed in the corresponding periodslast year, respectively, mainly driven by the paydown of short terms loans due to the positive freecash flow in the quarter.
ADAMA Ltd. Semi-Annual Report 2023
IV. Analysis of Non-Core Business
√ Applicable □ Not applicable
Unit: RMB’000
| Amount | Proportion in total profit | Reasons | Whether sustained | |
| Investment income | 10,090 | -3.17% | No | |
| Gain/loss from change of Fair Value | (782,218) | 245.53% | Mainly from changes in fair value and realization of derivatives. See explanation of financial expenses | No |
| Asset impairment losses | 105,887 | 33.24% | No | |
| Gain or loss from disposal of assets | 23,402 | -7.35% | No | |
| Non-operating income | 36,073 | -11.32% | No | |
| Non-operating loss | 11,015 | 3.46% | No |
V. Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB’000
| End of Reporting Period | End of last year | Change in percentage (%) | Reason for significant change | |||
| Amount | As a percentage of total assets (%) | Amount | As a percentage of total assets (%) | |||
| Cash at bank and on hand | 4,604,523 | 7.69% | 4,290,961 | 7.40% | 0.29% | |
| Accounts receivable | 9,363,758 | 15.63% | 9,018,375 | 15.55% | 0.08% | |
| Inventories | 16,667,957 | 27.83% | 16,927,241 | 29.19% | -1.36% | |
| Investment property | 22,963 | 0.04% | 3,168 | 0.01% | 0.03% | |
| Long term equity investments | 29,272 | 0.05% | 26,368 | 0.05% | 0.00% | |
| Fixed assets | 9,476,560 | 15.82% | 8,952,184 | 15.44% | 0.38% | |
| Construction in progress | 3,147,493 | 5.25% | 2,961,401 | 5.11% | 0.14% | |
| Right of use assets | 640,996 | 1.07% | 555,889 | 0.96% | 0.11% | |
| Short-term loans | 6,341,677 | 10.59% | 3,342,921 | 5.77% | 4.82% | Supporting the increased working capital. |
| Contract liabilities | 1,446,129 | 2.41% | 1,776,573 | 3.06% | -0.65% | |
| Lease liabilities | 498,967 | 0.83% | 431,076 | 0.74% | 0.09% | |
ADAMA Ltd. Semi-Annual Report 2023
2. Main Overseas Assets
√ Applicable □ Not applicable
| Specific contents of the assets | Reason | Scale (Amount) of the assets (RMB’000) | Location | Operation /Management mode | Control measures to guarantee safety of the assets | Net Profit of the assets (RMB’000) | Proportion of overseas assets out of total net assets (%) | Significant impairment risk? |
| Equity investment in Adama Solutions | Acquired through Major Assets Restructuring | 20,463,717 | Israel and globally | Corporate Governance | Corporate Governance | (229,154) | 87% | No |
| Other explanations | N/A | |||||||
3. Assets and Liabilities Measured at Fair Value
√ Applicable □ Not applicable
Unit: RMB’000
| Item | Opening balance | Profit/loss on fair value changes in the Reporting Period | Cumulative fair value changes charged to equity | Impairment provided in the Reporting Period | Purchased in the Reporting Period | Sold in the Reporting Period | Others | Closing balance |
| Financial assets | ||||||||
| 1.Financial assets held for trading (excluding derivative financial assets) | 1,685 | - | - | - | 245 | - | - | 1,930 |
| 2.Derivative financial assets (including long term) | 233,809 | (636,076) | 30,319 | - | 573,688 | (9,599) | - | 192,141 |
| 3.Other equity investments | 158,341 | - | 4,564 | - | - | - | - | 162,905 |
| Total financial assets | 393,835 | (636,076) | 34,883 | - | 573,933 | (9,599) | - | 356,976 |
| Other | 189,601 | - | - | - | 66,056 | (33,901) | - | 221,756 |
| Total of above | 583,436 | (636,076) | 34,883 | - | 639,989 | (43,500) | - | 578,732 |
| Financial liabilities | 545,516 | 190,142 | - | - | - | - | - | 735,658 |
Significant changes in the measurement attributes of the main assets in the Reporting Period
□ Yes √ No
4. Limitation on Asset Rights as of End of the Reporting PeriodAt the end of this Reporting Period, restricted assets included RMB 33,986,000 - restricted cash, most ofwhich as guarantee for bank acceptance bills; and RMB 195,920,000 - other non-current assets, mainlyas guarantee for asset securitization and lawsuits.
ADAMA Ltd. Semi-Annual Report 2023
VI. Investments Made
1. Overall Condition of the Total Investments Made
√ Applicable □ Not applicable
| Investment during the Reporting Period (RMB'000) | Investment during the Same Period Last Year (RMB'000) | +/-% YoY |
| 29,389,828 | 20,936,565 | 40.38% |
2. Significant Equity Investments during the Reporting Period
√ Applicable □ Not applicable
ADAMA Ltd. Semi-Annual Report 2023
| Name of the Invested Company | Main Business | Mode of Investment | Investment Amount (RMB'000) | Shareholding Proportion | Source of Funds | Investment Partner | Investment Term | Types of Products | Progress as of the Balance Sheet Date | Estimated Return | Profit or Loss on Investments for the Reporting Period (RMB'000) | Involved in Litigation or Not | Date of Disclosure | Disclosure Index (if applicable) |
| Agrinova New Zealand Limited | Agrochemical | Acquisition | 170,155 | 100% | Self-raised funds | None | Long-term | Crop protection products, growth regulators, bio-solutions and plant nutrients for the horticultural market | Completed | -- | 6,286 | No | Jan 6, 2023 | Announcement on Closing of the Acquisition of 100% Equity of Agrinova New Zealand Limited by a Wholly Owned Subsidiary (Announcement No. 2023-1) disclosed at www.cninfo.com |
| Adama Chile S.A. | Agrochemical | Acquisition | 116,311 | 100% | Self-raised funds | None | Long-term | Chemical crop protection products and bio-stimulants | Completed | -- | --* | No | March 14, 2023 | Announcement on the Acquisition of Equity Held by Minority Shareholders of a Controlled Subsidiary (Announcement No. 2023-7) disclosed at www.cninfo.com |
| Total | -- | -- | 286,466 | -- | -- | -- | -- | -- | -- | -- | 6,286 | -- | -- | -- |
ADAMA Ltd. Semi-Annual Report 2023
*Note: The Company previously indirectly held 60% equity of Adama Chile S.A., and consolidated Adama Chile S.A. inthe financial statements as a subsidiary. After the acquisition, the Company indirectly held 100% equity of Adama ChileS.A.
3. Significant Non-Equity Investments executed during the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Investments in Securities
□ Applicable √ Not applicable
None during the Reporting Period.
ADAMA Ltd. Semi-Annual Report 2023
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
(1) Investment in Derivative Financial Instruments for Hedging during the Reporting Period
√ Applicable □ Not Applicable
Unit: 000 RMB
| Investment Type | Opening Balance | Profit/loss on fair value changes in the Reporting Period | Cumulative fair value changes charged to equity | Purchased in the Reporting Period | Sold in the Reporting Period | Closing Balance | Percentage of investment amount divided by net asset at end of the period |
| Option | 3,490,710 | -247,866 | -243,643 | 8,899,295 | -3,490,710 | 8,899,295 | 37.64% |
| Forward | 22,863,927 | -578,354 | -568,501 | 20,490,533 | -22,863,927 | 20,490,533 | 86.66% |
| Total | 26,354,637 | -826,220 | -812,144 | 29,389,828 | -26,354,637 | 29,389,828 | 124.30% |
| Explanation of accounting policies and principles for hedging, and any significant changes compared with last reporting period | 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 accounting policies for hedging during the reporting period. | ||||||
| Explanations about gain/loss during the Reporting Period | The loss during the year was RMB 812,144,000 compared to a loss of RMB 1,324,948,000 in the same period last year. The loss was mainly due to the devaluation of the ILS of 5.1% compared to 13.9% last year. | ||||||
| Explanations for hedging effect | Despite of the loss incurred from the hedging transactions, the Group has effectively mitigated the impact from the exchange rate fluctuations during the year. | ||||||
| Source of fund for the investment | Internal. | ||||||
| Risk and control analysis for the Reporting Period (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | The aforesaid refers to short term hedging currency transactions made with banks. The Group’s transactions are not traded in the market. The Transactions are between the applicable company in the Group and the applicable bank until the expiration date of the transaction, therefore no market risk is involved. Regarding credit and liquidity risk, the Group is working with large and substantial banks only and with some of them the Group has ISDA agreements. As to operational risk, the Group is working with relevant software, which is its back office for all transactions. No legal risk is involved. The actions taken in order to further reduce risks are: ? The relevant subsidiaries have specific guidelines, under the Group’s policy, which were approved by the subsidiaries' financial statements | ||||||
ADAMA Ltd. Semi-Annual Report 2023
| committee of the board, which specifies, inter alia, the hedging policy, the persons that have the authorization to deal with hedging, the tools, ranges etc. The only subsidiary that has hedging positions in the Group in the period was Adama Solutions and its subsidiaries. ? The relevant subsidiaries apply management designed procedures and controls, which among other things, monitor the working process and the controls of the hedging transactions and are quarterly reviewed and annually audited. ? The controllers of the relevant subsidiaries are involved in the process and are monitoring the hedging accounting treatment. Every 2-3 years the internal audit of the relevant subsidiaries’ department is auditing the entire procedure. | |
| Market price or fair value change of investments during the Reporting Period. Specific methodology and assumptions should be disclosed in the analysis of fair value of the investments | The aforesaid refers to short time hedging currency transactions made by the relevant subsidiary with banks. Segregation of duties as follows: For the fair value evaluation, the relevant subsidiary is usually using external experts. The relevant subsidiary hedges currencies only; the relevant transactions are simple (Options and forwards) for short terms. For fair value methodology see section 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. |
| Litigation-related situations (if applicable) | N/A |
| Date of disclosure of Board approval (if any) | December 30, 2017 |
| Date of disclosure of Shareholders’ approval (if any) | N/A |
| Independent Directors’ opinion on the investment in derivative financial instruments and related risk controls | The derivative investments carried by the Company are for hedging and narrowing down the risk of market fluctuations. The investments respond to the Company’s routine business demands and are in accordance with the relevant laws and regulations. Additionally, the Company has adopted Currency Risk Hedging Policy to strengthen the risk management and control which benefit the Company’s ability to protect against market risk. The derivative investments do not harm the interests of the Company and its shareholders. |
The company is required to comply with the “Self-regulatory Guidelines for Listed Companies on Shenzhen Stock Exchange: No. 3 - Disclosure ofIndustry Information”.
The derivative transactions carried out by the Group were mainly through options and forward in order to mitigate the currency exposure and the fluctuation in Israeli CPI. Formore details, please refer to the section above.
(2) Investment in Derivative Financial Instruments for Speculation during the Reporting Period
□ Applicable √ Not Applicable
No such situation occurred during the Reporting Period.
ADAMA Ltd. Semi-Annual Report 2023
5. Use of Raised Fund
□ Applicable √ Not applicable
None during the Reporting Period.
VII. Sale of Major Assets and Equity Interests
1. Sale of Significant Assets
□ Applicable √ Not applicable
None during the Reporting Period.
2. Sale of Significant Equities
□ Applicable √ Not applicable
VIII. Main Controlled and Joint Stock Companies
√ Applicable □ Not applicable
List of main subsidiaries and stock-participating companies influencing over 10% of the net profits onthe Company
Unit: RMB’000
| Name | Type | Main services | Registered capital | Total assets | Net assets | Operating revenues | Operating profit | Net profit |
| Adama Solutions | Subsidiary | Development, manufacturing and marketing of agrochemicals, intermediate materials for other industries, food additives and synthetic aromatic products, mainly for export. | 720,085 | 50,595,236 | 17,581,989 | 15,440,683 | (318,175) | (226,280) |
Subsidiaries acquired or disposed during the Reporting Period
√ Applicable □ Not applicable
| Company Name | Way of Acquirement or Disposal | Impact on the Business Operation and Performance of the Company |
| Agrinova New Zealand Limited | Purchase 100% of Share Equity | Upon the completion of the Transaction, Adama New Zealand Ltd., the Company’s indirectly wholly-owned subsidiary, owns and hold 100% equity in Agrinova New Zealand Limited, and Agrinova became an indirectly wholly controlled subsidiary of the Company. Based on the Accounting Standards for Business Enterprises, Agrinova is included in the Company’s consolidated financial statements. |
ADAMA Ltd. Semi-Annual Report 2023
| For details, please refer to the Announcement on Closing of the Acquisition of 100% Equity of Agrinova New Zealand Limited by a Wholly Owned Subsidiary (Announcement No. 2023-1) | ||
| Adama Chile S.A. | Purchase the remaining 40% Share Equity of the controlled subsidiary | After completion of the Transaction, Adama Chile S.A. became an indirect wholly-owned subsidiary of the Company, which is conducive to enhancing the Company's decision-making efficiency, promoting development strategy, further integrating local market resources, and meeting the Company's production, operation and development needs. The Transaction will not lead to any change in the Company's combination scope. The transaction price is fair and reasonable. There is no situation that will harm the interests of the Company's shareholders and will not have an adverse impact on the Company's financial situation and operating results. For details, please refer to the Announcement on the Acquisition of Equity Held by Minority Shareholders of a Controlled Subsidiary (Announcement No. 2023-7) |
Explanations on the main controlled and joint stock companies
√ Applicable □ Not applicable
During the Reporting Period, total sales of Solutions, a wholly-owned subsidiary of the Company,amounted to $2,227 million, a decline of 12%, reflecting a decrease of 9% in volumes and stable prices.Solutions’ net loss was $32 million in the first half of the year, compared with net income of $63 million inthe corresponding period last year. For detailed explanation of the performance movement, see aboveexplanation of the Section.
IX. Structured Entities Controlled by the Company
□ Applicable √Not applicable
X. Risks Facing the Company and Countermeasures
The Group is exposed to several major risk factors, resulting from its economic environment, the industryand the Group'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 materialsubsidiary Solutions reports its consolidated financial statements in US dollars, which is its functionalcurrency, while its operations, sales and purchases of raw materials are carried out in various currencies.Therefore, fluctuations in the exchange rate of the selling currency against the purchasing currencyimpact the Company’s results. The Group's most significant exposures are to the Euro, the Israeli Shekel
ADAMA Ltd. Semi-Annual Report 2023
and the Brazilian Real. The Group has lesser exposures to other currencies. The strengthening of the USdollar against other currencies in which the Company operates reduces the dollar value of such salesand vice versa.On an annual basis, approximately 20% of the Group’s sales are to the European market and thereforethe 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, liabilitiesand cash flow denominated in foreign currencies are done constantly. High volatility of the exchangerates of these currencies could increase 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 balancesheet exposure to any particular currency. Nonetheless, since as part of these operations the Grouphedges against most of its balance sheet exposure and only against part of its economic exposure,exchange rate volatility might impact the Group’s results and profitability. As of the date of publication ofthis 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 agriculturalseasons, therefore the Company’s income and its exposure to the various currencies is not evenlydistributed over the year. Countries in the northern hemisphere have similar agricultural seasons andtherefore, in these countries, the highest sales are usually during the first half of the calendar year. Duringthis period, the Company is most exposed to the Euro. In the southern hemisphere, the seasons areopposite and most of the local sales are carried out during the second half of the year. During thesemonths, 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 basedand linked to the Israel Consumer Price Index “CPI” and therefore an increase in the CPI and anappreciation of the shekel rate against the dollar might lead to a significant increase in its financingexpenses. In addition, high volatility of the exchange rate of USD/NIS and expectations of materialchanges in the inflation rate, may increase the costs of hedging transactions on currency exposure, andas a result, may lead to a further increase in the company's financing costs. As of the date of approval ofthe financial statements, Solutions hedged most of its exposure to these risks on an ongoing basis,through CPI 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 onthe other hand, it may increase the Group's production costs and operating expenses. As of the date ofthe Report, the Group is unable to isolate the influence of inflation on its sale prices and its costs. TheGroup estimates that the cumulative cross influence of inflation does not have a material effect on to itsfinancial results.Since December 31, 2021the Group have had dollar denominated liabilities bearing variable LondonInterbank Offered Rates (LIBOR) interest. As a result, the Group was exposed to changes in the USdollar LIBOR interest rate. The Group prepares a quarterly summary of its exposure to changes in therelevant interest rate benchmarks (which replaced the LIBOR interest rate) and periodically examineshedging the variable interest rate by converting it to a fixed rate. As part of the global reform in interestrate benchmarks, the phasing out of LIBOR (the so-called LIBOR fallback) was scheduled for the end of2021. As of January 1, 2022 three global interest rate benchmarks has transitioned to alternative risk-
ADAMA Ltd. Semi-Annual Report 2023
free rates while replacing the former benchmark LIBOR: SOFR (USD), ESTR (EUR) and SONIA (GBP).As of the date of publication of this Report, the Group has not carried out hedging for such exposure,since US dollar interest rates have been relatively stable.In addition, the effect of interest changes on the debt that serves the Group’s working capital is seasonal.Such debt bears a variable interest, but has no material effect on the Group’s financing expenses. As aresult, the net increase in interest rate 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, inemerging markets such as Latin America (particularly in Brazil, the largest market, country wise, in whichthe Group operates), Eastern Europe, Southeast Asia and Africa. The Group's activity in emergingmarkets is exposed to risks typical of those markets, including: political and regulatory instability; volatileexchange rates; economic and fiscal instability and frequent revisions of economic legislation; relativelyhigh inflation and interest rates; terrorism or war; restrictions on import and trade; differing businesscultures; uncertainty as to the ability to enforce contractual and intellectual property rights; foreigncurrency controls; governmental price controls; restrictions on the withdrawal of money from the country;barter deals and potential entry of international competitors and accelerated consolidations by large-scalecompetitors in these markets. Developments in these regions may have a significant effect on the Group'soperations. Distress to the economies of these markets could impair the ability of the Group's customersto purchase its products or the ability to market them at international market prices, as well as harm theGroup's ability to collect customer debts, in a way that could have a significant adverse effect on theGroup's operating results.The Group’s operations in multiple regions allows for the diversification of such risks and for the reductionof its dependency on particular economies. In addition, changes in registration requirements orcustomers' preferences in developed western countries, which may limit the use of raw materialspurchased from emerging economies, may require redeployment of the Group's procurementorganization, 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 the Company, lead the global industry. Five of these, Bayer, Syngenta, Corteva, BASF andFMC, are Originator Companies, which develop, manufacture and market both patent-protected as wellas off-patent products. The Group competes with the original products with the aim of maintaining andincreasing its market share.The Originator Companies possess resources enabling them to compete aggressively, in the short-to-medium term, on price and profit margins, so as to protect their market share. Loss of market share orinability to acquire additional market share from the Originator Companies can affect the Group's positionin the market and adversely affect its financial results. For details regarding the Group’s competitiveadvantages see section III - subsection II. Core competitiveness analysis above.Similarly, the Group also competes in the more decentralized off-patent segment of the market, againstother off-patent companies and smaller-scale Originator Companies, which have significantly grown innumber in recent years and are materially changing the face of the crop protection industry, the majorityof whom have not yet deployed global distribution networks, and are only active locally. These companiesoften price their products aggressively and at times have lower profit margins than the Group, which mayadversely impact the Group's sales and product prices. The Group's ability to maintain its revenues and
ADAMA Ltd. Semi-Annual Report 2023
profitability from a specific product in the long term is affected by the number of companies producingand 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 marketsand/or growth of competitors that focus on off-patent active ingredients (whether by the expansion of theirproduct portfolio, granting registrations to other manufacturers (including manufacturers in China andIndia) to operate in additional markets, transforming their distribution network to a global scale orincreasing the competition for distribution access), and/or difficulty in purchasing low cost raw materials,may harm the Group’s sales, affect its global position and lead to price erosion.Decline in scope of agricultural activities; Climate change and exceptional changes in weatherconditionsThe scope of general agricultural activities worldwide may be negatively affected by many exogenousfactors, some resulting from climate change, including but not limited to extreme weather conditions,natural disasters, a decrease in agricultural commodity prices, government policies and the economiccondition of farmers. A material decline in the scope of agricultural activities would by necessaryimplication cause a decline in the demand for the Group’s products, erosion of its prices and collectiondifficulties, 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 onthe demand for the Group's products as well as to price thereof. For example, drought may reduce theneed for fungicides, which could result in fewer sales and greater unsold inventories in the market,whereas excessive rain could lead to increased plant disease or weed growth requiring growers topurchase and use more crop protection products. Drought and/or increased temperatures may changeinsect pest pressures, requiring growers to use more, less, or different insecticides. Climate change mayincrease 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 shoulda number of such bad seasons occur in succession, without favorable seasons in the interim, its resultsmay sustain 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 andtrading, and particularly in relation to the storage, treatment, manufacturing, transport, usage and disposalof its products, their ingredients and byproducts, some of which are considered hazardous. The Group'sactivities involve hazardous materials. Defective storage or handling of hazardous materials may causeharm to human life or to the environment in which the Group operates. The regulatory requirementsregarding the environment, health and safety could, inter alia, include soil and groundwater clean-uprequirements; 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 tomarket, and tend to become stricter with time. In recent years, both government authorities andenvironmental protection organizations have been applying increasing pressure, including throughinvestigations and indictments as well as increasingly stricter legislative proposals and class action suitsrelated to companies and products that may potentially pollute the environment. Compliance with theselegislative and regulatory requirements and protection against such legal actions requires the Group tocommit considerable human and financial resources (both in terms of substantial ongoing costs and interms of material one-time investments) to meet mandatory environmental standards. In some instances,this may result in delaying the introduction of products into new markets or in adverse effects on the
ADAMA Ltd. Semi-Annual Report 2023
Group’s profitability. In addition, the toughening, material alteration or revocation of environmentallicenses or permits, or their stipulations, or the inability to obtain such licenses and permits, maysignificantly affect the Group's ability to operate its production facilities, which in turn may have a materialadverse effect on the financial and business results of the Group. The Group may be required to bearsignificant civil liabilities (including due to class actions) or criminal liabilities (including high penaltiesand/or high compensation payments and/or costs of environmental monitoring and rehabilitation),resulting from violation of environmental, health and safety regulations, while some of the existinglegislation may impose “strict liability” regime on the Group, i.e. the Group will be held liable, regardlessof proof of negligence or malice.While the Group invests material sums in adapting its facilities and in constructing special facilities inaccordance with environmental requirements, it is currently unable to assess with any certainty whetherthese investments (current and future) 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 anycertainty the extent of future costs and investments it may incur in order to meet the requirements of theenvironmental authorities in the relevant countries in which it operates since, inter alia, the Group isunable to estimate the extent of potential pollutions, their duration, the extent of the measures requiredto be taken by the Group in handling them, the division of responsibility among other parties and theamounts recoverable from third parties.Furthermore, the Group may be the target of bodily injury claims and property damage claims caused byexposure to hazardous 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 stagesof their development, production, import, utilization and marketing, and are also subject to strict regulatorysupervision by the regulatory authorities in each country. Compliance with the regulatory requirementsthat vary from country to country and which are becoming more stringent with time, involves significanttime and costs, and rigorous compliance with individual registration requirements for each product.Noncompliance with these regulatory requirements might materially adversely affect the Group’sexpenses, 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 alreadysold, or to legal action. Moreover, to the extent new regulatory requirements are imposed on existingregistered products (requiring additional investment or leading to the existing registration's revocation)and/or the Group is required to compensate another company for its use of the latter's product registrationdata, these might amount to significant sums, considerably increasing the Group's costs and adverselyaffecting its results and reputation. In recent years the industry has been suffering from revocation ofregistration for many products around the world. This trend is particularly evident in European countriesas well as in many other countries worldwide.Nevertheless, the Group believes that, in countries where the Group maintains a competitive edge, anytoughening of registration requirements may actually increase this edge, since this will make it difficult forits competitors to penetrate the same market, whereas in countries in which the Group possesses a smallmarket share, if any, such toughening may make further penetration of the Group's products into thatmarket more difficult.
ADAMA Ltd. Semi-Annual Report 2023
Product liabilityProduct and producer liability are a risk for the Group. Regardless of their prospects or actual results,product liability lawsuits might involve considerable costs as well as tarnish the Group's reputation, thuspotentially impacting its profits. The Group has a third-party and defective product liability insurance cover.However, there is no certainty that the scope of insurance cover is sufficient. Any future product liabilitylawsuit or series of lawsuits could materially affect the Group’s operations and results, should the Grouplose the lawsuit or should its insurance cover not suffice or apply in a particular instance. In addition,while the Group has not currently encountered any difficulty renewing such insurance policy, it is possiblethat it will encounter future difficulties in renewing an insurance policy for third party liability and defectiveproducts on 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 developingdifferentiated products and obtaining registrations for them, so as to enable it to gain market share at theexpense of its competitors. Usually, being the first to launch a certain off-patent product affords the Groupcontinuing advantage, even after other competitors penetrate the same market. As such, the Group'srevenues and profit margins from a certain new off-patent product could be materially affected by itsability to launch such product ahead of the launch of a comparable product by its competitors.Should new products fail to meet registration requirements in the different countries or should it take along period of time to obtain such registrations, the Group's ability to successfully introduce a new productto the relevant market in the future may be affected, since entry into the market prior to other competitorsis important for successful market penetration. Furthermore, successful market penetration involves, interalia, product diversification in order to suit each market's changing needs. Therefore, if the Group fails toadapt its product mix by developing new products and obtaining the required regulatory approvals, itsfuture ability to penetrate that market and to maintain its existing market share could be affected. Failureto 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 questionin the relevant market, 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 patentsor patent application of Originator Companies or other third parties, or to develop products that do nototherwise infringe intellectual property rights in a manner that may involve significant legal and othercosts. Originator Companies tend to vigorously defend their products and may attempt to delay the launchof competing off-patent products by registering patents on slightly different versions of products for whichthe original patent protection is about to expire or has expired, with the aim of competing against the off-patent versions of the original product. The Originator Companies may also change the branding andmarketing of their products. Such actions may increase the Group's costs and the risk it entails, and harmor even prevent its ability to launch new products.The Group is also exposed to legal claims that its products or production processes infringe on third-partyintellectual property rights. Such claims may involve time, costs, substantial damages and managementresources, impair the value of the Group's brands and its sales and adversely affect its results. Suchlawsuits that were concluded involved non-material amounts.Furthermore, although the Group protects its brands and trade secrets with patents, trademarks and othermethods of intellectual property protection, these protective means may not be sufficient for fully
ADAMA Ltd. Semi-Annual Report 2023
safeguarding its intellectual property. Any unlawful or other unauthorized use of the Group's intellectualproperty rights could adversely affect the value of its intellectual property and goodwill. In addition, theGroup may be required to take legal actions involving financial costs and resources to safeguard itsintellectual 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, significantincreases or decreases in raw material costs affect the cost of goods sold, and are, due to the length ofthe Company’s inventory cycle, generally reflected in the Company’s financials. Most of the Group's rawmaterials are distant derivatives of oil prices and therefore, extreme changes or decrease in oil pricesmay 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 purchase contracts for key raw materials, wherever possible. Similarly, the Group acts to adjust itssales 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 hedgingtransactions against increases 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, includingas a result of regulatory changes in certain countries currently prohibiting the use of genetically modifiedseeds, and/or any significant increase in the sales of genetically modified seeds and/or to the extent newcrop protection products are developed for further crops that would be widely used (substituting traditionalproducts), will affect demand for crop protection products, requiring the Group to respond by adapting itsproduct portfolio to the new demand structure. Consequently, to the extent that the Group fails to adaptits product mix accordingly, this may reduce demand for its products, erode their sales price and byimplication affect the Group’s results and market share.Nevertheless, the fact that the Group itself markets some of the products for which herbicide tolerancetraits have been developed, 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 potentialalternatives for the Company’s products, though as of the date of the report, their efficiency is relativelylimited, and they are commercialized in a relatively small volumes.Operational risksThe Group’s operations, including its manufacturing activities, rely, inter alia, on state-of-the-art computersystems. The Group continually invests in upgrading and protecting these systems from malfunctions andattack. Any unexpected failure of these systems, as well as the integration of new systems, could involvesubstantial costs and adversely affect the Group's operations until completion of the repair or integration.The potential occurrence of a substantial failure that cannot be repaired within a reasonable time framemay also affect the Group's operations and its results. Currently, the Group has a property and loss-of-profit insurance policy.The Group's production capacity is affected, among others, by its facilities’ output and individual area andtime allocation at full capacity. The Group's Multi-purpose facilities provide manufacturing flexibility andenable the Group to prepare for the manufacturing of new products. Although the Group believes that itsexisting sites have sufficient facilities and land areas to expand its production capacity, if necessary, inthe case of immediate or short-term increases in demand for new products supply may be delayed dueto lack of capacity to meet demand for such new products.
ADAMA Ltd. Semi-Annual Report 2023
Data protection and cyber securityDuring its activity, the Group may be exposed to risks and threats, related to the stability of its informationtechnologies systems, data protection and cyber security, which could appear in many different forms(such as service denial, misleading employees, malfunction, encryption or data erasing and other cyber-attacks via E-mail or malicious software). An attack on such computerized systems, mainly network basedsystems may cause the group material damages and expenses and even partial suspension anddisruption of their proper functioning. In order to minimize the abovementioned risks, the group investsresources 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 theGroup from supplying its products or significantly increase production costs. Moreover, the Group importsraw materials to its production facilities worldwide, from where it then exports the technical or formulatedproducts to its subsidiaries around the world for formulation and/or commercialization purposes.Disruptions in the supply of raw materials from regular suppliers may adversely affect operations until analternative supplier is engaged. If any of the Group's suppliers are unable to supply raw materials for aprolonged period, including due to ongoing disruptions and/or prolonged strikes and/or infrastructuredefects 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 adverselyaffect the Group's results, significantly affect its ability to obtain raw materials in general, or obtain themat reasonable prices, as well as limit its ability to supply products and/or meet customer supply deadlines.These might negatively affect the Group, its finances and operating results. In order to reduce this risk, itis the Group's practice to occasionally adjust the volume of its product inventories or in certain scenarios,to increase the levels of inventory held by the Company to overcome possible supply shortages, logisticchallenges 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, thismay affect its finances and operating results.Failed mergers and acquisitions; difficulties in integrating acquired operationsThe Group's strategy includes growth through mergers, acquisitions, investments and collaborationsdesigned to expand its product portfolio and deepen its presence in certain geographical markets.Growth through mergers and acquisitions requires assimilation of acquired operations and their effectiveintegration in the Group, including realization of certain forecasts, profitability, market conditions andcompetition.Failure to successfully implement the above and/or non-realization of the relevant forecasts may result innot achieving the incremental value forecasted, loss of customers, exposure to unexpected liabilities,reduced value of the intangible assets included in the merger or acquisition as well as the loss ofprofessional and skilled human resources.Production concentration in limited plantsA large portion of the Group’s production operations is concentrated in a relatively small number oflocations. Natural disasters, hostilities, labor disputes, substantial operational malfunction or any othermaterial damage might significantly affect Group operations, as a result of the difficulty, the time andinvestment required for relocating the production operation or any other activity.International taxationMost of the Group’s sales are global, through its consolidated subsidiaries worldwide. These individual
ADAMA Ltd. Semi-Annual Report 2023
companies are assessed in accordance with the tax laws effective in each respective location. TheGroup’s effective tax rate could be significantly affected by different classification or attribution of theprofits arising from the proportional value of the components of each of the companies in the Group inthe various countries, as is recognized in each tax jurisdiction; changes in the characteristics (includingregarding the location of control and management) of these companies; changes in the breakdown of theGroup'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 in determining the areas in which the Group is taxed; and potential changes in the Group'sorganizational structure.Changes in tax regulations and the manner of their implementation, including with regard to theimplementation of BEPS, may lead to a substantial increase in the Group's applicable tax rates and havea material adverse effect on its financial position, results and cash flows.The Group’s Financial Statements do not include a material provision for exposure for internationaltaxation, as stated above.Risks arising from the Group’s debtThe Group finances its business operations by means of its own equity and loans from external sources(primarily traded debentures issued by Solutions and bank credit). The Group's main source for servicingthe debt and its operating expenses is by means of the profits from the Group companies’ operations.Restrictions applying to the Group companies regarding distribution of dividends to the Group, or the taxrate applicable on these dividends, may affect the Group's ability to finance its operations and service itsdebt.In addition, the Group's Finance Documents, as contained in the bank credit agreements, require meetingcertain Financial Covenants. Failure to meet these covenants due to an exogenous event or non-materialization of Group forecasts, and insofar as the financing parties refuse to extend or update theseFinancial Covenants as per the Group’s capabilities, may lead the financing parties to demand theimmediate 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 of these credit lines is insured, while the remainder are exposed to risk, particularly duringeconomic slowdowns in the relevant markets. The Group’s aggregate credit, however, is diversifiedamong many customers in dozens of countries, mitigating this risk. In addition, in certain regions,particularly in South America, credit days are particularly long (compared to those extended to customersin regions such as Europe), and on occasion, inter alia, owing to agricultural seasons or economicdownturns in those countries, the Group may encounter difficulty in timely collection of customer debts,with the collection period being extended over several years.Generally, such issues arise more often in developing countries where the Group may be less familiarwith its customers, the collaterals might be in double until actual repayment and the insurance cover ofthese customers is likely to be limited. Credit default by any of the customers may negatively impact theGroup'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 flowand working capital requirements in the ordinary course of operations. In view of the Group's growth andconsidering its primary growth regions, the Group’s broad product portfolio and the Group’s investments
ADAMA Ltd. Semi-Annual Report 2023
in manufacturing infrastructures, the Group has significant financing and investment needs. The Groupacts continually to improve the state and management of its working capital. While currently the Group isin compliance with all its financial covenants, significant deterioration of its operating results may in thefuture 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 financialobligations, may be harmed.Contagious disease outbreakOutbreak of a contagious disease and pandemics, or other adverse public health developments, interritories where significant production activity is taking place or from which raw materials are supplied toa significant extent, may have a material adverse effect on the Company’s activity, such that the Companymay encounter difficulties with procurement of raw materials and intermediates, experience a certaindecrease of activity within its production facilities due to governmental instructions, and be constrainedwith respect to its logistics and supply lines. In addition, the Company sales could be potentially impactedby a temporary decrease in demand for its products, as well as by temporary disruption of the Company’sability to sell and distribute products as mentioned above.
ADAMA Ltd. Semi-Annual Report 2023
Section IV - Corporate Governance
I. Annual and Special Meetings of Shareholders Convened during the Reporting
Period
1. Meetings of Shareholders Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Convened date | Disclosure date | Resolutions of the meeting |
| 2022 Annual Shareholders Meeting | Annual Shareholders Meeting | 80.3123% | April 12, 2023 | April 13, 2023 |
Announcement on theResolutions of 2022Annual General Meeting(Announcement No.:
2023-18).Disclosed at the websiteCNINFOwww.cninfo.com.cn
2. Special Meetings of Shareholders Convened at Request of Preference Shareholders with
Resumed Voting Rights
□ Applicable √ Not applicable
II. Changes in Directors, Supervisors and Senior Management
√Applicable □ Not applicable
Changes in directors, supervisors and senior management during the Reporting Period, were asfollows:
| Name | Position | Type | Date | Reason |
| Michal Arlosoroff | General Legal Counsel | Left the position | January 1, 2023 | Retirement |
| Shahar Florentz | Chief Financial Officer | Left the position | February 15, 2023 | Resignation for personal reasons |
| Efrat Nagar | Chief Financial Officer | Accepted the position | February 16, 2023 | -- |
| Ignacio Dominguez | President and CEO (legal representative of the Company) | Left the position | May 1, 2023 | Resignation from the Company |
| Steve Hawkins | President and CEO (legal representative of the Company) | Accepted the position | May 1, 2023 | -- |
ADAMA Ltd. Semi-Annual Report 2023
III. Basic Information on the Profit Distribution and Converting Capital Reserve into
Share Capital in the Reporting Period
□ Applicable √ Not applicable
For the Reporting Period, the Company does not plan to distribute cash dividends or bonus shares orconvert capital reserve into share capital.IV. Stock Incentive Plans, ESOP 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 be noted, that the Company’s subsidiary, Adama Solutions, currently has several long-termincentive plans according to which it has granted long-term cash rewards to executive officers andemployees. These long-term incentive plans are based either on the performance of the Company'sshares (phantom cash incentives) and/or the Company's performance. Adama Solutions has furtheradopted an incentive plan linked to the increase in the Syngenta Group EBITDA.
ADAMA Ltd. Semi-Annual Report 2023
Section V - Environmental and Social ResponsibilitiesI. Major Environmental Situation
Is the Company listed as a “Key Polluting Entity” by the 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 theprocess 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);
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.
14) Technical Specification for Setting Identification Signs of Hazardous Waste HJ1276-2022.
ADAMA Ltd. Semi-Annual Report 2023
Environmental Protection Administrative Permits
1. EIA Approval
On 12 June 2023, the Company received the "Approval of Environmental Impact Assessment Statement for the RecycledSolvent Purification Project of the Overall Relocation and Upgrading Project for Insecticides of ADAMA Ltd.". Thesubsidiaries, including Adama Anpon and Adama Huifeng have had EIA approvals for all the projects in operation andunder construction.
2. Waste Discharge Permits
The Company reapplied for Emission Permit on 17 April 2023 which remains valid during the reporting period. AdamaAnpon, the Company's subsidiary, had its discharge permit changed for Anpon site on December 1
st
, 2022 and renewedthe discharge permit for Maidao site on December 20
th, 2021, which means the discharge permits for both plants are withinthe validity period in H1 2023. The waste discharge permit of Adama Huifeng, another subsidiary of the Company, waschanged on 9 October 2022 and remains valid during the reporting period.
ADAMA Ltd. Semi-Annual Report 2023
Sector Discharge/Emission Standards and Pollutant Discharge and Emission during Operational Activities
| Company name | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit |
| ADAMA Ltd. | COD | Continuous | 1 | General Discharge Port | The new site: 16.27mg/L | Discharge Standards for Pollutants from Urban Sewage Treatment Plant (GB 18918 – 2002), COD <50mg/L | 33.3612 | 173.2104 | None |
| Ammonia nitrogen | Continuous | 1 | General Discharge Port | The new site: 0.33mg/L | Discharge Standards for Pollutants from Urban Sewage Treatment Plant (GB 18918 – 2002), ammonia nitrogen<8mg/L; | 0.6834 | 17.321 | None | |
| Total Phosphorous | Continuous | 1 | General Discharge Port | The new site: 0.34mg/L. | Discharge Standards for Pollutants from Urban Sewage Treatment Plant (GB 18918 – 2002), total phosphorous <0.5mg/L | 0.7151 | 1.722 | None | |
| NOx | Continuous | 4 | Power plant, Hazardous waste incinerator, Acephate RTO, and Wastewater RTO | Power plant: 26.76 mg/m3 Hazardous waste incinerator: 52.3 mg/m3 Acephate RTO: 6.3 mg/m3 Wastewater RTO: 3.17 mg/m3 | (1) The power plant complies with the ultra-low limit of the standard range for pollutant emission, which is NOx < 50mg/m3; (2) Hazardous waste incinerator: Table 3 in the "Standards for the Control of Hazardous Waste Incineration Pollution " (GB18484-2020), which is NOx | 19.9538 | 260.27 | None |
ADAMA Ltd. Semi-Annual Report 2023
| Company name | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit |
| <300mg/m3; (3) RTO: Table 1 and 2 and specifically the air pollutant emission limits in Table 2 of the "Standards for the Air Pollutant Emission of the Pesticide manufacturing Industry" (GB 39727-2020), which is NOx <200mg/m3; | |||||||||
| SO2 | Continuous | 4 | Power plant, Hazardous waste incinerator, Acephate RTO, Wastewater RTO | Power plant: 6.04 mg/m3 Hazardous waste incinerator: 12.33 mg/m3 Acephate RTO: 7.2 mg/m3 Wastewater RTO: 1.47 mg/m3 | (1) The power plant complies with the ultra-low limit of the standard range for pollutant emission, which is SO2 < 35 mg/m3; (2) Hazardous waste incinerator: Table 3 in the "Standards for the Control of Hazardous Waste Incineration Pollution " (GB18484-2020), which is SO2 <100mg/m3; (3) RTO: Table 1 and 2 and specifically the air pollutant emission limits in Table 2 of the "Standards for the Air Pollutant Emission of the Pesticide manufacturing | 5.1977 | 116.48 | None |
ADAMA Ltd. Semi-Annual Report 2023
| Company name | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit |
| Industry" (GB 39727-2020), which is SO2 <200mg/m3; | |||||||||
| Fume and Dust | Continuous | 7 | Power plant, Hazardous waste incinerator, Acephate RTO, Wastewater RTO , Acephate powder outlet, Acephate granule outlet, Sodium sulfate outlet | Power plant: 0.6mg/m3 Hazardous waste incinerator: 3.8 mg/m3 Acephate RTO: 5.09 mg/m3 Wastewater RTO: 7.7 mg/m3 Acephate powder outlet: 7.89mg/m3. Acephate granule outlet: 7.93mg/m3. Sodium sulfate outlet: 59mg/m3. | (1) The power plant complies with the ultra-low limit of the standard range for pollutant emission, which is fume and dust < 10 mg/m3; (2) Hazardous waste incinerator: Table 3 in the "Standards for the Control of Hazardous Waste Incineration Pollution " (GB18484-2020), which is fume and dust <30 mg/m3; (3) RTO: Table 1 and 2 and specifically the air pollutant emission limits in the " the Emission Standards for Air Pollutants of the Pesticide Manufacturing Industry" (GB 39727-2020), which is fume and dust < 30 mg/m3; (4) Table 1 particulates of the Emission Standards for Air Pollutants in the Pesticide Manufacturing | 4.7118 | 44.726 | None |
ADAMA Ltd. Semi-Annual Report 2023
| Company name | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit |
| Industry (GB39727-2020) <20mg/m3. (5) Table 2 particulates of the Comprehensive Emission Standards for Air Pollutants (GB 16297-1996) <120mg/m3. | |||||||||
| VOCs | Continuous | 5 | Acephate RTO, Wastewater RTO, Outlet of Class A Warehouse, Outlet of Class C Warehouse, Outlet of the Lab Building | Acephate RTO: 17.84 mg/m3 Wastewater RTO: 3.56 mg/m3 Class A Warehouse: 0.95mg/m3 Class C Warehouse: 1.04mg/m3 Lab Building: 1.43mg/m3 | (1) Table 1 and 2 and specifically, the emission limits of air pollutants in Table 2 of the Emission Standards for Air Pollutants of the Pesticide Manufacturing Industry (GB 39727-2020), which is VOCs <100mg/m3; (2) Table 1 Air Pollutant Emission Limits in "Volatile Organic Compounds Emission Control Standards for Industrial Enterprises" (DB12/524-2020) of VOCs <60mg/m3 | 2.9095 | 6.221 | None | |
| ADAMA Anpon (Jiangsu) Co., Ltd. | COD | Continuous | 2 | General Discharge Port | 52.57mg/L | Comprehensive Standard on Discharge of Waste Water (GB8978-1996)，COD< 500 mg/l; | 35.42 | 265.69 | None |
ADAMA Ltd. Semi-Annual Report 2023
| Company name | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit |
| Ammonia Nitrogen | Continuous | 2 | General Discharge Port | 2.77mg/L | Water Quality Standard for Sewage Discharged into Urban Sewerage (GBT 31962-2015), Ammonia Nitrogen <45 mg/l; | 1.87 | 28.348 | None | |
| Total Phosphorous | Continuous | 2 | General Discharge Port | 0.10mg/L | Water Quality Standard for Sewage Discharged into Urban Sewerage （GBT 31962-2015）, total phosphorous < 8 mg/l; | 0.0655 | 20.273 | None | |
| NOx | Continuous | 1 | Power Plant | / | Standard on Air Pollution of Thermal Power Plants（GB13223-2011）NOx < 100 mg/m3 | / | 181.516 | None The power plant has been deactivated. | |
| SO2 | Continuous | 1 | Power Plant | / | Standard on Air Pollution of Thermal Power Plants（GB13223-2011）SO2 < 50 mg/m3 | / | 396.902 | None The power plant has been deactivated. | |
| Fume and Dust | Continuous | 1 | Power Plant | / | Standard on Air Pollution of Thermal Power Plants（GB13223-2011）Fume and Dust < 20mg/m3 | / | 67.515 | None The power plant has been deactivated. | |
| VOCs | Continuous | 13 | Various Facilities | 28.26mg/m3 | Standards for the Volatile Organic Compound Emission of the Chemical Industry, DB 32/3151-2016 | 0.257 | 47.313 | None |
ADAMA Ltd. Semi-Annual Report 2023
| Company name | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit | ||
| Maidao Branch of ADAMA Anpon (Jiangsu) Co., Ltd. | COD | Continuous | 1 | General Discharge Port | 54.16mg/l | Agreement on Discharged Water: COD<500mg/L | 3.258 | 182.755 | None | ||
| Ammonia Nitrogen | Continuous | 1 | General Discharge Port | 0.91mg/l | Agreement on Discharged Water: ammonia nitrogen <35mg/L | 0.055 | 4.084 | None | |||
| Total Phosphorous | Continuous | 1 | General Discharge Port | 0.83mg/l | Agreement on Discharged Water: total phosphorus <3mg/L | 0.05 | 0.327 | None | |||
| NOx | Continuous | 1 | Outlet of DFTO Furnace | / | Emission Standards for Pollutants in Petrochemical Industry (GB31571-2015) NOx<100mg/m3 | / | 1.966 | None | |||
| SO2 | Continuous | 1 | Outlet of DFTO Furnace | / | Emission Standards for Pollutants in Petrochemical Industry (GB31571-2015) SO2 <50mg/m3 | / | 1.673 | None | |||
| Fume and Dust | Continuous | 1 | Outlet of DFTO Furnace | / | Emission Standards for Pollutants in Petrochemical Industry (GB31571-2015): Fume and Dust <20mg/ m?. | 0 | 3.095 | None | |||
| VOCs | Continuous | 10 | Various Facilities | 20.26mg/m3 | Standards for the Volatile Organic Compound Emission of the Chemical Industry, DB 32/3151-2016, Total non-methane | 0.03 | 2.017 | None | |||
ADAMA Ltd. Semi-Annual Report 2023
| Company name | Main pollutants and special pollutants | Way of emission | No. of emission points | Layout of emission points | Concentration | Pollution standards applied | Total amount emitted/ Discharged (ton) | Total amount Approved (ton) | Exceeding limit | |
| hydrocarbons ≤ 80 mg/m3 | ||||||||||
| ADAMA Huifeng (Jiangsu) Co., Ltd. | COD | Continuous | 1 | General Discharge Port | 185.9 mg/l | Standards of the Industrial Park | 34.236 | 247.6378 | None | |
| Ammonia Nitrogen | Continuous | 1 | General Discharge Port | 2.89mg/l | Standards of the Industrial Park | 0.4229 | 19.3783 | None | ||
| Total Phosphorous | Continuous | 1 | General Discharge Port | 0.32mg/l | Standards of the Industrial Park | 0.0546 | 0.9285 | None | ||
| Total Nitrogen | Continuous | 1 | General Discharge Port | 19.08 mg/l | Standards of the Industrial Park | 3.4031 | 46.77204 | None | ||
| NOx | Continuous | 10 | RTO and the Discharge Ports at Various Workshops | 7.44 mg/m? | Jiangsu Comprehensive Standard on Air Pollutants Emission (DB32/4041-2021) | 4.7532 | 147.7072 | None | ||
| SO2 | Continuous | 10 | RTO and the Discharge Ports at Various Workshops | 4.43 mg/m? | Jiangsu Comprehensive Standard on Air Pollutants Emission (DB32/4041-2021) | 3.2517 | 47.1958 | None | ||
| Fume and Dust | Continuous | 10 | RTO and the Discharge Ports at Various Workshops | 1.92 mg/m? | Comprehensive Standard on Air Pollutants Emission (DB32/4041-2021) | 0.8033 | 22.7146 | None | ||
| VOCs | Continuous | 10 | RTO and the Discharge Ports at Various Workshops | 7.92 mg/m? | Comprehensive Standard on Air Pollutants Emission (DB32/4041-2021) | 10.8160 | 62.92994 | None | ||
ADAMA Ltd. Semi-Annual Report 2023
Treatment of Pollutants
(1) Development and Operation of Wastewater Treatment Facilities
The Company has a 20,000 tons/day wastewater treatment plant, which adopts the processcomposed of "secondary A/O + MBR + ozone co-oxidation + MBBR + calcium used for phosphorusremoval". At present, all the facilities are operating normally, and after treatment, the COD,ammonia nitrogen and total phosphorus in the discharged wastewater all meet the standards.ADAMA Anpon, a subsidiary of the Company, has its own wastewater treatment plant with a designcapacity of 11,000 tons per day. At present, the facilities are operating normally, and the COD,ammonia nitrogen and total phosphorus in the treated wastewater are all up to the standard.ADAMA Huifeng, another subsidiary of the Company, has its own wastewater treatment plant witha capacity of 5,000 tons per day. At present, the facilities are operating normally, and after treatment,the COD, ammonia nitrogen, total nitrogen and total phosphorus in the discharged wastewater allmeet the standards.The COD and SS volume discharged by Adama (Nanjing) Agricultural Science and TechnologyCo., Ltd, a subsidiary of the Company meet the emission standards.
(2) Development and Operation of Exhaust Gas Treatment Facilities
The Company's self-owned coal-fired thermal power plant had undergone a transformation toenable ultra-low emission, and since the upgrading completed, the environmental protectionfacilities of the plant has been operating normally. The sulfur dioxide, nitrogen oxides, fume anddust in the exhaust gas have all achieved the target of the ultra-low emission and met the emissionstandards. To treat the exhaust gas from the incinerator of the solid waste rotary kiln, the companyadopts a process consisting of "SNCR + semi-dry (rapid cooling) de-acidification + activated carboninjection + dust removal bag + SCR". The sulfur dioxide, nitrogen oxides, fume and dust in theexhaust gas all meet the emission standards. As for the RTO treatment process for VOCs, thecompany adopts a flow of steps including "acid scrubbing and absorption, alkali scrubbing andabsorption, three-chamber RTO furnace incineration, rapid cooling tower and alkali absorption",and the sulfur dioxide, nitrogen oxides, fume and dust and VOCs all meet the emission standards.All chemical production lines at Adama Anpon are equipped with RTO incinerators, TO incineratorsand resin adsorption as well as other exhaust gas treatment facilities to strengthen the operationmanagement and further reduce the total emission amount of VOC in addition to the efforts toensure the emission standards are met.Adama Huifeng has RTO furnace, alkali washing exhaust gas treatment facilities and picklingexhaust gas treatment facilities, which are used to treat VOC-containing process exhaust gas,pickling exhaust gas and alkali washing exhaust gas respectively. The main emission targets ofsulfur dioxide, nitrogen oxides, fume and dust and non-methane total hydrocarbons have all metthe mandatory standards.Adama (Nanjing) Agricultural Science and Technology Co., Ltd. has installed five sets of fans andsupporting exhaust pipelines, each of which is equipped with a set of "water spray + activatedcarbon adsorption" treatment facilities. It also has two general pipes for exhaust. The emission ofVOCs and hydrogen chloride is compliant with the required standards.
ADAMA Ltd. Semi-Annual Report 2023
(3) Implementation of the "Interim Measures on Environmental Information Disclosure”
The Company and its subsidiaries disclose production and pollution information according to theInterim Measures on Environmental Information Disclosure and transfers information about all themain indicators in wastewater and air pollutants to the release platform for environmentalinformation of key pollution sources set up by the local ecology and environment bureaus on a dailybasis.Contingency plan of environmental accidentsThe Company and its relevant subsidiaries have formulated the Contingency Plan for EnvironmentalEmergencies according to their production facilities and industry features, and then submitted files to thelocal environmental protection authorities as record.
Inputs in Environmental Protection and Treatment and Payment of Environmental Tax
| Company Name | Inputs in Environmental Protection and Treatment during H1 2023 (0,000RMB) | Payment of Environmental Tax during H1 2023 (0,000RMB) |
| ADAMA Ltd. | 3,450.48 | 18.8933 |
| Adama Anpon (Jiangsu) Ltd. | 1,200 | 1.44 |
| Adama Huifeng (Jiangsu) Ltd. | 5,997 | 4.158 |
| Adama (Nanjing) Agricultural Science and Technology Co., Ltd | 12.87 | / |
Note: Adama (Nanjing) Agricultural Science and Technology Co., Ltd. is not required to pay environmentalprotection tax because it is not a key environmental enterprise.Environment self-monitoring planThe Company attributes great importance to protecting the environment, out of a sense of responsibilityto society and the environment and strives to meet the relevant regulatory requirements and to even gobeyond mere compliance, engaging in constant dialogue with stakeholders, including the authorities andthe community.In order to improve the environmental management, track the discharge of various pollutants, evaluatethe impact on the surrounding environment, strengthen the discharge management of pollutants in theproduction process, accept the supervision and inspection of environmental authorities and providereference for pollution prevention and control, the Company and its subsidiaries - Anpon and ADAMAHuifeng have formulated a self-monitoring plan, which conducts regular tests in strict accordance withthe requirements.
The major monitored indicators and frequency of the Company, Anpon and ADAMA Huifeng are as thefollowing:
1. Monitored Indicators
Waste water: COD, NH
-N, PH, SS, Petroleum, TP.
ADAMA Ltd. Semi-Annual Report 2023
Air Pollutant: SO
, Nitrogen oxide, Fume and Dust, Non-methane Hydrocarbon.Noise: Noise at the Site Border
2. Frequency
Boiler emission, Non-methane Hydrocarbon in the waste gas, SO
in RTO furnace, NOx, Fume andDust, and waste water discharged from the centralized point: continuous auto monitoring (COD,Ammonia nitrogen, Total Phosphorous).Manual sampling: PM in some waste gas discharge outlets, SS in wastewater discharge outlet,Petroleum, once a month.Noise: once a quarter.
While continually examining itself according to the implications of the environmental laws, the Companyhas been taking proactive actions to prevent or mitigate the environmental risks, reduce theenvironmental effects that may result from its activities, and invests extensive resources to fulfill thoselegal provisions that are, and are anticipated to, affect it. The Company’s plants are subject to atmosphericemissions 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 withinfrastructures and facilities containing fuels and hazardous materials. The Company takes actions toprevent soil and water pollution by these materials and treats them, if revealed. The Company’s plantsconduct various soil surveys, risk surveys and tests with regard to treatment of the soil or ground waterat the plants.The Company intends to continue investing in environmental protection, to the extent required andbeyond this, whether on its own volition or in compliance with contractual commitments, regulatory orlegal standards relating to environmental protection, so as to realize its best available policy and complywith any legal requirements.As part of its policy of ecological process improvement, the Company also invests in remediation,changes in production processes, establishment of sewage facilities, as well as in byproduct storage andrecycling.
Administrative punishment due to environmental problems in the Reporting PeriodNo
Other environmental information that should be disclosedNo.
Measures of reducing GHGs emissions and their effects
√Applicable □Not applicable
During the reporting period, the company had set up a dedicated work force for energy saving and carbonreduction, clarified future targets and completed carbon emission verification as well as carboncompliance. It also carried out a number of energy saving and emission reduction initiates, such as savingsteam consumption by the renovation of chlor-alkali chemical water steam pipeline, the optimization of
ADAMA Ltd. Semi-Annual Report 2023
public utility engineering and upgrading of brine pumps, reducing energy consumption and maintenancefrequency of equipment by the optimization of public utility engineering and rational resource allocation,and decreasing both energy consumption and CO2 emission by the replacement of water pumps andmotor types, the increase of frequency converters so as to better match pumps and motors with actualneeds, etc.
Other related information on environmental protectionNo.II. Social ResponsibilitiesIn terms of consolidating and expanding the achievements of poverty eradication and rural revitalization,in the first half of 2023, ADAMA Anpon, one of the Company’s subsidiaries, continued to provide paired-up assistance to Sanhe Village, Shunhe Township, Huai'an District in Huai’an City of Jiangsu Provincein accordance with the arrangements of the local provincial government for the economically lessdeveloped villages. During the spring farming season, various towns and communities at Huai'an Districtpushed forward the public space governance for the countryside. According to the unified planning of thetask force, volunteers from ADAMA Anpon analyzed and deployed with the village councils to facilitatethe implementation. Thanks to the efforts on public space governance, Sanhe Village managed to rectify235 problems, recovered land area of 743.67 mu, and increased collective income by 321,300 yuanthrough a variety of methods such as land transfer, revitalization of idle assets and resources, andremediation of encroached assets and resources.
ADAMA Ltd. Semi-Annual Report 2023
Section VI - Significant EventsI. Commitments completed by the Company, the shareholders, the actualcontrollers, the purchasers, or other related parties during the Reporting Period,and those which should have been completed failed to be fulfilled during theReporting Period
□ Applicable√ Not applicable
Note: No commitment that should have been completed during the Reporting Period failed to be timelyfulfilled. For details of the on-going commitments, please refer to the 2022 Annual Report published onthe website www.cninfo.com.cn on March 21, 2023.II. Inadequate use of Company’s capital by the controlling shareholder or its
related parties for non-operating purposes
□ Applicable √ Not applicable
No such situation occurred during the Reporting Period.
III. Illegal guarantee
□ Applicable √ Not applicable
Non during the Reporting Period.IV. Engagement and Disengagement of CPA Firm
Has the semi-annual financial report been audited?
□ Yes √ No
This Semi-Annual Report is unaudited.
V. Explanations Given by the Board of Directors and Board of Supervisors
Regarding “Modified Auditor’s Report” Issued by CPA Firm for the ReportingPeriod
□ Applicable √ Not applicable
VI. Explanations Given by Board of Directors Regarding “Modified Auditor’s Report”
Issued for Last Year
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2023
VII. Bankruptcy and Restructuring
□ Applicable √ Not applicable
None during the Reporting Period.VIII. Litigation and Arbitration Matters
Material litigations or arbitrations:
□ Applicable √ Not applicable
None during the Reporting Period.Other litigations or arbitrations:
□ Applicable √ Not applicable
No significant litigation or arbitrations during the Reporting Period.
IX. Punishment and Rectification
□Applicable √Not applicable
None during the Reporting Period.X. Integrity of the Company, its controlling shareholders and actual controller
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2023
XI. Material Related-Party Transactions
1. Related-Party Transactions in the ordinary course of business
√ Applicable □ Not applicable
| Related party | Relationship | Type of related party transaction | Content of related party transaction | Pricing principle of related party transaction | Price | Value (RMB ‘0000) | Percentage against transactions of the same kind | Approved transaction quota (RMB ‘0000) | Whether exceeds the approved quota | Settlement methods | Market price of similar transactions if the Company knows | Date of announcement | Index of the disclosure |
| Syngenta AG and its subsidiaries | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | Market price | Market price | 61,684 | 7.51% | 144,486 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Bluestar (Beijing) Chemical Machinery Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | - | - | - | - | 856 | No | - | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Jiangsu Huaihe Chemicals Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materials and products | Purchase of raw materials/products | Market price | Market price | 12,367 | 1.51% | 23,512 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business |
ADAMA Ltd. Semi-Annual Report 2023
| Related party | Relationship | Type of related party transaction | Content of related party transaction | Pricing principle of related party transaction | Price | Value (RMB ‘0000) | Percentage against transactions of the same kind | Approved transaction quota (RMB ‘0000) | Whether exceeds the approved quota | Settlement methods | Market price of similar transactions if the Company knows | Date of announcement | Index of the disclosure |
| from related parties | in 2023 (No.2023-12) | ||||||||||||
| Sinofert | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | Market price | Market price | 46 | 0.01% | 115 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Jiangsu Yangnong Chemical Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | Market price | Market price | 39 | 0.00% | 52,875 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Jiangsu Youjia Plant Protection Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | Market price | Market price | 10,696 | 1.30% | 29,561 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
ADAMA Ltd. Semi-Annual Report 2023
| Related party | Relationship | Type of related party transaction | Content of related party transaction | Pricing principle of related party transaction | Price | Value (RMB ‘0000) | Percentage against transactions of the same kind | Approved transaction quota (RMB ‘0000) | Whether exceeds the approved quota | Settlement methods | Market price of similar transactions if the Company knows | Date of announcement | Index of the disclosure |
| Hangzhou (Torch) Xidou Door Film Industry Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | Market price | Market price | 7 | 0.00% | 14 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinochem Lantian Fluorine Materials Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | - | - | - | - | 288 | No | - | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Zhonglan International Chemical Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | Market price | Market price | 4,448 | 0.54% | 25,300 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinochem Agro Co.,Ltd. | Under the same control | Purchasing raw | Purchase of raw | Market price | Market price | 721 | 0.09% | 8,090 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related- |
ADAMA Ltd. Semi-Annual Report 2023
| Related party | Relationship | Type of related party transaction | Content of related party transaction | Pricing principle of related party transaction | Price | Value (RMB ‘0000) | Percentage against transactions of the same kind | Approved transaction quota (RMB ‘0000) | Whether exceeds the approved quota | Settlement methods | Market price of similar transactions if the Company knows | Date of announcement | Index of the disclosure |
| of Sinochem Holdings | materials and products from related parties | materials/products | Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) | ||||||||||
| Jiangsu Youshi Chemical Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | Market price | Market price | 601 | 0.07% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Bluestar Engineering Co.,Ltd. | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | Market price | Market price | 1,114 | 0.14% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| ELKEM SILICONES BRASIL LTDA | Under the same control of Sinochem Holdings | Purchasing raw materials and products | Purchase of raw materials/products | Market price | Market price | 26 | 0.00% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business |
ADAMA Ltd. Semi-Annual Report 2023
| Related party | Relationship | Type of related party transaction | Content of related party transaction | Pricing principle of related party transaction | Price | Value (RMB ‘0000) | Percentage against transactions of the same kind | Approved transaction quota (RMB ‘0000) | Whether exceeds the approved quota | Settlement methods | Market price of similar transactions if the Company knows | Date of announcement | Index of the disclosure |
| from related parties | in 2023 (No.2023-12) | ||||||||||||
| Beijing Guangyuan Yinong Chemical Co., LTD | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | Market price | Market price | 15 | 0.00% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinochem Chemical Science and Technology Research Institute Co., LTD | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | Market price | Market price | 4 | 0.00% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Syngenta (China) Investment Company Limited | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | Market price | Market price | 3,583 | 0.44% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
ADAMA Ltd. Semi-Annual Report 2023
| Related party | Relationship | Type of related party transaction | Content of related party transaction | Pricing principle of related party transaction | Price | Value (RMB ‘0000) | Percentage against transactions of the same kind | Approved transaction quota (RMB ‘0000) | Whether exceeds the approved quota | Settlement methods | Market price of similar transactions if the Company knows | Date of announcement | Index of the disclosure |
| Shandong Dacheng Agrochemical Company Limited | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | Market price | Market price | 275 | 0.03% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinochem International Crop Care Company Limited | Under the same control of Sinochem Holdings | Purchasing raw materials and products from related parties | Purchase of raw materials/products | Market price | Market price | 2,484 | 0.30% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Syngenta AG and its subsidiaries | Under the same control of Sinochem Holdings | Selling raw materials and products to related parties | Selling products | Market price | Market price | 64,150 | 3.72% | 159,178 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Jiangsu Huaihe Chemicals | Under the same control of Sinochem | Selling raw materials and | Selling products | Market price | Market price | 11,835 | 0.69% | 26,893 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions |
ADAMA Ltd. Semi-Annual Report 2023
| Related party | Relationship | Type of related party transaction | Content of related party transaction | Pricing principle of related party transaction | Price | Value (RMB ‘0000) | Percentage against transactions of the same kind | Approved transaction quota (RMB ‘0000) | Whether exceeds the approved quota | Settlement methods | Market price of similar transactions if the Company knows | Date of announcement | Index of the disclosure |
| Co., Ltd. | Holdings | products to related parties | in the Ordinary Course of Business in 2023 (No.2023-12) | ||||||||||
| Sinofert | Under the same control of Sinochem Holdings | Selling raw materials and products to related parties | Selling products | Market price | Market price | 9,966 | 0.58% | 14,168 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sino MAP | Under the same control of Sinochem Holdings | Selling raw materials and products to related parties | Selling products | Market price | Market price | 788 | 0.05% | 1,150 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Jiangsu Yangnong Chemical Co., Ltd. | Under the same control of Sinochem Holdings | Selling raw materials and products to related parties | Selling products | Market price | Market price | 1 | 0.00% | 6 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Jiangsu | Under the | Selling raw | Selling | Market | Market | 2,451 | 0.14% | 12,650 | No | Cash | N/A | March | Announcement on |
ADAMA Ltd. Semi-Annual Report 2023
| Related party | Relationship | Type of related party transaction | Content of related party transaction | Pricing principle of related party transaction | Price | Value (RMB ‘0000) | Percentage against transactions of the same kind | Approved transaction quota (RMB ‘0000) | Whether exceeds the approved quota | Settlement methods | Market price of similar transactions if the Company knows | Date of announcement | Index of the disclosure |
| Youshi Chemical Co., Ltd. | same control of Sinochem Holdings | materials and products to related parties | products | price | price | Settlement | 21,2023 | Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) | |||||
| Jiangsu Youjia Plant Protection Co., Ltd. | Under the same control of Sinochem Holdings | Selling raw materials and products to related parties | Selling products | Market price | Market price | 51 | 0.00% | 173 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Syngenta Nantong Crop Protection Co.,Ltd. | Under the same control of Sinochem Holdings | Selling raw materials and products to related parties | Selling products | Market price | Market price | 170 | 0.01% | 610 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinochem International Crop Care Company Limited | Under the same control of Sinochem Holdings | Selling raw materials and products to related parties | Selling products | Market price | Market price | 1,426 | 0.08% | 1,898 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
ADAMA Ltd. Semi-Annual Report 2023
| Related party | Relationship | Type of related party transaction | Content of related party transaction | Pricing principle of related party transaction | Price | Value (RMB ‘0000) | Percentage against transactions of the same kind | Approved transaction quota (RMB ‘0000) | Whether exceeds the approved quota | Settlement methods | Market price of similar transactions if the Company knows | Date of announcement | Index of the disclosure |
| Sinochem Agro Co.,Ltd. | Under the same control of Sinochem Holdings | Selling raw materials and products to related parties | Selling products | Market price | Market price | 268 | 0.02% | 230 | Yes | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Syngenta (China) Investment Company Limited | Under the same control of Sinochem Holdings | Selling raw materials and products to related parties | Selling products | Market price | Market price | 646 | 0.04% | 725 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Beijing Guangyuan Yinong Chemical Co., LTD | Under the same control of Sinochem Holdings | Selling raw materials and products to related parties | Selling products | Market price | Market price | 109 | 0.01% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Henan Junhua Development Co. Ltd. | Under the same control of Sinochem Holdings | Selling raw materials and products to related | Selling products | Market price | Market price | 4 | 0.00% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business |
ADAMA Ltd. Semi-Annual Report 2023
| Related party | Relationship | Type of related party transaction | Content of related party transaction | Pricing principle of related party transaction | Price | Value (RMB ‘0000) | Percentage against transactions of the same kind | Approved transaction quota (RMB ‘0000) | Whether exceeds the approved quota | Settlement methods | Market price of similar transactions if the Company knows | Date of announcement | Index of the disclosure |
| parties | in 2023 (No.2023-12) | ||||||||||||
| Sinochem Information Technology Co., Ltd | Under the same control of Sinochem Holdings | Receiving services from related parties | Value-added OA services | Market price | Market price | 43 | 0.01% | 40 | Yes | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinochem Information Technology Co., Ltd | Under the same control of Sinochem Holdings | Receiving services from related parties | IT services | Market price | Market price | 2 | 0.00% | 35 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Syngenta AG and its subsidiaries | Under the same control of Sinochem Holdings | Receiving services from related parties | Regular services | Market price | Market price | 45 | 0.01% | 52 | No | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sino MAP | Under the same control of Sinochem | Receiving services from | Regular services | - | - | - | - | 40 | No | - | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions |
ADAMA Ltd. Semi-Annual Report 2023
| Related party | Relationship | Type of related party transaction | Content of related party transaction | Pricing principle of related party transaction | Price | Value (RMB ‘0000) | Percentage against transactions of the same kind | Approved transaction quota (RMB ‘0000) | Whether exceeds the approved quota | Settlement methods | Market price of similar transactions if the Company knows | Date of announcement | Index of the disclosure |
| Holdings | related parties | in the Ordinary Course of Business in 2023 (No.2023-12) | |||||||||||
| Bluestar (Beijing) Chemical Machinery Co., Ltd. | Under the same control of Sinochem Holdings | Receiving services from related parties | Regular services | - | - | - | - | 100 | No | - | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Shenyang Chemical Co., Ltd. | Under the same control of Sinochem Holdings | Receiving services from related parties | Regular services | Market price | Market price | 58 | 0.01% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| China Bluestar Chengrand Research Institute Chemical Industry | Under the same control of Sinochem Holdings | Receiving services from related parties | Regular services | Market price | Market price | 1 | 0.00% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Shenyang | Under the | Receiving | Regular | Market | Market | 2 | 0.00% | - | - | Cash | N/A | March | Announcement on |
ADAMA Ltd. Semi-Annual Report 2023
| Related party | Relationship | Type of related party transaction | Content of related party transaction | Pricing principle of related party transaction | Price | Value (RMB ‘0000) | Percentage against transactions of the same kind | Approved transaction quota (RMB ‘0000) | Whether exceeds the approved quota | Settlement methods | Market price of similar transactions if the Company knows | Date of announcement | Index of the disclosure |
| Shenhua Institute Testing Technology Co., Ltd. | same control of Sinochem Holdings | services from related parties | services | price | price | Settlement | 21,2023 | Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) | |||||
| Sinofert | Under the same control of Sinochem Holdings | Receiving services from related parties | Regular services | Market price | Market price | 1 | 0.00% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Syngenta (China) Investment Company Limited | Under the same control of Sinochem Holdings | Receiving services from related parties | Regular services | Market price | Market price | 31 | 0.00% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Sinochem Innovation (Beijing) Technology Research Institute Co., Ltd. | Under the same control of Sinochem Holdings | Receiving services from related parties | Regular services | Market price | Market price | 4 | 0.00% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
ADAMA Ltd. Semi-Annual Report 2023
| Related party | Relationship | Type of related party transaction | Content of related party transaction | Pricing principle of related party transaction | Price | Value (RMB ‘0000) | Percentage against transactions of the same kind | Approved transaction quota (RMB ‘0000) | Whether exceeds the approved quota | Settlement methods | Market price of similar transactions if the Company knows | Date of announcement | Index of the disclosure |
| Zhonglan Lianhai Design Institute Co., Ltd. | Under the same control of Sinochem Holdings | Purchasing fixed assets from related parties | Purchase of fixed assets | Market price | Market price | 40 | 0.00% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Syngenta AG and its subsidiaries | Under the same control of Sinochem Holdings | Rendering services to related parties | Regular services | Market price | Market price | 187 | 0.01% | - | - | Cash Settlement | N/A | March 21,2023 | Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.2023-12) |
| Total | -- | -- | 190,389 | -- | 503,045 | -- | -- | -- | -- | -- | |||
| Details of large sales return | - | ||||||||||||
| Execution of related-party transactions in the ordinary course of business whose value was expected by types during this reporting period (if any) | According to the Company's daily business operation needs, the Company estimates that the total amount of daily related party transactions in 2023 will not exceed RMB 5,030.45 million. For details, please refer to Announcement on Expected Related-Party Transactions in the Ordinary Course of Business in 2023 (No.: 2023-12). The Company’s actual amount of daily related party transactions defined in the listing rules incurred for the six months ended June 30,2023 is RMB 1,903.89 million, which does not exceed the expected amount. | ||||||||||||
| Reasons for large difference between transaction price and market reference price (if applicable) | The 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. Semi-Annual Report 2023
2. Related-Party Transactions arising from Asset/Equity acquisition or sale
□ Applicable √ Not applicable
The Company was not involved in any related-party transactions arising from asset/equity acquisition orsale during the Reporting Period.
3. Related-Party Transactions with Joint Investments
□ Applicable √ Not applicable
The Company was not involved in any related-party transaction with joint investments during theReporting Period.
4. Credits and Liabilities with Related Parties
√ Applicable □ Not applicable
Whether non-operating credits and liabilities with related parties exist or not?
□ Yes √ No
The Company was not involved in any non-operating credit and liability with related parties in theReporting Period.
5. Transactions with financial companies with related relationships
√ Applicable □ Not applicable
Deposit Business
In RMB ’0000
| Related Parties | Relations | Maximum Daily Deposit Limit | Range of Interest Rate | Opening Balance | Transactions during the Reporting Period | Ending Balance | |
| Total Deposit Amount for the Reporting Period | Total Withdrawal Amount for the Reporting Period | ||||||
| Sinochem Finance Co., Ltd | Under the same control of Sinochem Holdings | 150,000 | 0.55%-1.9% | 41,766 | 16,183 | 47,550 | 10,399 |
ADAMA Ltd. Semi-Annual Report 2023
Loans
In RMB ’0000
| Related Parties | Relations | Credit Amount of the Loan | Range of Interest Rate | Opening Balance | Transactions during the Reporting Period | Ending Balance | |
| Total Amount of Loans for the Reporting Period | Total Amount of Payment for the Reporting Period | ||||||
| Sinochem Finance Co., Ltd | Under the same control of Sinochem Holdings | 50,000 | 2.7%-3.0% | - | 5,000 | - | 5,000 |
Facilities and Other Financial Services
In RMB ’0000
| Related Party | Relations | Type of the Services | Total Amount | Actual Amount Incurred |
| Sinochem Finance Co., Ltd | Under the same control of Sinochem Holdings | 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
The 18th Meeting of the 9th Session of the Board of Directors approved the Proposal on Credit Facilitiesfrom the Related Party.
The website to disclose the interim announcements on significant related-party transactions:
| Name of the interim announcement | Disclosure date of the interim announcement | Website to disclose the interim announcement |
| Announcement on Credit Facility of USD 250 million from a Related Party (Announcement No.2023-6) | February 16, 2023 | Juchao website www.cninfo.com.cn |
ADAMA Ltd. Semi-Annual Report 2023
XII. 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
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.
ADAMA Ltd. Semi-Annual Report 2023
2. Significant Guarantees
(1) Details of guarantees
√Applicable □ Not applicable
Unless otherwise specified, the unit hereunder is RMB ‘0000
| Guarantees provided by the Company in favor of third parties (excluding subsidiaries) | ||||||||||
| Guaranteed party | Disclosure date of the announcement | Planned guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral（if any） | Counter Guarantee（if any） | Period of guarantee | expired or not | Guarantee for a related party or not |
| -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| Total guarantee line approved in favor of third parties (excluding subsidiaries) during the reporting period (A1) | 0 | Total amount of the occurred guarantee in favor of third parties (excluding subsidiaries) during the reporting period (A2) | 0 | |||||||
| Aggregated guarantee line in favor of third parties (excluding subsidiaries) that has been approved by the end of the reporting period (A3) | 5,000 | Total guarantee balance in favor of third parties (excluding subsidiaries) by the end of the reporting period (A4) | 0 | |||||||
| Guarantees provided by the Company in favor of its subsidiaries | ||||||||||
| Guaranteed party | Disclosure date of the announcement | Planned guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral（if any） | Counter Guarantee（if any） | Period of guarantee | expired or not | Guarantee for a related party or not |
| ADAMA Anpon (Jiangsu) Ltd. | December 22, 2020 April 29, 2021 October 28,2021 | 125,800 | December 1, 2021 | 3,800 | Joint and several liability | / | / | Three years after the project loan matures | No | No |
| December 1, 2021 | 200 | Joint and several | / | / | Three years | Yes | No | |||
ADAMA Ltd. Semi-Annual Report 2023
| liability | after the project loan matures | ||||||
| January 1, 2022 | 3,500 | Joint and several liability | / | / | Three years after the project loan matures | No | No |
| February 28, 2022 | 2,100 | Joint and several liability | / | / | Three years after the project loan matures | No | No |
| April 28, 2022 | 1,400 | Joint and several liability | / | / | Three years after the project loan matures | No | No |
| May 20, 2022 | 750 | Joint and several liability | / | / | Three years after the project loan matures | No | No |
| June 26, 2022 | 2,350 | Joint and several liability | / | / | Three years after the project loan matures | No | No |
| January 18, 2022 | 4,000 | Joint and several liability | / | / | Three years after the loan | Yes | No |
ADAMA Ltd. Semi-Annual Report 2023
| matures | |||||||||
| January 25, 2022 | 400 | Joint and several liability | / | / | Three years after the project loan matures | No | No | ||
| February 28, 2022 | 390 | Joint and several liability | / | / | Three years after the project loan matures | No | No | ||
| July 2, 2022 | 810 | Joint and several liability | / | / | Three years after the project loan matures | No | No | ||
| March 31, 2022 | 104,100 | March 30, 2022 | 3,000 | Joint and several liability | / | / | Three years after the loan matures | Yes | No |
| August 11, 2022 | 1,000 | Joint and several liability | / | / | Three years after the project loan matures | No | No | ||
| August 31, 2022 | 1,000 | Joint and several liability | / | / | Three years after the project loan matures | No | No |
ADAMA Ltd. Semi-Annual Report 2023
| October 28, 2022 | 1,100 | Joint and several liability | / | / | Three years after the project loan matures | No | No |
| October 31, 2022 | 1,000 | Joint and several liability | / | / | Three years after the project loan matures | No | No |
| November 17, 2022 | 2,000 | Joint and several liability | / | / | Three years after the project loan matures | No | No |
| November 23, 2022 | 2,500 | Joint and several liability | / | / | Three years after the project loan matures | No | No |
| November 30, 2022 | 1,100 | Joint and several liability | / | / | Three years after the project loan matures | No | No |
| December 17, 2022 | 2,000 | Joint and several liability | / | / | Three years after the loan matures | No | No |
| January 12, 2023 | 1,000 | Joint and several | / | / | Three years | No | No |
ADAMA Ltd. Semi-Annual Report 2023
| liability | after the loan matures | ||||||||
| January 16, 2023 | 1,000 | Joint and several liability | / | / | Three years after the loan matures | No | No | ||
| April 4, 2023 | 1,200 | Joint and several liability | / | / | Three years after the loan matures | No | No | ||
| April 4, 2023 | 1,400 | Joint and several liability | / | / | Three years after the loan matures | No | No | ||
| April 13, 2023 | 440 | Joint and several liability | / | / | Three years after the loan matures | No | No | ||
| April 26, 2023 | 200 | Joint and several liability | / | / | Three years after the loan matures | No | No | ||
| Total guarantee line approved in favor of the subsidiaries during the reporting period (B1) | 114,000 | Total amount of the occurred guarantee in favor of the subsidiaries during the reporting period (B2) | 5,240 | ||||||
| Aggregated guarantee line that has been approved in favor of the subsidiaries by the end of the reporting period | 343,900 | Total guarantee balance in favor of the subsidiaries by the end of the reporting period (B4) | 32,440 | ||||||
ADAMA Ltd. Semi-Annual Report 2023
| (B3) | |||||||||||
| Guarantees provided by subsidiaries in favor of subsidiaries (USD ’0000) | |||||||||||
| Guaranteed party | Disclosure date of the announcement | Planned guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral（if any） | Counter Guarantee（if any） | Period of guarantee | expired or not | Guarantee for a related party or not | |
| Control Solutions, Inc. | October 31, 2018 | 1,300 | October 30, 2018 | 0 | joint and several liability | / | / | Generally 7 years (subject to the overseas laws) | No | No | |
| Control Solutions, Inc. | January 10, 2019 | 4,000 | January 9, 2019 | 750 | joint and several liability | / | / | The loan term (5 years) and any applicable statute of limitations period (generally 7 years). | No | No | |
| ADAMA Brazil | Not applicable | 22,287.08 | Related guarantees existed before the company was consolidated into the financial statements of the Company. | 2.10 | joint and several liability | / | / | Valid until cancelled | No | No | |
ADAMA Ltd. Semi-Annual Report 2023
| ADAMA Brazil | January 22, 2022 | 900 | December 29, 2021 | 900 | joint and several liability | / | / | December 31, 2025 | No | No |
| Adama India Private Ltd. | Not applicable | 8,915.34 | Related guarantees existed before the company was consolidated into the financial statements of the Company. | 3,684.38 | joint and several liability | / | / | Valid until cancelled | No | No |
| ADAMA Turkey Tar?m Sanayi ve Ticaret Limited ?irketi | Not applicable | 7,150 | Related guarantees existed before the company was consolidated into the financial statements of the Company. | 711.95 | joint and several liability | / | / | Valid until cancelled | No | No |
| Adama Makhteshim | Not applicable | unlimited | Related guarantees existed before the company was consolidated into the financial statements of the Company. | 50,440 | joint and several liability | / | / | Valid until cancelled | No | No |
ADAMA Ltd. Semi-Annual Report 2023
| Adama Makhteshim | April 25, 2023 | 7,875 | May 3, 2023 | 0 | joint and several liability | / | / | Valid until cancelled | No | No |
| Adama Agan | Not applicable | unlimited | Related guarantees existed before the company was consolidated into the financial statements of the Company. | 29,570 | joint and several liability | / | / | Valid until cancelled | No | No |
| ADAMA Agricultural Solutions UK Ltd. | January 22, 2022 | 423.58 | January 22, 2022 | 113.01 | joint and several liability | / | / | Valid until cancelled | No | No |
| ADAMA CELSIUS BV, Curacao branch, & ADAMA Fahrenheit BV, Curacao Branch | November 25, 2022 | 4,500 | November 24, 2022 | 0 | joint and several liability | / | / | Valid until cancelled | No | No |
| ADAMA CELSIUS BV, Curacao branch, & ADAMA Fahrenheit BV, Curacao | January 22, 2022 | 7,000 | January 22, 2022 | 3,133.97 | joint and several liability | / | / | Valid until cancelled | No | No |
ADAMA Ltd. Semi-Annual Report 2023
| Branch | ||||||||||
| ADAMA Ukraine LLC | Not applicable | 3,000 | Related guarantees existed before the company was consolidated into the financial statements of the Company. | 0 | joint and several liability | / | / | Valid until cancelled | No | No |
| Makhteshim Agan of North Amercia Inc. | Not applicable | 4,000 | Related guarantees existed before the company was consolidated into the financial statements of the Company. | 3,100 | joint and several liability | / | / | Valid until cancelled | No | No |
| Total guarantee line approved in favor of the subsidiaries during the reporting period (C1) | 7,875（approximately RMB 541.15 million） | Total amount of the guarantee in favor of the subsidiaries occurred during the reporting period (C2) | 92,405.41（approximately RMB 6,677.03 million） | |||||||
| Aggregated guarantee line that has been approved in favor of the subsidiaries by the end of the reporting period (C3) | 71,351 (approximately RMB 5,155.68 million) (the guarantee amount for Adama Makhteshim and Adama Agan is unlimited) | Total guarantee balance in favor of the subsidiaries by the end of the reporting period (C4) | 92,405.41（approximately RMB 6,677.03 million） | |||||||
| Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees) | ||||||||||
ADAMA Ltd. Semi-Annual Report 2023
| Total guarantee line approved during the reporting period (A1+B1+C1) | 168,114.64 | Total actual occurred amount of guarantee during the reporting period (A2+B2+C2) | 672,943.01 |
| Total guarantee line that has been approved at the end of the reporting period (A3+B3+C3) | 864,468.06 | Total actual guarantee balance at the end of the reporting period (A4+B4+C4) | 700,143.01 |
| Proportion of total guarantee amount (A4+B4+C4) to the net assets of the Company | 29.61% | ||
| Of which: | |||
| The balance of the guarantee provided in favor of the controlling shareholder and related party. | 0 | ||
| Amount of debt guarantee provided for the guaranteed party whose asset-liability ratio is not less than 70% directly or indirectly (E) | USD 553.01 million (approximately RMB 3,995.94 million) | ||
| The amount of the guarantee that exceeds 50% of the net assets | 0 | ||
| Total amount of the above three guarantees (D+E+F) | USD 553.01 million (approximately RMB 3,995.94 million) | ||
| As for undue guarantee, liability to guarantee has happened or there is evidence that joint liquidated liability may be undertaken during this Reporting Period (if existing) | -- | ||
| Regulated procedures are violated to offer guarantee (if existing) | -- | ||
ADAMA Ltd. Semi-Annual Report 2023
3. Wealth management entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other Significant Contracts
□ Applicable √ Not applicable
None during the Reporting Period.
XIII. Other Significant Events
□ Applicable √ Not applicable
None during the Reporting Period.
XIV. Significant Events of Subsidiaries
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2023
Section VII - Share Changes and ShareholdersI. Changes in shares
1. Changes in shares
Unit: share
| Before the Change | Increase/Decrease (+/-) | After the Change | |||||||
| Amount | Proportion | Newly Issued Shares | Bonus Shares | Capitalization of Public Reserves | Other | Subtotal | Amount | Proportion | |
| I. Restricted Shares | 4,500 | 0.0002% | -- | -- | -- | -- | -- | 4,500 | 0.0002% |
| 1. State-owned Shares | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| 2. State-owned Legal Person’s Shares | 0 | 0.00% | -- | -- | -- | -- | -- | 0 | 0.00% |
| 3. Shares Held by Domestic Investors | 4,500 | 0.0002% | -- | -- | -- | -- | -- | 4,500 | 0.0002% |
| Among which, Shares Held by Domestic Legal Person | 0 | 0.00% | -- | -- | -- | -- | -- | 0 | 0.00% |
| Shares Held by Domestic Natural Person | 4,500 | 0.0002% | -- | -- | -- | -- | -- | 4,500 | 0.0002% |
| II. Shares not Subject to | 2,329,807,266 | 99.9998% | -- | -- | -- | -- | -- | 2,329,807,266 | 99.9998% |
ADAMA Ltd. Semi-Annual Report 2023
| Trading Moratorium | |||||||||
| 1.RMB Ordinary Shares | 2,177,067,461 | 93.4439% | -- | -- | -- | -- | -- | 2,177,067,461 | 93.4439% |
| 2.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. Semi-Annual Report 2023
Reasons for the change in shares
□ Applicable √ Not applicable
Approval of the change in shares
□ Applicable √ Not applicable
The registered status for the change in shares
□ Applicable √ Not applicable
Status of share buyback
□ Applicable √ Not applicable
Status of share buyback in the way of centralized bidding
□ Applicable √Not applicable
Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable tocommon shareholders of the Company and other financial indexes over the last year and last period.
□ Applicable √Not Applicable
Other contents that the Company considered necessary or is required by securities regulatory authoritiesto disclose
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
| Shareholders | Restricted shares at the opening of the Reporting Period | Restricted shares increased in the Reporting Period | Shares Released from Restricted Sale During the Reporting Period | Restricted shares at the end of the Reporting Period | Restriction reasons | Date of release |
| Jiang Chenggang | 4,500 | 0 | 0 | 4,500 | Shares held by a supervisor should be locked up. | Six months after the expiration of the term |
| Total | 4,500 | 0 | 0 | 4,500 | -- | -- |
ADAMA Ltd. Semi-Annual Report 2023
II. Issuance and Listing of Securities
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2023
III. Total Number of Shareholders and Their Shareholdings
Unit: share
| Total Number of Shareholders as of the End of the Reporting Period | 42,447 (the number of ordinary A share shareholders is 29,382; the number of B share shareholders is 13,065) | Total Number of Preferred Stockholders with Vote Right Restored (if any) as of the End of the Reporting Period | 0 | |||||
| Shareholding of Top 10 Common Shareholders or Those Holding More than 5% Shares | ||||||||
| Number of Shareholder | Nature of Shareholder | Holding Percentage (%) | Number of Shareholding at the End of the Reporting Period | Increase and Decrease of Shares during the Reporting Period | Number of Common Shares Held Subject to Trading Moratorium | Number of Common Shares Held Not Subject to Trading Moratorium | Pledged, Marked or Frozen Shares | |
| Status of Shares | Amount | |||||||
| Syngenta Group Co., Ltd. | State-owned Legal Person | 78.47% | 1,828,137,961 | 0 | 0 | 1,828,137,961 | -- | 0 |
| China Cinda Asset Management Co., Ltd. | State-owned Legal Person | 1.34% | 31,115,916 | 0 | 0 | 31,115,916 | -- | 0 |
| Wang Xiuqin | Domestic Natural Person | 0.31% | 7,216,454 | -1,271,261 | 0 | 7,216,454 | -- | 0 |
| Bosera Funds-China Merchants Bank- Bosera Funds Xincheng No.2 Collective Asset Management Plan | Others | 0.28% | 6,500,000 | 0 | 0 | 6,500,000 | -- | 0 |
| Wu Feng | Domestic Natural Person | 0.26% | 6,141,269 | 661,354 | 0 | 6,141,269 | -- | 0 |
| Bosera Funds-Postal Savings Bank- Bosera Funds Xincheng No.3 Collective Asset Management Plan | Others | 0.26% | 6,000,000 | 0 | 0 | 6,000,000 | -- | 0 |
| Zhu Shenglan | Domestic Natural Person | 0.25% | 5,756,000 | 1,766,000 | 0 | 5,756,000 | -- | 0 |
| Hong Kong Securities Clearing Company Ltd. (HKSCC) | Overseas Legal Person | 0.22% | 5,118,398 | -5,487,682 | 0 | 5,118,398 | -- | 0 |
| China Universal Asset Management Fund-Industrial Bank-CUAM-Strategic Enhancement No.3 Collective Asset Management Plan | Others | 0.19% | 4,400,000 | 0 | 0 | 4,400,000 | -- | 0 |
| Qichun County State-owned Assets Supervision and Administration Bureau | State-owned | 0.18% | 4,169,266 | 0 | 0 | 4,169,266 | -- | 0 |
| Strategic Investors or the General Legal Person Who Become the Top 10 Common Shareholders (if any) due to the | Not Applicable | |||||||
ADAMA Ltd. Semi-Annual Report 2023
| Placement of New Shares | ||||
| Explanation on Associated Relationship or/and Persons | Syngenta Group Co., Ltd. is neither a related party to any other shareholders listed above, nor any acting-in-concert party as prescribed in the Administrative Methods for Acquisition of Listed Companies. It is unknown whether the other shareholders are related parties or acting-in-concert parties as prescribed in the Administrative Methods for Acquisition of Listed Companies. | |||
| Explanation on Situations of Entrusted Voting Rights or Waiver of Voting Rights Involved by the Above Shareholders | Not Applicable | |||
| Explanation on the Existence of Special Repurchase Accounts among the Top 10 Shareholders (if any) | Not applicable | |||
| Details of Shares Held by Top 10 Common Shareholders Not Subject to Trading Moratorium | ||||
| Number of Shareholders | Number of Common Shares Held Not Subject to Trading Moratorium at the End of the Period | Type of Shares | ||
| Type of Shares | Amount | |||
| Syngenta Group Co., Ltd. | 1,828,137,961 | RMB Ordinary Share | 1,828,137,961 | |
| China Cinda Asset Management Co., Ltd. | 31,115,916 | RMB Ordinary Share | 31,115,916 | |
| Wang Xiuqin | 7,216,454 | RMB Ordinary Share | 7,216,454 | |
| Bosera Funds-China Merchants Bank- Bosera Funds Xincheng No.2 Collective Asset Management Plan | 6,500,000 | RMB Ordinary Share | 6,500,000 | |
| Wu Feng | 6,141,269 | RMB Ordinary Share | 6,141,269 | |
| Bosera Funds-Postal Savings Bank- Bosera Funds Xincheng No.3 Collective Asset Management Plan | 6,000,000 | RMB Ordinary Share | 6,000,000 | |
| Zhu Shenglan | 5,756,000 | RMB Ordinary Share | 5,756,000 | |
| Hong Kong Securities Clearing Company Ltd. (HKSCC) | 5,118,398 | RMB Ordinary Share | 5,118,398 | |
| China Universal Asset Management Fund-Industrial Bank-CUAM-Strategic Enhancement No.3 Collective Asset Management Plan | 4,400,000 | RMB Ordinary Share | 4,400,000 | |
| Qichun County State-owned Assets Supervision and Administration Bureau | 4,169,266 | RMB Ordinary Share | 4,169,266 | |
| Explanation on associated relationship among the top ten common shareholders of tradable share not subject to trading moratorium, as well as among the top ten common shareholders of tradable share not subject to trading moratorium and top ten shareholders, or explanation on acting-in-concert | Syngenta Group Co., Ltd. is neither a related party to any other shareholders listed above, nor any acting-in-concert party as prescribed in the Administrative Methods for Acquisition of Listed Companies. It is unknown whether the other shareholders are related parties or acting-in-concert parties as prescribed in the Administrative Methods for Acquisition of Listed Companies. | |||
| Particular about the top ten common shareholder participating in the securities lending and borrowing business (if any) | Shareholder Wang Xiuqin held 7,216,454 shares of the Company through a credit collateral securities trading account. Shareholder Wu Feng held 4,776,243 shares of the Company through a common securities account and 1,365,026 shares of the Company through a credit collateral securities trading account, altogether 6,141,269 shares. Shareholder Zhu Shenglan held 5,756,000 shares of the Company through a credit collateral securities trading account. | |||
ADAMA Ltd. Semi-Annual Report 2023
Did any top 10 common shareholders or the top 10 common shareholders not subject to tradingmoratorium of the Company carry out a promissory buy-back in the Reporting Period?
□ Yes √ No
The top 10 common shareholders or the top 10 common shareholders not subject to tradingmoratorium of the Company had not carried out any agreed buy-back in the Reporting Period.IV. Changes in Shareholdings of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
No such cases in the Reporting Period. For details, see Annual Report 2022.V. Change of the Controlling Shareholder or the Actual ControllerChange of the controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
There was no change of the controlling shareholder of the Company in the Reporting Period.
Change of the actual controller in the Reporting Period
□ Applicable √ Not applicable
There was no change of the actual controller of the Company in the Reporting Period.
ADAMA Ltd. Semi-Annual Report 2023
Section VIII - Preferred stock
□ Applicable √ Not applicable
There was no preferred stock during Reporting Period.
ADAMA Ltd. Semi-Annual Report 2023
Section IX - Bonds
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2023
Section X - Financial Report
I. Audit report
Was the half-year report audited?
□ Yes √ No
The half-year report was not audited.
II. Financial Statements
Notes to the financial statements are presented in RMB’000.
ADAMA Ltd. Semi-Annual Report 2023
(Expressed in RMB '000)Consolidated Balance Sheet
| June 30 | December 31 | ||||
| Notes | 2023 | 2022 | |||
| Current assets | |||||
| Cash at bank and on hand | V.1 | 4,604,523 | 4,290,961 | ||
| Financial assets held for trading | V.2 | 1,930 | 1,685 | ||
| Derivative financial assets | V.3 | 192,141 | 233,809 | ||
| Bills receivable | V.4 | 107,296 | 112,297 | ||
| Accounts receivable | V.5 | 9,363,758 | 9,018,375 | ||
| Receivables financing | V.6 | 125,292 | 63,639 | ||
| Prepayments | V.7 | 375,984 | 341,102 | ||
| Other receivables | V.8 | 870,122 | 1,021,824 | ||
| Inventories | V.9 | 16,667,957 | 16,927,241 | ||
| Other current assets | V.10 | 1,168,948 | 1,129,688 | ||
| Total current assets | 33,477,951 | 33,140,621 | |||
| Non-current assets | |||||
| Long-term receivables | V.11 | 59,273 | 82,510 | ||
| Long-term equity investments | V.12 | 29,272 | 26,368 | ||
| Other equity investments | V.13 | 162,905 | 158,341 | ||
| Investment properties | 22,963 | 3,168 | |||
| Fixed assets | V.14 | 9,476,560 | 8,952,184 | ||
| Construction in progress | V.15 | 3,147,493 | 2,961,401 | ||
| Right-of-use assets | V.16 | 640,996 | 555,889 | ||
| Intangible assets | V.17 | 5,533,495 | 5,342,754 | ||
| Goodwill | V.18 | 5,100,028 | 4,805,157 | ||
| Deferred tax assets | V.19 | 1,759,583 | 1,347,263 | ||
| Other non-current assets | V.20 | 491,383 | 604,833 | ||
| Total non-current assets | 26,423,951 | 24,839,868 | |||
| Total assets | 59,901,902 | 57,980,489 | |||
ADAMA Ltd. Semi-Annual Report 2023
(Expressed in RMB '000)Consolidated Balance Sheet (continued)
| June 30 | December 31 | ||
| Notes | 2023 | 2022 | |
| Current liabilities | |||
| Short-term loans | V.21 | 6,341,677 | 3,342,921 |
| Derivative financial liabilities | V.22 | 735,658 | 545,516 |
| Bills payable | V.23 | 497,344 | 1,114,775 |
| Accounts payable | V.24 | 5,944,976 | 7,527,269 |
| Contract liabilities | V.25 | 1,446,129 | 1,776,573 |
| Employee benefits payable | V.26 | 856,181 | 1,370,786 |
| Taxes payable | V.27 | 575,271 | 459,574 |
| Other payables | V.28 | 2,489,597 | 1,611,282 |
| Non-current liabilities due within one year | V.29 | 2,591,835 | 2,262,131 |
| Other current liabilities | V.30 | 749,821 | 703,794 |
| Total current liabilities | 22,228,489 | 20,714,621 | |
| Non-current liabilities | |||
| Long-term loans | V.31 | 3,276,454 | 3,662,870 |
| Debentures payable | V.32 | 7,433,065 | 7,353,511 |
| Lease liabilities | V.33 | 498,967 | 431,076 |
| Long-term payables | 108,886 | 107,686 | |
| Long-term employee benefits payable | V.34 | 762,792 | 792,153 |
| Provisions | V.35 | 297,238 | 222,181 |
| Deferred tax liabilities | V.19 | 332,560 | 315,861 |
| Other non-current liabilities | V.36 | 1,318,941 | 1,255,875 |
| Total non-current liabilities | 14,028,903 | 14,141,213 | |
| Total liabilities | 36,257,392 | 34,855,834 | |
| Shareholders' equity | |||
| Share capital | V.37 | 2,329,812 | 2,329,812 |
| Capital reserve | V.38 | 12,945,837 | 12,986,333 |
| Less: Treasury shares | - | - | |
| Other comprehensive income | V.39 | 1,964,795 | 1,080,590 |
| Special reserves | 15,788 | 15,818 | |
| Surplus reserve | V.40 | 242,498 | 242,498 |
| Retained earnings | V.41 | 6,145,780 | 6,469,604 |
| Total equity attributed to the shareholders of the company | 23,644,510 | 23,124,655 | |
| Non-controlling interests | - | - | |
| Total Equity | 23,644,510 | 23,124,655 | |
| Total liabilities and equity | 59,901,902 | 57,980,489 | |
| Steve Hawkins Legal representative | Efrat Nagar Chief Financial Officer |
These financial statements were approved by the Board of Directors of the Company on August 82 2023.
The notes form part of these financial statements.
ADAMA Ltd. Semi-Annual Report 2023
(Expressed in RMB '000)
Company's Balance Sheet
| June 30 | December 31 | ||
| Notes | 2023 | 2022 | |
| Current assets | |||
| Cash at bank and on hand | XV.1 | 124,556 | 271,080 |
| Accounts receivable | XV.2 | 1,031,440 | 758,462 |
| Receivables financing | XV.3 | 47,446 | 2,596 |
| Prepayments | 18,305 | 7,944 | |
| Other receivables | XV.4 | 11,611 | 11,611 |
| Inventories | 175,209 | 256,001 | |
| Non-current assets due within one year | 125,000 | 125,000 | |
| Other current assets | 1,415 | 2,312 | |
| Total current assets | 1,534,982 | 1,435,006 | |
| Non-current assets | |||
| Long-term equity investments | XV.5 | 17,511,352 | 17,511,352 |
| Other equity investments | 84,720 | 84,720 | |
| Investment properties | 2,893 | 3,168 | |
| Fixed assets | 1,777,912 | 1,822,134 | |
| Construction in progress | 71,832 | 90,074 | |
| Right-of-use assets | 1,665 | 2,842 | |
| Intangible assets | 255,294 | 258,997 | |
| Deferred tax assets | 55,004 | 75,383 | |
| Other non-current assets | 271,708 | 269,574 | |
| Total non-current assets | 20,032,380 | 20,118,244 | |
| Total assets | 21,567,362 | 21,553,250 | |
| Current liabilities | |||
| Short-term loans | 50,000 | 50,000 | |
| Bills payables | 10,676 | 42,451 | |
| Accounts payables | 185,854 | 205,767 | |
| Contract liabilities | 23,468 | 15,116 | |
| Employee benefits payable | 6,881 | 14,699 | |
| Taxes payable | 2,558 | 3,529 | |
| Other payables | 729,711 | 730,901 | |
| Non-current liabilities due within one year | 718,780 | 671,454 | |
| Total current liabilities | 1,727,928 | 1,733,917 | |
| Non-current liabilities | |||
| Long-term loans | 829,063 | 836,795 | |
| Lease liabilities | 184 | 701 | |
| Long-term employee benefits payable | 96,417 | 97,574 | |
| Provisions | 27,326 | 28,516 | |
| Other non-current liabilities | 374,360 | 374,360 | |
| Total non-current liabilities | 1,327,350 | 1,337,946 | |
| Total liabilities | 3,055,278 | 3,071,863 | |
| Shareholders’ equity | |||
| Share capital | V.37 | 2,329,812 | 2,329,812 |
| Capital reserve | 5,523,8811 | 15,523,881 | |
| Other comprehensive income | 30,822 | 30,822 | |
| Special reserves | 16,479 | 16,509 | |
| Surplus reserve | V.40 | 242,498 | 242,498 |
| Retained earnings | 368,592 | 337,865 | |
| Total shareholders’ equity | 18,512,084 | 18,481,387 | |
| Total liabilities and shareholders’ equity | 21,567,362 | 21,553,250 |
ADAMA Ltd. Semi-Annual Report 2023
(Expressed in RMB '000)
Consolidated Income Statement
| Six months ended June 30 | ||||
| Notes | 2023 | 2022 | ||
| I. Operating income | V.42 | 17,253,201 | 18,795,828 | |
| Less: Cost of sales | V.42 | 13,358,727 | 13,822,755 | |
| Taxes and surcharges | V.43 | 51,420 | 55,837 | |
| Selling and Distribution expenses | V.44 | 2,161,199 | 2,159,089 | |
| General and administrative expenses | V.45 | 461,146 | 642,313 | |
| Research and Development expenses | V.46 | 262,378 | 274,738 | |
| Financial expenses (incomes) | V.47 | 455,855 | (438,224) | |
| Including: Interest expense | 565,782 | 326,788 | ||
| Interest income | 134,254 | 53,960 | ||
| Add: Investment income, net | V.48 | 10,090 | 4,706 | |
| Including: Income from investment in associates and joint ventures | 3,439 | 4,706 | ||
| Loss from changes in fair value | V.49 | (782,218) | (1,341,717) | |
| Credit impairment reversal (losses) | V.50 | 8,490 | (97,125) | |
| Asset impairment losses | V.51 | (105,887) | (85,346) | |
| Gain from disposal of assets | V.52 | 23,402 | 60,298 | |
| II. Operating profit | (343,647) | 820,136 | ||
| Add: Non-operating income | 36,073 | 29,797 | ||
| Less: Non-operating expenses | 11,015 | 16,559 | ||
| III. Total profit (loss) | (318,589) | 833,374 | ||
| Less: Income tax expenses (income) | V.53 | (76,433) | 101,276 | |
| IV. Net profit (loss) | (242,156) | 732,098 | ||
| (1). Classified by nature of operations | ||||
| (1.1). Continuing operations | (242,156) | 732,098 | ||
| (2). Classified by ownership | ||||
| (2.1). Shareholders of the Company | (242,156) | 732,098 | ||
| (2.2). Non-controlling interests | - | |||
| V. Other comprehensive income, net of tax | V. 39 | 884,205 | 788,235 | |
| Other comprehensive income (net of tax) attributable to shareholders of the Company | 884,205 | 788,235 | ||
| (1) Items that will not be reclassified to profit or loss: | 14,741 | 61,296 | ||
| (1.1) Re-measurement of defined benefit plan liability | 14,741 | 61,296 | ||
| (1.2) Fair Value changes in other equity investment | - | - | ||
| (2) Items that were or will be reclassified to profit or loss | 869,464 | 726,939 | ||
| (2.1) Effective portion of gains or loss of cash flow hedge | 26,534 | (60,863) | ||
| (2.2) Translation differences of foreign financial statements | 842,930 | 787,802 | ||
| VI. Total comprehensive income for the period attributable to Shareholders of the Company | 642,049 | 1,520,333 | ||
| Total comprehensive income for the period attributable to shareholders of the Company | 642,049 | 1,520,333 | ||
| Total comprehensive income for the period attributable to Non-controlling interests | - | - | ||
| VII. Earnings per share | XIV.2 | |||
| (1) Basic earnings (loss) per share (Yuan/share) | (0.10) | 0.31 | ||
| (2) Diluted earnings per share (Yuan/share) | N/A | N/A | ||
ADAMA Ltd. Semi-Annual Report 2023
(Expressed in RMB '000)
Company's Income Statement
| Six months ended June 30 | |||
| Notes | 2023 | 2022 | |
| I. Operating income | XV.6 | 1,093,709 | 1,185,094 |
| Less: Operating costs | XV.6 | 893,238 | 881,418 |
| Taxes and surcharges | 4,292 | 3,003 | |
| Selling and Distribution expenses | 2,744 | 2,178 | |
| General and administrative expenses | 66,887 | 65,151 | |
| Research and Development expenses | 16,129 | 38,042 | |
| Financial expenses | 755 | 25,075 | |
| Including: Interest expense | 24,412 | 25,382 | |
| Interest income | 4,814 | 3,340 | |
| Add: Investment income, net | - | - | |
| Gain from changes in fair value (losses) | - | - | |
| Credit impairment losses | 91 | (141) | |
| Asset Impairment reversal (losses) | (3,067) | 3,142 | |
| Gain from disposal of assets | 17 | 59,654 | |
| II. Operating Profit | 106,705 | 232,882 | |
| Add: Non-operating income | 7,815 | 13,082 | |
| Less: Non-operating expenses | 509 | 162 | |
| III. Total profit | 114,011 | 245,802 | |
| Less: Income tax expense | 20,379 | - | |
| IV. Net profit | 93,632 | 245,802 | |
| V. Other comprehensive income, net of tax | - | - |
| (1) Items that will not be reclassified to profit or loss | - | - |
| (1.1) Re-measurement of defined benefit plan liability | - | - |
| (1.2) FV changes in other equity investment | - | - |
| VI. Total comprehensive income for the period | 93,632 | 245,802 |
ADAMA Ltd. Semi-Annual Report 2023
(Expressed in RMB '000)
Consolidated Cash Flow Statement
| Six months ended June 30 | |||
| Notes | 2023 | 2022 | |
| I. Cash flows from operating activities: | |||
| Cash received from sale of goods and rendering of services | 17,397,575 | 16,427,981 | |
| Refund of taxes and surcharges | 93,456 | 164,802 | |
| Cash received relating to other operating activities | V.56(1) | 201,011 | 304,088 |
| Sub-total of cash inflows from operating activities | 17,692,042 | 16,896,871 | |
| Cash paid for goods and services | 13,362,264 | 13,683,974 | |
| Cash paid to and on behalf of employees | 2,464,353 | 2,329,629 | |
| Payments of taxes and surcharges | 388,247 | 494,626 | |
| Cash paid relating to other operating activities | V.56(2) | 1,542,054 | 1,734,503 |
| Sub-total of cash outflows from operating activities | 17,756,918 | 18,242,732 | |
| Net cash flows from operating activities | V.57(1)a | (64,876) | (1,345,861) |
| II. Cash flows from investing activities: | |||
| Cash received from disposal of investments | 158,498 | 5,887 | |
| Cash received from returns of investments | 1,710 | 1,588 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 30,688 | 70,264 | |
| Cash received relating to other investing activities | V.56(3) | 16,643 | - |
| Sub-total of cash inflows from investing activities | 207,539 | 77,739 | |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 1,178,443 | 1,291,889 | |
| Cash paid for acquisition of investments | 1,745 | - | |
| Net cash paid to acquire subsidiaries or other business units | 148,460 | - | |
| Cash paid relating to other investing activities | V.56(4) | - | 64,719 |
| Sub-total of cash outflows from investing activities | 1,328,648 | 1,356,608 | |
| Net cash flows used in investing activities | (1,121,109) | (1,278,869) | |
| III. Cash flows from financing activities: | |||
| Cash received from borrowings | 2,711,547 | 2,435,083 | |
| Cash received from other financing activities | V.56(5) | 1,428,302 | 11,012 |
| Sub-total of cash inflows from financing activities | 4,139,849 | 2,446,095 | |
| Cash repayments of borrowings | 1,599,428 | 1,163,615 | |
| Cash payment for dividends, profit distributions and interest | 584,774 | 431,993 | |
| Including: Dividends paid to non-controlling interest | 18,763 | 39,074 | |
| Cash paid relating to other financing activities | V.56(6) | 554,624 | 944,580 |
| Sub-total of cash outflows from financing activities | 2,738,826 | 2,540,188 | |
| Net cash flow provided by (used in) financing activities | 1,401,023 | (94,093) | |
| IV. Effects of foreign exchange rate changes on cash and cash equivalents | 130,246 | 150,085 | |
| V. Net increase (decrease) in cash and cash equivalents | V.57(1)b | 345,284 | (2,568,738) |
| Add: Cash and cash equivalents at the beginning of the year | 4,225,253 | 5,759,480 | |
| I. VI. Cash and cash equivalents at the end of the period | V.57(2) | 4,570,537 | 3,190,742 |
ADAMA Ltd. Semi-Annual Report 2023
(Expressed in RMB '000)
Company's Cash Flow Statement
| Six months ended June 30 | |||
| Notes | 2023 | 2022 | |
| I. Cash flows from operating activities: | |||
| Cash received from sale of goods and rendering of services | 621,379 | 786,908 | |
| Refund of taxes and surcharges | 28,662 | 51,548 | |
| Cash received relating to other operating activities | XV.7(1) | 25,659 | 23,102 |
| Sub-total of cash inflows from operating activities | 675,700 | 861,558 | |
| Cash paid for goods and services | 551,879 | 653,912 | |
| Cash paid to and on behalf of employees | 68,837 | 70,273 | |
| Payments of taxes and surcharges | 6,605 | 3,899 | |
| Cash paid relating to other operating activities | XV.7(2) | 112,039 | 70,927 |
| Sub-total of cash outflows from operating activities | 739,360 | 799,011 | |
| Net cash flows from operating activities | XV.8 | (63,660) | 62,547 |
| II. Cash flows from investing activities: | |||
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 17 | 66,420 | |
| Cash received relating to other investing activities | XV.7.(3) | 2,850 | 150,000 |
| Sub-total of cash inflows from investing activities | 2,867 | 216,420 | |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 36,808 | 50,383 | |
| Cash paid for other investing activities | XV.7.(4) | - | 250,000 |
| Sub-total of cash outflows from investing activities | 36,808 | 300,383 | |
| Net cash flows used in investing activities | (33,941) | (83,963) | |
| III. Cash flows from financing activities: | |||
| Cash received from borrowings | 450,000 | 650,000 | |
| Cash received relating to other financing activities | XV.7.(5) | 12,750 | 6,124 |
| Sub-total of cash inflows from financing activities | 462,750 | 656,124 | |
| Cash repayments of borrowings | 409,732 | 553,732 | |
| Cash payment for dividends, profit distributions or interest | 87,684 | 45,228 | |
| Cash paid relating to other financing activities | XV.7.(6) | 3,837 | 18,741 |
| Sub-total of cash outflows from financing activities | 501,253 | 617,701 | |
| Net cash flow provided by (used in) financing activities | (38,503) | 38,423 | |
| IV. Effects of foreign exchange rate changes on cash and cash equivalents | (880) | 60 | |
| V. Net decrease in cash and cash equivalents | (136,984) | 17,067 | |
| Add: Cash and cash equivalents at the beginning of the year | XV.8(2) | 258,330 | 259,434 |
| VI. Cash and cash equivalents at the end of the period | XV.8(2) | 121,346 | 276,501 |
ADAMA Ltd. Semi-Annual Report 2023
(Expressed in RMB '000)Consolidated Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2023
| Share capital | Capital reserve | Other comprehensive income | Special reserves | Surplus reserve | Retained earnings | Total | Non-controlling interests | Total equity | |||
| I. 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 | ||
| II. Changes in equity for the period | - | (40,496) | 884,205 | (30) | - | (323,824) | 519,855 | - | 519,855 | ||
| 1. Total comprehensive income (loss) | - | - | 884,205 | - | - | (242,156) | 642,049 | - | 642,049 | ||
| 2. Owner’s contributions and reduction | - | (40,496) | - | - | - | - | (40,496) | - | (40,496) | ||
| 2.1 Transactions with holders of non controlling interest | - | (40,496) | - | - | - | - | (40,496) | - | (40,496) | ||
| 3. Appropriation of profits | - | - | - | - | - | (81,668) | (81,668) | - | (81,668) | ||
| 3.1 Distribution to owners | - | - | - | - | - | (62,905) | (62,905) | - | (62,905) | ||
| 3.2 Distribution to non-controlling interest | - | - | - | - | - | (18,763) | (18,763) | - | (18,763) | ||
| 4. Special reserve | - | - | - | (30) | - | - | (30) | - | (30) | ||
| 4.1 Transfer to special reserve | - | - | - | 5,010 | - | - | 5,010 | - | 5,010 | ||
| 4.2 Amount utilized | - | - | - | (5,040) | - | - | (5,040) | - | (5,040) | ||
| III. Balance at June 30, 2023 | 2,329,812 | 12,945,837 | 1,964,795 | 15,788 | 242,498 | 6,145,780 | 23,644,510 | - | 23,644,510 | ||
ADAMA Ltd. Semi-Annual Report 2023
(Expressed in RMB '000)Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2022
| Share capital | Capital reserve | Other comprehensive income | Special reserves | Surplus reserve | Retained earnings | Total | Non-controlling interests | Total equity | |
| I. 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 |
| II. Changes in equity for the period | - | - | 788,235 | (1,034) | - | 674,386 | 1,461,587 | - | 1,461,587 |
| 1. Total comprehensive income | - | - | 788,235 | - | - | 732,098 | 1,520,333 | - | 1,520,333 |
| 2. Owner’s contributions and reduction | - | - | - | - | - | - | - | - | - |
| 2.1 Cancellation of shares | - | - | - | - | - | - | - | - | - |
| 2.2 Non-controlling interests in respect of business combination | - | - | - | - | - | - | - | - | - |
| 3. Appropriation of profits | - | - | - | - | - | (57,712) | (57,712) | - | (57,712) |
| 3.1 Distribution to owners | - | - | - | - | - | (18,638) | (18,638) | - | (18,638) |
| 3.2 Distribution to non-controlling interest | - | - | - | - | - | (39,074) | (39,074) | - | (39,074) |
| 4. Special reserve | - | - | - | (1,034) | - | - | (1,034) | - | (1,034) |
| 4.1 Transfer to special reserve | - | - | - | 3,507 | - | - | 3,507 | - | 3,507 |
| 4.2 Amount utilized | - | - | - | (4,541) | - | - | (4,541) | - | (4,541) |
| III. Balance at June 30, 2022 | 2,329,812 | 12,977,171 | 355,851 | 18,823 | 240,162 | 6,614,851 | 22,536,670 | - | 22,536,670 |
ADAMA Ltd. Semi-Annual Report 2023
(Expressed in RMB '000)Company's Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2023
| Share capital | Capital reserve | Other comprehensive income | Special reserves | Surplus reserve | Retained earnings | Total | |||||
| I. Balance at December 31, 2022 | 2,329,812 | 15,523,881 | 30,822 | 16,509 | 242,498 | 337,865 | 18,481,387 | ||||
| II. Changes in equity for the period | - | - | - | (30) | - | 30,727 | 30,697 | ||||
| 1. Total comprehensive income | - | - | - | - | - | 93,632 | 93,632 | ||||
| 2. Appropriation of profits | - | - | - | - | - | (62,905) | (62,905) | ||||
| 2.1 Transfer to Distribution to shareholders | - | - | - | - | - | (62,905) | (62,905) | ||||
| 3. Special reserve | - | - | - | (30) | - | - | (30) | ||||
| 3.1 Transfer to special reserve | - | - | - | 5,010 | - | - | 5,010 | ||||
| 3.2 Amount utilized | - | - | - | (5,040) | - | - | (5,040) | ||||
| Ⅲ. Balance at June 30, 2023 | 2,329,812 | 15,523,881 | 30,822 | 16,479 | 242,498 | 368,592 | 18,512,084 | ||||
For the six months ended June 30, 2022
| Share capital | Capital reserve | Other comprehensive income | Special reserves | Surplus reserve | Retained earnings | Total | |
| I. Balance at December 31, 2021 | 2,329,812 | 15,523,881 | 30,668 | 20,548 | 240,162 | 335,485 | 18,480,556 |
| II. Changes in equity for the period | - | - | - | (1,034) | - | 227,164 | 226,130 |
| 1. Total comprehensive income | - | - | - | - | - | 245,802 | 245,802 |
| 2. Appropriation of profits | - | - | - | - | - | (18,638) | (18,638) |
| 2.1 Transfer to Distribution to shareholders | - | - | - | - | - | (18,638) | (18,638) |
| 3. Special reserve | - | - | - | (1,034) | - | - | (1,034) |
| 3.1 Transfer to special reserve | - | - | - | 3,507 | - | - | 3,507 |
| 3.2 Amount utilized | - | - | - | (4,541) | - | - | (4,541) |
| Ⅲ. Balance at June 30, 2022 | 2,329,812 | 15,523,881 | 30,668 | 19,514 | 240,162 | 562,649 | 18,706,686 |
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, andsubsequently the Company, are ultimately controlled by Sinochem Holdings - parent of both ChemChinaand Sinochem 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 largestsubsidiaries of the Company, refer to Note VII.
The Company’s consolidated financial statements had been approved by the Board of Directors of theCompany on August 28, 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 RegulatoryCommission (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 cashequivalents or fair value of the consideration paid. Liabilities shall be measured at the actual amount of cashor assets received, or the contractual amount in a present obligation, or the prospective amount of cash orcash equivalents 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 from June 30,2023 andhave not identified any significant doubtful matter or event on the going concern, as such the financialstatement have been prepared 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 June 30, 2023 and the Company'sconsolidated operating results, changes in shareholders' equity and cash flows for the six months then 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 functionalcurrency. Functional currencies of overseas subsidiaries are determined on the basis of the principaleconomic environment in which the overseas subsidiaries operate. The functional currency of the overseassubsidiaries is mainly the United States Dollar (hereinafter "USD"). The presentation currency of thesefinancial statements is Renminbi.
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. Thedifference between the carrying amount of the net assets obtained and the carrying amount of theconsideration paid for the combination is adjusted to the share premium in capital reserve. If the sharepremium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.Costs that are directly attributable to the combination are charged to profit or loss in the period in which theyare 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 relatedmanagement costs that are directly attributable to the combination by the acquirer are charged to profit orloss in the period in which they are incurred. Direct capital issuance costs incurred in respect of equityinstruments or liabilities issued pursuant to the business combination should be charged to the respect equityinstruments or 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 theacquiree’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.
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-controllinginterests and presented as "non-controlling interests" in the shareholders’ equity in consolidated balancesheet. The portion of net profits or losses of subsidiaries for the period attributable to non-controllinginterests is presented as "non-controlling interests" in consolidated income statement below the "net profit"line item. Total comprehensive income attributable to non-controlling shareholders is presented separatelyin the consolidated 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 subsidiaryexceeds 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.
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 otherfinancial instrument is recognized as a liability at the present value of the exercise price (according to the"anticipated acquisition method"). The Group’s share of a subsidiary’s profits includes the share of theholders of the 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 anticipatedacquisition method implementation no value is given to the Call option in the consolidated financialstatements.
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 toinvestment 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.
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 arecapitalized 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 bereclassified 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 andpresented under other comprehensive income to profit or loss in the period in which the disposal occurs.
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 arereclassified 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 madeaccording 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.
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 thefinancial asset give rise on specified dates to cash flows that are solely payments of principal and interest onthe principal 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 orreclassified. When the financial asset is derecognized the cumulative gain or loss previously recognized inother comprehensive 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 theperiod in which the Group holds these non-trading investment instruments, the right to receive dividends inthe Group has been established, and the economic benefits related to dividends are likely to flow into theGroup, and when the amount of dividends can be reliably measured, the dividend income is recognized inthe current profit and loss.
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 hasincreased 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 sinceinception.(b) significant changes in external market indicators of credit risk for a particular financial instrument
or 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 technologicalenvironment 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 economic
incentive to make scheduled contractual payments or to otherwise have an effect on the probability
of a default occurring.(h) significant changes that are expected to reduce the receivable’s economic incentive to make
scheduled 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.
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’sfinancial difficulty, having granted to the receivable a concession(s) that the lender(s) would nototherwise consider;(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 collateralrelative 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 differencebetween: (a) the contractual cash flows that are due to an entity under the contract; and (b) the cash flowsthat the 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.
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 continuinginvolvement 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 asliabilities 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.
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 isderecognized in full or in part, the difference between the carrying amount of the financial liabilitiesderecognized and the consideration paid (including transferred non-cash assets or new financial liability) isrecognized in profit 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 andexpected 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 recordsspecific provision or collective provision, which is determined for groups of similar assets in countries inwhich there 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 theattention of the Group about loss events such as a significant decline in the solvency of an individual debtoror the portfolio of debtors, and significant changes in the financial condition that have an adverse effect onthe debtor.
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 ofconversion 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
inventories
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.
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 financialstatements. 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 ofcombination. The difference between initial investment cost and cash paid, non-cash assets transferred andbook value of liabilities assumed, is adjusted in capital reserve. If the balance of capital reserve is notsufficient to absorb 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 involvesmultiple exchange transactions, the initial investment cost is carried at the aggregate of the carrying amountof the 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 equityinstruments, the historical cost is determined based on the fair value of the equity instruments issued.
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 appropriateadjustments to be confirmed with the Group's accounting policies and accounting period. The Groupdiscontinues recognizing its share of net losses of the investee after the carrying amount of the long-termequity investment together with any long-term interests that in substance form part of its net investment inthe investee is reduced to zero. If the Group has incurred obligations to assume additional losses of theinvestee, a provision is recognized according to the expected obligation, and recorded as investment loss forthe 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 beconsidered.
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).
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 leasedconstructions, 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 subsequentexpenditures can be measured reliably. Other subsequent expenditures are recognized in profit or loss in theperiod in which they are incurred.
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 anaccounting 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) | Residual value (%) | Annual depreciation rate (%) |
| Buildings | the straight-line method | 15-50 | 0-4 | 1.9-6.7 |
| Machinery and equipment | the straight-line method | 3-22 | 0-4 | 4.4-33.3 |
| Office and other equipment | the straight-line method | 3-17 | 0-4 | 5.6-33.3 |
| Motor 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,installation costs, borrowing costs capitalized and other expenditures incurred until such time as the relevantassets are completed and ready for its intended use. When the asset concerned is ready for its intended use,the cost of 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).
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 thesuspension 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 customerrelations. 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).
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 anddevelopment 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 reliablymeasured.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. Thoseexpenditures capitalized during the development stage are recognized as development costs incurred andwill be transferred 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,construction 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.
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 forcontributions 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 definedbenefit 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 byrespective employees. Service cost and interest expense on the defined benefit liability are charged to profitor loss and remeasurements of the defined benefit liability are recognized in other comprehensive income.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 correspondingexpense 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 employee
termination plan or a curtailment proposal.- When the Group has a formal detailed restructuring plan involving the payment of termination benefits
and has raised a valid expectation in those affected that it will carry out the restructuring by starting to
implement 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 corporatedebentures denominated in the same currency, that have maturity dates approximating the terms of theGroup’s obligation.
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 liabilitiesrecognized based on the shares or other equity instrument undertaken by the Company. For cash-settledshare-based payment made in return for the rendering of employee services that cannot be exercised untilthe services are fully provided during the vesting period or specified performance targets are met, on eachbalance sheet date within the vesting period, the services acquired in the current period shall, based on thebest estimate of the number of exercisable instruments, be recognized in relevant expenses and thecorresponding liabilities 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, theCompany should re-measure the fair value of the liabilities and the changes should be included in the currentperiod profit and loss.
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
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 assetrecognized 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, isamortized in the contract period using effective interest rate. The Group does not adjust the amount ofconsideration for the effects of a significant financing component if the Group expects, at contract inception,that the period between when the entity transfers a good to a customer and when the customer pays for thatgood will 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 anyexpected costs to recover those products.
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 isrecognized only when the Group can comply with the conditions attached to the grant and the Group willreceive the 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. Agovernment 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 andexpenses. Government grants related that are irrelevant with the Groups’s normal course of business areincluded 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 aremeasured 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 initialrecognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not abusiness combination) that affects neither the accounting profit nor taxable profits (or deductible losses) atthe time of 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 insubsidiaries and associates, and interests in joint ventures, except where the Group is able to control thetiming of the reversal of the temporary difference and it is probable that the temporary difference will notreverse in 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 comprehensiveincome or shareholders’ equity, and deferred tax recognized on business combinations, all other currentincome 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 orliabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presentedon a net basis.
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(exclude certain variable lease payments, as detailed in note III 27.4), and concurrently the Group recognizesa right-of-use asset at the same amount, adjusted for any prepaid lease payments paid at the lease date orbefore, 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.
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 economicrelationship;? 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.
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 arerecognized 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 suchderivatives 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.
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 forsegment reporting. Segment accounting policies are consistent with those for the consolidated financialstatements.
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 November 2022, the Ministry of Finance issued "Accounting Standards for Business EnterprisesInterpretation No. 16” (hereinafter referred to as “Interpretation No. 16”) which clarified the followingaccounting 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 clarification regarding “Deferred tax related to assets andliabilities arising from a single transaction” was effective from 1 January 2023. Adoption of the interpretationhas 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.
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 andexpenses. 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 theattention of the Group about loss events such as a significant decline in the solvency of an individual debtoror the portfolio of debtors, and significant changes in the financial condition that have an adverse effect onthe debtor. If there is objective evidence of a recovery in the value of receivables which can be relatedobjectively to an event occurring after the impairment was recognized, the previously recognized impairmentloss is reversed .
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.
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 thedepreciation 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 totalprovision 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.
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.
IV. Taxation
1. Main types of taxes and corresponding tax rates
The income tax rate in China is 25% (2022: 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 | 2023 | ||
| 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. | 25.3% | ||
| 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. | 26.1% |
The VAT rate of the Group's subsidiaries is in the range between 2.5% to 27%.
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 “ApprovedEnterprise” 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 - “theAmendment”). The Amendment is effective from January 1, 2011 and its provisions apply to preferredincome derived or accrued in 2011 and thereafter by a preferred company, per the definition of these termsin the Amendment.
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
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 iseffective 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 InvestmentRegulations (Preferred Technological Income and Capital Gain of Technological Enterprise) – 2017(hereinafter: “the Regulations”), which provides rules for applying the “preferred technological enterprise”and “special preferred technological enterprise” tax benefit tracks including the Nexus formula that providesthe mechanism 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 theconditions set forth in the Amendment.
During 2022, Solutions announced its choice to release the retained earnings in a number of subsidiaries andcommitted to pay a reduced corporate tax in the amount of approximately 101 million RMB, which wasrecorded as tax expenses in the financial statements of 2022.
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.
V. Notes to the consolidated financial statements
1. Cash at Bank and On Hand
| June 30 | December 31 | ||
| 2023 | 2022 | ||
| Cash on hand | 960 | 785 | |
| Deposits in banks | 4,569,577 | 4,224,468 | |
| Other cash and bank balances | 33,986 | 65,708 | |
| 4,604,523 | 4,290,961 | ||
| Including cash and bank balances placed outside China | 3,890,804 | 3,300,538 | |
As at June 30, 2023 restricted cash and bank balances was 33,986 thousand RMB (as at December 31, 202265,708 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Financial assets held for trading
| June 30 | December 31 | ||
| 2023 | 2022 | ||
| Bank deposits | 1,930 | 1,685 | |
| 1,930 | 1,685 |
3. Derivative financial assets
| June 30 | December 31 | ||
| 2023 | 2022 | ||
| Economic hedge | 170,384 | 224,128 | |
| Accounting hedge derivatives | 21,757 | 9,681 | |
| 192,141 | 233,809 |
4. Bills Receivable
| June 30 | December 31 | ||
| 2023 | 2022 | ||
| Post-dated checks receivable | 107,296 | 112,297 | |
| 107,296 | 112,297 |
All bills receivables are due within 1 year.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable
a. By category
| June 30, 2023 | |||||
| Book value | Provision for expected credit losses | ||||
| Amount | Percentage (%) | Amount | Percentage (%) | Carrying amount | |
| Account receivables assessed individually for impairment | 993,479 | 10 | 229,040 | 23 | 764,439 |
| Account receivables assessed collectively for impairment | 8,700,720 | 90 | 101,401 | 1 | 8,599,319 |
| 9,694,199 | 100 | 330,441 | 3 | 9,363,758 | |
| December 31, 2022 | |||||
| Book value | Provision for expected credit losses | ||||
| Amount | Percentage (%) | Amount | Percentage (%) | Carrying amount | |
| Account receivables assessed individually for impairment | 383,265 | 4 | 212,640 | 55 | 170,625 |
| Account receivables assessed collectively for impairment | 8,945,138 | 96 | 97,388 | 1 | 8,847,750 |
| 9,328,403 | 100 | 310,028 | 3 | 9,018,375 | |
b. Aging analysis
| June 30, 2023 | |
| Within 1 year (inclusive) | 9,217,990 |
| Over 1 year but within 2 years | 246,154 |
| Over 2 years but within 3 years | 25,500 |
| Over 3 years but within 4 years | 34,619 |
| Over 4 years but within 5 years | 54,576 |
| Over 5 years | 115,360 |
| 9,694,199 |
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 geographicallocation:
Geographical location A:
Account receivables in geographical location A are grouped based on similar credit risk:
| June 30, 2023 | |||
| Book value | Provision for expected credit loss | Percentage (%) | |
| Credit group A | 1,928,342 | 8,868 | 0.5 |
| Credit group B | 556,005 | 4,812 | 0.9 |
| Credit group C | 129,336 | 5,643 | 4.4 |
| Credit group D | 46,583 | 972 | 2.1 |
| 2,660,266 | 20,295 | 0.8 | |
Geographical location B:
Account receivables in geographical location B are grouped based on aging analysis:
| June 30, 2023 | |||
| Book value | Provision for expected credit loss | Percentage (%) | |
| Accounts receivable that are not overdue | 746,193 | 6,629 | 0.9 |
| Debts overdue less than 60 days | 29,054 | 872 | 3.0 |
| Debts overdue less than 180 days but more than 60 days | 37,678 | 3,768 | 10.0 |
| Debts overdue above 180 days | 24,684 | 9,874 | 40.0 |
| Legal Debtors | 41,960 | 41,960 | 100.0 |
| 879,569 | 63,103 | 7.2 | |
Other geographical locations:
| June 30, 2023 | |||
| Book value | Provision for expected credit loss | Percentage (%) | |
| Other account receivables assessed collectively for impairment | 5,160,885 | 18,003 | 0.35 |
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 expected credit loss (credit losses has not occurred) | Lifetime expected credit loss (credit losses has occurred) | Total | |
| January 1, 2023 | 44,012 | 266,016 | 310,028 |
| Addition (write back) during the period, net | (2,285) | 1,420 | (865) |
| Exchange rate effect | 3,259 | 18,019 | 21,278 |
| Balance as of June 30, 2023 | 44,986 | 285,455 | 330,441 |
d. Five largest accounts receivable at June 30, 2023:
| Name | Closing balance | Proportion of Accounts receivable (%) | Allowance of expected credit losses (credit losses has occurred) |
| Customer 1 | 190,711 | 2.0 | - |
| Customer 2 | 188,882 | 1.9 | - |
| Customer 3 | 140,159 | 1.4 | - |
| Customer 4 | 114,009 | 1.2 | - |
| Customer 5 | 97,122 | 1.0 | - |
| Total | 730,883 | 7.5 | - |
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 variousdifferent currencies, to a foreign company that was set up for this purpose and that is not owned by theAdama Ltd. (hereinafter – “the Acquiring Company”). Acquisition of the trade receivables by the AcquiringCompany 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 30 June2023, the Securitization agreement was approved up to October 31, 2023.
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 June 30, 2023 – 2,529 million RMB), during the months July through September themaximum scope of the securitization is $300 million (as of June 30, 2023 – 2,168 million RMB) and duringthe months October through February the maximum scope of the securitization is $250 million (as of June30, 2023– 1,806 million RMB).In addition the company has a temporary uncommitted facility of $150million (as of June 30, 2023- 1,084 million RMB) until September 20
th2023 and permanent uncommittedfacility of 50$ million (as of June 30, 2023- 361 million RMB) which will be applicable each period. Theproceeds received from those customers whose debts were sold are used for acquisition of new tradereceivables.
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 tradereceivable and its anticipated repayment date. In the month following acquisition of the debt, the AcquiringCompany pays in cash most of the debt while the remainder is recorded as a subordinated note and ascontinuing involvement that is paid after collection of the debt sold. If the customer does not pay its debt onthe anticipated repayment date, the Company bears interest up to the earlier of the date on which the debt isactually repaid or the date on which debt collection is transferred to the insurance company (the actual costsare not significant 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 supplyagreement covering the product, such as: a failure to supply the correct product, a defect in the product,delinquency 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 tradereceivables 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 June 30, 2023, 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 notconsolidated 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.
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 continuing involvement and subordinated note recorded in the balance sheet as part of the “otherreceivables” line item.
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
agreements:
(1) Since 2016, a securitization transaction with Rabobank Brazil for sale of customer receivables(hereinafter "FIDC-Donegal agreement"). Under the FIDC-Donegal agreement, the subsidiary will sell itsreceivables to a securitization structure (hereinafter - “the entity”) that was formed for this purpose wherethe subsidiary has subordinate rights of 5% of the entity's capital.
As at 30 June 2023, the FIDC-Donegal agreement was approved up to September 30, 2024. The maximumsecuritization scope as of June 30, 2023 is BRL 350 million (as of June 30, 2023 – 525 million RMB).
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 itscontinuing 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 thesecuritization 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 30 June 2023, the FIDC-Liverpool agreement was approved up to November 10, 2024. The maximumsecuritization scope as of June 30, 2023 is BRL 300 million (as of June 30, 2023 – 450 million RMB).
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.
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
f. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
| June 30 | December 31 | |
| 2023 | 2022 | |
| Accounts receivables derecognized | 4,039,429 | |
| 3,963,341 | ||
| Continuing involvement | 155,564 | 193,532 |
| Subordinated note in respect of trade receivables | 512,533 | 591,998 |
| Liability in respect of trade receivables | 741,512 | 79,619 |
| Six months ended June 30 | ||
| 2023 | 2022 | |
| Loss in respect of sale of trade receivables | 115,531 | 70,123 |
6. Receivables financing
| June 30 | December 31 | |
| 2023 | 2022 | |
| Bank acceptance draft | 125,292 | 63,639 |
| 125,292 | 63,639 |
As at June 30, 2023, bank acceptance endorsed but not yet due amounts to 342,458 thousands RMB.
7. Prepayments
(1) The aging analysis of prepayments is as follows:
| June 30 | December 31 | |||
| 2023 | 2022 | |||
| Amount | Percentage (%) | Amount | Percentage (%) | |
| Within 1 year (inclusive) | 364,240 | 97 | 327,809 | 97 |
| Over 1 year but within 2 years (inclusive) | 9,597 | 3 | 11,047 | 3 |
| Over 2 years but within 3 years (inclusive) | 1,434 | - | 1,204 | - |
| Over 3 years | 713 | - | 1,042 | - |
| 375,984 | 100 | 341,102 | 100 | |
(2) Total of five largest prepayments by debtor at the end of the period:
| Amount | Percentage of prepayments (%) | |
| June 30, 2023 | 78,554 | 21% |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables
(1) Other receivables by nature
| June 30 | December 31 | |
| 2023 | 2022 | |
| Dividends receivable | 3,187 | - |
| Others | 866,935 | 1,021,824 |
| 870,122 | 1,021,824 |
a. Others breakdown by categories
| June 30 | December 31 | |
| 2023 | 2022 | |
| Trade receivables as part of securitization transactions not yet eliminated | 155,564 | 193,532 |
| Subordinated note in respect of trade receivables | 512,533 | 591,998 |
| Financial institutions | 69,223 | 38,354 |
| Other | 167,851 | 242,688 |
| Sub total | 905,171 | 1,066,572 |
| Provision for expected credit losses - other receivables | (38,236) | (44,748) |
| 866,935 | 1,021,824 |
b. Other receivables by aging
| June 30 | |
| 2023 | |
| Within 1 year (inclusive) | 842,680 |
| Over 1 year but within 2 years | 46,924 |
| Over 2 years but within 3 years | 1,292 |
| Over 3 years but within 4 years | 7,403 |
| Over 4 years but within 5 years | 152 |
| Over 5 years | 6,720 |
| 905,171 |
(2) Additions, recovery or reversal and written-off of provision for expected credit losses during the
period:
| Six months ended | ||
| June 30, 2023 | ||
| Balance as of January 1 2023, | 44,748 | |
| Addition (written back) during the period | (7,625) | |
| Write-off during the period | - | |
| Exchange rate effect | 1,113 | |
| Balance as of June 30, 2023 | 38,236 |
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables – (cont'd)
(3) Five largest other receivables at June 30, 2023:
| Name | Closing balance | Proportion of other receivables (%) | Allowance of expected credit losses |
| Party 1 | 512,533 | 57 | - |
| Party 2 | 69,223 | 8 | - |
| Party 3 | 7,164 | 1 | - |
| Party 4 | 6,865 | 1 | - |
| Party 5 | 5,231 | 1 | - |
| Total | 601,016 | 68 | - |
9. Inventories -
(1) Inventories by category:
| June 30, 2023 | |||
| Book value | Provision for impairment | Carrying amount | |
| Raw materials | 4,216,888 | 22,972 | 4,193,916 |
| Work in progress | 1,907,103 | 6,465 | 1,900,638 |
| Finished goods | 10,371,744 | 305,963 | 10,065,781 |
| Others | 518,011 | 10,389 | 507,622 |
| 17,013,746 | 345,789 | 16,667,957 | |
| December 31, 2022 | |||
| Book value | Provision for impairment | Carrying amount | |
| Raw materials | 4,341,176 | 20,939 | 4,320,237 |
| Work in progress | 2,410,883 | 5,952 | 2,404,931 |
| Finished goods | 9,954,831 | 237,337 | 9,717,494 |
| Others | 495,125 | 10,546 | 484,579 |
| 17,202,015 | 274,774 | 16,927,241 | |
V. Notes to the consolidated financial statements – (cont'd)
9. Inventories - (cont'd)
(2) Provision for impairment of inventories:
For the six months ended June 30, 2023
| January 1, 2023 | Provision | Reversal or write-off | Other | June 30, 2023 | |
| Raw material | 20,939 | 7,969 | (6,850) | 914 | 22,972 |
| Work in progress | 5,952 | 5,613 | (5,168) | 68 | 6,465 |
| Finished goods | 237,337 | 152,191 | (94,325) | 10,760 | 305,963 |
| Others | 10,546 | 570 | (1,053) | 326 | 10,389 |
| 274,774 | 166,343 | (107,396) | 12,068 | 345,789 |
10. Other Current Assets
| June 30 | December 31 | |
| 2023 | 2022 | |
| Deductible VAT | 728,516 | 679,428 |
| Current tax assets | 325,136 | 219,057 |
| Short term investments | 56,730 | 171,496 |
| Others | 58,566 | 59,707 |
| 1,168,948 | 1,129,688 |
11. Long-Term Receivables
| June 30 | December 31 | |
| 2023 | 2022 | |
| Long term account receivables from sale of goods | 59,273 | 82,510 |
| 59,273 | 82,510 |
V. Notes to the consolidated financial statements – (cont'd)
12. Long-Term Equity Investments
(1) Long-term equity investments by category:
| June 30 | December 31 | ||
| 2023 | 2022 | ||
| Joint venture | 1,358 | 2,110 | |
| Associate | 27,914 | 24,258 | |
| 29,272 | 26,368 | ||
(2) Movements of long-term equity investments for the period are as follows:
| January 1, 2023 | Investment income | Other Comprehensive income | Declared distribution of cash dividend | Balance at the end of the period | |
| Joint venture | |||||
| Investee A | 2,110 | 70 | 33 | (855) | 1,358 |
| Sub-total | 2,110 | 70 | 33 | (855) | 1,358 |
| Associate | |||||
| Investee B | 24,258 | 3,369 | 3,072 | (2,785) | 27,914 |
| Sub-total | 24,258 | 3,369 | 3,072 | (2,785) | 27,914 |
| Sub-total | 26,368 | 3,439 | 3,105 | (3,640) | 29,272 |
13. Other equity investments
| Dividend received during 2023 | |||
| June 30, 2023 | December 31, 2022 | ||
| Investment A | 84,720 | 84,720 | - |
| Investment B | 76,334 | 71,840 | 6,651 |
| Investment C | 1,851 | 1,781 | - |
| 162,905 | 158,341 | 6,651 |
Other equity investments are non-core businesses that are intended to be held in the foreseeable future.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
14. Fixed assets
| Land & Buildings | Machinery & equipment | Motor vehicles | Office & other equipment | Total | |
| Cost | |||||
| Balance as at January 1, 2023 | 4,240,658 | 16,516,306 | 166,587 | 438,542 | 21,362,093 |
| Purchases | 11,656 | 49,281 | 44,044 | 20,307 | 125,288 |
| Transfer from construction in progress | 38,105 | 610,084 | 1,855 | 8,051 | 658,095 |
| Classification to Investment property | (20,125) | - | - | - | (20,125) |
| Disposals | (8,175) | (20,132) | (11,547) | (3,533) | (43,387) |
| Newly consolidated subsidiaries | - | 3,483 | 270 | 478 | 4,231 |
| Currency translation adjustment | 100,486 | 501,709 | 8,295 | 19,007 | 629,497 |
| Balance as at June 30, 2023 | 4,362,605 | 17,660,731 | 209,504 | 482,852 | 22,715,692 |
| Accumulated depreciation | |||||
| Balance as at January 1, 2023 | (1,791,373) | (9,815,859) | (74,448) | (342,199) | (12,023,879) |
| Charge for the period | (69,021) | (384,563) | (14,206) | (19,210) | (487,000) |
| Classification to Investment property | 2,149 | - | - | - | 2,149 |
| Disposals | 1,353 | 19,084 | 9,561 | 3,500 | 33,498 |
| Newly consolidated subsidiaries | - | (2,348) | (256) | (277) | (2,881) |
| Currency translation adjustment | (53,730) | (301,637) | (3,276) | (15,319) | (373,962) |
| Balance as at June 30, 2023 | (1,910,622) | (10,485,323) | (82,625) | (373,505) | (12,852,075) |
| Provision for impairment | |||||
| Balance as at January 1, 2023 | (132,663) | (251,190) | (1,107) | (1,070) | (386,030) |
| Charge for the period | - | (634) | (15) | (41) | (690) |
| Disposals | 1,553 | 1,925 | 38 | 107 | 3,623 |
| Currency translation adjustment | (678) | (3,254) | (15) | (13) | (3,960) |
| Balance as at June 30, 2023 | (131,788) | (253,153) | (1,099) | (1,017) | (387,057) |
| Carrying amounts | |||||
| As at June 30, 2023 | 2,320,195 | 6,922,255 | 125,780 | 108,330 | 9,476,560 |
| As at January 1, 2023 | 2,316,622 | 6,449,257 | 91,032 | 95,273 | 8,952,184 |
The lands reported as fixed assets are owned by the group subsidiaries and are located outside of China.
V. Notes to the consolidated financial statements - (cont'd)
15. Construction in Progress
(1) Construction in progress
| June 30 | December 31 | ||||
| 2023 | 2022 | ||||
| Book value | Provision for impairment | Carrying amount | Book value | Provision for impairment | Carrying amount |
| 3,265,974 | (118,481) | 3,147,493 | 3,079,882 | (118,481) | 2,961,401 |
(2) Details and Movements of major construction projects in progress during period ended June 30, 2023
| Budget | January 1, 2023 | Additions | Including: Interest capitalized | Currency translation differences | Transfer to fixed assets | June 30, 2023 | Actual cost to budget (%) | Project progress (%) | Source of funds | |
| Project A | 765,314 | 542,618 | 111,861 | 5,264 | - | (66,338) | 588,141 | 77% | 77% | Bank loan |
| Project B | 639,165 | 531,817 | 72,285 | 19,363 | 411 | - | 604,513 | 95% | 95% | Internal finance |
| Project C | 367,649 | 333,514 | 30,609 | - | (1,888) | (362,235) | - | 100% | 100% | Internal finance |
| Project D | 194,604 | 74,523 | 1,625 | - | - | (22,282) | 53,866 | 49% | 49% | Internal finance |
| Project E | 968,257 | 352,423 | 123,192 | 13,026 | 18,565 | - | 494,180 | 51% | 51% | Internal finance |
| Project G | 74,173 | 17,070 | 3,123 | 616 | 776 | - | 20,969 | 28% | 28% | Internal finance |
| Project F | Under re-evalution | 238,078 | 319 | - | - | - | 238,397 | - | - | Internal finance |
* As of June 30, 2023 Project A Project D and are include impairment of RMB 14 million and 35 million , respectively.
V. Notes to the consolidated financial statements - (cont'd)
16. Right-of-use assets
| Land & Buildings | Machinery & equipment | Motor vehicles | Office & other equipment | Total | |
| Cost | |||||
| Balance as at January 1, 2023 | 593,790 | 46,364 | 294,122 | 3,858 | 938,134 |
| Additions | 106,292 | 3,072 | 44,577 | - | 153,941 |
| Disposals | (21,010) | (301) | (23,340) | - | (44,651) |
| Currency translation adjustment | 32,328 | 1,851 | 12,490 | 145 | 46,814 |
| Balance as at June 30, 2023 | 711,400 | 50,986 | 327,849 | 4,003 | 1,094,238 |
| Accumulated depreciation | |||||
| Balance as at January 1, 2023 | (221,223) | (23,108) | (136,165) | (1,749) | (382,245) |
| Charge for the period | (47,496) | (617) | (45,246) | (360) | (93,719) |
| Disposals | 17,793 | 301 | 21,116 | - | 39,210 |
| Currency translation adjustment | (9,159) | (876) | (6,350) | (103) | (16,488) |
| Balance as at June 30, 2023 | (260,085) | (24,300) | (166,645) | (2,212) | (453,242) |
| Provision for impairment | |||||
| Balance as at January 1, 2023 | - | - | - | - | - |
| Balance as at June 30, 2023 | - | - | - | - | - |
| Carrying amounts | |||||
| As at June 30, 2023 | 451,315 | 26,686 | 161,204 | 1,791 | 640,996 |
| As at January 1, 2023 | 372,567 | 23,256 | 157,957 | 2,109 | 555,889 |
ADAMA LTD.(Expressed in RMB '000)Notes to the Financial Statements
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 registration | Intangible assets on Purchase of Products | Software | Marketing rights, tradename and trademarks | Customers relations | Land use rights (1) | Others(2) | Total | |
| Costs | ||||||||
| Balance as at January 1, 2023 | 12,204,376 | 4,182,457 | 1,216,249 | 794,577 | 578,572 | 510,272 | 588,585 | 20,075,088 |
| Newly consolidated subsidiaries | 6,418 | - | - | 30,070 | 52,182 | - | - | 88,670 |
| Purchases | 295,676 | - | 63,975 | 48 | - | - | 13,585 | 373,284 |
| Currency translation adjustment | 478,902 | 156,860 | 46,267 | 32,422 | 22,190 | 1,451 | 15,623 | 753,715 |
| Transfer from construction in progress | - | - | 8,898 | - | - | - | - | 8,898 |
| Disposal | (3,231) | - | (137) | - | - | (4,427) | - | (7,795) |
| Balance as at June 30, 2023 | 12,982,141 | 4,339,317 | 1,335,252 | 857,117 | 652,944 | 507,296 | 617,793 | 21,291,860 |
| Accumulated amortization | ||||||||
| Balance as at January 1, 2023 | (9,525,327) | (3,125,941) | (732,640) | (524,730) | (312,019) | (95,570) | (262,984) | (14,579,211) |
| Charge for the period | (265,738) | (82,684) | (46,927) | (14,308) | (22,750) | (5,173) | (11,792) | (449,372) |
| Currency translation adjustment | (375,438) | (120,835) | (30,302) | (21,254) | (13,339) | (1,296) | (9,252) | (571,716) |
| Disposal | - | 116 | - | - | 682 | - | 798 | |
| Balance as at June 30, 2023 | (10,166,503) | (3,329,460) | (809,753) | (560,292) | (348,108) | (101,357) | (284,028) | (15,599,501) |
| Provision for impairment | ||||||||
| Balance as at January 1, 2023 | (95,951) | (56,601) | (49) | - | - | (272) | (250) | (153,123) |
| Charge for the period | - | - | - | - | - | - | - | - |
| Currency translation adjustment | (3,599) | (2,123) | (9) | - | - | (10) | - | (5,741) |
| Balance as at June 30, 2023 | (99,550) | (58,724) | (58) | - | - | (282) | (250) | (158,864) |
| Carrying amount | ||||||||
| As at June 30, 2023 | 2,716,088 | 951,133 | 525,441 | 296,825 | 304,836 | 405,657 | 333,515 | 5,533,495 |
| As at January 1, 2023 | 2,583,098 | 999,915 | 483,560 | 269,847 | 266,553 | 414,430 | 325,351 | 5,342,754 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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-coreactivity 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.
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, 2023 | Change during the year | Currency translation adjustment | Balance at June 30, 2023 | |
| Book value | 4,805,157 | 113,075 | 181,796 | 5,100,028 |
| Impairment provision | - | - | - | - |
| Carrying amount | 4,805,157 | 113,075 | 181,796 | 5,100,028 |
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
| June 30 | December 31 | |||
| 2023 | 2022 | |||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Deferred tax assets | ||||
| Deferred tax assets in respect of carry forward losses | 2,532,017 | 506,105 | 1,568,088 | 256,749 |
| Deferred tax assets in respect of inventories | 3,132,366 | 921,585 | 2,402,900 | 689,062 |
| Deferred tax assets in respect of employee benefits | 953,114 | 155,405 | 1,005,874 | 166,264 |
| Other deferred tax asset | 2,529,942 | 606,021 | 2,030,651 | 545,937 |
| 9,147,439 | 2,189,116 | 7,007,513 | 1,658,012 | |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 the
same tax jurisdiction
| June 30 | December 31 | |||
| 2023 | 2022 | |||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Deferred tax liabilities | ||||
| Deferred tax liabilities in respect of fixed assets and intangible assets | 4,046,916 | 762,093 | 3,430,096 | 626,610 |
| 4,046,916 | 762,093 | 3,430,096 | 626,610 | |
(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting
| June 30 | December 31 | |||
| 2023 | 2022 | |||
| The offset amount of deferred tax assets and liabilities | Deferred tax assets or liabilities after offset | The offset amount of deferred tax assets and liabilities | Deferred tax assets or liabilities after offset | |
| Presented as: | ||||
| Deferred tax assets | 429,533 | 1,759,583 | 310,749 | 1,347,263 |
| Deferred tax liabilities | 429,533 | 332,560 | 310,749 | 315,861 |
(4) Details of unrecognized deferred tax assets
| June 30 | December 31 | |
| 2023 | 2022 | |
| Deductible temporary differences | 468,300 | 518,542 |
| Deductible losses carry forward | 259,775 | 229,672 |
| 728,075 | 748,214 |
(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets
| June 30 | December 31 | |
| 2023 | 2022 | |
| 2023 | 1,778 | 1,713 |
| 2024 | 36,310 | 33,646 |
| 2025 | 6,518 | 6,282 |
| 2026 | 6,612 | 6,373 |
| 2027 | 8,013 | 7,724 |
| After 2027 | 200,544 | 173,934 |
| 259,775 | 229,672 |
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
| June 30 | December 31 | ||
| 2023 | 2022 | ||
| Judicial deposits | 195,920 | 154,273 | |
| Assets related to securitization | 96,464 | 112,388 | |
| Advances in respect of non-current assets | 62,729 | 174,035 | |
| Others | 136,270 | 164,137 | |
| 491,383 | 604,833 |
21. Short-Term Loans
Short-term loans by category:
| June 30 | December 31 | |
| 2023 | 2022 | |
| Unsecured loans | 6,341,677 | 3,342,921 |
| 6,341,677 | 3,342,921 |
22. Derivative financial liabilities
| June 30 | December 31 | |
| 2023 | 2022 | |
| Economic hedge | 698,821 | 490,496 |
| Accounting hedge derivatives | 36,837 | 55,020 |
| 735,658 | 545,516 |
V. Notes to the consolidated financial statements - (cont'd)
23. Bills Payables
| June 30 | December 31 | |
| 2023 | 2022 | |
| Post-dated checks payables | 392,325 | 900,537 |
| Note payables draft | 105,019 | 214,238 |
| 497,344 | 1,114,775 |
As at June 30, 2023, none of the bills payable are overdue.
24. Accounts payable
| June 30 | December 31 | |
| 2023 | 2022 | |
| Within 1 year (including 1 year) | 5,861,662 | 7,447,355 |
| 1-2 years (including 2 years) | 27,861 | 59,671 |
| 2-3 years (including 3 years) | 35,547 | 2,048 |
| Over 3 years | 19,906 | 18,195 |
| 5,944,976 | 7,527,269 |
There are no significant accounts payables aging over one year.
25. Contract liabilities
| June 30 | December 31 | |
| 2023 | 2022 | |
| Discount for customers | 1,273,467 | 904,615 |
| Advances from customers | 172,662 | 871,958 |
| 1,446,129 | 1,776,573 |
26. Employee Benefits Payable
| June 30 | December 31 | |
| 2023 | 2022 | |
| Short-term employee benefits | 515,938 | 1,027,543 |
| Post-employment benefits | 49,251 | 33,317 |
| Share based payment (See note XIII) | 49,771 | 76,875 |
| Other benefits within one year | 216,605 | 204,794 |
| 831,565 | 1,342,529 | |
| Current maturities | 24,616 | 28,257 |
| 856,181 | 1,370,786 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
27. Taxes Payable
| June 30 | December 31 | |
| 2023 | 2022 | |
| Corporate income tax | 291,828 | 240,672 |
| VAT | 244,410 | 187,066 |
| Others | 39,033 | 31,836 |
| 575,271 | 459,574 |
28. Other Payables
| June 30 | December 31 | |
| 2023 | 2022 | |
| Dividends payables | 750 | 750 |
| Other payables | 2,488,847 | 1,610,532 |
| 2,489,597 | 1,611,282 |
(1) Other payables
| June 30 | December 31 | |
| 2023 | 2022 | |
| Accrued expenses | 776,142 | 758,158 |
| Payables in respect of intangible assets | 169,120 | 106,510 |
| Liability in respect of securitization transactions | 741,512 | 79,619 |
| Hold-back payment due to acquistions | 254,000 | 254,000 |
| Others | 548,073 | 412,245 |
| 2,488,847 | 1,610,532 |
29. Non-Current Liabilities Due Within One Year
Non-current liabilities due within one year by category are as follows:
| June 30 | December 31 | |
| 2023 | 2022 | |
| Long-term loans due within one year | 1,852,573 | 1,539,496 |
| Lease liabilities due within one year | 167,492 | 156,977 |
| Debentures payable due within one year | 571,770 | 565,658 |
| 2,591,835 | 2,262,131 |
V. Notes to the consolidated financial statements - (cont'd)
30. Other Current Liabilities
| June 30 | December 31 | |
| 2023 | 2022 | |
| Put options to holders of non-controlling interests | 483,688 | 507,483 |
| Provision in respect of returns | 231,117 | 158,173 |
| Provision in respect of claims | 34,626 | 37,769 |
| Others | 390 | 369 |
| 749,821 | 703,794 |
31. Long-Term Loans
Long-term loans by category
| June 30 | December 31 | |||
| 2023 | Interest range | 2022 | Interest range | |
| Long term loans | ||||
| Guaranteed loans | 394,810 | 3.55%-3.75% | 404,841 | 2.92%-3.75% |
| Unsecured loans | 7344,,919 | 1.73%-8.72% | 4,797,525 | 1.73%-7.67% |
| Total Long term loans | 5,129,027 | 5,202,366 | ||
| Less: Long term loans from banks due within 1 year | (1,852,573) | (1,539,496 ) | ||
| Long term loans, net | 3,276,454 | 3,662,870 | ||
* For more detailes regarding the guaranteed loans – see note X. related parties and related partiestransactions.For the maturity analysis, see note VIII.C - Liquidity risk.
32. Debentures Payable
| June 30 | December 31 | |
| 2023 | 2022 | |
| Debentures Series B | 8,004,835 | 7,919,169 |
| Current maturities | (571,770) | (565,658) |
| 7,433,065 | 7,353,511 |
| June 30 | |
| 2023 | |
| First year (current maturities) | 571,770 |
| Second year | 571,770 |
| Third year | 571,770 |
| Fourth year | 571,770 |
| Fifth year and thereafter | 5,717,755 |
| 8,004,835 |
V. Notes to the consolidated financial statements - (cont'd)
32. Debentures Payable - (cont'd)
Movements of debentures payable:
For the year ended June 30, 2023:
| Maturity period | Face value in RMB | Face value NIS | Issuance date | Maturity period | Issuance amount | Balance at January 1, 2023 | Amortization of discounts or premium | CPI and exchange rate effect | Repayment during the period | Currency translation adjustment | Balance at June 30, 2023 |
| Debentures Series B | 2,673,640 | 1,650,000 | 4.12.2006 | November 2020-2036 | 3,043,742 | 3,321,071 | 117 | (83,196) | - | 120,704 | 3,358,696 |
| Debentures Series B | 843,846 | 513,527 | 16.1.2012 | November 2020-2036 | 842,579 | 996,237 | 5,075 | (25,386) | - | 36,409 | 1,012,335 |
| Debentures Series B | 995,516 | 600,000 | 7.1.2013 | November 2020-2036 | 1,120,339 | 1,231,947 | 2,209 | (31,263) | - | 44,851 | 1,247,744 |
| Debentures Series B | 832,778 | 533,330 | 1.2.2015 | November 2020-2036 | 1,047,439 | 1,151,945 | (1,357) | (29,233) | - | 41,789 | 1,163,144 |
| Debentures Series B | 418,172 | 266,665 | 1-6.2015 | November 2020-2036 | 556,941 | 625,358 | (3,683) | (15,863) | - | 22,558 | 628,370 |
| Debentures Series B | 497,989 | 246,499 | 5.5.2020 | November 2020-2036 | 692,896 | 592,611 | (4,348) | (15,055) | - | 21,338 | 594,546 |
| 7,919,169 | (1,987) | (199,996) | - | 287,649 | 8,004,835 | ||||||
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.
V. Notes to the consolidated financial statements - (cont'd)
33. Lease liabilities
| June 30 | December 31 | |||
| 2023 | Interest range | 2022 | Interest range | |
| Lease liabilities | 666,459 | 1.1%-9.0% | 588,053 | 1.1%-9.1% |
| Less: Lease liabilities due within one year | (167,492) | (156,977) | ||
| Long term lease liabilities, net | 498,967 | 431,076 | ||
34. Long-Term Employee Benefits Payable
Post-employment benefit plans – defined benefit plan and early retirement
| June 30 | December 31 | |
| 2023 | 2022 | |
| Total present value of obligation | 537,594 | 566,550 |
| Less: fair value of plan's assets | (63,399) | (70,001) |
| Net liability related to Post-employment benefits | 474,195 | 496,549 |
| Termination benefits | 63,771 | 65,782 |
| Total recognized liability for defined benefit plan, net (1) | 537,966 | 562,331 |
| Other long-term employee benefits | 249,442 | 258,079 |
| Total long-term employee benefits, net | 787,408 | 820,410 |
| Including: Long-term employee benefits payable due within one year | 24,616 | 28,257 |
| 762,792 | 792,153 |
(1) Movement in the net liability and assets in respect of defined benefit plans, early retirement and
their components
| Defined benefit obligation and early retirement | Fair value of plan's assets | Total | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| Balance as at January 1, 2023 | 632,332 | 779,671 | 70,001 | 86,282 | 562,331 | 693,389 |
| Expense/income recognized | ||||||
| in profit and loss: | ||||||
| Current service cost | 17,410 | 12,707 | - | - | 17,410 | 12,707 |
| Past service cost | 1,724 | - | 1,717 | - | 7 | - |
| Interest costs | 10,046 | 6,682 | 1,295 | 648 | 8,751 | 6,034 |
| Losses on curtailments and settlements | 10,221 | 5,478 | - | - | 10,221 | 5,478 |
| Changes in exchange rates | (22,559) | (68,417) | (3,206) | (9,611) | (19,353) | (58,806) |
| Actuarial losses due to early retirement | 122 | (77) | - | - | 122 | (77) |
| Included in other comprehensive income: | ||||||
| Actuarial gain (losses) as a result of changes in actuarial assumptions | (17,680) | (72,633) | (1,766) | (3,474) | (15,914) | (69,159) |
| Foreign currency translation differences in respect of foreign operations | 21,971 | 31,967 | 2,276 | 3,743 | 19,695 | 28,224 |
| Additional movements: | ||||||
| Benefits paid | (37,361) | (35,291) | (3,330) | (6,104) | (34,031) | (29,187) |
| Classification to termination | (14,861) | - | (4,211) | - | (10,650) | - |
| Contributions paid by the Group | - | - | 623 | 1,342 | (623) | (1,342) |
| Balance as at June 30, 2023 | 601,365 | 660,087 | 63,399 | 72,826 | 537,966 | 587,261 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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
| June 30 | December 31 | |
| 2023 | 2022 | |
| Discount rate (%)* | 2.2%-3.0% | 1.7%-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 June 30, 2023 | ||
| Increase of 1% | Decrease of 1% | |
| Change in defined benefit obligation | (43,856) | 53,030 |
35. Provisions
| June 30 | December 31 | |
| 2023 | 2022 | |
| Liabilities in respect of contingencies* | 181,871 | 149,187 |
| Provision in respect of site restoration | 64,627 | 65,291 |
| Long-term liability in respect of business combinations | 49,454 | 5,182 |
| Other | 1,286 | 2,521 |
| 297,238 | 222,181 |
* Liabilities in respect of contingencies includes obligations of pending litigations, where an outflow ofresources had been reliably estimated.
V. Notes to the consolidated financial statements - (cont'd)
36. Other Non-Current Liabilities
| June 30 | December 31 | |
| 2023 | 2022 | |
| Put options to holders of non- controlling interests | 957,651 | 907,644 |
| Long term loans – others | 361,290 | 348,231 |
| 1,318,941 | 1,255,875 | |
| Current maturities | - | - |
| 1,318,941 | 1,255,875 |
37. Share Capital
| Balance at January 1, 2023 | Issuance of new shares | Buyback of shares | Balance at June 30, 2023 | |
| Share capital | 2,329,812 | - | - | 2,329,812 |
38. Capital Reserve
| Balance at January 1, 2023 | Additions during the period | Reductions during the period | Balance at June 30, 2023 | |
| Share premiums | 12,606,562 | - | - | 12,606,562 |
| Other capital reserve | 379,771 | - | (40,496) | 339,275 |
| 12,986,333 | - | (40,496) | 12,945,837 | |
V. Notes to the consolidated financial statements - (cont'd)
39. Other Comprehensive Income, net of tax
| Attributable to shareholders of the company | ||||||
| Balance at January 1, 2023 | Before tax amount | Less: transfer to profit or loss | Less: Income tax expenses | Net-of-tax amount | Balance at June 30, 2023 | |
| Items that will not be reclassified to profit or loss | 101,370 | 15,914 | - | 1,173 | 14,741 | 116,111 |
| Re-measurement of changes in liabilities under defined benefit plans | 46,838 | 15,914 | - | 1,173 | 14,741 | 61,579 |
| Changes in fair value of other equity investment | 54,532 | - | - | - | - | 54,532 |
| Items that may be reclassified to profit or loss | 979,220 | 822,559 | (50,690) | 3,785 | 869,464 | 1,848,684 |
| Effective portion of gain or loss of cash flow hedge | (41,369) | (20,371) | (50,690) | 3,785 | 26,534 | (14,835) |
| Translation difference of foreign financial statements | 1,020,589 | 842,930 | - | - | 842,930 | 1,863,519 |
| 1,080,590 | 838,473 | (50,690) | 4,958 | 884,205 | 1,964,795 | |
40. Surplus reserve
| Balance at January 1, 2023 | Additions during the period | Reductions during the period | Balance at June 30, 2023 | |
| Statutory surplus reserve | 238,684 | - | - | 238,684 |
| Discretional surplus reserve | 3,814 | - | - | 3,814 |
| 242,498 | - | - | 242,498 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
41. Retained Earnings
| 2023 | 2022 | |
| Retained earnings as at January 1 | 6,469,604 | 5,940,465 |
| Net profits (loss) for the period attributable to shareholders of the Company | (242,156) | 732,098 |
| Dividends to non-controlling Interest | (18,763) | (39,074) |
| Dividend to the shareholders of the company (Note 1 & 2) | (62,905) | (18,638) |
| Retained earnings as at June 30 | 6,145,780 | 6,614,851 |
Note 1:
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 2:
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.
V. Notes to the consolidated financial statements - (cont'd)
42. Operating Income and Cost of Sales
| Six months ended June 30 | Six months ended June 30 | |||
| 2023 | 2022 | |||
| Income | Cost of sales | Income | Cost of sales | |
| Principal activities | 17,232,976 | 13,349,948 | 18,761,356 | 13,802,108 |
| Other businesses | 20,225 | 8,779 | 34,472 | 20,647 |
| 17,253,201 | 13,358,727 | 18,795,828 | 13,822,755 | |
43. Taxes and Surcharges
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Tax on turnover | 16,382 | 17,666 | |
| Others | 35,038 | 38,171 | |
| 51,420 | 55,837 | ||
44. Selling and Distribution Expenses
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Salaries and related expense | 972,566 | 1,015,829 | |
| Depreciation and amortization | 476,152 | 481,460 | |
| Advertising and sales promotion | 179,661 | 173,457 | |
| Warehouse expenses | 98,906 | 75,378 | |
| Travel expenses | 72,342 | 62,794 | |
| Registration | 69,834 | 64,983 | |
| Professional services | 56,550 | 53,811 | |
| Insurance | 47,574 | 56,054 | |
| Others | 187,614 | 175,323 | |
| 2,161,199 | 2,159,089 | ||
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
45. General and Administrative Expenses
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Salaries and related expenses | 157,127 | 375,272 | |
| Professional services | 61,710 | 56,828 | |
| IT systems | 61,002 | 58,466 | |
| Depreciation and amortization | 55,710 | 48,168 | |
| Cost contribution arrangement | 39,065 | 33,864 | |
| Office rent, maintenance and expenses | 22,964 | 24,348 | |
| Other | 63,568 | 45,367 | |
| 461,146 | 642,313 | ||
46. Research and development expenses
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Salaries and related expenses | 134,457 | 127,574 | |
| Depreciation and amortization | 38,407 | 42,400 | |
| Professional services | 23,639 | 17,350 | |
| Field trial | 21,526 | 16,475 | |
| Materials | 13,741 | 38,803 | |
| Office rent, maintenance and expenses | 5,416 | 6,077 | |
| Other | 25,192 | 26,059 | |
| 262,378 | 274,738 | ||
47. Financial expenses (incomes), net
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Interest expenses on debentures and loans and other charges | 562,720 | 341,633 | |
| CPI expenses in respect of debentures | 184,710 | 236,815 | |
| Loss in respect of sale of trade receivables | 115,352 | 51,063 | |
| Interest expense in respect of post-employment benefits and early retirement, net | 11,287 | 7,000 | |
| Revaluation of put option, net | 83,584 | 101,901 | |
| Interest income from customers, banks and others | (134,254) | (53,960) | |
| Exchange rate differences, net | (414,163) | (1,153,323) | |
| Interest expense on lease liabilities | 16,132 | 11,962 | |
| Others | 30,487 | 18,685 | |
| 455,855 | (438,224) | ||
V. Notes to the consolidated financial statements - (cont'd)
48. Investment income, net
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Income from long-term equity investments accounted for using the equity method | 3,439 | 4,706 | |
| Other | 6,651 | - | |
| 10,090 | 4,706 | ||
49. Gain (loss) from Changes in Fair Value
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Gain (loss) from changes in fair value of derivative financial | |||
| Instruments | (775,528) | (1,330,194) | |
| Others | (6,690) | (11,523) | |
| (782,218) | (1,341,717) | ||
50. Credit impairment reversal (losses)
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Bills receivable and accounts receivable | 865 | (64,703) | |
| Other receivables | 7,625 | (32,422) | |
| 8,490 | (97,125) | ||
51. Asset impairment losses
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Inventories | (105,197) | (79,445) | |
| Fixed assets | (690) | (1,623) | |
| Intangible asset | - | (4,278) | |
| (105,887) | (85,346) | ||
V. Notes to the consolidated financial statements - (cont'd)
52. Gain from Disposal of Assets
| Six months ended June 30 | Included in non-recurring items | |||
| 2023 | 2022 | |||
| Gain from disposal of fixed assets | 23,402 | 60,572 | 23,402 | |
| Loss from disposal of intangible assets | - | (274) | - | |
| 23,402 | 60,298 | 23,402 | ||
53. Income Tax Expenses
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Current year | 286,525 | 431,750 | |
| Deferred tax expenses (income) | (367,924) | (306,884) | |
| Adjustments for previous years, net | 4,966 | (23,590) | |
| (76,433) | 101,276 | ||
(1) Reconciliation between income tax expense and accounting profit is as follows:
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Profit before taxes (loss) | (318,589) | 833,374 | |
| Statutory tax in china | 25% | 25% | |
| Tax calculated according to statutory tax in china | (79,647) | 208,344 | |
| Tax benefits from Approved Enterprises | (14,942) | (98,005) | |
| Difference between measurement basis of income for financial statement and for tax purposes | (28,110) | 3,085 | |
| Taxable income and temporary differences at other tax rate | (128,074) | (58,494) | |
| Taxes in respect of prior years | 4,966 | (23,590) | |
| Utilization of tax losses prior years for which deferred taxes were not created | (5,308) | (31,440) | |
| Temporary differences and losses in the report year for which deferred taxes were not created | 14,398 | 34,798 | |
| Non-deductible expenses, non-taxable income and other difference, net | 93,470 | 21,569 | |
| Neutralization of tax calculated in respect of the Company’s share in results of equity accounted investees | (931) | (1,599) | |
| Effect of change in tax rate in respect of deferred taxes | 66,971 | 13,979 | |
| Creation and reversal of deferred taxes for tax losses and temporary differences from previous years | 774 | 32,629 | |
| Income tax expenses | (76,433) | 101,276 | |
54. Other comprehensive income
Details of the Other comprehensive income are set out in Note V.39
V. Notes to the consolidated financial statements - (cont'd)
55. Government g ?rants
| Amount recognized in the profit and loss statements during the six months ended June 30 | |||
| Category | Presentation accounts | 2023 | 2022 |
| Government grants related to income | Non-Operating income | 11,665 | 15,623 |
| Government grants related to assets | Fixed assets, Intangible assets | 7,388 | 9,211 |
56. Notes to items in the cash flow statements
(1) Cash received relating to other operating activities
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Interest income | 80,270 | 30,761 | |
| Financial institutions | 38,020 | 231,142 | |
| Government subsidies | 12,883 | 15,623 | |
| Others | 69,838 | 26,562 | |
| 201,011 | 304,088 | ||
(2) Cash paid relating to other operating activities
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Derivatives transactions | 225,818 | 471,332 | |
| Advertising and sales promotion | 167,451 | 181,788 | |
| Professional services | 164,944 | 122,886 | |
| Commissions and Warehouse | 118,902 | 75,076 | |
| IT and Communication | 114,304 | 125,187 | |
| Registration and Field trials | 85,831 | 86,410 | |
| Travel | 83,184 | 64,767 | |
| Insurance | 70,183 | 37,655 | |
| Financial institutions | 67,142 | 116,107 | |
| Others | 444,295 | 453,295 | |
| 1,542,054 | 1,734,503 | ||
(3) Cash received relating to other investing activities
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Investment grant | 16,643 | - | |
| 16,643 | - | ||
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
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Increase in short and long term investments,net | - | 64,719 | |
| - | 64,719 | ||
(5) Cash received from other financing activities
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Deposit for issuing bills payables | 34,932 | 11,010 | |
| Borrowing from related party * | 1,393,370 | - | |
| 1,428,302 | 11,010 | ||
* For more detailes regarding the borrowing from related party – see note X. related parties and related
parties transactions.
(6) Cash paid relating to other financing activities
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Payment in respect of hedging transactions on debentures | 347,870 | 802,237 | |
| Realization of Call option | 116,311 | - | |
| Repayment of lease liability | 86,608 | 84,743 | |
| Deposit for issuing bills payable | 3,210 | 57,447 | |
| Repayment of loan from others | 625 | 153 | |
| 554,624 | 944,580 | ||
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:
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Net profit (loss) | (242,156) | 732,098 | |
| Add: Impairment provisions for assets | 105,887 | 85,346 | |
| Credit impairment losses (gain) | (8,490) | 97,125 | |
| Depreciation of fixed assets and investment property | 487,815 | 499,714 | |
| Depreciation of right-of-use asset | 93,719 | 80,900 | |
| Amortization of intangible asset | 449,372 | 453,387 | |
| Gains on disposal of fixed assets, intangible assets, and other long-term assets, net | (23,402) | (60,298) | |
| Losses from changes in fair value | 782,218 | 1,341,717 | |
| Financial expenses | 329,817 | (342,658) | |
| Investment income, net | (10,090) | (4,706) | |
| Increase in deferred tax assets, net | (350,613) | (318,979) | |
| Decrease in deferred tax liabilities, net | (17,311) | 12,095 | |
| Decrease (increase) in inventories, net | 905,851 | (3,360,343) | |
| Increase in operating receivables, net | (752,091) | (2,842,961) | |
| Increase (decrease) in operating payables, net | (1,786,212) | 2,248,418 | |
| Others | (29,190) | 33,284 | |
| Net cash flow from operating activities | (64,876) | (1,345,861) | |
b. Net increase (decrease) in cash and cash equivalents
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Closing balance of cash and cash equivalents | 4,570,537 | 3,190,742 | |
| Less: Opening balance of cash and cash equivalents | 4,225,253 | 5,759,480 | |
| Increase (decrease) in cash and cash equivalents | 345,284 | (2,568,738) | |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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
| June 30 | December 31 | ||
| 2023 | 2022 | ||
| Cash on hand | 960 | 785 | |
| Bank deposits available on demand without restrictions | 4,569,577 | 4,224,468 | |
| 4,570,537 | 4,225,253 |
58. Assets with Restricted Ownership or Right of Use
| June 30 | ||
| 2023 | Reason | |
| Cash | 33,986 | Pledged |
| Other non-current assets | 195,920 | Guarantees |
| 229,906 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items
(1) Foreign currencies denominated items
| As at June 30, 2023 | |||
| Foreign currency at the end of the period | Exchange rate | RMB at the end of the period | |
| Cash and bank balances | |||
| BRL | 329,919 | 1.499 | 494,548 |
| EUR | 41,621 | 7.848 | 326,642 |
| GBP | 24,852 | 9.121 | 226,673 |
| ILS | 93,092 | 1.953 | 181,808 |
| ARS | 6,262,188 | 0.028 | 175,341 |
| RON | 72,130 | 1.579 | 113,893 |
| USD | 12,806 | 7.226 | 92,533 |
| PLN | 50,745 | 1.760 | 89,311 |
| ZAR | 96,680 | 0.387 | 37,415 |
| RUB | 274,232 | 0.083 | 22,761 |
| TRY | 46,142 | 0.280 | 12,920 |
| Other | 186,253 | ||
| Total | 1,960,098 | ||
| Bills and Accounts receivable | |||
| BRL | 964,126 | 1.499 | 1,445,225 |
| EUR | 97,454 | 7.848 | 764,822 |
| TRY | 1,282,941 | 0.280 | 359,223 |
| USD | 45,302 | 7.226 | 327,344 |
| RON | 184,439 | 1.579 | 291,229 |
| HUF | 9,349,497 | 0.021 | 196,339 |
| CAD | 24,370 | 5.448 | 132,767 |
| ZAR | 265,954 | 0.387 | 102,924 |
| THB | 460,422 | 0.203 | 93,466 |
| ILS | 39,995 | 1.953 | 78,110 |
| RUB | 891,820 | 0.083 | 74,021 |
| CZK | 173,747 | 0.331 | 57,510 |
| IDR | 84,611 | 0.4809 | 40,688 |
| Other | 204,059 | ||
| Total | 4,167,727 | ||
| Other receivables | |||
| EUR | 31,965 | 7.848 | 250,860 |
| GBP | 7,378 | 9.121 | 67,293 |
| ILS | 21,769 | 1.953 | 42,515 |
| BRL | 20,689 | 1.499 | 31,013 |
| Other | 76,742 | ||
| Total | 468,423 | ||
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 June 30, 2023 | |||
| Foreign currency at the end of the period | Exchange rate | RMB at the end of the period | |
| Other current assets | |||
| BRL | 154,460 | 1.499 | 231,536 |
| ILS | 69,801 | 1.953 | 136,322 |
| EUR | 8,418 | 7.848 | 66,065 |
| UAH | 301,622 | 0.198 | 59,721 |
| ARS | 1,236,386 | 0.028 | 34,619 |
| Other | 100,056 | ||
| Total | 628,319 | ||
| Long-term receivables | |||
| BRL | 39,542 | 1.499 | 59,273 |
| Total | 59,273 | ||
| Other non-current assets | |||
| BRL | 156,948 | 1.499 | 235,265 |
| Other | 64,339 | ||
| Total | 299,604 | ||
| Short-term loans | |||
| ILS | 165,883 | 1.953 | 323,969 |
| EUR | 28,108 | 7.848 | 220,589 |
| TRY | 205,316 | 0.280 | 57,488 |
| Other | 19,590 | ||
| Total | 621,636 | ||
| Bills and Accounts payable | |||
| ILS | 749,274 | 1.953 | 1,463,333 |
| EUR | 63,553 | 7.848 | 498,761 |
| BRL | 152,884 | 1.499 | 229,173 |
| USD | 9,175 | 7.226 | 66,297 |
| Other | 132,045 | ||
| Total | 2,389,609 | ||
| Other payables | |||
| ILS | 97,401 | 1.953 | 190,225 |
| BRL | 123,967 | 1.499 | 185,826 |
| ILS CPI | 22,230 | 1.953 | 43,416 |
| Other | 139,548 | ||
| Total | 559,015 | ||
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 June 30, 2023 | |||
| Foreign currency at the end of the period | Exchange rate | RMB at the end of the period | |
| Contract liabilities | |||
| EUR | 53,046 | 7.848 | 416,307 |
| CAD | 47,966 | 5.448 | 261,321 |
| BRL | 45,143 | 1.499 | 67,670 |
| UAH | 335,708 | 0.198 | 66,470 |
| Other | 95,366 | ||
| Total | 907,134 | ||
| Non-current liabilities due within one year | |||
| ILS CPI | 317,339 | 1.953 | 619,764 |
| EUR | 67,984 | 7.848 | 533,539 |
| Other | 50,501 | ||
| Total | 1,203,804 | ||
| Other current liabilities | |||
| EUR | 8,047 | 7.848 | 63,153 |
| Other | 3,468 | ||
| Total | 66,621 | ||
| Long-term loan | |||
| EUR | 28,999 | 7.848 | 227,584 |
| Total | 227,584 | ||
| Debentures payable | |||
| ILS CPI | 3,805,973 | 1.953 | 7,433,065 |
| Total | 7,433,065 | ||
| Provision and Long-term payables | |||
| BRL | 111,510 | 1.499 | 167,154 |
| Other | 2,919 | ||
| Total | 170,073 | ||
| Other non-current liabilities | |||
| ILS CPI | 48,183 | 1.953 | 94,102 |
| EUR | 5,526 | 7.848 | 43,369 |
| USD | 3,358 | 7.226 | 24,264 |
| Other | 51,723 | ||
| Total | 213,458 | ||
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 | Functional currency |
| ADAMA France S.A.S | France | Distribution | USD |
| ADAMA Brasil S/A | Brazil | Manufacturing; Distribution; Registration | USD |
| ADAMA Deutschland GmbH | Germany | Distribution; Registration | USD |
| ADAMA India Private Ltd. | India | Manufacturing Distribution; Registration | INR |
| Makhteshim Agan of North America Inc. | United States | Manufacturing; Distribution; Registration | USD |
| Control Solutions Inc. | United States | Manufacturing; Distribution; Registration | USD |
| ADAMA Agan Ltd. | Israel | Manufacturing; Distribution; Registration | USD |
| ADAMA Makhteshim Ltd. | Israel | Manufacturing; Distribution; Registration | USD |
| ADAMA Australia Pty Limited | Australia | Distribution | AUD |
| ADAMA Italia SRL | Italy | Distribution | USD |
| ADAMA Northern Europe B.V. | Netherlands | Distribution | USD |
| Alligare 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
1. Business combinations involving enterprises not under common control
(1) Business combinations involving enterprises not under common control during current period
| Name of the Company | Acquisition date | Total consideration of equity investment | Proportion of equity investment | Acquisition method | Basis of acquisition date determination | From acquisition date till period end | |
| Revenue | Net profit | ||||||
| AgriNova New Zealand Ltd | 05.01.2023 | 214,476 | 100% | Stock purchase | Obtained control | 35,158 | 6,286 |
(2) Acquisition cost and goodwill
| Acquisition costs | Total of AgriNova New Zealand Ltd |
| Total acquisition cost in cash | 170,155 |
| Contingent consideration | 44,321 |
| Less: share of the fair value of the identifiable net assets acquired | 101,401 |
| Goodwill | 113,075 |
(3) Identifiable assets and liabilities of the acquiree, at acquisition date
| AgriNova New Zealand Ltd | |||
| Fair value at acquisition date 05.01.2023 | Book value at acquisition date 05.01.2023 | ||
| Assets: | |||
| Cash and bank balances | 21,695 | 21,695 | |
| Bills and Accounts receivable | 8,066 | 8,066 | |
| Prepayments | 903 | 903 | |
| Inventories | 21,898 | 21,898 | |
| Fixed assets | 1,350 | 1,350 | |
| Intangible assets | 88,670 | - | |
| Deferred tax assets | 2,354 | 2,354 | |
| Liabilities: | |||
| Bills and Accounts payable | 7,601 | 7,601 | |
| Employee benefits payable | 1,273 | 1,273 | |
| Taxes payable | 8,573 | 8,573 | |
| Other payables | 452 | 452 | |
| Contract liabilities | 807 | 807 | |
| Deferred tax liabilities | 24,829 | - | |
| Net assets | 101,401 | 37,560 | |
| Less: Non-controlling interests | - | - | |
| Net assets acquired | 101,401 | 37,560 | |
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 of business | Business nature | Direct | Indirect | Method of obtaining the subsidiary |
| ADAMA France S.A.S | France | Distribution | 100% | Established | |
| ADAMA Brasil S/A | Brazil | Manufacturing; Distribution; Registration | 100% | Purchased | |
| 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 | 100% | Restructure | |
| ADAMA Australia Pty Limited | Australis | Distribution | 100% | Purchased | |
| ADAMA 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. | China | Manufacturing; Distribution | 100% | Purchased | |
| Adama Huifeng (Jiangsu) Co. Ltd. | China | Manufacturing; Distribution | 51% | Purchased |
2. Interests in joint ventures or associates
| June 30 | December 31 | ||
| 2023 | 2022 | ||
| Joint venture | 1,358 | 2,110 | |
| Associate | 27,914 | 24,258 | |
| 29,272 | 26,368 | ||
3. Summarized financial information of joint ventures and associates
| June 30, 2023 and six months then ended | June 30, 2022 and six months then ended | |
| Joint venture: | ||
| Total carrying amount | 1,358 | 2,584 |
| The Group's share of the following items: | ||
| Net profit | 70 | 234 |
| Other comprehensive income | 33 | 123 |
| Total comprehensive income | 103 | 357 |
| Associate: | ||
| Total carrying amount | 27,914 | 17,924 |
| The Group's share of the following items: | ||
| Net profit | 3,369 | 4,472 |
| Other comprehensive income | 3,072 | 1,754 |
| Total comprehensive income | 6,441 | 6,226 |
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(hereinafter - “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 quantitativedisclosure 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 adisciplined and constructive control environment in which all the employees understand their roles andobligations.
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,agriculturists, agents and agrochemical manufacturers who purchase the products either as finished goods oras intermediate 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 theindustry and geographic region in which the customer operates. No single customer accounted for greater than5% of total accounts receivable.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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. Theexamination made by the Group includes an outside credit rating, if any, and in many cases, receipt ofdocuments from an insurance company. A credit limit is prescribed for each customer, outstanding amount ofthe accounts receivable balance. These limits are examined annually. Customers that do not meet the Group’scriteria for credit quality may do business with the Group on the basis of a prepayment or against furnishingof appropriate collateral.
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 equipment)against execution of the sales, the value of which is examined on a current ongoing basis by the Company. Inthese countries, in a case of expected credit risk, the Company records a provision for the amount of the debtless 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 ofaccount receivables, Other receivables and investments on a lifetime expected credit loss basis. See also notesⅢ.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:
| June 30, 2023 | |
| Past due by less than 90 days | 1,041,318 |
| Past due by more than 90 days | 557,013 |
| 1,598,331 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 theobservable 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 8,567,344 thousand relate tocategory of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 1,126,855thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has creditrisk exposures for other receivables amounted to RMB 38,236 thousand related to category of "Lifetimeexpected 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 ongoingoperations, is invested in short-term interest-bearing investment channels.
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 June 30, 2023 | ||||||||||||
| Third- | Fifth year | Contractual | Carrying | |||||||||
| First year | Second year | Fourth year | and above | Cash flow | amount | |||||||
| Non-derivative financial liabilities | ||||||||||||
| Short-term loans | 6,445,953 | - | - | - | 6,445,953 | 6,341,677 | ||||||
| Bills payables | 497,344 | - | - | - | 497,344 | 497,344 | ||||||
| Accounts payables | 5,944,976 | - | - | - | 5,944,976 | 5,944,976 | ||||||
| Other payables | 2,489,597 | - | - | - | 2,489,597 | 2,489,597 | ||||||
| Other current liabilities | 483,688 | - | - | - | 483,688 | 483,688 | ||||||
| Debentures payable | 934,238 | 937,974 | 1,787,786 | 7,174,504 | 10,834,502 | 8,004,835 | ||||||
| Long-term loans | 1,941,192 | 1,557,367 | 1,274,012 | 657,204 | 5,429,775 | 5,129,027 | ||||||
| Long-term payables | 7,233 | 13,324 | 25,436 | 88,402 | 134,395 | 108,886 | ||||||
| Lease Liabilities | 199,842 | 157,989 | 173,183 | 359,338 | 890,352 | 666,459 | ||||||
| Long-term liability in respect of business combinations | - | 59,240 | 2,764 | - | 62,004 | 49,454 | ||||||
| Other non-current liabilities | 9,754 | 9,755 | 1,307,083 | 371,044 | 1,697,636 | 1,318,941 | ||||||
| Derivative financial liabilities | ||||||||||||
| Foreign currency derivatives | 735,658 | - | - | - | 735,658 | 735,658 | ||||||
| 19,689,475 | 2,735,649 | 4,570,264 | 8,650,492 | 35,645,880 | 31,770,542 | |||||||
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 financialinstruments. 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 financialliabilities 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 andpurchases, which may be affected by exchange rate fluctuations.
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 thesubsequent year. Likewise, the Group hedges most of its monetary assets and liabilities denominated in anon- U.S. dollar currency. The Group uses foreign currency derivatives to hedge its currency risk, mostly withmaturity dates 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:
| June 30, 2023 | ||
| Total assets | Total liabilities | |
| In US Dollar | 2,868,242 | 2,226,263 |
| In Euro | 1,559,256 | 2,048,441 |
| In Brazilian real | 2,496,860 | 482,676 |
| CPI-linked NIS | 45,205 | 8,169,485 |
| In New Israeli Shekel | 438,755 | 2,015,990 |
| Denominated in or linked to other foreign currency | 4,977,640 | 874,345 |
| 12,385,958 | 15,817,200 | |
(B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows:
| June 30, 2023 | ||||||
| Currency/linkage receivable | Currency/linkage payable | Average expiration date | USD thousands Par value | RMB thousands Par value | Fair value | |
| Forward foreign currency | USD | EUR | 20/10/2023 | 340,684 | 2,461,716 | (328,803) |
| Contracts and call options | USD | PLN | 12/07/2023 | 18,177 | 131,346 | 2,586 |
| USD | BRL | 01/08/2023 | 203,448 | 1,470,076 | (28,237) | |
| USD | GBP | 10/07/2023 | 13,022 | 94,098 | (5,172) | |
| USD | ZAR | 19/08/2023 | 33,812 | 244,316 | 7,164 | |
| ILS | USD | 04/08/2023 | 1,418,850 | 10,252,324 | (194,263) | |
| USD | OTHER | 608,192 | 4,394,672 | (45,549) | ||
| CPI forward contracts | CPI | ILS | 20/09/2023 | 608,108 | 4,394,068 | 48,757 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 June 30, 2023 andthe increase or decrease in the CPI would increase (decrease) the equity and profit or loss by the amountspresented below. This analysis assumes that all the remaining variables, among others interest rates,remains constant.
| June 30, 2023 | ||||
| Decrease of 5% | Increase of 5% | |||
| Equity | Profit (loss) | Equity | Profit (loss) | |
| New Israeli shekel | (645,224) | (667,211) | 51,429 | 73,568 |
| British pound | 12,622 | 12,622 | (12,622) | (12,622) |
| Euro | 8,066 | (38,484) | (7,087) | 41,087 |
| Brazilian real | 96,127 | 100,709 | (97,004) | (100,709) |
| Polish zloty | 2,468 | 2,468 | (1,798) | (1,798) |
| South African Rand | (6,378) | 371 | 5,200 | (912) |
| Chinese Yuan Renminbi | (11,105) | (11,105) | 15,721 | 15,721 |
| CPI-linked NIS | 232,100 | 232,100 | (232,100) | (232,100) |
(2) Interest rate risks
The Group has exposure to changes in the variable interest rate. The Group has different assets andliabilities 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.
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:
| June 30, 2023 | |
| Fixed-rate instruments – unlinked to the CPI | |
| Financial assets | |
| Other non-current assets | 66,044 |
| Financial liabilities | |
| Long-term loans (1) | 3,845,009 |
| Long-term payables | 27,610 |
| Other non-current liabilities | 361,290 |
| (4,167,865) | |
| Fixed-rate instruments – linked to the CPI | |
| Financial liabilities | |
| Debentures payable (1) | 8,004,835 |
| Variable-rate instruments | |
| Financial assets | |
| Cash at banks | 855,860 |
| Financial assets at fair value through profit or loss | 1,930 |
| Other current assets | 56,730 |
| Financial liabilities | |
| Short-term loans and credit from banks | 6,341,677 |
| Long-term loans (1) | 1,284,018 |
| Long-term payables | 70,755 |
| (6,781,930) |
(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 othersexchange rates, remained fixed.
| Profit or loss | Equity | |||
| Increase in interest | Decrease in interest | Increase in interest | Decrease in interest | |
| As at June 30, 2023 | 981 | (997) | 981 | (997) |
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:
| June 30, 2023 | ||
| Carrying amount | Fair value | |
| Financial assets | ||
| Other non-current assets (a – Level 2) | 102,845 | 88,714 |
| Financial liabilities | ||
| Long-term loans and others (b – Level 2) | 6,266,949 | 6,015,605 |
| Debentures (c – Level 1) | 8,004,835 | 9,105,391 |
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:
| June 30, 2023 | |
| % | |
| U.S. dollar interest | 5.85% - 7.03% |
| Chinese Yuan Renminbi | 1.08% - 1.96% |
| Euro | %18.3 - 3.66% |
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 financialinstruments 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.
| June 30 | |
| 2023 | |
| Forward contracts and options used for hedging the cash flow (Level 2) | (10805,) |
| Forward contracts and options used for economic hedging (Level 2) | (528,437) |
| Other equity investment (Level 2) | 90,6215 |
| Receivables financing (Level 2) | 125,292 |
| Other non-current assets (Level 2) | 96,464 |
| Other (Level 2) | 1,930 |
| Financial Instrument | Fair value |
| Forward contracts | Fair value measured on the basis of discounting the difference between the stated forward price in the contract and the current forward price for the residual 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.
X. Related parties and related party transactions
1. Information on parent Company
| Company name | Registered place | Business nature | Registered capital (Thousand RMB) | Shareholding percentage | Percentage of voting rights |
| Syngenta Group | Shanghai, China | Production and sales of agrochemicals, fertilizers 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 |
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties
| Name of other related parties | Related party relationship |
| Beijing Guangyuan Yinong Chemical Co., LTD | Common control |
| Beijing Junmao Real Estate Co. Ltd. | Common control |
| Zhonglan Lianhai Design and Research Institute | Common control |
| Bluestar (Beijing) Chemical Machinery Co. Ltd. | Common control |
| Bluestar Engineering Co. Ltd. | Common control |
| China Chemical Information Center | Common control |
| China National Bluestar (Group) Co. Ltd. | Common control |
| China National Chemical Agrochemical Corporation | Common control |
| Dipagro LTDA | Common control |
| Elkem Silicones Brasil Ltd. | Common control |
| Elkem Silicones Hong Kong Co. Ltd. | Common control |
| Hangzhou (torch) Xidou door Film Industry Co., LTD | Common control |
| Henan Junhua Development Co. Ltd. | 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 |
| Jingzhou Sanonda Holdings Co. Ltd. | Common control |
| (MAP) Sinochem Modern Agriculture Co.LTD Xinjiang Branch | Common control |
| (MAP) Sinochem Modern Agriculture Co.LTD Yichang Branch | Common control |
| OOO Syngenta | Common control |
| P.T. Syngenta Indonesia | Common control |
| PT Syngenta Seed Indonesia | Common control |
| Shandong Dacheng Agrochemical Company Limited | Common control |
| Shenyang Chemical Co., Ltd. | Common control |
| Shenyang Shenhua Institute Testing Technology Co. Ltd. | Common control |
| Sinochem (Hainan) Agroecology Co. | Common control |
| Sinochem (Linyi) Crop Nutrition Co. Ltd | Common control |
| Sinochem Agriculture (Xinjiang) Biotechnology Co. Ltd. | Common control |
| Sino MAP | Common control |
| Sinochem Agro Co. Ltd. | Common control |
| Sinochem Chemical Science and Technology Research Institute 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 |
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 Jiangsu Branch | Common control |
| Sinochem Fertilizer Company Limited Jilin Branch | Common control |
| Sinochem Fertilizer Company Limited Northwest Branch | Common control |
| Sinochem Fertilizer Company Limited Shandong Branch | Common control |
| Sinochem Fertilizer Company Limited Southwest Branch | Common control |
| Sinochem Information Technology Co. Ltd. | Common control |
| Sinochem International Crop Care (Overseas) Pte. Ltd. | Common control |
| Sinochem Innovation (Beijing) Technology Research Institute Co., Ltd. | Common control |
| Sinochem Lantian Fluorine Materials Co. Ltd. | Common control |
| Sinochem Modern Agriculture (Gansu) Co. LTD | Common control |
| Sinochem Modern Agriculture (Guangxi) Co. LTD | Common control |
| Sinochem Modern Agriculture (Hunan) Co. LTD | Common control |
| Sinochem Modern Agriculture (Inner Mongolia) Co. LTD | Common control |
| Sinochem Modern Agriculture (Jiangsu) Co. LTD | Common control |
| Sinochem Modern Agriculture (Xinjiang) Co. LTD | Common control |
| Sinochem Modern Agriculture Anhui Co. LTD | Common control |
| Sinochem Modern Agriculture Sichuan Co. LTD | Common control |
| Syngenta (China) Investment Company Ltd | Common control |
| Syngenta Agro (Argentina) S.A. | Common control |
| Syngenta Agro AG | Common control |
| Syngenta Agro d.o.o. | Common control |
| Syngenta Agro GmbH | Common control |
| Syngenta Agro SA de CV | Common control |
| Syngenta Australia Pty Ltd | Common control |
| Syngenta Canada Inc | Common control |
| Syngenta Comercial Agricola | Common control |
| Syngenta Crop Protection AG | Common control |
| Syngenta Crop Protection BV | Common control |
| Syngenta Crop Protection LLC | Common control |
| Syngenta Crop Protection Ltd. | Common control |
| Syngenta Crop Protection SA | Common control |
| Syngenta Czech s.r.o. | Common control |
| Syngenta Espa?a S.A. | Common control |
| Syngenta France S.A.S | Common control |
| Syngenta A.G. | Common control |
| Syngenta Group Saturn (NL) B.V. | Common control |
| Syngenta Hellas AEBE | Common control |
| Syngenta India Ltd | Common control |
| Syngenta Italia SpA | Common control |
| Syngenta Nantong Crop Protection Co., LTD | Common control |
| Syngenta Protecao de Cultivos Ltda | Common control |
| Syngenta S.A. | Common control |
| Syngenta Seeds LTDA | Common control |
| Syngenta Slovakia s.r.o. | Common control |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 Tarim Sanay ve Ticaret AS | Common control |
| Syngenta Vietnam Limited | Common control |
| Syngenta Zambia Limited | Common control |
| Tov Syngenta | Common control |
| Valagro S.p.A. | Common control |
| China Bluestar Chengrand Research Institute Chemical Industry | Common control |
| Zhonglan International Chemical Co. Ltd. | Common control |
| Ningxia Ruitai Technology Co. Ltd. | Common control |
| Sinochem Finance Corporation | 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 |
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties
(1) Transactions with related parties
| Six months ended June 30 | |||
| Type of purchase | Related Party Relationship | 2023 | 2022 |
| Summary of purchase of goods/services: | |||
| Purchase of goods/services received | Common control under Sinochem Holdings | 982,940 | 1,567,313 |
| Minority shareholder and its subsidiary | 7,478 | 3,232 | |
| Purchase of fixed assets and other assets | Common control under Sinochem Holdings | 396 | 8,474 |
| Lease expenses | Common control under Sinochem Holdings | 97 | 117 |
| Minority shareholder and its subsidiary | 2,668 | 410 | |
| Summary of Sales of goods: | |||
| Sale of goods/ Service rendered | Common control under Sinochem Holdings | 920,513 | 987,560 |
| Joint venture | 34,979 | 51,757 | |
| Minority shareholder and its subsidiary | 38,840 | 44,658 | |
| Lease income | Minority shareholder and its subsidiary | 631 | - |
(2) Guarantees
The Group as the guarantee receiver
| Guarantee provider | Amount of guaranteed loan | Inception date of guaranty | Maturity date of guaranty | Guaranty completed (Y / N) |
| Parent company | 323,000 | 21/04/2021 | 20/04/2028 | N |
| 71,108 | 01/06/2021 | 31/05/2028 | N |
* During the reporting period, the Company paid a guarantee fee amounting to 219 thousand RMB(2022 1-6: 227 thousand RMB) to the parent company.
(3) Remuneration of key management personnel and directors
| Periods ended June 30 | ||
| 2023 | 2022 | |
| Remuneration of key management personnel and directors | 33,773 | 52,977 |
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
| June 30 | December 31 | ||||
| 2023 | 2022 | ||||
| Items | Related Party Relationship | Book Balance | Expected credit losses | Book Balance | Expected credit losses |
| Trade receivables | Common control under Sinochem Holdings | 153,673 | - | 356,708 | |
| Joint venture | 16,273 | - | 25,727 | - | |
| Minority shareholder and its subsidiary | 24,839 | - | 13,172 | - | |
| Other receivables | Common control under Sinochem Holdings | - | - | 17 | - |
| Other Non-Current assets | Common control under Sinochem Holdings | 37 | - | 52 | - |
| Prepayments | Common control under Sinochem Holdings | 9,685 | - | 34,393 | - |
Payable Items
| June 30 | December 31 | ||
| Items | Related Party Relationship | 2023 | 2022 |
| Trade payables | Common control under Sinochem Holdings | 486,257 | 426,454 |
| Minority shareholder and its subsidiary | 2,899 | - | |
| Other payables | Common control under Sinochem Holdings | 21,850 | 24,974 |
| Short-term loans * | Common control under Sinochem Holdings | 2,167,740 | 696,459 |
| Other non-current liabilities * | Common control under Sinochem Holdings | 361,290 | 348,231 |
* The liabilities are loans from a related party, the interest expenses for the year ended June 30, 2023 is43,976 thousand RMB (six months ended June 30, 2022: 3,033 thousand RMB ).
On October 27, 2021, the Board of Directors first approved (following the approval of the Company’sAudit Committee dated October 25, 2021) the Company, through one of its subsidiaries, entering intocommitted credit facilities agreements in the aggregate amount of $100 million (RMB 696 million) onmarket terms with Syngenta Group, or any of its subsidiaries. Following the approvals of the Company’srequisite organs, these facilities were amended and further increased in December 2022 and in April 2023,to an aggregate amount of $400 million (RMB 2,890 million). As of 30 June 2023, a total of $350 million(RMB 2,529 million) was utilized.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 (31.12.22:
nil) Interest income of bank deposit for the current period was nil thousand RMB (amount for six monthsended June 30, 2022 was 90 thousand RMB).The closing balance of bank deposit in Sinochem Finance Corporation was 103,987 thousand RMB(31.12.22: 417,661) Interest income of bank deposit for the current period was 2,802 thousand RMB (amountfor six months ended June 30, 2022 was 976 thousand RMB ).The closing balance of a loan received from Sinochem Finance Corporation was 50,000 thousand RMB(31.12.22: nil) Interest expenses in the current period was 137 thousand RMB (amount for six months endedJune 30, 2022 was nil thousand RMB).
XI. Commitments and contingencies
1. Significant commitments
| June 30 | December 31 | |
| 2023 | 2022 | |
| Investment in Fixed assets | 439,492 | 429,862 |
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 seniorofficers of the Company (“D&O Liability Insurance) as originally approved by the 22nd meeting of the 7thsession of Board of Directors and the 4th Interim Shareholders Meeting in 2017, and authorized the managementto annually deal with all matters relating to renewal/extension of the customary D&O Liability Insurancepolicies, with up to 20% flexibility in the relevant terms of the original policy. On December 26, 2018 the 3rdInterim Shareholders Meeting approved the above resolution. The current D&O Liability Insurance wasrenewed for an additional 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 theapplicable environmental laws and attempts to prevent or minimize the environmental risks that could occur asa result 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 patentinfringement. 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 commercializinga product that allegedly infringes the plaintiff’s patents, and seeks actual damages and profits loss. The saidpreliminary injunctions were granted by the court in favor of the plaintiff. The subsidiary has filed appealsagainst such preliminary injunctions, which were rejected. Prior to such claims, and on-going, the subsidiaryfiled several lawsuits against the said plaintiff seeking to declare the said patents are invalid and the subsidiarydoes not infringe them. In May 2023, an additional lawsuit (including a preliminary injunction) was filed by thesame large competitor against said subsidiary, alleging infringement of the same two patents for a differentproduct. The said preliminary injunction was rejected by the court, and plaintiff’s appeals with respect theretoare pending. All these lawsuits are pending as of the approval date of the financial statements. At this stage, theclaims 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, inimmaterial amounts, for causes of action primarily involving employee-employer relations and various civilclaims, for which the Company did not record a provision in the financial statements. The claims that in theestimation of Company’s management, based on its legal advisors’ opinion, have lower chances of succeedingthan being rejected, amount to a negligible amount. Furthermore, claims were filed against the Company forproduct liability damages, for which the Company has adequate insurance coverage, such that the Company’sexposure in respect thereof is limited to the deductible amount or the amount thereof does not exceed thedeductible amount.
XII. Events subsequent to the balance sheet date
The Company is not aware of any events subsequent to the balance sheet date.
XIII. Share-based Payments
1. In February 2019, the remuneration committee and Solutions Board of Directors (as well as the General
Meeting with respect to theformer CEO and Vice President who also serves as a director) approved theallocation of 77,864,910 phantom warrants to officers and employees in accordance with the long-termphantom compensation plan (hereinafter - "the 2019 Plan"), out of which 75,814,897 phantom warrants weregranted at the grant date of February 21, 2019. During 2019, 1,206,081 additional Phantom warrants weregranted.
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 | 30,196,487 |
| Total number of Phantom warrants granted in current period | - |
| Total number of Phantom warrants exercised in current period | (198,228) |
| Total number of Phantom warrants forfeited in current period | (632,648) |
| Total number of Phantom warrants at the end of the period | 29,365,611 |
| The exercise prices and the remainder of the contractual period for Phantom warrants outstanding at the end of period | RMB 9.87 – 10.85 2.5 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-free interest rate | 3.06 % |
| Economic value as of February 21, 2019 (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 payments (in thousands RMB) | 32,977 |
| Expenses arising from cash-settled share-based payments in current period (in thousands RMB) | (20,682) |
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 wasdetermined 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 thebinomial option pricing model and by the vesting period from the original grant date of the 2017 plan to theend of the service period determined by the alternative plan, taking into account the extent of the service thatthe employees provided until that date and the stock price at the reporting date.
Statement of share based payments in the period
| Phantom warrants | |
| Changes in the number of 2017 Plan: | |
| Total number of Phantom warrants at the beginning of the period | 12,172,969 |
| Total number of Phantom warrants granted in current period | - |
| Total number of Phantom warrants exercised in current period | (82,739) |
| Total number of Phantom warrants forfeited in current period | (317,967) |
| Total number of Phantom warrants at the end of the period | 11,772,263 |
| The range of the exercise prices and the remainder of the contractual period for Phantom warrants outstanding at the end of period | RMB 9.37 – 9.43 3.25 years |
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-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 the alternative plan | The binomial pricing model |
| Accumulated amount of liabilities arising from cash-settled share-based payments related to the alternative plan (in thousands RMB) | 16,794 |
| Expenses (income) arising from cash-settled share-based payments in current period related to the alternative plan (in thousands RMB) | (8,288) |
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 ofconventional 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 equityinvestments. 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.
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 | |||||
| Six months ended June 30 | Six months ended June 30 | Six months ended June 30 | Six months ended June 30 | |||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| Operating income from external customers | 15,855,165 | 16,842,617 | 1,398,036 | 1,953,211 | - | - | 17,253,201 | 18,795,828 |
| Inter-segment operating income | - | - | 709 | 870 | (709) | (870) | - | - |
| Interest in the profit or loss of associates and joint ventures | - | - | 3,439 | 4,706 | - | - | 3,439 | 4,706 |
| Segment's results | 954,027 | 1,385,155 | (41,194) | 351,710 | - | - | 912,833 | 1,736,865 |
| Financial expenses | 455,855 | (438,224) | ||||||
| Loss from changes in fair value | (782,218) | (1,341,717) | ||||||
| Investment income | 6,651 | - | ||||||
| Profit before tax | (318,589) | 833,374 | ||||||
| Income tax income (expense) | 76,433 | (101,276) | ||||||
| Net profit | (242,156) | 732,098 | ||||||
| Crop Protection | Intermediates and ingredients | Unallocated assets and liabilities | Total | |||||||||
| June 30 | December 31 | June 30 | December 31 | June 30 | December 31 | June 30 | December 31 | |||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||
| Total assets | 48,359,453 | 47,113,346 | 2,440,361 | 2,520,000 | 9,102,808 | 8,347,143 | 59,901,902 | 57,980,489 | ||||
| Total liabilities | 6,286,775 | 8,689,479 | 123,512 | 383,640 | 29,316,105 | 25,782,715 | 36,257,392 | 34,855,834 | ||||
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, thegeographical location of the company which owns the assets.
| Operating income from external customers | ||
| Six months ended June 30 | ||
| 2023 | 2022 | |
| Europe, Africa and Middle East | 5,286,856 | 5,136,114 |
| North America | 3,018,617 | 3,639,600 |
| Latin America | 3,902,210 | 3,993,953 |
| Asia Pacific | 5,045,518 | 6,026,161 |
| 17,253,201 | 18,795,828 | |
| Specified non-current assets | ||
| June 30 | December 31 | |
| 2023 | 2022 | |
| Europe, Africa and Middle East | 14,141,270 | 13,365,820 |
| North America | 1,346,640 | 1,184,067 |
| Latin America | 2,589,195 | 2,482,569 |
| Asia Pacific | 5,996,887 | 5,862,043 |
| 24,073,992 | 22,894,499 | |
* As of 2023, the India, Middle East & Africa (IMA) region has been reorganized such that the countriesformerly included in this region are now included in the Europe region (renamed EAME) or in the Asia Pacificregion. The information for 2022 was re-classified accordingly.
2. The dependency on major customers
No single customer's proportion of the total amount of sales is over 10%.
XIV. Other significant items - (cont'd)
3. Calculation of Earnings per share and Diluted earnings per share
| Amount for the current period | Amount for the prior period | |
| Net profit (loss) from continuing operations attributable to ordinary shareholders | (242,156) | 732,098 |
| Shares | Amount for the current period | Amount for the prior 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 for the current period | Amount for the prior period | |
| Calculated based on net profit attributable to ordinary shareholders | ||
| Basic earnings per share | (0.10) | 0.31 |
| Diluted earnings per share | N/A | N/A |
| Calculated based on net profit from continuing operations attributable to ordinary shareholders: | ||
| Basic earnings per share | (0.10) | 0.31 |
| Diluted earnings per share | N/A | N/A |
| Calculated based on net profit from discontinued operations attributable to ordinary shareholders: | ||
| Basic earnings per share | N/A | N/A |
| Diluted earnings per share | N/A | N/A |
XV. Notes to major items in the Company's financial statements
1. Cash at bank and on hand
| June 30 | December 31 | |
| 2023 | 2022 | |
| Deposits in banks | 121,346 | 258,330 |
| Other cash and bank balances | 3,210 | 12,750 |
| 124,556 | 271,080 |
As at June 30, 2023, restricted cash and bank balances was 3,210 thousand RMB (as at December 31, 2022:
12,750 thousand RMB).
2. Accounts receivable
a. By category
| June 30, 2023 | |||||
| Book value | Provision for expected credit losses | ||||
| Amount | Percentage (%) | Amount | Percentage (%) | Carrying amount | |
| Account receivables assessed individually for impairment | 13,893 | 1 | 13,893 | 100 | - |
| Account receivables assessed collectively for impairment | 1,031,461 | 99 | 21 | - | 1,031,440 |
| 1,045,354 | 100 | 13,914 | 1 | 1,031,440 | |
| December 31, 2022 | |||||
| Book value | Provision for expected credit losses | ||||
| Amount | Percentage (%) | Amount | Percentage (%) | Carrying amount | |
| Account receivables assessed individually for impairment | 13,893 | 2 | 13,893 | 100 | - |
| Account receivables assessed collectively for impairment | 758,471 | 98 | 9 | - | 758,462 |
| 772,364 | 100 | 13,902 | 2 | 758,462 | |
b. Aging analysis
| June 30, 2023 | |
| Within 1 year (inclusive) | 1,031,461 |
| Over 1 year but within 2 years | - |
| Over 2 years but within 3 years | - |
| Over 3 years but within 4 years | 15 |
| Over 4 years but within 5 years | 1 |
| Over 5 years | 13,877 |
| 1,045,354 |
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
| Six months ended June 30, 2023 | |
| Balance as of January 1 | 13,902 |
| Addition during the year, net | 21 |
| Write back during the year | (9) |
| Write-off during the year | - |
| Exchange rate effect | - |
| Balance as of June 30 | 13,914 |
d. Five largest accounts receivable at June 30, 2023:
| Name | Closing balance | Proportion of Accounts receivable (%) | Allowance of expected credit losses |
| Party 1 | 815,623 | 78 | - |
| Party 2 | 114,009 | 11 | - |
| Party 3 | 20,520 | 2 | - |
| Party 4 | 18,965 | 2 | - |
| Party 5 | 18,056 | 2 | - |
| 987,173 | 95 | - |
3. Receivable financing
| June 30 | December 31 | ||
| 2023 | 2022 | ||
| Bank acceptance draft | 7,4464 | 2,596 | |
| 7,4464 | 2,596 |
As at June 30, 2023, bank acceptance endorsed but not yet due amounts to 218,243 thousand RMB.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables
| June 30 | December 31 | |
| 2023 | 2022 | |
| Other receivables | 11,611 | 11,611 |
| 11,611 | 11,611 |
(1) Other receivables
a. Other receivables by categories
| June 30 | December 31 | |
| 2023 | 2022 | |
| Other | 17,530 | 17,633 |
| Provision for expected credit losses | (5,919) | (6,022) |
| 11,611 | 11,611 |
b. Other receivables by aging
| June 30, 2023 | |
| Within 1 year (inclusive) | - |
| Over 1 year but within 2 years | 113 |
| Over 2 years but within 3 years | 634 |
| Over 3 years but within 4 years* | 11,830 |
| Over 4 years but within 5 years | - |
| Over 5 years | 4,953 |
| 17,530 |
* Include intergroup balance with Anpon
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:
| Period ended June 30, 2023 | ||
| Balance as of January 1, 2023 | 6,022 | |
| Addition during the period | - | |
| Written back during the period | (103) | |
| Write-off during the period | - | |
| Balance as of June 30, 2023 | 5,919 |
d. Five largest other receivables at June 30 2023:
| Name | Closing balance | Proportion of other receivables (%) | Credit loss provision |
| Party 1 | 11,611 | 66 | - |
| Party 2 | 3,125 | 18 | 3,125 |
| Party 3 | 548 | 3 | 548 |
| Party 4 | 543 | 3 | 543 |
| Party 5 | 237 | 1 | 237 |
| 16,064 | 91 | 4,453 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
5. Long-term equity investments
| June 30, 2023 | December 31, 2022 | |||||
| Amount balance | Impairment loss | Book value | Amount balance | Impairment loss | 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 | Opening balance | Increase | Decrease | Closing balance | Current provision Impairment loss | Balance provision Impairment 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) Agricultural Technology Co., Ltd | 310,557 | - | - | 310,557 | - | - |
| 17,511,352 | - | - | 17,511,352 | - | - |
6. Operating Income and operating costs
| Six months ended June 30, 2023 | Six months ended June 30, 2022 | |||
| Revenue | Operating costs | Revenue | Operating costs | |
| Main operations | ,073,3261 | 84,3068 | 1,162,352 | 870,245 |
| Other operations | 0,3832 | ,9328 | 22,742 | 11,173 |
| ,093,7091 | 93,2388 | 1,185,094 | 881,418 | |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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
| Six months ended June 30, 2023 | Six months ended June 30, 2022 | |
| Interest income | ,9641 | 3,340 |
| Government subsidies | ,7667 | 13,377 |
| Other | 5,9291 | 6,385 |
| 5,6592 | 23,102 |
(2) Other cash paid relevant to operating activities
| Six months ended June 30, 2023 | Six months ended June 30, 2022 | |
| Professional services | 1,2887 | 37,608 |
| Transportation and Commissions | 26,151 | 26,622 |
| Other | 14,600 | 6,697 |
| 112,039 | 70,927 |
(3) Other cash received relevant to investing activities
| Six months ended June 30, 2023 | Six months ended June 30, 2022 | |
| Loans | 2,850 | 150,000 |
| 2,850 | 150,000 |
(4) Other cash paid relevant to investing activities
| Six months ended June 30, 2023 | Six months ended June 30, 2022 | |
| Loans | - | 250,000 |
| - | 250,000 |
(5) Other cash received relevant to financing activities
| Six months ended June 30, 2023 | Six months ended June 30, 2022 | |
| Deposit for issuing bills payables | 12,750 | 6,124 |
| 12,750 | 6,124 |
XV. Notes to major items in the Company's financial statements - (cont'd)
(6) Other cash paid relevant to financing activities:
| Six months ended June 30, 2023 | Six months ended June 30, 2022 | |
| Deposit for issuing bills payable | 3,210 | 18,741 |
| Other | 627 | - |
| 3,837 | 18,741 |
8. Supplementary information to cash flow statement
(1) Reconciliation of net profit to net cash flows generated from operating activities:
| Six months ended June 30 | |||
| 2023 | 2022 | ||
| Net profit | 93,632 | 245,802 | |
| Add: Assets impairment loss | 3,067 | (3,142 ) | |
| Credit impairment loss | (91) | 141 | |
| Depreciation of fixed assets and investment property | 114,931 | 100,485 | |
| Depreciation of-right-of use assets | 1,177 | 1,434 | |
| Amortization of intangible assets | 6,033 | 5,727 | |
| Gain on disposal of fixed assets, intangible assets and other long-term assets | 472 | (59,538 ) | |
| Financial expenses | 2,661 | 28,333 | |
| Decrease in deferred income tax assets | 20,379 | - | |
| Decrease (increase) in inventory | 77,725 | (107,348) | |
| Decrease in accounts receivable from operating activities | (327,200 ) | (287,302 ) | |
| Increase (decrease) in payables from operating activities | 56,446) ) | 137,955 | |
| Net cash flows generated from operating activities | (63,660) | 62,547 | |
(2) Net increase in cash and cash equivalents
| Six months ended June 30 | ||
| 0232 | 2022 | |
| Closing balance of cash | 21,3461 | 276,501 |
| Less: Opening balance of cash | 58,3302 | 259,434 |
| Net increase in cash and cash equivalents | 136,984)( | 17,067 |
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
| Company name | Registered place | Business nature | Registered capital (Thousand RMB) | Shareholding percentage | Percentage of voting rights |
| Syngenta Group | Shanghai, China | Production and sales of agrochemicals, fertilizers 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
| Six months ended June 30 | ||||||
| 2023 | 2022 | |||||
| Summary of Purchase of goods/services received: | Related Party Relationship | |||||
| Purchase of goods/services received | Common control under ChemChina | 50,950 | 67,101 | |||
| Subsidiary | 53,851 | 47,970 | ||||
| Purchase of fixed assets and other assets | Common control under ChemChina Holdings | - | 2,569 | |||
| Summary of Sales of goods: | ||||||
| Sale of goods | Common control under ChemChina | 2,553 | 20,068 | |||
| Subsidiary | 499,786 | 497,938 | ||||
| Sale of raw materials | Subsidiary | 164 | 1,003 | |||
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 of guaranteed loan | Inception date of guaranty | Maturity date of guaranty | Guaranty completed (Y/ N) | ||||
| 40,000 | 2022.01.18 | 2023.01.17 | Y | ||||
| Subsidiary | 30,000 | 2022.03.30 | 2023.03.29 | Y | |||
| 38,000 | 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 | ||||
| 10,000 | 2023.01.12 | 2025.06.20 | N | ||||
| 20,000 | 2022.11.17 | 2024.12.20 | N | ||||
| 12,000 | 2023.04.03 | 2025.06.20 | 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 | ||||
| 4,400 | 2023.04.13 | 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 | 202706.22 | N | ||||
| 25,000 | 2022.11.23 | 2026.12.22 | N | ||||
| 10,000 | 2023.01.16 | 2026.06.22 | N | ||||
| 14,000 | 2023.04.04 | 2026.06.22 | N | ||||
| 2,000 | 2023.04.26 | 2028.05.05 | N | ||||
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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 of guaranteed loan | Inception date of guaranty | Maturity date of guaranty | Guaranty completed (Y / N) |
| Parent company | 323,000 | 21/04/2021 | 20/04/2028 | N |
| 71,108 | 01/06/2021 | 31/05/2028 | N |
During the reporting period, the Company paid a guarantee fee amounting to 219 thousand RMB(2022.1-6: 227) to the parent company.
c. Intercompany borrowings/lending
| Related party | Borrowing/ Lending amount | Commencement date | Termination date | Balance at year end | Note |
| 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 | 2024.05 | 125,000 | Fixed rate at 2.4% |
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
| June 30 | December 31 | ||||
| 2023 | 2022 | ||||
| Items | Related Party Relationship | Book Balance | Expected credit losses | Book Balance | Expected credit losses |
| Trade receivables | Subsidiary | 834,588 | - | 548,601 | - |
| Non-current assets within one year | Subsidiary | 125,000 | - | 125,000 | - |
| Other non-current assets | Subsidiary | 125,000 | - | 125,000 | - |
| Other receivables | Subsidiary | 11,611 | - | 11,611 | - |
| Trade receivables | Common control under Sinochem Holding | 955 | - | 304 | - |
| Prepayments | Common control under Sinochem Holding | 1,311 | - | 537 | - |
| Other non-current assets | Common control under Sinochem Holding | 37 | - | 52 | - |
Payable Items
| June 30 | December 31 | ||
| Items | Related Party Relationship | 2023 | 2022 |
| Trade payables | Subsidiary | 19 | 5,686 |
| Trade payables | Common control under Sinochem Holdings | 44,877 | 46,152 |
| Other payables | Subsidiary | 311,065 | 395,152 |
| Common control under Sinochem Holdings | 327 | 700 |
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 (231.12.2: nil).Interest income of bank deposit for the current period was nil (amount for period ended June 30, 2022was 67 thousand RMB).
The closing balance of bank deposit in SinoChem Finance Corporation was 42,360 thousand RMB(231.12.2: 202,615 thousand RMB) Interest income of bank deposit for the current period was 1,490thousand RMB (amount for period ended June 30, 2022 was 493 thousand RMB).
ADAMA Ltd. Semi-Annual Report 2023
Supplementary information(Expressed in RMB '000)
1. Extraordinary Gain and Loss
| Six months ended | |
| June 30, 2023 | |
| Disposal of non-current assets | 23,402 |
| Government grants recognized through profit or loss | 19,053 |
| Recovery or reversal of expected credit losses which is assessed individually during the years | 27,325 |
| Other non-operating income or expenses other than the above | 13,569 |
| Other profit or loss that meets the definition of non-recurring profit or loss | (2,751) |
| Tax effect | (17,788) |
| 62,810 |
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 forInformation Disclosure by Companies Offering Securities to the Public No. 9 – Calculation andDisclosure of Return on net assets and Earnings per share (2010 Amendment) issued by China SecuritiesRegulatory Commission.
| 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 | (1.03) | (0.10) | N/A | ||
| Net profit after deduction of extraordinary gains/losses attributable to ordinary shareholders of the Company | (1.30) | (0.13) | N/A | ||
ADAMA Ltd.Legal Representative：Steve Hawkins
August 28, 2023