ADAMA Ltd. Semi-Annual Report 2019
ADAMA LTD.SEMI-ANNUAL REPORT 2019
ADAMA Ltd. is one of the world's leading crop protection companies. We strive to Create Simplicityin Agriculture - offering farmers effective products and services that simplify their lives and helpthem grow. With one of the most comprehensive and diversified portfolios of differentiated, qualityproducts, our 7,000 strong team reaches farmers in over 100 countries, providing them with solutionsto control weeds, insects and disease, and improve their yields.Please see important additional information and further details included in the Annex.
August 2019
ADAMA Ltd. Semi-Annual Report 2019
Section I Important Notice, Table of Contents and DefinitionsThe Company’s Board of Directors, Board of Supervisors, directors, supervisors and senior managersconfirm that the content of the Report is true, accurate and complete and contains no false statement,misleading representation or material omissions, and assume joint and several legal liability arisingtherefrom.Chen Lichtenstein, the person in charge of the Company as well as its legal representative, and AviramLahav, the person leading the accounting function (Chief Financial Officer), hereby state and ensurethe truthfulness, 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 strategyetc., does not constitute, in any manner whatsoever, a substantial commitment of the Company toinvestors. Investors and other relevant people are cautioned to be sufficiently mindful of investmentrisks as 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 IV herein.For the Reporting Period, the Company does not plan to distribute cash dividends or bonus shares orconvert capital reserve into share capital.This Report and its Abstract have been prepared in both Chinese and English. Should there be anydiscrepancies between the two versions, the Chinese version shall prevail.
ADAMA Ltd. Semi-Annual Report 2019
Table of Contents
Section I Important Notice, Table of Contents and Definitions ...... 2
Section II Corporate Profile and Financial Results ...... 5
Section III Business Profile ...... 8
Section IV Performance Discussion and Analysis ...... 10
Section V Significant Events ...... 30
Section VI Change in Shares and Shareholders ...... 44
Section VII Preference Shares ...... 50
Section VIII Directors, Supervisors and Senior Management ...... 51
Section IX Corporate Bonds ...... 52
Section X Financial Report ...... 53
Section XI Documents Available for Reference ...... 174
ADAMA Ltd. Semi-Annual Report 2019
Definitions
Term DefinitionCompany, the Company ADAMA Ltd.Solutions
Adama Agricultural Solutions Ltd., a wholly-
Company, incorporated in Israel according to its lawsBoard of Directors/Board The Board of Directors of the CompanyBoard of Supervisors The Board of Supervisors of the CompanyADAMA or Group, the Group The Company and its subsidiariesCSRC China Securities Regulatory CommissionSZSE Shenzhen Stock ExchangeReporting Period, this period January 1, 2019 - June 30, 2019ChemChina China National Chemical Co., Ltd.CNAC
China National Agrochemical Co., Ltd.
owned subsidiary of the, the controlling shareholder of the
Company, a wholly-owned subsidiary of ChemChina
ADAMA Ltd. Semi-Annual Report 2019
Section II Corporate Profile and Financial ResultsI Corporate InformationStock name ADAMA A, ADAMA B Stock code 000553, 200553Stock exchange Shenzhen Stock ExchangeCompany name in Chinese 安道麦股份有限公司Abbr. 安道麦Company name in English ADAMA Ltd.Abbr. ADAMALegal representative Chen Lichtenstein
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 their postal 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 2018 AnnualReport.
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 place where thisReport is kept during the Reporting Period.
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by the CSRC for
Board Secretary Securities Affairs Representative Investor Relations Manager
Name Li Zhongxi Liang Jiqin Wang ZhujunAddress 6/F, No.7 Office Building, No.10 Courtyard, Chaoyang Park South Road, Chaoyang District, BeijingTel. 010-56718110 010-56718110 010-56718110Fax 010-59246173 010-59246173 010-59246173E-mail irchina@adama.com irchina@adama.com irchina@adama.com
ADAMA Ltd. Semi-Annual Report 2019
the publication of this Report and the location where this Report is kept did not change during the Reporting Period.Said information can be found in the 2018 Annual Report.
3. Other Relevant Documents
Indicate by tick mark whether any changes occurred to the relevant documents during the Reporting Period.
□ Applicable √ Not applicable
IV Main Accounting Data and Financial Indexes
Indicate by tick mark whether the Company needs to retroactively adjust or restate any of its accounting data.
√ Yes □ No
Reason for retrospective adjustment or restatement: Business combination under common control.
Reporting Period
Same period of last year +/- (%)Before adjustment
After adjustment
After adjustment
Operating revenues (RMB’000) 13,616,032
| 13,026,258 | |
13,639,073
-0.17%
the Company (RMB’000)
588,638
| Net profit attributable to shareholders of | ||
2,362,781
2,389,167
-75.36%
Net profit attributable to shareholders of
the Company excluding non-recurring
| Net profit attributable to shareholders of |
profit and loss (RMB’000)
430,270
790,296
790,296
-45.56%
Net cash flow from
(RMB’000)
(304,950)
| operating activities | ||
779,518
839,803
-136.31%
Basic EPS (RMB/share) 0.2406
0.9658
0.9765
-75.36%
Diluted EPS (RMB/share) N/A
N/A
N/A
N/A
Weighted average return on net assets
2.59%
11.65%
11.53%
-8.94%
End of Reporting
Period
End of last year +/- (%)Before adjustment
After adjustment
After adjustment
Total assets (RMB’000) 45,810,089
41,577,798
44,135,063
3.80%
the Company (RMB’000)
22,479,404
| Net assets attributable to shareholders of | ||
21,543,425
22,744,862
-1.17%
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 andInternational Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
ADAMA Ltd. Semi-Annual Report 2019
2. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under Chinese andForeign Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
3. Reason for accounting data differences under Chinese and Foreign Accounting Standards
□ Applicable √ Not applicable
VI Non-Recurring Profit/Loss
√ Applicable □ Not applicable
Unit: RMB’000Item Reporting Period NoteGains/losses on the disposal of non-
asset impairment provisions)
115,514
| current assets (including the offset part of | ||
Government grants recognized through profit or loss (excluding
governmentgrants closely related to business of the Company and given at a fixed quota or
amount in accordance with government’s uniform standards)
14,854
| grants closely related to business of the Company and given at a fixed quota or |
Profit or loss of subsidiaries generated before combination
combination involving enterprises under common control
38,027
date of a business
Recovery or reversal of provision for bad debts which is assessed individually
during the years
15,748
Recovery or reversal of provision for bad debts which is assessed individually
Other non-operating income and expenses other than the above -8,431
Less: Income tax effects 17,344
NCI (after tax) -
Total 158,368
Explanation of why the Company classified an item as non-recurring profit/loss according to the definition in theExplanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public- Non-Recurring Profit and Loss, or reclassified any non-recurring profit/loss item given as an example in the saidexplanatory announcement to recurrent profit/loss
□ Applicable √ Not applicable
No such cases in the Reporting Period.
ADAMA Ltd. Semi-Annual Report 2019
Section III Business ProfileI Main Business of the Company during the Reporting PeriodIs the Company subject to any disclosure requirements for special industries?No.
The Company is a corporation incorporated in the People's Republic of China.ADAMA engages in the development, manufacturing and commercialization of crop protection products, that arelargely off-patent, and is one of the leading companies in the world in this field. The Group provides solutions tofarmers in approximately 100 countries, through approximately 60 subsidiary companies throughout the world.In 2018, ADAMA was the world’s leading company in off-patent crop protection solutions (by sales), and wasranked sixth in the world among companies engaged in the field of crop protection. The Group's business modelintegrates end-customer access, regulatory expertise, global R&D and production capabilities, thereby providingADAMA a significant competitive edge and allowing it to launch new and differentiated products that addressfarmers’ needs in key markets.ADAMA's primary operations are focused on Europe, North America, Latin America, Asia-Pacific (including China)and India, the Middle-East and Africa. In aggregate, the Group sells its products in approximately 100 countriesacross the globe.ADAMA is focused on the development, manufacturing and commercialization of largely off-patent crop protectionproducts, which are generally herbicides, insecticides and fungicides, which protect agricultural and other cropsagainst weeds, insects and disease, respectively. The Group also utilizes its expertise to adapt such products also forthe development, manufacturing and commercialization of similar products for non-agricultural purposes(Consumer and Professional Solutions).In addition, ADAMA leverages its core capabilities in the agricultural and chemical fields and operates in severalother non-agricultural areas, none of which, individually, is material for the Group. These activities include primarily,(a) the manufacturing and marketing of dietary supplements, food colors, texture and flavor enhancers, and foodfortification ingredients; (b) fragrance products for the perfume, cosmetics, body care and detergents industries; (c)the manufacturing of industrial products and (d) other non-material activities.Trends, events and key developments in the Group's macro-economic environment may have a material impact onits business results and development. The effects of these factors may differ depending on the geographic regionand the different products of the Group. Since the Group maintains a broad product portfolio and since it is activein many geographic regions, the aggregate effect of these factors in any given year, and the course thereof, is notuniform and may sometimes be mitigated by counterbalancing influences. The activities and results of the Groupare further subject to, and affected by, certain global, localized and other factors, such as: demographic changes;economic growth and rising standards of living; agricultural commodity prices; significant fluctuations in rawmaterial costs and global energy prices; development of new crop protection technologies; patent expiry and growthin volumes of off-patent products; the agricultural market and volatile weather conditions; regulatory changes;government policies; world ports and monetary policy and the financial market.Please see important additional information and further details included in the Annex.
ADAMA Ltd. Semi-Annual Report 2019
II Significant Changes in Main Assets
1. Significant Changes in Main Assets
Main assets Explanations regarding significant changeStock rights/Equity assets No significant changesFixed assets No significant changesIntangible assets No significant changesConstruction in progress No significant changes
2. Main Assets Overseas
√ Applicable □ Not applicable
Specificcontents ofthe assets
Reason
Scale of theassets(RMB’000)
Location
Operation/
Management
mode
Controlmeasures to
guarantee
assets
Net Profit
safety of theof
the assets(RMB’000)
of
Proportion of
overseas
Proportion ofassets out of
total netassets (%)
assets out of
Significantimpairmentrisk?Equity
investment in
Solutions
Acquired
investment inthrough major
assetsrestructuring.
through major
19,153,146
| Israel and |
globally
CorporateGovernance
CorporateGovernance
487,920 85% NoOtherexplanations
III Core Competitiveness AnalysisIs the Company subject to any disclosure requirements for special industries?No.No significant changes occurred to the core competitiveness of the Company in the Reporting Period.
ADAMA Ltd. Semi-Annual Report 2019
Section IV Performance Discussion and AnalysisI OverviewSignificant precipitation in North America in the first quarter followed by unprecedented flooding in the secondquarter, alongside extreme dry weather in Europe, India and parts of Asia-Pacific, delayed and reduced applicationof crop protection products in these regions. Latin America benefited from relatively strong demand in the southernhemisphere off-season. India’s monsoon season started late in the second quarter, delaying the sowing of severalsummer-planted crops.Crop prices have generally remained subdued in the first half of 2019, with the exception of corn, which continuesto challenge farmer income in most regions, resulting in continued sluggish demand for crop protection products.The sustained supply-constrained environment, mostly owing to increased environmental focus in China, has seencontinued industry-wide shortages in certain raw materials and intermediates, and resulted in procurement costsremaining elevated compared to the first half of last year. The Company continues to raise its prices in all regionsand contain its manufacturing and other operating costs to mitigate this impact.For ADAMA, the extended cold and wet conditions in North America, alongside dry weather in Europe, India andparts of Asia-Pacific, delayed and reduced application of crop protection products, while continued tight supplyconditions prevented the Company from taking advantage of demand for certain products.Strong growth in Latin America, led by Brazil, as well as resilient performance in APAC, notably Australia,alongside the contribution of joiners Bonide and Anpon, partially offset these weather- and supply-related delays.In China, continued strong demand for the Company’s differentiated, formulated and branded products is supportingthe shift towards sales through its own channels and away from sales of unformulated, technical active ingredientsto intermediaries.The Company continues to drive growth with new launches of differentiated product throughout all regions. Thecontinued supportive pricing environment allowed for the raising of prices by an average of 3% across all regions,passing on some of the impact of the constrained supply and higher procurement costs, while mitigating the impactof generally softer currencies. In addition, the Company continues to contain its manufacturing and other operatingcosts, while recording idleness costs at Jingzhou old site.Looking toward the second half of the year, the Company expects robust growth, as the southern hemisphere regions,which are performing strongly, move into their peak season, as the Monsoon season progresses in India, and assupply constraints start alleviating.Increasing collaboration activitiesThe Company continues to advance collaboration opportunities with other ChemChina group entities, as well asother entities of the Sinochem group, to make the most of its positioning.Jingzhou Old SiteFollowing resumption of operations at the Jingzhou old site in late March, the Company is advancing the gradualramp-up of production. The new state-of-the-art wastewater treatment facility is operational, and the upgraded
ADAMA Ltd. Semi-Annual Report 2019
biological-decomposition systems are being acclimated to the improved wastewater quality. As this progresses, theCompany is still experiencing constrained supply in key products manufactured at the site, especially impacting theAmericas, Asia-Pacific, China and India, Middle-East and Africa, constraining sales and gross profit byapproximately $100 million and $35 million, respectively, in the half-year, and recorded approximately $20 millionin related idleness costs during the period, bringing the impact from the disruption on EBITDA to approximately$50 million and on Net Income to approximately $40 million. In recent weeks, the Ecological Protection SupervisionTeam of the central government commenced on-site inspections at many ChemChina’s group companies, includingthe Company’s sites in China, as part of its strengthening ongoing environmental and safety focus. ADAMA isworking in full cooperation, in the context of its 3-year relocation and upgrade process which is due to concludenext year, to identify and rectify any safety or environmental matter.Notwithstanding that the old site only produces a small number of products for the group, and the fact that ADAMAhas significant production and procurement capabilities elsewhere in China and worldwide ,the suspension has hada negative impact on the Company’s performance as described above.Regarding the explanations on the changes of the financial data, please refer to the “II Analysis of Main Business”of this chapter.II Analysis of Main BusinessSee details on the relevant contents of “I. Overview” of “Performance Discussion and Analysis”.
Year-on-year changes of main financial data:
ReportingPeriod(000’RMB)
Same period oflast year(000’RMB)(Restated)
+/-%
Reporting
Period(000’USD)
Same period oflast year(000’USD)(Restated)
+/-%Operating income 13,616,032
13,639,073
-0.17%
2,008,150
2,141,685
-6.24%
Cost of goods sales 9,023,242
9,042,183
-0.21%
1,330,711
1,419,822
-6.28%
Gross Profits 4,592,790
4,596,890
-0.09%
677,439
721,863
-6.15%
Selling andDistributionexpenses
2,499,774
2,256,991
10.76%
368,715
354,394
4.04%
General andadministrativeexpenses
628,259
523,821
19.94%
92,661
82,258
12.65%
R&D expenses 210,699
156,275
34.83%
31,062
24,541
26.57%
Financial Expense 938,196
347,554
169.94%
138,402
54,482
154.03%
Total profits 729,175
3,126,725
-76.68%
107,630
491,559
-78.10%
Income tax expenses
140,537
737,558
-80.95%
20,692
115,912
-82.15%
Net income 588,638
2,389,167
-75.36%
86,938
375,647
-76.86%
EBITDA 2,460,919
4,486,211
-45.14%
362,956
704,994
-48.52%
Net cash flows fromoperating activities
(304,950)
839,803
-136.31%
(46,757)
131,525
-135.55%
Net cash flows used ininvesting activities
(1,369,994)
(233,651)
486.34%
(202,688)
(36,605)
453.72%
ADAMA Ltd. Semi-Annual Report 2019
ReportingPeriod(000’RMB)
Same period of
last year(000’RMB)(Restated)
+/-%
Reporting
Period(000’USD)
Same period of
last year(000’USD)(Restated)
+/-%Net cash flows used infinancing activities
735,633
(2,427,887)
-130.30%
109,154
(381,626)
-128.60%
Net increase (decrease)in cash and cashequivalents
(964,376)
(1,823,328)
-47.11%
(141,826)
(290,777)
-51.23%
Note: The significantly higher total profits, net income and EBITDA for the first half of 2018 mainly reflect theone-time capital gain from the divestment of a portfolio of registrations in connection with the 2017 ChemChina-Syngenta transaction, which increased Total Profits and EBITDA by USD 314.3 million and Net Income by USD
244.8 million.
Analysis of Financial Highlights
(1) Sales
Regional Sales Performance
Europe: Sales in Europe were impacted by tight supply conditions as well as unseasonably hot weather towards theend of the second quarter, which constrained sales in key countries.In Northern Europe, sales continued to be impacted by credit restraint in Ukraine, with the Company proactivelyrestricting sales to only those customers with a proven ability to pay, as well as by adverse weather conditions inGermany, reducing crop protection application in all major crops, alongside the tight supply conditions.In Southern Europe, weak disease pressure in key markets resulted in subdued demand for crop protection products,while supply-related constraints further impacted sales.In the second quarter, ADAMA launched MERKUR? in France, a differentiated, broad-spectrum three-wayherbicide mixture in an innovative formulation, combating weed seed germination and growth. In addition, theCompany obtained several new product registrations, including MERPLUS?, a differentiated fungicide for pomefruits in Europe and FLUTEPRID?, a 3-way combination insecticide-fungicide seed dressing for control of diseasesand pests in grain crops in Russia.North America. Sales in North America benefited from continued price increases partially offsetting adverseweather conditions.Significant and extended precipitation in the first quarter, followed by unprecedented floodings in the second quarter,
Q2 2019$m
Q2 2018$m
ChangeUSD
H1 2019
$m
H1 2018$m
Change
USDEurope 267 309 -13.6% 628 702 -10.6%
| North America | 220 | 213 | +3.5% | 400 | 407 | - | 1.6% | ||||||||||||||
| Latin America | 196 | 172 | +14.2% | 355 | 311 | +14.4% |
| Asia Pacific | 173 | 167 | +3.1% | 358 | 356 | +0.7% |
| Of which China | 86 | 88 | - | 3.0% | 179 | 173 | +3.9% | |||||||||||||||
| India, Middle East & Africa | 146 | 162 | - | 10.2% | 267 | 270 | - | 1.4% | |||||||||||||||
| Total | 1,002 | 1,023 | - | 2.1% | 2,008 | 2, | 04 | 5 | - | 1.8% | |||||||||||||||
ADAMA Ltd. Semi-Annual Report 2019
posed significant challenges for farmers, delaying the planting season and reducing planted acreage, impacting salesacross key agricultural markets.In Consumer and Professional Solutions, the Company saw a pleasing contribution from joiner Bonide, despite thechallenging weather conditions which similarly impacted the non-crop market.BRAZEN?, a selective herbicide for grass control in spring wheat and barley in Canada, delivered a strongperformance in its first quarter following its recent launch.Latin America. Latin America delivered business growth in key countries across the region, alongside continuedprice increases, more than offsetting the impact of constrained supply.The Company continues to grow strongly in Brazil, where robust demand for its corn portfolio overcame supplyshortages in certain products. The Company saw strong performance in the key soybean market, leveraging itsdistinctive product offering, including flagship CRONNOS?, the triple-action fungicide for rust, while benefitingfrom an increase in planted areas.Noteworthy performance was recorded in the second quarter in Argentina, despite adverse weather conditions.During the quarter, the Company launched several new products, including BREVIS?, a differentiated post-bloomfruit thinner in apples in Argentina, as well as KADABRA?, a broad-spectrum mixture insecticide for vegetablesin Mexico, and UBERTOP? an insecticide used mainly for the control of a wide range of pests in tomato andcabbage in Central America, while the proprietary NIMITZ? suite of nematicide products was launched in Peru.Asia-Pacific. Sales in the region grew, driven by business growth and continued price increases.The second quarter saw a strong recovery in Australia, as long-awaited rain bolstered the winter crop seasonfollowing the severe drought which significantly impacted sales in the country in the first quarter. However, droughtconditions continued to impact the broader Asia-Pacific region in the second quarter, reducing crop protectionapplication and constraining sales in many countries.During the quarter, the Company obtained a number of new registrations for differentiated products, includingLEGACY MA-X? for controlling a wide range of broadleaf weeds in Australian winter cereals and pasture,APROPO? fungicide for rice in Philippines, and TOPNOTCH? to control various diseases in Australian wheat andbarley.In China, ADAMA continues to see strong demand for its differentiated, formulated and branded products, andprioritizes the sale of these products through its own channels by rapidly shifting away from selling unformulated,technical product to intermediaries, and in so doing benefiting from the full product positioning as well as end-to-end margin. Sales of these formulated, branded products other than those from the Jingzhou old site, grew by morethan 20% in both the quarter and first half.ADAMA continues to make significant portfolio advances in China, with the launch in the second quarter ofLEIWANG?, a combination insecticide to help combat the fall army worm outbreak.Anpon delivered a solid performance in its first full quarter since joining, compensating for the interruption tosupply resulting from the Jingzhou old site.India, Middle East & Africa. Sales in India were impacted by the late Monsoon rains, reducing planting areas anddelaying crop protection application, as well as supply constraints in China-sourced products. In the half-year,growth in the region benefited from a strong performance in Turkey.
(2) Gross Profit
ADAMA Ltd. Semi-Annual Report 2019
Compared to the first half of last year, procurement costs remained elevated, mostly owing to increasedenvironmental and safety focus in China that has seen continued industry-wide shortages in certain raw materialsand intermediates. Benefiting from a stronger pricing environment, the Company continued to raise prices, by anaverage of 3% across all regions, and contained its manufacturing and other operating costs, which compensatedfor a large part of the impact of the constrained supply, higher procurement costs and softer currencies. The Jingzhouold site disruption constrained H1 gross profit by approximately $35 million.
(3) Operating Expenses
Sales and Marketing expenses increased mainly due to the first-time inclusion of Bonide’s expenses, as well asthe amortization of the written-up value of assets transferred from Syngenta in connection with the 2017ChemChina-Syngenta transaction (see additional details below), which offset the benefit of expense containmentand softer currencies.In recent years, the Company conducted various corporate development activities, including mergers andacquisitions, which resulted in the inclusion within its sales and marketing expenses of various one-time or non-cash or non-operational items affecting the Company’s reported numbers, mainly as follows:
? Amortization of legacy Purchase Price Allocation (PPA) of 2011 acquisition of Solutions: Under PRC GAAP,since the first combined reporting in Q3 2017 following the combination, the Company has inherited thehistorical “legacy” amortization charge that ChemChina previously was incurring in respect of its acquisition ofSolutions in 2011. This amortization is done in a linear manner on a quarterly basis, most of which will be fullyamortized by the end of 2020. Its reported financial impact in the first half of 2019 is USD 19 million, net of tax.? Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction:
The proceeds from the Divestment of crop protection products in connection with the approval by the EUCommission of the acquisition of Syngenta by ChemChina, net of taxes and transaction expenses, were paid toSyngenta in return for the transfer of a portfolio of products in Europe of similar nature and economic value.Since the products acquired from Syngenta are of the same nature, and with the same net economic value asthose divested, the Divestment and Transfer transactions had no net impact on the underlying economicperformance of the Company. Its reported financial impact in the first half of 2019 is USD 19.8 million.? Amortization of acquisition PPA (non-cash): The amortization of non-cash intangible assets created in the
course of acquisitions, has no impact on the ongoing performance of the companies acquired. Its reportedfinancial impact in the first half of 2019 is USD 2.4 million, net of tax.General and Administrative expenses: the Company continued to contain expenses and benefited from softercurrencies, which offset the first-time inclusion of expenses of Bonide, while the increase mainly resulted from therecording of a first half charge in respect of idleness costs at the Jingzhou old site, as it advances its gradual ramp-up in production.Research and Development expenses reflect higher spending on strategic research and development projects.
(4) Financial Expenses
Financial expenses alone mainly reflect interest payments on corporate bonds and loans as well as foreign exchangegains/losses on the bonds and other monetary assets and liabilities before the Company carries out any hedging. Thesharp increase in the first half of 2019 compared with the same period last year is mainly due to the impact of boththe appreciation of the Israeli Shekel, as well as the increase of the higher CPI on the Shekel-denominated CPI-linked bonds.
ADAMA Ltd. Semi-Annual Report 2019
Given the global nature of its operational activities and the composition of its assets and liabilities, the Group, inthe ordinary course of its business, uses foreign currency derivatives (forwards and options) to hedge the cash flowrisks associated with existing monetary assets and liabilities that may be affected by exchange rate fluctuations. Netgains/losses from hedging of those positions are recorded in Gains/Losses from Changes in Fair Value, and are thentransferred to Investment Income upon realization.The aggregate of Financial Expenses, Gains/Losses from Changes in Fair Value and Investment Income uponrealization (hereinafter as Total Net Financial Expenses and Investment Income), which more comprehensivelyreflects financial cost of the Company in supporting its main business and protecting its monetary assets/liabilities,amounts to USD 84 million for H1 2019 compared with USD 70 million for H1 2018.The increase in aggregate Net Financial Expenses and Investment Income reflects the higher CPI impact on theIsraeli bonds, as well as higher interest and hedging costs, while the lower expenses in the corresponding periodslast year reflect the benefit of foreign exchange income related to balance sheet positions.
(5) Tax expenses.
Net tax expenses were lower largely due to the lower taxable income, while the higher tax expenses in the priorperiods reflected the non-cash impact of the devaluation of the Brazilian Real, resulting in a lower value of localcurrency-denominated non-monetary assets, as well as the tax charge incurred on the capital gain from thedivestment of registrations related to the ChemChina-Syngenta transaction, in the amount of USD 69.5 million.
(6) Cash Flow.
Operating cash flow was lower, reflecting the build-up of working capital and the impact of the partially operationalJingzhou old site. The higher level of working capital reflects increased trade receivables resulting from theCompany’s strong growth in Q4 2018 and the robust performance in Brazil in the first-half of 2019, alongsidecertain reduction in payable days due to a change in supplier mix. Inventory levels were higher due to the missingof sales resulting from the weather-related challenges as well as credit restraint in eastern Europe, alongside thebuild-up of inventory to prepare for the expected growth in the second half of 2019, as well as the first-time additionof Bonide.Net cash used in investing activities increased mainly reflecting the acquisition of Bonide, while in the first quarterof 2018, the Company recorded the one-time proceeds from the divestiture of several products in connection withthe approval by the EU Commission of the acquisition of Syngenta by ChemChina, and outflow of a lesser netamount for the transfer of a similar portfolio of products.Net cash provided by Financing Activities includes mainly the increase in borrowing during the period, offset byinterest and dividend payments, as well as payments in respect of bond hedges.
Major changes to the profit structure or sources of the Company in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Breakdown of main business:
Unit: RMB’000
ADAMA Ltd. Semi-Annual Report 2019
Operatingrevenues
sold
GrossMargin (%)
YoY
Cost of goodsincrease/decrease
of the operating
revenues
YoY
| increase/decrease | increase/decrease |
of the cost of
goods sold
YoY
of the grossmarginTotal 13,616,032
increase/decrease
9,023,242
33.73%
-0.17%
-0.21%
0.08%
Classified by industriesIndustry ofmanufacturing chemical
raw materials andchemical products
13,616,032
9,023,242
33.73%
-0.17%
-0.21%
0.08%
Classified by productsAgro 12,302,544
8,012,367 34.87%
0.45%
0.35% 0.19%
Classified by regions
-- -- -- -- -- -- --III Analysis of Non-Core Business
√ Applicable □ Not applicable
Unit:RMB’000
Amount
Proportion in total
profit
Reasons Whether sustainedInvestment income -514,443
Proportion in total
-70.55%
Mainly from the realization ofderivatives. See explanation offinancial expenses.
NoGain/loss from changeof Fair Value
884,135
121.25%
Mainly from changes in fair valueof derivatives. See explanation offinancial expenses.
NoAsset impairment losses
23,809
3.27%
NoGain or loss fromdisposal of assets
115,514
15.84%
Mainly includes expropriation of
land.
NoNon-operating income
10,811
1.48%
NoNon-operating loss 16,016
2.20%
No
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB’000
End of Reporting Period
End of same period of last year
(Restated)
Change inpercentage
(%)
Reason for significant
change
Amount
Reason for significantAs a percentage of
total assets (%)
| As a percentage of | |
Amount
total assets (%)
| As a percentage of | |
Cash at bank and on hand
5,425,392
11.84%
6,185,654
14.36%
-2.52%
Accounts receivable 7,674,381
16.75%
6,727,731
15.62%
1.13%
Inventories 10,337,924
22.57%
8,482,602
19.70%
2.87%
Investment properties 3,933
0.01%
4,251
0.01%
0.00%
Long term equity
investments
135,075
Long term equity
0.29%
119,251
0.28%
0.01%
Fixed assets 7,167,032
15.65%
6,862,475
15.94%
-0.29%
Construction in progress
534,351
1.17%
922,728
2.14%
-0.97%
Short-term loans 2,308,286
5.04%
1,135,482
2.64%
2.40%
Long-term loans 673,796
1.47%
320,382
0.74%
0.73%
Derivative financial assets
416,991
0.91%
940,225
2.18%
-1.27%
ADAMA Ltd. Semi-Annual Report 2019
End of Reporting Period
End of same period of last year
(Restated)
Change inpercentage(%)
Reason for significant
change
Amount
Reason for significantAs a percentage of
total assets (%)
| As a percentage of | |
Amount
total assets (%)
| As a percentage of | |
Intangible assets 5,802,932
12.67%
5,961,296
13.84%
-1.17%
Goodwill 4,298,747
9.38%
3,939,153
9.15%
0.23%
Deferred tax assets 767,928
1.68%
628,635
1.46%
0.22%
Accounts payables 4,178,668
9.12%
4,249,085
9.87%
-0.75%
Employee benefitspayable
912,354
1.99%
778,018
1.81%
0.18%
Debentures 8,152,990
17.80%
7,548,581
17.53%
0.27%
Derivative financialliabilities
688,267
1.50%
1,209,687
2.81%
-1.31%
Other payables 1,970,641
4.30%
1,593,570
3.70%
0.60%
2. Assets and Liabilities Measured at Fair Value
√ Applicable □ Not applicable
Unit: RMB’000Item
Openingbalance
Profit/loss on fair
value changes inthe Reporting
Period
| Profit/loss on fair | Cumulative fair |
value changes
charged to
equity
Impairmentprovided in
Period
Purchased in
the Reportingthe Reporting
Period
Sold in theReporting
Period
| the Reporting | ||
Closingbalance
Financial assetsFinancial assets
held for
trading (excludingderivative financialassets)
46,095
held for
-
-
-
-
(13,021)
33,074
Derivative financialassets(including longterm)
517,719
(264,908)
(164,602)
-
374,343
(41,127)
421,425
Other equityinvestments
91,559
-
10,086
-
-
(13,833)
87,812
Total financial assets 655,373
(264,908)
(154,516)
-
374,343
(67,981)
542,311
Other 106,118
5,590
-
-
-
(4,587)
107,121
Total of above 761,491
(259,318)
(154,516)
-
374,343
(72,568)
649,432
Financial liabilities 1,451,684
(754,989)
-
-
-
-
696,695
Significant changes in the measurement attributes of the main assets in the Reporting Period
□ Yes √ No
3. Restricted Asset Rights as of End of the Reporting PeriodAt the end of this Reporting Period, restricted assets included RMB 43.572 million - restricted cash, most of whichis as guarantee for bank acceptance bills; RMB 5.926 million - fixed assets, as mortgage for loans; and RMB 143.377million - other non-current assets, mainly as guarantee for asset securitization and law suits.
ADAMA Ltd. Semi-Annual Report 2019
V Investments Made
1. Overall Condition of the Total Investments Made
√ Applicable □ Not applicable
Investment during the ReportingPeriod (RMB’000)
Investment during the Same PeriodLast Year (RMB’000)
+/-% YoY25,350,061
27,502,683
-7.83%
2. Significant Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Significant Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
ADAMA Ltd. Semi-Annual Report 2019
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable Unit: RMB’000The party thatoperates theinvestment
Relationwith theCompany
Relatedparty
| transaction |
or not?
Type Initial
investmentamount
Starting date
Expiringdate
Investmentamount at
beginning of the
period
Amountpurchasedduring thereportingperiod
beginning of theAmount sold
during thereporting
period
Impairmentaccrued (if
any)
Investmentamount at endof the period
Amount sold
Percentage of
investment amount
investment amountdivided by net asset
at end of the period
divided by net asset
Gain/lossduring thereporting
periodBanks No No Option
3,362,968 15/12/2018
16/10/2019
3,362,968
2,443,626
-3,294,221
No 2,512,373
11.18%
147,899
Banks No No Forwards
11,634,236
02/03/2019
28/09/2019
11,634,236
22,906,435
-19,760,262
No 14,780,409
65.75%
342,182
Total 14,997,204
-- -- 14,997,204
25,350,061
-23,054,483
17,292,782
76.93%
490,081
Source of fund for the investment InternalLitigation-related situations (if applicable) N/ADate of disclosure of Board approval (if any) December 30, 2017Date of disclosure of Shareholders’
approval (if
any)
N/A
Risk and control analysis for the reporting
approval (ifperiod (including but not limited to market risk,
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 applicablebank until the expiration date of the transaction, therefore no market risk is involved.Regarding credit and liquidity risk, the Group is working with large and substantial banks only and with some of them the Group has ISDAagreements.As to operational risk, the Group is working with relevant software, which is its back office for all transactions.No legal risk is involved.The actions taken in order to further reduce risks are:
? The relevant subsidiaries have specific guidelines, under the Group’s policy, which were approved by the subsidiaries' financial
ADAMA Ltd. Semi-Annual Report 2019
statements committee of the board, which specifies, inter ali
hedging, the tools, ranges etc. The only subsidiary that has hedging positions in the Group in the period was Solutions and itssubsidiaries.? The relevant subsidiaries apply management designed procedures and controls, which among other things, monitor the workingprocess 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 ofinvestments during the reporting period.Specific methodology and assumptions shouldbe disclosed in the analysis of fair value of theinvestments
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
a, the hedging policy, the persons that have the authorization to deal withusing 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
using external experts. The relevant subsidiary hedges currencies only; the relevant. The
exchange rates are provided by the accounting department of the relevant subsidiary and all other parameters are provided by the experts.Explanation for any significant changes inaccounting policies and principles, comparedwith last reporting period
N/AIndependent Directors’ opinion on theinvestment in derivative financial instrumentsand related risk controls
The derivative investments carried by the Company are for hedging and narrowing down the risk of mark
. Theet 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 adopte
et fluctuations. The investments respondd
Currency Risk Hedging Policy to strengthen the risk management and control which benefit the Company’
ds ability to protect against market risk.
The derivative investments do not harm the interests of the Company and its shareholders.
ADAMA Ltd. Semi-Annual Report 2019
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Main Controlled and Joint Stock Companies
√ Applicable □ Not applicable
List of the stock-participating companies influencing over 10% of the net profits on the major subsidiaries and theCompany
Unit: RMB’000Name Type
Main services
capital
Registered
Total assets
Net assets
| Total assets | |
Operatingrevenues
Operating
profit
Net profit
Solutions
Subsidiary
Development,manufacturing and
intermediatematerials for otherindustries, food additivesand synthetic aromaticproducts, mainly for export
marketing of agrochemicals,
720,085
37,243,089
16,012,275
12,504,993
775,843 616,805
Subsidiaries acquired or disposed during the Reporting Period
√ Applicable □ Not applicable
Company Name Way of Acquirement or
Disposal
Impact on the Business Operation andPerformance of the CompanyJiangsu AnponElectrochemical Co., Ltd.
Purchase of Share Equity Anpon's main
with the Company's main business. Significant
business has a high degree of synergysynergies are generated by selling Anpon's AgChem
products through ADAMA
synergies are generated by selling Anpon's AgChem's China domestic
distribution channels as well as Adama's broad globalnetwork.Bonide Products, Inc. Purchase of Share Equity
Bonide is a US provider of pest-control solutions forthe consumer Home & Garden market. The
ADAMA Ltd. Semi-Annual Report 2019
Company Name Way of Acquirement or
Disposal
Impact on the Business Operation andPerformance of the Companyacquisition allows the Company to bring its advancedtechnologies and differentiated portfolio of pest-control and turf solutions directly to the benefit of theconsumer.
VIII Structured Entities Controlled by the Company
□ Applicable √Not applicable
IX Performance Forecast for January-September 2019Warning of possible loss or considerable YoY change in the accumulative net profit made during the period-beginning to the end of the next reporting period, as well as the reasons:
□ Applicable √ Not applicable
X Risks Facing the Company and Countermeasures
The Group believes that it is exposed to several major risk factors, resulting from its economic environment, theindustry and 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 material subsidiarySolutions reports its consolidated financial statements in US dollars, which is its functional currency, while itsoperations, sales and purchases of raw materials are carried out in various currencies. Therefore, fluctuations in theexchange rate of the selling currency against the purchasing currency impact the Company’s results. The Group'smost significant exposures are to the Euro, the Israeli Shekel and the Brazilian Real. The Group has lesser exposuresto other currencies. The strengthening of the US dollar against other currencies in which the Company operatesreduces the dollar value of such sales and vice versa.On an annual perspective, approximately 27% of the Group’s sales are to the European market and therefore theimpact of long-term trends on the Euro may affect the Company's results and profitability.Concentration of currency exposure from foreign currency exchange rate fluctuations against assets, includinginventory of finished products in countries of sale, liabilities and cash flow denominated in foreign currencies aredone constantly. High volatility of the exchange rates of these currencies could increase the costs of transactions tohedge against currency exposure, thereby increasing the Company's financing costs.The Group uses commonly accepted financial instruments to hedge most of its substantial net balance sheet exposureto any particular currency. Nonetheless, since as part of these operations the Group hedges against most of itsbalance sheet exposure and only against part of its economic exposure, exchange rate volatility might impact theGroup’s results and profitability. As of the date of approval of the financial statements, the Group has hedged mostof its balance sheet exposure for 2019 as it is on the date of publication of this report.In addition, as the Company’s product sales depend directly on the cyclical nature of the agricultural seasons,therefore the Company’s income and its exposure to the various currencies is not evenly distributed over the year.Countries in the northern hemisphere have similar agricultural seasons and therefore, in these countries, the highest
ADAMA Ltd. Semi-Annual Report 2019
sales are usually during the first half of the calendar year. During this period, the Company is most exposed to theEuro and the Polish Zloty. In the southern hemisphere, the seasons are opposite and most of the local sales arecarried out during the second half of the year. During these months, most of the Company's exposure pertains to theBrazilian Real. The Company has more sales in markets in the northern hemisphere and therefore, the Company'ssales volume during the first half of the year is higher than the sales volume during the second half of the year.Exposure to Interest rate, Israel CPI and NIS exchange rate fluctuationsThe debentures issued by Solutions, the material subsidiary of the Company, are Israeli Shekel based and linked tothe Israel Consumer Price Index (CPI) and therefore an increase in the CPI and an appreciation of the shekel rateagainst the dollar might lead to a significant increase in its financing expenses. As of the date of approval of thefinancial statements, Solutions hedged most of its exposure to these risks on an ongoing basis, through CPI hedgingand USD-ILS exchange rate hedging transactions.The Group is exposed to changes in the US dollar LIBOR interest rate as the Group has dollar denominated liabilities,which bear variable LIBOR interest. The Group prepares a quarterly summary of its exposure to changes in theLIBOR interest rate and periodically examines hedging the variable interest rate by converting it to a fixed rate. Asof the date of approval of the financial statements, the Group has not carried out hedging for such exposure, sinceUS dollar interest rates have been relatively stable.Business operations in emerging marketsThe Group conducts business – mainly product sales and raw material procurement – inter alia, in emerging marketssuch as Latin America (particularly in Brazil, the largest market, country wise, in which the Group operates), EasternEurope, South East Asia and Africa. The Group's activity in emerging markets is exposed to risks typical of thosemarkets, including: political and regulatory instability; volatile exchange rates; economic and fiscal instability andfrequent revisions of economic legislation; relatively high inflation and interest rates; terrorism or war; restrictionson import and trade; differing business cultures; uncertainty as to the ability to enforce contractual and intellectualproperty rights; foreign currency controls; governmental price controls; restrictions on the withdrawal of moneyfrom the country; barter deals and potential entry of international competitors and accelerated consolidations bylarge-scale competitors 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 customers to purchaseits products or the ability to market them at international market prices, as well as harm the Group's ability to collectcustomer debts, in a way that could have a significant adverse effect on the Group's operating results.The Group’s operations in multiple regions allows for the diversification of such risks and for the reduction of itsdependency on particular economies. In addition, changes in registration requirements or customers' preferences indeveloped western countries, which may limit the use of raw materials purchased from emerging economies, mayrequire redeployment of the Group's procurement organization, which might negatively affect its profitability for acertain period.Operating in a competitive marketThe crop protection products industry is highly competitive. Currently, approximately 60% of the industry's globalmarket is shared by five leading Originator Companies, which are based in Europe or North America, these beingCorteva, Bayer, BASF Syngenta and FMC, 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 and increasingits 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 or inability to acquire additional
ADAMA Ltd. Semi-Annual Report 2019
market share from the Originator Companies can affect the Group's position in the market and adversely affect itsfinancial results.Similarly, the Group also competes in the more decentralized off-patent market, with other off-patent companiesand smaller-scale Originator Companies, which have significantly grown in number in recent years and arematerially changing the face of the crop protection products industry, the majority of whom have not yet deployedglobal distribution networks, and are only active locally. These companies price their products aggressively and attimes have lower profit margins than the Group, which may harm the volume of the Group's sales and product prices.The Group's ability to maintain its revenues and profitability from a specific product in the long term is affected bythe number of companies producing and selling comparable off-patent products and the time of their entrance to therelevant market.Any delay in developing or obtaining registrations for products and/or delayed penetration into markets and/orgrowth of competitors that focus on off-patent active ingredients (whether by the expansion of their product portfolio,granting registrations to other manufacturers (including manufacturers in China and India) to operate in additionalmarkets, transforming their distribution network to a global scale or increasing the competition for distributionaccess), and/or difficulty in purchasing low cost raw materials, may harm the Group’s sales volumes in this sector,affect its global position and lead to price erosion.Decline in scope of agricultural activities; exceptional changes in weather conditionsThe scope of agricultural activities may be negatively affected by many exogenous factors, such as extreme weatherconditions, natural disasters, a significant decrease in agricultural commodity prices, government policies and theeconomic condition of farmers. A decline in the scope of agricultural activities necessarily would cause a declinein the demand for the Group’s products, erosion of its prices and collection difficulties, which may have a significantadverse effect on the Group's results. Extreme weather conditions as well as damages caused by nature have animpact on the demand for the Group's products. The Group believes that, should a number of such bad seasonsoccur in succession, without favorable seasons in the interim, its results may 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 and trading, andparticularly in relation to the storage, treatment, manufacturing, transport, usage and disposal of its products, theiringredients and byproducts, some of which are considered hazardous. The Group's activities involve hazardousmaterials. Defective storage or handling of hazardous materials may cause harm to human life or to the environmentin which the Group operates. The regulatory requirements regarding the environment, health and safety could, interalia, include soil and groundwater clean-up requirements; as well as restrictions on the volume and type of emissionsthe Group is permitted to release into the air, water and soil.The regulatory requirements applicable to the Group vary from product to product and from market to market, andtend to become stricter with time. In recent years, both government authorities and environmental protectionorganizations have been applying growing pressure, including through investigations and indictments as well asincreasingly stricter legislative proposals and class action suits related to companies and products that maypotentially pollute the environment. Compliance with the foregoing legislative and regulatory requirements andprotection against such legal actions requires the Group to spend considerable financial resources (both in terms ofsubstantial ongoing costs and in terms of material one-time investments) as well as human resources in order tomeet mandatory environmental standards. In some instances, this may result in delaying the introduction of productsinto new markets or in adverse effects on the Group’s profitability. In addition, the toughening, material alterationor revocation of environmental licenses or permits, or their stipulations, or the inability to obtain such licenses andpermits, may significantly affect the Group's ability to operate its production facilities, which in turn may have a
ADAMA Ltd. Semi-Annual Report 2019
material adverse effect on the financial and business results of the Group. The Group may be required to bearsignificant civil liability (including due to class actions) or criminal liability (including high penalties and/or highcompensation payments and/or costs of environmental monitoring and rehabilitation), resulting from violation ofenvironmental, health and safety regulations, while some of the existing legislation may impose obligations on theGroup for strict liability, regardless of proof of negligence or malice.While the Group invests material sums in adapting its facilities and in constructing special facilities in accordancewith environmental requirements, it is currently unable to assess with any certainty whether these investments(current and future) and their outcomes may satisfy or meet future requirements, should these be significantlyincreased or adjusted. In addition, the Group is unable to predict with any certainty the extent of future costs andinvestments it may incur so as to meet the requirements of the environmental authorities in the relevant countries inwhich it operates since, inter alia, the Group is unable to estimate the extent of potential pollutions, their length, theextent of the measures required to be taken by the Group in handling them, the division of responsibility amongother parties and the amounts recoverable from third parties.Furthermore, the Group may be the target of bodily injury claims and property damage claims caused by exposureto hazardous materials, which are predominantly covered under the Group’s insurance policies.Legislative, standard and regulatory changes in product registrationThe majority of the substances and products marketed by the Group require registration at various stages of theirdevelopment, production, import, utilization and marketing, and are also subject to strict regulatory supervision bythe regulatory authorities in each country. Compliance with the registration requirements that vary from country tocountry and which are becoming more stringent with time, involves significant time and costs, and rigorouscompliance with individual registration requirements for each product. Noncompliance with these regulatoryrequirements might materially adversely affect the scope of the Group’s expenses, cost structure and profit margins,as well as penetration of its products in the relevant market, and may even lead to suspension of sales of the relevantproduct, and recall of those products already sold, or to legal action. Moreover, to the extent new regulatoryrequirements are imposed on existing registered products (requiring additional investment or leading to the existingregistration's revocation) and/or the Group is required to compensate another company for its use of the latter'sproduct registration data, these might amount to significant sums, considerably increasing the Group's costs andadversely affecting its results and reputation.Additionally, the Group believes that, in countries where the Group maintains a competitive edge, any tougheningof registration requirements may actually increase this edge, since this will make it difficult for its competitors topenetrate the same market, whereas in countries in which the Group possesses a small market share, if any, suchtoughening may make further penetration of the Group's products into that market more difficult.Product liabilityProduct and producer liability present a risk factor to the Group. Regardless of their prospects or actual results,product liability lawsuits might involve considerable costs as well as tarnish the Group's reputation, thus impactingits profits. The Group has a third-party and defective product liability insurance cover. However, there is no certaintythat the scope of insurance cover is sufficient. Any future product liability lawsuit or series of lawsuits couldmaterially affect the Group’s operations and results, should the Group lose the lawsuit or should its insurance covernot suffice or apply in a particular instance. In addition, while currently the Group has not encountered any difficultyrenewing such insurance policy, it is possible that it will encounter future difficulties in renewing an insurancepolicy for third party liability and defective products on terms acceptable to the Group.
Successful market penetration and product diversification
ADAMA Ltd. Semi-Annual Report 2019
The 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 the expense ofits competitors. Usually, being the first to launch a certain off-patent product affords the Group continuing advantage,even after other competitors penetrate the same market. Thus, the Group's revenues and profit margins from a certainproduct could be materially affected by its ability to launch such product ahead of the launch of a comparableproduct by its competitors.Should new products fail to meet registration requirements in the different countries or should it take a long periodof time to obtain such registrations, the Group's ability to successfully introduce a new product to the market inquestion in the future would be affected, since entry into the market prior to other competitors is important forsuccessful market penetration. Furthermore, successful market penetration involves, inter alia, productdiversification in order to suit each market's changing needs. Therefore, if the Group fails to adapt its product mixby developing new products and obtaining the required regulatory approvals, its future ability to penetrate thatmarket and to maintain its existing market share could be affected. Failure to introduce new products to givenmarkets and meet Group objectives (given the considerable time and resources invested in their development andregistration) might affect the sales of the product in question in 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 patents of anOriginator Company or other third parties, or to develop products that do not otherwise infringe intellectual propertyrights in a manner that may involve significant legal and other costs. Originator Companies tend to vigorouslydefend their products and may attempt to delay the launch of competing off-patent products by registering patentson slightly different versions of products for which the 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 mayalso change the branding and marketing method of their products. Such actions may increase the Group's costs andthe risk it entails, and harm or 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 management resources,impair the value of the Group's brands and its sales and adversely affect its results. To the best of the Group’s currentknowledge, such lawsuits that were concluded involved non-material amounts.Furthermore, the Group protects its brands and trade secrets with patents, trademarks and other methods ofintellectual property protection, however these protective means may not be sufficient for safeguarding itsintellectual property. Any unlawful or other unauthorized use of the Group's intellectual property rights couldadversely affect the value of its intellectual property and goodwill. In addition, the Group may be required to takelegal action involving financial costs and resources to safeguard its intellectual property rights.Fluctuations in raw material inputs and prices, and in sales costsSignificant percentage of the cost of the Groups’ sales derives from raw material costs. Hence, significant increasesor decreases in raw material cost affect the cost of goods sold, which is generally expressed a number of monthsfollowing such cost fluctuation. Most of the Group's raw materials are distant derivatives of oil prices and therefore,extreme increase or decrease in oil prices may affect the costs of raw materials, yet only partially.To reduce exposure to fluctuations in the prices of raw materials, the Group customarily engages in long-termpurchase contracts for key raw materials, wherever possible. Similarly, the Group acts to adjust its sales prices, ifpossible, to reflect the changes in the costs of raw materials.As of the date of approval of the financial statements, the Group has not engaged in any hedging transactions againstincreases in oil and other raw material costs.
ADAMA Ltd. Semi-Annual Report 2019
Exposure due to recent developments in the genetically modified seeds marketAny further significant development in the market of genetically modified seeds for agricultural crops, including asa result of regulatory changes in certain countries currently prohibiting the use of genetically modified seeds, and/orany significant increase in the sales of genetically modified seeds or Glyphosate and/or to the extent new cropprotection products are developed for further crops that would be widely used (substituting traditional products),will affect demand for crop protection products, requiring the Group to respond by adapting its product portfolio tothe new demand structure. Consequently, to the extent that the Group fails to adapt its product mix accordingly, thismay reduce demand for its products, erode their sales price and necessarily affect the Group’s results and marketshare.Nevertheless, the fact that the Group itself markets Glyphosate acts to mitigate this exposure (albeit only in termsof marketing margins).Operational risksThe Group’s operations, including its manufacturing activities, rely, inter alia, on state-of-the-art computer systems.The Group continually invests in upgrading and protecting these systems. Any unexpected failure of these systems,as well as the integration of new systems, could involve substantial costs and adversely affect the Group's operationsuntil completion of the repair or integration. The potential occurrence of a substantial failure that cannot be repairedwithin a reasonable time frame may also affect the Group's operations and its results. Currently, the Group has aproperty and loss-of-profit insurance policy.Data protection and cyberDuring its activity, the Group may be exposed to risks and threats, related to the stability of its informationtechnologies systems, data protection and cyber, 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 malicioussoftware). An attack on such computerized systems, mainly network based systems may cause the group materialdamages and expenses and even partial suspension and disruption of their proper functioning. In order to minimizethe abovementioned risks, the group invests resources in its technological strength and in proper protection of itssystems.Raw material supply and/or shipping and port services disruptionsLack of raw materials or other inputs utilized in the manufacture of Group products may prevent the Group fromsupplying its products or significantly increase production costs. Moreover, the Group imports raw materials to itsproduction facilities worldwide, from where it exports the products to its subsidiaries around the world forformulation and/or commercialization purposes. Disruptions in the supply of raw materials from regular suppliersmay adversely affect operations until an alternative supplier is engaged. If any of the Group's suppliers are unableto supply raw materials for a prolonged period, including due to ongoing disruptions and/or prolonged strikes and/orinfrastructure defects in the operating of a relevant port, and the Group is unable to engage with an alternativesupplier at similar terms and in accordance with product registration requirements, this may adversely affect theGroup's results, significantly affect its ability to obtain raw materials in general, or obtain them at reasonable prices,as well as limit its ability to supply products and/or meet customer supply deadlines. These might negatively affectthe Group, its finances and operating results. In order to reduce this risk, it is the Group's practice to occasionallyadjust the volume of its product inventories and at times utilize air freight.
Failed mergers and acquisitions; difficulties in integrating acquired operationsThe Group's strategy includes growth through mergers, acquisitions, investments and collaborations designed, in acalculated manner, to expand its product portfolio and deepen its presence in certain geographical markets.
ADAMA Ltd. Semi-Annual Report 2019
Growth through mergers and acquisitions requires assimilation of acquired operations and their effective integrationin the Group, including realization of certain forecasts, profitability, market conditions and competition.Failure to successfully implement the above and/or non-realization of the said forecasts may result in not achievingthe additional value forecasted, losing customers, exposure to unexpected liabilities, reduced value of the intangibleassets included in the merger or acquisition as well as the loss of professional and skilled human resources.Production concentration in limited plantsA large portion of the Group’s production operations is concentrated in a small number of locations. Naturaldisasters, hostilities, labor disputes, substantial operational malfunction or any other material damage mightsignificantly affect Group operations, as a result of the difficulty, the time and investment required for relocatingthe production operation or any other activity.International taxationMost of the Group’s sales are global, through its consolidated subsidiaries worldwide. These individual companiesare assessed in accordance with the tax laws effective in each respective location. The Group’s effective tax ratecould be significantly affected by different classification or attribution of the profits arise from the share of valueearned of the companies in the Group in the various countries, as shall be recognized in each tax jurisdiction;changes in the characteristics (including regarding the location of control and management) of these companies;changes in the breakdown of the Group's profits into regions where differing tax rates apply; changes in statutorytax rates and other legislative changes; changes in assessment of the Group's deferred tax assets or deferred taxliabilities; 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 the implementation ofBEPS, may lead to a substantial increase in the Group's applicable tax rates and have a material adverse effect onits financial state, results and cash flows.The Group’s Financial Statements do not include a material provision for exposure for international taxation, asstated above.Risks arising from the Group’s debtThe Group finances its business operations by means of its own equity and loans from external sources (primarilydebentures issued by Solutions and bank credit). The Group's main source for servicing the debt and its operatingexpenses is by means of the profits from the Group companies’ operations. Restrictions applying to the Groupcompanies regarding distribution of dividends to the Group, or the tax rate applicable on these dividends, may affectthe Group's ability to finance its operations and service its debt.In addition, the Group's Finance Documents require it to meet certain Financial Covenants. Failure to meet thesecovenants due to an exogenous event or non-materialization of Group forecasts, and insofar as the financing partiesrefuse to extend or update these Financial Covenants as per the Group’s capabilities, may lead the financing partiesto demand the immediate payment of these liabilities (or part thereof).Exposure to customer credit risksThe Group’s sales to customers usually involve customer credit as is customary in each market. A portion of thesecredit lines are insured, while the remainder are exposed to risk, particularly during economic slowdowns in therelevant markets. The Group’s aggregate credit, however, is diversified among many customers in multiplecountries, mitigating this risk. In addition, in certain regions, particularly in South America, credit days areparticularly long (compared to those extended to customers in regions such as Europe), and on occasion, inter alia,owing to agricultural seasons or economic downturns in those countries, the Group may encounter difficulty incollection of customer debts, with the collection period being extended over several years.
ADAMA Ltd. Semi-Annual Report 2019
Generally, such issues arise more often in developing countries where the Group is less familiar with its customers,the collaterals might be in double until actual repayment and the insurance cover of these customers is likely to belimited. Credit default by any of the customers may negatively impact the Group's cash flow and financial results.The Group’s working capital and cash flow needsSimilar to other companies operating in the crop protection industry, the Group has substantial cash flow andworking capital requirements in the ordinary course of operations. In view of the Group's growth and consideringits primary growth regions, the Group’s broad product portfolio and the Group’s investments in manufacturinginfrastructures, the Group has significant financing and investment needs. The Group acts continually to improvethe state and management of its working capital. While currently the Group is in compliance with all its financialcovenants, significant deterioration of its operating results may in the future lead the Group to fail to comply withits financial covenants and fail to meet its financial needs. As a result, the Group's ability to meet its goals andgrowth plans, and its ability to meet its financial obligations, may be harmed.
Section V Significant EventsI Annual and Special Meetings of Shareholders Convened during the Reporting Period
1. Meetings of Shareholders Convened during the Reporting PeriodMeeting Type
Investorparticipation
Convened date Disclosure date
Index to disclosedinformation
ADAMA Ltd. Semi-Annual Report 2019
ratio
st
InterimShareholdersMeeting in 2019
Meeting
3.84% March 11, 2019 March 12, 2019
Interim Shareholders
Announcement of the 1
st
Interim ShareholdersMeeting in 2019(AnnouncementNumber:2019-13).Disclosed at the websiteCNINFOwww.cninfo.com.cn
2018 AnnualShareholdersMeeting
Annual
Shareholders
Meeting
75.42% April 10, 2019 April 11, 2019
Shareholders
Announcement of the
Annual
Shareholders Meeting
(AnnouncementNumber:2019-26).Disclosed at the websiteCNINFOwww.cninfo.com.cn
nd
InterimShareholdersMeeting in 2019
AnnualInterim Shareholders
Meeting
74.64% May 30, 2019 May 31, 2019
Announcement of the 2
nd
Interim ShareholdersMeeting in 2019(AnnouncementNumber:2019-38).Disclosed at the websiteCNINFOwww.cninfo.com.cn
2. Special Meetings of Shareholders Convened at Request of Preference Shareholders with Resumed VotingRights
□ Applicable √ Not applicable
II Basic Information of the Profit Distribution and Converting Capital Reserve into ShareCapital for the Reporting Period
□ Applicable √ Not applicable
For the Reporting Period, the Company does not plan to distribute cash dividends or bonus shares or convert capitalreserve into share capital.III Commitments completed by the Company, the shareholders, the actual controllers, thepurchasers, or the other related parties during the reporting period and those which should becompleted but failed during the reporting period
√Applicable □ Not applicable
Note: No commitment that should be completed but failed during the reporting period. For details of the commitments that are underperforming, please refer to the 2018 Annual Report published in the website of CNINFO www.cninfo.com.cn on March 21, 2019. Thefollowing is the commitment which is completed during the reporting period.
ADAMA Ltd. Semi-Annual Report 2019
Commitment
Commitment maker
Commitment
type
Contents
Time ofmakingcommitment
Period ofcommitment
Fulfillment
Commitmentsmade at thetime of assetsreorganization
China Cinda AssetManagement Co.,Ltd., CCB PrincipleAsset ManagementCo., Ltd., Aegon-industrial Fund Co.,Ltd., Penghua FundManagement Co.,Ltd., ChinaStructural ReformFund Co. ,Ltd.,Caitong FundManagement Co.,Ltd.
Commitment on
share lock-up
The new shares issued in thenon-public offering to raisesupporting fund shall not betransferred in any mannerwithin 12 months after theinitial trading day of the newissued shares.
December25, 2017
January 18,2019
The committedparties compliedwith thecommitmentsduring thereporting period.The shares have
Commitment onbeen unlocked on
January 21, 2019.
been unlocked on
Executed timely
or not?
YesIV Engagement and Disengagement of CPA FirmHas the semi-annual financial report been audited?
□ Yes √ No
This Semi-Annual Report is unaudited.V Explanations Given by Board of Directors and Board of Supervisors Regarding “ModifiedAuditor’s Report” Issued by CPA Firm for the Reporting Period
□ Applicable √ Not applicable
VI Explanations Given by Board of Directors Regarding “Modified Auditor’s Report” Issuedfor Last Year
□ Applicable √ Not applicable
VII Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such cases in the Reporting Period.VIII Litigation and Arbitration MattersSignificant litigations or arbitrations:
ADAMA Ltd. Semi-Annual Report 2019
□ Applicable √ Not applicable
No such cases in the Reporting Period.Other litigations or arbitrations:
□ Applicable √ Not applicable
No substantial litigation or arbitrations in the Reporting Period.IX Punishments and Rectifications
√ Applicable □ Not applicable
Companyname
Personpunished
Reason Type of the
punishment
Conclusion made bythe authority
Disclosuredate
Index of the disclosureADAMALtd.
ADAMALtd.
On January 30 and31, 2019, theProvincialEnvironmentalInspection Team,together withpersonnel from itsmunicipal branch,conducted aninspection at theJingzhou oldproduction site.During suchinspection, theinspectors tookseveral samples,some of whichshowed elevatedlevels of waterpollutant, in excessof dischargestandardsprescribed by theState in theproductionprocess.
Punished bytheenvironmentalprotectionauthority.
(1) An
administrativepenalty of a fine ofone million RMByuan for theCompany’swastewaterdischarge thatexceeded themaximumallowable emissionlimit.
(2) Stop
production at theJingzhou oldproduction site andtake correctivemeasures.
February 13,2019;
April 2, 2019
Announcement onReceiving a Notice Prior toAdministrative Punishment(Hearing) and DecisionNotice of ProductionSuspension andRectification(announcement number2019-9);Announcement on theResumption of Productionat the Old Site in Jingzhou(announcement number2019-25).Both published in thewebsite ofwww.cninfo.com.cn
Please see further information in section XV. below with respect to Social Responsibilities.
Status of Rectification
√ Applicable □ Not applicable
ADAMA Ltd. Semi-Annual Report 2019
The Company is deeply committed to environmentally sustainable production, has a strong track record worldwideof compliance with relevant regulations, and takes seriously any potential instance of exceeding of emissionsthresholds. During the suspension of its production, the Company has been taking specific measures to meet allrectification requirements of the relevant authorities.On March 29th, the Notice on Agreeing to the Production Resumption of ADAMA Ltd. was issued by the Bureau,confirming, “It has been agreed by all experts and representatives at the on-site review organized by the BranchTeam of Municipal Environmental Monitoring Authority that the rectification plan was technically feasible andyour company finished rectification as required, which has justified the resumption of production in your company.”Therefore, the Bureau agreed to allow the resumption of production at the Company’s old site in Jingzhou.X Integrity of the Company, its controlling shareholders and actual controller
□ Applicable √ Not applicable
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees
□ Applicable √ Not applicable
To the date of the report, the Company does not have stock incentive plans, ESOP or other staff incentives. It shallbe noted, that a Company’s subsidiary approved in December 2017 and in February 2019 long-term incentive plansand granted long-term cash rewards to executive officers and employees, which are based on the performance ofthe Company's shares (phantom cash incentives).XII Significant Related Transactions
1. Related Transactions Relevant to Routine Operations
□Applicable √ Not applicable
(1) There are no significant related-party transactions during the reporting period.
(2) Item XII of Section X “Financial Statements” has set out the related parties and the related-party transactionsof the Company.
2. Related Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
The Company purchased 100% of the equity interests in Jiangsu Anpon Electrochemical Co., Ltd. which was arelated-party transaction and announced timely during the Reporting Period. Please refer to the below Item 5 “Othersignificant related-party transactions”
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
The Company was not involved in any significant related-party transaction with joint investments during theReporting Period.
ADAMA Ltd. Semi-Annual Report 2019
4. Credits and Liabilities with Related Parties
√ Applicable □ Not applicable
Whether exist non-operating credits and liabilities with related parties or not?
□ Yes √ No
The Company was not involved in any non-operating credit and liability with related parties in the Reporting Period.
5. Other significant related-party transactions
√Applicable □ Not applicable
(1) The 1
st Interim Shareholders Meeting and the 2
ndInterim Shareholders Meeting separately approved theexpected related-party transactions in the ordinary business course of the Company in 2019 and the newexpected related-party transactions in the ordinary course of business in 2019. Please refer to Item X ofSection X “Financial Statements” for details of the related-party transactions in the ordinary business course.
(2) The 12
th
meeting of the 8
thsession of the BOD approved the Company to purchase 100% of the equityinterests in Jiangsu Anpon Electrochemical Co., Ltd.
(3) The 2
nd
Interim Shareholders Meeting approved the Company to sign a Supplemental Financial ServicesAgreement with ChemChina Finance Co., Ltd.in a related-party transaction.
The website to disclose the interim announcements on significant related-party transactions:
Name of the interim announcement
Disclosure date of theinterim announcement
announcementAnnouncement on Expected Related-Party Transactions in the OrdinaryCourse of Business in 2019 (announcement no. 2019-11)
February 22, 2019 www.cninfo.com.cnAnnouncement on the New Expected Related-Party Transactions in theOrdinary Course of Business in 2019 (announcement no. 2019-31)
April 30, 2019 www.cninfo.com.cnPreliminary Announcement on the Intended Acquisition of 100% of theEquity Interests in Jiangsu Anpon Electrochemical Co., Ltd., in aRelated-Party Transaction (announcement no. 2019-1)
January 3, 2019 www.cninfo.com.cnAnnouncement on the Acquisition of 100% of the Equity Interests inJiangsu Anpon Electrochemical Co., Ltd., in a Related-PartyTransaction (announcement no. 2019-16)
March 21, 2019
www.cninfo.com.cn
Progress Announcement on the Acquisition of 100% of the EquityInterests in Jiangsu Anpon Electrochemical Co., Ltd., in a Related-PartyTransaction (announcement no. 2019-24)
March 30, 2019
www.cninfo.com.cn
Announcement on the Signing of Supplemental Financial ServicesAgreement in a Related-Party Transaction with ChemChina FinanceCo., Ltd. (announcement no. 2019-32)
April 30, 2019
www.cninfo.com.cn
ADAMA Ltd. Semi-Annual Report 2019
XIII. Utilization of the Company’s capital by the controlling shareholder or its related partiesfor non-operating purposes
□ Applicable √ Not applicable
The Company was not involved in the non-operating utilization of funds by the controlling shareholder and otherrelated parties during the Reporting Period.
XIV. Significant Contracts and Execution
1. Entrustment, Contracting and Leasing
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leasing
□Applicable√ Not applicable
No significant leasing in the Reporting Period.
2. Significant Guarantees
□Applicable √ Not applicable
The Company did not provide any significant guarantee during the reporting period.
3. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XV. Social Responsibilities
1. Information on the Environmental Situation
Is the Company listed as “Key Polluting Entities” by the environmental protection authorities?Yes
ADAMA Ltd. Semi-Annual Report 2019
Company
and itsSubsidiaries
Name of the
MainPollutants
and Special
Pollutants
and Special
Way ofEmission
Number of
Emission
Points
Layout ofEmission
Points
EmissionConcentration
Number of
PollutantEmissionStandardsApplied
TotalDischarg
edVolume
MaximumAllowable
Discharged
Volume
ExcessiveEmission
| Discharged |
ADAMALtd.
COD Continuous
CentralizedDischargePoint
Within Limit
Comprehens
ive Standard
on
ive StandardDischarge of
Discharge ofWaste Water
(GB8978-2002) ，COD<100mg/L
147 391.3 None
AmmoniaNitrogen
Continuous
Waste Water
CentralizedDischargePoint
Within Limit
Comprehens
ive Standard
on
ive StandardDischarge of
Discharge ofWaste Water
(GB8978-2002),Ammonianitrogen<15mg/L
14.8 50 None
TotalPhosphorous
Continuous
Waste Water
CentralizedDischargePoint
Within Limit
DischargeStandardsforPollutantsfrom UrbanSewageTreatmentPlant (GB18918 –2002), totalphosphorous
<0.5mg/L
N/A N/A
The totalphosphorous of thewastewaterdischargedby the oldsite of theCompanyexceededthemaximumallowableemission in
January. For
details,please referto theAnnouncement on
January. ForReceiving a
ADAMA Ltd. Semi-Annual Report 2019
Companyand itsSubsidiaries
Name of the
MainPollutants
and Special
Pollutants
and Special
Way ofEmission
Number of
Emission
Points
Layout ofEmission
Points
EmissionConcentration
Number of
PollutantEmissionStandardsApplied
TotalDischargedVolume
MaximumAllowable
Discharged
Volume
ExcessiveEmission
| Discharged |
toAdministrative
Notice PriorPunishment
(Hearing)andDecisionNotice ofProductionSuspensionandRectification(announcement number2019-9).
Nitrogenoxide
Continuous
Punishment
1 Power Plant
Within Limit
Standard onAirPollution ofPower Plant（GB13223-2011）NOx<200mg/m
261.5 564.7 None
SO
Continuous
1 Power Plant
Within Limit
Standard onAirPollution ofPower Plant（GB13223-2011）SO
<200mg/m
151 380 None
Fume andDust
Continuous
1 Power Plant
Within Limit
Standard onAirPollution ofPower Plant（GB13223-2011）
22.25 80 None
ADAMA Ltd. Semi-Annual Report 2019
Companyand itsSubsidiaries
Name of the
MainPollutants
and Special
Pollutants
and Special
Way ofEmission
Number of
Emission
Points
Layout ofEmission
Points
EmissionConcentration
Number of
PollutantEmissionStandardsApplied
TotalDischarg
edVolume
MaximumAllowable
Discharged
Volume
ExcessiveEmission
| Discharged |
Fume andDust<30mg/m
JiangsuAnponElectrochemical Co.,Ltd.
COD Continuous
CentralizedDischargePoint
Within Limit
Comprehens
ive Standard
on
ive StandardDischarge of
Discharge ofWaste Water
(GB8978-2002) ，COD<100mg/L
105.90 265.69 None
AmmoniaNitrogen
Continuous
Waste Water
CentralizedDischargePoint
Within Limit
WaterQuality
Standard for
SewageDischargedinto UrbanSewerage（GBT31962-2015）,AmmoniaNitrogen<45mg/L
7.53 28.348 None
TotalPhosphorous
Continuous
Standard for
CentralizedDischargePoint
Within Limit
DischargeStandardsforPollutantsfrom UrbanSewageTreatmentPlant (GB18918 –2002), totalphosphorous
<0.5mg/L
N/A N/A None
Nitrogenoxide
Continuous
1 Power Plant
Within Limit
Standard onAir
66.01 114.16 None
ADAMA Ltd. Semi-Annual Report 2019
Companyand itsSubsidiaries
Name of the
MainPollutants
and Special
Pollutants
and Special
Way ofEmission
Number of
EmissionPoints
Layout ofEmission
Points
EmissionConcentration
Number of
PollutantEmissionStandardsApplied
TotalDischargedVolume
MaximumAllowable
Discharged
Volume
ExcessiveEmission
| Discharged |
Pollution ofPower Plant（GB13223-2011）NOx<200mg/m
SO
Continuous
1 Power Plant
Within Limit
Standard onAirPollution ofPower Plant（GB13223-2011）SO
<200mg/m
36.74 79.91 None
Fume andDust
Continuous
1 Power Plant
Within Limit
Standard onAirPollution ofPower Plant（GB13223-2011）Fume andDust<30mg/m
3.16 23.64 None
(1) Development and Operation of Environmental Facilities
1. Development and Operation of Waste Water FacilitiesThere are waste water treatment facilities in both the Company and Anpon with the designed capacity of 37,400tons/day and 11,000 tons/day, respectively. As all the facilities are operating well, COD, ammonia nitrogen,and total phosphorous discharged after the treatment are within the limit.
2. Development and Operation of Waste Gas Facilities
The exhaust treatment facilities in the coal-based power plants of the Company and Anpon are running well.Therefore, SO
, Nitrogen oxide and fume and dust discharged after the treatment are within the limit.
3. The Company and Anpon disclose production and pollution information according the Interim Measures onEnvironmental Information Disclosure and transfers information of main waste water and air pollutants to theinformation platform of the local environmental bureau on a daily basis.
(2) EIA of construction projects and other environmental administrative permits
The Company is currently carrying out environmental impact assessment and preparing environmental impactfor the relocation and upgrading project of pesticide series products which is under construction in the new site
ADAMA Ltd. Semi-Annual Report 2019
of Jingzhou in the reporting period.
(3) Contingency plan of environmental accidents
The 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 the localenvironmental protection authorities as record.
(4) Environment self-monitoring plan
ADAMA attributes great importance to protecting the environment, out of a sense of responsibility to societyand the environment and strives to meet the relevant regulatory requirements and to even go beyond merecompliance, engaging in constant dialogue with stakeholders, including the authorities and the community.In order to improve the environmental management, track the discharge of various pollutants, evaluate theimpact on the surrounding environment, strengthen the discharge management of pollutants in the productionprocess, accept the supervision and inspection of environmental authorities and provide reference for pollutionprevention and control, the company and its subsidiary Anpon have formulated a self-monitoring plan, whichconducts regular tests in strict accordance with the requirements.
The major monitored indicators and frequency of the Company and Anpon are as the following:
1. Monitored Indicators
Waste water: COD, NH
-N, PH, SS, Petroleum, TP.Air Pollutant: SO
, Nitrogen oxide, Fume and Dust.Noise: Noise at the Site Border
2. Frequency
Boiler emission and waste water discharged from the centralized point: continuous auto monitoringManual sampling: SS, Petroleum, TP, once a month.Noise: once a quarter.
ADAMA continually examines the implications of the environmental laws, taking actions to prevent or mitigate theenvironmental risks and to reduce the environmental effects that may result from its activities, and invests extensiveresources to fulfill those legal provisions that are, and are anticipated to, affect it. ADAMA’s plants are subject toatmospheric emissions regulations, whether by virtue of the stipulations provided in the business licenses or underthe applicable law. Hazardous materials are stored and utilized in the Company's plants, together with infrastructuresand facilities containing fuels and hazardous materials. ADAMA takes actions to prevent soil and water pollutionby these materials and treats them, if revealed. ADAMA’s plants conduct various soil surveys, risk surveys and testswith regard to treatment of the soil or ground water at the plants.ADAMA intends to continue investing in environmental protection, to the extent required and beyond this, whetheron its own volition or in compliance with contractual commitments, regulatory or legal standards relating toenvironmental protection, so as to realize its best available policy and comply with any legal requirements.As part of its policy of ecological process improvement, ADAMA also invests in remediation, changes in productionprocesses, establishment of sewage facilities, as well as in byproduct storage and recycling.
(5) Other environmental information that should be disclosedNo.
ADAMA Ltd. Semi-Annual Report 2019
(6) Other related information on environmental protection
At the end of January 2019, preceding the Spring Festival, the Company voluntarily suspended operations atSanonda’s old site in Jingzhou, which is in the process of being relocated to a nearby advanced site, due to recordingof higher than permitted levels of wastewater compounds. The Company was subsequently instructed by the localgovernment not to resume operations before rectification. The Company rectified the discharge levels and resumedoperations at the old site at the beginning of April 2019. For details, please see the announcement published onwww.cninfo.com.cn on February 13, 2019.Following resumption of operations at the Jingzhou old site in late March, the Company is advancing the gradualramp-up of production. The new state-of-the-art wastewater treatment facility is operational, and the upgradedbiological-decomposition systems are being acclimated to the improved wastewater quality. As this progresses, theCompany is experiencing constrained supply in key products manufactured at the site, especially impacting NorthAmerica, Latin-America, Asia-Pacific, China, India, Middle-East and Africa, and recorded approximately $20million in related idleness costs during the half-year.In recent years, the Company has already invested $125 million in the relocation of the Jingzhou old site, and hasinstalled advanced production and environmental facilities at a new and already operational site, including aninvestment of $16 million in a new, state-of-the-art wastewater facility, which is ready to commence operation.As the ramp-up of production proceeds, the site continues to remain under inspection of the relevant authorities withwhom the Company is working in close and constant collaboration. In this regard, in recent weeks, the EcologicalProtection Supervision Team of the Central Government commenced on-site inspections at many of ChemChina’ssubsidiaries, including ADAMA, as part of its efforts to strengthen ongoing environmental and safety focus.ADAMA is working in full cooperation in the context of its 3-year relocation and upgrade process, which is due toconclude next year, to identify and rectify any safety or environmental issue at Jingzhou.
2. Perform the social responsibility of targeted poverty alleviation
(1) Targeted Poverty Alleviation Planning
The Company actively implements targeted poverty alleviation according to relevant instructions from JingzhouLeading Group on Poverty Alleviation.
(2) Half-year OverviewDuring the reporting period, the employees of the Company visited 20 households below the poverty line in Sanzhouvillage and gave 300 RMB to each family.
(3) Performance of Targeted Poverty Alleviation
Indicator
Measurementunit
Number/ProgressI. General condition —— ——Of which: 1. Capital RMB'0,000 5II. Itemized investment —— ——
1. Out of poverty by industrial development —— ——
ADAMA Ltd. Semi-Annual Report 2019
Indicator
Measurement
unit
Number/ProgressOf which: 1.1 type of industrial development out of poverty ——
1.2 number of industrial development out of poverty Unit
1.3 investment amount of industrial development out ofpoverty
RMB'0,000
1.4 the number of people out of poverty who were helped toestablish card for archives
Number
2. Out of poverty by transferring employment —— ——
3. Out of poverty by relocating —— ——
4. Out of poverty by education —— ——
5. Out of poverty by improving health —— ——
6. Out of poverty by protecting ecological environment —— ——
7. Subsidy for the poorest —— ——
8. Social poverty alleviation RMB'0,000 5
9. Other items —— ——III. Received awards(contents and rank) —— ——
(4) Follow-up Plan
The Company will continue to perform its obligation of poverty alleviation based on the requirements of centraland local governments..XVI. Other Significant Events
□ Applicable √ Not applicable
The Company completed the following two non-significant acquisitions during the reporting period:
? On March 19, 2019, the Company entered into an agreement with CNAC and CNAC International Company Limited for the
acquisition of Jiangsu Anpon Electrochemical Co., Ltd. (“Anpon”), a backward-integrated manufacturer of key active ingredients
used in crop protection markets worldwide, most notably Ethephon, Pymetrozine and Buprofezin, as well as intermediates such as
chlor-alkali, with advanced membrane production technology. The above transaction was closed on March 29, 2019.
Significant Events Date of
Disclosure
Index of the Disclosed Announcements
Anpon Acquisition
March 21,2019
Announcement on the Acquisition of 100% of the Equity Interests in Jiangsu AnponElectrochemical Co., Ltd., in a Related-Party Transaction (Announcement No:
2019-16 ) disclosed at www.cninfo.com.cn.March 30,2019
Announcement on the Progress of the Acquisition of 100% of the Equity Interests
in Jiangsu Anpon Electrochemical Co., Ltd. (Announcement No: 2019-24)
disclosed at www.cninfo.com.cn.
ADAMA Ltd. Semi-Annual Report 2019
? In January 2019, the Company, through a subsidiary of Solutions, acquired Bonide Products Inc., a US provider of pest-control
solutions for the consumer Home & Garden use, allowing the Company to bring its advanced technologies and differentiatedportfolio of pest-control directly to the consumers.Please see key additional information and further details included in the Annex.
XVII. Significant Events of Subsidiaries
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2019
Section VI Share Changes and Shareholders’ Profile
I. Changes in shares
1. Changes in shares
Unit: share
Before this change Increase/decrease (+, -) After the changeAmount Proportion
Issuanceof newshares
Bonus
share
Bonus
Capitalization
of publicreserve fund
Capitalization
Other Subtotal
Amount Proportion
I.
tradingMoratorium(Restricted Shares)
Shares subject to
1,915,585,521
78.30%
-- -- --
-104,697,982
-104,697,982
1,810,887,539
74.02%
1. State’s shares
-- -- -- -- -- -- -- -- --
2. State-owned
legal person’
s
shares
1,810,883,039
| s | |
74.02%
--
--
---- --
1,810,883,039
74.02%
3. Shares held
by otherdomesticinvestors
104,702,482
4.28%
--
--
---104,697,982
-104,697,982
4,500 0Amongwhich: (1) Sharesheld by domesticlegal person;
104,697,982
4.28%
--
--
---104,697,982
-104,697,982
0 0
(2) Shares held by
domestic naturalperson
4,500 0
--
--
---- -- 4,500 0II. Shares notsubject to tradingmoratorium
530,968,061
21.70%
--
--
--104,697,982
104,697,982
635,666,043
25.98%
Ordinary sharesdenominated inRMB
363,918,720
14.87%
--
--
--
104,697,982
104,697,982
468,616,702
19.15%
Domestically167,049,341
6.83%
167,049,341
6.83%
ADAMA Ltd. Semi-Annual Report 2019
Before this change Increase/decrease (+, -) After the changeAmount Proportion
Issuanceof newshares
Bonus
share
Bonus
Capitalization
of publicreserve fund
Capitalization
Other Subtotal
Amount Proportion
listed foreignshares
--
--
--
--
--
III. Total of shares
2,446,553,582
100.00%
--
--
--
--
-- 2,446,553,582
100.00%
Reasons for changes in share
□ Applicable √ Not applicable
Approval of share changes
□ 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
Influence of share changes towards financial indexes in the latest year and latest period such as basic EPS anddiluted EPS, and net assets per share belonging to shareholder with ordinary share
□ Applicable √ Not applicable
Other contents that the Company thinks necessary or is asked by securities regulators to be disclosed
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
ADAMA Ltd. Semi-Annual Report 2019
Shareholder
Restricted
| shares at the |
| beginning of |
| the reporting |
period
Restricted
sharesreleasedduring thereporting
period
Restricted
shares increased
during thereporting period
shares increased
Restricted shares
at the end of thereporting period
Restricted shares
Reason forrestricting
Released dateChina Structural ReformFund Co., Ltd.
33,557,046
33,557,046
0 0
trade
Jan 21, 2019Industrial Bank Co., Ltd,Mixed SecuritiesInvestment
Committed not toFund, Xingquan
New Vision Investment
4,026,800
Fund, Xingquan
4,026,800
0 0
trade
Jan 21, 2019Industrial Bank Co., Ltd,Mixed SecuritiesInvestment Fund, Aegon-
Committed not toIndustrial Trend Investment
(LOF)
8,053,736
Industrial Trend Investment
8,053,736
0 0
trade
Jan 21, 2019
CCB Principal-ICBC-AvicTrust, Trust Plan of PooledFunds of CCB PrincipalPrivate PlacementInvestment, Tianqi (2016)No. 293 of Avic Trust
12,885,906
Committed not to
12,885,906
0 0
trade
Jan 21, 2019
Caitong Fund XiangyunNo.2 Asset ManagementPlan
536,912 536,912 0 0
Committed not toCommitted not to
trade
Jan 21, 2019Caitong Fund FuchunChuangyi PrivatePlacement No.3 AssetManagement Plan
4,697,986
Committed not to
4,697,986
0 0
trade
Jan 21, 2019Penghua Fund-CCB-ChinaLife Insurance, PrivatePlacement Portfolio of
Committed not toPenghua Fund Management
| Penghua Fund Management |
| Co., Ltd Entrusted by China |
Life Insurance (Group)Company
4,697,990
4,697,990
0 0
trade
Jan 21, 2019
Penghua Fund-PinganBank—
Committed not toHuarun Shenguotou
Trust-Huren Single Trust
2,684,560
| Huarun Shenguotou |
2,684,560
0 0
Committed not to
trade
Jan 21, 2019China Cinda AssetManagement Co., Ltd.
33,557,046
Committed not to
33,557,046
0 0
trade
Jan 21, 2019China NationalAgrochemical Co., Ltd.
1,810,883,0
0 0 1,810,883,039
Committed not to
Committed not to
trade
August 2, 2020
Committed not to
Jiang Chenggang 4,500 0 0 4,500
Shares held by a
| Shares held by a |
| supervisor should |
be locked up.
six months after
the termTotal
1,915,585,5
104,697,982
the expiration of
0 1,810,887,539
-- --
II. Issuance and Listing of Securities
□ Applicable √ Not applicable
ADAMA Ltd. Semi-Annual Report 2019
III. Total Number of Shareholders and Their Shareholdings
Unit: share
at the end of the Reporting Period
51,819 (the number of ordinary Ashare shareholders is 35,774;
Total number of common shareholdersthe number of B share shareholders is
16,045)
Total number of preferredshareholders that had resumed their
the number of B share shareholders is
voting right at the end of theReporting Period (if any)
Shareholding of common shareholders holding more than 5% shares or the top 10 shareholders
Name of shareholder
Nature ofshareholder
Holding
percentage
(%)
Number ofshares held
| percentage | ||
Increase
decreaseof sharesduring
/Reporting
Period
Reporting
Number ofrestrictedshares held
Number ofshares held
not subject to
tradingmoratorium
not subject to
Pledged orfrozen shares
Status
| Status | Number |
China National
Co., Ltd.
State-ownedlegal
Agrochemicalperson
| person |
74.02%
1,810,883,039
-
1,810,883,039
- -
Jingzhou Sanonda Holding Co.,
Ltd.
State-ownedlegal
Jingzhou Sanonda Holding Co.,person
| person |
4.89% 119,687,202
--119,687,202
- -
Co., Ltd.
State-ownedlegal
China Cinda Asset Managementperson
| person |
1.37% 33,557,046
--33,557,046
- -China Structural Reform FundCo., Ltd.
State-ownedlegal
| person |
1.37% 33,557,046
- - 33,557,046
- -Portfolio No.503 of National
| Social Security Fund |
Others 0.53% 12,999,893
6,799,972
- 12,999,893
- -CCB Principal-ICBC-
Avic
| Avic | |||
| Trust, Trust Plan of Pooled | |||
| Funds of CCB Principal Private | |||
| Placement Investment, Tianqi | |||
| (2016) No. 293 of Avic Trust | |||
Others 0.53% 12,885,906
- - 12,885,906
- -
| Industrial Bank Co., Ltd, Mixed |
| Securities Investment Fund, |
Aegon-
| Industrial Trend | |||
| Investment (LOF) | |||
Others 0.33% 8,053,736 - - 8,053,736
- -Jiang Yun
Domestic
individual
| individual |
0.27% 6,500,000 579,927 - 6,500,000
- -
Caitong Fund Fuchun Chuangyi
| Caitong Fund Fuchun Chuangyi | ||
| Private Placement No.3 Asset | ||
| Management Plan | ||
Others 0.19% 4,697,986--4,697,986
- -
GUOTAI JUNAN
SECURITIES(HONGKONG)
GUOTAI JUNANLIMITED
| LIMITED |
Foreign
legal
| person |
0.19% 4,697,389
-216,755
4,697,389
- -
Strategic investors or the general legal persondue to the placement of new shares become
the top 10 shareholders (if any) (note 3)
Not applicable
due to the placement of new shares becomeExplanation on associated relationship or/and
persons
Jingzhou Sanonda Holdings Co., Ltd. and CNAC are related parties, and are acting-in-
Explanation on associated relationship or/andconcert parties as prescribed in the Administrative Methods for Acquisition of Listed
ADAMA Ltd. Semi-Annual Report 2019
Companies. Sanonda
whether the other shareholders are related parties or acting-in-
Holding is a controlled subsidiary of CNAC. It is unknownconcert parties as
prescribed in the Administrative Methods for Acquisition of Listed Companies.Particulars about shares held by top 10 common shareholders not subject to trading moratoriumName of shareholder
Number of shares held not subject to tradingmoratorium at the end of the Period
Type of shareType of share Number
concert parties as
Jingzhou Sanonda Holding Co., Ltd. 119,687,202 RMB ordinary share 119,687,202
China Cinda Asset Management Co., Ltd. 33,557,046 RMB ordinary share 33,557,046
China Structural Reform Fund Co., Ltd. 33,557,046 RMB ordinary share 33,557,046
Portfolio No.503 of National Social Security
Fund
12,999,893
RMB ordinary share
12,999,893
| Portfolio No.503 of National Social Security | ||
CCB Principal-ICBC-Avic Trust, Trust Planof Pooled Funds of CCB Principal PrivatePlacement Investment, Tianqi (2016) No.293 of Avic Trust
12,885,906
RMB ordinary share
12,885,906
Industrial Bank Co., Ltd, Mixed SecuritiesInvestment Fund, Aegon-Industrial TrendInvestment (LOF)
8,053,736
RMB ordinary share
8,053,736
Jiang Yun 6,500,000 RMB ordinary share 6,500,000
Caitong Fund Fuchun Chuangyi PrivatePlacement No.3 Asset Management Plan
4,697,986
RMB ordinary share
4,697,986
GUOTAI JUNANSECURITIES(HONGKONG) LIMITED
4,697,389
Domestically listedforeign share
4,697,389
State-owned Assets Administration Bureauof Qichun County
4,169,266
RMB ordinary share
4,169,266
Explanation on associated relationship among
the
Explanation on associated relationship amongtop ten shareholders of tradable share not
subject to trading moratorium
top ten shareholders of tradable share not, as well as
, as well asamong the top ten shareholders of tradable
share not subject to
among the top ten shareholders of tradabletrading moratorium and
top ten shareholders, or explanation on acting-in-concert
Qichun County Administration of State-
trading moratorium andOwned Assets held shares of the Company on
Owned Assets held shares of the Company onbehalf of the government. It is unknown whether the other shareholders are related
parties or acting-in-
behalf of the government. It is unknown whether the other shareholders are relatedconcert parties as prescribed in the Administrative Methods for
Acquisition of Listed Companies
concert parties as prescribed in the Administrative Methods forParticular about shareholder participate in the
Particular about shareholder participate in thesecurities lending and borrowing business (if
any) (note 4)
-Did any top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of theCompany 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 trading moratorium of the
ADAMA Ltd. Semi-Annual Report 2019
Company had not carried out any agreed buy-back in the Reporting Period.IV. 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 2019
Section VII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
ADAMA Ltd. Semi-Annual Report 2019
Section VIII Directors, Supervisors and Senior ManagementI Changes in Shareholdings of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
No such cases in the Reporting Period. For details, see Annual Report 2018.
II Changes in Directors, Supervisors and Senior Management
□Applicable √ Not applicable
No such cases in the Reporting Period. For details, see Annual Report 2018.
ADAMA Ltd. Semi-Annual Report 2019
- 52 -
Section IX Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approvaldate of this Report or were due but could not be redeemed in full?
No
ADAMA Ltd. Semi-Annual Report 2019
- 53 -
Section X Financial Report
I. Audit reportWas the half-year report audited?
□ Yes √ No
The half-year report was not audited.
II. Financial StatementsNotes to the financial statements are presented in RMB’000.
ADAMA Ltd. Semi-Annual Report 2019
- 54 -
ADAMA Ltd.(Expressed in RMB '000)Consolidated Balance Sheet
| June 30 | December 31 |
Notes 2019 2018 (Restated)
| Current assets | ||||||||||
| Cash at bank and on hand | V | .1 | ||||||||
| 5,425,392 | 6,400,190 | ||||||||||||||||||||||||||||||||||||
| Financial assets held for trading | V | .2 | 33,074 | 46,095 | |||||||||||||||||||||||||||||||||
| Derivative financial assets | V | .3 | 416,991 | 517,726 | |||||||||||||||||||||||||||||||||
| Bills receivable | V | .4 | 54,702 | 40,569 | |||||||||||||||||||||||||||||||||
| Accounts receivable | V | .5 | 7,674,381 | 6,573,100 | |||||||||||||||||||||||||||||||||
| Receivables financing | V | .6 | 6 | 8 | , | 629 | 7 | 3,216 | |||||||||||||||||||||||||||||
| Prepayments | V | 7 | 319,471 | 410,506 | |||||||||||||||||||||||||||||||||
| Other receivables | V | 8 | 929,945 | 1,079,332 | |||||||||||||||||||||||||||||||||
| Inventories | V | .9 | 10,337,924 | 9,433,876 | |||||||||||||||||||||||||||||||||
| Non | - | current assets due within one year | V | .20 | 48 | ||||||||||||||||||||||||||||||||
| Other current assets | V | 10 | |||||||||||||||||||||||||||||||||||
715,767
660,806
| Total current assets |
25,976,276
25,235,464
Non-current assets
| Long | - | term receivable | V.11 | 174,246 | 157,600 | |||||||||||||||||||||||||||||||||
| Long | - | term equity investments | V.12 | 135,075 | 108,350 | |||||||||||||||||||||||||||||||||
| Other equity investments | V.13 | 87,812 | 91,559 | |||||||||||||||||||||||||||||||||||
| Investment properties | 3,933 | 4,094 | ||||||||||||||||||||||||||||||||||||
| Fixed assets | V.1 | 4 | 7, | 16 | 7 | , | 0 | 32 | 7, | 2 | 63 | , | 866 | |||||||||||||||||||||||||
| Construction in progress | V.1 | 5 | 534,351 | 487,204 | ||||||||||||||||||||||||||||||||||
| Right | of | - | use assets | V.16 | 554,372 | N/A | ||||||||||||||||||||||||||||||||
| Intangible assets | V.1 | 7 | ||||||||||||||||||||||||||||||||||||
| 5,802,932 | 5,741,962 | |||||||||||||||||
| Goodwill | V.1 | 8 | 4,298,747 | 4,085,945 | ||||||||||||||
| Deferred tax assets | V.1 | 9 | 767,928 | 741,737 | ||||||||||||||
| Other non | - | current assets | V.20 | |||||||||||||||
307,385
217,282
Total non-current assets19,833,813
18,899,599
| Total assets |
45,810,089
44,135,063
ADAMA Ltd. Semi-Annual Report 2019
- 55 -
ADAMA Ltd.(Expressed in RMB '000)Consolidated Balance Sheet (continued)
| June 30 | December 31 |
Notes 2019 2018 (Restated)
Current liabilities
| Short | term loans | V | .21 | 2,308,286 | 1,122,774 | |||||||||||||||||||||
| Derivative financial liabilities | V | .22 | 688,267 | 1,451,670 | ||||||||||||||||||||||
| Bills payable | V | .23 | 375,777 | 445,533 | ||||||||||||||||||||||
| Accounts payable | V | .24 | 4,178,668 | 4,627,936 | ||||||||||||||||||||||
| Contract liabilities | V | .25 | 917,747 | 848,402 | ||||||||||||||||||||||
| Employee benefits payable | V | 26 | 912,354 | 944,175 | ||||||||||||||||||||||
| Taxes payable | V | 27 | 437,227 | 616,780 | ||||||||||||||||||||||
| Other payables | V | 28 | ||||||||||||||||||||||||
| 1,970,641 | 1,197,579 | ||||||||||||||||
| Non | - | current liabilities due within one year | V | .29 | 422,208 | 301,814 | |||||||||||
| Other current liabilities | V | 30 | |||||||||||||||
344,127
578,184
| Total current liabilities |
12,555,302
12,134,847
| Non | current liabilities | |||||||||||||||||||
| Long | - | term loans | V. | 31 | 673,796 | 235,819 | ||||||||||||||
| Debentures payable | V.32 | 8,152,990 | 7,649,098 | |||||||||||||||||
| Lease Liabilities | V.33 | |||||||||||||||||||
| 418,814 | N/A | |||||||||||||||||||||
| Long | - | term payables | 26,419 | 25,106 | ||||||||||||||||||
| Long | - | term employee | benefits payable | V | .34 | 644,449 | 620,646 | |||||||||||||||
| Provisions | V | .35 | 135,924 | 132,351 | ||||||||||||||||||
| Deferred tax liabilities | V | 19 | ||||||||||||||||||||
| 350,735 | 392,404 | ||||||||||||
| Other non | - | current liabilities | V | 36 |
372,256
199,930
| Total non | - | current liabilities |
10,775,383
9,255,354
| Total liabilities | ||||||||
23,330,685
21,390,201
Shareholders' equity
| Share capital | V.3 | 7 | 2,446,554 | 2,446,554 | ||||||||||||||||||||
| Capital reserve | V | 38 | 12,903,168 | 13,324,491 | ||||||||||||||||||||
| Other comprehensive income | V | 39 | 972,845 | 1,090,827 | ||||||||||||||||||||
| Special reserves | 16,798 | 13,536 | ||||||||||||||||||||||
| Surplus reserve | V | 40 | 240,162 | 240,162 | ||||||||||||||||||||
| Retained earnings | V | 41 | ||||||||||||||||||||||
5,899,877
5,629,292
| Total shareholders’ equity |
22,479,404
22,744,862
Total liabilities and shareholders’ equity
45,810,089
44,135,063
Chen Lichtenstein
| Legal representative |
Aviram Lahav
| Chief of | accounting work & Chief of accounting organ |
These financial statements were approved by the Board of Directors of the Company on August 21, 2019.
The notes on pages 54 to 117 form part of these financial statements.
ADAMA Ltd. Semi-Annual Report 2019
- 56 -
ADAMA Ltd.(Expressed in RMB '000)Balance Sheet
| June 30 | December 31 |
Notes 2019 2018
| Current assets | |||||||||||||||||||||||||||||
| Cash at bank and on hand | XV | .1 | 2,173,167 | 2,058,253 | |||||||||||||||||||||||||
| Accounts receivable | XV | .2 | 252,070 | 692,199 | |||||||||||||||||||||||||
| Receivables financing | XV | .3 | 46,331 | 19,917 | |||||||||||||||||||||||||
| Prepayments | 32,916 | 10,500 | |||||||||||||||||||||||||||
| Other | receivables | XV | .4 | 13,912 | 31,748 | ||||||||||||||||||||||||
| Inventories | 107,808 | 147,975 | |||||||||||||||||||||||||||
Other current assets1,743
1,343
| Total current assets |
2,627,947
2,961,935
Non-current assets
| Long | - | term equity investments | XV | .5 | 16,403,642 | 15,939,826 | |||||||||||||||||||||||||||
| Other equity investments | 86,059 | 80,119 | |||||||||||||||||||||||||||||||
| Investment properties | 3,932 | 4,094 | |||||||||||||||||||||||||||||||
| Fixed assets | 932,920 | 1,012,674 | |||||||||||||||||||||||||||||||
| Construction in progress | 259,900 | 188,020 | |||||||||||||||||||||||||||||||
| Right | of | - | use assets | 609 | - | ||||||||||||||||||||||||||||
| Intangible assets | 172,650 | 174,997 | |||||||||||||||||||||||||||||||
| Deferred tax assets | 58,433 | 48,103 | |||||||||||||||||||||||||||||||
Other non-current assets110,631
54,060
| Total non | - | current assets |
18,028,776
17,501,893
| Total assets |
20,656,723
20,463,828
| Current liabilities | |||||||||||||||
| Short | term loans | 20,000 | 20,000 | ||||||||||||
| Bills payables | 146,595 | 209,700 | |||||||||||||
| Accounts payables | |||||||||||||||
| 130,843 | 182,110 | |||||||||||||||||
| Contract | liabilities | 3,096 | 9,983 | |||||||||||||||
| Employee benefits payable | 22,236 | 25,758 | ||||||||||||||||
| Taxes payable | 3,032 | 55,198 | ||||||||||||||||
| Other payables | ||||||||||||||||||
| 849,222 | 187,762 |
Non-current liabilities due within one year
72,000
| Total current liabilities |
1,175,655
762,511
Non-current liabilities
| Long | - | term employee benefits payable | 98,241 | 100,144 | |||||||||||||
| Provisions | 16,865 | 16,454 | |||||||||||||||
| Other non | current liabilities | ||||||||||||||||
171,770
171,770
Total non-current liabilities
286,876
288,368
Total liabilities
1,462,531
1,050,879
| Shareholders | ’ | equity | |||||||||||||||||||||||||||
| Share capital | V.38 | 2,446,554 | 2,446,554 | ||||||||||||||||||||||||||
| Capital reserve | 15,463,245 | 15,414,429 | |||||||||||||||||||||||||||
| Other comprehensive income | 48,217 | 43,167 | |||||||||||||||||||||||||||
| Special reserves | 14,046 | 11,564 | |||||||||||||||||||||||||||
| Surplus reserve | V | .41 | 240,162 | 240,162 | |||||||||||||||||||||||||
| Retained earnings |
981,968
1,257,073
| Total | shareholders | ’ | equity | |||||||||
19,194,192
19,412,949
| Total liabilities and shareholders | ’ | equity |
20,656,723
20,463,828
- 57 -
ADAMA Ltd.(Expressed in RMB '000)Consolidated Income Statement
Six months ended June 30Notes 2019 2018 (Restated)
| I. | Operating income | V. | 42 | 13,616,032 | 13,639,073 | |||||||||||
Less
| : | Cost of sales | V. | 42 | 9,023,242 | 9,042,183 | ||||||||||||||||||||||||||||
| Taxes and surcharges | V.43 | 46,226 | 60,548 | ||||||||||||||||||||||||||||||
| Selling and Distribution expenses | V.44 | 2,499,774 | 2,256,991 | ||||||||||||||||||||||||||||||
| General and administrative expenses | V. | 45 | 628,259 | 523,821 | |||||||||||||||||||||||||||||
| Research and Development expenses | V. | 46 | 210,699 | 156,275 | |||||||||||||||||||||||||||||
| Financial expenses | V.47 | 938,196 | 347,554 | ||||||||||||||||||||||||||||||
| Including: Interest expense | 325,138 | 306,821 | |||||||||||||||||||||||||||||||
Interest
| income | 41,534 | 41,465 | |||||||||||||||||
| Add: | Investment income, net | V.48 | (514,443) | 147,053 | |||||||||||||||
Including: Income from investmentin associates and
| joint ventures | 21,724 | 12,758 | |||||||||||||||||||||||||||
| Gain (loss) from changes in fair value | V.49 | 884,135 | (243,376) | ||||||||||||||||||||||||||
| Credit impairment loss | V.50 | 3,347 | (6,097) | ||||||||||||||||||||||||||
| Asset impairment losses | V.51 | (23,809) | (37,783) | ||||||||||||||||||||||||||
| Gain from disposal of assets | V.52 | ||||||||||||||||||||||||||||
115,514
1,997,170
| II. Operating profit | 734,380 | 3,108,668 | |||||||||
Add:
| Non | - | operating income |
| 10,811 | 26,884 | ||||||||||||||||
| Less: | Non | - | operating expenses | V. | 53 |
16,016
8,827
III. Total profit
| 729,175 | 3,126,725 | |||||||||
Less:
| Income tax expense | ||
| V.54 |
140,537
737,558
| IV. Net profit |
588,638
2,389,167
| (1). | Classified by nature of operations |
| (1.1). Continuing | operations | 588,638 | 2,389,167 | |||||||||||||||||||||||||
| (2). | Classified by ownership | |||||||||||||||||||||||||||
| (2.1). Shareholders of the Company | 588,638 | 2,389,167 | ||||||||||||||||||||||||||
| V. | Other comprehensive income, net of tax | V. 39 | (113,471) | 505,361 | ||||||||||||||||||||||||
Other comprehensive income (net of tax)
| attributable to shareholders of the Company |
| (113,471) | 505,361 |
| (1) | Items that will not be reclassified to profit or loss: | (4,417) | 11,106 | ||||||||||||||||||||||||||||
| (1.1) | R | e | - | measurement of defined benefit plan | liability | (13,978) | 11,106 | ||||||||||||||||||||||||
| (1.2) FV changes in other equity investment | 9,561 | - | |||||||||||||||||||||||||||||
| (2) | Items that were or will be reclassified to profit or loss | (109,054) | 494,255 | ||||||||||||||||||||||||||||
(2.1) Effective portion of gains or loss of cash flow
| hedge |
| (151,993) | 293,474 |
(2.2) Translation differences of foreign financial
| statements |
| 42,939 | 200,781 | |||||
VI. Total comprehensive income for the period attributable toShareholders of the Company
475,167
2,894,528
| VII. | Earnings per | share | XIV.2 | ||||||||||||||
| (1) Basic earnings per share (Yuan/share) | 0.24 | 0.98 | |||||||||||||||
| (2) Diluted earnings per share (Yuan/share) | |||||||||||||||||
| N/A | N/A |
For business combination under common control in the reporting period, net profit of the acquiree before the businesscombination was 38,027 thousand RMB; net profit of the acquiree in the comparative period (six months ended June 30, 2018)was 22,089 thousand RMB.
- 58 -
ADAMA Ltd.(Expressed in RMB '000)Income Statement
Six months ended June 30
Notes 2019 2018
| I. | Operating income | XV | .6 | 735,426 | 1,666,573 | ||||||||||
Less:
| Operating costs | XV | .6 | 518,561 | 1,169,757 | ||||||||||||||||||||
| Taxes and surcharges | 8,910 | 21,211 | ||||||||||||||||||||||
| Selling and Distribution expenses | 43,054 | 69,533 | ||||||||||||||||||||||
| General | and | administrative expenses | 190,950 | 85,677 | ||||||||||||||||||||
| Research and Development | expenses | |||||||||||||||||||||||
| 24,464 | 2,430 | |||||||||||||||||||
| Financial expenses (income) | (1,254) | (20,437) | ||||||||||||||||||
| Including: Interest expense | 2,059 | 4,918 | ||||||||||||||||||
| Interest income | 14,333 | 13,035 | ||||||||||||||||||
Add:
| Credit impairment loss | (1,633) | (3,073) | |||||||||||||
| Asset Impairment | losses | ||||||||||||||
(272)
(905)
II. Operating Profit
| (51,164) | 334,424 | |||||||||||||||
| Add: | Non | - | operating income | 4,430 | 975 | |||||||||||
Less:
| Non | - | operating expenses |
1,896
| III. Total profit | (48,630) | 335,276 | ||||||||||||||
| Less: | Income tax | expense (income) | ||||||||||||||
(10,841)
52,893
IV. Net profit
(37,789)
282,383
| Continuing operations |
(37,789)
282,383
| V. | Other comprehensive income, net of tax |
5,050
(391)
| (1) |
| Items that will not be reclassified to profit or loss | 5,050 | (391) | ||||||||||||
| (1.1) Re | - | measurement of defined benefit plan liability | (391) | |||||||||||
(1.2) FV changes in other equity investment 5,050
-
| VI. | Total comprehensive income for the period |
(32,739)
281,992
- 59 -
ADAMA Ltd.(Expressed in RMB '000)Consolidated Cash Flow Statement
Six months ended June 30
Notes 2019 2018 (Restated)
| I. | Cash flows from operating activities: | ||||||||||||
| Cash received from sale of goods and rendering of services | 12,817,678 | 12,600,613 | |||||||||||
| Refund of taxes and surcharges | 39,737 | 16,347 |
| Cash received relating to other operating activities | V | .56(1) |
258,378
260,834
| Sub | total of cash inflows from operating activities |
13,115,793
12,877,794
| Cash paid | for goods and services | 9,779,321 | 8,642,298 | ||||||||||||||||||||
| Cash paid | to and on behalf of employees | 1,801,614 | 1,779,363 | ||||||||||||||||||||
| Payments of taxes and surcharges | 465,018 | 241,030 | |||||||||||||||||||||
| Cash paid relating to other operating activities | V | .56(2) | |||||||||||||||||||||
1,374,790
1,375,300
| Sub | total of cash outflows from operating activities |
13,420,743
12,037,991
Net cash flows from (used in) operating activities
| V | .57(1)a |
(304,950)
839,803
| II. | Cash flows from investing activities | : | ||||||||||||||||||
| Cash received from disposal of investments | 20,173 | 9,792 | ||||||||||||||||||
| Cash | received from returns of investments | 3,372 | - | |||||||||||||||||
Net cash received from disposal of fixed assets, intangible
| assets and other long | - | term assets | 30,843 | 2,444,437 |
| Cash received relating to other investing activities | V | .56(3) |
9,327
| Sub | total of cash inflows from investing activities |
63,715
2,454,286
Cash paid to acquire fixed assets, intangible assets and
| other long | - | term assets | 606,126 | 2,678,605 | |||||||||||||||||||
| Net cash paid | to acquire subsidiaries or other business units | V | .57(2) | 826,805 | 9,332 | ||||||||||||||||||
| Cash paid relating to other investing activities | |||||||||||||||||||||||
-
| Sub | total of cash outflows from investing activities |
1,433,709
2,687,937
| Net cash flows used in investing activities | ||||||||||
(1,369,994)
(233,651)
III. Cash flows from financing activities:
| Cash received | from borrowings | 1,987,810 | 396,500 |
| Cash received from other financing activities | V | .56(4) |
61,701
-
| Sub | total of cash inflows from financing activities |
2,049,511
396,500
| Cash | r | epayments of borrowings | 463,876 | 2,497,633 | ||||||||||||||||||||||||||
| Cash | payment | for dividends, profit distributions and interest | 406,111 | 294,135 | ||||||||||||||||||||||||||
| Including: Dividends paid to | non | - | controlling | interest | 28,936 | 16,028 | ||||||||||||||||||||||||
| Cash | paid relating to other financing activities | V | .56(5) | |||||||||||||||||||||||||||
443,891
32,619
| Sub | total of cash outflows from | financing activities |
1,313,878
2,824,387
| Net cash from (used in) financing activities |
735,633
(2,427,887)
| IV. | Effects of foreign exchange rate changes on cash and cash equivalents | (25,065) | (1,593) | ||||||||||||||||||
| V. | Net increase (decrease) in cash and | cash equivalents | V. | 57 | (1)b | (964,376) | (1,823,328) | ||||||||||||||
Add:
| Cash and cash equivalents at the beginning of the year |
6,346,196
7,979,502
VI. Cash and cash equivalents at the end of the period
| V. | 57 | ( | 3 |
5,381,820
6,156,174
- 60 -
ADAMA Ltd.(Expressed in RMB '000)Cash Flow Statement
Six months ended June 30
Notes 2019 2018
| I. | Cash flows from operating activities: |
| Cash received from sale of goods and rendering of services |
| 1,034,417 |
1,289,145
| Refund of taxes and surcharges |
| 23,042 |
| Cash | received relating to other operating activities |
XV.7(1) 18,958
15,192
| Sub | total of cash inflows from operating activities |
1,076,417
1,304,503
| Cash paid for goods and services |
| 535,991 |
587,656
| Cash paid | to and on behalf of employees |
| 94,867 |
91,839
| Payments of taxes and surcharges |
| 73,468 |
57,171
| Cash paid relating to other operating activities |
XV.7(2) 89,570
86,182
| Sub | total of cash outflows | from operating activities |
793,896
822,848
| Net cash flows from operating | activities |
XV.8 282,521
481,655
| II. | Cash flows from investing activities | : | |||||||
| Cash | received relating to | other | investing activities |
1,808
-
| Sub | total of cash inflows from investing activities |
1,808
-
Cash paid to acquire fixed assets, intangible assets and
| other long | - | term assets |
92,180
48,465
| Sub | total of cash outflows from investing activities |
92,180
48,465
| Net cash flows used in investing activities | |||||||
(90,372)
(48,465)
| III. | Cash flows from financing activities |
| Cash received | relating to | other financing activities |
XV.7.(3)
11,947
-
| Sub | total of cash inflows | from financing activities |
11,947
-
| Cash | r | epayments of | borrowings |
72,000
96,590
| Cash | payment | for dividends, profit distributions or interest |
2,059
4,767
| Cash paid relating to other financing activities |
XV.7.(4)
424,313
| Sub | total of cash outflows from financing activities |
74,259
525,670
| Net cash flow used in financing activities |
(62,312)
(525,670)
IV. Effects of foreign exchange rate changes on cash and cash equivalents
| (2, | 97 | 6) | (9,951) | ||||||
| V. | Net increase in cash and cash equivalents |
| 126,861 |
(102,431)
Add:
Cash and cash equivalents at the beginning of the year
| Cash and cash equivalents at the beginning of the year |
XV.1 2,005,313
1,864,003
VI. Cash and cash equivalents at the end of the period
XV.1 2,132,174
1,761,572
- 61 -
ADAMA Ltd.(Expressed in RMB '000)Consolidated Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2019
Attributable to shareholders of the Company
Share capital Capital reserve
Othercomprehensive
income
Specialreserves
Surplus reserve Retained earnings Total
I. Balance at December 31, 2018
| 2,446,554 | 12,975,456 | 1,090,952 | 13,536 | 240,162 | 5,513,466 | 22,280,126 |
Add: Business combination under common control* -
349,035
(125)
-
-
115,826
464,736
| II. | Balance at January 1, 2019 | 2,446,554 | 13,324,491 | 1,090,827 | 13,536 | 240,162 | 5,629,292 | 22,744,862 | ||||||||||||||||||||||||||||
| III. Changes in equity for the period | (421,323) | (117,982) | 3,262 | - | 270,585 | (265,458) | ||||||||||||||||||||||||||||||
| 1. | Total comprehensive income | - | (113,471) | 588,638 | 475,167 | |||||||||||||||||||||||||||||||
| 2. | ||||||||||||||||||||||||||||||||||||
| Owner | s contributions and reduction | - | (415,000) | - | - | - | - | (415,000) | |||||||||||||||||||||
2.1 Consideration for Business combination
| under common control | - | (415,000) | - | - | - | - | (415,000) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3. | Appropriation of profits | (6,323) | (322,564) | (32 | 8 | ,887) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.1 | Distribution to owners | - | (293,628) | (293,628) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.2 | Distribution to non | - | controlling interest | (28,936) | (28,936) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.3 | Other | (6,323) | (6,323) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4. Transfers within owners | ’ | equity | (4,511) | 4,511 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4.1 | Others | (4,511) | 4,511 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5. | Special reserve | 3,262 | 3,262 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5.1 | Transfer to special reserve | 10,646 | 10,646 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5.2 Amount utilized -
-
-
(7,384)
-
-
(7,384)
IV. Balance at June 30, 2019 2,446,554
12,903,168
972,845
16,798
240,162
5,899,877
22,479,404
*See note VI(2) – Change in consolidation scope
- 62 -
ADAMA Ltd.(Expressed in RMB '000)Consolidated Statement of Changes in Shareholders’ Equity (continued)
For the six months ended June 30, 2018
Attributable to shareholders of the Company
Share capital Capital reserve
Othercomprehensiveincome
Specialreserves
Surplus reserve Retained earnings Total
| I. | Balance at December 31, 2017 | 2,446,554 | 12,982,277 | (154,701) | 9,349 | 207,823 | 3,286,711 | 18,778,013 | |||||||||||||||||||||
| Add: Changes in accounting policy | 50,621 | 39,481 | 90,102 | ||||||||||||||||||||||||||
Business combination under common
-
| control* |
349,035
-
-
55,045
404,112
| II. | Balance at January 1, 2018 | 2,446,554 | 13,331,312 | (104,048) | 9,349 | 207,823 | 3,381,237 | 19,272,227 | |||||||||||||||||||||||||
| III. Changes in equity for the period | (9,371) | 505,361 | 4,883 | 2,234,372 | 2,735,245 | ||||||||||||||||||||||||||||
| 1. | Total comprehensive income | - | 505,361 | - | 2,389,167 | 2,894,528 | |||||||||||||||||||||||||||
| 2. | |||||||||||||||||||||||||||||||||
| Owner | s contributions and reduction | - | (9,371) | - | - | - | - | (9,371) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2. | 1 | Others | (9,371) | (9,371) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3. | Appropriation of profits | - | (154,795) | (154,795) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.1 | Distribution to owners | (154,133) | (154,133) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.2 | Distribution to non | - | controlling interest | ( | 16,028 | ( | 16,028 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3.3 | Other | 15,366 | 15,366 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4. | Special reserve | 4,883 | 4,883 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4.1 | Transfer to special reserve | 11,063 | 11,063 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4.2 Amount utilized -
-
-
(6,180)
-
-
(6,180)
IV. Balance at June 30, 2018 2,446,554
13,321,941
401,313
14,232
207,823
5,615,609
22,007,472
*See note VI(2) – Change in consolidation scope
- 63 -
Statement of Changes in Shareholders’ Equity
For the six months ended June 30, 2019
Attributable to shareholders of the Company
Sharecapital
Capitalreserve
Other
income
Specialreserves
| comprehensive | ||
Surplusreserve
Retainedearnings
Total
I. Balance at December 31, 20182,446,554
15,414,429
43,167
11,564
240,162
1,257,073
19,412,949
| II. | Changes in equity for the period |
-
48,816
5,050
2,482
-
(275,105)
(218,757)
| 1. | Total comprehensive income |
-
-
5,050
-
-
(37,789)
(32,739)
| 2. | Owner | s contributions and reduction |
-
48,816
-
-
-
-
48,816
| 2.1 |
| Other |
-
48,816
-
-
-
-
48,816
| 3. | Appropriation of profits |
-
-
-
-
-
(237,316)
(237,316)
| 3.1 Transfer to Distribution to shareholders |
-
-
-
-
-
(237,316)
(237,316)
| 4. | Special reserve |
-
-
-
2,482
-
-
2,482
| 4.1 |
| Transfer to special reserve |
-
-
-
5,462
-
-
5,462
| 4.2 | Amount utilized |
-
-
-
(2,980)
-
-
(2,980)
Ⅲ. Balance at June 30, 20192,446,554
15,463,245
48,217
14,046
240,162
981,968
19,194,192
For the six months ended June 30, 2018
| Attributable to shareholders of the Company |
Sharecapital
Capitalreserve
Other
comprehensive
income
Specialreserve
| comprehensive | ||
Surplusreserve
Retained
earnings
| Retained | |
Total
| Balance at December 31, 2017 | 2,446, | 554 | 15,423,034 | - | 10,040 | 207,823 | 1,110, | 649 | 19,198,100 | |||||||||||||
Add: Changes in accounting policy
50,621
9,500
60,121
| I. | Balance at January 1, 2018 | ||||||||||||||||||||||
| 2,446, | 554 | 15,423,034 | 50,621 | 10,040 | 207,823 | 1,120, | 149 | 19,258,221 |
II. Changes in equity for the period
| - | (9,371) | (391) | 3,671 | - | 128,250 | 122,159 | |||||||||||||||||||||||||||||||||||||||||||||
| 1. | Total comprehensive income | (391) | 282,383 | 281,992 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2. | Owner | s | contributions and reduction | (9,371) | (9,371) | ||||||||||||||||||||||||||||||||||||||||||||||
| 2. | 1 | Others | (9,371) | (9,371) | |||||||||||||||||||||||||||||||||||||||||||||||
| 3. | Appropriation of profits | (154,133) | (154,133) | ||||||||||||||||||||||||||||||||||||||||||||||||
| 3. | 1 | D | ividend | to Shareholders | (154,133) | (154,133) | |||||||||||||||||||||||||||||||||||||||||||||
| 4. | Special | reserve | 3,671 | 3,671 | |||||||||||||||||||||||||||||||||||||||||||||||
| 4.1 | Transfer to | special | reserve | 5,215 | 5,215 | ||||||||||||||||||||||||||||||||||||||||||||||
4.2 Amount utilized
-
-
-
(1,544)
-
-
(1,544)
III.
Balance at June 30, 20182,446,554
15,413,663
50,230
13,711
207,823
1,248,399
19,380,380
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 64 -
I BASIC CORPORATE INFORMATION
ADAMA Ltd (former name: Hubei Sanonda Co., Ltd., hereinafter the “Company” or the “Group”) is acompany limited by shares established in China with its head office located in Hubei Jingzhou.
During July 2017 a major assets restructuring was successfully completed, with the acquisition of AdamaAgricultural Solutions Ltd (hereinafter: "Solutions"), a wholly-owned subsidiary of China NationalAgrochemical Corporation Limited (hereinafter: "CNAC").
Following the completion of the major assets restructuring, Solutions became a wholly owned subsidiary ofthe Company. The combination was considered as a business combination under common control.
The Company's parent company is CNAC, and the ultimate holding company is China National ChemicalCorporation (hereinafter - “ChemChina”).
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 21, 2019.
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).
- 65 -
II BASIS OF PREPARATION - (cont’d)
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.
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 an assessment of the going concern for the following 12 months from June 30,2019 and have not identified any significant doubtful matter or event on the going concern, as such thefinancial statement 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 consolidated and the Company's financial position as at June 30, 2019 andconsolidated and the Company's operating results, changes in shareholders' equity and cash flows for the sixmonths then ended.
2. Accounting period
The Group has adopted the calendar year as its accounting year, i.e. from 1 January to 31 December.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 66 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
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.
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.
During March 2019, the acquisition of Jiangsu Anpon Electrochemical co. LTD. (Hereinafter – “Anpon”), awholly-owned subsidiary of CNAC, was successfully completed. Anpon became a wholly owned subsidiary of theCompany. The combination was considered as a business combination under common control. On March 29,2019 the entire share capital of Anpon was transferred from CNAC to the Company - (See note VI.2 – Change inconsolidation scope).
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.
- 67 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
5. Business combinations - (cont’d)
5.2 Business combinations not involving enterprises under common control and goodwill - (cont’d)
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.
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.
- 68 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
6. Basis for preparation of consolidated financial statements - (cont’d)
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.
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. The Group’s shareof a subsidiary’s profits includes the share of the holders of the non-controlling interests to which the Groupissued a put option.
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.
- 69 -
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 the 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 the spot exchange rates on the dates of the transactions; the opening balance of retainedearnings is the translated closing balance of the previous year's retained earnings; the closing balance ofretained earnings is calculated and presented on the basis of each translated income statement and profitdistribution item. The difference between the translated assets and the aggregate of liabilities andshareholders' equity items is recorded as other comprehensive income. Cash Flows arising from transactionin foreign currency and the cash flows of a foreign subsidiary are translated at the spot exchange rate on thedate of the cash flow, the effect of exchange rate changes on the cash and cash equivalents is regarded as areconciling item and present separately in the statement “effect of foreign exchange rate changes on the cashand 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 70 -
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, in the case of a financial asset or financial liability not at fair value throughprofit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial assetor financial liability. At initial recognition, an entity shall measure trade receivables at their transaction priceif the trade receivables do not contain a significant financing component.
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 financial asset is held within a business model whose objective is to hold financial assets in order tocollect contractual cash flows; and (b) the contractual terms of the financial asset give rise on specified datesto cash flows that are 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 71 -
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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 72 -
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 for tradereceivables.
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, if thecredit risk on that financial instrument has increased significantly since initial recognition, the Groupmeasures the loss allowance for a financial instrument at an amount equal to the lifetime expected creditlosses. The Group recognizes in profit or loss, as an impairment gain or loss, the amount of expected creditlosses (or reversal) that is required to adjust the loss allowance to the amount that is required to be recognized.
10.2.1 Significant increases in credit risk
At each balance sheet date, the Group assesses whether the credit risk on a financial instrument has increasedsignificantly 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 orsimilar financial instruments with the same expected life.(c) a significant change in the debtors’ ability to meet its debt obligations.(d) an actual or expected significant change in the operating results of the debtor.(e) significant increases in credit risk on other financial instruments of the same debtor.(f) an actual or expected significant adverse change in the regulatory, economic, or technological
environment 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 73 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.2 Impairment of financial assets - (cont’d)
10.2.2 Credit-impaired financial asset
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimatedfuture cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impairedinclude observable data about the following events:
(a) significant financial difficulty of the issuer or the receivable;
(b) a breach of contract, such as a default or past due event;(c) the lender(s) of the receivable, for economic or contractual reasons relating to the receivable’s financialdifficulty, having granted to the receivable a concession(s) that the lender(s) would not otherwiseconsider;(d) it is becoming probable that the receivable will enter bankruptcy or other financial reorganization;
10.2.3 Recognition of expected credit losses
For the purpose of determining significant increases in credit risk and recognizing a loss allowance on acollective basis, financial instruments are grouped on the basis of shared credit risk. Examples of sharedcredit risk characteristics may include, but are not limited to, the:(a) instrument type; (b) credit risk ratings;(c) collateral type; (d) industry; (e) geographical location of the debtor; and (f) the value of collateral relativeto the financial asset if it has an impact on the probability of a default occurring.
Expected credit losses of financial instruments are determined as the present value of the difference between:
(a) the contractual cash flows that are due to an entity under the contract; and (b) the cash flows that the entityexpects 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 recognized inprofit 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 possible
outcomes;(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.
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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 74 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
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 is transferred to the transferee; or(iii) although the financial asset has been transferred, the Group neither transfers nor retains substantially allthe risks 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 the Group’scontinuing involvement in the transferred asset is the extent to which it is exposed to changes in the value ofthe 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 75 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Financial instruments - (cont’d)
10.5 Derecognition of financial liabilities
Financial liabilities are derecognized in full or in part only when the present obligation is discharged in fullor in part. An agreement entered into force between the Group (debtor) and a creditor to replace the originalfinancial liabilities with new financial liabilities with substantially different terms, derecognize the originalfinancial liabilities as well as recognize the new financial liabilities. When financial liabilities is derecognizedin full or in part, the difference between the carrying amount of the financial liabilities derecognized and theconsideration paid (including transferred non-cash assets or new financial liability) is recognized in profit orloss 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 realize thefinancial asset and settle the financial liability simultaneously, a financial asset and a financial liability shallbe 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 into theshare capital. Treasury shares are excluded from profit distributions and are stated as a deduction undershareholders’ equity in the balance sheet.
- 76 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Receivable
Receivables are assessed for impairment on a collective group and/or on an individual basis as follows:
Expected credit losses in respect of a receivable 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 collective provision for non-overdue accountreceivables is between 0%-1.4%.
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.
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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 77 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
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. For a long-term equity investment acquired through business combination not involvingenterprises under common control, the investment cost of the long-term equity investment is the cost ofacquisition. For a business combination not involving enterprises under common control achieved in stagesthat involves multiple exchange transactions, the initial investment cost is carried at the aggregate of thecarrying amount of the acquirer’s previously held equity interest in the acquiree and the new investment costincurred on the acquisition 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.
- 78 -
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 initial investment cost of a long-term equity investment exceeds theGroup’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, noadjustment is made to the initial investment cost. Where the initial investment cost is less than the Group’sshare of the fair value of the investee’s identifiable net assets at the time of acquisition, the difference isrecognized in profit or loss for the period, and the cost of the long-term equity investment is adjustedaccordingly.
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).
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.
- 79 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
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, transportationvehicles, 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 80 -
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(%)
Annualdepreciation rate(%)Buildings the straight-line method 15-50 0-4 1.9-6.7Machinery and equipment the straight-line method 3-22 0-4 4.4-33.3Office and other equipment the straight-line method 3-17 0-4 5.6-33.3Motor vehicles the straight-line method 5-9 0-2 10.9-20.0Land 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).
- 81 -
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 is 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 trademarks, land use rights and software. Intangible assets are stated at thebalance sheet 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 years | ||||||||||||||||||||||||||||||
| Intangible assets on purchase of products | 7 | - | 11, 20 years | ||||||||||||||||||||||||||||
| Tradename and trademarks | 4 | - | 10, 30 years | ||||||||||||||||||||||||||||
| Software | 3 | - | 5 years | ||||||||||||||||||||||||||||
| Customer relations | 5 | - | 10 | years | |||||||||||||||||||||||||||
The difference between recoverable amounts of the intangible assets under the carrying amount is referredto as impairment loss (see Note III 20).
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 82 -
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 of thefuture cash flow estimated to be derived from the asset. The Group estimates the recoverable amount on anindividual 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.
- 83 -
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.
- 84 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
21. Employee benefits - (cont’d)
.312 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 employeetermination plan or a curtailment proposal.- When the Group has a formal detailed restructuring plan involving the payment of termination benefitsand has raised a valid expectation in those affected that it will carry out the restructuring by starting toimplement that plan or announcing its main features to those affected by it.
If the benefits are payable more than 12 months after the end of the reporting period, they are discounted totheir present value. The discount rate used is the yield on the reporting date on highly-rated 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.
- 85 -
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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 86 -
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
- 87 -
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 entity ordifferent 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.
- 88 -
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 theuse of an identified asset, the Group assesses whether it has the following two rights throughout the leaseterm:
(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 Grouprecognizes a right-of-use asset at the same amount, adjusted for any prepaid lease payments paid at thelease date or before, plus initial direct costs incurred in respect of the lease.When the interest rate implicit in the lease is not readily determinable, the incremental borrowing rate ofthe lessee 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 ortermination option, 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 rateand adjust 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 correspondencechange in 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 89 -
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 effectiveinterest method.
28. Other significant accounting policies and accounting estimates
28.1 Hedging
The Group uses derivative financial instruments to hedge its risks related to foreign currency and inflationrisks and derivatives that are not used for hedging.
Hedge accounting
The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoingbasis, whether the hedge is expected to be effective in offsetting the changes in the fair value of cash flowsthat can be attributed to the hedged risk during the period for which the hedge is designated.
An effective hedge exists when all of the below conditions are met:
? There is an economic relationship between the hedged item and the hedging instrument;? the effect of credit risk does not dominate the value changes that result from that economic relationship;? the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged
item that the entity actually hedges and the quantity of the hedging instrument that the entity actuallyuses to hedge that quantity of hedged item.
On the commencement date of the accounting hedge, the Group formally documents the relationship between thehedging instrument and hedged item, including the Group’s risk management objectives and strategy in executingthe hedge transaction, together with the methods that will be used by the Group to assess the effectiveness of thehedging 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.
Measurement of derivative financial instruments
Derivative financial instruments are recognized initially at fair value; attributable transaction costs arerecognized in profit or loss as incurred.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 90 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.1 Hedging (cont’d)
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 or investment income.
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 or investment income.
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.
- 91 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Other significant accounting policies and accounting estimates - (cont’d)
28.3 Segment reporting - (cont’d)
Two or more operating segments may be aggregated into a single operating segment if the segments havesimilar economic characteristics and are same or similar in respect of the nature of each product and service,the nature of production processes, the type or class of customers for the products and services, the methodsused to distribute the products or provide the services, and the nature of the regulatory environment.
Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segmentreporting. Segment accounting policies are consistent with those for the consolidated financial statements.
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
The contents and reasons for the changes of accounting policies
management
Process forapproval
| approval |
The Group began to adopt revised Accounting Standards for Business Enterprises 21 Leases
revised accounting policies for leases are presents in Note III.27
For existing contracts at the initial application date, the Group elects not tore-assess whether they are, or contain leases. Contracts that are signed or modified after the dateof initial application, the Group assess whether they are, or contain leases, according to thedefinition of lease in the new lease standards.
The Group adjusts all relevant financial accounts at the initial application date, for the accumulatedimpact from the new lease standards, with no retrospective adjustments for comparative numbers.The Group elected to apply the transitional provision of recognizing a right-of-use asset at thesame amount of the lease liability, adjusted for any prepaid or accrued lease payments that wererecognized as an asset or liability before the date of initial application, and therefore, the
(“New lease standard”), promulgated by Ministry of Finance in 2018, from January 1, 2019. Theimplementation of the standard does not affect retained earnings balance at the date of initial
application.
implementation of the standard does not affect retained earnings balance at the date of initial
The accountingpolicy changewas approvedby the board ofdirectorsmeeting in
28.4.2019
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 92 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
29. Changes in significant accounting policies and accounting estimates - (cont’d)
29.1 Changes in significant accounting policies - (cont’d)
The contents and reasons for the changes of accounting policies
Process formanagement
| approval |
For operating leases before the initial application date, the Group adopts the simplifyingapproaches below for each lease:
- When determining lease liabilities, the same discount rate will be used for leases with similar
characteristics;- For leases with options to extend or terminate, the Group determines the lease term based onthe actual exercise of options before the initial application date and other most updatedinformation;- As a substitute of impairment test for right-of-use assets, the Group applies ASBE13
Contingencies, to assess if the contract containing a lease is a loss contract and adjust the
right of-use assets based on the loss incurred at the initial application date.- For lease modifications before the initial application date, the Group makes accounting
treatments based on the final lease arrangements after the lease modification.
On January 1, 2019, as a result of the implementation of the standard, the lease liabilities increasedby 506,862 thousands RMB, and right-of-
leases before the initial application date, the Group measures the lease liability at the present valueof the lease payments, with the incremental borrowing rate as the discount rate. The borrowingrates are between 1.9% to 6.1%.
In preparation of 2019 interim financial report, the Group began to adopt the Notice on Revisingthe Format of 2019 Financial Statements for General Enterprises
use assets by 506,862 thousands RMB. For operating(CaiKuai [2019] No.6,
hereinafter “CaiKuai No.6”) promulgated by Ministry of Finance on April 30, 2019. CaiKuai No.6revised accounts in balance sheets, income statements, statements of cash flows and statements ofchanges in shareholders’ equity, including:
- “Notes and accounts receivable” is split into “Notes receivable” and “Accounts receivable”;- “Notes and accounts payable” is split into “Notes payable” and “Accounts payable”;- Newly added “Receivables financing” and “Special reserve”;- Make clear or revise the contents presented within the accounts of “Other receivables”, “Non-
current assets due within one year”, “Other payables”, “Deferred income”, “Other equityinstruments”, “Research and Development expenses”, “Interest income” and “Interestexpenses” as subitems of “Finance expenses”, “Other income”, “Non-operating income”,“Non-operating expenses”, and “Capital injected by holders of other equity instruments”.- Added disclosure requirements for provision of loss allowance, for loan commitments andfinancial guarantee contracts;- Added “Gain from derecognition of financial assets at amortized cost” as a subitem of“Investment income”;- Adjusted the sequence of some items within the income statements;- Make clear of the items in the cash flow statements, for the cash flows related to governmentgrants.The above modifications were retrospectively adjusted for comparative numbers. There is nosignificant impact to the Company’s financial statements from implementation Caikuai No.6.
The accountingpolicy changewas approvedby the board ofdirectorsmeeting in
21.8.2019
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 93 -
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
29. Changes in significant accounting policies and accounting estimates - (cont’d)
29.1 Changes in significant accounting policies - (cont’d)
Summary of impacts to assets and liabilities from adoption of new lease standard, as at January 1, 2019:
Items
December 31,2018
Impact fromadoption of newleases standard
January 1,2019Fixed assets
7,263,866
(6,917)
7,256,949
Right-of-use assets N/A
513,780
513,780
Total non-current assets 18,899,599
506,863
19,406,462
Total assets 44,135,063
506,863
44,641,926
Non-current liabilities due within one year
301,814
120,584
422,398
Other payables 1,197,579
(4,327)
1,193,252
Total current liabilities 12,134,847
116,257
12,251,104
Lease liabilities N/A
390,606
390,606
Total non-current liabilities 9,255,354
390,606
9,645,960
Total liabilities 21,390,201
506,863
21,897,064
29.2 Changes in significant accounting estimates
There are no significant changes in accounting estimates in the reporting period.
- 94 -
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 Impairment 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 95 -
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 recoverableamount of 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 amount ofdeferred tax assets, the Group makes reasonable judgements and estimates about the timing and amount oftaxable 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.
- 96 -
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 assessment ofthe 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.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 97 -
IV. Taxation
1. Main types of taxes and corresponding tax rates:
The income tax rate in China is 25% (2018: 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
2019
ADAMA agriculture solutions Ltd.
Israel
23.0%
ADAMA Makhteshim Ltd.
Israel
7.5%
ADAMA Agan Ltd.
Israel
16.0%
ADAMA Brasil S/A
Brazil
34.0%
Makhteshim Agan of North America Inc.
U.S.
24.7%
ADAMA India Private Ltd
India
34.9%
ADAMA Deutschland GmbH
Germany
32.5%
Control Solutions Inc.
U.S.
24.0%
Adama Australia Pty Ltd
Australia
30.0%
ADAMA France S.A.S
France
30.5%
ADAMA Northern Europe B.V.
Netherlands
25.0%
ADAMA Italia S.R.L.
Italy
27.9%
Alligare Inc.
U.S.
27.5%
The VAT rate of the Group's subsidiaries is in the range between 2.5% to 27%.
- 98 -
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(1) Benefits from Hi-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, Hubei Provincial Office of the StateAdministration of Taxation and Hubei Local Taxation Bureau, and the applicable income tax rate from 2017to 2019 is 15%.
(2) Benefits under the Law for the Encouragement of Capital Investments
Industrial enterprises of subsidiaries in Israel are preferred enterprise under the Israeli Law for theEncouragement of Capital Investments, 1959, according to which preferred enterprise in Development AreaA, will be subject to tax rate of 7.5%, the tax rate applicable to preferred enterprises located in other areas is16%.
Should a dividend be distributed from the historic tax-exempt income, the subsidiaries will be liable for taxon the income from which the dividend was distributed at a rate of 25%. No tax shall apply to dividenddistributed out of preferred income to shareholder who is Israel resident company. On dividend distributedout of preferred income to foreign shareholder subject to double taxation treaties, tax of 20% shall apply.
(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 Adama Agan) and amortization of know-how over 8 years.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 99 -
V. Notes to the consolidated financial statements
1. Cash at Bank and On Hand
June 30 December 31
2019 2018 (Restated)
| Cash on | hand | 7,770 | 1,380 | ||||||||||||||||||
| Deposits in banks | 5,374,050 | 6,344,816 | |||||||||||||||||||
Other cash and bank43,572 53,994
5,425,392 6,400,190
| Including cash and bank placed outside China |
| 2,862,309 |
| 3,873,638 |
As at June 30, 2019, restricted cash and bank balances was 43,572 thousand RMB (as at December 31, 2018-53,994 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Financial assets held for trading
June 30 December 31
2019 2018 (Restated)
| Debt instruments | 15,365 | 22,108 | ||||||||||||
| Other | ||||||||||||||
17,709 23,987
33,074 46,095
3. Derivative financial assets
June 30 December 31
2019 2018 (Restated)
| Economic hedge | 392,098 | 389,068 |
Accounting hedge derivatives24,893 128,658
416,991 517,726
4. Bills Receivable
June 30 December 31
2019 2018 (Restated)
| Post | - | dated checks receivable | 20,597 | 31,935 |
| Bank acceptance draft |
34,105 8,634
54,702 40,569
All bills receivables are due within 1 year.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 100 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable
a. By category
June 30, 2019
Book value
Provision for bad anddoubtful debts
Amount
Percentage (%)
Amount
Percentage (%)
Carrying
amount
Account receivables assessed
| individually for impairment | 510,505 | 6 | 350,809 | 69 | 159,696 |
Account receivables assessed
| collectively for impairment |
7,597,460
82,775
7,514,685
8,107,965
433,584
7,674,381
December 31, 2018 (Restated)
Book value
Provision for bad anddoubtful debts
Amount
Percentage (%)
Amount
Percentage (%)
Carrying
amount
Account receivables assessed
| individually for impairment | 458,217 | 7 | 335,873 | 73 | 122,343 |
Account receivables assessed
| collectively for | impairment |
6,548,131
97,375
6,450,757
7,006,348
433,248
6,573,100
b. Aging analysis
June 30, 2019
| Within 1 year (inclusive) | 7,672,012 | ||||||||
| Over 1 year but within 2 years | 139,094 | ||||||||
| Over 2 years but within 3 years | 58,648 | ||||||||
| Over 3 years but within 4 | years | 82,014 | |||||||
| Over 4 years but within 5 years | 36,023 | ||||||||
Over 5 years120,174
8,107,965
- 101 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
c. Addition, written-back and written-off of provision for bad and doubtful debts during the period
Addition of provision for bad and doubtful debts during the period
Lifetime expected credit
loss (credit losses hasnot occurred)
Lifetime expected
| Lifetime expected credit | ||
| credit loss (credit losses |
has occurred) Total
| January 1, 2019 | 52,575 | 380,673 | 433,248 | ||||||||||||||||||||||||||
| First time consolidation | - | 2,131 | 2,131 | ||||||||||||||||||||||||||
| Addition during the period, net | - | 30,763 | 30,763 | ||||||||||||||||||||||||||
| W | rite back during the period | (16,379) | (17,740) | (34,119) | |||||||||||||||||||||||||
| Write | - | off during the period | - | (2,749) | (2,749) | ||||||||||||||||||||||||
| Exchange | rate effect | ||||||||||||||||||||||||||||
4,258
4,310
Balance as of June 30, 2019
| Balance as of June 30, 2019 |
36,248
397,336
433,584
d. Five largest accounts receivable at June 30, 2019:
Name Closing balance
Proportion of Accountsreceivable (%)
Allowance of doubtful
debts
Party 1
| Party 1 | 136,339 | 2 | - | |||||||||
| Party 2 | 105,107 | 1 | - | |||||||||
| Party 3 | 94,513 | 1 | - | |||||||||
| Party 4 | 88,099 | 1 | - | |||||||||
Party 584,387
-
Total508,445
-
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 SecuritizationTransaction”).
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 a U.S. company, Nieuw Amsterdam Receivables Corporation for the RabobankInternational Group.
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 the date ofthe report, the Securitization Agreement was approved up to July 16, 2019. Subsequent to the report date,the Securitization Agreement was extended up to July 16, 2020.
- 102 -
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, 2019 - 2,406 million RMB), during the months July through September themaximum scope of the securitization is $300 million (as of June 30, 2019 - 2,062 million RMB) and duringthe months October through February the maximum scope of the securitization is $250 million (as of June30, 2019 - 1,719 million RMB). The proceeds received from those customers whose debts were sold are usedfor acquisition of new trade receivables.
The price at which the trade receivables debts are sold is the amount of the debt sold less a discount calculatedbased on, among other things, the expected length of the period between the date of sale of the 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 that is paidafter collection of the debt sold. If the customer does not pay its debt on the anticipated repayment date, theCompany bears interest up to the earlier of the date on which the debt is actually repaid or the date on whichdebt collection is transferred to the insurance company (the actual costs are not significant and are notexpected 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, 2019, 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.
The continuing involvement and subordinated note recorded in the balance sheet as part of the “otherreceivables” line item.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 103 -
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The loss from sale of the trade receivables is recorded at the time of sale in the statement of income in the“financing expenses” line item.
In the fourth quarter of 2016, a subsidiary in Brazil (hereinafter - “the subsidiary”) entered into a 3 yearssecuritization transaction with Rabobank Brazil for sale of trade receivables. Under the agreement, thesubsidiary will sell its trade receivables to a securitization structure (hereinafter - “the entity”) that wasformed for this purpose where the subsidiary has subordinate rights of 5% of the entity's capital.
The maximum securitization scope amounts to BRL 200 million (as of June 30, 2019 - 359 million RMB).
On the date of the sale of the trade receivables, the entity pays the full amount which is the debt amount soldnet of discount calculated, among others, over the expected length of the period between the date of sale ofthe customer receivable and its anticipated repayment date.
The entity bears 90% of the credit risk in respect of the customers whose debts were sold such that the entityhas the right of recourse of 10% of the unpaid amount. The subsidiary should make a pledged deposit equalto the amount the entity’s right of recourse.
The subsidiary handles the collection of receivables included in the securitization for the entity.
The subsidiary does not control the entity and therefore the entity is not consolidated in the group's financialstatements.
The subsidiary continues to recognize the trade receivables sold to the entity based on the extent of itscontinuing involvement therein (10% right of recourse) and also recognizes an associated liability in thesame amount.
The loss from the sale of the trade receivables is recorded at the time of sale in the statement of income inthe “financing expenses” category.
June 30
December 31
2019
2018 (Restated)
| Accounts | receivables derecognized | 2,527,285 | 2,541,443 | ||||||||||||||
| Continuing involvement | 112,986 | 129,893 | |||||||||||||||
| Subordinated note in respect of trade receivables | 343,027 | 622,362 | |||||||||||||||
| Liability in respect of trade receivables | 249,332 | 35,572 | |||||||||||||||
Six months ended June 30
2019
2018
| Loss | in respect of sale of trade receivables | 33,129 | 32,186 | |||||||
- 104 -
V. Notes to the consolidated financial statements – (cont'd)
6. Receivables financing
June 30 December 31
2019 2018 (Restated)
| Bank acceptance draft |
68,629 73,216
68,629 73,216
As at June 30, 2019, bank acceptance endorsed but not yet due amounts to 381,812 thousands RMB.
7. Prepayments
(1) The aging analysis of prepayments is as follows:
June 30 December 31 2018
2019 (Restated)
Amount
Percentage(%)
Amount
Percentage(%)
| Within 1 year (inclusive) | 312,411 | 98 | 401,674 | 98 | |||||||||||||||||||
| Over 1 year but within 2 years (inclusive) | 2,969 | 1 | 3,810 | 1 | |||||||||||||||||||
| Over 2 years but within 3 years (inclusive) | 984 | - | 1,840 | - | |||||||||||||||||||
3,107
| Over 3 years |
3,182
319,471
410,506
(2) Total of five largest prepayments by debtor at the end of the period:
Amount
Percentage of prepayments (%)
| June 30, 2019 |
111,119
- 105 -
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables
(1) Other receivables by nature
June 30
| December 31 |
2019
2018 (Restated)
| Dividends receivable | - | 5,245 |
Others929,945
1,074,087
929,945
1,079,332
a. Other receivables by categories
June 30
December 31
2019
2018 (Restated)
| Trade receivables as part of securitization transactions | ||||||||||||||||||
| not yet eliminated | 112,986 | 129,893 | ||||||||||||||||
| Subordinated note in respect of trade receivables | 343,027 | 622,362 | ||||||||||||||||
| Financial institutions | 61,522 | 98,837 | ||||||||||||||||
| Receivables in respect of disposal of fixed assets | 145,861 | 28,551 | ||||||||||||||||
| Other | ||||||||||||||||||
281,381
214,512
| Sub total | 944,777 | 1,094,155 | ||||||||||||
| Provision | for doubtful debts | - | other receivables | (14,832) | (14,823) | |||||||||
929,945
1,079,332
b. Other receivables by aging
June 30
2019
| Within 1 year (inclusive) | 907,590 | |||||||||
| Over 1 year but within 2 years | 5,630 | |||||||||
| Over 2 years but within 3 years | 6,648 | |||||||||
| Over 3 years but | within 4 years | 17,797 | ||||||||
| Over 4 years but within 5 years | 28 | |||||||||
Over 5 years7,084
944,777
- 106 -
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables - (cont'd)
(2) Additions, recovery or reversal and written-off of provision for bad and doubtful debts during the
period:
| Six months ended | |||||||||||||||
| June 30, 2019 | |||||||||||||||
| Balance as of January 1 2019, | 14,823 | ||||||||||||||
| Addition during the period | 9 | ||||||||||||||
| Written back during the period | - | ||||||||||||||
| Write | - | off during the period | |||||||||||||
-
Balance as of June 30, 2019
| Balance as of June 30, 2019 | 14,832 |
(3) Five largest other receivables at June 30 2019:
Name
Closingbalance
Proportion of otherreceivables (%)
Allowance ofdoubtful debts
| Party 1 | 343,027 | 36 | - | ||||||||||
| Party 2 | 135,308 | 14 | - | ||||||||||
| Party 3 | 61,522 | 7 | - | ||||||||||
| Party 4 | 24,103 | 3 | - | ||||||||||
Party 521,407
-
Total585,367
-
9. Inventories
(1) Inventories by category:
| June 30, 2019 | |||
Book value
impairment Carrying amount
Provision for
| Raw materials | 3,170,206 | 17,952 | 3,152,254 | ||||||||||||||||||||
| Work in progress | 499,233 | 4,160 | 495,073 | ||||||||||||||||||||
| Finished | goods | 6,554,951 | 152,794 | 6,402,157 | |||||||||||||||||||
| Others | 297,983 | 9,543 | 288,440 | ||||||||||||||||||||
| 10,522,373 | 184,449 | 10,337,924 | |||||||||||||||||||||
December 31, 2018
Book value
impairment Carrying amount
| Provision for | ||||||||||||||||||||||||||||
| Raw materials | 3,321,193 | 20,232 | 3,300,961 | |||||||||||||||||||||||||
| Work in progress | 577,964 | 1,576 | 576,388 | |||||||||||||||||||||||||
| Finished goods | 5,452,653 | 158,053 | 5,294,600 | |||||||||||||||||||||||||
| Others | 272,441 | 10,514 | 261,927 | |||||||||||||||||||||||||
| 9,624,251 | 190,375 | 9,433,876 | ||||||||||||||||||||||||||
- 107 -
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, 2019
January 1, 2019
Provision
write-off
| Reversal or | |
Other*
June 30, 2019
| Raw material | 20,232 | 4,329 | (4,994) | (1,615) | 17,952 | ||||||||||||||||||||||||||||||
| Work in progress | 1,576 | - | (16) | 2,600 | 4,160 | ||||||||||||||||||||||||||||||
| Finished goods | 158,053 | 29,577 | (43,680) | 8,844 | 152,794 | ||||||||||||||||||||||||||||||
| Others | 10,514 | 447 | (450) | (968) | 9,543 | ||||||||||||||||||||||||||||||
| 190,37 | 5 | 34,353 | (49,140) | 8,861 | 184,449 | ||||||||||||||||||||||||||||||
* Includes amount of 8,766 RMB related to first time consolidation.
10. Other Current Assets
June 30
December 31
2019
2018 (Restated)
| Deductible VAT | 476,327 | 476,706 | ||||||||
| Current tax assets | 199,690 | 142,412 | ||||||||
| Others |
39,750
41,688
715,767
660,806
11. Long-Term Receivables
June 30
December 31
2019
2018 (Restated)
| Long term account receivables from sale of goods | 174,246 | 157,600 | |||||||
174,246 157,600
- 108 -
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 |
2019
2018 (Restated)
| Investments in joint ventures | 95,258 | 68,584 |
| Investments in associates |
39,817
39,766
135,075
108,350
(2) Movements of long-term equity investments for the period are as follows:
13. Other equity investments
June 30
2019
December 31
2018 (Restated)
| Company A | ||||||
| 85,493 | 79,554 | |||||
| Company B |
| - | 9,574 | |||||
| Company C |
| 1,709 | 1,709 | |||||
| Company D |
| 564 | 564 | |||||
| Other |
| 46 | 158 |
87,812
91,559
Other equity investments are non-core businesses that are intended to be held in the foreseeable future. For thesix months period ended at June 30, 2019 the company did not recognize dividend income from other equityinvestments.
January 1 2019
Investmentincome(loss)
Translationdifferences offoreign operations
Other
Balance at the end of
the period
| Joint ventures | |||||||||||||||||||||||||||
| Company A | 62,696 | 11,462 | (81) | 4,344 | 78,421 | ||||||||||||||||||||||
| Company B | 4,598 | 440 | 15 | - | 5,053 | ||||||||||||||||||||||
| Company C | 1,290 | - | 23 | 1,313 | |||||||||||||||||||||||
Company D -
9,838
10,471
Sub-total 68,584
21,740
4,776
95,258
Associates
Company E 39,766
(16)
-
39,817
| Sub total Sub |
-total 39,766
(16)
-
39,817
108,350
21,724
4,776
135,075
- 109 -
V. Notes to the consolidated financial statements – (cont'd)
14. Fixed assets
Land &
Buildings
Machinery &equipment
Motor vehicles
Office & otherequipment
Total
| Cost | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as at January 1, 2019 | 3, | 225 | , | 214 | 13, | 689 | , | 164 | 101,078 | 321,424 | 17, | 336 | , | 880 | |||||||||||||||||||||||||||||||||||||
| Purchases | 16,709 | 96,525 | 14,652 | 20,861 | 148,747 | ||||||||||||||||||||||||||||||||||||||||||||||
| Transfer from construction in progress | 4 | 895 | 145,033 | 27 | 1,295 | 151, | 250 | ||||||||||||||||||||||||||||||||||||||||||||
| Disposals | 62 | 726 | (2,735) | (4,885) | (6,686) | (77, | 032 | ||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | 5, | 187 | 21,84 | 3 | 513 | 767 | 28, | 310 | |||||||||||||||||||||||||||||||||||||||||||
| First time consolidation | |||||||||||||||||||||||||||||||||||||||||||||||||||
85,831
39,307
1,956
127,190
Balance as at June 30, 2019
| Balance as at June 30, 2019 |
3,275,110
13,989,137
111,481
339,617
17,715,345
| Accumulated depreciation | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as at January 1, 2019 | (1, | 476 | , | 951 | (7,96 | 1 | 572 | (51,531) | (242,697) | (9, | 732 | , | 751 | ||||||||||||||||||||||||||||||||||||||
| Charge for the period | (76, | 064 | ( | 313, | 835 | (7,905) | (15,837) | (413, | 641 | ||||||||||||||||||||||||||||||||||||||||||
| Disposals | 11, | 106 | 2,261 | 4,233 | 6,584 | 24, | 184 | ||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | (2, | 371 | (13,34 | 6 | (208) | (658) | (16, | 583 | |||||||||||||||||||||||||||||||||||||||||||
| First time consolidation | |||||||||||||||||||||||||||||||||||||||||||||||||||
(39,354)
(29,094)
(96)
(1,956)
(70,500)
Balance as at June 30, 2019
| Balance as at June 30, 2019 |
(1,583,634)
(8,315,586)
(55,507)
(254,564)
(10,209,291)
| Provision for impairment | ||||||||||||||||||||||||||||||||
| Balance as at January 1, 2019 | (68,702) | ( | 278,223 | (8) | (247) | ( | 347,180 | |||||||||||||||||||||||||
| Disposals | 8,204 | - | - | 8,204 | ||||||||||||||||||||||||||||
| Currency translation adjustment | ||||||||||||||||||||||||||||||||
(131)
-
-
(46)
| Balance as at June 30, 2019 |
(60,413)
(278,354)
(8)
(247)
(399,022)
Carrying amounts
| As at June 30, 201 | 9 |
1,631,063
5,395,197
55,966
84,806
7,167,032
As at
| As at | January 1, 2019 |
1,679,561
5,449,369
49,539
78,480
7,256,949
The lands reported as fixed assets are owned by the group subsidiaries and are located outside of China.
- 110 -
V. Notes to the consolidated financial statements - (cont'd)
15. Construction in Progress
(1) Construction in progress
June 30 December 312019 2018 (Restated)Book value
Provision forimpairment Carrying amount
Book value
Provision forimpairment Carrying amount
534,351
-
534,351
487,204
-
487,204
(2) Details and Movements of major construction projects in progress during the six months ended
June 30, 2019
Budget
January
| 1, 2019 |
Additions
Currencytranslationdifferences
Transfer
to fixed
assets
June 30,2019
Actual cost
to budget
(%)
Projectprogress
(%)
Source of
funds
| Project A | 1,509,420 | 120,412 | 50,039 | - | - | 170,451 | 11 | 11 | ||||||||||||||||||||||||||||||||||||||
| Internal finance | ||||||||||||||||||||||||||||||||||||||||||||||
| Project B | 505,643 | 1,220 | 5,009 | 6,229 | 1 | 1 | ||||||||||||||||||||||||||||||||||||||||
| Internal finance | ||||||||||||||||||||||||||||||||||||||||||||||
| Project C | 157,951 | 58,177 | 1,095 | (947) | 58,325 | 37 | 37 | |||||||||||||||||||||||||||||||||||||||
| Internal finance | ||||||||||||||||||||||||||||||||||||||||||||||
| Project D | 79,747 | 42,476 | 947 | 84 | 43,507 | 55 | 55 | |||||||||||||||||||||||||||||||||||||||
| Internal finance | ||||||||||||||||||||||||||||||||||||||||||||||
| Project | E | 45,373 | 2,457 | 2,821 | 43 | 5,321 | 12 | 12 | ||||||||||||||||||||||||||||||||||||||
| Internal finance | ||||||||||||||||||||||||||||||||||||||||||||||
| Project F | 44,760 | 13,818 | 6,178 | 19,996 | 45 | 45 | ||||||||||||||||||||||||||||||||||||||||
| Internal finance | ||||||||||||||||||||||||||||||||||||||||||||||
| Project G | 34,374 | 31,358 | 800 | (378) | (31,780) | 94 | 100 | |||||||||||||||||||||||||||||||||||||||
| Internal finance | ||||||||||||||||||||||||||||||||||||||||||||||
| Project H | 27,800 | 16,593 | 3,512 | 20,105 | 72 | 72 | ||||||||||||||||||||||||||||||||||||||||
| Internal finance | ||||||||||||||||||||||||||||||||||||||||||||||
16. Right-of-use assets
Land &
Buildings
Machinery &
equipment
Motor vehicles
Office & other
equipment
Total
Cost
| Balance as at January 1, 2019 | 353,708 | 43,058 | 118,378 | 2,795 | 517,939 | ||||||||||||||||||||||
| Additions | 82,350 | - | 36,857 | 68 | 119,275 | ||||||||||||||||||||||
| Disposals | (2,071) | (94) | (5,412) | - | (7,577) | ||||||||||||||||||||||
| Currency translation adjustment |
1,784
Balance as at June 30, 2019
| Balance as at June 30, 2019 |
434,943
43,034
150,577
2,867
631,421
| Accumulated depreciation | ||||||||||||||||||||||||||||||||||
| Balance as at January 1, 2019 | (3,198) | (961) | - | - | (4,159) | |||||||||||||||||||||||||||||
| Charge for the period | (37,434) | (1,087) | (36,418) | (590) | (75,529) | |||||||||||||||||||||||||||||
| Disposals | 705 | 75 | 2,862 | 3,642 | ||||||||||||||||||||||||||||||
| Currency translation adjustment | ||||||||||||||||||||||||||||||||||
(492)
(16)
(487)
(8)
(1,003)
Balance as at June 30, 2019
| Balance as at June 30, 2019 |
(40,419)
(1,989)
(34,043)
(598)
(77,049)
| Provision for | impairment | |||||||||||||
| Balance as at January 1, 2019 | ||||||||||||||
-
-
-
-
-
Balance as at June 30, 2019
| Balance as at June 30, 2019 |
-
-
-
-
-
Carrying amounts
As at June 30, 2019
394,524
41,045
116,534
2,269
554,372
As at January 1, 201
| As at January 1, 201 | 9 |
350,510
42,097
118,378
2,795
513,780
ADAMA LTD.(Expressed in RMB '000)Notes to the Financial Statements
- 111 -
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.
Productregistration
Intangible assetson Purchase ofProducts Software
Tradename and
trademarks
Customersrelations Land use rights
(1)
Others
(2)
Total
Costs
Balance as at
January 1, 2019
| January 1, 2019 | 9,721,455 | 4,121,559 | 648,478 | 460,640 | 192,177 | 346,967 | 307,692 | 15, | 798,968 | ||||||||||||||||||||||||||||||||||||
| Purchases | 217,375 | 36,655 | 3,322 | 257,352 | |||||||||||||||||||||||||||||||||||||||||
| Currency | translation adjustment | 20,1 | 56 | 6,906 | 1,586 | 1,547 | 816 | 41 | 598 | 31, | 650 | ||||||||||||||||||||||||||||||||||
| Disposal | (1,593) | (366) | (1,959) | ||||||||||||||||||||||||||||||||||||||||||
First time consolidation 8,057
-
4,248
260,390
200,392
-
-
473,087
Balance as at June 30, 20199,967,043
4,128,465
689,374
722,211
393,385
347,008
311,612
16,559,098
| Accumulated amortization | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as at January 1, 2019 | (6,864,532) | (1,863,482) | (439,696) | (406,082) | (159,323) | (58,211) | (125,596) | (9, | 916,922 | ||||||||||||||||||||||||||||||||||||||||||||
| Charge for the period | (387,491) | (200,553) | (30,623) | (10,766) | (16,933) | (3,750) | (19,903) | (670,019) | |||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | (17,326) | (5,910) | (1,186) | (917) | (638) | (19) | (548) | (26,544) | |||||||||||||||||||||||||||||||||||||||||||||
| Disposal | 1,593 | 292 | 1,885 | ||||||||||||||||||||||||||||||||||||||||||||||||||
First time consolidation -
-
(4,248)
-
-
-
-
(4,248)
Balance as at June 30, 2019(7,269,349)
(2,069,945)
(474,160)
(417,473)
(176,894)
(61,980)
(146,047)
(10,615,848)
| Provision for impairment | ||||||||||||||||||||||||||||||||
| Balance as at January 1, 2019 | (84,026) | (51,337) | - | - | (4,721) | (140,084) | ||||||||||||||||||||||||||
| Charge for the period | - | |||||||||||||||||||||||||||||||
| Currency translation | adjustment | (148) | (86) | (234) | ||||||||||||||||||||||||||||
| Disposal |
-
-
-
-
-
-
-
-
Balance as at June 30, 2019 (84,174)
(51,423)
-
-
-
-
(4,721)
(140,318)
| Carrying amount | ||||||||||||||||||
As at June 30, 20192,613,520
2,007,097
215,214
304,738
216,491
285,028
160,844
5,802,932
As at January 1, 20192,772,897
2,206,740
208,782
54,558
32,854
288,756
177,375
5,741,962
- 112 -
V. Notes to the consolidated financial statements - (cont'd)
18. Goodwill
Changes in goodwill
The Group identified two cash generating units ("CGU"), Crop Protection (Agro) and Other (Non Agro) units.Operations are allocated into either one of the two cash generating units according to their business.
At the end of the year, or more frequently whether indicators for impairment exists, the Group estimates therecoverable amount of Agro and Non Agro units, which are the cash generating units of the Group that containgoodwill.
For the purpose of evaluating the groups Goodwill, the Group used a comparable trading multiple analysis in orderto benchmark each of its CGU’s valuation against that of the markets peer companies.
As of December 31, 2018 the fair value of the cash generating units to which the goodwill relates exceeds itscarrying amount.
As at the reporting period, there were no indicators for impairment.
January 1,2019 Additions
Currencytranslationadjustment
Balance atJune 30, 2019
| Book value | ||||||||||
| 4,085,945 | 205,615 | 7,187 | 4,298,747 |
| Impairment provision |
-
-
-
-
| Carrying amount |
4,085,945
205,615
7,187
4,298,747
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
2019 2018 (Restated)
Deductible
temporary
| Deductible | |
differences
Deferred tax
assets
| Deferred tax | |
| Deductible |
| temporary |
differences
Deferred tax
assets
| Deferred tax | |
Deferred tax assets
Deferred tax assets in respect of
| carry forward losses | 513,109 | 81,116 | 576,498 | 82,516 |
Deferred tax assets in respect of
| inventories | 1,610,875 | 437,698 | 1,651,046 | 442,237 |
Deferred tax assets in respect of
| employee benefits | 774,387 | 102,548 | 660,472 | 101,026 | |||||||||||
| Other deferred tax asset | |||||||||||||||
1,531,144
385,821
1,236,811
340,984
4,429,515
1,007,183
4,124,827
966,763
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 113 -
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont’d)
(2) Deferred tax liabilities without taking into consideration of the offsetting of balances within thesame tax jurisdiction
June 30 December 31
2019 2018 (Restated)
| Taxable | |||
| temporary | |||
differences
Deferred tax
liabilities
| Deferred tax | |
| Taxable | |
| temporary | |
differences
Deferred
tax
liabilities
| tax | |||||||||||
| Deferred tax liabilities | |||||||||||
Deferred tax liabilities in respect of
| fixed assets and intangible assets |
3,687,112
589,990
3,886,541
617,430
3,687,112
589,990
3,886,541
617,430
(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting
June 30 December 31
2019 2018 (Restated)
The offsetamount ofdeferred taxassets andliabilities
Deferred taxassets orliabilities after
offset
The offset amount
of deferred taxassets and
liabilities
Deferred tax assetsor liabilities after
offset
| Presented as: | ||||||||||
| Deferred tax assets |
239,255
767,928
225,026
741,737
| Deferred tax liabilities |
239,255
350,735
225,026
392,404
(4) Details of unrecognized deferred tax assets
June 30
December 31
2019
2018 (Restated)
| Deductible temporary differences | 83,488 | 82,886 | |||||||||||
| Deductible losses | carry forward |
165,813
162,186
249,301
245,072
(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets
June 30
December 31
2019
2018 (Restated)
| 2019 | - | - | |||||||||||||||||
| 2020 | 15,936 | 15,909 | |||||||||||||||||
| 2021 | 13,541 | 13,537 | |||||||||||||||||
| 2022 | 1,382 | 1,380 | |||||||||||||||||
| After 2022 | |||||||||||||||||||
134,954
131,360
165,813
162,186
- 114 -
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
| 2019 | 2018 (Restated) | ||||||||||||||||||||||||||||
| Asset related to securitization deposit | 66,960 | 62,395 | |||||||||||||||||||||||||||
| Advances in respect of non | - | current assets | 94,027 | 55,282 | |||||||||||||||||||||||||
| Judicial deposits | 59,597 | 51,906 | |||||||||||||||||||||||||||
| Call option in respect of business combination | 15,097 | 11,880 | |||||||||||||||||||||||||||
| Long term loan | - | 48 | |||||||||||||||||||||||||||
| Others | |||||||||||||||||||||||||||||
71,704
35,819
| Sub total |
307,385
217,330
| Due within one year | ||||||||
-
(48)
307,385
217,282
21. Short-Term Loans
Short-term loans by category:
June 30
December 31
2019
2018 (Restated)
| Guaranteed loans | 589,000 | 570,000 | |||||||||
| Unsecured loans | |||||||||||
1,719,286
552,774
2,308,286
1,122,774
Details of the guarantees are set out in note X.5(3) Related parties and related party transactions.
22. Derivative financial liabilities
June 30
December 31
2019
2018 (Restated)
| Economic hedge | 604,265 | 1,430,497 | |||||||
Accounting hedge derivatives 84,002
21,173
688,267
1,451,670
- 115 -
V. Notes to the consolidated financial statements - (cont'd)
23. Bills Payables
June 30
December 31
2019
2018 (Restated)
| Post | - | dated checks payables | 224,438 | 235,833 | ||||||||
| Note payables draft | ||||||||||||
151,339
209,700
375,777
445,533
As at June 30, 2019, none of the bills payable are overdue.
24. Accounts payables
June 30
| December 31 |
2019
2018 (Restated)
| Within 1 year (including 1 year) | 4,143,156 | 4,587,719 | |||||||||||
| 1 | - | 2 years (including 2 years) | 13,705 | 12,545 | |||||||||
| 2 | - | 3 years (including 3 years) | 12,087 | 16,749 | |||||||||
Over 3 years9,720
10,923
4,178,668
4,627,936
There are no significant accounts payables ageing over one year.
25. Contract liabilities
June 30
December 31
2019
2018 (Restated)
| Rebates | 717,368 | 525,982 | ||||||
Advances from customers200,379
322,420
917,747
848,402
26. Employee Benefits Payable
June 30
December 31
2019
2018 (Restated)
| Short | - | term employee benefits | ||||||
| 470,752 | 608,839 | ||||||||||||||||||
| Share based payment (See note XIII) | 79,24 | 9 | - | ||||||||||||||||
| Post | - | employment benefits | - | defined contribution plans | 21,511 | 18,050 | |||||||||||||
| Other benefits within one year | |||||||||||||||||||
308,237
277,191
| 879,749 | 904,080 | ||||||||
| Current maturities | |||||||||
32,605
40,095
912,354
944,175
- 116 -
V. Notes to the consolidated financial statements - (cont'd)
27. Taxes Payable
June 30
December 31
2019
2018 (Restated)
| Corporate income tax | 236,055 | 407,457 | |||||||||||
| VAT | 177,130 | 186,939 | |||||||||||
| Others | |||||||||||||
24,042
22,384
437,227
616,780
28. Other Payable
June 30
December 31
2019
2018 (Restated)
Dividends payable (See note 41)
| 238,066 | 750 |
Interest payable
| 53,458 | 46,258 |
Other payable1,679,117
1,150,571
1,970,641
1,197,579
(1) Interest payable
June 30
December 31
2019
2018 (Restated)
Accrued interest in respect of debenture
| 34,745 | 33,698 | |||||||
| Accrued interest in respect of bank loans | 11,199 | 2,430 | ||||||
Accrued interest in respect of other liabilities7,514
10,130
53,458
46,258
As at 30 June, 2019, the Group did not have any overdue interest.
(2) Other payable
June 30
December 31
2019
2018 (Restated)
| Accrued expenses | 631,540 | 640,507 | |||||||
Payables in respect of business combination under common
| control | 415,000 | - | |||||||||||||||||
| Liability in respect of | securitization transactions | 249,332 | 35,572 | ||||||||||||||||
| Payables in respect of intangible assets | 128,880 | 131,396 | |||||||||||||||||
| Financial institutions | 4,668 | 44,336 | |||||||||||||||||
| Other payables | |||||||||||||||||||
249,697
298,760
1,679,117
1,150,571
As at June 30, 2019, the Group did not have any significant overdue other payables.
- 117 -
V. Notes to the consolidated financial statements - (cont'd)
29. Non-Current Liabilities Due Within One Year
Non-current liabilities due within one year by category are as follows:
June 30
December 31
2019
2018 (Restated)
| Long | - | term loans due within one year | 282,110 | 301,629 | |||||||||
| Lease liabilities due within one year | 140,098 | - | |||||||||||
| Long | - | term payables due within one year |
-
422,208
301,814
30. Other Current Liabilities
June 30
December 31
2019
2018 (Restated)
| Put options to holders of non | - | controlling interests | 169,661 | 404,463 | |||||||||||||
| Provision in respect of returns | 161,899 | 149,686 | |||||||||||||||
| Provision in respect of claims | 12,175 | 23,644 | |||||||||||||||
| Others | |||||||||||||||||
344,127
578,184
- 118 -
V. Notes to the consolidated financial statements - (cont'd)
31. Long-Term Loans
Long-term loans by category
June 30 December 31 2018 (Restated)
2019
Interest range
2018
Interest range
Long term loans
Loan secured by tangible assets
| other than monetary assets | 529 | 5.5% | 741 | 5.5% | ||||||||||||||||
| Guaranteed loans | - | - | 72,000 | 4.5% | ||||||||||||||||
| Unsecured loans |
955,377
| 1.7% | - | 6.1% |
464,707
| 5.1% | - | 6.1% |
| Total Long term loans | 955,906 | 537,448 |
| Less: Long term loans due within 1 year |
(282,110)
(301,629)
| Long term loans, net |
673,796
235,819
For the maturity analysis, see note VIII (c)
The long-term loans were mortgaged by fixed assets with carrying amounts of 5,926 thousand RMB as at June30, 2019. Details of the guarantees are set out in note X(5) Related parties and related party transactions.
32. Debentures Payable
June 30
December 31
2019
2018 (Restated)
| Debentures Series B |
8,152,990
7,649,098
June 30
2019
| First year (current maturities) |
| - | ||||
| Second year |
| 479,588 | ||||||||
| Third year | 479,588 | |||||||
| Fourth year | ||||||||
| 479,588 |
Fifth year and thereafter
6,714,226
8,152,990
- 119 -
V. Notes to the consolidated financial statements - (cont'd)
32. Debentures Payable - (cont'd)
Movements of debentures payable:
For the six months ended June 30, 2019
Face value
in RMB
Face valueNIS
Issuance date
Maturity period
Issuance amount
Balance atJanuary 1,2019
Issuanceduring theperiod
Amortizationof discounts orpremium
CPI andexchange rateeffect
Repayment
during the
period
Currencytranslationadjustment
Balance atJune 30, 2019
| Debentures Series B | 2,673,640 | 1,650,000 | 4.12.2006 | November 2020 | 2036 |
3,043,742
3,471,674
| - | |||||
218,737
| - | ||||||
8,765
3,699,291
| Debentures Series B | 843,846 | 513,527 | 16.1.2012 | November 2020 | 2036 |
842,579
1,018,314
| - | |||||
4,972
64,547
| - | ||||||
2,632
1,090,465
Debentures Series B 995,516
600,000
7.1.2013
November 2020-2036
1,120,339
1,277,399
-
2,197
80,564
-
3,251
1,363,411
| Debentures Series B | 832,778 | 533,330 | 1.2.2015 | November 2020 | 2036 |
1,047,439
1,210,195
| - | |||||
)1,377(
76,338
| - | ||||||
3,032
1,288,188
| Debentures Series B | 418,172 | 266,665 | 1 | 6.2015 | November 2020 | 2036 |
556,941
671,516
-
)3,859(
42,337
-
1,641
711,635
7,649,098
-
2,048
482,523
-
19,321
8,152,990
Series B debentures issued by Solutions, in the amount of NIS 3,563.5 million par value, are linked to the Israeli CPI and bear interest at base annual rate of 5.15%. Thedebenture principal is to be repaid in 17 equal payments in the years 2020 through 2036.
- 120 -
V. Notes to the consolidated financial statements - (cont'd)
33. Lease liabilities
June 30
2019
Interest range
| Lease liabilities | |||||||||||
558,912
| 1.9% | - | 6.1% |
| Less: Lease liabilities due within one year |
(140,098)
| Long term lease liabilities, net |
418,814
34. Long-Term Employee Benefits Payable
Post-employment benefit plans – defined benefit plan and early retirement
June 30
December 31
2019
2018 (Restated)
| Total present value of obligation | 577,191 | 533,574 | ||||||
Less: fair value of plan's assets (93,585)
(87,492)
| Post | - | employment benefits | - | Net liability arising from defined benefit plan | 483,606 | 446,082 | |||||||||||
| Termination benefits | 92,186 | 104,781 | |||||||||||||||
| Share based payment (See note XIII) | 51,540 | 61,961 | |||||||||||||||
Other long-term employee benefits 49,722
47,917
| Total long | - | term employee benefits, net | 677,054 | 660,74 | 1 |
Including: Long-term employee benefits payable due within one year 32,605
40,095
644,449
620,646
(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 ofplan's assets Total 2019
2018
2019
2018
2019
2018
| Balance as at January 1, | 638,355 | 703,679 | 87,492 | 97,614 | 550,863 | 606,065 | ||||||||||||||||||
| Expense/income recognized | ||||||||||||||||||||||||
in profit and loss:
| Current service cost | 11,429 | 10,928 | - | - | 11,429 | 10,928 | ||||||||||||||||||||||||||||||||||
| Past service cost | - | (757) | - | (757) | ||||||||||||||||||||||||||||||||||||
| Interest costs | 10,931 | 10,078 | 1,749 | 1,490 | 9,182 | 8,588 | ||||||||||||||||||||||||||||||||||
| Changes in exchange rates | 22,709 | (26,394) | 4,265 | (4,783) | 18,444 | (21,611) | ||||||||||||||||||||||||||||||||||
| Actuarial gain (losses) due to early retirement | 707 | (366) | 707 | (366) | ||||||||||||||||||||||||||||||||||||
Included in other comprehensive
| income: |
Actuarial gain (losses) as a resultof changes in actuarial
| assumptions | 17,515 | (13,723) | 1,953 | (1,643) | 15,562 | (12,080) |
Foreign currency translationdifferences in respect of foreign
| operations | 1,359 | 6,242 | 350 | 925 | 1,009 | 5,317 | ||||||||||||||||||||||
| Additional movements: | ||||||||||||||||||||||||||||
| Benefits paid | (33,628) | (31,779) | (5,404) | (6,145) | (28,224) | (25,634) | ||||||||||||||||||||||
Contributions paid by the Group -
-
3,180
3,229
(3,180)
(3,229)
Balance as at June 30, 669,377
657,908
93,585
90,687
575,792
567,221
- 121 -
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
2019
2018 (Restated)
| Discount rate (%)* |
0.7%-3.5%
1.4%-3.5%
*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, 2019
Increase of 1%
Decrease of 1%
| Discount rate |
(44,360)
54,443
35. Provisions
June 30
| December 31 |
2019
2018 (Restated)
| Liabilities in respect of | contingencies* | 96,592 | 92,542 | |||||||
| Other | ||||||||||
39,332
39,809
135,924
132,351
* Liabilities in respect of contingencies includes obligations of pending litigations, where an outflow of
resources had been reliably estimated.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 122 -
V. Notes to the consolidated financial statements - (cont'd)
36. Other Non-Current Liabilities
June 30
December 31
2019
2018 (Restated)
| Put options to holders of | non | - | controlling interests | 189,782 | - | |||||||||||||||||
| Long term transactions in derivative | s | 8,428 | 14 | |||||||||||||||||||
| Deferred income | 2,276 | 28,146 | ||||||||||||||||||||
| Long term loans | - | others |
171,770
171,770
372,256
199,930
37. Share Capital
Balance at
January 1, 2019
| Balance at | |
Issuance of new
sharesCancellations of
| Cancellations of | |
| shares | |
Balance at
June 30, 2019
| Share capital |
2,446,554
-
-
2,446,554
38. Capital Reserve
Balance at
January 1, 2019
| Balance at | |
| Additions during | |
| the period | |
the period*
| Reductions during | |
Balance at
June 30, 2019
| Share premiums | 12,965,177 | - | (415,000) | 12,550,177 | |||||||||||||
| Other capital reserve | |||||||||||||||||
359,314
-
(6,323)
352,991
13,324,491
-
(421,323)
12,903,168
* Mainly due to consideration of business combination under common, see note VI.2 - change inconsolidation scope.
- 123 -
V. Notes to the consolidated financial statements - (cont'd)
39. Other Comprehensive Income
Attributable to shareholders of the companyBalance at
January 1, 2019
Before taxamount
Less: transfer to
profit or loss
Less: Incometax expenses
Net –of-taxamount
Less: transfer toretained earnings
Balance atJune 30, 2019
| Items that will not be reclassified to | profit or loss | 66,516 | (5,110) | - | (693) | (4,417) | 4,511 | 57,588 | ||||||||||||||||||||||||||||
Re-measurement of changes in liabilities under
| defined benefit plans | 15,895 | (15,562) | - | (1,584) | (13,978) | - | 1,917 | ||||||||||||||||||||||||||||||||||
| Changes in fair value of other equity investment | 50,621 | 10,452 | 891 | 9,561 | 4,511 | 55,671 | |||||||||||||||||||||||||||||||||||
| Items that may be reclassified to profit or loss | 1,024,311 | 14,988 | 145,239 | (21,197) | (109,054) | 915,257 | |||||||||||||||||||||||||||||||||||
| Effective portion of gain or loss of cash flow hedge | 93,385 | (27,951) | 145,239 | (21,197) | (151,993) | (58,608) | |||||||||||||||||||||||||||||||||||
| Translation difference of foreign financial statements | |||||||||||||||||||||||||||||||||||||||||
930,926
42,939
-
-
42,939
-
973,865
1,090,827
9,878
145,239
(21,890)
(113,471)
4,511
972,845
- 124 -
V. Notes to the consolidated financial statements - (cont'd)
40. Surplus reserve
Balance at
January 1, 2019
Additions
| Additions | |
| during the | |
period
Reductions
| Reductions | |
| during the | |
period
Balance at
June 30, 2019
| Statutory surplus reserve | 236,348 | - | |||||||||||
-
| 236,348 |
Discretional surplus reserve3,814
-
-
3,814
240,162
-
-
240,162
41. Retained Earnings
2019
2018
| Retained earnings as at December 31 of preceding year | 5,513,466 | 3,286,711 | ||||||||||||||||
| Changes in accounting policy | - | 39,481 | ||||||||||||||||
| A | djustment for business combination under common control | (Note 1) | ||||||||||||||||
115,826
55,045
| Retained earnings as at January 1 | 5,629,292 | 3,381,237 | ||||||||||||||||||
| Net profits for the period attributable to shareholders of the | Company | 588,638 | 2,389,167 | |||||||||||||||||
| Dividends to non | - | controlling Interest | (28,936) | (16,028) | ||||||||||||||||
| Dividend to the shareholders of the company (Note 2) | (293,628) | (154,133) | ||||||||||||||||||
| Other | ||||||||||||||||||||
4,511
15,366
5,899,877
| Retained earnings as at June 30 |
5,615,609
Note 1:
During the reporting period the acquisition of Jiangsu Anpon Electrochemical co. LTD., a wholly-ownedsubsidiary of CNAC, was successfully completed. Anpon became a wholly owned subsidiary of the Company.The combination was considered as a business combination under common control (See note VI.2 – Change inconsolidation scope).
Note 2:
A. On March 19, 2019, after obtaining the approval of the 12th meeting of the company's 8th Board ofDirectors, the Company declared RMB 0.97 (including tax) per 10 shares as cash dividend to allshareholders, resulting in a total cash dividend of 237,316 thousands RMB (including tax), and zero sharesas share dividend, as well as no reserve transferred to equity capital. The proposal was approved by theCompany’s shareholders at the 2nd interim shareholders’ meeting held on May 30, 2019.
B. On May 31, 2019, as part of Anpon’s acquisition agreement’s terms, and after obtaining the approval of
Anpon’s former sole shareholder, Anpon paid a cash dividend to its former sole shareholder, CNACInternational, in a total of 56,312 thousands RMB (including tax), and zero shares as share dividend, as wellas no reserve transferred to equity capital.
- 125 -
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
2019 2018 (Restated)
Income
Cost of sales
Income
Cost of sales
| Principal | activities | 13,579,047 | 8,999,083 | 13,606,947 | 9,030,648 | |||||||||||||||
| Other | businesses | |||||||||||||||||||
36,985
24,159
32,126
11,535
13,616,032
9,023,242
13,639,073
9,042,183
43. Taxes and Surcharges
Six months ended June 30
2019
2018 (Restated)
| Tax on turnover | 8,285 | 17,620 | ||||||||
Others37,941
42,928
46,226
60,548
44. Selling and Distribution Expenses
Six months ended June 30
2019
2018 (Restated)
| Salaries and related expense | 811,280 | 736,594 | |||||||||||||||||||||||
| Depreciation and amortization | 703,980 | 541,154 | |||||||||||||||||||||||
| Transportation and Commissions | 372,574 | 382,703 | |||||||||||||||||||||||
| Advertising and sales promotion | 178,645 | 156,329 | |||||||||||||||||||||||
| Warehouse expenses | 75,558 | 67,991 | |||||||||||||||||||||||
| Registration | 74,483 | 48,757 | |||||||||||||||||||||||
| Travel expenses | 68,795 | 65,566 | |||||||||||||||||||||||
| Insurance | 41,668 | 34,252 | |||||||||||||||||||||||
| Professional services | 38,998 | 32,447 | |||||||||||||||||||||||
| Others | |||||||||||||||||||||||||
133,793
191,198
2,499,774
2,256,991
45. General and Administrative Expenses
Six months ended June 30
2019
2018 (Restate
d)
| Salaries | and related expenses | 248,290 | 264,555 | |||||||||||||||||||||||||||
| Idleness expenses* | 155,214 | 26,851 | ||||||||||||||||||||||||||||
| Professional services | 64,171 | 62,853 | ||||||||||||||||||||||||||||
| Depreciation | and amortization | 45,283 | 32,378 | |||||||||||||||||||||||||||
| IT systems | 41,929 | 33,554 | ||||||||||||||||||||||||||||
| Office rent, maintenance and expenses | 25,925 | 38,446 | ||||||||||||||||||||||||||||
| Other |
47,447
65,184
628,259
523,821
* See note XI - Commitments and contingencies (environmental protection)
- 126 -
V. Notes to the consolidated financial statements - (cont'd)
46. Research and development expenses
Six months ended June 30
2019
2018 (Restate
d)
| Salaries | and related expenses |
| 90,220 | 68,187 | ||||||||||||||||||||||||
| Field trial | 33,143 | 27,133 | |||||||||||||||||||||||
| Professional services | 27,519 | 24,557 | |||||||||||||||||||||||
| Depreciation | and amortization | 18,826 | 7,330 | ||||||||||||||||||||||
| Materials | 14,860 | 2,983 | |||||||||||||||||||||||
| Office rent, maintenance and expenses | 4,316 | 3,720 | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||||
21,815
22,365
210,699
156,275
47. Financial Expenses, net
Six months ended June 30
2019
2018 (Restate
d)
| Interest expenses on debentures and loans | 349,941 | 306,821 | |||||||||||||||
| CPI expense in respect of debentures | 96,329 | 64,891 | |||||||||||||||
| Loss in | respect of sale of trade receivables | 33,129 | 32,186 | ||||||||||||||
Interest expense in respect of post-employment benefits and early
| retirement, net | 9,182 | 8,588 | ||||||||||||||
| Revaluation of put option, net | (14,954) | 8,027 | ||||||||||||||
| Interest income from customers, banks and others | (41,104) | (41,465) | ||||||||||||||
| Exchange rate differences, net | 481,6 | 76 | (31,995) | |||||||||||||
| Other expenses | ||||||||||||||||
23,997
938,196
347,554
48. Investment income, net
Six months ended June 30
2019
2018 (Restated)
| Investment income (expenses) from disposal of derivatives | (536,167) | 134,295 | ||||||||
Income from long-term equity investments accounted for using
| the equity method | 21,724 | 12,758 |
(514,443)
147,053
49. Gain (loss) from Changes in Fair Value
Six months ended June 30
2019
2018 (Restate
d)
Gain (loss) from changes in fair value of derivative financial
| instruments | 881,007 | (242,567) |
| Others |
3,128
(809)
884,135
(243,376)
- 127 -
V. Notes to the consolidated financial statements - (cont'd)
50. Credit impairment loss
Six months ended June 30
2019
2018 (Restate
d)
| Bills receivable and accounts receivable | 3,356 | ( | 5,625 | ) | ||||||||
| Other receivables |
(9)
(472)
3,347
(6,097)
51. Asset impairment Losses
Six months ended June 30
2019
2018 (Restated)
| Inventories | (19,371) | (36,214) | ||||||||||||||||||
| Fixed assets | - | ( | 420 | ) | ||||||||||||||||
| Intangible asset | - | ( | 911 | ) | ||||||||||||||||
| Other | ||||||||||||||||||||
(4,438)
(238)
(23,809)
(37,783)
52. Gain from Disposal of Assets
Six months ended June 30
Included innon-recurringitems
2019
2018 (Restate
d)
Gain from disposal of fixed assets
| 115,730 | 74 |
115,730
Gain
| Gain | (loss) | from disposal of intangible assets |
(216)
1,997,096
(216)
115,514
1,997,170
115,514
53. Non-Operating Expenses
Six months ended June 30Included innon-recurringitems
2019
2018 (Restate
d)
| Donation expenses | 4,512 | 4,267 | 4,512 | |||||||||||
Other11,504
4,560
9,223
16,016
8,827
13,735
- 128 -
V. Notes to the consolidated financial statements - (cont'd)
54. Income Tax Expenses
Six months ended June 30
2019
2018 (Restate
d)
| Current year | 192,289 | 301,718 | ||||||||||||||
| Deferred tax expenses (income) | (54, | 959 | ) | 439,377 | ||||||||||||
| Adjustments for previous years, net |
3,207
(3,537)
140,537
737,558
(1) Reconciliation between income tax expense and accounting profit is as follows:
Six monthsended June 30
2019
| Profit before taxes | 729,175 | |||||||
| Statutory tax in china | ||||||||
25%
| Tax calculated according to statutory tax in china | 182,294 | ||||||
| Tax benefits from Approved Enterprises | (29,962) | ||||||
Difference between measurement basis of income for financial statement
| and for tax purposes | 870 | |||||||||||
| Taxable income and temporary differences | at other tax rate | (6,378) | ||||||||||
| Taxes in respect of prior years | 3,207 | |||||||||||
Temporary differences and losses in the report year for which deferred
| taxes were not created | 897 | |||||||
| Non | deductible expenses and other differences | (5,907) | ||||||
Neutralization of tax calculated in respect of the Company’s share in
| results of equity accounted investees | (6,304) | |||||||
| Effect of change in tax rate in respect of deferred taxes | 442 | |||||||
Creation and reversal of deferred taxes for tax losses and temporary
| differences from previous years |
1,378
Income tax expenses
| Income tax expenses |
140,537
55. Other comprehensive income
Details of the Other comprehensive income are set out in Note V.39
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 129 -
V. Notes to the consolidated financial statements - (cont'd)
56. Notes to items in the cash flow statements
(1) Other cash received relevant to operating activities
Six months ended June 30
2019
2018 (Restate
d)
| Derivatives transactions | 44,546 | - | |||||||||||||||||||||||
| Interest | income | 29,257 | 24,455 | ||||||||||||||||||||||
| Government subsidies | 363 | 1,077 | |||||||||||||||||||||||
| Financial institutions | - | 135,686 | |||||||||||||||||||||||
| Deferred income | - | 96,946 | |||||||||||||||||||||||
| Others | |||||||||||||||||||||||||
184,212
2,670
258,378
260,834
(2) Other cash paid relevant to operating activities
Six months ended June 30
2019
2018 (Restated)
| Transportation and Commissions | 345,943 | 346,724 | |||||||||||||||||||||
| Advertising and sales promotion | 159,574 | 150,410 | |||||||||||||||||||||
| Professional services | 141,127 | 137,374 | |||||||||||||||||||||
| Registration | 75,194 | 55,229 | |||||||||||||||||||||
| Derivatives transactions | 54,030 | 128,503 | |||||||||||||||||||||
| Financial institutions | 39,402 | 23,511 | |||||||||||||||||||||
| Insurance | 29,015 | 24,935 | |||||||||||||||||||||
| Others | |||||||||||||||||||||||
530,505
508,614
Net cash flow from operating activities
| Net cash flow from operating activities |
1,374,790
1,375,300
(3) Other cash received relevant to investment activities
Six months ended June 30
2019
2018 (Restated)
| Proceeds from loan to affiliate company | 7,491 | - | |||||||||||
| Investment grant | 1,808 | - | |||||||||||
| Other |
9,327
(4) Other cash received relevant to financing activities
Six months ended June 30
2019
2018 (Restated)
| Cash received in respect of hedging | transactions on debentures | 41,144 | - | ||||||||
| Deposit for issuing bills payable |
20,557
-
61,701
-
- 130 -
V. Notes to the consolidated financial statements - (cont'd)
56. Notes to items in the cash flow statements - (cont'd)
(5) Other cash paid relevant to financing activities
Six months ended June 30
2019
2018 (Restate
d)
| Payment in respect of hedging transactions on debentures | 325,474 | - | ||||||||||||||||||||||
| Repayment of lease liability | 74,182 | N/A | ||||||||||||||||||||||
| Realization of call option | 35,625 | - | ||||||||||||||||||||||
| Deposit for issuing bills payable | 8,610 | 24,880 | ||||||||||||||||||||||
| Other | ||||||||||||||||||||||||
-
7,739
443,891
32,619
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
2019
2018 (Restate
d)
| Net profit | 588,638 | 2,389,167 | ||||||||||||||||||||||||
| Add: Impairment provisions for assets | 23,809 | 37,783 | ||||||||||||||||||||||||
| Credit impairment loss | (3,347) | 6,097 | ||||||||||||||||||||||||
| Depreciation of fixed assets and investment property | 413,802 | 362,473 | ||||||||||||||||||||||||
| Amortization of right | - | of | use asset | 75,529 | N/A | |||||||||||||||||||||
| Amortization of intangible asset | 670,019 | 558,415 | ||||||||||||||||||||||||
Gains on disposal of fixed assets, intangible assets, and other
| long | - | term assets, net | (115,514) | (1,997,170) | |||||||||||||||||||||||
| Loss (gain) from changes in fair value | (884,135) | 243,376 | |||||||||||||||||||||||||
| Financial expenses | 806,091 | (65,692) | |||||||||||||||||||||||||
| Investment income, net | 900,426 | (147,053) | |||||||||||||||||||||||||
| Decrease (increase) in deferred tax assets | (50,833) | 234,072 | |||||||||||||||||||||||||
| Increase (decrease) in deferred tax liabilities | (4,126) | 205,528 | |||||||||||||||||||||||||
| Decrease (increase) in inventories, net | (777,827) | (812,551) | |||||||||||||||||||||||||
| Increase in operating receivables | (1,263,516) | (1,132,939) | |||||||||||||||||||||||||
| Increase in operating payables | (751,460) | 913,650 | |||||||||||||||||||||||||
| Others |
67,494
44,647
Net cash flow from operating activities
| Net cash flow from operating activities |
(304,950)
839,803
b. Net increase in cash and cash equivalents
Six months ended June 30
2019
2018 (Restated)
| Closing balance of cash | 5,381,820 | 6,156,174 | |||||||||
| Less: Opening balance of cash | |||||||||||
6,346,196
7,979,502
Net increase in cash and cash equivalents
| Net increase in cash and cash equivalents |
(964,376)
(1,823,328)
- 131 -
V. Notes to the consolidated financial statements - (cont'd)
57. Supplementary Information on Cash Flow Statement - (cont'd)
(2) Information on acquisition or disposal of subsidiaries and other business units
Six monthsended June 30
2019
| Cash paid for business combination | 829,866 | |||||||
Less: Cash and cash equivalents of the acquiree at the date of
| acquisition |
3,061
Net cash paid to acquire a subsidiary
| Net cash paid to acquire a subsidiary |
826,805
(3) Details of cash and cash equivalents
June 30
January 1
2019
2019
| Cash on hand | 7,770 | 1,380 | |||||||||
| Bank | deposits available on demand without restrictions |
5,374,050
6,344,816
5,381,820
6,346,196
58. Assets with Restricted Ownership or Right of Use
June 30
2019
Reason
| Cash | 43,572 | Pledged | ||||||||||||||
| Fixed assets | 5,926 | Mortgaged | ||||||||||||||
| Other non | - | current | assets |
143,377
Guarantees
192,875
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 132 -
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items
(1) Foreign currencies denominated items
As at June 30, 2019
Foreign currency at
the end of theperiod Exchange rate
RMB at the end ofthe period
| Cash and bank balances | |||||||||||||||||
| EUR | 44,867 | 7.8211 | 350,912 | ||||||||||||||
| USD | 39,168 | 6.8747 | 269,271 | ||||||||||||||
| PLN | 139,196 | 1.8413 | 256,303 | ||||||||||||||
| ILS | 95,191 | 1.9278 | 183,513 | ||||||||||||||
| BRL | 67,765 | 1.7939 | 121,565 | ||||||||||||||
| ZAR | 93,084 | 0.4862 | 45,256 | ||||||||||||||
| CAD | 7,366 | 5.2533 | 38,698 | ||||||||||||||
OTHER
428,761
1,694,279
| Bills and Accounts receivable | ||||||||||||||
| BRL | 473,150 | 1.7939 | 848,799 | |||||||||||
| EUR | 98,888 | 7.8211 | 773,417 | |||||||||||
| RON | 195,232 | 1.6530 | 322,712 | |||||||||||
| CAD | 53,926 | 5.2533 | 283,286 | |||||||||||
| USD | 38,492 | 6.8747 | 264,621 | |||||||||||
| TRY | 215,656 | 1.1922 | 257,100 | |||||||||||
| HUF | 7,005,697 | 0.0242 | 169,537 | |||||||||||
OTHER
537,333
3,456,805
Other receivables
| EUR | 43,605 | 7.8211 | 341,041 | |||||||||||
| ILS | 112,700 | 1.9278 | 217,268 | |||||||||||
| UAH | 397,776 | 0.2627 | 104,509 | |||||||||||
| PLN | 45,520 | 1.8413 | 83,817 | |||||||||||
| BRL | 32,582 | 1.7939 | 58,449 | |||||||||||
OTHER
111,019
916,103
| Other current assets | ||||||||||||||||||
| ILS | 79,886 | 1.9278 | 154,007 | |||||||||||||||
| BRL | 49,041 | 1.7939 | 87,976 | |||||||||||||||
| EUR | 8,195 | 7.8211 | 64,093 | |||||||||||||||
| ARS | 279,831 | 0.1619 | 45,304 | |||||||||||||||
| UAH | 162,465 | 0.2627 | 42,685 | |||||||||||||||
OTHER
87,371
481,436
| Long | - | term receivables |
BRL97,131
1.7939
174,246
174,246
- 133 -
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, 2019
Foreign currency at
the end of theperiod Exchange rate
RMB at the end ofthe period
Other non-current assets
| BRL | 71,133 | 1.7939 | 127,608 |
OTHER
4,311
131,919
| Short | term loans | |||||||||||||||||||
| TRY | 143,038 | 1.1922 | 170,527 | |||||||||||||||||
| BRL | ||||||||||||||||||||
| 30,018 | 1.7939 | 53,850 | |||||||||||||||||
| UAH | 336,992 | 0.2627 | 88,539 | ||||||||||||||||
| OTHER | 275 | ||||||||||||||||||
313,191
Bills and Accounts payable
| ILS | 324,374 | 1.9278 | 625,343 | ||||||||||
| EUR | 51,263 | 7.8211 | 400,933 | ||||||||||
| BRL | 77,024 | 1.7939 | 138,175 | ||||||||||
| USD | 15,105 | 6.8747 | 103,842 | ||||||||||
OTHER
75,436
1,343,729
Other payables
| BRL | 58,468 | 1.7939 | 104,887 | ||||||||||||||||
| UAH | 315,719 | 0.2627 | 82,950 | ||||||||||||||||
| ILS | 29,398 | 1.9278 | 56,675 | ||||||||||||||||
| ILS CPI | 18,023 | 1.9278 | 34,745 | ||||||||||||||||
| PLN | 7,493 | 1.8413 | 13,798 | ||||||||||||||||
| OTHER | 32,556 | ||||||||||||||||||
325,611
| Contract liabilities | |||||||||||||||||||||||||||
| EUR | 36,126 | 7.8211 | 282,549 | ||||||||||||||||||||||||
| BRL | 45,029 | 1.7939 | 80,778 | ||||||||||||||||||||||||
| USD | 1,536 | 6.8747 | 10,559 | ||||||||||||||||||||||||
| OTHER | 125,755 | ||||||||||||||||||||||||||
499,641
- 134 -
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, 2019Foreign currency at
the end of the period
Exchange rate
RMB at the end ofthe period
Non-current liabilities due within one year
| EUR | 12,757 | 7.8211 | 99,773 | |||||||||||||
| ILS CPI | 14,506 | 1.9278 | 27,966 | |||||||||||||
| ILS | 3,028 | 1.9278 | 5,837 | |||||||||||||
| BRL | 1,031 | 1.7939 | 1,849 | |||||||||||||
OTHER
29,596
TOTAL
165,021
Other current liabilities
| EUR | 5,783 | 7.8211 | 45,229 | ||||||||||
| ILS | 5,281 | 1.9278 | 10,181 | ||||||||||
| BRL | 2,514 | 1.7939 | 4,510 | ||||||||||
OTHER
19,304
79,224
Long-term loan
| EUR | 35,599 | 7.8211 | 278,425 | |||||||||
| BRL | 57 | 1.7939 | 103 | |||||||||
278,528
| Debentures payable | ||||||||||||||||||||
| ILS CPI | 4,229,066 | 1.9278 | 8,152,989 | |||||||||||||||||
| 8,152,989 | ||||||||||||||||||||
| Provision and Long | term payables | |||||||||||||||||||
| BRL | 41,659 | 1.7939 | 74,734 | |||||||||||||||||
| OTHER | 27,723 | |||||||||||||||||||
102,457
| Other non | - | current liabilities | |||||||||||||||
| EUR | 8,290 | 7.8211 | 64,841 | ||||||||||||||
| ILS CPI | 24,245 | 1.9278 | 46,740 | ||||||||||||||
| USD | 4,470 | 6.8747 | 30,732 | ||||||||||||||
| GBP | 1,148 | 8.7342 | 10,031 | ||||||||||||||
| OTHER | 33,477 | ||||||||||||||||
185,821
- 135 -
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 ofbusiness Business nature
Functionalcurrency
The basis of selecting functional
currency
ADAMA France S.A.S FRANCE Distribution USD The main currency that represent
the principal economic
| environment |
ADAMA Brasil S/A BRAZIL Manufacturing;
Distribution; Registration
USD The main currency that represent
the principal economic
| environment |
ADAMA DeutschlandGmbH
GERMANY Distribution; Registration
USD The main currency that represent
the principal economic
environment
| environment |
ADAMA India Private Ltd. INDIA Manufacturing
Distribution; Registration
INR The main currency that represent
the principal economic
| environment |
Makhteshim Agan of NorthAmerica Inc.
UNITED STATES Manufacturing;
Distribution; Registration
USD
The main currency that representthe principal economic
environment
| environment |
Control Solutions Inc. UNITED STATES Manufacturing;
Distribution; Registration
USD
The main currency that representthe principal economic
environment
| environment |
ADAMA Agan Ltd. ISRAEL Manufacturing;
Distribution; Registration
USD The main currency that represent
the principal economic
| environment |
ADAMA Makhteshim Ltd. ISRAEL Manufacturing;
Distribution; Registration
USD The main currency that represent
the principal economic
| environment |
Limited
AUSTRALIA Distribution AUD The main currency that represent
the principal economic
ADAMA Australia Ptyenvironment
| environment |
ADAMA Italia SRL ITALY Distribution USD The main currency that represent the
| principal | economic environment |
ADAMA Northern
| Europe B.V. |
NETHERLANDS Distribution USD The main currency that represent the
| principal economic environment |
Alligare LLC UNITED STATES Manufacturing;
Distribution;
| Registration |
USD The main currency that represent the
principal economic environment
- 136 -
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 oftheCompany
AcquisitionTime ofequity
investment
| investment |
Cost ofequityinvestment
Proportion ofequityinvestment
Acquisitionmethod
Acquisitiondate
Basis ofacquisitiondate
determination
| determination |
From acquisition date till period
| end |
Revenue Net profitBonideProducts
| INC. |
07.01.2019
829,866 100% Stock
purchase
07.01.2019
Obtainedcontrol
271,550
24,574
(2) Acquisition cost and goodwill
Acquisition costs Bonide Products INC.
| Cash | 829,866 |
Total acquisition cost
| 829,866 |
Less: share of the fair value of the identifiable net assets acquired 638,786
| Currency translation differences | (14,535) |
Goodwill / Amount of acquisition cost less than share of the fair valueof the identifiable net assets acquired
205,615
In January 2019, the Company, through a subsidiary of Solutions, acquired Bonide Products Inc., a USprovider of pest-control solutions for the consumer Home & Garden use, allowing the Company to bringits advanced technologies and differentiated portfolio of pest-control directly to the consumers.
Bonide was purchased for a consideration of approximately 830 million RMB. As of January 7, 2019(hereinafter: “date of the business combination”), control has been achieved and the Group consolidatesthe results of Bonide in its consolidated financial statements. Upon the consolidation of Bonide, theidentified tangible assets, identifiable intangible assets and identifiable liabilities were included in theconsolidated statement of financial position as of the date of the business combination at their fair valuebased on the information held by the management of the Company and the management of Bonide on thedate close to the date of acquisition, and based, inter alia, on external consultants in this matter.
The initial accounting treatment for the acquisition of the operations, as presented in these interimfinancial statements, is accounted for using provisional amounts (as this term is defined in ASBE 20Business combination). Until the date of approval of the interim financial statements, the Group has notyet completed the initial important treatment of Bonide's business combination, including the estimationof the fair value of the acquired assets and the goodwill. Therefore, some of the fair value data are stillprovisional and may be subject to changes affecting the data as included in these financial statements.
- 137 -
VI. Change in consolidation Scope - (cont'd)
1. Business combinations involving enterprises not under common control- (cont'd)
(3) Identifiable assets and liabilities of the acquiree, at acquisition date
Bonide
Fair value atacquisition date
Book value atacquisition date
Assets:
| Cash and bank balances | 3,061 | 3,061 | ||||||||||||||||||||
| Bills and | Accounts receivable | 104,362 | 104,362 | |||||||||||||||||||
| Prepayments | 11,750 | 11,750 | ||||||||||||||||||||
| Inventories | 111,959 | 109,777 | ||||||||||||||||||||
| Fixed assets | 56,690 | 56,690 | ||||||||||||||||||||
| Intangible assets | 468,839 | 1,510 | ||||||||||||||||||||
Liabilities:
| Bills and Accounts payable | 24,062 | 24,062 | |||||||||
| Other payables | 82,434 | 82,434 | |||||||||
Deferred tax liabilities11,379
-
Net assets
| 638,786 | 180,654 | |||||
Less: Non-controlling interests -
-
Net assets acquired638,786
180,654
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 138 -
VI. Change in consolidation Scope (cont'd)
2. Business combinations under common control
(1) Business combinations involving enterprises under common control in current period
Name of theCompany
EquityProportion
obtained
fromcombinati
on
| on |
Basis of judgement asbusiness combinationinvolving enterprises undercommon control
Acquisitiondate
Basis ofdeterminingacquisitiondate
Beginning of the Year tillacquisition date set out as
| follows |
Revenue ofcomparativeperiod
Net profit ofcomparativeperiodRevenue
Net profit/lossJiangsu AnponElectrochemicalco. LTD.
100% Both of the combining
enterprises are ultimatelycontrolled by ChinaNational AgrochemicalCorporation, and the controlis not transitory.
March 29th,2019
Obtainedcontrol
393,990
37,830
761,329
26,162
(2) Acquisition cost
Acquisition costs Jiangsu Anpon Electrochemical co. LTD.
| Cash | 415,000 |
(3) Carrying Value of acquiree’s financial position at acquisition date and prior year end
Jiangsu Anpon Electrochemical co. LTD.
Acquisition date Prior year endAssets:
| Cash and bank balances | 131,663 | 167,101 | |||||||||||||
| Bills receivable | 42,437 | 53,299 | |||||||||||||
| Accounts receivable | 146,770 | 101,522 | |||||||||||||
| Prepayments | 45,596 | 55,218 | |||||||||||||
Other receivables 15,660
27,606
| Inventories | 193,483 | 191,811 | |||||||||||||||||||||
| Other current assets | - | 31 | |||||||||||||||||||||
| Fixed assets | 603,205 | 628,268 | |||||||||||||||||||||
| Construction in progress | 61,693 | 59,397 | |||||||||||||||||||||
| Intangible assets | 64,115 | 64,574 | |||||||||||||||||||||
| Deferred tax assets | 8,556 | 8,040 | |||||||||||||||||||||
| Other non | - | current assets | 20,315 | 15,219 | |||||||||||||||||||
Liabilities:
| Short | - | term borrowings | 500,000 | 550,000 | ||||||||||||||||||
| Accounts payable | 102,429 | 99,487 | ||||||||||||||||||||
| Employee benefits payable | 12,855 | 18,829 | ||||||||||||||||||||
| Taxes payable | 12,997 | 14,150 | ||||||||||||||||||||
| Other payables | 171,318 | 131,818 | ||||||||||||||||||||
| Contractual liability | 21,321 | 26,730 | ||||||||||||||||||||
| Long | term employee benefits payable | 40,266 | 40,284 | |||||||||||||||||||
Provision21,858
21,858
Net assets 450,449
468,930
| Less: Non | - | controlling interests | - | - |
Net assets acquired
450,449
468,930
- 139 -
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 ofobtaining the
subsidiary
| ADAMA France S.A.S | FRANCE | Distribution | 100% | Established | ||||||||||||||||||||
ADAMA Brasil S/A BRAZIL Manufacturing; Distribution;
| Registration |
100% Purchased
ADAMA Deutschland GmbH
| ADAMA Deutschland GmbH | GERMANY | Distribution; Registration; | 100% | Established |
ADAMA India Private Ltd. INDIA Manufacturing;
| Distribution; Registration |
100% EstablishedMakhteshim Agan of North America
Inc.
| Inc. |
UNITED STATES Manufacturing; Distribution;
| Registration |
100% EstablishedControl Solutions Inc. UNITED STATES Manufacturing; Distribution;
Registration
| Registration |
67% PurchasedADAMA Agan Ltd. ISRAEL Manufacturing; Distribution;
Registration
| Registration |
100% RestructureADAMA Makhteshim Ltd. ISRAEL Manufacturing; Distribution;
| Registration |
100% Restructure
| ADAMA Australia Pty Limited | AUSTRALIA | Distribution | 100% | Purchased | |||||||||||||||||||
| ADAM Italia SRL | ITALY | Distribution | 100% | Established | |||||||||||||||||||
| ADAMA Northern Europe B.V. | NETHERLANDS | Distribution | 55% | Purchased | |||||||||||||||||||
Alligare LLC UNITED STATES
Manufacturing; Distribution;
| Registration |
100% PurchasedJiangsu Anpon Electrochemical co.
| Ltd. |
CHINA
Manufacturing; Distribution
100% Purchased
2. Interests in joint ventures or associates
June 30
December 31
2019
2018
| Joint ventures | 95,258 | 68,584 | ||||||||
| Associates | ||||||||||
39,817
39,766
135,075
108,350
3. Summarized financial information of joint ventures and associates
June 30, 2019 and six
months then ended
| June 30, 2019 and six | |
June 30, 2018 and sixmonths then ended
| Joint ventures: | ||||||||||||||||||||||||||||||||||
| Total carrying amount | 95,258 | 80,913 | ||||||||||||||||||||||||||||||||
| The Group's share of the following items: | ||||||||||||||||||||||||||||||||||
| Net profit | 21,740 | 12,758 | ||||||||||||||||||||||||||||||||
| Other comprehensive income | 158 | (761) | ||||||||||||||||||||||||||||||||
| Total comprehensive income | 21,898 | 11,997 | ||||||||||||||||||||||||||||||||
| Associates: | ||||||||||||||||||||||||||||||||||
| Total carrying amount | 39,817 | 38,338 | ||||||||||||||||||||||||||||||||
| The Group's share of the following items: | ||||||||||||||||||||||||||||||||||
| Net profit | (16) | - | ||||||||||||||||||||||||||||||||
| Other comprehensive income | 67 | 478 | ||||||||||||||||||||||||||||||||
| Total comprehensive income | 51 | 478 | ||||||||||||||||||||||||||||||||
- 140 -
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 exposureto these 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.5e.
In April 2018, 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
- 141 -
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 and South America where necessary itoperates to limit its exposure to customers in countries having significantly unstable economies.
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 and Ⅲ.11.
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, 2019
| Past due by less than 90 days | 452,611 | |||||
Past due by more than 90 days614,452
1,067,063
- 142 -
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 in countries in which there are large number of customerswith immaterial balances.The Group has credit risk exposures for accounts receivables amounted to RMB 7,478,332 thousand relate tocategory of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 629,633thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has creditrisk exposures for other receivables amounted to RMB 14,832 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.
- 143 -
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, 2019
Third-
Fifth year
Contractual
Carrying
First year
Second year
Fourth year
and above
Cash flow
amount
Non-derivative financial
| liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Short | term loans | 2,348,647 | - | - | 2,348,647 | 2,308,286 | ||||||||||||||||||||||||||||||||||||||||||||||
| Bills payables | 375,777 | 375,777 | 375,777 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts payables | 4,178,668 | 4,178,668 | 4,178,668 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other payables | 1,970,641 | 1,970,641 | 1,970,641 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other current liabilities | 169,661 | 169,661 | 169,661 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Debentures payable | 388,469 | 894,158 | 1,713,635 | 9,207,224 | 12,203,486 | 8,152,990 | ||||||||||||||||||||||||||||||||||||||||||||||
| Long | - | term loans | 299,840 | 259,049 | 338,696 | 124,532 | 1,022,117 | 955,906 | ||||||||||||||||||||||||||||||||||||||||||||
| Long | - | term payables | 1,871 | 1,771 | 3,097 | 27,497 | 34,236 | 26,419 | ||||||||||||||||||||||||||||||||||||||||||||
| Lease Liabilities | 159,114 | 127,997 | 154,965 | 253,713 | 695,789 | 558,912 | ||||||||||||||||||||||||||||||||||||||||||||||
| Other non | current liabilities | 2,061 | 2,061 | 61,036 | 307,733 | 372,891 | 361,552 | |||||||||||||||||||||||||||||||||||||||||||||
| Derivative financial liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency derivatives | 688,267 | 8,428 | 696,695 | 696,695 | ||||||||||||||||||||||||||||||||||||||||||||||||
10,583,016
1,293,464
2,271,429
9,920,699
24,068,608
19,755,507
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.
- 144 -
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, except in respect of derivative financial
instruments is as follows:
June 30, 2019
Total assets
Total liabilities
| In US Dollar | 1,150,413 | 957,089 | |||||||||||||||||||
| In Euro | 1,603,215 | 1,156,183 | |||||||||||||||||||
| In Brazilian real | 1,435,424 | 386,614 | |||||||||||||||||||
| CPI | - | linked NIS | - | 8,262,440 | |||||||||||||||||
| In New Israeli Shekel | 603,170 | 702,162 | |||||||||||||||||||
| Denominated in or linked to other foreign currency | |||||||||||||||||||||
4,108,457
734,333
8,900,679
12,198,821
(B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows:
June 30, 2019
Currency/linkagereceivable
Currency/linkagepayable
Averageexpirationdate
USDthousandsPar value
RMBthousandsPar value
Fair value
| Forward foreign currency |
USD
| EUR | 20 | 20 | / | 03 | 02 | 470,368 | 3,233,637 | ( | 265,914 | ) | |||||||||||||||
| Contracts and call options |
USD
| PLN | 201 | 9 | / | 08 | 08 | 50,048 | 344,065 | ( | 5,679 | ) | ||||||||||||||
USD
| BRL | 201 | 9 | / | 0 | 8 | 20 | 192,904 | 1,326,158 | ( | 9,528 | ) | ||||||||||||||
USD
| GBP | 201 | 9 | / | 09 | 08 | 16,283 | 111,939 | 2,186 | ||||||||||||||
USD
| ZAR | 201 | 9 | / | 07 | 2 | 9 | 13,620 | 93,633 | ( | 120 | ) | ||||||||||||||
ILS
| USD | 201 | 9 | / | 09 | 07 | 1,361,025 | 9,356,636 | 12,402 | ||||||||||||||
USD
| OTHER | 411,176 | 2,826,714 | ( | 23,986 | ) | ||||||||||||||
| CPI forward contracts |
CPI
| ILS | 20 | 20 | / | 01 | 13 | 602,916 | 4,144,870 | 15,370 |
- 145 -
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, 2019 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, 2019Decrease of 5% Increase of 5% Equity Profit (loss)
Equity Profit (loss)
| New Israeli shekel | 82,193 | 60,274 | (26,182) | (4,263) | |||||||||||||||||||||||||||||||||||
| British pound | (284) | 734 | 284 | (734) | |||||||||||||||||||||||||||||||||||
| Euro | ( | 143,085 | ( | 10,232 | 148,893 | 12,183 | |||||||||||||||||||||||||||||||||
| Brazilian real | (17,312) | 19,903 | 10,571 | (23,001) | |||||||||||||||||||||||||||||||||||
| Polish zloty | 6,167 | ) | 1,593 | 6,167 | 1,593 | ||||||||||||||||||||||||||||||||||
| South African | Rand | (313) | 352 | 313 | (352) | ||||||||||||||||||||||||||||||||||
| Chinese Yuan Renminbi | ( | 18,403 | ) | ( | 18,403 | 18,403 | 18,403 | ||||||||||||||||||||||||||||||||
| CPI | - | linked NIS | 205,520 | 205,520 | (193,406) | (193,406) | |||||||||||||||||||||||||||||||||
(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 Libor interest. As a result, most of the variableinterest exposure of those loans is to the Libor interest. Due to market conditions, the variable interestrates 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, 2019
Fixed-rate instruments – unlinked to the CPI
| Financial assets | ||||
| Cash at banks | ||||
| 1,275,887 | ||||||||
| Other non | - | current assets | 1,086 | |||||
Financial liabilities
| Long | - | term loans | 529 | ||||||
| Long | - | term payables | 20,790 | ||||||
Other non-current liabilities171,770
1,083,884
Fixed-rate instruments – linked to the CPI
Financial liabilities
Debentures payable
8,152,990
Variable-rate instruments
Financial assets
| Cash at banks | 233,602 | |||||||||||||
| Financial assets at fair value through profit or loss | 33,074 | |||||||||||||
| Other non | - | current assets | 46,067 | |||||||||||
Financial liabilities
| Short | - | term loans and credit from banks | 2,308,286 | |||||
Long-term loans(1)955,377
)2,950,920(
(1) Including long-term loans 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
interest
| Increase in | |
interest
| Decrease in | |
interest
| Increase in | |
interest
| Decrease in | |
As at June 30, 20192,118
(2,134)
2,118
(2,134)
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
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, 2019
Carrying amount
Fair value
Financial assets
Other non-current assets (a – Level 2) 54,331
55,243
Financial liabilities
Long-term loans and others (b – Level 2) 1,714,259
1,714,813
Debentures (c – Level 1) 8,152,990
10,409,445
a) The fair value of the other non-current assets is based on a discounted future cash flows, using the acceptable
interest 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 acceptableinterest 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, 2019
%
| Brazilian real interest | 5.98 | – | 6.26 | ||||||||
| U.S. dollar interest | 2.37 | – | 2.58 | ||||||||
| Indian Rupee | 6.14 | – | 6.96 | ||||||||
- 148 -
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
2019
| Forward contracts and options | used for hedging | the cash flow | (Level 2) | (65,921) | ||||||||||||||||||||||||||
| Forward contracts and options | used for economic hedging | (Level 2) | (209,348) | |||||||||||||||||||||||||||
| Debt instruments | (Level 1) | 15,365 | ||||||||||||||||||||||||||||
| Other equity investment (Level 2) | 87,812 | |||||||||||||||||||||||||||||
| Other non | - | current asset (Level 2) | 23,395 | |||||||||||||||||||||||||||
| Call option in respect of business combination (Level 2) | 15,097 | |||||||||||||||||||||||||||||
| Other | (Level 2) | 17,709 | ||||||||||||||||||||||||||||
Financial Instrument Fair valueForward contracts
Fair value measured on the basis of discounting the difference between
stated forward price in the contract and the current forward price for theresidual period until redemption using an appropriate interest rates.
the
Foreign currency options
| The fair value is measured based on the Black | & | Scholes model. | ||
4. No transfer between any levels of the fair value hierarchy in the reporting period.
5. No change in the valuation techniques in the reporting period.
- 149 -
X. Related parties and related party transactions
1. Information on parent Company
Companyname
Registeredplace Business nature
Registered capital(Thousand RMB)
Shareholding
percentage
Percentageof voting rights
| CNAC |
Beijing,
| China |
Production and sales
| of agrochemicals | 3,338,220 | 78.91 | % | 78.91 | % |
The ultimate controller of the company is China National Chemical Corporation.
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
| Alfa Agricultural Supplies S. | Joint venture of the Group | |||||||
| Innovaroma SA | Joint venture of the Group | |||||||
| Agribul Ltd. | Joint venture of the Group | |||||||
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 150 -
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties
Name of other related parties Related party relationship
| Jingzhou Sanonda holdings co. LTD | Common control | |||||||||||||||||||||||||||||||||||||||||||
| CNAC International Co., Ltd. (SPV Company) (Headquarter) | Common control | |||||||||||||||||||||||||||||||||||||||||||
| ChemChina Asset Management Co., Ltd. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| ChemChina Information Center Co., Ltd. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Crop Protection AG | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Supply AG | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Crop Protection LLC. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Romania SRL | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta France SAS | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Australia Pty Ltd | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Agro Sociedad Anonima | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Protecao De Cultivos LTDA | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Czech s.r.o. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Espana S.A. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta India Limited | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Agro AG | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Polska Sp. z o.o. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Agro, S.A. DE C.V. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Italia S.p.A. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Crop Protection Lda. | Common | control | ||||||||||||||||||||||||||||||||||||||||||
| Syngenta Crop Protection NV | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Nordics A.S. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Tarim Sanayi ve Ticaret A.S. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Agro GmbH | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Kazakhstan Limited Liability Partnership | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta | Slovakia S.R.O. | Common control | ||||||||||||||||||||||||||||||||||||||||||
| Syngenta Hungary Kft. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta UK Ltd | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Syngenta Ireland Ltd | Common control | |||||||||||||||||||||||||||||||||||||||||||
| China Bluestar Lehigh Engineering Corp. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| China National Bluestar Co., Ltd. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| China | Bluestar Chengrand | Common control | ||||||||||||||||||||||||||||||||||||||||||
| Bluestar (Beijing) Chemical Machinery Co., Ltd. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Hangzhou (Torch) Xidoumen Membrane Industry Co., Ltd | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Shandong Dacheng International Trading | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Shandong Dacheng agricultural che | mical co. LTD. | Common control | ||||||||||||||||||||||||||||||||||||||||||
| Southwest Chemical Research and Design Institute Co., Ltd. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Jiangsu Lianhai Testing Co., Ltd. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Jiamusi Black Dragon Pesticide Chemical Co., Ltd. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Beijing Guangyuan Yinong Chemical | Co., Ltd. | Common control | ||||||||||||||||||||||||||||||||||||||||||
| Anhui Research Institute of Chemical Industry | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Haohua engineering co. LTD. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Shanghai branch of China blue lianhai design and research institute. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Jiangsu Huaihe Chemical Co.,Ltd. | Common control | |||||||||||||||||||||||||||||||||||||||||||
| Zhonglan International Chemical Co., Ltd | Common control | |||||||||||||||||||||||||||||||||||||||||||
- 151 -
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
2019
2018 (Restate
d)
Type of purchase Related Party Relationship
Summary of purchase of
| goods/services: |
Purchase of goods/services received Common control under
| ChemChina | 734,273 | 847,818 |
Purchase of fixed assets and other
| assets |
Common control under
| ChemChina | 13,098 | 2,129,457 | |||||||||||||||||||||
| Purchase of goods/services received | Joint venture | 3,332 | 6,325 | ||||||||||||||||||||
| Summary of Sales | of goods | ||||||||||||||||||||||
Sale of goods/ Service rendered Common control under
| ChemChina | 408,089 | 333,327 | |||||||||||||
| Sale of goods/ Service rendered | Joint venture | 108,664 | 99,823 | ||||||||||||
(2) Leases
The Group as lessor
June 30 June 30Type of leased assets
Lessee
2019
2018 (Restate
d)
Building and Structures Common control under
| ChemChina | - | 10 |
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 152 -
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties - (cont'd)
(3) Guarantee
The Group as the guarantee receiver
Guarantee provider
Amount ofguaranteed loan
Inception dateof guaranty
Maturity dateof guaranty
Guarantycompleted (Y / N)
Parent company
| 50,000 | 18/10/2017 | 18/10/2021 | N | |||||||||||
| 300,000 | 20/11/2017 | 20/11/2022 | N | |||||||||||
| 100,000 | 13/06/2018 | 12/06/2022 | N | |||||||||||
| 30,000 | 12/07/2018 | 11/07/2019 | N | |||||||||||
| 20,000 | 01/03/2017 | 20/02/2020 | N | |||||||||||
| 30,000 | 07/08/2018 | 06/08/2019 | N | |||||||||||
| 50,000 | 01/06/2019 | 29/05/2020 | N | |||||||||||
| 50,000 | 30/10/2018 | 29/10/2019 | N | |||||||||||
| 40,000 | 30/07/2018 | 29/07/2019 | N | |||||||||||
| 40,000 | 15/08/2018 | 14/08/2019 | N | |||||||||||
| 64,000 | 19/02/2019 | 18/02/2020 | N | |||||||||||
| 15,000 | 25/02/2019 | 23/08/2019 | N | |||||||||||
| 50,000 | 28/03/2019 | 14/02/2020 | N | |||||||||||
| 80,000 | 02/02/2019 | 30/01/2020 | N | |||||||||||
| 50,000 | 01/11/2018 | 26/10/2019 | N | |||||||||||
| 50,000 | 01/12/2018 | 26/11/2019 | N | |||||||||||
| Ultimate controller of the Group | 160,000 | 27/05/2014 | 09/06/2021 | Y | ||||||||||
(4) Remuneration of key management personnel and directors
Periods ended June 30
2019
2018 (Restate
d)
| Remuneration of key management personnel | 32,606 | 24,999 | ||||||||
| Directors Fee | ||||||||||
| 150 | - |
- 153 -
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties - (cont'd)
(5) Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
2019 2018 (Restated)Items
Related Party Relationship
Bad debtProvision
Bad debtprovision
| Trade receivables | Common control under ChemChina | 136,347 | - | 39,420 | - | |||||||||||||||||||
| Trade receivables | Joint venture | 30,366 | - | 30,562 | - | |||||||||||||||||||
| Other receivables | Common control under ChemChina | - | - | 42,969 | - | |||||||||||||||||||
| Prepayments | Common control under ChemChina | 34,962 | - | 31,867 | - | |||||||||||||||||||
Other Non-
| Current assets | Common control under ChemChina | 38,098 | - | - | - | ||||||||||||||||
| Other assets | Joint venture | - | - | 7,543 | - | ||||||||||||||||
Payable Items
June 30
December 31
Items Related Party Relationship 2019
2018 (Restated)
| Trade payables | Common control under ChemChina | 94,835 | 329,049 | |||||||||||||||||
| Trade payables | Joint venture | 703 | 397 | |||||||||||||||||
| Other payables | Common control under ChemChina | 436,748 | 21,636 | |||||||||||||||||
Other non-current
| liabilities * |
Common control under ChemChina 171,770
171,770
* The liability is a loan from a related party, the interest expense for the six months ended June 30, 2019 is1,042 thousand RMB (six months ended June 30,2018: 1,042 thousand RMB).
(6) Acquisition of a subsidiary
June 30
December 31
Related Party Related Party Relationship 2019
2018 (Restated)
| Parent | Acquisition of a subsidiary | 415,000 | - |
(7) Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 231,316 thousand RMB(31.12.18: 295,661 thousand RMB) Interest income of bank deposit for the current period was 1,654thousand RMB (amount for six months ended June 30, 2018 is 738 thousand RMB).
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 154 -
XI. Commitments and contingencies
1. Significant commitments
June 30
December 31
2019
2018 (Restated)
| Investment in Fixed assets | 711,386 | 667,785 | |||||||
2. Commitments and Contingent Liabilities
On December 10, 2018 the 9th meeting of the 8th session of the Board of Directors of the Company resolvedto approve the extension of the engagement in annual liability insurance policies for directors, supervisors andsenior officers of the Company as approved by the 22nd meeting of the 7th session of Board of Directors andthe 4th interim Shareholders meeting, and to authorize the management to annually deal with all matters relatingto renewal/extension of the customary D&O liability insurance policies, with up to 20% flexibility in therelevant terms of the original policy. On December 26, 2018 the 3rd interim Shareholders meeting approved theabove resolution.
Environmental protection
The manufacturing processes of the Company, and the products it produces and markets, 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, none of its applicablepermits and licenses with respect to environmental issues have been revoked.
At the end of January 2019, the Company voluntarily suspended operations at Sanonda’s old site in Jingzhou,which is in the process of being relocated to a nearby advanced site, due to recording of higher than permittedlevels of wastewater compounds. The Company was subsequently instructed by the local government not toresume operations before rectification. The Company rectified the discharge levels and at the beginning of April2019 resumed operations at the old site. Following the resumption, the Company is advancing the gradual ramp-up of production. As the ramp-up of production proceeds, the site continues to remain under inspection of therelevant authorities with whom the Company is working in close and constant collaboration.
Claims against subsidiaries
In the ordinary course of business, legal claims are filed against subsidiaries, including lawsuits, regardingclaims for patent infringement. Inter alia, from time to time, the Company, similar to other companies operatingin the plant protection industry, is exposed to class actions for large amounts, which it must defend against whileincurring considerable costs, even if these claims, from the start, have no basis. In the estimation of theCompany’s management, based, inter alia, on opinions of its legal counsel regarding the prospects of theproceedings, the financial statements include appropriate provisions where necessary to cover the exposureresulting from the claims.
Various immaterial claims have been filed against Group companies in courts throughout the world, inimmaterial amounts, for causes of action involving mainly employee-employer relations and various civil claims,for which the Company did not record a provision in the financial statements. Furthermore, claims were filedfor product liability damages, for which the Company has appropriate insurance coverage, such that theCompany’s exposure in respect thereof is limited to the amount its deductible requirement or the amount thereofdoes not exceed the deductible amount.
XII. Events subsequent to the balance sheet date
There are no events occur after the balance sheet date.
- 155 -
XIII. Share-based Payments
1. In December 2017, the remuneration committee and the Board of Directors (and the General Meeting withrespect to the CEO) of Adama solutions, a wholly-owned subsidiary, approved the allocation of 49,042,146phantom warrants to officers and employees in accordance with the long-term phantom compensation plan("the Plan"). The allocation date is December 28, 2017
The warrants will vest in four equal portions, where the first and second quarters are exercisable after one year,the third quarter after two years and the fourth quarter after three years from January 1, 2018. The warrantswill be exercisable, in whole or in part, in accordance with the terms of the plan, and subject to achievingfinancial targets as determined in the plan. The warrants may be exercised until the end of 2023.
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 theend of the reporting period, amounted to a total of 113 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.
Statement of share based payments in the period
Phantom warrants
| Total number of Phantom warrants at the beginning of | the period | 48,101,391 | |||||||||
| Total number of Phantom warrants granted in current period | - | ||||||||||
| Total number of Phantom warrants exercised in current period | - | ||||||||||
Total number of Phantom warrants forfeited in current period(231,851)
| Total number of Phantom warrants at | the end of the period | 47,869,540 |
The range of the exercise prices and the remainder of the contractual period
| for Phantom warrants | outstanding at the end of period |
RMB 15.067-
| 15.13, 4.5 | ||||
| years | ||||
The parameters used in implementing the model are as follows:
| Stock price (RMB) | 10.72 | |||||||||
| E | xercise increment (RMB) | 15.067/15.13 | ||||||||
| Expected volatility | 44.83% | |||||||||
| Risk | - | free interest rate | 2.9 | 8 | % | ||||||
| Economic value as of June 30, 2019 (in thousands RMB) | 112,571 | ||||||||||
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) | 93,199 |
Expenses arising from cash-settled share-based payments in
| current period (in thousands RMB) | 30,430 |
- 156 -
XIII. Share-based Payments - (cont’d)
2. In February 2019, the remuneration committee and the Company's Board of Directors (and the GeneralMeeting with respect to the CEO and to a 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"). The allocation date is February 21, 2019.
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 187 million RMB . The liability at the end of the reporting period wasrecorded according to the vesting period as determined in the plan, taking into account the extent of the servicethat the employees provided until that date.
Statement of share based payments in the period
Phantom warrants
| Total number of Phantom warrants at the beginning of the period | - | |||||||||
| Total number of Phantom warrants granted in current period | 76,383,331 | |||||||||
| Total number of Phantom warrants exercised in current period | - | |||||||||
Total number of Phantom warrants forfeited in current period-
| Total number of Phantom warrants at the end of the period | 76,383,331 |
The exercise prices and the remainder of the contractual period for Phantom
| warrants | outstanding at the end of period | RMB 10.03, | 6.5 years | |||||||||||||||||
| The parameters used in implementing the model are as follows: | ||||||||||||||||||||
| Stock price (RMB) | 10.72 | |||||||||||||||||||
| E | xercise increment (RMB) | 10.03/10.85 | ||||||||||||||||||
| Expected volatility | 44.71% | |||||||||||||||||||
| Risk | - | free interest rate | 3.16 | % | |||||||||
| Economic value as of June 30, 2019 (in thousands RMB) | 186,886 | ||||||||||||
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) | 37,590 |
Expenses arising from cash-settled share-based payments in current period
| (in thousands RMB) | 37 | ,064 |
- 157 -
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.
? Other (Non Agro)
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 agro-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 payables, contractual liabilities, deferredincome and lease liabilities. All other assets and liabilities which are not attributable to a specific segment arepresented as unallocated assets and liabilities.
- 158 -
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 (Agro) Other (Non Agro) Elimination among segments Total
Six months ended
June 30
Six months ended
June 30
Six months endedJune 30
Six months endedJune 30
2019
2018 (Restated)
2019
2018 (Restated)
2019
2018 (Restated)
2019
2018 (Restated)
Operating income from external
| customers | 12,302,544 | 12,247,053 | 1,313,488 | 1,392,020 | - | - | 13,616,032 | 13,639,073 | |||||||||||||||||||||||||||||
| Inter | segment operating income | - | - | 692 | 380 | (692) | (380) | - | - | ||||||||||||||||||||||||||||
Interest in the profit or loss of
| associates and joint ventures |
11,463
12,394
10,262
-
-
21,725
12,758
| Segment's results | 1,244,460 | 3,480,246 | 74,943 | 103,115 | - | - | 1,319,403 | 3,583,361 | |||||||||||||||||||
| Financial expenses, net | (938,346) | (347,557) | |||||||||||||||||||||||||
Gain (loss) from changes in fair
| value |
884,135
(243,376)
| Investment income | (536,017) | 134,297 | |||||||||||||||||||||
| Profit before tax | 729,175 | 3,126,725 | |||||||||||||||||||||
| Income tax expense |
(140,537)
(737,558)
| Net profit |
588,638
2,389,167
Crop Protection (Agro) Other (Non Agro) Unallocated assets and liabilities Total
June 30
December 31
June 30
December 31
June 30
December 31
June 30
December 31
2019
2018 (Restated)
2019
2018 (Restated)
2019
2018 (Restated)
2019
2018 (Restated)
| Total assets | 34,676,096 | 32,310,319 | 2,582,309 | 2,404,190 | 8,551,684 | 9,420,554 | 45,810,089 | 44,135,063 | |||||||||||||||||||||||||
| Total liabilities | 4,724,360 | 4,800,772 | 291,902 | 300,843 | 18,314,423 | 16,274,174 | 23,330,685 | 21,375,789 | |||||||||||||||||||||||||
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 159 -
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 fixed assets,right-of-use assets, construction in progress, investment properties intangible assets and goodwill). In the caseof investment property, fixed assets and construction in progress, the geographical location of the assets isbased on its physical location. In case of intangible assets and goodwill, the geographical location of thecompany which owns the assets.
Operating income from external
customers
Six months ended June 30
2019 2018 (Restated)
| Europe | 4,252,479 | 4,469,617 | |||||||||||||
| North America | 2,715,528 | 2,689,565 | |||||||||||||
| Latin America | 2,411,530 | 1,978,828 | |||||||||||||
| Asia Pacific | 2,426,931 | 2,762,968 | |||||||||||||
| Africa, Middle East (including Israel) and India | |||||||||||||||
1,809,564
1,738,095
13,616,032
13,639,073
Specified non-current assets
June 30
December 31
2019
2018 (Restated)
| Europe | 883,894 | 733,855 | ||||||||||||||||
| Latin | America | 2,065,178 | 2,065,089 | |||||||||||||||
| North America | 1,293,860 | 503,093 | ||||||||||||||||
| Asia Pacific | 2,900,154 | 2,815,195 | ||||||||||||||||
| Africa, Middle East (including Israel) and India | ||||||||||||||||||
11,491,336
11,659,701
18,634,422
11,776,933
The dependency on major customers
No single customer's proportion of the total amount of sales is over 10%.
- 160 -
XIV. Other significant items - (cont'd)
2. Calculation of Earnings per share and Diluted earnings per share
Amount forthe currentperiod
Amount forthe priorperiod
| Net profit | from continuing operations | attributable to ordinary shareholders |
588,638
2,389,167
| Thousands shares |
Amount forthe currentperiod
Amount forthe priorperiod
| Number of ordinary shares outstanding at the beginning of the year | 2,446,554 | 2,341,856 | ||||||||||
| Add: weighted average number of ordinary shares issued during the year | - | 104,698 | ||||||||||
Less: weighted average number of ordinary shares repurchased during the
| year |
-
-
Weighted average number of ordinary shares outstanding at the end of the
| year |
2,446,554
2,446,554
In December 2017, non-publicly offered 104,697,982 ordinary shares (A-share) at nominal value of RMB 1 pershare to specific investors. The Company received proceeds of 1,531,920 thousand RMB, net of the issuing cost of28,080 thousand RMB on December 27, 2017.
Amount forthe currentperiod
Amount forthe priorperiodCalculated based on net profit attributable to ordinary shareholders
| Basic earnings per share | 0.24 | 0.9 | 8 | ||||||
| Diluted earnings per share | N/A | N/A | |||||||
Calculated based on net profit from continuing operationsattributable to ordinary shareholders:
| Basic earnings per share | 0.24 | 0.9 | 8 | ||||||
| Diluted earnings per share | N/A | N/A | |||||||
Calculated based on net profit from discontinued operationsattributable to ordinary shareholders:
| Basic earnings per share | N/A | N/A | ||||||
| Diluted earnings per share | N/A | N/A | ||||||
- 161 -
XV. Notes to major items in the Company's financial statements
1. Cash at bank and on hand
June 30 December 31
2019
2018
| Deposits in banks | 2,132,174 | 2,005,313 |
Other cash and bank40,993
52,940
2,173,167
2,058,253
As at June 30, 2019, restricted cash and bank balances was 40,993 thousand RMB (as at December 31, 2018-52,940 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Accounts receivable
a. By category
June 30, 2019
Book value
Provision for bad anddoubtful debts
Amount
Percentage (%)
Amount
Percentage (%)
Carrying
amount
Account receivables assessed
| individually for impairment | 190,972 | 50 | 131,416 | 69 | 59,556 |
Account receivables assessed
| collectively for impairment |
192,663
-
192,514
383,635
131,565
252,070
December 31, 2018
Book value
Provision for bad anddoubtful debts
Amount
Percentage (%)
Amount
Percentage (%)
Carrying
amount
Account receivables assessed
| individually for impairment | 190,376 | 23 | 127,406 | 67 | 62,970 |
Account receivables assessed
| collectively for impairment |
631,764
2,535
-
629,229
822,140
129,941
692,199
b. Aging analysis
June 30, 2019
Within 1 year (inclusive)
194,863
| 194,863 |
Over 1 year but within 2 years
| 73,272 |
Over 2 years but within 3 years
| 103,291 |
Over 3 years but within 4 years
| 2,635 |
Over 4 years but within 5 years
| 1,266 |
Over 5 years8,308
383,635
- 162 -
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 bad and doubtful debts during the period
Six months ended June 30, 2019
| Balance as of January 1, | 129,941 | ||||||||||
| Addition during the year, net | 1,624 | ||||||||||
| Write back during the year | - | ||||||||||
| Write | - | off during the year | |||||||||
| - | |||
| Exchange rate effect |
-
Balance as of December 31
| Balance as of December 31 |
131,565
d. Five largest accounts receivable at June 30, 2019:
Name
Closing balance
Proportion of
receivable (%)
| Accounts | |
Allowance ofdoubtful debts
| Party 1 | 177,039 | 46 | 117,483 | |||||||||||
| Party 2 | 114,094 | 30 | - | |||||||||||
| Party 3 | 47,002 | 12 | - | |||||||||||
| Party 4 | 8,774 | 2 | - | |||||||||||
Party 56,739
-
353,648
117,483
3. Receivable financing
June 30 December 31
2019 2018
| Bank acceptance draft |
46,331 19,917
46,331 19,917
As at June 30, 2019, bank acceptance endorsed but not yet due amounts to 127,816 thousands RMB.
ADAMA Ltd.(Expressed in RMB '000)
Notes to the Financial Statements
- 163 -
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables
June 30
December 31
2019
2018
| Dividends receivable | - | 1,808 |
Other receivables13,912
29,940
13,912
31,748
(1) Dividends receivable
a. Dividends receivable by categories
June 30
December 31
Items/Invested companies2019
2018
Hubei Bank-
1,808
As at 30 June 2019, the Company did not have any significant dividends receivable exceeded 1 year.
(2) Other receivables
a. Other receivables by categories
June 30
December 31
2019
2018
| Other |
| 19,053 | 35,072 |
| Provision for doubtful debts |
(5,141)
(5,132)
13,912
29,940
b. Other receivables by aging
June 30, 2019Within 1 year (inclusive)
13,910
| 13,910 | |||||
| Over 1 year but within 2 years | - | ||||
Over 2 years but within 3 years
| 72 | |||||
| Over 3 years but within 4 years | 10 | ||||
| Over 4 years but within 5 years | - | ||||
Over 5 years5,061
19,053
- 164 -
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 bad and doubtful debts during theperiod:
June 30, 2019
| Six months ended | |||||||||||||||
| Balance as of January 1, 2019 | 5,132 | ||||||||||||||
| Addition during the period | 9 | ||||||||||||||
| Written back during the period | - | ||||||||||||||
| Write | - | off during the period |
-
Balance as of June 30, 2019
| Balance as of June 30, 2019 |
5,141
d. Five largest other receivables at June 30 2019:
Name Closing balance
Proportion of otherreceivables (%) Credit loss provision
Party 1
| Party 1 | 10,553 | 55 | - | |||||||||||
| Party 2 | 3,125 | 16 | 3,125 | |||||||||||
| Party 3 | 2,000 | 11 | - | |||||||||||
| Party 4 | 651 | 3 | - | |||||||||||
Party 5
16,877 88 3,673
- 165 -
XV. Notes to major items in the Company's financial statements - (cont'd)
5. Long-term equity investments
June 30, 2019 December 31, 2018Amountbalance
Impairmentloss Book value
Amountbalance
Impairmentloss Book value
Invest in
| subsidiaries. |
16,403,642
-
16,403,642
15,939,826
-
15,939,826
16,403,642
-
16,403,642
15,939,826
-
15,939,826
Investments in subsidiaries
Invested unit
Openingbalance Increase Decrease
Closingbalance
CurrentprovisionImpairment
loss
BalanceprovisionImpairment
loss
Jingzhou Hongxiang chemical
| co. LTD. | 37,620 | - | - | 37,620 | - | - | |||||||||||||||||||||||||||||
| Hubei Sanonda foreign trade co. | |||||||||||||||||||||||||||||||||||
| LTD. | 11,993 | 11,993 | |||||||||||||||||||||||||||||||||
| Jiangsu Anpon Electrochemical | |||||||||||||||||||||||||||||||||||
| co. LTD. | - | 463,816 | 463,816 | ||||||||||||||||||||||||||||||||
| ADAMA Agricultural Solutions | |||||||||||||||||||||||||||||||||||
| Ltd | |||||||||||||||||||||||||||||||||||
15,890,213
-
-
15,890,213
-
-
15,939,826
463,816
-
16,403,642
-
-
6. Operating Income and operating costs
Six months ended June 30, 2019 Six months ended June 30, 2018
Revenue
Operatingcosts Revenue
Operating
costs
| Main operations | 704,594 | 493,979 | 1,585,485 | 1,096,095 | ||||||||||||||
| Other operations | ||||||||||||||||||
30,832 24,582 81,088 73,662
735,426 518,561 1,666,573 1,169,757
- 166 -
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 endedJune 30, 2019
Six months ended
June 30, 2018
| Interest income | 14,333 | 13,035 | |||||||||||
| Government subsidies | 4,414 | 748 | |||||||||||
| Other |
211 1,409
18,958 15,192
(2) Other cash paid relevant to operating activities
Six months endedJune 30, 2019
Six months endedJune 30, 2018
| Professional services | 44,848 | 36,133 | |||||||||||||
| Transportation and Commissions | 28,438 | 38,259 | |||||||||||||
Other16,284 11,790
89,570 86,182
(3) Other cash received relevant to financing activities
Six months endedJune 30, 2019
Six months ended
June 30, 2018
Restricted cash11,947 -
(4) Other cash paid relevant to financing activities:
Six months endedJune 30, 2019
Six months endedJune 30, 2018
| Repurchase of B shares | - | 393,025 | ||||||||||||||
| Restricted cash | - | 28,150 | ||||||||||||||
Other200 3,138
200 424,313
- 167 -
XV. Notes to major items in the Company's financial statements - (cont'd)
8. Supplementary information to cash flow statement
Six months ended June 30
2019 2018a. Reconciliation of net profit to net cash flows generated
from operating activities:
Net profit
| (37,789) | 282,383 |
Add: Assets impairment loss
| 272 | 905 |
Credit impairment loss
| 1,633 | 3,073 |
| Depreciation of fixed assets | 99,602 | 79,145 |
Amortization of intangible assets
| 2,347 | 2,503 |
Amortization of-right-of use assets
| 209 | N/A |
Loss on disposal of fixed assets, intangible assets and other
| long | - | term assets | 293 | 44 |
Financial expenses
| 12,588 | (9,876) |
Decrease (increase) in deferred income tax assets
| (11,220) | (4,870) |
Decrease (increase) in inventory
| 39,895 | 13,343 |
Increase in accounts receivable from operating activities
| 411,591 | 15,037 |
Increase in payables from operating activities(236,900)99,968Net cash flows generated from operating activities282,521 481,655
b. Net increase in cash and cash equivalents
Closing balance of cash
| 2,132,174 | 1,761,572 |
Less: Opening balance of cash2,005,3131,864,003
Net increase in cash and cash equivalents126,861(102,431)
- 168 -
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Related parties and related parties transactions
(1) Information on parent Company
Companyname
Registeredplace
Business nature
Registeredcapital(Thousand)
Shareholdingpercentage (%)
Percentageof voting rights (%)
| CNAC | Beijing, China |
Production and sales of
| agrochemicals | 3,338,220 | 78.91 | 78.91 |
The ultimate controller of the company is China National Chemical Corporation.
(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
2019
2018
Related Party Relationship
Summary of Purchase of goods/services
| received: |
Purchase of goods/services received Common control under
| ChemChina | 7,571 | 7,846 |
Purchase of fixed assets and other assets Common control under
| ChemChina | 12,766 | 54,060 | ||||||||||||||||||||||||||||||
| Purchase of goods/services received | Subsidiary | 48,064 | 114,174 | |||||||||||||||||||||||||||||
| Summary of Sales of goods: | ||||||||||||||||||||||||||||||||
| Sale of goods | Subsidiary | 260,266 | 419,636 | |||||||||||||||||||||||||||||
| Sale of raw materials | Subsidiary | 331 | 54,210 | |||||||||||||||||||||||||||||
| Sale of fixed assets | Subsidiary | - | 1,528 | |||||||||||||||||||||||||||||
- 169 -
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. Leases
The Company as lessor
June 30
December 31
Type of leased assets Lessee 2019
2018
Building and Structures Common control under
| ChemChina |
-
The Company as the guarantee receiver
Guarantee provider
Amount ofguaranteedloan
Inceptiondate ofguaranty
Maturity
date ofguaranty
Guarantycompleted(Y/ N)
Parent
| 300,000 | 20/11/2017 | 20/11/2022 | N | ||||||||||||||||||
| 50,000 | 18/10/2017 | 18/10/2021 | N | ||||||||||||||||||
| 100,000 | 13/06/2018 | 12/06/2022 | N | ||||||||||||||||||
| Ultimate controller | |||||||||||||||||||||
| 160,000 | 27/05/2014 | 09/06/2021 | |||||||||||||||||||
Y
- 170 -
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)
c. Receivables from and payables to related parties (including loans)
Receivable Items
June 30
December 31
2019
2018
Items
Related PartyRelationship
BookBalance
Bad debtProvision
BookBalance
Bad debtProvision
| Trade receivables | Subsidiary | 338,135 | 117,483 | 753,369 | 113,245 | ||||||||||||||||
| Prepayments |
Common control under
| ChemChina | 684 | - | 298 | - | ||||||||||||
Other non-current
| assets |
Common control under
| ChemChina | 38,098 | - | - | - |
Payable Items
June 30
December 31
Items Related Party Relationship 2019
2018
| Trade payables | Common control under ChemChina | 2,974 | 184 | |||||||||||||||
| Other payables | Subsidiary | 102,170 | 105,164 | |||||||||||||||
| Other payables | Common control under ChemChina | 415,250 | 240 | |||||||||||||||
Other non-current
| liabilities* | Common control under ChemChina | 171,770 | 171,770 |
*loans from related party, the interest expense for the 6 months ended June 30, 2019 and 2018 was1,042 thousand RMB for each of the periods.
d. Other related party transactions
The closing balance of bank deposit in ChemChina Finance Corporation was 231,316 thousand RMB(31.12.18: 295,661 thousand RMB) Interest income of bank deposit for the current period was 1,654thousand RMB (amount for six months ended June 30, 2018 is 738 thousand RMB).
ADAMA Ltd. Semi-Annual Report 2019
Supplementary information(Expressed in RMB '000)
1. Extraordinary Gain and Loss
Six months ended
June 30, 2019
| Disposal of non | - | current assets | 115,514 | |||||||
| Government grants recognized through profit or loss | 14,854 | |||||||||
Profit of subsidiaries generated before combination date of a business combination involving
| enterprises under common control | 38,027 | ||||||||||
| Recovery or reversal of provision for bad debts which is assessed individually during the years | 15,748 | ||||||||||
| Other non | - | operating income and expenses besides items above | (8,431) | ||||||||
| Tax effect | |||||||||||
(17,344)
158,368
Note: Extraordinary gain and loss items listed above are presented in the amount before taxation
2. Return on net assets and earnings per share (“EPS”)
The information of Return on net assets and EPS is in accordance with the Preparation Rules for InformationDisclosure by Companies Offering Securities to the Public No. 9 – Calculation and Disclosure of Return on netassets and Earnings per share (2010 Amendment) issued by China Securities Regulatory Commission
Profit during the reporting period
Weighted average
| Weighted average | |
| rate of return on net | |
assets (%)
Basic EPS
(RMB/share)
Diluted EPS
(RMB/share)
Net profit attributable to ordinary
| shareholders of the Company | 2.59% |
| 0.24 |
| N/A |
Net profit after deduction of extraordinarygains/losses attributable to ordinary
| shareholders of the Company | 1.89% |
0.18
| 0.18 |
N/A
| N/A |
ADAMA Ltd. Semi-Annual Report 2019
Supplementary information - (cont'd)(Expressed in RMB '000)
3. Supplementary information for retrospective restatement
During March 2019, the acquisition of Anpon, a wholly-owned subsidiary of CNAC, was successfullycompleted. On March 29, 2019, the entire share capital of Anpon was transferred from CNAC to theCompany, in return for cash installments of 415 million RMB. The transaction was considered as abusiness combination under common control.
The restated consolidated balance sheets as at January 1, 2018 and December 31, 2018 are as follows:
| January 1, | December 31 | June 30 |
2018 2018 2019
| (Restated) | (Restated) | |||||||||||||||||||||||||||||||||||||||||||||
| Current assets | ||||||||||||||||||||||||||||||||||||||||||||||
| Cash at bank and on hand | 7,984,102 | 6,400,190 | 5,425,392 | |||||||||||||||||||||||||||||||||||||||||||
| Financial assets at fair value through profit or loss | 23,000 | 46,095 | 33,074 | |||||||||||||||||||||||||||||||||||||||||||
| Derivative financial assets | 455,153 | 517,726 | 416,991 | |||||||||||||||||||||||||||||||||||||||||||
| Bills receivables | 29,927 | 40,569 | 54,702 | |||||||||||||||||||||||||||||||||||||||||||
| Accounts receivable | 5,229,446 | 6,573,100 | 7,674,381 | |||||||||||||||||||||||||||||||||||||||||||
| Receivables financing | 282,645 | 7 | 3,216 | 6 | 8 | , | 629 | |||||||||||||||||||||||||||||||||||||||
| Prepayments | 298,036 | 410,506 | 319,471 | |||||||||||||||||||||||||||||||||||||||||||
| Other receivables | 1,083,330 | 1,079,332 | 929,945 | |||||||||||||||||||||||||||||||||||||||||||
| Inventories | 7,669,358 | 9,433,876 | 10,337,924 | |||||||||||||||||||||||||||||||||||||||||||
| Assets held for sale | 403,297 | |||||||||||||||||||||||||||||||||||||||||||||
| Non | - | current assets due within one year | 46 | 48 | ||||||||||||||||||||||||||||||||||||||||||
| Other current assets | ||||||||||||||||||||||||||||||||||||||||||||||
614,957
660,806
715,767
Total current assets
24,073,297
25,235,464
25,976,276
| Non | - | current assets | ||||||||||||||||||||||||||||||||||||||||||||
| Available | for | sale financial assets | 91,090 | 157,600 | 174,246 | |||||||||||||||||||||||||||||||||||||||||
| Long | term | receivables | 192,968 | 108,350 | 135,075 | |||||||||||||||||||||||||||||||||||||||||
| Long | - | term equity investments | 102,384 | 91,559 | 87,812 | |||||||||||||||||||||||||||||||||||||||||
| Investment properties | 4,408 | 4,094 | 3,933 | |||||||||||||||||||||||||||||||||||||||||||
| Fixed assets | 6,872,164 | 7,263,866 | 7, | 16 | 7 | , | 0 | 32 | ||||||||||||||||||||||||||||||||||||||
| Construction in progress | 841,100 | 487,204 | 534,351 | |||||||||||||||||||||||||||||||||||||||||||
| R | ight | of | use assets | N/A | N/A | 554,372 | ||||||||||||||||||||||||||||||||||||||||
| Intangible assets | 4,102,983 | 5,741,962 | 5,802,932 | |||||||||||||||||||||||||||||||||||||||||||
| Goodwill | 3,890,097 | 4,085,945 | 4,298,747 | |||||||||||||||||||||||||||||||||||||||||||
| Deferred tax assets | 896,326 | 741,737 | 767,928 | |||||||||||||||||||||||||||||||||||||||||||
| Other non | current assets | |||||||||||||||||||||||||||||||||||||||||||||
183,519
217,282
307,385
Total non
| Total non | - | current assets |
17,177,039
18,899,599
19,833,813
| Total assets |
41,250,336
44,135,063
45,810,089
ADAMA Ltd. Semi-Annual Report 2019
Supplementary information - (cont'd)(Expressed in RMB '000)
3. Supplementary information for retrospective restatement - (cont'd)
January 1, December 31 June 30
| 2018 | 2018 | 2019 | ||||||||||||||||||
| (Restated) | (Restated) | |||||||||||||||||||
Current liabilities
| Short | term loans | 3,080,912 | 1,122,774 | 2,308,286 | |||||||||||||||||||||||||
| Derivative financial liabilities | 789,050 | 1,451,670 | 688,267 | ||||||||||||||||||||||||||
| Bills payable | 311,557 | 445,533 | 375,777 | ||||||||||||||||||||||||||
| Accounts payable | 3,983,018 | 4,627,936 | 4,178,668 | ||||||||||||||||||||||||||
| Contract liabilities | 781,374 | 848,402 | 917,747 | ||||||||||||||||||||||||||
| Employee benefits payable | 1,013,830 | 944,175 | 912,354 | ||||||||||||||||||||||||||
| Taxes payable | 437,457 | 616,780 | 437,227 | ||||||||||||||||||||||||||
| Other payables | 1,062,400 | 1,197,579 | 1,970,641 | ||||||||||||||||||||||||||
| Non | - | current liabilities due within one year | 448,504 | 301,814 | 422,208 | ||||||||||||||||||||||||
| Other current liabilities | |||||||||||||||||||||||||||||
466,078
578,184
344,127
Total current liabilities
12,374,180
12,134,847
12,555,302
| Non | - | current liabilities | ||||||||||||||||||||||||||||||||||
| Long | - | term loans | 514,320 | 235,819 | 673,796 | |||||||||||||||||||||||||||||||
| Debentures payable | 7,777,410 | 7,649,098 | 8,152,990 | |||||||||||||||||||||||||||||||||
| L | ease liabilities | N/A | N/A | 418,814 | ||||||||||||||||||||||||||||||||
| Long | - | term | payables | 23,909 | 25,106 | 26,419 | ||||||||||||||||||||||||||||||
| Long | - | term employee benefits payable | 652,071 | 620,646 | 644,449 | |||||||||||||||||||||||||||||||
| Provisions | 186,020 | 132,351 | 135,924 | |||||||||||||||||||||||||||||||||
| Deferred tax liabilities | 224,613 | 392,404 | 350,735 | |||||||||||||||||||||||||||||||||
| Other non | - | current liabilities | ||||||||||||||||||||||||||||||||||
225,586
199,930
372,256
Total non-current liabilities
9,603,929
9,255,354
10,775,383
| Total liabilities |
21,978,109
21,390,201
23,330,685
| Shareholders' capital | ||||||||||||||||||||||||||||
| Share capital | 2,446,554 | 2,446,554 | 2,446,554 | |||||||||||||||||||||||||
| Capital reserve | 13,331,312 | 13,324,491 | 12,903,168 | |||||||||||||||||||||||||
| Other comprehensive income | (104,048) | 1,090,827 | 972,845 | |||||||||||||||||||||||||
| Special reserves | 9,349 | 13,536 | 16,798 | |||||||||||||||||||||||||
| Surplus reserve | 207,823 | 240,162 | 240,162 | |||||||||||||||||||||||||
| Retained earnings | ||||||||||||||||||||||||||||
3,381,237
5,629,292
5,899,877
Total shareholders’ equity
| Total shareholders’ equity |
19,272,227
22,744,862
22,479,404
Total liabilities and shareholders’ equity
41,250,336
44,135,063
45,810,089
ADAMA Ltd. Semi-Annual Report 2019
Section XI Documents Available for Reference(I) Financial Statements carried with signatures and seals of Legal Representative and Accounting Principal as well as Head of theAccounting Organ;(II) In the Reporting Period, originals of all documents of the Company ever disclosed publicly in media designated by China SecuritiesRegulatory Commission as well as the originals of all the public notices were deposited in the office of the Company.
ADAMA Ltd.Legal Representative: Chen Lichtenstein
August 21, 2019