ADAMA Reports Full Year and Fourth Quarter 2022 Results
Record Sales & EBITDA in Full Year 2022
Full Year 2022 Highlights:
? Sales up 16% to a record-high of $5,570 million (+20% in RMB terms; +19% in CER
terms),driven by 16% higher prices and 4% volume growth
? Improvement of Opex/Sales ratio of 19.9% vs. 20.5% in 2021; Adjusted operating income up 8%
to $458 million (RMB: +11%)? Adjusted EBITDA up 10% to $740 million (RMB: +14%) vs. $671 million in the full year of 2021? Adjusted net income amounted to $118 million; Reported net income nearly tripled to $96 millionFourth Quarter 2022 Highlights:
? Sales down 2% to $1,312 million (+9% in RMB terms; +1% in CER terms), 6% higher prices and
6% decrease in volume
? Adjusted EBITDA amounted to $129 million vs. $207 million in Q4 2021? Adjusted net loss of $42 million; Reported net loss of $22 million
BEIJING, CHINA and TEL AVIV, ISRAEL, March 20, 2023 – ADAMA Ltd. (the “Company”) (SZSE000553), today reported its financial results for the fourth quarter and twelve-month period endedDecember 31, 2022.Ignacio Dominguez, President and CEO of ADAMA, said, "As we enter the year of 2023, we reflecton the remarkable year that was 2022. This was a year in which the crop protection marketexperienced exceptional growth, both in volumes, and especially in prices largely aimed to offsetincreases in costs. I am happy to say that ADAMA grew with the market reaching record sales andEBITDA in 2022."As 2022 proceeded, crop commodity prices came down from their peak, maintaining historicallyelevated levels. This has continued into 2023, while fertilizer and energy prices declined at a slowerpace, leading to lower but still historically high farmer profitability. With high inventories in the market,
we anticipate a gradual return to normalization in the crop protection market towards the second half
of 2023."We believe that in 2023 farmers will continue to invest in crop protection products that bring themincremental value. In 2022 ADAMA introduced many differentiated products to the market, optimizingits offering to farmers around the globe while maintaining simplicity in doing business, and intends to
continue to do so in 2023."
Table 1. Financial Performance Summary
| USD (m) | As Reported | Adjustments | Adjusted | |||||||
| Q4 2022 | Q4 2021 | % Change | Q4 2022 | Q4 2021 | Q4 2022 | Q4 2021 | % Change | |||
Revenues
| Revenues | 1,312 | 1,337 | (2%) | - | - | 1,312 | 1,337 | (2%) | |||
| Gross profit | 304 | 343 | (11%) | 36 | 69 | 341 | 412 | (17%) | |||
| % of sales | 23.2% | 25.6% | 26.0% | 30.8% | |||||||
| Operating income (EBIT) | 26 | 110 | (76%) | 28 | 33 | 55 | 143 | (62%) | |||
| % of sales | 2.0% | 8.2% | 4.2% | 10.7% | |||||||
| Income before taxes | (20) | 47 | (18) | 34 | (39) | 81 | |||||
| % of sales | (1.6%) | 3.5% | (2.9%) | 6.0% | |||||||
| Net income | (22) | 25 | (19) | 29 | (42) | 54 | |||||
| % of sales | (1.7%) | 1.9% | (3.2%) | 4.0% | |||||||
| EPS | |||||||||||
| - USD | (0.0096) | 0.0108 | (0.0178) | 0.0231 | |||||||
| - RMB | (0.0681) | 0.0692 | (0.1265) | 0.1476 | |||||||
| EBITDA | 127 | 188 | (33%) | 2 | 19 | 129 | 207 | (38%) | |||
| % of sales | 9.6% | 14.1% | 9.8% | 15.5% |
| USD (m) | As Reported | Adjustments | Adjusted | |||||||
| 2022 | 2021 | % Change | 2022 | 2021 | 2022 | 2021 | % Change | |||
Revenues
| Revenues | 5,570 | 4,813 | +16% | - | - | 5,570 | 4,813 | +16% | |||
| Gross profit | 1,403 | 1,183 | +19% | 162 | 229 | 1,565 | 1,412 | +11% | |||
| % of sales | 25.1% | 24.6% | 28.1% | 29.3% | |||||||
| Operating income (EBIT) | 389 | 291 | +34% | 68 | 129 | 458 | 425 | +8% | |||
| % of sales | 7.0% | 6.0% | 8.2% | 8.8% | |||||||
| Income before taxes | 118 | 85 | +40% | 25 | 134 | 144 | 219 | (34%) | |||
| % of sales | 2.1% | 1.8% | 2.6% | 4.6% | |||||||
| Net income | 96 | 25 | +292% | 21 | 115 | 118 | 139 | (15%) | |||
| % of sales | 1.7% | 0.5% | 2.1% | 2.9% | |||||||
| EPS | |||||||||||
| - USD | 0.0413 | 0.0106 | 0.0505 | 0.0596 | |||||||
| - RMB | 0.2616 | 0.0676 | 0.3177 | 0.3843 | |||||||
| EBITDA | 731 | 593 | +23% | 9 | 79 | 740 | 671 | +10% | |||
| % of sales | 13.1% | 12.3% | 13.3% | 13.9% |
Notes:
? “As Reported” denotes the Company’s financial statements according to the Accounting Standards for Business Enterprises and the
implementation guidance, interpretations and other relevant provisions issued or revised subsequently by the Chinese Ministry ofFinance (the “MoF) (collectively referred to as “ASBE”). Note that in the reported financial statements, as a result of recent changes inthe ASBE guidelines [IAS 37], certain items as of Q4 2021 (specifically certain transportation costs and certain idleness charges) havebeen reclassified from Operating Expenses to COGS. Please see the appendix to this release for further information.? Relevant income statement items contained in this release are also presented on an “Adjusted” basis, which exclude items that are ofa transitory or non-cash/non-operational nature that do not impact the ongoing performance of the business, and reflect the way theCompany’s management and the Board of Directors view the performance of the Company internally. The Company believes thatexcluding the effects of these items from its operating results allows management and investors to effectively compare the trueunderlying financial performance of its business from period to period and against its global peers. A detailed summary of theseadjustments appears in the appendix below.? The number of shares used to calculate both basic and diluted earnings per share in both Q4 and FY 2021 and 2022 is 2,329.8 millionshares.? In this table and all tables in this release numbers may not sum due to rounding.
The general crop protection market environment
Crop prices reached record levels in May 2022, driven by tight stocks, adverse weather conditionsand the Ukraine-Russia conflict which disrupted the supply of commodities. Prices have since declinedbut are expected to remain above pre-pandemic levels
. The high crop prices drove strong farmerincome, despite the higher cost environment (fertilizer, chemicals, labor, energy) faced by farmers. Asa result, crop protection demand stayed strong in 2022 and farmers were able to absorb cropprotection price increases. Going into 2023, crop protection channel inventories in some regions areabove average, which may dampen demand in the near future.The cost environment has improved throughout the second half of 2022, as raw material and activeingredient prices in China continued to decline, logistic prices normalized and energy prices eased.However, costs are still higher than pre-pandemic levels, with some areas still experiencing especiallyhigh costs, like European co-formulants and inland transportation.Sustainability
? Promoting sustainability in agriculture by providing a solution that enables farmers to switch toa crop that requires less water:
Double Team? Sorghum Cropping Solution provide farmers with FirstAct?, a post-emergentgrass weed control and a herbicide-tolerant DT? trait hybrid seed, providing them the tools toswitch to Sorghum, a drought tolerant crop that requires less water, enabling regenerativefarming practices.The Double Team? Sorghum Cropping Solution is a joint effort between ADAMA US andS&W Seed Co.? Sustainability in Products:
ADAMA's high-load formulations in Australia have led to substantial savings in energy/waterconsumption, usage of co-formulants, amount of packaging used, storage and accompanyingmaterials as well as transportation.ADAMA's new proprietary high-load formulation technology platform Sesgama?, has beengranted a patent.? Sustainability in manufacturing:
Carbon footprint reduction of a high-margin leading insecticide by lowering energy usage andreducing CO
emissions, while increasing production output and capacity.
Portfolio Development Update
Formulation Mastery progress:
? Araddo
?
, a dual mode herbicide for use in soybean won the award for “Best FormulationInnovation” in the IHS Markit's 2022 Crop Science Forum & Awards, November 2022. Araddo
?
is the first product to combine ACC'ase Inhibition and Auxin herbicidal modes of action,overcoming the chemical degradation between the two active ingredients.? Patent granted for Sesgama?, a proprietary formulation technology platform for high-load andother challenging formulations, enabling less use of co-formulants, transport and packaging
Sources: Rabobank, Agri Commodity Markets Research, Dec 2022; AgbioInvestor-Quarterly-Briefing-Service-PLUS_Q4-2022;
JPM: Global Economic Research, Global Data Watch, Dec 2022; JPM: Agricultural Markets Weekly, Dec 2022
Source: AgbioInvestor-Quarterly-Briefing-Service-PLUS_Q4-2022
materials per acre treated with a resulting improved product sustainability profile. First productsexpected to be launched in the coming year.Product Launches & Registrations:
During 2022 ADAMA continued to register and launch multiple new products in markets across theglobe, adding on to its differentiated product portfolio. Differentiated products may also be based onrecently off-patented active ingredients (AI's) that have been classified as high commercial potential -"Core Leap" AI's and include a variety of product characteristics such as (i) unique proprietaryformulations, (ii) products with more than one mode of action, and (iii) biologicals. Among these were:
Launch of 18 new differentiated products during 2022 in select countries including the followingproducts during the fourth quarter of 2022:
? Launch in Brazil of Protege
?
, a microbial based biological nematicide and fungicide (based ona triple microbe combination) for sugarcane and soybean that also increases productivity.? Launch in Brazil of Emerge
?
, a bio-stimulant based on an enriched fermented SeaweedExtract, promoting root/vegetative growth and nutrient uptake in the establishment phase,targeted for Soybean, Cotton and Corn.? Launch in several central American countries of ADAMA's sustainable offering of biologicalproducts including Expert Grow
?
.? Launch in Ecuador of Custodia
?
Active, a broad-spectrum dual action systemic fungicide foruse in Rice and Corn that also increases productivity.? Label Extension of Folpan 500 SC
?
in Germany a multi-site contact mode-of-action fungicide,for use on Barley against leaf spot diseases. (during Q2 2022 this product was granted"Nationwide emergency registration for FOLPAN? 500 SC against Ramularia collo-cygni inBarley" allowing it to be used only for this specification.)? Launch in Panama and El Salvador of Trivor
?
, a dual action insecticide for use in Vegetables.? Launch in several central American countries of Banjo Forte 400 SC
?
, a dual mode foliarfungicide for use in Fruit, Vegetables and specialty crops.? Launch in Russia of Cormoran
?
, a dual mode insecticide that includes ADAMA's proprietaryAI Novaluron.? Pre-launch in Paraguay of Araddo
?
, an innovative dual mode herbicide and Plethora
?
, abroad spectrum, dual mode insecticide that includes ADAMA's proprietary AI Novaluron andIndoxacarb produced in-house.? Launch in France of Helanov
?
, a differentiated herbicide for use in Sugar Beets.Registration of 10 new differentiated products during 2022 in select countries including the followingproducts during the fourth quarter of 2022:
? Registration in India for "Core Leap" insecticide AI, Chlorantraniliprole (CTPR).? Registration in the USA of Fullscript?, a dual mode herbicide for rice, part of the FullPage
?
rice cropping solution, in collaboration with Rice Tech.? Registration in Paraguay of Apresa
?
, a pre-emergent dual mode herbicide, powered by
ADAMA’s proprietary T.O.V. Formulation Technology.
Financial Highlights
Revenues in the fourth quarter declined by approximately 2% (+9% in RMB terms; +1% in CER terms)to $1,312 million, reflecting an increase of 6% in prices and a decrease of 6% in volumes mainly dueto advancement of sales in Brazil from the fourth quarter in 2022 to the third quarter, a decline in rawmaterial, fine chemicals and intermediates sales in China and the depreciation of the Euro incomparison to the US Dollar. Despite the shift of sales in Brazil from the fourth quarter to the thirdquarter, the Company's sales grew in constant exchange rates across most regions.In the full year 2022, sales reached a record-high of $5,570 million, an increase of 16% (+20% in RMBterms; +19% in CER terms), driven by a 16% increase in prices and a 4% growth in volume. Theincrease in sales in the full year period reflected the strong demand in the market for crop protectionproducts, led by sales in Brazil and China.
Table 2. Regional Sales Performance
* As of 2023, the India, Middle East & Africa (IMA) region has been reorganized such that the countriesformerly included in this region will now be included in the Europe region (renamed EAME) or in theAsia Pacific region. Proforma regional sales will be provided in the quarterly 2023 financial resultspress releases.
Europe: Excluding Ukraine based sales, the sales in Europe grew by a double-digit percentagein the fourth quarter and full year period. This growth was achieved by gaining market share overthe year in some key countries such as France, Italy, Romania and Greece and was alsosupported by the introduction of the product Soratel
?
, which includes ADAMA’s proprietaryAsorbital formulation technology. The growth was achieved despite drought mainly in the southof Europe, supply challenges and high channel inventories in some countries.North America: In the US Ag market, sales increased in the full year period despite adverseweather conditions mainly in the second half of the year, impacting the California Fruit &Vegetable market and the Cotton market across Texas and the southwest regions, both importantmarkets for the Company.Very strong growth in sales achieved in Canada in the full year period and fourth quarter in allcategories: herbicides, fungicides and insecticides. The Company's new in-house production atHuifeng of cereal herbicides supported sales against the backdrop of supply shortages in themarket, while broadening of the fungicide portfolio and increased insect pressure drove fungicideand insecticide sales, respectively.The Consumer & Professional business grew nicely over the full year period following robustdemand, while in the second half of the year there was a slowdown in this growth due to
| Q4 2022 $m | Q4 2021 $m | Change USD | Change CER | 2022 $m | 2021 $m | Change USD | Change CER |
Europe
| Europe | 254 | 247 | 3% | 12% | 1,115 | 1,072 | 4% | 11% |
North America
| North America | 291 | 289 | 1% | 2% | 1,027 | 917 | 12% | 12% |
Latin America
| Latin America | 431 | 456 | (5%) | (9%) | 1,592 | 1,276 | 25% | 22% |
Asia Pacific
| Asia Pacific | 208 | 221 | (6%) | 0% | 1,166 | 898 | 30% | 34% |
Of which China
| Of which China | 130 | 133 | (2%) | 1% | 735 | 513 | 43% | 45% |
India, Middle East & Africa
| India, Middle East & Africa | 127 | 125 | 2% | 14% | 669 | 650 | 3% | 16% |
Total
| Total | 1,312 | 1,337 | (2%) | 1% | 5,570 | 4,813 | 16% | 19% |
inflationary pressure on consumer demand and a slowdown in the professional market mostlydue high levels of inventory in the channel and expectation for price decreases.Latin America: In the full year period the Company achieved very strong growth in sales in Brazil,driven by prices, volume and new innovative formulation product launches, such as fungicideARMERO
?
and herbicide ARADDO
?
. Slowdown in sales in Brazil in the fourth quarter was due toadvancement of sales from the fourth quarter in 2022 to the third quarter.In other LATAM countries higher sales were achieved in the full year period despite adverseweather conditions. In the fourth quarter the sales remained stable. During 2022 the Companycontinued with the rollout of biological products in this region, which is a key market for Fruit &Vegetable crops for export.Asia-Pacific (APAC): During the full year period of 2022 the Company’s significant growth inAsia Pacific was led by the strong sales of raw material, intermediates and fine chemicals in China.In the fourth quarter, a decline was recorded in such sales following the softening of demand inthe Chinese market and an overall decline in market prices. The sales in China of ADAMA'sbranded portfolio also continued to grow nicely during the full year period despite the strongcompetition in the market, and also included the contribution of a company acquired in 2021.In the wider APAC region growth in sales in the full year period was supported by the positiveimpact of a rare 3
rd
consecutive year of La Ni?a and despite strong competition from China. In thefourth quarter, sales were negatively impacted by excessive rain and flooding in some key areasof the region. The slowdown in sales in the fourth quarter in the Pacific region was also due toadvancement of sales from the fourth quarter in 2022 to the third quarter.India, Middle East & Africa: Sales grew moderately in USD terms and nicely in constantexchange rates in 2022 and in the fourth quarter. In the full year period the growth was led byMiddle Eastern countries, as 2021 was a very strong year in India. In the fourth quarter the salesin India also grew nicely due to positive weather conditions.Gross Profit reported in the fourth quarter declined by 11% to $304 million (gross margin of 23.2%)compared to $343 million (gross margin of 25.6%) in the same quarter last year and increased by 19%to $1,403 million (gross margin of 25.1%) in the full year of 2022 compared to $1,183 million (grossmargin of 24.6%) in 2021.
Adjustments to reported results: The adjusted gross profit includes all idleness costs,inventory impairment and taxes and surcharge and excludes certain transportation costs(classified under operating expenses).Additionally, in the fourth quarter and full year of 2021 certain extraordinary chargesrelated largely to a temporary disruption of the production of certain products wereadjusted. These charges have significantly declined since the first quarter of 2022, as therelocation and upgrade of the manufacturing Jingzhou site in China has been completedand is now at a high level of operation.Excluding the impact of the abovementioned extraordinary items, adjusted gross profit in the fourthquarter was down 17% to $341 million (gross margin of 26.0%) compared to $412 million (grossmargin of 30.8%) in the same quarter last year and was up 11% to $1,565 million (gross margin of
28.1%) in the full year of 2022 compared to $1,412 million (gross margin of 29.3%) in 2021.The decline in gross profit in the fourth quarter was due to the decline in sales, as described above,exchange rates and higher procurement, production and logistics costs, which were impactedamongst other factors by higher inflation. Likewise, during the quarter, the Company recorded certainnon-recurring expenses attributed to implementation of sustainable manufacturing practices.
For the full year period, the higher gross profit was mainly driven by the markedly higher prices,complemented by volume growth, which offset the higher logistic, procurement and production costs,as well as the negative impact of exchange rates.Operating expenses reported in the fourth quarter were $278 million (21.2% of sales) and $1,013million (18.2% of sales) in the full year of 2022, compared to $233 million (17.4% of sales) and $892million (18.5% of sales) in the corresponding periods last year, respectively.Adjustments to reported results: please refer to the explanation regarding adjustments tothe gross profit in respect to certain transportation costs, idleness, taxes and surchargesand inventory impairment.Additionally, the Company recorded certain non-operational charges within its reportedoperating expenses amounting to $26 million in Q4 2022 in comparison to $1 million in Q42021 and $57 million in the full year of 2022 in comparison to $33 million in 2021. Thesecharges include mainly (i) non-cash amortization charges in respect of Transfer Assetsreceived from Syngenta related to the 2017 ChemChina-Syngenta acquisition, (ii) chargesrelated to the non-cash amortization of intangible assets created as part of the PurchasePrice Allocation (PPA) on acquisitions, with no impact on the ongoing performance of thecompanies acquired, (iii) provision for asset impairment in one of its subsidiaries and (iv)incentive plans - share-based compensation. For further details on these non-operationalcharges, please see the appendix to this release.Excluding the impact of the abovementioned non-operational charges, adjusted operating expensesin the fourth quarter and full year of 2022 were $286 million (21.8% of sales) and $1,107 million (19.9%of sales), compared to $269 million (20.1% of sales) and $986 million (20.5% of sales) in thecorresponding periods last year, respectively.The higher operating expenses in the fourth quarter reflected inflationary pressures. In the full year of2022, the higher operating expenses also reflected the strong growth of the business, which includedhigher transportation and logistics costs, an increase in expenses attributed to company success-based employee compensation, the contribution of a company acquired in 2021, a doubtful debtprovision for trade receivables in Ukraine moderated by the positive impact of exchange rates.Operating income reported in the fourth quarter amounted to $26 million (2.0% of sales) comparedto $110 million (8.2% of sales) in the same quarter last year and was up 34% to $389 million (7.0% ofsales) in the full year of 2022 compared to $291 million (6.0% of sales) last year.Excluding the impact of the abovementioned non-operational items, adjusted operating income inthe fourth quarter amounted to $55 million (4.2% of sales) compared to $143 million (10.7% of sales)in the same quarter last year and was up 8% to $458 million (8.2% of sales) in the full year of 2022compared to $425 million (8.8% of sales) in 2021.EBITDA reported in the fourth quarter amounted to $127 million (9.6% of sales) compared to $188million (14.1% of sales) in the same quarter last year and was up 23% to $731 million (13.1% of sales)in the full year of 2022 compared to $593 million (12.3% of sales) last year.Excluding the impact of the abovementioned non-operational items, adjusted EBITDA in the fourthquarter amounted to $129 million (9.8% of sales) compared to $207 million (15.5% of sales) in thesame quarter last year and was up 10% to $740 million (13.3% of sales) in the full year of 2022compared to $671 million (13.9% of sales) in 2021.Financial expenses reported amounted to $47 million in the fourth quarter and $271 million in the fullyear of 2022, compared to $63 million and $207 million in the corresponding periods last year,respectively.
Adjustments to reported results: The adjusted financial expenses have been adjusted fora non-recurring, non-cash, income due to revaluation of put options attributed to minoritystakes.Adjusted financial expenses were $94 million in the fourth quarter and $314 million in the full yearof 2022, compared to $62 million and $206 million in the corresponding periods last year, respectively.The higher financial expenses were mainly driven by (i) the net effect of the high Israeli CPI on theILS-denominated, CPI-linked bonds and (ii) higher hedging costs on exchange rates mainly due tovolatility in the ILS/Dollar exchange rate. In the full year period, these expenses also included putoptions attributed to minority stakes acquired in 2021.Adjusted Taxes on income in the fourth quarter were $3 million and $26 million in the full year of2022, compared to $27 million and $79 million in the corresponding periods last year, respectively.In the fourth quarter of 2022 the taxes were significantly lower due to recording a loss before tax incomparison to a profit before tax in the fourth quarter of 2021 and due to the impact of the strongerBRL that led to lower tax expenses; impacts which were moderated by a one-time tax expense electingto apply for temporary relief available in 2022 and reducing tax exposure in Israel going forward.In the full year of 2022, the company also recognized a higher deferred tax asset, related to inter-group sales, that led to a decline in the tax on income.Net income attributable to the shareholders of the Company, in the fourth quarter the Companyreported a net loss of $22 million and in the full year of 2022 a net income of $96 million (1.7% ofsales), compared to a net income of $25 million (1.9% of sales) and a net income of $25 million (0.5%of sales) in the corresponding periods last year, respectively.Excluding the impact of the abovementioned extraordinary and non-operational charges, adjustednet income (loss) in the fourth quarter was a loss of $42 million and an income of $118 million (2.1%of sales) in the full year of 2022, compared to an income of $54 million (4.0% of sales) and $139million (2.9% of sales) in the corresponding periods last year, respectively.Trade working capital as of December 31, 2022, was $2,634 million compared to $2,210 million atthe same point last year. The increase in working capital was due to an increase in the value andlevels of inventory held by the Company to support the sales in light of supply shortages, logisticchallenges and inventory costs increases. In the fourth quarter the procurement of inventory declinedin comparison to the third quarter of 2022. The increase in inventory levels was moderated by highertrade payables. Trade receivables increased slightly despite the strong growth in sales, reflecting goodcollections across the board.Cash Flow: Operating cash flow of $352 million was generated in the fourth quarter and $106 milliongenerated in the full year of 2022, compared to $372 million and $710 million generated in thecorresponding periods last year, respectively. The lower cash flow generated in the full year of 2022was primarily due to higher payments to suppliers to support the procurement of inventory.Net cash used in investing activities was $96 million in the fourth quarter and $396 million in the fullyear of 2022, compared to $136 million and $525 million in the corresponding periods last year,respectively. The cash used in investing activities in the fourth quarter of 2022 largely related toinvestments new production facilities in ADAMA Anpon and investments in intangible assets relatingto ADAMA's global registrations. In the full year of 2022, cash was also used for investing in "CoreLeap" manufacturing capabilities in Israel and Brazil (Multi-Purpose Production Site).In the full year of 2021, cash was also used for the completion of the payment and acquisition ofHuifeng’s domestic commercial crop protection business and manufacturing site, as well as for therelocation and upgrade of the manufacturing Sanonda Jingzhou site, both completed towards the endof the second quarter of 2021.
Free cash flow of $204 million was generated in the fourth quarter and $417 million consumed in fullyear of 2022 compared to $190 million generated and $75 million generated in the correspondingperiods last year, respectively, reflecting the aforementioned operating and investing cash flowdynamics.
Table 3. Revenues by operating segment
Sales by segment
| Q4 2022 USD (m) | % | Q4 2021 USD (m) | % | 2022 USD (m) | % | 2021 USD (m) | % |
Crop Protection
| Crop Protection | 1,207 | 92% | 1,197 | 90% | 5,032 | 90% | 4,349 | 90% |
Intermediates andIngredients
| Intermediates and Ingredients | 105 | 8% | 140 | 10% | 538 | 10% | 464 | 10% |
Total
| Total | 1,312 | 100% | 1,337 | 100% | 5,570 | 100% | 4,813 | 100% |
Sales by product category
| Q4 2022 USD (m) | % | Q4 2021 USD (m) | % | 2022 USD (m) | % | 2021 USD (m) | % |
Herbicides
| Herbicides | 546 | 42% | 582 | 44% | 2,479 | 45% | 1,972 | 41% |
Insecticides
| Insecticides | 382 | 29% | 359 | 27% | 1,505 | 27% | 1,425 | 30% |
Fungicides
| Fungicides | 279 | 21% | 256 | 19% | 1,048 | 19% | 952 | 20% |
Intermediates andIngredients
| Intermediates and Ingredients | 105 | 8% | 140 | 10% | 538 | 10% | 464 | 10% |
Total
| Total | 1,312 | 100% | 1,337 | 100% | 5,570 | 100% | 4,813 | 100% |
Note: the sales split by product category is provided for convenience purposes only and is not representative of the way the Company ismanaged or in which it makes its operational decisions. Numbers may not sum due to rounding.
Further InformationAll filings of the Company, together with a presentation of the key financial highlights of the period,can be accessed through the Company website at www.adama.com.
About ADAMAADAMA Ltd. is a global leader in crop protection, providing solutions to farmers across the world tocombat weeds, insects and disease. ADAMA has one of the widest and most diverse portfolios ofactive ingredients in the world, state-of-the art R&D, manufacturing and formulation facilities,together with a culture that empowers our people in markets around the world to listen to farmersand ideate from the field. This uniquely positions ADAMA to offer a vast array of distinctive mixtures,formulations and high-quality differentiated products, delivering solutions that meet local farmer andcustomer needs in over 100 countries globally. For more information, visit us at www.ADAMA.comand follow us on Twitter
?
at @ADAMAAgri.
ContactRivka Neufeld Zhujun WangGlobal Investor Relations China Investor RelationsEmail: ir@adama.com Email: irchina@adama.com
Abridged Adjusted Consolidated Financial StatementsThe following abridged consolidated financial statements and notes have been prepared as described in Note 1 in thisappendix. While prepared based on the principles of Chinese Accounting Standards (ASBE), they do not contain all of theinformation which either ASBE or IFRS would require for a complete set of financial statements, and should be read inconjunction with the consolidated financial statements of both ADAMA Ltd. and Adama Agricultural Solutions Ltd. as filedwith the Shenzhen and Tel Aviv Stock Exchanges, respectively.Relevant income statement items contained in this release are also presented on an “Adjusted” basis, which exclude itemsthat are of a one-time or non-cash/non-operational nature that do not impact the ongoing performance of the business, andreflect the way the Company’s management and the Board of Directors view the performance of the Company internally.The Company believes that excluding the effects of these items from its operating results allows management and investorsto effectively compare the true underlying financial performance of its business from period to period and against its globalpeers.Abridged Consolidated Income Statement for the Fourth Quarter
| Adjusted4 | Q4 2022 USD (m) | Q4 2021 USD (m) | Q4 2022 RMB (m) | Q4 2021 RMB (m) |
Revenues
| Revenues | 1,312 | 1,337 | 9,304 | 8,550 |
Cost of Sales
| Cost of Sales | 948 | 918 | 6,724 | 5,870 |
Other costs
| Other costs | 23 | 7 | 165 | 46 |
Gross profit
| Gross profit | 341 | 412 | 2,415 | 2,634 |
% of revenue
| % of revenue | 26.0% | 30.8% | 26.0% | 30.8% |
Selling & Distribution expenses
| Selling & Distribution expenses | 198 | 198 | 1,402 | 1,265 |
General & Administrative expenses
| General & Administrative expenses | 60 | 45 | 426 | 289 |
Research & Development expenses
| Research & Development expenses | 23 | 25 | 162 | 161 |
Other operating expenses
| Other operating expenses | 5 | 1 | 36 | 5 |
Total operating expenses
| Total operating expenses | 286 | 269 | 2,026 | 1,719 |
% of revenue
| % of revenue | 21.8% | 20.1% | 21.8% | 20.1% |
Operating income (EBIT)
| Operating income (EBIT) | 55 | 143 | 389 | 915 |
% of revenue
| % of revenue | 4.2% | 10.7% | 4.2% | 10.7% |
Financial expenses and investment income
| Financial expenses and investment income | 94 | 62 | 664 | 398 |
Income before taxes
| Income before taxes | (39) | 81 | (274) | 517 |
Taxes on Income
| Taxes on Income | 3 | 27 | 21 | 173 |
| Net Income | (42) | 54 | (295) | 344 |
Attributable to:
| Attributable to: |
Non-controlling interest
| Non-controlling interest | 0 | 0 | 0 | 0 |
Shareholders of the Company
| Shareholders of the Company | (42) | 54 | (295) | 344 |
% of revenue
| % of revenue | (3.2%) | (4.0%) | (3.2%) | 4.0% |
Adjustments
| Adjustments | (19) | 29 | (136) | 183 |
Reported Net income attributable to theshareholders of the Company
| Reported Net income attributable to the shareholders of the Company | (22) | 25 | (159) | 161 |
% of revenue
| % of revenue | (1.7%) | 1.9% | (1.7%) | 1.9% |
Adjusted EBITDA
| Adjusted EBITDA | 129 | 207 | 913 | 1,324 |
% of revenue
| % of revenue | 9.8% | 15.5% | 9.8% | 15.5% |
Adjusted EPS
– Basic
| Adjusted EPS5 – Basic | (0.0178) | 0.0231 | (0.1265) | 0.1476 |
– Diluted
| – Diluted | (0.0178) | 0.0231 | (0.1265) | 0.1476 |
Reported EPS
– Basic
| Reported EPS2 – Basic | (0.0096) | 0.0108 | (0.0681) | 0.0692 |
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the financial
statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
The number of shares used to calculate both basic and diluted earnings per share in both Q4 and FY 2021 and 2022 is 2,329.8 millionshares.
| – Diluted | (0.0096) | 0.0108 | (0.0681) | 0.0692 |
Abridged Consolidated Income Statement for the Full Year 2022
| Adjusted6 | 2022 USD (m) | 2021 USD (m) | 2022 RMB (m) | 2021 RMB (m) |
Revenues
| Revenues | 5,570 | 4,813 | 37,382 | 31,039 |
Cost of Sales
| Cost of Sales | 3,915 | 3,377 | 26,293 | 21,779 |
Other costs
| Other costs | 90 | 24 | 607 | 156 |
Gross profit
| Gross profit | 1,565 | 1,412 | 10,482 | 9,103 |
% of revenue
| % of revenue | 28.1% | 29.3% | 28.0% | 29.3% |
Selling & Distribution expenses
| Selling & Distribution expenses | 805 | 743 | 5,409 | 4,793 |
| General & Administrative expenses | 206 | 171 | 1,388 | 1,100 |
Research & Development expenses
| Research & Development expenses | 86 | 78 | 578 | 502 |
Other operating expenses
| Other operating expenses | 11 | (5) | 68 | (33) |
Total operating expenses
| Total operating expenses | 1,107 | 986 | 7,442 | 6,362 |
% of revenue
| % of revenue | 19.9% | 20.5% | 19.9% | 20.5% |
Operating income (EBIT)
| Operating income (EBIT) | 458 | 425 | 3,040 | 2,742 |
% of revenue
| % of revenue | 8.2% | 8.8% | 8.1% | 8.8% |
Financial expenses and investment income
| Financial expenses and investment income | 314 | 206 | 2,126 | 1,328 |
Income before taxes
| Income before taxes | 144 | 219 | 914 | 1,414 |
Taxes on Income
| Taxes on Income | 26 | 79 | 174 | 511 |
Net Income
| Net Income | 118 | 140 | 740 | 903 |
Attributable to:
| Attributable to: |
Non-controlling interest
| Non-controlling interest | 0 | 1 | 0 | 7 |
Shareholders of the Company
| Shareholders of the Company | 118 | 139 | 740 | 895 |
% of revenue
| % of revenue | 2.1% | 2.8% | 2.0% | 2.9% |
Adjustments
| Adjustments | 21 | 114 | 131 | 738 |
Reported Net income attributable to theshareholders of the Company
| Reported Net income attributable to the shareholders of the Company | 96 | 25 | 609 | 157 |
% of revenue
| % of revenue | 1.7% | 0.5% | 1.6% | 0.5% |
Adjusted EBITDA
| Adjusted EBITDA | 740 | 671 | 4,940 | 4,328 |
% of revenue
| % of revenue | 13.3% | 13.9% | 13.2% | 13.9% |
Adjusted EPS
– Basic
| Adjusted EPS7 – Basic | 0.0505 | 0.0596 | 0.3177 | 0.3843 |
– Diluted
| – Diluted | 0.0505 | 0.0596 | 0.3177 | 0.3843 |
Reported EPS
– Basic
| Reported EPS2 – Basic | 0.0413 | 0.0106 | 0.2616 | 0.0676 |
– Diluted
| – Diluted | 0.0413 | 0.0106 | 0.2616 | 0.0676 |
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the financialstatements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
The number of shares used to calculate both basic and diluted earnings per share in both Q4 and FY 2021 and 2022 is 2,329.8 million
shares.
Abridged Consolidated Balance Sheet
| December 31 2022 USD (m) | December 31 2021 USD (m) | December 31 2022 RMB (m) | December 31 2021 RMB (m) |
Assets
| Assets |
Current assets:
| Current assets: |
Cash at bank and on hand
| Cash at bank and on hand | 616 | 913 | 4,291 | 5,819 |
Bills and accounts receivable
| Bills and accounts receivable | 1,433 | 1,423 | 9,980 | 9,071 |
Inventories
| Inventories | 2,430 | 1,843 | 16,927 | 11,750 |
| Other current assets, receivables and prepaid expenses | 279 | 274 | 1,943 | 1,748 |
Total current assets
| Total current assets | 4,758 | 4,453 | 33,141 | 28,389 |
Non-current assets:
| Non-current assets: |
Fixed assets, net
| Fixed assets, net | 1,711 | 1,599 | 11,914 | 10,192 |
Rights of use assets
| Rights of use assets | 80 | 73 | 556 | 464 |
Intangible assets, net
| Intangible assets, net | 1,457 | 1,527 | 10,148 | 9,736 |
Deferred tax assets
| Deferred tax assets | 193 | 113 | 1,347 | 723 |
Other non-current assets
| Other non-current assets | 126 | 115 | 875 | 732 |
Total non-current assets
| Total non-current assets | 3,567 | 3,427 | 24,840 | 21,847 |
Total assets
| Total assets | 8,325 | 7,879 | 57,980 | 50,235 |
Liabilities
| Liabilities |
Current liabilities:
| Current liabilities: |
Loans and credit from banks and otherlenders
| Loans and credit from banks and other lenders | 805 | 419 | 5,605 | 2,671 |
Bills and accounts payable
| Bills and accounts payable | 1,241 | 1,065 | 8,642 | 6,788 |
Other current liabilities
| Other current liabilities | 929 | 773 | 6,468 | 4,929 |
Total current liabilities
| Total current liabilities | 2,974 | 2,257 | 20,715 | 14,387 |
Long-term liabilities:
| Long-term liabilities: |
Loans and credit from banks and otherlenders
| Loans and credit from banks and other lenders | 526 | 549 | 3,663 | 3,499 |
Debentures
| Debentures | 1,056 | 1,223 | 7,354 | 7,797 |
Deferred tax liabilities
| Deferred tax liabilities | 45 | 60 | 316 | 380 |
Employee benefits
| Employee benefits | 114 | 124 | 792 | 792 |
Other long-term liabilities
| Other long-term liabilities | 290 | 361 | 2,017 | 2,304 |
Total long-term liabilities
| Total long-term liabilities | 2,030 | 2,317 | 14,141 | 14,773 |
Total liabilities
| Total liabilities | 5,005 | 4,574 | 34,856 | 29,160 |
Equity
| Equity |
Total equity
| Total equity | 3,320 | 3,306 | 23,125 | 21,075 |
Total liabilities and equity
| Total liabilities and equity | 8,325 | 7,879 | 57,980 | 50,235 |
Abridged Consolidated Cash Flow Statement for the Fourth Quarter
| Q4 2022 USD (m) | Q4 2021 USD (m) | Q4 2022 RMB (m) | Q4 2021 RMB (m) | |
| Cash flow from operating activities: | ||||
| Cash flow from operating activities | 352 | 372 | 2,499 | 2,380 |
| Cash flow from operating activities | 352 | 372 | 2,499 | 2,380 |
| Investing activities: | ||||
| Acquisitions of fixed and intangible assets | (99) | (123) | (699) | (786) |
| Proceeds from disposal of fixed and intangible assets | 2 | 1 | 13 | 7 |
| Other investing activities | 0 | (15) | 2 | (93) |
| Cash flow used for investing activities | (96) | (136) | (684) | (872) |
| Financing activities: | ||||
| Receipt of loans from banks and other lenders | 79 | 81 | 559 | 516 |
| Repayment of loans from banks and other lenders | (142) | (159) | (1,006) | (1,015) |
| Interest payment and other | (53) | (47) | (379) | (302) |
| Other financing activities | (47) | 30 | (336) | 193 |
| Cash flow from (used for) financing activities | (164) | (95) | (1,163) | (609) |
| Effects of exchange rate movement on cash and cash equivalents | 2 | 1 | (70) | (80) |
| Net change in cash and cash equivalents | 94 | 142 | 582 | 819 |
| Cash and cash equivalents at the beginning of the period | 513 | 762 | 3,643 | 4,940 |
| Cash and cash equivalents at the end of the period | 607 | 903 | 4,225 | 5,759 |
| Free Cash Flow | 204 | 190 | 1,445 | 1,212 |
Abridged Consolidated Cash Flow Statement for the Full Year 2022
| 2022 USD (m) | 2021 USD (m) | 2022 RMB (m) | 2021 RMB (m) | |
| Cash flow from operating activities: | ||||
| Cash flow from operating activities | 106 | 710 | 941 | 4,562 |
| Cash flow from operating activities | 106 | 710 | 941 | 4,562 |
| Investing activities: | ||||
| Acquisitions of fixed and intangible assets | (397) | (402) | (2,667) | (2,589) |
| Proceeds from disposal of fixed and intangible assets | 13 | 4 | 85 | 27 |
| Acquisition of subsidiaries | 0 | (101) | 0 | (655) |
| Other investing activities | (12) | (26) | (78) | (166) |
| Cash flow used for investing activities | (396) | (525) | (2,660) | (3,383) |
| Financing activities: | ||||
| Receipt of loans from banks and other lenders | 669 | 756 | 4,468 | 4,885 |
| Repayment of loans from banks and other lenders | (342) | (570) | (2,331) | (3,670) |
| Interest payment and other | (137 | (117) | (933) | (755) |
| Dividends to shareholders | (3) | (6) | (19) | (37) |
| Other financing activities | (187) | 64 | (1,242) | 414 |
| Cash flow from (used for) financing activities | (0) | 128 | (56) | 837 |
| Effects of exchange rate movement on cash and cash equivalents | (7) | 2 | 241 | (91) |
| Net change in cash and cash equivalents | (297) | 316 | (1,534) | 1,925 |
| Cash and cash equivalents at the beginning of the period | 903 | 588 | 5,759 | 3,835 |
| Cash and cash equivalents at the end of the period | 607 | 903 | 4,225 | 5,759 |
| Free Cash Flow | (417) | 75 | (2,593) | 467 |
Notes to Abridged Consolidated Financial Statements
Note 1: Basis of preparationBasis of presentation and accounting policies: The abridged consolidated financial statements for thequarters ended December 31, 2022 and 2021 incorporate the financial statements of ADAMA Ltd. and of all ofits subsidiaries (the “Company”), including Adama Agricultural Solutions Ltd. (“Solutions”) and its subsidiaries.The Company has adopted the Accounting Standards for Business Enterprises (ASBE) issued by the Ministryof Finance (the "MoF") and the implementation guidance, interpretations and other relevant provisions issuedor revised subsequently by the MoF (collectively referred to as “ASBE”). Note that in the reported financialstatements, as a result of recent changes in the ASBE guidelines (IAS 37), certain items as of Q4 2021(specifically certain transportation costs and certain idleness charges) have been reclassified from OperatingExpenses to COGS. See the notes to the financial statements for more details in this regard.The abridged consolidated financial statements contained in this release are presented in both ChineseRenminbi (RMB), as the Company’s shares are traded on the Shenzhen Stock Exchange, as well as in UnitedStates dollars ($) as this is the major currency in which the Company’s business is conducted. For the purposesof this release, a customary convenience translation has been used for the translation from RMB to US dollars,with Income Statement and Cash Flow items being translated using the quarterly average exchange rate, andBalance Sheet items being translated using the exchange rate at the end of the period.The preparation of financial statements requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements, and the reported amounts of revenues and expenses during the reporting period. Actualresults could differ from those estimated.Note 2: Abridged Financial StatementsFor ease of use, the financial statements shown in this release have been abridged as follows:
Abridged Consolidated Income Statement:
? “Gross profit” in this release is revenue less costs of goods sold, taxes and surcharges, inventoryimpairment and other idleness charges (in addition to those already included in costs of goods sold);part of the idleness charges is removed in the Adjusted financial statements? “Other operating expenses” includes impairment losses (not including inventory impairment); gain (loss)from disposal of assets and non-operating income and expenses? “Operating expenses” in this release differ from those in the formally reported financial statements inthat in the reported financial statements, as a result of recent changes in the ASBE guidelines (IAS 37),certain items as of Q4 2021 (specifically certain transportation costs and certain idleness charges) havebeen reclassified from Operating Expenses to COGS.? “Financial expenses and investment income” includes net financing expenses; gains from changes infair value; and investment income (including share of income of equity accounted investees)
Abridged Consolidated Balance Sheet:
? “Other current assets, receivables and prepaid expenses” includes financial assets held for trading;
financial assets in respect of derivatives; prepayments; other receivables; and other current assets? “Fixed assets, net” includes fixed assets and construction in progress? “Intangible assets, net” includes intangible assets and goodwill? “Other non-current assets” includes other equity investments; long-term equity investments; long-term
receivables; investment property; and other non-current assets? “Loans and credit from banks and other lenders” includes short-term loans and non-current liabilities
due within one year? “Other current liabilities” includes financial liabilities in respect of derivatives; payables for employee
benefits, taxes, interest, dividends and others; advances from customers and other current liabilities? “Other long-term liabilities” includes long-term payables, provisions, deferred income and other non-
current liabilities
Income Statement Adjustments
| Q4 2022 USD (m) | Q4 2021 USD (m) | Q4 2022 RMB (m) | Q4 2021 RMB (m) |
Net Income (Reported)
| Net Income (Reported) | (22.4) | 25.8 | (158.8) | 165.0 |
Adjustments to COGS & Operating Expenses:
| Adjustments to COGS & Operating Expenses: |
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash)
| 1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash) | 0.3 | 0.3 | 1.8 | 1.6 |
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
Syngenta transaction (non-cash)
| 2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash) | 5.9 | 4.3 | 41.6 | 27.2 |
3. Upgrade & Relocation related costs
| 3. Upgrade & Relocation related costs | 1.8 | 29.6 | 12.9 | 189.7 |
4. Incentive plans
| 4. Incentive plans | 1.1 | -6.0 | 7.8 | -38.2 |
5. Amortization of acquisition-related PPA (non-cash), other acquisition-related costs
| 5. Amortization of acquisition-related PPA (non-cash), other acquisition-related costs | 4.4 | 5.2 | 31.3 | 33.7 |
6. ASBEs classifications COGS impact
| 6. ASBEs classifications COGS impact | (33.7) | (36.7) | (239.1) | (234.4) |
7. ASBEs classifications OPEX impact
| 7. ASBEs classifications OPEX impact | 33.7 | 36.7 | 239.1 | 234.4 |
8. Asset impairment in subsidiary
| 8. Asset impairment in subsidiary | 15.0 | - | 106.4 | - |
| Total Adjustments to Operating Income (EBIT) | 28.5 | 33.4 | 201.8 | 213.9 |
Total Adjustments to EBITDA
| Total Adjustments to EBITDA | 2.3 | 19.1 | 16.0 | 122.3 |
Adjustments to Financing Expenses
| Adjustments to Financing Expenses |
Revaluation of non-cash adjustment related to non-controlling interest
| Revaluation of non-cash adjustment related to non-controlling interest | 0.6 | 0.5 | 3.7 | 3.4 |
Put option revaluation
| Put option revaluation | (47.3) | - | (335.4) | - |
Adjustments to Taxes
| Adjustments to Taxes |
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions
| 1. Tax shield on Legacy PPA of 2011 acquisition of Solutions | 0.0 | 0.0 | 0.3 | 0.3 |
3. Taxes related to Upgrade & Relocation related costs
| 3. Taxes related to Upgrade & Relocation related costs | 0.1 | 5.0 | 0.5 | 32.3 |
| 5. Deferred tax on amortization of acquisition-related PPA, other acquisition-related costs | 0.8 | 0.9 | 5.3 | 5.8 |
Total adjustments to Net Income
| Total adjustments to Net Income | (19.1) | 29.0 | (136.0) | 178.9 |
Net Income (Adjusted)
| Net Income (Adjusted) | (41.5) | 53.7 | (294.8) | 343.8 |
Total adjustments to Net Income attributable to the shareholders of the Company
| Total adjustments to Net Income attributable to the shareholders of the Company | (19.1) | 28.5 | (136.0) | 182.5 |
| USD (m) | USD (m) | RMB (m) | RMB (m) |
Net Income (Reported)
| Net Income (Reported) | 96.3 | 25.5 | 609.4 | 163.3 |
Adjustments to COGS & Operating Expenses:
| Adjustments to COGS & Operating Expenses: | ||||
| 1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash) | 1.0 | 1.0 | 6.7 | 6.5 |
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
Syngenta transaction (non-cash)
| 2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash) | 22.9 | 23.1 | 154.3 | 149.2 |
3. Upgrade & Relocation related costs
| 3. Upgrade & Relocation related costs | 7.3 | 96.5 | 48.7 | 622.1 |
4. Incentive plans
| 4. Incentive plans | 2.8 | (4.5) | 18.2 | -28.5 |
5. Amortization of acquisition-related PPA (non-cash), other acquisition-related costs
| 5. Amortization of acquisition-related PPA (non-cash), other acquisition-related costs | 19.5 | 16.6 | 130.5 | 106.7 |
6. ASBEs classifications COGS impact
| 6. ASBEs classifications COGS impact | (150.0) | (128.0) | (1,005.3) | (825.6) |
7. ASBEs classifications OPEX impact
| 7. ASBEs classifications OPEX impact | 150.0 | 128.0 | 1,005.3 | 825.6 |
8. Provisions in respect of prior years’ legal- and tax-related costs
| 8. Provisions in respect of prior years’ legal- and tax-related costs | - | 1.6 | - | 10.3 |
9. Asset impairment in subsidiary
| 9. Asset impairment in subsidiary | 15.0 | - | 106.4 | - |
Total Adjustments to Operating Income (EBIT)
| Total Adjustments to Operating Income (EBIT) | 68.5 | 134.3 | 464.9 | 866.3 |
| Total Adjustments to EBITDA | 8.9 | 78.5 | 59.3 | 507.0 |
Adjustments to Financing Expenses
| Adjustments to Financing Expenses |
Revaluation of non-cash adjustment related to non-controlling interest
| Revaluation of non-cash adjustment related to non-controlling interest | 4.2 | 0.5 | 27.5 | 3.4 |
Put option revaluation
| Put option revaluation | (47.3) | - | (335.4) | - |
Adjustments to Taxes
| Adjustments to Taxes |
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions
| 1. Tax shield on Legacy PPA of 2011 acquisition of Solutions | 0.1 | 0.2 | 1.1 | 1.1 |
3. Taxes related to Upgrade & Relocation related costs
| 3. Taxes related to Upgrade & Relocation related costs | 0.3 | 16.9 | 1.8 | 109.4 |
5. Deferred tax on amortization of acquisition-related PPA, other acquisition-related costs
| 5. Deferred tax on amortization of acquisition-related PPA, other acquisition-related costs | 3. 5 | 2.7 | 23.2 | 17.6 |
| 8. Provisions in tax expenses in respect of prior years’ legal- and tax-related costs | - | 0.4 | - | 2.5 |
Total adjustments to Net Income
| Total adjustments to Net Income | 21.5 | 114.6 | 130.9 | 739.4 |
Net Income (Adjusted)
| Net Income (Adjusted) | 117.8 | 140.1 | 740.2 | 902.7 |
Total adjustments to Net Income attributable to the shareholders of the Company
| Total adjustments to Net Income attributable to the shareholders of the Company | 21.5 | 114.4 | 130.8 | 738.0 |
Notes:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash): Under ASBE, since the first combined reporting for Q3 2017, theCompany has inherited the historical “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 have been completed by the end of 2020.
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash): The proceeds fromthe Divestment of crop protection products in connection with the approval by the EU Commission of the acquisition of Syngenta by ChemChina,net of taxes and transaction expenses, were paid to Syngenta in return for the transfer of a portfolio of products in Europe of similar nature andeconomic value. Since the products acquired from Syngenta are of the same nature and with the same net economic value as those divested,and since in 2018 the Company adjusted for the one-time gain that it made on the divested products, the additional amortization charge incurreddue to the written-up value of the acquired assets is also adjusted to present a consistent view of Divestment and Transfer transactions, whichhad no net impact on the underlying economic performance of the Company. These additional amortization charges will continue until 2032 butat a reducing rate, yet will still be at a meaningful level until 2028.
3. Upgrade & manufacturing facilities relocation-related costs: These charges all relate to the multi-year Upgrade & Relocation program inChina. As part of this program, production assets located in the old production sites in Jingzhou and Huai’An were relocated to new sites in 2020,2021 and in the coming years. Since some of the older production assets may not be able to be relocated, some of these assets which are nolonger operational are being written off (or impaired), while for others, their economic life has been shortened and therefore will be depreciatedover a shorter period. Since these are older assets that were built many years ago and will be replaced by newer production facilities at the newsites, and since the ongoing operations of the business will not be impacted thereby, the Company adjusts for the impact of all charges relatedto the China Upgrade & Relocated program, which include mainly: (i) excess procurement costs incurred as the Company continued to fulfilldemand for its products, in order to protect its market position, through replacement sourcing at significantly higher costs from third-party suppliers(ii) elevated idleness charges largely related to suspensions at the facilities being relocated These charges have significantly declined since thefirst quarter of 2022, as the relocation and upgrade of the manufacturing Jingzhou site in China has been completed and is now at a high levelof operation.
4. Incentive plans: ADAMA granted certain of its employees, a long-term incentive (LTI) in the form of 'phantom' awards linked to the Company’s
share price. As such, the Company records an expense, or recognizes income, depending on the fluctuation in the Company’s share price,regardless of award exercises. To neutralize the impact of such share price movements on the measurement of the Company’s performanceand expected employee compensation and to reflect the existing phantom awards, in the Company’s adjusted financial performance, the LTI ispresented on an equity-settled basis in accordance with the value of the existing plan at the grant date.
5. Amortization of acquisition-related PPA (non-cash) and other acquisition-related costs: Related mainly to the non-cash amortization ofintangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions, with no impact on the ongoing performance of thecompanies acquired, as well as other M&A-related costs.
6. ASBE classification COGS & OPEX impact – according to the ASBE guidelines, certain expenses, which the company views as COGS, areclassified under OPEX. Additionally, as a result of recent changes in the ASBE guidelines [IAS 37], certain items as of Q4 2021 (specificallycertain transportation costs and certain idleness charges) have been reclassified from Operating Expenses to COGS.
8. Provisions in tax expenses related to prior years’ activities - Provisions in respect of tax expenses related to activities of prior years.
9. Asset impairment in subsidiary - non-cash, non-recurring provision for asset impairment and income due to revaluation of put options attributedto minority stake in a subsidiary.
Exchange Rate Data for the Company's Principal Functional Currencies
| December 31 | Q4 Average | 12M Average | |||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | 2022 | 2021 | Change | |||
| EUR/USD | 1.067 | 1.132 | (5.8%) | 1.019 | 1.144 | (10.9%) | 1.052 | 1.183 | (11.1%) | ||
| USD/BRL | 5.218 | 5.581 | 6.5% | 5.256 | 5.584 | 5.9% | 5.165 | 5.395 | 4.3% | ||
| USD/PLN | 4.402 | 4.060 | (8.4%) | 4.646 | 4.040 | (15.0%) | 4.458 | 3.862 | (15.4%) | ||
| USD/ZAR | 16.949 | 15.924 | (6.4%) | 17.618 | 15.739 | (11.9%) | 16.367 | 14.864 | (10.1%) | ||
| AUD/USD | 0.680 | 0.727 | (6.5%) | 0.657 | 0.729 | (9.9%) | 0.694 | 0.751 | (7.6%) | ||
| GBP/USD | 1.204 | 1.351 | (10.9%) | 1.171 | 1.348 | (13.1%) | 1.234 | 1.376 | (10.3%) | ||
| USD/ILS | 3.519 | 3.110 | (13.2%) | 3.493 | 3.155 | (10.7%) | 3.358 | 3.231 | (3.9%) | ||
| USD LIBOR 3M | 4.77% | 0.22% | 4.51% | 0.16% | 2.41% | 0.16% | |||||
| December 31 | Q4 Average | 12M Average | |||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | 2022 | 2021 | Change | |||
| USD/RMB | 6.965 | 6.376 | 9.2% | 7.092 | 6.395 | 10.9% | 6.721 | 6.451 | 4.2% | ||
| EUR/RMB | 7.428 | 7.216 | 2.9% | 7.225 | 7.315 | (1.2%) | 7.071 | 7.630 | (7.3%) | ||
| RMB/BRL | 0.749 | 0.875 | 14.4% | 0.741 | 0.873 | 15.1% | 0.768 | 0.836 | 8.1% | ||
| RMB/PLN | 0.632 | 0.637 | 0.7% | 0.655 | 0.632 | (3.7%) | 0.663 | 0.599 | (10.8%) | ||
| RMB/ZAR | 2.434 | 2.498 | 2.6% | 2.484 | 2.461 | (0.9%) | 2.435 | 2.304 | (5.7%) | ||
| AUD/RMB | 4.733 | 4.633 | 2.2% | 4.656 | 4.659 | (0.1%) | 4.663 | 4.844 | (3.7%) | ||
| GBP/RMB | 8.387 | 8.617 | (2.7%) | 8.307 | 8.623 | (3.7%) | 8.292 | 0.836 | 891.4% | ||
| RMB/ILS | 0.505 | 0.488 | (3.6%) | 0.492 | 0.493 | 0.2% | 0.500 | 0.501 | 0.2% | ||
| RMB LIBOR 3M | 2.42% | 2.50% | (8) bp | 2.03% | 2.47% | (44) bp | 2.07% | 2.52% | (45) bp | ||