[一季报]安道麦B(200553):2022年第一季度报告（英文版）
ADAMA LTD. FIRST QUARTER REPORT 2022 ADAMA Ltd. (hereinafter referred to as “the Company”) is a global leader in crop protection, providing solutions to farmers across the world to combat weeds, insects and disease. ADAMA has one of the widest and most diverse portfolios of active ingredients in the world, state-of-the art R&D, manufacturing and formulation facilities, together with a culture that empowers our people in markets around the world to listen to farmers and 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 and customer needs in over 100 countries globally. Please see important additional information and further details included in the Annex. April 2022 Important Notice The Company’s Board of Directors, Board of Supervisors, directors, supervisors and senior managers confirm that the content of the Report is true, accurate and complete and contains no false statements, misleading presentations or material omissions, and assume joint and several legal liability arising therefrom. Ignacio Dominguez, the person leading the Company (President and Chief Executive Officer) as well as its legal representative and the person leading the accounting function (acting Chief Financial Officer), hereby assert and confirm the truthfulness, accuracy and completeness of the Financial Report. The First Quarter Report has not been audited. This Report has been prepared in both Chinese and English. Should there be any discrepancy between the two versions, the Chinese version shall prevail. I. Main Financial Data 1. Main accounting and financial results Whether the Company performs any retroactive adjustments to, or restatements of, its accounting data of last year √ Yes □ No
Reason for retroactive adjustments: When the financial assets measured at fair value through profit or loss were disposed, the Company used to reclassify the accumulated fair value change of the financial assets to investment income. Starting from 2022, the Company no longer performed the abovementioned reclassification when the financial assets measured at fair value through profit or loss were disposed. Such change did not impact the operating results during the quarter. 2. Non-Recurring profit/loss √ Applicable □ Not applicable Unit: RMB’000
Explanation of other profit or loss that meets the definition of non-recurring profit or loss √ Applicable □ Not applicable Mainly provision for early retirement plan of employees at the Company’s Israeli manufacturing facilities as explained above in the note. Explanation of why the Company classified an item as non-recurring profit/loss according to the definition in the First Explanatory Announcement on Information Disclosure for Companies Offering their Securities to the Public. Non-recurring Profit and Loss, and reclassified any non-recurring profit/loss item given as an example in the said explanatory announcement to recurrent profit/loss □ Applicable √ Not applicable No such cases during the Reporting Period. 3. Changes in main accounting statement items and financial indicators in the Reporting Period, as well as reasons for the changes √ Applicable □ Not applicable General Crop Protection Market Environment Crop prices increased sharply during Q1 2022 as a result of concerns regarding supply, due mainly to the Russia-Ukraine conflict, and also due to persistent dryness in parts of South America. Prices are generally expected to remain high throughout 2022, incentivizing another year of increases in global planted areas. As a result, crop protection demand remains strong globally as farmers strive to maximize yields in this high crop price environment. Farmers continue to face elevated production costs, mainly from higher fertilizer prices resulting from disruption to supply and tight availability caused by the Russia-Ukraine conflict, yet their farming activities are nevertheless still very profitable in most regions. The challenging cost environment of 2021 has extended into 2022. Global energy prices further increased during the quarter, impacted by Russia's strong share of global gas exports. In addition, global freight and logistics costs have recently increased again due to oil prices going up, while the availability of shipping resources continues to be limited. Despite some easing in procurement prices for raw materials, intermediates and active ingredients in China during the quarter, prices are expected to remain generally elevated and could increase further due to production disruptions and tight supply in China as COVID-19 impacts the country. Strong global crop protection demand, as well as the high energy prices, may exert additional upward pressure on such procurement prices. Additionally, the availability of certain intermediates, such as co-formulants, has become uncertain as higher energy prices have decreased the economic viability of their production, causing a spike in their prices.
Note: Since the functional currency of main overseas subsidiaries is the USD, and the Company’s management review of the Company’s performance is based on the USD results, following explanations and analysis are based on USD-denominated numbers as listed above. Analysis of Financial Highlights (1) Revenues Revenues in the first quarter grew by 28% (+25% in RMB terms) to $1,420 million, driven by a significant 18% increase in prices, a trend which started in the third quarter of 2021. The markedly higher prices were complemented by continued strong volume growth (14%), including the contribution of newly acquired companies, achieved despite supply challenges in the market, which were only slightly moderated by the adverse impact of exchange rate movements. Regional Sales Performance
Europe: A strong performance in France, Romania and Poland, bolstered by good demand and high prices, more than offset a decline in sales in Ukraine, drought conditions in parts of southern Europe, and the adverse impact of exchange rates. The Company benefited from the sales in various countries of recently launched products POLEPOSITION? and TIMELINE? FX. North America: The remarkably strong growth in sales in the first quarter was driven by the Consumer & Professional business, which experienced robust demand, allowing for price increases in light of concerns regarding potential shortages. This was further complemented by continued growth in US crop protection, driven both by higher volumes as well as higher prices, reflecting generally strong demand, especially in corn, soybeans, cereals and rice. Latin America: Strong growth was achieved in Brazil due to early demand from farmers and higher prices, supported by good soybean and corn planting seasons, and despite drought conditions in the south of the country. This was complemented by demand for the Company's differentiated products, including the fungicides ARMERO?, ACROSS? and the herbicide ARADDO?, which are part of ADAMA's leading soybean protection offering. Sales also grew in most of the countries of the wider region, driven by price increases, as the Company continues to strengthen its positioning throughout the region. Asia Pacific: The Company's rapid growth in Asia Pacific during the first quarter was led by the particularly strong increase in sales in China. The growth in China was led firstly by the sales of raw materials and intermediates, which continued to benefit from strong demand and high prices in light of ongoing tight supply following shutdowns in competing facilities due to COVID-19 and environmental inspections, which has also disrupted and slowed down transportation. In addition, sales of ADAMA's branded, formulated portfolio in China also grew significantly, and were supported by a pleasing performance from the commercial activities and portfolio acquired from Huifeng at the end of 2020. In the wider APAC region, strong sales were delivered in the Pacific region and in certain countries in the Far East, benefiting from favorable seasonal conditions, and despite the impact of the weakening of the Australian dollar. India, Middle East and Africa: Sales in the region grew in constant exchange rate terms, mainly led by India, and despite the cold and rainy season in the Middle East and Africa which brought low insect and disease pressure. This growth is particularly noteworthy in light of a very strong first quarter in 2021. This growth was offset by the adverse impact of exchange rates, particularly the depreciation of the Turkish Lira, as well as the Indian Rupee. (2) Cost of Goods and Gross Profit In the reported results, as of Q4 2021, following recent changes in the guidelines in China, the transportations costs to third parties and its marketing subsidiaries and opex idleness have been reclassified from operating expenses to costs of goods (not impacting the operating results), while these expenses were not recorded in the cost of goods in Q1 2021, but rather in the operating expenses. Additionally, certain extraordinary charges related largely to a temporary disruption of the production of certain products were adjusted in Q1 2021. These charges have significantly declined in Q1 2022, as the relocation and upgrade of the manufacturing Jingzhou site in China has been completed and is now almost fully operational. Excluding the impact of the abovementioned items, the significantly higher gross profit was mainly driven by the markedly higher prices, complemented by continued volume growth, all of which more than offset higher transportation and logistics costs driven by both volumes being transported and an increase in freight costs, procurement and production costs as well as the negative FX impact. (3) Operating Expenses Operating expenses include Sales and Marketing, General and Administration and R&D. The Company recorded certain non-operational, mostly non-cash, charges within its reported operating expenses amounting to RMB 36 million ($5.7 million) in Q1 2022 in comparison to RMB 104 million ($16.0 million) in Q1 2021, mainly as follows: Non-cash amortization charges in respect of Transfer assets received and written-up related to the 2017 ChemChina-Syngenta acquisition. The proceeds from the 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 and economic value. Since the products acquired from Syngenta are of the same nature, and with the same net economic value as those divested, the Divestment and Transfer transactions had no net impact on the underlying economic performance of the Company. These additional amortization charges will continue until 2032 but at a reducing rate, yet will still be at a meaningful level until 2028; (ii) Charges related mainly to the non-cash amortization of intangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions, with no impact on the ongoing performance of the companies acquired, as well as other M&A-related costs; (iii) Non-cash, share-based compensation (incentive plans). Excluding the impact of the abovementioned non-operational charges, the level of operating expenses in the quarter primarily reflect the reclassification of certain transportation costs and idleness from operating expenses to costs of goods as explained above and the inclusion of recent acquisitions. (4) Financial Expenses “Financial Expenses” alone mainly reflect interest payments on corporate bonds and bank loans as well as foreign exchange gains/losses on the bonds and other monetary assets and liabilities before the Company carries out any hedging. The impact of Financial Income, net (before hedging) is RMB 258 million ($41 million) for Q1 2022, compared with Financial Expenses, net of RMB 185 million ($29 million) for the corresponding periods in 2021. Given the global nature of its operational activities and the composition of its assets and liabilities, the Company, in the ordinary course of its business, uses foreign currency derivatives (forwards and options) to hedge the cash flow risks associated with existing monetary assets and liabilities that may be affected by exchange rate fluctuations. The impact of the hedging transactions which is recorded in Gains/Losses from Changes in Fair Value is a net loss of RMB 594 million ($94 million) in Q1 2022, compared with RMB 53 million ($8 million) in the corresponding period in 2021. The aggregate of Financial Expenses and Gains/Losses from Changes in Fair Value (hereinafter as “Total Net Financial Expenses”), which more comprehensively reflects the financial expenses of the Company in supporting its main business and protecting its monetary assets/liabilities, amounts to RMB 336 million ($53 million) in Q1 2022, compared with RMB 238 million ($37 million) in the corresponding period in 2021. The higher Total Net Financial Expenses in the quarter were non-cash charges related to put options in respect of minority interests on recent acquisitions. (5) Credit and Asset Impairment Loss Due to the current events in Ukraine, in order to cover the estimated risk, the Company made an impairment for the expected credit loss related to the accounts receivables in Ukraine. (6) Income Tax Expenses The first quarter is generally characterized by a low effective tax rate compared to the effective tax rate of the Company over the full year. This is mainly due to the generation of profits by subsidiary companies within ADAMA whose tax rates are lower relative to the Company’s aggregate effective tax rate, as well as to the method of calculation of tax assets related to unrealized profits. In the first quarter of 2022, the low effective tax rate also reflects the tax income due to non-cash impact on the value of non-monetary tax assets of the significant strengthening of the BRL, while in the first quarter of 2021, the Company recorded tax expenses due to the impact of the weakening of the BRL. Changes in main assets and liabilities Unit: 000 RMB
* Both derivative financial assets and liabilities are hedging instruments, the sum-up of which reflects the net position. II. Information regarding Shareholders 1. Total number of ordinary shareholders and preference shareholders who had resumed their voting right and shareholdings of top 10 shareholders at the period-end Unit: share
2. Total number of preference shareholders and shareholdings of the top 10 of such at the period-end □ Applicable √ Not applicable III. Other Significant Events □ Applicable √ Not applicable IV. Financial Statements i. Financial statements 1. Consolidated balance sheet Prepared by ADAMA Ltd. 31 March 2022 Unit: RMB’000
Ignacio Dominguez Legal representative Chief of the accounting work and Chief of the accounting organ 2. Consolidated income statement Unit: RMB’000
Ignacio Dominguez Legal representative Chief of the accounting work and Chief of the accounting organ 3. Consolidated cash flow statement Unit: RMB’000
ii. Auditor’s report Is this Report audited? □ Yes √ No This Report is unaudited. ADAMA Ltd. Board of Directors April 28, 2022 中财网
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