[中报]安道麦B(200553):2022年半年度报告（英文版）
原标题:安道麦B:2022年半年度报告（英文版） ADAMA LTD. SEMI-ANNUAL REPORT 2022 ADAMA Ltd. 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. August 2022 Section I - Important Notice, Table of Contents and Definitions ? The Company’s Board of Directors, Board of Supervisors, directors, supervisors and senior managers confirm that the content of the Report is true, accurate and complete and contains no false statement, misleading presentations or material omissions, and assume joint and several legal liability arising therefrom. ? Ignacio Dominguez, the person in charge of the Company (President and Chief Executive Officer) as well as its legal representative, and Shahar Florentz, the person leading the accounting function (Chief Financial Officer), hereby assert and confirm the 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 strategy, market trends and their effect etc., does not constitute, in any manner whatsoever, a substantial commitment of the Company to investors. Investors and other relevant people are cautioned to be sufficiently mindful of investment risks 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 III herein. The major risks of the Company include, among others, exchange rate fluctuations; exposure to interest rate, Israel CPI and NIS exchange rate fluctuations; fluctuations in raw material inputs and prices, and in sales. Investors and other relevant people are cautioned to be sufficiently mindful of investment risks. For the complete “Risks Facing the Company and Countermeasures” of the Company, please see the relevant section below. ? For the Reporting Period, the Company does not plan to distribute cash dividends or bonus shares or convert capital reserve into share capital. ? This Report and its Abstract have been prepared in both Chinese and English. Should there be any discrepancies between the two versions, the Chinese version shall prevail. Table of Contents Section I - Important Notice, Table of Contents and Definitions ....................................... 2 Section II - Corporate Profile and Financial Results.......................................................... 6 Section III - Performance Discussion and Analysis ........................................................... 9 Section IV – Corporate Governance ................................................................................. 33 Section V – Environmental and Social Responsibilities ................................................. 35 Section VI - Significant Events .......................................................................................... 46 Section VII - Share Changes and Shareholders ............................................................... 78 Section VIII - Preferred stock ............................................................................................ 86 Section IX - Bonds ............................................................................................................. 87 Section X - Financial Report .......................................................................................... - 88 - Documents Available for Reference (I) Duly signed Financial Statements by the Legal Representative and Accounting Principal as well as Head of the Accounting Organ; (II) Originals of all Company’s documents previously disclosed in media designated by the CSRC as well as the originals of all the public notices, were deposited in the Company’s office. Definitions General Terms Definition Company, the Company ADAMA Ltd. Adama Agricultural Solutions Ltd., a wholly-owned subsidiary of the Company, Adama Solutions incorporated in Israel according to its laws ADAMA Anpon (Jiangsu) Ltd., a wholly-owned subsidiary of the Company, Anpon, ADAMA Anpon incorporated in China according to its laws ADAMA Huifeng (Jiangsu) Ltd., a 51% owned subsidiary of the Company, ADAMA Huifeng incorporated in China according to its laws Board of Directors/Board The Board of Directors of the Company Board of Supervisors The Board of Supervisors of the Company Group, the Group, ADAMA The Company, including all its subsidiaries, unless expressly stated otherwise ChemChina China National Chemical Co., Ltd. ChemChina-Syngenta The acquisition of Syngenta AG by ChemChina in 2017 Transaction China National Agrochemical Co., Ltd., the indirect controlling shareholder of the CNAC Company, a wholly-owned subsidiary of ChemChina CSRC China Securities Regulatory Commission SZSE Shenzhen Stock Exchange SASAC State Assets Supervision and Administration Commission of China Syngenta Group Co., Ltd, the controlling shareholder of the Company as of June Syngenta Group 15, 2020, a wholly-owned subsidiary of CNAC Sinochem Holdings Sinochem Holdings Corporation Ltd. Sinochem Holdings including all its subsidiaries unless otherwise indicated or the Sinochem Group context otherwise requires Report This 2022 Semi-Annual Report Reporting Period, this Period January 1, 2022 - June 30, 2022 2021 Annual Report The Company’s 2021 Annual Report published on March 31, 2022 Section II - Corporate Profile and Financial Results I. Corporate Information Stock name ADAMA A, ADAMA B Stock code 000553, 200553 Stock exchange Shenzhen Stock Exchange Company name in Chinese 安道麦股份有限公司 Abbr. 安道麦 Company name in English (if any) ADAM A Ltd. Abbr. (if any) ADAMA Legal representative Ignacio Dominguez II. Contact Information Securities Affairs Representative & Board Secretary Investor Relations Manager Name Guo Zhi Wang Zhujun Address 6/F, No.7 Office Building, No.10 Courtyard, Chaoyang Park South Road, Chaoyang District, Beijing Tel. 010-56718110 010-56718110 Fax 010-59246173 010-59246173 E-mail [email protected] [email protected] 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 2021 Annual Report. 2. Information Disclosure Media and Place where this Report is Kept Indicate by tick mark whether any changes occurred to the information disclosure media and the place where this Report 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 the publication of this Report and the location where this Report is kept did not change during
22,536,670 21,075,083 21,075,083 6.94% (RMB’000) Reason for retroactive adjustments: According to ASBE 22 - Financial Instruments Recognition and Measurement, starting from 2022 the Group recorded the gain or loss from the disposal of derivative instruments in the “Gain(loss) from Changes in Fair Value”. Before 2022, the Group recorded the abovementioned gain of loss in the “Investment income, net”. The Company reclassified the “Gain(loss) from Changes in Fair Value” and the “Investment income, net” in the corresponding period in 2021. Such change did not impact the operating results or net assets of the reporting period. V. Differences in Accounting Data under Domestic and Foreign Accounting Standards 1. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under Chinese and International Accounting Standards □ Applicable √ Not applicable None during the Reporting Period.
Details of other profit and loss items that meet the definition of non-recurring profit or loss. √ Applicable □ Not applicable Mainly provisions for early retirement plan of employees at the Company’s Israeli manufacturing facilities as explained above in the note. Explanation whether the Company has classified an item as non-recurring profit/loss according to the definition in the Explanatory Announcement No. 1 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 in the Reporting Period. Section III - Performance Discussion and Analysis I. Main Business of the Company during the Reporting Period The Company is a corporation incorporated in the People's Republic of China. The Group is a global leader in crop protection, engaging in the development, manufacturing and commercialization of a wide range of crop protection products, that are largely off-patent. The Group provides solutions to farmers to combat weeds, insects and disease, and sells its products in approximately 100 countries, through approximately 60 subsidiaries worldwide. The Group's business model integrates end-customer access, regulatory expertise, state-of-the art global R&D, production and formulation facilities, thereby providing the Group a significant competitive edge and allowing it to launch new and differentiated products that meet local farmers and customer needs in key markets. The Group's primary operations are global, spanning activities in Europe, North America, Latin America, Asia-Pacific (including China) and India, the Middle-East and Africa. The Group also utilizes its expertise to adapt such products also for the development, manufacturing and commercialization of similar products for non-agricultural purposes (Consumer and Professional Solutions). In addition, the Group leverages its core capabilities in the agricultural and chemical fields and operates in several other non-agricultural areas, none of which, individually, is material for the Group. These activities, collectively reported as Intermediates and Ingredients, include primarily, (a) the manufacturing and marketing of dietary supplements, food colors, texture and flavor enhancers, and food fortification ingredients; (b) fragrance products for the perfume, cosmetics, body care and detergents industries; (c) the manufacturing of industrial products and (d) other non-material activities. ADAMA Group is a distinctive member of Syngenta Group, a world leader in agricultural inputs, spanning crop protection, seeds, fertilizers, additional agricultural and digital technologies, as well as an advanced distribution network in China. The General Crop Protection Market Environment Crop prices remain elevated above historic averages despite decreasing somewhat in Q2 2022 after reaching historically high levels in Q1 2022. Prices are, however, expected to remain elevated into H2 2022 and beyond, supported by key fundamentals including very low stocks, unfavorable weather conditions in the Americas and parts of Europe and continued supply and logistics disruptions exacerbated by the conflict in Ukraine. The high crop prices incentivize another year of increases in global planted areas. As a result, the global demand for crop protection remains strong as farmers strive to maximize yields in this high crop price environment. Farmers continue to face high production costs, mainly from higher fertilizer prices resulting from disruption to supply and tight availability caused by the conflict in Ukraine, yet their farming Global energy prices remain inflated while the challenging cost environment is expected to extend throughout 2022. Despite this, global energy prices have decreased recently mainly due to concerns regarding recession, but are expected to remain elevated into H2 2022, due to tight supply and concerns regarding supply outages following sanctions on Russian energy exports combined with pockets of increased demand as economies recover from COVID. Global freight and logistics costs are declining as a result of reduced demand in light of COVID lockdowns in China as well as high inflation rates, but remain elevated, after reaching record highs in February 2022. Prices are expected to remain elevated well into H2 2022, due to high fuel costs, prolonged supply chain disruptions while the availability of shipping resources continues to be limited. Additionally, global freight volumes are expected to increase as the lockdown in Shanghai Port has eased and production has resumed. Despite some easing in global procurement prices for raw materials, intermediates and active ingredients during the quarter, most products are expected to keep fluctuating at elevated levels in H2 2022. This overall trend is impacted both by the general softening of prices in China and by the increase in prices of such products in other geographies. In China, an increase in production capacity and an ease in logistic disruptions led to softening of prices, while in other geographies cost inflation, energy prices, supply shortages and logistic challenges are driving prices upward and impacting availability. With strong global crop protection demand, transportation disruptions and supply shortages driven by the ongoing conflict in Ukraine, as well as the "Zero COVID" policy in China, prices are expected to remain high. Crop Protection Products As described within the Company’s 2021 annual report, the Group is focused on the development, manufacturing and commercialization of largely off-patent crop protection products, which are generally herbicides, insecticides and fungicides, which protect agricultural and other crops against weeds, insects and disease, respectively. Since the publication of the 2021 annual report, no major changes occurred with that respect. For details, please refer to 2021 annual report. Please see important additional information and further details included in the Annex.
(483,583) 722,759 -166.91% (103,376) 122,074 -184.68% equivalents
(2,568,738) 780,137 -429.27% (427,928) 126,656 -437.87% cash and cash equivalents Major changes to the profit structure or sources of the Company in the Reporting Period: □ Applicable √ Not applicable None during the Reporting Period.
Europe: In Europe, the Company presented strong sales, despite the negative impact of exchange rates, loss of sales due to the Ukraine-Russia conflict and some supply challenges. The Company continued to gain market share in the key countries France and Italy, presenting strong sales across most countries in the region and particularly in France, Germany, Hungary as well as in Scandinavian, BENELUX, Baltic and Balkan countries, while negative seasonal conditions impacted the sales in Spain and Italy. Notably, the Company benefited from the sale of Folpet in Germany, which was granted an emergency 1 registration in Barley for 2022. North America: In the US Ag market, sales increased as the Company focused on the quality of business and despite drought conditions across western Texas and California that impacted demand. Very strong growth in sales and gain of market share in Canada due to seizing market opportunity to supply increased demand for cereal herbicides in light of general market supply shortages. ADAMA initiated in-house production of cereal herbicide MCPA to meet this demand. The Consumer & Professional business presented very strong sales achieved through capturing market opportunities and driven by steady demand mainly attributed to the commercial business (hotels, restaurants, etc.) coming back to full strength after COVID shutdowns as well as very successful new launch of Suprado, strengthening ADAMA's position as an innovator in the C&P arena. This is despite softening of demand in the consumer market and with homeowners as inflation rises and recreational activities decrease post-COVID. Latin America: Significant growth in sales in Brazil as ADAMA continues to reinforce its position in this market while demand remains strong supported by elevated crop commodities prices. ? ? ? The Company's innovative herbicides Araddo , Cheval and Arremate and fungicides Armero? and ? Across continued to be well received in the market. Higher sales were also achieved in other LATAM countries, particularly in the key countries Colombia, Argentina and Mexico, despite some supply challenges. Asia-Pacific: The Company's strong growth in Asia Pacific was led by the exceptionally strong sales of raw material, intermediates and fine chemicals in China, driven both by volumes and prices, in light of the strong global demand for crop protection and achieved despite logistic challenges related to COVID. The sales in China of ADAMA's branded portfolio also grew significantly as the Company gains market share, despite the negative impact of some seasonal conditions and the strong competition in the market. In the wider APAC region, strong sales were delivered in the Pacific region, which continued to benefit from the favorable La Ni?a season, that has now potentially ended after an extended two-year season. 1 Despite not having received yet full label registration in Germany, Folpet was granted "Nationwide emergency registration for FOLPAN? 500 SC against Ramularia collo-cygni in barley" allowing it to be used only for this
1,953,211 1,484,682 24.0% 38.5% 38.6% 0.0% Intermediates If the scope of the Company's main business was adjusted during the Reporting Period, the Company's annual financial data of main business according to the adjusted scope at the end of the year is disclosed as follows: □ Applicable √ Not applicable Reasons for any over 30% YoY movement of the data above: √ Applicable □ Not applicable 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 the second quarter and first half period 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 the second quarter and first half period in 2021. These charges have significantly declined since the first quarter of 2022, as the relocation and upgrade of the manufacturing Jingzhou site in China has been completed and is now at a high level of operation. Excluding the impact of the abovementioned extraordinary charges, the higher Cost of Goods sold, both in the quarter and in the half-year periods, reflect the strong growth of the business, higher logistics, procurement and production costs as well as the negative impact of exchange rates. Nevertheless, in the quarter and half year period, the Company saw the significantly higher gross profit and improvement in the adjusted gross margin, mainly driven by the markedly higher prices and complemented by continued volume growth. (3) Operating Expenses: Operating expenses include Sales and Marketing, General and Administration and R&D. Please refer to the explanation above regarding the reclassification of certain transportation costs and idleness from operating expenses to COGs. Additionally, the Company recorded certain non-operational charges within its operating expenses amounting to RMB 146 million ($ 22 million) in Q2 2022 in comparison to RMB 65 million ($ 10 million) in Q2 2021, and RMB 182 million ($ 28 million) in H1 2022 in comparison to RMB 169 million ($ 26 million) in H1 2021, mainly as follows: (i) 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; and (iii) Incentive plans - share-based compensation. Excluding the impact of the abovementioned non-operational charges, the higher operating expenses in the quarter and half-year period reflect the strong growth of the business, an increase in expenses attributed to company success-based employee compensation, the inclusion of a recent acquisition and moderated by the positive impact of exchange rates. In addition, in the first quarter the Company recorded a doubtful debt provision for trade receivables in Ukraine. (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 Expenses (before hedging) is an income of RMB 438 million ($68 million) for the first half of 2022 compared with an expense of RMB 449 million ($69 million) for the corresponding period 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 is recorded in “Gains/Losses from Changes in Fair Value” is a net loss of RMB 1,341 million ($207 million) in the first half of 2022 compared with a net loss of RMB 140 million ($22 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 903 million ($139 million) in the first half of 2022 compared with RMB 589 million ($91 million) in the corresponding period in 2021. The higher total net Financial Expenses were mainly driven by the net effect of the high Israeli CPI on the ILS-denominated, CPI-linked bonds, higher hedging costs on exchange rates and the valuation of put options attributed to minority stakes. (5) Cash Flow: Net cash flows from (used in) operating activities: Operating cash flow of $71 million (RMB 468 million) was generated in the quarter and $215 million (RMB 1,346 million) was used in the half-year period, compared to $361 million (RMB 2,329 million) and $231 million (RMB 1,491 million) generated in the corresponding periods last year, respectively. The lower cash flow generated in the quarter was primarily due to an increase in payments for goods procured in previous quarters supporting the increase in inventory levels. Net cash used in investing activities was $107 million (RMB 705 million) in the quarter and $197 million (RMB 1,279 million) in the half-year period, compared to $184 million (RMB 1,188 million) and $292 million (RMB 1,892 million) in the corresponding periods last year, respectively. The cash used in investing activities in the second quarter of 2022 and the half year period is largely related to investments in "Core Leap" manufacturing capabilities in Israel and Brazil as well as investments in intangible assets relating to ADAMA's global registrations. In the corresponding periods in 2021, cash was also used for the completion of the payment related to the acquisition of Huifeng’s domestic commercial crop protection business and the acquisition of the Huifeng Dafeng manufacturing site towards the end of the second quarter in 2021, as well as for the relocation and upgrade of the manufacturing Sanonda Jingzhou site, which was completed towards the end of the second quarter of 2021. Free cash flow of $83 million (RMB 551 million) was consumed in the second quarter and $469 million (RMB 2,999 million) consumed in the half-year period compared to $132 million (RMB 854 million) generated and $116 million (RMB 752 million) consumed in the corresponding periods last year, respectively, reflecting the aforementioned operating and investing cash flow dynamics. Cash Flow from Financing Activities was $64 million (RMB 421 million) consumed in the quarter and $12 million (RMB 94 million) consumed in the half-year period, compared to $58 million (RMB 372 million) consumed and $186 million (RMB 1,209 million) generated in the corresponding periods last year, respectively, mainly driven by realization of hedging transactions.
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