ADAMALtd.ENGLISH TRANSLATION OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026ADAMALtd.FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
CONTENTS PAGES
THE CONSOLIDATEDAND COMPANY'S BALANCE SHEETS 1 - 3
THE CONSOLIDATEDAND COMPANY'S INCOME STATEMENTS 4 - 5
THE CONSOLIDATEDAND COMPANY'S CASH FLOW STATEMENTS 6 - 7
THE CONSOLIDATEDAND COMPANY'S STATEMENTS
OF CHANGES IN SHAREHOLDERS' EQUITY 8 - 10
NOTES TO THE FINANCIAL STATEMENTS 11 – 116ADAMALtd.
(Expressed in RMB '000)
Consolidated Balance Sheet
June 30 December 31
Notes 2026 2025
Current assets
Cash at bank and on hand V.1 2906052 3450300
Financial assets held for trading V.2 2711 1223
Derivative financial assets V.3 228492 449379
Bills receivable V.4 256325 358489
Accounts receivable V.5 7781302 7124736
Receivables financing V.6 78314 30767
Prepayments V.7 309064 368012
Other receivables V.8 776266 1076164
Inventories V.9 11280787 11607842
Other current assets V.10 965692 1094273
Total current assets 24585005 25561185
Non-current assets
Long-term receivables V.11 203183 118203
Long-term equity investments V.12 42820 39312
Other equity investments V.13 127475 129796
Investment properties 18053 18869
Fixed assets V.14 9635349 10073551
Construction in progress V.15 713670 897175
Right-of-use assets V.16 562738 661443
Intangible assets V.17 3981086 4302343
Goodwill V.18 4814486 4964450
Deferred tax assets V.19 1526168 1294176
Other non-current assets V.20 439056 403459
Total non-current assets 22064084 22902777
Total assets 46649089 48463962
- 1 -ADAMALtd.
(Expressed in RMB '000)
Consolidated Balance Sheet (continued)
June 30 December 31
Notes 2026 2025
Current liabilities
Short-term loans V.21 5763384 6673792
Derivative financial liabilities V.22 249837 189581
Bills payable V.23 605314 622660
Accounts payable V.24 5048131 5461749
Contract liabilities V.25 1515640 1789490
Employee benefits payable V.26 734607 936724
Taxes payable V.27 571720 539168
Other payables V.28 1523019 1418093
Non-current liabilities due within one year V.29 3794710 3825203
Other current liabilities V.30 898096 929259
Total current liabilities 20704458 22385719
Non-current liabilities
Long-term loans V.31 1152479 1507514
Debentures payable V.32 5138114 4894076
Lease liabilities V.33 652730 751226
Long-term payables 153307 164735
Long-term employee benefits payable V.34 559208 536895
Provisions V.35 421488 424347
Deferred tax liabilities V.19 231286 224024
Other non-current liabilities V.36 - -
Total non-current liabilities 8308612 8502817
Total liabilities 29013070 30888536
Shareholders' equity
Share capital V.37 2329812 2329812
Capital reserve V.38 12867123 12867123
Other comprehensive income V.39 1218425 1570748
Special reserves 8705 6156
Surplus reserve V.40 298610 298610
Retained earnings V.41 913344 502977
Total equity attributed to the shareholders 17636019 17575426
of the company
Non-controlling interests - -
Total Equity 17636019 17575426
Total liabilities and equity 46649089 48463962
Gael Hili Efrat Nagar
Legal representative Chief Financial Officer
These financial statements were approved by the Board of Directors of the Company on August 17 2026.The notes form part of these financial statements.- 2 -ADAMALtd.
(Expressed in RMB '000)
Company's Balance Sheet
June 30 December 31
Notes 2026 2025
Current assets
Cash at bank and on hand XV.1 152578 64964
Bills receivable 74268 112369
Accounts receivable XV.2 2005930 1636608
Receivables financing XV.3 26915 10490
Prepayments 24350 92227
Other receivables XV.4 23722 26434
Inventories 169629 210072
Other current assets 53046 14923
Total current assets 2530438 2168087
Non-current assets
Long-term equity investments XV.5 17430716 17430716
Other equity investments 54299 54299
Investment properties 1248 1522
Fixed assets 1181097 1252804
Construction in progress 25474 10184
Right-of-use assets 790 1354
Intangible assets 221238 227391
Deferred tax assets 34870 46359
Other non-current assets 242671 230156
Total non-current assets 19192403 19254785
Total assets 21722841 21422872
Current liabilities
Short-term loans 626532 418692
Bills payables 213636 155220
Accounts payables 258330 280455
Contract liabilities 10458 21420
Employee benefits payable 5678 9800
Taxes payable 2677 3171
Other payables 770039 778254
Non-current liabilities due within one year 19631 13930
Other current liabilities 116585 116585
Total current liabilities 2023566 1797527
Non-current liabilities
Long-term loans 631000 642000
Lease liabilities 162 443
Long-term employee benefits payable 61320 63175
Provisions 24615 24871
Total non-current liabilities 717097 730489
Total liabilities 2740663 2528016
Shareholders’ equity
Share capital V.37 2329812 2329812
Capital reserve 15523881 15523881
Other comprehensive income 24916 24916
Special reserves 9396 6847
Surplus reserve V.40 298610 298610
Retained earnings 795563 710790
Total shareholders’ equity 18982178 18894856
Total liabilities and shareholders’ equity 21722841 21422872
- 3 -ADAMALtd.
(Expressed in RMB '000)
Consolidated Income Statement
Six months ended June 30
Notes 2026 2025
I. Operating income V.42 14476540 15024200
Less: Cost of sales V.42 10523330 11030173
Taxes and surcharges V.43 46920 57128
Selling and Distribution expenses V.44 2038063 1975668
General and administrative expenses V.45 602039 734867
Research and Development expenses V.46 211350 216793
Financial expenses V.47 1023706 1024340
Including: Interest expense 462779 527096
Interest income 76612 101281
Add: Investment income net V.48 6593 5261
Including: Income from investment
in associates and joint ventures 6593 5261
Gain (loss) from changes in fair value V.49 213451 (6493)
Credit impairment losses V.50 (28205) (93679)
Asset impairment losses V.51 (152029) (27617)
Gain from disposal of assets V.52 306349 5054
II. Operating income (loss) 377291 (132243)
Add: Non-operating income 94399 19219
Less: Non-operating expenses 79305 12555
III. Total income (loss) 392385 (125579)
Less: Income tax expenses (income) V.53 (40182) (45227)
IV. Net income (loss) 432567 (80352)
(1). Classified by nature of operations
(1.1). Continuing operations 432567 (80352)
(2). Classified by ownership
(2.1). Shareholders of the Company 432567 (80352)
(2.2). Non-controlling interests - -
V. Other comprehensive income (loss) net of tax V. 39 (352323) 71116
Other comprehensive income (loss) (net of tax)
attributable to shareholders of the Company (352323) 71116
(1) Items that will not be reclassified to profit or loss: (2167) 979
(1.1) Re-measurement of defined benefit plan liability (2167) 979
(1.2) Fair Value changes in other equity investment - -
(2) Items that were or will be reclassified to profit or loss (350156) 70137
(2.1) Effective portion of gains or loss of cash flow hedge 45686 (48355)
(2.2) Translation differences of foreign financial statements (395842) 118492
VI. Total comprehensive income (loss) for the period attributable to 80244 (9236)
Shareholders of the Company
Total comprehensive (loss) for the period 80244 (9236)
attributable to shareholders of the Company
Total comprehensive income for the period - -
attributable to Non-controlling interests
VII. Earnings per share XIV.3
(1) Basic earnings (loss) per share (Yuan/share) 0.19 (0.03)
(2) Diluted earnings per share (Yuan/share) N/A N/A
- 4 -ADAMALtd.
(Expressed in RMB '000)
Company's Income Statement
Six months ended June 30
Notes 2026 2025
I. Operating income XV.6 1179597 1094572
Less: Operating costs XV.6 963743 879975
Taxes and surcharges 4595 7663
Selling and Distribution expenses 5009 2185
General and administrative expenses 60247 105840
Research and Development expenses 10956 664
Financial expenses 58952 13170
Including: Interest expense 13058 14052
Interest income 1939 1019
Add: Investment income net 20301 32445
Gain from changes in fair value (“-” means loss) - 30714
Credit impairment losses (90) (1084)
Asset Impairment losses (2099) (3362)
Gain from disposal of assets - 3607
II. Operating Profit 94207 147395
Add: Non-operating income 2083 4225
Less: Non-operating expenses 28 20
III. Total profit 96262 151600
Less: Income tax expense 11489 21449
IV. Net profit 84773 130151
V. Other comprehensive income net of tax - -
(1) Items that will not be reclassified to profit or loss - -
(1.1) Re-measurement of defined benefit plan liability - -
(1.2) FV changes in other equity investment - -
VI. Total comprehensive income for the period 84773 130151
- 5 -ADAMALtd.
(Expressed in RMB '000)
Consolidated Cash Flow Statement
Six months ended June 30
Notes 2026 2025
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 13018653 14968968
Refund of taxes and surcharges 69659 90510
Cash received relating to other operating activities V.56(1) 234064 75142
Sub-total of cash inflows from operating activities 13322376 15134620
Cash paid for goods and services 8920011 9451146
Cash paid to and on behalf of employees 2212852 1999080
Payments of taxes and surcharges 270755 289600
Cash paid relating to other operating activities V.56(2) 1248849 1656216
Sub-total of cash outflows from operating activities 12652467 13396042
Net cash flows provided by operating activities V.57(1)a 669909 1738578
II. Cash flows from investing activities:
Cash received from disposal of investments 150917 41370
Cash received from returns of investments 2325 -
Net cash received from disposal of fixed assets intangible
assets and other long-term assets 464112 17493
Sub-total of cash inflows from investing activities 617354 58863
Cash paid to acquire fixed assets intangible assets and
other long-term assets 479402 589861
Net cash paid to acquire subsidiaries or other business units - 56272
Cash paid relating to other investing activities V.56(3) 631 47825
Sub-total of cash outflows from investing activities 480033 693958
Net cash flows provided by (used in) investing activities 137321 (635095)
III. Cash flows from financing activities:
Cash received from borrowings 959512 1625222
Cash received from other financing activities V.56(4) 778828 1082504
Sub-total of cash inflows from financing activities 1738340 2707726
Cash repayments of borrowings 2311558 3107377
Cash payment for dividends profit distributions and interest 475346 527153
Including: Dividends paid to non-controlling interest 22200 74170
Cash paid relating to other financing activities V.56(5) 202602 440257
Sub-total of cash outflows from financing activities 2989506 4074787
Net cash flow used in financing activities (1251166) (1367061)
IV. Effects of foreign exchange rate changes on cash and cash equivalent
equivalent (90358) (4700)
V. Net decrease in cash and cash equivalents V.57(1)b (534294) (268278)
Add: Cash and cash equivalents at the beginning of the year 3353326 3583963
I. VI. Cash and cash equivalents at the end of the period V.57(2) 2819032 3315685
- 6 -ADAMALtd.
(Expressed in RMB '000)
Company's Cash Flow Statement
Six months ended June 30
Notes 2026 2025
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services 481456 650459
Refund of taxes and surcharges 9757 32238
Cash received relating to other operating activities XV.7(1) 5034 15324
Sub-total of cash inflows from operating activities 496247 698021
Cash paid for goods and services 236511 413963
Cash paid to and on behalf of employees 61073 64712
Payments of taxes and surcharges 11480 9317
Cash paid relating to other operating activities XV.7(2) 112893 23927
Sub-total of cash outflows from operating activities 421957 511919
Net cash flows provided by operating activities XV.8 74290 186102
II. Cash flows from investing activities:
Cash received from returns of investments 22626 32445
Net cash received from disposal of fixed assets intangible assets and other
long-term assets - 11210
Cash received relating to other investing activities XV.7.(3) 757 803
Sub-total of cash inflows from investing activities 23383 44458
Cash paid to acquire fixed assets intangible assets and
other long-term assets 21109 9369
Cash paid for other investing activities XV.7.(4) 20000 -
Sub-total of cash outflows from investing activities 41109 9369
Net cash flows provided by (used in) investing activities (17726) 35089
III. Cash flows from financing activities:
Cash received from borrowings 201000 300000
Cash received relating to other financing activities XV.7.(5) 4500 1858
Sub-total of cash inflows from financing activities 205500 301858
Cash repayments of borrowings 155000 473046
Cash payment for dividends profit distributions or interest 13073 14395
Cash paid relating to other financing activities XV.7.(6) 12172 14246
Sub-total of cash outflows from financing activities 180245 501687
Net cash flow provided (used in) financing activities 25255 (199829)
IV. Effects of foreign exchange rate changes on cash and cash equivalents (1877) 4965
V. Net increase in cash and cash equivalents 79942 26327
Add: Cash and cash equivalents at the beginning of the year XV.8(2) 58950 39173
VI. Cash and cash equivalents at the end of the period XV.8(2) 138892 65500
- 7 -ADAMALtd.
(Expressed in RMB '000)
Consolidated Statement of Changes in Shareholders’ Equity
For the Six months ended June 30 2026
Other
Share Capital comprehensive Special Surplus Retained Non-controlling
capital reserve income reserves reserve earnings Total interests Total equity
I. Balance at December 31 2025 2329812 12867123 1570748 6156 298610 502977 17575426 - 17575426
II. Changes in equity for the period - - (352323) 2549 - 410367 60593 - 60593
1. Total comprehensive income - - (352323) - - 432567 80244 - 80244
2. Appropriation of profits - - - - - (22200) (22200) - (22200)
2.1 Distribution to non-controlling - - - - - (22200) (22200) - (22200)
interest
3. Special reserve - - - 2549 - - 2549 - 2549
3.1 Transfer to special reserve - - - 4724 - - 4724 - 4724
3.2 Amount utilized - - - (2175) - - (2175) - (2175)
III. Balance at June 30 2026 2329812 12867123 1218425 8705 298610 913344 17636019 - 17636019
- 8 -ADAMALtd.
(Expressed in RMB '000)
Statement of Changes in Shareholders’ Equity
For the Six months ended
June 30 2025
Other
Share Capital comprehensive Special Surplus Retained Non-controlling
capital reserve income reserves reserve earnings Total interests Total equity
I. Balance at December 31 2024 2329812 12950464 1721028 10798 298610 1680382 18991094 - 18991094
II. Changes in equity for the period - - 71116 (2644) - (154522) (86050) - (86050)
1. Total comprehensive loss - - 71116 - - (80352) (9236) - (9236)
2. Appropriation of profits - - - - - (74170) (74170) - (74170)
2.1 Distribution to non-controlling - - - - - (74170) (74170) - (74170)
interest
3. Special reserve - - - (2644) - - (2644) - (2644)
3.1 Transfer to special reserve - - - 4514 - - 4514 - 4514
3.2 Amount utilized - - - (7158) - - (7158) - (7158)
III. Balance at June 30 2025 2329812 12950464 1792144 8154 298610 1525860 18905044 - 18905044
- 9 -ADAMALtd.
(Expressed in RMB '000)
Company's Statement of Changes in Shareholders’ Equity
For the Six months ended June 30 2026
Other
Share Capital comprehensive Special Surplus Retained
capital reserve income reserves reserve earnings Total
I. Balance at December 31 2025 2329812 15523881 24916 6847 298610 710790 18894856
II. Changes in equity for the period - - - 2549 - 84773 87322
1. Total comprehensive income - - - - - 84773 84773
2. Special reserve - - - 2549 - - 2549
2.1 Transfer to special reserve - - - 4724 - - 4724
2.2 Amount utilized - - - (2175) - - (2175)
Ⅲ. Balance at June 30 2026 2329812 15523881 24916 9396 298610 795563 18982178
For the Six months ended June 30 2025
Other
Share Capital comprehensive Special Surplus Retained
capital reserve income reserves reserve earnings Total
I. Balance at December 31 2024 2329812 15523881 23894 11489 298610 779972 18967658
II. Changes in equity for the period - - - (2644) - 130151 127507
1. Total comprehensive income - - - - - 130151 130151
2. Special reserve - - - (2644) - - (2644)
2.1 Transfer to special reserve - - - 4514 - - 4514
2.2 Amount utilized - - - (7158) - - (7158)
Ⅲ. Balance at June 30 2025 2329812 15523881 23894 8845 298610 910123 19095165
- 10 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
I BASIC CORPORATE INFORMATION
ADAMA Ltd. (hereinafter the “Company” or the “Group”) is a company limited by shares established in
China with its head office located in Hubei Jingzhou.In June 2020 the controlling shareholder of the Company changed from China National Agrochemical Co.Ltd. (hereinafter – “CNAC") to Syngenta Group Co. Ltd. (hereinafter “Syngenta Group”). As of August
2021 following the combination between China National Chemical Co. Ltd. (hereinafter - “ChemChina”)
and Sinochem Holdings Corporation Ltd. (hereinafter - “Sinochem Holdings”) Syngenta Group and
subsequently the Company are ultimately controlled by Sinochem Holdings - parent of both ChemChina
and Sinochem Group Co. Ltd. (hereinafter “Sinochem Holdings”) subordinated to SASAC.The principal activities of the Company and its subsidiaries (together referred to as the “Group”) are
engaged in development manufacturing and marketing of agrochemicals intermediate materials for other
industries food additives and synthetic aromatic products mainly for export. For information about the
largest subsidiaries of the Company refer to Note VII.The Company’s consolidated financial statements had been approved by the Board of Directors of the
Company on August 17 2026.Details of the scope of consolidated financial statements are set out in Note VII "Interest in other entities"
whereas the changes of the scope of consolidation are set out in Note VI "Changes in consolidation scope".II BASIS OF PREPARATION
1. Basis of preparation
The Group has adopted the Accounting Standards for Business Enterprises issued by the Ministry of
Finance (the "MoF"). In addition the Group has disclosed relevant financial information in these financial
statements in accordance with Information Disclosure and Presentation Rules for Companies Offering
Securities to the Public No. 15－General Provisions on Financial Reporting (revised by China SecuritiesRegulatory Commission (hereinafter "CSRC”) in 2023).
2. Accrual basis and measurement principle
The Group has adopted the accrual basis of accounting.In the historical cost measurement assets obtained shall be measured at the amount of cash or cash
equivalents or fair value of the consideration paid. Liabilities shall be measured at the actual amount of
cash or assets received or the contractual amount in a present obligation or the prospective amount of
cash or cash equivalents paid to discharge the liabilities.Fair value is the amount for which an asset could be exchanged or a liability settled between
knowledgeable willing market participants in an arm’s length transaction at the measurement date. Fair
value measured and disclosed in the financial statements are determined on this basis whether it is
observable or estimated by valuation techniques.- 11 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
II BASIS OF PREPARATION - (cont’d)
2. Accrual basis and measurement principle - (cont’d)
The following table provides an analysis grouped into Levels 1 to 3 based on the degree to which the fair
value input is observable and significant to the fair value measurement as a whole:
Level 1 - based on quoted prices (unadjusted) in active markets;
Level 2 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is observable (other than quoted prices included within Level 1) either directly or
indirectly;
Level 3 - based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
3. Going concern
The financial statements have been prepared on the going concern basis.The Group has performed going concern assessment for the following 12 months from June 30 2026 and
have not identified any significant doubtful matter or event on the going concern as such the financial
statement have been prepared on the going concern basis.III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
1. Statement of compliance
These financial statements are in compliance with the Accounting Standards for Business Enterprises to
truly and completely reflect the Company's consolidated financial position as at June 30 2026 and the
Company's consolidated operating results changes in shareholders' equity and cash flows for the six
months then ended.
2. Accounting period
The Group has adopted the calendar year as its accounting year i.e. from 1 January to 31 December.
3. Business cycle
The company takes the period from the acquisition of assets for processing to their realisation in cash or
cash equivalents as a normal operating cycle. The operating cycle for the company is 12 months.
4. Reporting currency
The Company and its domestic subsidiaries choose Renminbi (hereinafter "RMB") as their functional
currency. Functional currencies of overseas subsidiaries are determined on the basis of the principal
economic environment in which the overseas subsidiaries operate. The functional currency of the overseas
subsidiaries is mainly the United States Dollar (hereinafter "USD"). The presentation currency of these
financial statements is Renminbi.- 12 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
5. Criteria of determining material item in the report and its benchmark
Item Benchmark for Material Item
Material construction in progress projects Individual construction in progress project with a budget higher than RMB100 million
Material receivables assessed individually for
impairment Individual impairment higher than RMB 150 million
6. Business combinations
6.1 Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a business combination in
which all of the combining enterprises are not ultimately controlled by the same party or parties before and
after the combination.The costs of business combination are the fair value of the assets paid liabilities incurred or assumed and
equity instruments issued by the acquirer for the purpose of achieving the control rights over the acquiree.The intermediary costs such as audit legal services and assessment consulting costs and other related
management costs that are directly attributable to the combination by the acquirer are charged to profit or
loss in the period in which they are incurred. Direct capital issuance costs incurred in respect of equity
instruments or liabilities issued pursuant to the business combination should be charged to the respect
equity instruments or liabilities upon initial recognition of the underlying equity instruments or liabilities.The acquiree’s identifiable assets liabilities and contingent liabilities acquired by the acquirer in a business
combination that meet the recognition criteria shall be measured at fair value at the acquisition date.The consideration transferred includes the fair value of any contingent consideration. (such as earnout
arrangements with the former shareholders). After the acquisition date the Group recognizes changes in
the fair value of contingent consideration classified as a financial liability at fair value through profit or
loss.Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable
net assets the difference is treated as an asset and recognized as goodwill which is measured at cost on
initial recognition. Where the cost of combination is less than the acquirer’s interest in the fair value of the
acquiree’s identifiable net assets the remaining difference is recognized immediately in profit or loss for
the current year.The goodwill raised because of the business combination should be separately disclosed in the
consolidated financial statement and measured by the initial amount less any accumulative impairment
provision.In a business combination achieved in stages the Group remeasure its previously held equity interest in the
acquiree at its acquisition-date fair value and recognise the resulting gain or loss if any in profit or loss.- 13 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
7. Basis for preparation of consolidated financial statements
The scope of consolidation in consolidated financial statements is determined on the basis of control.Control is achieved when the Company has power over the investee; is exposed or has rights to variable
returns from its involvement with the investee; and has the ability to use its power to affect its returns.For a subsidiary disposed of by the Group the operating results and cash flows before the date of disposal
(the date when control is lost) are included in consolidated income statement and consolidated statement of
cash flows.For a subsidiary acquired through a business combination not involving enterprises under common control
the operating results and cash flows from the acquisition date (the date when control is obtained) are
included in consolidated income statement and consolidated statement of cash flows.The significant accounting policies and accounting years adopted by the subsidiaries are determined based
on the uniform accounting policies and accounting years set out by the Company.All significant intra-group balances transactions and unrealized profits are eliminated on consolidation.The portion of subsidiaries' equity that is not attributable to the Company is treated as non-controlling
interests and presented as "non-controlling interests" in the shareholders’ equity in consolidated balance
sheet. The portion of net profits or losses of subsidiaries for the period attributable to non-controlling
interests is presented as "non-controlling interests" in consolidated income statement below the "net profit"
line item. Total comprehensive income attributable to non-controlling shareholders is presented separately
in the consolidated income statement below the total comprehensive income line item.When the amount of loss for the period attributable to the non-controlling shareholders of a subsidiary
exceeds the non-controlling shareholders' portion of the opening balance of owners' equity of the
subsidiary the excess amount is still allocated against non-controlling interests.Acquisition of non-controlling interests or disposal of equity interest in a subsidiary that does not result in
the loss of control over the subsidiary is accounted for as equity transactions. The carrying amounts of the
Company's interests and non-controlling interests are adjusted to reflect the changes in their relative
interests in the subsidiary. The difference between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received is adjusted to capital reserve under owners'
equity. If the capital reserve is not sufficient to absorb the difference the excess is adjusted against
retained earnings. Other comprehensive income attributed to the non-controlling interest is reattributed to
the shareholders of the company.A put option issued by the Group to holders of non-controlling interests that is settled in cash or other
financial instrument is recognized as a liability at the present value of the exercise price (according to the
"anticipated acquisition method"). The Group’s share of a subsidiary’s profits includes the share of the
holders of the non-controlling interests to which the Group issued a put option.- 14 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
7. Basis for preparation of consolidated financial statements - (cont’d)
In cases which the Group has a Call option in addition to the Put option above due to the anticipated
acquisition method implementation no value is given to the Call option in the consolidated financial
statements.When the Group loses control over a subsidiary due to disposal of certain equity interest or other reasons
any retained interest is re-measured at its fair value at the date when control is lost. The difference between
(i) the aggregate of the consideration received on disposal and the fair value of any retained interest and (ii)
the share of the former subsidiary's net assets cumulatively calculated from the acquisition date according
to the original proportion of ownership interest is recognized as investment income in the period in which
control is lost. Other comprehensive income associated with the disposed subsidiary is reclassified to
investment income in the period in which control is lost.
8. Classification and accounting methods of joint arrangement
There are two types of joint arrangements – joint operations and joint ventures. The type of joint
arrangements is determined based on the rights and obligations of joint operator to the joint arrangements
by considering the factors such as the structure the legal form of the arrangements and the contractual
terms etc. A joint operation is a joint arrangement whereby the joint operators have rights to the assets
and obligations for the liabilities relating to the arrangement. A joint venture is a joint arrangement
whereby the joint ventures have rights to the net assets of the arrangement.
9. Cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are
the Group's short-term highly liquid investments that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
10. Translation of transactions and financial statements denominated in foreign currencies
10.1 Transactions denominated in foreign currencies
On initial recognition foreign currency transactions are translated into functional currency using the spot
exchange rate prevailing at the date of transaction.At the balance sheet date foreign currency monetary items are translated into functional currency using the
spot exchange rates at the balance sheet date. Exchange differences arising from the differences between
the spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the
previous balance sheet date are recognized in profit or loss for the period except that (i) exchange
differences related to a specific-purpose borrowing denominated in foreign currency that qualify for
capitalization are capitalized as part of the cost of the qualifying asset during the capitalization period. (ii)
exchange differences related to hedging instruments for the purpose of hedging against foreign currency
risks are accounted for using hedge accounting.- 15 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
10. Translation of transactions and financial statements denominated in foreign currencies - (cont’d)
10.1 Transactions denominated in foreign currencies - (cont’d)
When preparing financial statements involving foreign operations if there is any foreign currency
monetary items which in substance forms part of the net investment in the foreign operations exchange
differences arising from the changes of foreign currency are recorded as other comprehensive income and
will be reclassified to profit or loss upon disposal of the foreign operations.Foreign currency non-monetary items measured at historical cost are translated to the amounts in
functional currency at the spot exchange rates on the dates of the transactions and the amounts in
functional currency remain unchanged.
10.2 Translation of financial statements denominated in foreign currency
For the purpose of preparing consolidated financial statements financial statements of a foreign operation
are translated from the foreign currency into RMB using the following method: assets and liabilities on the
balance sheet are translated at spot exchange rate prevailing at the balance sheet date; shareholders' equity
items except for retained earnings are translated at the spot exchange rates at the dates on which such
items arose; all items in the income statement as well as items reflecting the distribution of profits are
translated at average rate or at spot exchange rates on the dates of the transactions; the retained earnings
opening balance is previous year's translated retained earnings closing balance; the closing balance of
retained earnings is calculated and presented on the basis of each translated income statement and profit
distribution item. The difference between the translated assets and the aggregate of liabilities and
shareholders' equity items is recorded as other comprehensive income. Cash Flows arising from transaction
in foreign currency and the cash flows of a foreign subsidiary are translated at the spot exchange rate on
the date of the cash flow the effect of exchange rate changes on the cash and cash equivalents is regardedas a reconciling item and present separately in the statement “effect of foreign exchange rate changes onthe cash and cash equivalents".The opening balances and the comparative figures of prior year are presented at the translated amounts in
the prior year's financial statements.On disposal of the Group's entire equity interest in a foreign operation or upon a loss of control over a
foreign operation due to disposal of certain equity interest in it or other reasons the Group transfers the
accumulated translation differences which are attributable to the owners' equity of the Company and
presented under other comprehensive income to profit or loss in the period in which the disposal occurs.In case of a disposal or other reason that does not result in the Group losing control over a foreign
operation the proportionate share of accumulated translation differences are re-attributed to non-
controlling interests and are not recognized in profit and loss. For partial disposals of equity interest in
foreign operations which are associates or joint ventures the proportionate share of the accumulated
translation differences are reclassified to profit or loss.- 16 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Financial instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual
provisions of the instrument. At initial recognition the Group measures a financial asset or financial
liability at its fair value plus or minus (which is not measured at fair value through profit or loss)
transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial
liability. Initial recognition in trade receivables which do not contain a significant financing component
shall be made according to their transaction price.
11.1 Classification and measurement of financial assets
After initial recognition an entity shall measure a financial asset at: (a) amortised cost; (b) fair value
through other comprehensive income (“FVTOCI”); or (c) fair value through profit or loss (“FVTPL”).
11.1.1 Financial assets at amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met: (a) the financial
asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows; and (b) the contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal amount outstanding.Such financial assets are subsequently measured at amortised cost using effective interest method. Gains
or losses upon impairment and derecognition are recognized in profit or loss.
11.1.1.1 Effective interest method and amortised cost
Effective interest rate represents the rate that discounts the future cash flow over the expected subsisting
period or shorter period if appropriate of the financial asset or financial liability to the current carrying
value of such financial asset or financial liability.When calculating the effective interest rate the Group will consider the anticipated future cash flow (not
considering the future credit loss) on the basis of all contract clauses of financial assets or financial
liabilities as well as consider all kinds of charges which are an integral part of the effective interest rate
including transaction fees and discount or premium paid or received between both parties of financial asset
or financial liability contract.- 17 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Financial instruments - (cont’d)
11.1 Classification and measurement of financial assets - (cont’d)
11.1.2 Financial assets at FVTOCI
A financial asset is measured at fair value through other comprehensive income if both of the following
conditions are met: (a) the financial asset is held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets and (b) the contractual terms of the
financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.A gain or loss on a financial asset measured at fair value through other comprehensive income is
recognized in other comprehensive income except for impairment gains or losses foreign exchange gains
and losses and interest calculated using the effective interest method until the financial asset is
derecognized or reclassified. When the financial asset is derecognized the cumulative gain or loss
previously recognized in other comprehensive income is reclassified from equity to profit or loss as a
reclassification adjustment.
11.1.3 Financial assets at FVTPL
Financial assets at FVTPL are either those that are classified as financial assets at FVTPL or designated as
financial assets at FVTPL.A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVTOCI.The Group may at initial recognition irrevocably designate a financial asset as measured at FVTPL if
doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes
referred to as an ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or
recognizing the gains and losses on them on different bases.A gain or loss on a financial asset that is measured at FVTPL is recognized in profit or loss unless it is part
of a hedging relationship. Dividends are recognized in profit or loss.
11.1.4 Designated financial assets at FVTOCI
At initial recognition the Group makes an irrevocable election to designate to FVTOCI an investment in
an equity instrument that is not held for trading.When a non-trading equity instrument investment is designated as a financial asset that is measured at fair
value through other comprehensive income the changes in the fair value of the financial asset are
recognised in other comprehensive income. Upon realization the accumulated gains or losses from other
comprehensive income are transferred from other comprehensive income and included in retained earnings.During the period in which the Group holds these non-trading investment instruments the right to receive
dividends in the Group has been established and the economic benefits related to dividends are likely to
flow into the Group and when the amount of dividends can be reliably measured the dividend income is
recognized in the current profit and loss.- 18 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Financial instruments - (cont’d)
11.2 Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses on financial assets that are classified to
amortised cost and FVTOCI.The Group always measures the loss allowance at an amount equal to lifetime expected credit losses for
trade receivables and notes receivables.For financial assets other than trade receivables the Group initially measure the loss allowance for that
financial instrument at an amount equal to 12-month expected credit losses. At each balance sheet date if
the credit risk on that financial instrument has increased significantly since initial recognition the Group
measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit
losses. The Group recognizes in profit or loss as an impairment gain or loss the amount of expected credit
losses (or reversal) that is required to adjust the loss allowance to the amount that is required to be
recognized.
11.2.1 Significant increases in credit risk
At each balance sheet date the Group assesses whether the credit risk on a financial instrument has
increased significantly since initial recognition.The Group mainly considers the following list of information in assessing changes in credit risk:
(a) significant changes in internal price indicators of credit risk as a result of a change in credit risk
since inception.(b) significant changes in external market indicators of credit risk for a particular financial instrument
or similar financial instruments with the same expected life.(c) a significant change in the debtors’ ability to meet its debt obligations.(d) an actual or expected significant change in the operating results of the debtor.(e) significant increases in credit risk on other financial instruments of the same debtor.(f) an actual or expected significant adverse change in the regulatory economic or technological
environment of the debtor.(g) significant changes in the value of the collateral supporting the obligation or in the quality of third-
party guarantees or credit enhancements which are expected to reduce the debtor’s economic
incentive to make scheduled contractual payments or to otherwise have an effect on the probability
of a default occurring.(h) significant changes that are expected to reduce the receivable’s economic incentive to make
scheduled contractual payments.(i) significant changes in the expected performance and behaviour of the debtor.The Group assumes that the credit risk on a financial instrument has not increased significantly since
initial recognition if the financial instrument is determined to have low credit risk at the reporting date.- 19 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Financial instruments - (cont’d)
11.2 Impairment of financial assets - (cont’d)
11.2.2 Credit-impaired financial asset
A financial asset is credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-
impaired include observable data about the following events:
(a) significant financial difficulty of the issuer or the receivable;
(b) a breach of contract such as a default or past due event;
(c) the lender(s) of the receivable for economic or contractual reasons relating to the receivable’s
financial difficulty having granted to the receivable a concession(s) that the lender(s) would not
otherwise consider;
(d) it is becoming probable that the receivable will enter bankruptcy or other financial reorganization;
11.2.3 Recognition of expected credit losses
Expected credit losses of financial instruments are determined as the present value of the difference
between: (a) the contractual cash flows that are due to an entity under the contract; and (b) the cash flows
that the entity expects to receive.For a financial asset that is credit-impaired at the reporting date an entity shall measure the expected
credit losses as the difference between the asset’s gross carrying amount and the present value of
estimated future cash flows discounted at the financial asset’s original effective interest rate. Any
adjustment is recognized in profit or loss as an impairment gain or loss.The Group measures expected credit losses of a financial instrument in a way that reflects:
(a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible
outcomes;
(b) the time value of money; and
(c) reasonable and supportable information that is available without undue cost or effort at the
reporting date about past events current conditions and forecasts of future economic conditions.- 20 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Financial instruments - (cont’d)
11.2 Impairment of financial assets - (cont’d)
11.2.4 Written-off of financial assets
The Group directly reduces the gross carrying amount of a financial asset when the entity has no
reasonable expectations of recovering a financial asset in its entirety or a portion thereof. A write-off
constitutes a derecognition event.
11.3 Transfer of financial asset
The Group derecognizes a financial asset if one of the following conditions is satisfied: (i) the contractual
rights to the cash flows from the financial asset expire; or (ii) the financial asset has been transferred and
substantially all the risks and rewards of ownership of the financial asset transferred to the transferee; or
(iii) although the financial asset has been transferred the Group neither transfers nor retains substantially
all the risks and rewards of ownership of the financial asset but has not retained control of the financial
asset.If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial
asset and it retains control of the financial asset it recognizes the financial asset to the extent of its
continuing involvement in the transferred financial asset and recognizes an associated liability. The extent
of the Group’s continuing involvement in the transferred asset is the extent to which it is exposed to
changes in the value of the transferred asset.When the company is derecognizing a financial asset in its entirety the difference between (i) the carrying
amount of the financial asset transferred; and (ii) the sum of the consideration received from the transfer is
recognized in profit or loss.
11.4 Classification and measurement of financial liabilities
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a financial liability and an equity
instrument.All financial liabilities are subsequently measured at FVTPL or other financial liabilities.Financial liabilities are classified as at FVTPL when the financial liability is (i) held for trading or (ii) it is
designated as at FVTPL. The financial liability other than derivative financial liabilities are stated as
liabilities held for trading.Other financial liabilities are subsequently measured at amortized cost by using effective interest method.Gain or loss arising from derecognition or amortization is recognized in current profit or loss.- 21 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
11. Financial instruments - (cont’d)
11.5 Derecognition of financial liabilities
Financial liabilities are derecognized in full or in part only when the present obligation is discharged in full
or in part. An agreement entered into force between the Group (debtor) and a creditor to replace the
original financial liabilities with new financial liabilities with substantially different terms derecognize the
original financial liabilities as well as recognize the new financial liabilities. When financial liabilities is
derecognized in full or in part the difference between the carrying amount of the financial liabilities
derecognized and the consideration paid (including transferred non-cash assets or new financial liability) is
recognized in profit or loss for the current period.
11.6 Derivatives
Derivative financial instruments include forward exchange contracts currency swaps and foreign exchange
options etc. Derivatives are initially measured at fair value at the date when the derivative contracts are
entered into and are subsequently re-measured at fair value. The resulting gain or loss is recognized in
profit or loss unless the derivative is designated and highly effective as a hedging instrument in which case
the timing of the recognition in profit or loss depends on the nature of the hedge relationship (Note III
32.1).
11.7 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be
offset except for circumstances where the Group has a legal right that is currently enforceable to offset the
recognized financial assets and financial liabilities and intends either to settle on a net basis or to realize
the financial asset and settle the financial liability simultaneously a financial asset and a financial liability
shall be offset and the net amount is presented in the balance sheet.
11.8 Equity instruments
The consideration received from the issuance of equity instruments net of transaction costs is recognized in
shareholders’ equity. Consideration and transaction costs paid by the Company for repurchasing self-
issued equity instruments are deducted from shareholders’ equity.When the Company repurchases its own shares those shares are treated as treasury shares. All
expenditures relating to the repurchase are recorded in the cost of the treasury shares with the transaction
entering into the share capital. Treasury shares are excluded from profit distributions and are stated as a
deduction under shareholders’ equity in the balance sheet.- 22 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
12. Accounts receivables
Accounts receivables are assessed for impairment on a collective group and/or on an individual basis as
follows:
Expected credit losses in respect of accounts receivables is measured at an amount equal to lifetime
expected credit losses. The assessment is made collectively for account receivables where receivables
share similar credit risk characteristics based on geographical location using the expected credit losses
model including inter-alia aging analysis historical loss experiences adjusted by the observable factors
reflecting current and expected future economic conditions. The ratio of the account receivables collective
provision for expected credit losses in which credit losses has not occurred is between 0%-2.81%.When credit risk on accounts receivable has increased significantly since initial recognition the group
records specific provision or collective provision which is determined for groups of similar assets in
countries in which there are large number of customers with immaterial balances.In assessing whether the credit risk on accounts receivables has increased significantly since initial
recognition the Group compares the risk of a default occurring on the accounts receivables at the reporting
date with the risk of a default occurring on the accounts receivables at the date of initial recognition and
considers both quantitative and qualitative information that is reasonable and supportable including
observable data that comes to the attention of the Group about loss events such as a significant decline in
the solvency of an individual debtor or the portfolio of debtors and significant changes in the financial
condition that have an adverse effect on the debtor.
13. Receivables financing
All receivbales financing are bank acceptance notes due within 1 year. From the past experience the
possibility of significant losses due to banks default is low the Group believes that there is no significant
credit risk in the bank acceptances notes held.
14. Other receivables
The Group determines expected credit losses for other receivables on an individual basis.
15. Inventories
15.1 Categories of inventories and initial measurement
The Group's inventories mainly include raw materials work in progress semi-finished goods finished
goods and reusable materials. Reusable materials include low-value consumables packaging materials and
other materials which can be used repeatedly but do not meet the definition of fixed assets.Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase costs of
conversion and other expenditures incurred in bringing the inventories to their present location and
condition including direct labor costs and an appropriate allocation of production overheads.- 23 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
15. Inventories - (cont’d)
15.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
15.3 Basis for determining net realizable value of inventories and provision methods for decline in value of
inventories
At the balance sheet date inventories are measured at the lower of cost and net realizable value. If the net
realizable value is below the cost of inventories a provision for decline in value of inventories is made.Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs
of completion the estimated costs necessary to make the sale and relevant taxes. In determining the
realizable value of inventory it is based on solid evidence obtained while also considering the purpose of
holding the inventory and the impact of events after the balance sheet date.After the provision for decline in value of inventories is made if the circumstances that previously caused
inventories to be written down below cost no longer exist so that the net realizable value of inventories is
higher than their carrying amount the original provision for decline in value is reversed and the reversal is
included in profit or loss for the period.
15.4 The perpetual inventory system is maintained for stock system.
16. Long-term equity investments
Long-term equity investments include investments in subsidiaries joint ventures and associates.
16.1 Basis for determining control joint control and significant influence over investee
Control is achieved when the Company has power over the investee; is exposed or has rights to variable
returns from its involvement with the investee; and has the ability to use its power to affect its returns.Joint control is the contractually agreed sharing of control over an economic activity and exists only when
the strategic financial and operating policy decisions relating to the activity require the unanimous consent
of the parties sharing control.Significant influence is the power to participate in the financial and operating policy decisions of the
investee but is not control or joint control over those policies.When determining whether an investing enterprise is able to exercise control or significant influence over
an investee the effect of potential voting rights of the investee (for example warrants and convertible
debts) held by the investing enterprises or other parties that are currently exercisable or convertible shall be
considered.- 24 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
16. Long-term equity investments - (cont’d)
16.2 Determination of investment cost
Subsidiaries are the companies that are controlled by the Company. Associates are the companies over
which the Group has significant influence. Joint ventures are joint arrangements over which the Group has
joint control along with other investors and has rights to the net assets of the joint arrangement.The Company accounts for the investment in subsidiaries at historical cost in the Company's financial
statements. Investments in associates and joint ventures are accounted for under equity method.For a long-term equity investment acquired through a business combination involving enterprises under
common control the investment cost of the long-term equity investment is the share of the carrying
amount of the shareholders' equity of the acquiree attributable to the ultimate controlling party at the date
of combination. The difference between initial investment cost and cash paid non-cash assets transferred
and book value of liabilities assumed is adjusted in capital reserve. If the balance of capital reserve is not
sufficient to absorb the difference any excess is adjusted to retained earnings.For a long-term equity investment acquired through business combination not involving enterprises under
common control the investment cost of the long-term equity investment is the cost of acquisition. For a
business combination not involving enterprises under common control achieved in stages that involves
multiple exchange transactions the initial investment cost is carried at the aggregate of the carrying
amount of the acquirer’s previously held equity interest in the acquiree and the new investment cost
incurred on the acquisition date.Regarding the long-term equity investment acquired otherwise than through a business combination if the
long-term equity investment is acquired by cash the historical cost is determined based on the amount of
cash paid and payable; if the long-term equity investment is acquired through the issuance of equity
instruments the historical cost is determined based on the fair value of the equity instruments issued.
16.3 Subsequent measurement and recognition of profit or loss
If the long-term equity investment is accounted for at cost it should be measured at historical cost less
accumulated impairment losses. Dividend declared by the investee should be accounted for as investment
income.Under the equity method where the long-term equity investment initial investment cost exceeds the
Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition no
adjustment is made to the initial investment cost. Where the initial investment cost is less than the Group’s
share of the fair value of the investee’s identifiable net assets at the time of acquisition the difference is
recognized in profit or loss for the period and the cost of the long-term equity investment is adjusted
accordingly.- 25 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
16. Long-term equity investments - (cont’d)
16.3 Subsequent measurement and recognition of profit or loss - (cont’d)
Under the equity method the Group recognizes its share of the net profit or loss and other comprehensive
income of the investee for the period as investment income or loss and other comprehensive income for the
period. The Group recognizes its share of the investee’s net profit or loss based on the fair value of the
investee’s individual separately identifiable assets etc. at the acquisition date after making appropriate
adjustments to be confirmed with the Group's accounting policies and accounting period. The Group
discontinues recognizing its share of net losses of the investee after the carrying amount of the long-term
equity investment together with any long-term interests that in substance form part of its net investment in
the investee is reduced to zero. If the Group has incurred obligations to assume additional losses of the
investee a provision is recognized according to the expected obligation and recorded as investment loss
for the period.
16.4 Methods of impairment assessment and determining the provision for impairment loss
If the recoverable amounts of the investments to subsidiaries joint ventures and associates are less than
their carrying amounts an impairment loss should be recognized to reduce the carrying amounts to the
recoverable amounts (Note III 23).
16.5 The disposal of long-term equity investment
On disposal of a long term equity investment the difference between the proceeds actually received and
receivable and the carrying amount is recognized in profit or loss for the period.
17. Investment properties
Investment property refers to real estate held to earn rentals or for capital appreciation or both including
leased land use rights land use rights held and provided for transferring after appreciation and leased
constructions etc.Investment property is initially measured at cost. Subsequent expenditures related to an investment
property shall be included in cost of investment property only when the economic benefits associated with
the asset will likely flow to the Group and its cost can be measured reliably. All other subsequent
expenditures on investment property shall be included in profit or loss for the current period when incurred.The Group adopts cost method for subsequent measurement of investment property which is depreciated
or amortized using the same policy as that for buildings and land use rights.When an investment property is sold transferred retired or damaged the amount of proceeds on disposal
of the property net of the carrying amount and related taxes and surcharges is recognized in profit or loss
for the current period.- 26 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
18. Fixed assets
18.1 Recognition criteria for fixed assets
Fixed assets include land owned by the Group and buildings machinery and equipment motor vehicles
office equipment and others.Fixed assets are tangible assets that are held for use in the production or supply of goods or for
administrative purposes and have useful lives of more than one accounting year. A fixed asset is
recognized only when it is probable that economic benefits associated with the asset will flow to the Group
and the cost of the asset can be reliably measured. Purchased or constructed fixed assets are initially
measured at cost when acquired.Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is
probable that economic benefits associated with the asset will flow to the Group and the subsequent
expenditures can be measured reliably. Other subsequent expenditures are recognized in profit or loss in
the period in which they are incurred.
18.2 Depreciation of each category of fixed assets
Fixed asset is depreciated based on the cost of fixed asset recognized less expected net residual value over
its useful life using the straight-line method since the month subsequent to the one in which it is ready for
intended use. Depreciation is calculated based on the carrying amount of the fixed asset after impairment
over the estimated remaining useful life of the asset.The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation
method applied at least once at each financial year-end and account for any change as a change in an
accounting estimate.The estimated useful life estimated net residual value and annual depreciation rate of each category of
fixed assets are as follows:
Residual Annual
Useful life value depreciation rate
Category Depreciation (years) (%) (%)
Buildings the straight-line method 15-50 0-4 1.9-6.7
Machinery and equipment the straight-line method 3-22 0-4 4.4-33.3
Office and other equipment the straight-line method 3-17 0-4 5.6-33.3
Motor vehicles the straight-line method 5-9 0-2 10.9-20.0
Overseas Land owned by the Group is not depreciated.- 27 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
18. Fixed assets - (cont’d)
18.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or
disposal the fixed asset is derecognized. When a fixed asset is sold transferred retired or damaged the
amount of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognized
in profit or loss for the period.The difference between recoverable amounts of the fixed assets under the carrying amount is referred to as
impairment loss (Note III 23).
19. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various construction
installation costs borrowing costs capitalized and other expenditures incurred until such time as the
relevant assets are completed and ready for its intended use. When the asset concerned is ready for its
intended use the cost of the asset is transferred to fixed assets and depreciated starting from the following
month.The difference between recoverable amounts of the construction in progress under the carrying amount is
referred to as impairment loss (Note III 23).
20. Borrowing costs
Borrowing costs directly attributable to the acquisition construction or production of qualifying asset are
capitalized when expenditures for such asset and borrowing costs are incurred and activities relating to the
acquisition construction or production of the asset that are necessary to prepare the asset for its intended
use or sale have commenced. Capitalization of borrowing costs ceases when the qualifying asset being
acquired constructed or produced becomes ready for its intended use or sale. Borrowing costs incurred
subsequently should be charged to profit or loss. Capitalization of borrowing costs is suspended during
periods in which the acquisition construction or production of a qualifying asset is suspended abnormally
and when the suspension is for a continuous period of more than 3 months. Capitalization is suspended
until the acquisition construction or production of the asset is resumed.Where funds are borrowed under a specific-purpose borrowing the amount of interest to be capitalized is
the actual interest expenses incurred on that borrowing for the period less any bank interest earned from
depositing the borrowed funds before being used on the asset or any investment income on the temporary
investment of those funds.Where funds are borrowed under general-purpose borrowings the Group determines the amount of interest
to be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excess
of cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The
capitalization rate is the weighted average of the interest rates applicable to the general-purpose
borrowings.During the capitalization period exchange differences on foreign currency specific-purpose borrowing are
fully capitalized whereas exchange differences on foreign currency general-purpose borrowing charged to
profit or loss.- 28 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
21. Intangible assets
21.1 Valuation methods useful life impairment test
The Group’s intangible assets include product registration assets intangible assets upon purchase of
products marketing rights and rights to use tradenames and trademarks land use rights software and
customer relations. Intangible assets are stated at cost less accumulated amortization and impairment losses.When an intangible asset with a finite useful life is available for use its original cost less any accumulated
impairment losses is amortized over its estimated useful life using the straight-line method. An intangible
asset with an indefinite useful life is not amortized.For an intangible asset with a finite useful life the Group reviews the useful life and amortization method
at the end of the year and makes adjustments when necessary.The respective amortization periods for such intangible assets are as follows:
Item Amortization period (years)
Land use rights 49-50 years
Product registration 8-11 years
Intangible assets on purchase of products 7-20 years
Marketing rights tradename and trademarks 4-10 30 years
Exclusivity agreement 21 years
Software 3-5 years and 12 years for ERP
Customer relations 5-10 13 years
The difference between recoverable amounts of the intangible assets under the carrying amount is referred
to as impairment loss (see Note III 23).- 29 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
21. Intangible assets - (cont’d)
21.2 Research and development expenditure
Internal research and development project expenditures were classified into research expenditures and
development expenditures depending on its nature and the greater uncertainty whether the research
activities becoming to intangible assets.Expenditure during the research phase is recognized as an expense in the period in which it is incurred.Expenditure during the development phase that meets all of the following conditions at the same time is
recognized as intangible asset:
- It is technically feasible to complete the intangible asset so that it will be available for use or sale;
- The Group has the intention to complete the intangible asset and use or sell it;
- The Group can demonstrate the ways in which the intangible asset will generate economic benefits;
- The availability of adequate technical financial and other resources to complete the development and the
ability to use or sell the intangible asset;
- The expenditure attributable to the intangible asset during its development phase can be reliably
measured.Expenditures that do not meet all of the above conditions at the same time are recognized in profit or loss
when incurred. If the expenditures cannot be distinguished between the research phase and development
phase the Group recognizes all of them in profit or loss for the period. Expenditures that have previously
been recognized in the profit or loss would not be recognized as an asset in subsequent years. Those
expenditures capitalized during the development stage are recognized as development costs incurred and
will be transferred to intangible asset when the underlying project is ready for an intended use.The research and development expenditure includes salaries and welfare expenses of personnel directly
engaged in research and development activities depreciation expenses of instruments and equipment used
in research and development activities expenses for field trial and professional services materials
consumed and lease and maintenance expenses related to research and development activities.- 30 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
22. Goodwill
The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’s interest in the
fair value of the identifiable net assets of the acquiree under a business combination not involving
enterprises under common control.Goodwill is not amortized and is stated in the balance sheet at cost less accumulated impairment losses
(see Note III 23). On disposal of an asset group or a set of asset groups any attributable goodwill is written
off and included in the calculation of the profit or loss on disposal.
23. Impairment of long-term assets
The Company assesses at each balance sheet date whether there is any indication that the fixed assets
construction in progress right of use assets intangible assets with finite useful lives investment properties
measured at historical cost investments in subsidiaries joint ventures and associates may be impaired. If
there is any indication that such assets may be impaired recoverable amounts are estimated for such assets.The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value of
the future cash flow estimated to be derived from the asset. The Group estimates the recoverable amount
on an individual basis. If it is not possible to estimate the recoverable amount of the individual asset the
Group determines the recoverable amount of the asset group to which the asset belongs. Identification of
an asset group is based on whether major cash inflows generated by the asset group are largely
independent of the cash inflows from other assets or asset groups.Goodwill arising from a business combination is tested for impairment at least at each year end
irrespective of whether there is any indication that the asset may be impaired. For the purpose of
impairment testing the carrying amount of goodwill acquired in a business combination is allocated from
the acquisition date on a reasonable basis to each of the related asset groups; if it is impossible to allocate
to the related asset groups it is allocated to each of the related set of asset groups. Each of the related asset
groups or set of asset groups is an asset group or set of asset group that is able to benefit from the synergies
of the business combination and shall not be larger than a reportable segment determined by the Group. If
the carrying amount of the asset group or set of asset groups is higher than its recoverable amount the
amount of the impairment loss first reduced by the carrying amount of the goodwill allocated to the asset
group or set of asset groups and then the carrying amount of other assets (other than the goodwill) within
the asset group or set of asset groups pro rata based on the carrying amount of each asset.Once the impairment loss of such assets is recognized it will not be reversed in any subsequent period.
24. Contract liabilities
Contract liabilities refer to the Group’s obligation to transfer goods or services to a customer for which the
Group has received consideration from the customer.- 31 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
25. Employee benefits
25.1 Short-term employee benefits
Employee wages or salaries bonuses social security contributions measured on a non-discounted basis
and the expense is recorded when the related service is provided. A provision for short-term employee
benefits in respect of cash bonuses is recognized in the amount expected to be paid where the Group has a
current legal or constructive obligation to pay the said amount for services provided by the employee in the
past and the amount can be estimated reliably.
25.2 Post-employment benefits
Post-employment benefits are classified into defined contribution plans and defined benefit plans.A defined contribution plan is a post- employment benefit plan under which the Group pays contributions
to a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution plans are recognized as an expense in profit or loss in the periods
during which related services are rendered by employees.Defined benefit plans of the Group are post-employment benefit plans other than defined contribution
plans. In accordance with the projected unit credit method the Group measures the obligations under
defined benefit plans using unbiased and mutually compatible actuarial assumptions to estimate related
demographic variables and financial variables and discount obligations under the defined benefit plans to
determine the present value of the defined benefit liability. The discount rate used is the yield on the
reporting date on highly-rated corporate debentures denominated in the same currency that have maturity
dates approximating the terms of the Group’s obligation.The Group attributes benefit obligations under a defined benefit plan to periods of service provided by
respective employees. Service cost and interest expense on the defined benefit liability are charged to
profit or loss and remeasurements of the defined benefit liability are recognized in other comprehensive
income.
25.3 Termination benefits
When the Group terminates the employment with employees or provides compensation under an offer to
encourage employees to accept voluntary redundancy a provision is recognized with a corresponding
expense in profit or loss at the earlier of when the Group can no longer withdraw the offer of the
termination benefit and when it recognises any related restructuring costs.If the benefits are payable more than 12 months after the end of the reporting period they are discounted to
their present value. The discount rate used is the yield on the reporting date on highly-rated corporate
debentures denominated in the same currency that have maturity dates approximating the terms of the
Group’s obligation.- 32 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
25. Employee benefits - (cont’d)
25.4 Other long-term employee benefits
The Group’s net obligation for long-term employee benefits which are not attributable to
post- employment benefit plans is for the amount of the future benefit to which employees are entitled for
services that were provided during the current and prior periods.The amount of these benefits is discounted to its present value and the fair value of the assets related to
these obligations is deducted therefrom. The discount rate used is the yield on the reporting date on highly-
rated corporate debentures denominated in the same currency that have maturity dates approximating the
terms of the Group’s obligation.
26. Share-based payment
Share-based payment refers to the transaction in order to acquire the service offered by the employees or
other parties that grants equity instruments or liabilities on the basis of the equity instruments. Share-based
payment classified into equity-settled share-based payment and cash-settled share-based payment.
26.1 Cash-settled share-based payment
The cash-settled share-based payment should be measured according to the fair value of the liabilities
recognized based on the shares or other equity instrument undertaken by the Company. For cash-settled
share-based payment made in return for the rendering of employee services that cannot be exercised until
the services are fully provided during the vesting period or specified performance targets are met on each
balance sheet date within the vesting period the services acquired in the current period shall based on the
best estimate of the number of exercisable instruments be recognized in relevant expenses and the
corresponding liabilities at the fair value of the liability incurred by the Company.On each balance sheet date and the settlement date before the settlement of the relevant liabilities the
Company should re-measure the fair value of the liabilities and the changes should be included in the
current period profit and loss.
27. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency it is probable
that an outflow of economic benefits will be required to settle the obligation and the amount of the
obligation can be measured reliably.The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation at the settlement date taking into account factors pertaining to a contingency such as the risks
uncertainties and time value of money. Where the effect of the time value of money is material the amount
of the provision is determined by discounting the related future cash outflows. The increase in the
provision due to passage of time is recognized as interest expense.If all or part of the provision settlements is reimbursed by third parties when the realization of income is
virtually certain then the related asset should be recognized. However the amount of related asset
recognized should not be exceeding the respective provision amount.- 33 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
At the balance sheet date the amount of provision should be re-assessed to reflect the best estimation then.- 34 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
28. Revenue
Revenue of the Group is mainly from sale of goods.The Group recognizes revenue when transferring goods to a customer at the amount of the transaction
price. The timing of transferring the control of goods changes according to the specific terms of the sale
contract. Regarding sales of products transfer of the control of goods generally occurs when the products
arrive at the customer’s warehouse while for certain overseas shipments the transfer occurs when the
products are loaded on the shipper’s transport vehicles.Transaction price is the amount of consideration to which an entity expects to be entitled in exchange for
transferring goods to a customer excluding amounts collected on behalf of third parties.Variable consideration
Variable consideration includes sales with a right of return (see below) refunds discounts volume rebates
etc. The amounts of variable consideration are estimated using the Group’s past experience in the relevant
markets. The Group includes in the transaction price the amounts of variable consideration only to the
extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized
will not occur when the uncertainty associated with the variable consideration is subsequently resolved.Significant financing component
For a contract with a significant financing component the Group recognize revenue at an amount that
reflects the price that a customer would have paid for the goods if the customer had paid cash for those
goods at receipt. The difference between the amount of consideration and the cash selling price of the
goods is amortized in the contract period using effective interest rate. The Group does not adjust the
amount of consideration for the effects of a significant financing component if the Group expects at
contract inception that the period between when the entity transfers a good to a customer and when the
customer pays for that good will be one year or less.Sale with a right of return
For sale with a right of return the Group recognizes revenue at the amount of consideration to which the
Group expects to be entitled (ie excluding the products expected to be returned). For any amounts received
(or receivable) for which an entity does not expect to be entitled the entity shall not recognize revenue
when it transfers products to customers but shall recognize those amounts received (or receivable) as a
refund liability. An asset recognized for the Group’s right to recover products from a customer on settling a
refund liability shall initially be measured by reference to the former carrying amount of the product less
any expected costs to recover those products.Advance receipts for the sale of goods
When the Group receives advance payments from customers for the sale of goods it first recognizes such
payments as liabilities and then transfers them to revenue when the relevant performance obligations are
fulfilled.- 35 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
29. Government grants
Government grants are transfer of monetary assets and non-monetary assets from the government to the
Group at no consideration including tax returns financial subsidies and so on. A government grant is
recognized only when the Group can comply with the conditions attached to the grant and the Group will
receive the grant.If a government grant is in the form of a transfer of a monetary asset it is measured at the amount received
or receivable. If a government grant is in the form of a non-monetary asset it is measured at fair value. If
the fair value cannot be reliably determined it is measured at a nominal amount.Government grants are either related to assets or income.
(1) The basis of judgment and accounting method of the government grants related to assets
Government grants obtained for acquiring long-term assets are government grants related to assets. A
government grant related to an asset is offset with the cost of the relevant asset.
(2) The basis of judgment and accounting method of the government grants related to income
For a government grant related to income if the grant is a compensation for related expenses or losses to
be incurred in subsequent periods the grant is recognized as deferred income and recognized in profit or
loss over the periods in which the related costs are recognized. If the grant is a compensation for related
expenses or losses already incurred the grant is recognized immediately in profit or loss for the period.Government grants related to the Group’s normal course of business are offset with related costs and
expenses. Government grants related that are irrelevant with the Groups’s normal course of business are
included in non-operating gains.
30. Current and deferred tax
The income tax expenses include current income tax and deferred income tax.
30.1 Current income tax
At the balance sheet date current income tax liabilities (or assets) for the current and prior periods are
measured at the amount expected to be paid (or recovered) according to the requirements of tax laws.
30.2 Deferred tax assets and deferred tax liabilities
Temporary differences are differences between the carrying amounts of certain assets or liabilities and
their tax base.All taxable temporary differences are recognized as related deferred tax liabilities. Deferred tax assets are
recognized to the extent that it is probable that future taxable profits will be available against which the
deductible losses and tax credits can be utilized.- 36 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
30. Current and deferred tax - (cont’d)
30.2 Deferred tax assets and deferred tax liabilities - (cont’d)
For deductible losses and tax credits that can be carried forward deferred tax assets are recognized to the
extent that it is probable that future taxable profits will be available against which the deductible losses and
tax credits can be utilized. However for deductible temporary differences associated with the initial
recognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a
business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at
the time of transaction no deferred tax asset or liability is recognized.At the balance sheet date deferred tax assets and liabilities are measured at the tax rates according to tax
laws that are expected to apply in the period in which the asset is realized or the liability is settled.Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates and interests in joint ventures except where the Group is able to control the
timing of the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.The Group may be required to pay additional tax in case of distribution of dividends by the Group
companies. This additional tax was not included in the financial statements since the policy of the Group
is not to distribute in the foreseeable future a dividend which creates a significant additional tax liability.Except for those current income tax and deferred tax charged to comprehensive income or shareholders’
equity in respect of transactions or events which have been directly recognized in other comprehensive
income or shareholders’ equity and deferred tax recognized on business combinations all other current
income tax and deferred tax items are charged to profit or loss in the current period.At the balance sheet date the carrying amount of deferred tax assets is reviewed and reduced if it is no
longer probable that sufficient taxable profits will be available in the future to allow the benefit of deferred
tax assets to be utilized. Such reduction is reversed when it becomes probable that sufficient taxable profits
will be available.
30.3 Offset of income tax
When the Group has a legal right to settle current tax assets and liabilities on a net basis and tax assets and
tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity
or different taxable entities which intend to realize the assets and liabilities simultaneously current tax
assets and liabilities are offset and presented on a net basis.When the Group has a legal right to settle deferred tax assets and liabilities on a net basis which relates to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable
entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets
and liabilities simultaneously in each future period in which significant amounts of deferred tax assets or
liabilities are expected to be reversed deferred tax assets and deferred tax liabilities are offset and
presented on a net basis.- 37 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
31. Leases
Lease is a contract that conveys the right to use an asset for a period of time in exchange for consideration.
31.1 Determining whether an arrangement contains a lease
On the inception date of the lease the Group determines whether the arrangement is a lease or contains a
lease while assessing if it conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. In its assessment of whether an arrangement conveys the right to control the
use of an identified asset the Group assesses whether it has the following two rights throughout the lease
term:
(a) The right to obtain substantially all the economic benefits from use of the identified asset; and
(b) The right to direct the identified asset’s use.An arrangement does not contain a lease if an asset is leased for a period of less than 12 months or to lease of
asset with low economic value.
31.2 Initial recognition of leased assets and lease liabilities
Upon initial recognition the Group recognizes a liability at the present value of future lease payments
(exclude certain variable lease payments as detailed in Note III 31.4) and concurrently the Group
recognizes a right-of-use asset at the same amount adjusted for any prepaid lease payments paid at the
lease date or before plus initial direct costs incurred in respect of the lease.When the interest rate implicit in the lease is not readily determinable the incremental borrowing rate of
the lessee is used.The Group presents right-of-use assets separately from other assets in the balance sheet.
31.3 The lease term
The lease term is the non-cancellable period of the lease plus periods covered by an extension or
termination option if it is reasonably certain that the lessee will exercise or not exercise the option
respectively.If there is a change in the lease term or in the assessment of an option to purchase the underlying asset the
Group remeasures the lease liability on the basis of the revised lease term and the revised discount rate and
adjust the right-of-use assets accordingly.
31.4 Variable lease payments
Variable lease payments that depend on an index or a rate are initially measured using the index or rate
existing at the commencement of the lease. When the cash flows of future lease payments change as the
result of a change in an index or a rate the balance of the liability is adjusted with a correspondence
change in the right-of-use asset.Other variable lease payments that are not included in the measurement of the lease liability are recognized
in profit or loss in the period in which the condition that triggers payment occurs.- 38 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
31. Leases - (cont’d)
31.5 Subsequent measurement
After lease commencement a right-of-use asset is measured on a cost basis less accumulated depreciation
and accumulated impairment losses and is adjusted for re-measurements of the lease liability. The asset is
depreciated on a straight-line basis over the useful life or contractual lease period whichever earlier.The Group applies ASBE8 Impairment of Assets to determine whether the right-of-use asset is impaired
and to account for any impairment loss identified.A lease liability is measured after the lease commencement date at amortized cost using the effective
interest method.
32. Other significant accounting policies and accounting estimates
32.1 Hedging
The Group uses derivative financial instruments to hedge its risks related to foreign currency and inflation
risks and derivatives that are not used for hedging.Hedge accounting
The Group makes an assessment both at the inception of the hedge relationship as well as on an ongoing
basis whether the hedge is expected to be effective in offsetting the changes in the fair value of cash flows
that can be attributed to the hedged risk during the period for which the hedge is designated.An effective hedge exists when all of the below conditions are met:
* There is an economic relationship between the hedged item and the hedging instrument;
* the effect of credit risk does not dominate the value changes that result from that economic
relationship;
* the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the
hedged item that the entity actually hedges and the quantity of the hedging instrument that the
entity actually uses to hedge that quantity of hedged item.On the commencement date of the accounting hedge the Group formally documents the relationship
between the hedging instrument and hedged item including the Group’s risk management objectives and
strategy in executing the hedge transaction together with the methods that will be used by the Group to
assess the effectiveness of the hedging relationship.With respect to a cash- flow hedge a forecasted transaction that constitutes a hedged item must be highly
probable and must give rise to exposure to changes in cash flows that could ultimately affect profit or loss.- 39 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
32. Other significant accounting policies and accounting estimates - (cont’d)
32.1 Hedging - (cont’d)
Cash-flow hedges
Subsequent to the initial recognition changes in the fair value of derivatives used to hedge cash flows are
recognized through other comprehensive income directly in a hedging reserve with respect to the part of
the hedge that is effective. Regarding the portion of the hedge that is not effective the changes in fair value
are recognized in profit and loss. The amount accumulated in the hedging reserve is reclassified to profit
and loss in the period in which the hedged cash flows impact profit or loss and is presented in the same line
item in the statement of income as the hedged item.If the hedging instrument no longer meets the criteria for hedge accounting expires or is sold terminated
or exercised the hedge accounting is discontinued. The cumulative gain or loss previously recognized in a
hedging reserve through other comprehensive income remains in the reserve until the forecasted
transaction occurs or is no longer expected to occur. If the forecasted transaction is no longer expected to
occur the cumulative gain or loss in respect of the hedging instrument in the hedging reserve is reclassified
to profit or loss.Economic hedge
Hedge accounting is not applied with respect to derivative instruments used to economically hedge
financial assets and liabilities denominated in foreign currency or CPI linked. Changes in the fair value of
such derivatives are recognized in profit or loss as gain (loss) from changes in fair value.
32.2 Securitization of assets
Details of the securitization of asset agreements and accounting policy are set out in Note V.5 - Account
receivables.
32.3 Segment reporting
Reportable segments are identified based on operating segments which are determined based on the
structure of the Group’s internal organization management requirements and internal reporting system.Two or more operating segments may be aggregated into a single operating segment if the segments have
similar economic characteristics and are same or similar in respect of the nature of each product and
service the nature of production processes the type or class of customers for the products and services the
methods used to distribute the products or provide the services and the nature of the regulatory
environment.Inter-segment revenues are measured on the basis of actual transaction price for such transactions for
segment reporting. Segment accounting policies are consistent with those for the consolidated financial
statements.- 40 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
32. Other significant accounting policies and accounting estimates - (cont’d)
32.4 Profit distributions to shareholders
Dividends which are approved after the balance sheet date are not recognized as a liability at the balance
sheet date but are disclosed in the notes separately.
33. Changes in significant accounting policies and accounting estimates
33.1 Changes in significant accounting policies
There are no significant changes in accounting policies in the reporting period.
33.2 Changes in significant accounting estimates
There are no significant changes in accounting estimates in the reporting period.
34. Significant accounting estimates and judgments
The preparation of the financial statements requires management to make estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets liabilities income and
expenses. Actual results may differ from these estimates. Estimates as well as underlying assumptions and
uncertainties involved are reviewed on an ongoing basis. Revisions to accounting estimates are recognized
in the period in which the estimate is revised and in any future periods affected.Notes V.34 Note VIII Note IX and Note XIII contain information about the assumptions and their risk
factors relating to post-employment benefits – defined benefit plans fair value of financial instruments and
share-based payments. Other key sources of estimation uncertainty are as follows:
34.1 Expected credit loss of trade receivables
As described in Note III.12 trade receivables are reviewed at each balance sheet date to determine whether
credit risk on a receivable has increased significantly since initial recognition lifetime expected losses is
accrued for impairment provision. Evidence of impairment includes observable data that comes to the
attention of the Group about loss events such as a significant decline in the solvency of an individual
debtor or the portfolio of debtors and significant changes in the financial condition that have an adverse
effect on the debtor. If there is objective evidence of a recovery in the value of receivables which can be
related objectively to an event occurring after the impairment was recognized the previously recognized
impairment loss is reversed.- 41 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
34. Significant accounting estimates and judgments - (cont’d)
34.2 Provision for impairment of inventories
As described in Note III.15 the net realisable value of inventories is under management’s regular review
and as a result provision for impairment of inventories is recognized for the excess of inventories’
carrying amounts over their net realisable value. When making estimates of net realisable value the Group
takes into consideration the use of inventories held on hand and other information available to form the
underlying assumptions including the inventories’ market prices and the Group’s historical operating costs.The actual selling price the costs of completion and the costs necessary to make the sale and relevant taxes
may vary based on the changes in market conditions and product saleability manufacturing technology
and the actual use of the inventories resulting in the changes in provision for impairment of inventories.The net profit or loss may then be affected in the period when the impairment of inventories is adjusted.
34.3 Impairment of assets other than inventories and financial assets
As described in Note III.23 if impairment indication exists assets other than inventories and financial
assets are assessed at balance sheet date to determine whether the carrying amount exceeds the recoverable
amount of the assets. If any such case exists an impairment loss is recognized.If it is not practical to estimate the recoverable amount of an individual asset the recoverable amount of
the asset group to which the asset belongs will be estimated. Impairment exists if the carrying amount of an
asset or asset group is higher than recoverable amount the higher of its fair value less costs of disposal and
the present value of the future cash flows expected to be derived from the asset or asset group. In assessing
the present value of estimated future cash flows significant judgements are exercised over the asset’s
production selling price related operating expenses and discount rate to calculate the present value. All
the parameters used for estimation of the recoverable amount are based on reasonable and supportable
assumptions.
34.4 Depreciation and amortisation of assets such as fixed assets and intangible assets
As described in Note III.18 and III.21 assets such as fixed assets and intangible assets are depreciated and
amortised over their useful lives after taking into account residual value. The estimated useful lives of the
assets are regularly reviewed to determine the depreciation and amortisation costs charged in each
reporting period. The useful lives of the assets are determined based on historical experience of similar
assets and the estimated technical changes. If there have been significant changes in the factors used to
determine the depreciation or amortisation the rate of depreciation or amortisation is revised prospectively.- 42 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
34. Significant accounting estimates and judgments - (cont’d)
34.5 Income taxes and deferred income tax
The Company and Group companies are assessed for income tax purposes in a large number of
jurisdictions and therefore Company management is required to use considerable judgment in
determining the total provision for taxes and attribution of income.When assessing whether there will be sufficient future taxable profits available against which the
deductible temporary differences can be utilised the Group recognizes deferred tax assets to the extent that
it is probable that future taxable profits will be available against which the deductible temporary
differences can be utilised using tax rates that would apply in the period when the asset would be utilised.In determining the amount of deferred tax assets the Group makes reasonable judgements and estimates
about the timing and amount of taxable profits to be utilised in the following periods and of the tax rates
applicable in the future according to the existing tax policies and other relevant regulations. If the actual
timing and amount of future taxable profits or the actual applicable tax rates differ from the estimates made
by management the differences affect the amount of tax expenses.
34.6 Contingent liabilities
When assessing the possible outcomes of legal claims filed against the Company and its investee
companies the company positions are based on the opinions of their legal advisors. These assessments by
the legal advisors are based on their professional judgment considering the stage of the proceedings and
the legal experience accumulated regarding the various matters. Since the results of the claims will be
determined by the courts the outcomes could be different from the assessments.In addition to the said claims the Group is exposed to unasserted claims inter alia where there is doubt as
to interpretation of the agreement and/or legal provision and/or the manner of their implementation. This
exposure is brought to the Company’s attention in several ways among others by means of contacts made
to Company personnel. In assessing the risk deriving from the unasserted claims the Company relies on
internal assessments by the parties dealing with these matters and by management who weigh assessment
of the prospects of a claim being filed and the chances of its success if filed. The assessment is based on
experience gained with respect to the filing of claims and the analysis of the details of each claim. By their
nature in view of the preliminary stage of the clarification of the legal claim the actual outcome could be
different from the assessment made before the claim was filed.
34.7 Employee benefits
The Group’s liabilities for long-term post-employment and other benefits are calculated according to the
estimated future amount of the benefit to which the employee will be entitled in consideration for his
services during the current period and prior periods. The benefit is stated at present value net of the fair
value of the plan’s assets based on actuarial assumptions. Changes in the actuarial assumptions could lead
to material changes in the book value of the liabilities and in the operating results.- 43 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)
34. Significant accounting estimates and judgments - (cont’d)
34.8 Derivative financial instruments
The Group enters into transactions in derivative financial instruments for the purpose of hedging risks
related to foreign currency and inflationary risks. The derivatives are recorded at their fair value. The fair
value of derivative financial instruments is based on quotes from financial institutions. The reasonableness
of the quotes is examined by discounting the future cash flows based on the terms and length of the period
to maturity of each contract while using market interest rates of a similar instrument as of the
measurement date. Changes in the assumptions and the calculation model could lead to material changes in
the fair value of the assets and liabilities and in the results.- 44 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
IV. Taxation
1. Main types of taxes and corresponding tax rates
The income tax rate in China is 25% (2025: 25%). The subsidiaries outside of China are assessed based on
the tax laws in the country of their residence.Set forth below are the tax rates outside China relevant to the largest subsidiaries of the Group in respect of
assets and operating income:
Name of subsidiary Location 2026
ADAMA agriculture solutions Ltd. Israel 23.0%
ADAMA Makhteshim Ltd. Israel 7.5%
ADAMA Agan Ltd. Israel 16.0%
ADAMA Brasil S/A Brazil 34.0%
Makhteshim Agan of North America Inc. U.S. 24.3%
ADAMA India Private Ltd India 25.2%
ADAMA Deutschland GmbH Germany 32.5%
Control Solutions Inc. U.S. 26.0%
Adama Australia Pty Ltd Australia 30.0%
ADAMA Northern Europe B.V. Netherlands 25.8%
ADAMA Italia SRL Italy 27.9%
Alligare LLC U.S. 26.1%
The VAT rate of the Group's subsidiaries is in the range between 2.6% to 27%.
(1) Benefits from High-Tech Certificate
The Company was jointly approved as new and high-tech enterprise by the Hubei Provincial Department
of Science and Technology Department of Finance of Hubei Province and Hubei Provincial Office of the
State Administration of Taxation. The applicable income tax rate for 2026 and 2025 is 15%.Adama Anpon (Jiangsu) Ltd. (Formally know as Jiangsu Anpon Electrochemical Co. Ltd hereinafter -“Anpon") a subsidiary of the Company was jointly approved as new and high-tech enterprise by theJiangsu Provincial Department of Science and Technology Department of Finance of Jiangsu Province
and Jiangsu Provincial Office of the State Administration of Taxation. The applicable income tax rate for
2026 and 2025 is 15%.
(2) Amendment to the Law for the Encouragement of Capital Investments 1959
Since 2013 the Israeli enterprises are taxed under the "Preferred Enterprise" regime. The benefits include a
grants track for enterprises located in Area A. Tax rates on preferred income as from 2017 tax year are as
follows: 7.5% for Development Area A and 16% for the rest of the country. The amendment further
determined that no tax shall apply to dividend distributed out of preferred income to Israel resident
company shareholder.- 45 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
IV. Taxation - (cont’d)
1. Main types of taxes and corresponding tax rates - (cont’d)
(3) Amendment to the Law for the Encouragement of Capital Investments 1959 - (cont’d)
As of January 1 2017 the law includes new tax benefit tracks for a “preferred technological enterprise”
and a “special preferred technological enterprise” which award reduced tax rates to a technological
industrial enterprise for the purpose of encouraging activity relating to the development of qualifying
intangible assets.The benefits will be awarded to a “preferred company” that has a “preferred technological enterprise” or a
“special preferred technological enterprise” with respect to taxable “preferred technological income” per
its definition in the Encouragement Law. Regulations that provide a nexus formula for allocating eligible
profits govern these regimes.Income of a Preferred Technological Enterprise a Special Preferred Technological Enterprise will be
subject to a reduced corporate tax rate of 6% regardless of the development area in which the enterprise is
located.- 46 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements
1. Cash at Bank and On Hand
June 30 December 31
20262025
Cash on hand 1091 1107
Deposits in banks 2817941 3352219
Other cash and bank balances 87020 96974
29060523450300
Including cash and bank balances placed outside China 1905710 2279489
As at June 30 2026 restricted cash and bank balances was 87020 thousand RMB (as at December 31 2025
96974 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.
2. Financial assets held for trading
June 30 December 31
20262025
Bank deposits 2711 1223
27111223
3. Derivative financial assets
June 30 December 31
20262025
Economic hedge 164551 401091
Accounting hedge derivatives 63941 48288
228492449379
4. Bills Receivable
June 30 December 31
20262025
Post-dated checks receivable 256325 358489
256325358489
- 47 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable
a. By category
June 30 2026
Provision for expected
Book value credit losses
Percentage Carrying
Amount (%) Amount Percentage (%) amount
Account receivables assessed 676529 8 353127 52 323402
individually for impairment
Account receivables assessed 7573420 92 115520 2 7457900
collectively for impairment
824994910046864767781302
December 31 2025
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed 617676 8 350083 57 267593
individually for impairment
Account receivables assessed 6968418 92 111275 2 6857143
collectively for impairment
758609410046135867124736
b. Aging analysis
June 30 2026
Within 1 year (inclusive) 7684583
Over 1 year but within 2 years 307110
Over 2 years but within 3 years 51960
Over 3 years but within 4 years 19636
Over 4 years but within 5 years 25446
Over 5 years 161214
8249949
- 48 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
Main groups of account receivables assessed collectively for impairment based on geographical
location:
Geographical location A:
Account receivables in geographical location A are grouped based on similar credit risk:
June 30 2026
Provision for expected
Book value credit loss Percentage (%)
Credit group A 1340303 5097 0.4
Credit group B 481517 7434 1.5
Credit group C 367692 10329 2.8
Credit group D 66135 250 0.4
2255647231101.0
Geographical location B:
Account receivables in geographical location B are grouped based on aging analysis:
June 30 2026
Provision for expected
Book value credit loss Percentage (%)
Accounts receivable that are not overdue 529483 7486 1.4
Debts overdue less than 90 days 39072 1141 2.9
Debts overdue less than 180 days but 18372 1862 10.1
more than 90 days.Debts overdue less than 360 days but 15055 3909 26.0
more than 180 days.Debts overdue above 360 days 14580 11210 76.9
Legal Debtors 54638 54638 100.0
6712008024612.0
Other geographical locations:
June 30 2026
Provision for expected
Book value credit loss Percentage (%)
Other account receivables assessed 4646573 12164 0.3
collectively for impairment
- 49 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
c. Addition written-back and written-off of provision for expected credit losses during the period
Lifetime
expected credit Lifetime expected
loss (credit losses credit loss (credit
has not occurred) losses has occurred) Total
January 1 2026 42428 418930 461358
Addition (write back) during the period net (641) 29081 28440
Write-off during the period - (7435) (7435)
Classification between long term and short - (16808) (16808)
term net
Exchange rate effect (1149) 4241 3092
Balance as of June 30 2026 40638 428009 468647
d. Five largest accounts receivable at June 30 2026:
Allowance of expected
Proportion of Accounts credit losses (credit losses
Name Closing balance receivable (%) has occurred)
Customer 1 238106 3 -
Customer 2 96081 1 (89727)
Customer 3 88426 1 -
Customer 4 69968 1 -
Customer 5 66481 1 -
Total 559062 7 (89727)
e. Derecognition of accounts receivable due to transfer of financial assets
Certain subsidiaries of the group entered into a securitization transaction with Rabobank International for
sale of trade receivables (hereinafter – “the Securitization Program” and/or “the SecuritizationTransaction”).Pursuant to the Securitization Program the companies will sell their trade receivables debts in various
different currencies to a foreign company that was set up for this purpose and that is not owned by the
Adama Ltd. (hereinafter – “the Acquiring Company”). Acquisition of the trade receivables by the
Acquiring Company is financed by Cooperative Rabobank U.A..The trade receivables included as part of the Securitization Transaction are trade receivables that meet the
criteria provided in the agreement.Every year the credit facility is re-approved in accordance with the Securitization Program. As at 30 June
2026 the Securitization agreement was approved up to October 24 2026.
- 50 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The maximum scope of the securitization is adjusted for the seasonal changes in the scope of the
Company’s activities as follows: during January - 350m$ (as of June-2026 2384 million RMB ) during
the months of February through July – 400m$ (as of June-2026 2724 million RMB ) during the months of
August through September – 300m$ (as of June-2026 2043 million RMB) during the months of October
through November- 275m$ (as of June-2026 1873 million RMB) and during the month of December –
300m$ (as of June-2026 2043 million RMB). In addition the company has a permanent uncommitted
facility of 50$ million (as of June-2026 - 341 million RMB) which will be applicable each period. The
proceeds received from those customers whose debts were sold are used for acquisition of new trade
receivables.The price at which the trade receivables debts are sold is the amount of the debt sold less a discount
calculated based on among other things the expected length of the period between the date of sale of the
trade receivable and its anticipated repayment date. In the month following acquisition of the debt the
Acquiring Company pays in cash most of the debt while the remainder is recorded as a subordinated note
and as continuing involvement that is paid after collection of the debt sold. If the customer does not pay its
debt on the anticipated repayment date the Company bears interest up to the earlier of the date on which
the debt is actually repaid or the date on which debt collection is transferred to the insurance company (the
actual costs are not significant and are not expected to be significant).The Acquiring Company bears 95% of the credit risk in respect of the customers whose debts were sold
and will not have a right of recourse to the Company in respect of the amounts paid in cash except
regarding debts with respect to which a commercial dispute arises between the companies and their
customers that is a dispute the source of which is a claim of non-fulfillment of an obligation of the seller
in the supply agreement covering the product such as: a failure to supply the correct product a defect in
the product delinquency in the supply date and the like.The Acquiring Company appointed a policy manager who will manage for it the credit risk involved with
the trade receivables sold including an undertaking with an insurance company.Pursuant to the Receivables Servicing Agreement the Group subsidiaries handle collection of the trade
receivables as part of the Securitization Transaction for the benefit of the Acquiring Company.As part of the agreement Solutions is committed to comply with certain financial covenants mainly the
ratio of the liabilities to equity and profit ratios. As of June 30 2026 Solutions was in compliance with the
financial covenants.The accounting treatment of sale of the trade receivables included as part of the Securitization Program is:
The Company is not controlling the Acquiring Company therefore the Acquiring Company is not
consolidated in the financial statements.The Company continues to recognize the trade receivables included in the Securitization Program based on
the extent of its continuing involvement therein.A subordinated note is recorded in respect of the portion of trade receivables included in the Securitization
Program with respect to outstanding cash proceeds however the Company has transferred the credit risk.The continuing involvement and subordinated note recorded in the balance sheet as part of the “otherreceivables” line item.- 51 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
The loss from sale of the trade receivables is recorded at the time of sale in the statement of income in the
“financing expenses”.f. A subsidiary in Brazil (hereinafter - “the subsidiary”) entered into the following securitization
agreements:
Since 2016 a securitization transaction with Rabobank Brazil for sale of customer receivables (hereinafter
"FIDC-Donegal agreement"). Under the FIDC-Donegal agreement the subsidiary will sell its receivables
to a securitization structure (hereinafter - “the entity”) that was formed for this purpose where the
subsidiary has subordinate rights of 5% of the entity's capital.As at June 17 2024 the FIDC-Donegal agreement was approved up to September 30 2027. The maximum
securitization scope as of June 2026 is BRL 350 million (460 million RMB).On the date of the sale of the customer receivables the entity pays the full amount which is the debt
amount sold net of discount calculated among others over the expected length of the period between the
date of sale of the customer receivable and its anticipated repayment date.The entity bears 95% of the credit risk in respect of the customers whose debts were sold such that the
entity has the right of recourse to 5% of the unpaid amount. The subsidiary has a pledged deposit with
regards to the entity’s right of recourse.The subsidiary continues to recognize the trade receivables sold to the entity based on the extent of its
continuing involvement therein (5% right of recourse) and also recognizes an associated liability in the
same amount.In "FIDC-Donegal agreement" the subsidiary handles the collection of receivables included in the
securitization for the entity.In the agreement above the subsidiary does not control the entities and therefore the entities are not
consolidated in the Group's financial statements.The loss from the sale of the trade receivables is recorded at the time of sale in the statement of income in
the “financing expenses” category.- 52 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
5. Accounts Receivable – (cont'd)
f. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)
June 30 December 31
20262025
Accounts receivables derecognized 3812231 3275491
Continuing involvement 168951 148167
Subordinated note in respect of trade receivables 521388 777505
Liability in respect of trade receivables 58376 29191
Six months ended June 30
20262025
Loss in respect of sale of trade receivables 87785 87344
6. Receivables financing
June 30 December 31
20262025
Bank acceptance draft 78314 30767
7831430767
As at June 30 2026 bank acceptance endorsed but not yet due amounts to 297560 thousands RMB.
7. Prepayments
(1) The aging analysis of prepayments is as follows:
June 30 December 31
20262025
Amount Percentage (%) Amount Percentage (%)
Within 1 year (inclusive) 289497 94 358321 98
Over 1 year but within 2 years (inclusive) 18451 6 8726 2
Over 2 years but within 3 years (inclusive) 753 - 774 -
Over 3 years 363 - 191 -
309064100368012100
(2) Total of five largest prepayments by debtor at the end of the period:
Percentage of prepayments
Amount (%)
June 30 2026 75240 24
- 53 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables
(1) Other receivables by nature
June 30 December 31
20262025
Dividend receivable 4340 2325
Others 771926 1073839
7762661076164
a. Others breakdown by categories
June 30 December 31
20262025
Subordinated note in respect of trade receivables 521388 777505
Trade receivables as part of securitization transactions
not yet eliminated 168951 148167
Other 94010 162387
Sub total 784349 1088059
Provision for expected credit losses - other receivables (12423) (14220)
7719261073839
b. Other receivables by aging
June 30
2026
Within 1 year (inclusive) 764254
Over 1 year but within 2 years 4488
Over 2 years but within 3 years 1498
Over 3 years but within 4 years 48
Over 4 years but within 5 years 6151
Over 5 years 7910
784349
(2) Additions recovery or reversal and written-off of provision for expected credit losses during the
period:
Six months ended
June 30 2026
Balance as of January 1 2026 14220
Addition (written back) during the period (235)
Write-off during the period (1508)
Exchange rate effect (54)
Balance as of June 30 2026 12423
- 54 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
8. Other Receivables – (cont'd)
(3) Five largest other receivables at June 30 2026:
Allowance of
Proportion of other expected credit
Name Closing balance receivables (%) losses
Party 1 521388 66 -
Party 2 17885 2 -
Party 3 5572 1 5572
Party 4 1595 - 1595
Party 5 1280 - 1280
Total 547720 70 8447
9. Inventories
(1) Inventories by category:
June 30 2026
Provision for
Book value impairment Carrying amount
Raw materials 3126338 25769 3100569
Work in progress 1334872 851 1334021
Finished goods 6627347 277792 6349555
Others 513244 16602 496642
1160180132101411280787
December 31 2025
Provision for
Book value impairment Carrying amount
Raw materials 2903909 32098 2871811
Work in progress 1806286 820 1805466
Finished goods 6729824 277285 6452539
Others 495793 17767 478026
1193581232797011607842
- 55 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
9. Inventories - (cont'd)
(2) Provision for impairment of inventories:
For the Six months ended June 30 2026
January 1 Reversal or
2026 Provision write-off Other June 30 2026
Raw material 32098 5975 (11177) (1127) 25769
Work in progress 820 341 (310) - 851
Finished goods 277285 100458 (92767) (7184) 277792
Others 17767 2920 (3865) (220) 16602
327970109694(108119)(8531)321014
10. Other Current Assets
June 30 December 31
20262025
Deductible VAT 570110 528604
Current tax assets 308233 311227
Short term investments - 155154
Others 87349 99288
9656921094273
11. Long-Term Receivables
June 30 December 31
20262025
Long term account receivables from sale of goods 281583 180324
Provision for expected credit losses (78400) (62121)
203183118203
1) Additions recovery or reversal of provision for expected credit losses during the period:
Provision for
long term
receivables
Balance as of January 1 2026 62121
Classification between long term and short term net 16808
Addition (write back) during the period net -
Exchange rate effect (529)
Balance as of June 30 2026 78400
- 56 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
12. Long-Term Equity Investments
(1) Long-term equity investments by category:
June 30 December 31
20262025
Joint venture 1956 2129
Associate 40864 37183
4282039312
(2) Movements of long-term equity investments for the period are as follows:
Other Declared
January 1 Investment Comprehensive distribution of Balance at the
2026 income gain (loss) cash dividend end of the period
Joint
venture
Investee A 2129 )110( (63) - 1956
Sub-total 2129 )110( (63) - 1956
Associate
Investee B 37183 6703 1134 (4156) 40864
Sub-total 37183 6703 1134 (4156) 40864
Sub-total 39312 6593 1071 (4156) 42820
13. Other equity investments
December 31 Dividend recognized
June 30 2026 2025 during 2026
Investment A 54299 54299 -
Investment B 73176 75497 -
127475129796-
Other equity investments are non-core businesses that are intended to be held in the foreseeable future.- 57 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
14. Fixed assets
Land & Machinery & Office & other
Buildings equipment Motor vehicles equipment Total
Cost
Balance as at January 1 2026 4692472 19736914 172406 487236 25089028
Purchases 13181 37195 19933 14354 84663
Transfer from construction in progress 13717 354388 - 553 368658
Disposals (180005) (543528) (22666) (3601) (749800)
Currency translation adjustment (72705) (470143) (3626) (14863) (561337)
Balance as at June 30 2026 4466660 19114826 166047 483679 24231212
Accumulated depreciation
Balance as at January 1 2026 (2019460) (11380299) (78043) (383424) (13861226)
Charge for the period (69463) (417366) (13087) (18605) (518521)
Disposals 108227 483505 15934 3305 610971
Currency translation adjustment 40612 275804 1128 13292 330836
Balance as at June 30 2026 (1940084) (11038356) (74068) (385432) (13437940)
Provision for impairment
Balance as at January 1 2026 (380580) (772042) (681) (948) (1154251)
Charge for the period - (74229) - - (74229)
Transfer from construction in progress - (298) - - (298)
Disposals 20353 31789 75 18 52235
Currency translation adjustment 7090 11524 - 6 18620
Balance as at June 30 2026 (353137) (803256) (606) (924) (1157923)
Carrying amounts
As at June 30 2026 2173439 7273214 91373 97323 9635349
As at January 1 2026 2292432 7584573 93682 102864 10073551
The lands reported as fixed assets are owned by the group subsidiaries and are located outside of China.- 58 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
15. Construction in Progress
(1) Construction in progress
June 30 December 31
20262025
Provision for Provision for
Book value impairment Carrying amount Book value impairment Carrying amount
1038405(324735)7136701213760(316585)897175
(2) Details and Movements of major construction projects in progress during period ended June 30 2026
Actual
Including: Currency Transfer cost to Project
January Interest translation to fixed June 30 budget progress
Budget 1 2026 Additions capitalized differences assets Impairment 2026 (%) (%) Source of funds
Project A 874889 66308 3196 - - (2032) - 67472 94% 94% Bank loan and internal finance
Project B 912661 162376 7034 - (5121) - - 164289 86% 86% Bank loan and internal finance
* As of June 30 2026 Project A include impairment of RMB 17 million.- 59 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
16. Right-of-use assets
Land & Machinery & Office & other
Buildings equipment Motor vehicles equipment Total
Cost
Balance as at January 1 2026 852943 41927 282628 4224 1181722
Additions 16154 733 55634 (13) 72508
Decrease (76984) (3845) (51596) (739) (133164)
Currency translation adjustment (13094) (1273) (9271) (154) (23792)
Balance as at June 30 2026 779019 37542 277395 3318 1097274
Accumulated depreciation
Balance as at January 1 2026 (356593) (23003) (137632) (3051) (520279)
Charge for the period (44226) (1366) (41194) (442) (87228)
Decrease 5928 3845 47004 2012 58789
Currency translation adjustment 8757 693 4648 84 14182
Balance as at June 30 2026 (386134) (19831) (127174) (1397) (534536)
Provision for impairment
Balance as at January 1 2026 - - - - -
Balance as at June 30 2026 - - - - -
Carrying amounts
As at June 30 2026 392885 17711 150221 1921 562738
As at January 1 2026 496350 18924 144996 1173 661443
- 60 -ADAMALTD.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
17. Intangible Assets
Marketing
Intangible assets rights
Product on Purchase of tradename and Customers
registration Products Software trademarks relations Land use rights (1) Others(2) Total
Costs
Balance as at January 1 2026 13291894 4183197 1568175 783128 638122 506245 605009 21575770
Purchases 121513 - 57790 - - - 6928 186231
Disposals (452428) - (6308) (9748) - - (8996) (477480)
Currency translation adjustment (404322) (129684) (43928) (24377) (16573) (1212) (12679) (632775)
Balance as at June 30 2026 12556657 4053513 1575729 749003 621549 505033 590262 20651746
Accumulated amortization
Balance as at January 1 2026 (11006559) (3571987) (992254) (550475) (446031) (130437) (234807) (16932550)
Charge for the period (241116) (53168) (57910) (9875) (20608) (4968) (10631) (398276)
Disposals 451762 - 6281 9748 - - 8996 476787
Currency translation adjustment 341594 111392 27711 17272 12806 (248) 5200 515727
Balance as at June 30 2026 (10454319) (3513763) (1016172) (533330) (453833) (135653) (231242) (16338312)
Provision for impairment
Balance as at January 1 2026 (170389) (159597) (9273) - - - (1618) (340877)
Charge for the period - - - - - - - -
Disposals 348 - - - - - - 348
Currency translation adjustment 2964 4948 269 - - - - 8181
Balance as at June 30 2026 (167077) (154649) (9004) - - - (1618) (332348)
Carrying amount
As at June 30 2026 1935261 385101 550553 215673 167716 369380 357402 3981086
As at January 1 2026 2114946 451613 566648 232653 192091 375808 368584 4302343
(1) Include land parcel in Israel that has not yet been registered in the name of the Group subsidiaries at the Land Registry Office mostly due to registration procedures or technical problems.
(2) Mainly exclusivity agreements.
- 61 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
18. Goodwill
Changes in goodwill
The Group allocates goodwill to two cash generating units ("CGU") Crop Protection (Agro) and a non-core
activity included in the Intermediates and ingredients segment. At the end of the year or more frequently
whether indicators for impairment exists the Group estimates the recoverable amount of each CGU for which
goodwill has been allocated to using the DCF model. As of June 30 2026 no indicators of impairment existed.The 2025 DCF model was based on:
The actual results of 2025 2026 workplan and the forecast results for the next 4 years. The key
assumptions contains projected revenue growth rate and gross margin.The discount rate (8.6% WACC) based on the company's cost of equity and cost of debt taking into
account the comprehensive risk factors.The annual growth rate (1.5%) based on the management projections and market expectations.As of December 31 2025 the value in use of the cash generating units to which goodwill has been allocated to
exceeds its carrying amount.Change Currency
January 1 during the translation Balance at
2026 year adjustment June 30 2026
Book value 4964450 - (149964) 4814486
Impairment provision - - - -
Carrying amount 4964450 - (149964) 4814486
19. Deferred Tax Assets and Deferred Tax Liabilities
(1) Deferred tax assets without taking into consideration of the offsetting of balances within the same
tax jurisdiction
June 30 December 31
20262025
Deductible Deductible
temporary Deferred tax temporary Deferred tax
differences assets differences assets
Deferred tax assets
Deferred tax assets in respect of carry
forward losses 2727787 503850 3217169 484298
Deferred tax assets in respect of
inventories 2760879 750488 2199271 585021
Deferred tax assets in respect of
employee benefits 900396 135489 874432 142094
Other deferred tax asset 2601400 634354 2508133 644334
8990462202418187990051855747
- 62 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont’d)
(2) Deferred tax liabilities without taking into consideration of the offsetting of balances within the
same tax jurisdiction
June 30 December 31
20262025
Taxable Taxable
temporary Deferred tax temporary Deferred tax
differences liabilities differences liabilities
Deferred tax liabilities
Deferred tax liabilities in respect of
fixed assets intangible assets and
right-of-use assets 3937397 729299 4258988 785595
39373977292994258988785595
(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting
June 30 December 31
20262025
The offset The offset
amount of Deferred tax amount of Deferred tax
deferred tax assets or deferred tax assets or
assets and liabilities assets and liabilities after
liabilities after offset liabilities offset
Presented as:
Deferred tax assets 498013 1526168 561571 1294176
Deferred tax liabilities 498013 231286 561571 224024
(4) Details of unrecognized deferred tax assets
June 30 December 31
20262025
Deductible temporary differences 756471 830630
Deductible losses carry forward 4857241 5547431
56137126378061
(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets
June 30 December 31
20262025
2026189779190326
20273373040585
2028227919238789
2029154015199050
20304848639474
After 2030 4203312 4839207
48572415547431
- 63 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
19. Deferred Tax Assets and Deferred Tax Liabilities - (cont'd)
(6) Unrecognized deferred tax liabilities
When calculating the deferred taxes taxes that would have applied in the event of realizing investments
in subsidiaries were not taken into account since it is the Company’s intention to hold these investments
and not realize them.
20. Other Non-Current Assets
June 30 December 31
20262025
Judicial deposits 171328 152033
Advances in respect of non-current assets 34418 38745
Assets related to securitization 29171 27799
Others 204139 184882
439056403459
21. Short-Term Loans
Short-term loans by category:
June 30 December 31
20262025
Unsecured loans 5763384 6673792
57633846673792
- 64 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements – (cont'd)
22. Derivative financial liabilities
June 30 December 31
20262025
Economic hedge 246105 152525
Accounting hedge derivatives 3732 37056
249837189581
23. Bills Payables
June 30 December 31
20262025
Post-dated checks payables 127309 221808
Note payables draft 478005 400852
605314622660
As at June 30 2026 none of the bills payable are overdue.
24. Accounts payable
June 30 December 31
20262025
Within 1 year (including 1 year) 4974877 5379999
1-2 years (including 2 years) 35295 43276
2-3 years (including 3 years) 7009 4125
Over 3 years 30950 34349
50481315461749
There are no significant accounts payables aging over one year.As at June 30 2026 the amount of the accounts payable included under the supplier financing
arrangements was 892228 thousand RMB (as at December 312025: 1040262). Accounts payables
under financing arrangements have payment due dates ranging from 90 to 180 days from the invoice
date. Comparable accounts payable that are not part of supplier financing arrangements have similar
payment terms.Under supplier finance arrangements participating suppliers may elect to receive early payment
from the financial institutions for invoices owed and the company makes a payment to the financial
institutions on the original invoice due date regardless of whether the supplier has elected to receive
early payment or not.- 65 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
24. Accounts payable - (cont'd)
The company may provide guarantees to the financial institutions (as may be provided to suppliers
directly as well) but incurs no interest or other charges payable to the financial institutions on the
payments made.The balance of the accounts payable is not derecognized from the balance sheet because the original
liability is not substantially modified on entering the arrangements as it continues to carry the
characteristic of accounts payable and represent liabilities to pay for goods and services.The settlements to the financial institutions are included within operating cash flows because they
continue to be part of the normal operating cycle.Supplier financing arrangements have no impact on the company's liquidity risk.
25. Contract liabilities
June 30 December 31
20262025
Discount for customers 1394296 813747
Advances from customers 121344 975743
15156401789490
26. Employee Benefits Payable
June 30 December 31
20262025
Short-term employee benefits 446626 643371
Post-employment benefits 25038 46389
Share based payment (See note XIII) - 110
Other benefits within one year 215342 197286
687006887156
Current maturities 47601 49568
734607936724
- 66 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
27. Taxes Payable
June 30 December 31
20262025
Corporate income tax 348041 322939
VAT 196985 187569
Others 26694 28660
571720539168
28. Other Payables
June 30 December 31
20262025
Dividends payables 750 750
Other payables 1522269 1417343
15230191418093
(1) Other payables
June 30 December 31
20262025
Accrued expenses 789954 762284
Hold-back payment due to acquistions 100000 100000
Liability in respect of securitization transactions 58376 29191
Payables in respect of intangible assets 18097 43944
Financial institutions 9753 886
Others 546089 481038
15222691417343
29. Non-Current Liabilities Due Within One Year
Non-current liabilities due within one year by category are as follows:
June 30 December 31
20262025
Long term loans from related party due within one year 2350850 2359991
Long-term loans due within one year 760991 819790
Debentures payable due within one year 513807 489394
Lease liabilities due within one year 169062 156028
37947103825203
- 67 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
30. Other Current Liabilities
June 30 December 31
20262025
Put options to holders of non-controlling interests 549492 544725
Provision in respect of returns 311873 344273
Provision in respect of claims 36343 39846
Others 388 415
898096929259
31. Long-Term Loans
Long-term loans by category
June 30 December 31
2026 Interest range 2025 Interest range
Long term loans
Unsecured loans 1913470 2.25%-6.45% 2327304 1.65%-6.45%
Less:
Long term loans from banks due within 1 year (760991) (819790)
Long term loans net 1152479 1507514
* For more detailes regarding the guaranteed loans – see note X. related parties and related parties
transactions.For the maturity analysis see note VIII.C - Liquidity risk.
32. Debentures Payable
June 30 December 31
20262025
Debentures Series B 5651921 5383470
Current maturities (513807) (489394)
51381144894076
June 30
2026
First year (current maturities) 513807
Second year 513807
Third year 513807
Fourth year 513807
Fifth year and thereafter 3636693
5691921
- 68 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
32. Debentures Payable - (cont'd)
Movements of debentures payable:
For the Six months ended June 30 2026:
Original Original Balance at Amortization CPI and Repayment Currency Balance at
Maturity Face value Face value Issuance Maturity Issuance January 1 of discounts exchange during the translation June 30
period in RMB NIS date period amount 2026 or premium rate effect period adjustment 2026
Debentures November
Series B 2673640 1650000 4.12.2006 2020-2036 3043742 2237456 48 186753 - (74852) 2349405
Debentures November
Series B 843846 513527 16.1.2012 2020-2036 842579 692337 4129 58056 - (23195) 731327
Debentures November
Series B 995516 600000 7.1.2013 2020-2036 1120339 848376 1778 70908 - (28392) 892670
Debentures November
Series B 832778 533330 1.2.2015 2020-2036 1047439 786741 (1096) 65766 - (26305) 825106
Debentures November
Series B 418172 266665 1-6.2015 2020-2036 556941 421173 (2868) 35152 - (14038) 439419
Debentures November
Series B 497989 246499 5.5.2020 2020-2036 692893 397387 (3412) 33251 - (13232) 413994
5383470(1421)449886-(180014)5651921
Series B debentures in amount of NIS 3810 million par value (2958 million par value net of self-purchased) linked to the CPI and bear interest at the base annual rate of
5.15%. The debenture principal shall be repaid in 17 equal payments in the years 2020 through 2036.
On May 26 2025 ADAMA Solutions Board of Directors approved a buyback plan for the Company's debentures (Series B) in the amount of up to USD 300 million (RMB
2148 million). On May 29 2025 the Company purchased NIS 642448thousand par value of Bonds for a total consideration of approximately USD 268 million (RMB
1927 million). The loss in respect of the debentures buyback was USD 9 million (RMB 68 million) and included in the financial expenses.
- 69 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
33. Lease liabilities
June 30 December 31
2026 Interest range 2025 Interest range
Lease liabilities 821792 1.9%-14.1% 907254 1.0%-14.1%
Less: Lease liabilities due within one year (169062) (156028)
Long term lease liabilities net 652730 751226
34. Long-Term Employee Benefits Payable
Post-employment benefit plans – defined benefit plan and early retirement
June 30 December 31
20262025
Total present value of obligation 497317 490562
Less: fair value of plan's assets (64649) (63751)
Net liability related to Post-employment benefits 432668 426811
Termination benefits 71004 67828
Total recognized liability for defined benefit plan net (1) 503672 494639
Other long-term employee benefits 103137 91824
Total long-term employee benefits net 606809 586463
Including: Long-term employee benefits payable due within one year 47601 49568
559208536895
(1) Movement in the net liability and assets in respect of defined benefit plans early retirement and
their components
Defined benefit
obligation and early Fair value of plan's
retirement assets Total
202620252026202520262025
Balance as at January 1 558390 531452 63751 54186 494639 477266
Expense/income recognized
in profit and loss:
Current service cost 7423 8400 - - 7423 8400
Past service cost 1855 (309) 579 - 1276 (309)
Interest costs 10251 10360 1400 1315 8851 9045
Losses on curtailments and settlements 13260 3374 - - 13260 3374
Changes in exchange rates 28029 32895 4268 4260 23761 28635
Actuarial gain (losses) due to early retirement (301) 1033 - - (301) 1033
Included in other comprehensive income:
Actuarial gain (losses) as a result of changes in
actuarial assumptions 2787 (1555) 1317 (302) 1470 (1252)
Foreign currency translation differences in respect of
foreign operations (20274) (2324) (2142) (285) (18132) (2040)
Additional movements:
Benefits paid (33099) (34220) (5227) (3161) (27872) (31059)
Contributions paid by the Group - - 703 690 (703) (690)
Balance as at June 30 568321 549106 64649 56703 503672 492403
- 70 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
34. Long-Term Employee Benefits Payable - (cont'd)
Post-employment benefit plans – defined benefit plan and early retirement - (cont'd)
(2) Actuarial assumptions and sensitivity analysis
The principal actuarial assumptions at the reporting date for defined benefit plan
June 30 December 31
20262025
Discount rate (%)* 1.8%-2.7% 1.8%-3.3%
* According to the demographic and the benefit components.The assumptions regarding the future mortality rate are based on published statistical data and acceptable
mortality rates.Possible reasonable changes as of the date of the report in the discount rate assuming the other
assumptions remain unchanged would have affected the defined benefit obligation as follows:
As of June 30 2026
Increase of 1% Decrease of 1%
Change in defined benefit obligation (36231) 47336
35. Provisions
June 30 December 31
20262025
Liabilities in respect of contingencies* 231874 210045
Provision in respect of site restoration 188592 211997
Other 1022 2305
421488424347
* Liabilities in respect of contingencies includes obligations of pending litigations where an outflow of
resources had been reliably estimated.- 71 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
36. Other Non-Current Liabilities
June 30 December 31
20262025
Long term loans from related party 2350850 2359991
23508502359991
Current maturities (2350850) (2359991)
--
37. Share Capital
Balance at Issuance of new Balance at
January 1 2026 shares Buyback of shares June 30 2026
Share capital 2329812 - - 2329812
38. Capital Reserve
Balance at Additions during Reductions during Balance at
January 1 2026 the period the period June 30 2026
Share premiums 12606562 - - 12606562
Other capital reserve 260561 - - 260561
12867123--12867123
- 72 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
39. Other Comprehensive Income net of tax
Attributable to shareholders of the company
Less:
Balance at transfer Less:
January 1 Before tax to profit Income tax Net-of-tax Balance at June
2026 amount or loss expenses amount 30 2026
Items that will not be
reclassified to profit or loss 114141 (1470) - 697 (2167) 111974
Re-measurement of changes
in liabilities under defined
benefit plans 85466 (1470) - 697 (2167) 83299
Changes in fair value of
other equity investment 28675 - - - - 28675
Items that may be
reclassified to profit or loss 1456607 (305939) 40827 3390 (350156) 1106451
Effective portion of gain or
loss of cash flow hedge 8880 89903 40827 3390 45686 54566
Translation difference of
foreign financial statements 1447727 (395842) - - (395842) 1051885
1570748(307409)408274087(352323)1218425
40. Surplus reserve
Additions Reductions
Balance at during the during the Balance at
January 1 2026 period period June 30 2026
Statutory surplus reserve 294796 - - 294796
Discretional surplus reserve 3814 - - 3814
298610--298610
41. Retained Earnings
20262025
Retained earnings as at January 1 502977 1680382
Net income (loss) for the period attributable to shareholders of the
Company 432567 (80352)
Dividends to non-controlling Interest (22200) (74170)
Retained earnings as at June 30 913344 1525860
- 73 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
42. Operating Income and Cost of Sales
Six months ended June 30 Six months ended June 30
20262025
Income Cost of sales Income Cost of sales
Principal activities 14442307 10511602 14991514 11019714
Other businesses 34233 11728 32686 10459
14476540105233301502420011030173
43. Taxes and Surcharges
Six months ended June 30
20262025
Tax on turnover 11648 10953
Others 35272 46175
4692057128
44. Selling and Distribution Expenses
Six months ended June 30
20262025
Salaries and related expense 962780 912703
Depreciation and amortization 410537 465967
Advertising and sales promotion 165134 132972
Warehouse expenses 103994 85581
Travel expenses 69539 67740
Registration 67653 70147
Professional services 57746 51287
Insurance 45360 39707
Others 155320 149564
20380631975668
- 74 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
45. General and Administrative Expenses
Six months ended June 30
20262025
Salaries and related expenses 311785 238606
IT systems 75682 76570
Professional services 67609 225996
Depreciation and amortization 64956 71596
Cost contribution arrangement 22226 36281
Office rent maintenance and expenses 18710 17901
Other 41071 67917
602039734867
46. Research and development expenses
Six months ended June 30
20262025
Salaries and related expenses 119301 110779
Depreciation and amortization 33275 32164
Materials 16100 19589
Office rent maintenance and expenses 8351 8101
Field trial 7834 13186
Professional services 7076 8839
Other 19413 24135
211350216793
47. Financial expenses (incomes) net
Six months ended June 30
20262025
Interest expenses on debentures and loans and other charges 454511 522664
Exchange rate differences net 421845 230008
CPI expenses in respect of debentures 65049 117480
Interest income from customers banks and others (76612) (101281)
Loss in respect of sale of trade receivables 87785 87344
Revaluation of put option net 10677 43890
Interest expense on lease liabilities 28689 24084
Interest expense in respect of post-employment benefits and early
retirement net 10417 8992
Others 21345 91159
10237061024340
- 75 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
48. Investment income net
Six months ended June 30
20262025
Income from long-term equity investments accounted for using
the equity method 6593 5261
65935261
49. Gain (loss) from changes in fair value
Six months ended June 30
20262025
Gain (loss) from changes in fair value of derivative financial
Instruments 213451 (36189)
Others - 29696
213451(6493)
50. Credit impairment reversal (losses)
Six months ended June 30
20262025
Bills receivable and accounts receivable (28440) (93532)
Other receivables 235 (147)
(28205)(93679)
51. Asset impairment losses
Six months ended June 30
20262025
Fixed assets (74229) -
Inventories (76256) (26081)
Construction in progress (1544) (101)
Intangible asset - (1435)
(152029)(27617)
- 76 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
52. Gain from Disposal of Assets
Six months ended June 30 Included in
non-recurring
2026 2025 items
Gain from disposal of fixed assets 304273 5160 304273
Gain (loss) from disposal of intangible assets 2076 (106) 2076
3063495054306349
53. Income Tax Expenses (incomes)
Six months ended June 30
20262025
Current year 231081 192126
Deferred tax expenses (income) (268411) (245081)
Adjustments for previous years net (2852) 7728
(40182)(45227)
(1) Reconciliation between income tax expense and accounting profit is as follows:
Six months ended June 30
20262025
Loss before taxes 392385 (125579)
Statutory tax in china 25% 25%
Tax calculated according to statutory tax in china 98096 (31395)
Tax benefits from Approved Enterprises (17203) (19282)
Difference between measurement basis of income for financial
statement and for tax purposes (18164) (82453)
Taxable income (loss) and temporary differences at other tax rate (142908) (197928)
Taxes in respect of prior years (2852) 7728
Utilization of tax losses prior years for which deferred taxes were
not created (103537) (14177)
Temporary differences and losses in the report year for which
deferred taxes were not created 130936 180931
Non-deductible expenses non-taxable income and other difference
net 49617 48007
Neutralization of tax calculated in respect of the Company’s share
in results of equity accounted investees (2392) (1744)
Effect of change in tax rate in respect of deferred taxes (32028) 12056
Creation and reversal of deferred taxes for tax losses and temporary
differences from previous years net 253 53030
Income tax expenses (incomes) (40182) (45227)
54. Other comprehensive income
Details of the Other comprehensive income are set out in Note V.39
- 77 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
55. Government grants
Amount recognized in the profit
and loss statements during the Six
months ended June 30
Category Presentation accounts 2026 2025
Government grants related to income Non-Operating income 3940 5111
Government grants related to assets Fixed assets Intangible assets 5352 5334
56. Notes to items in the cash flow statements
(1) Cash received relating to other operating activities
Six months ended June 30
20262025
Financial institutions 70735 -
Interest income 24555 39574
Government subsidies 2970 12854
Others 135804 22714
23406475142
(2) Cash paid relating to other operating activities
Six months ended June 30
20262025
Derivatives transactions 100589 402853
Professional services 186982 256694
Advertising and sales promotion 173576 141629
IT and Communication 132238 106662
Commissions and Warehouse 108548 99741
Registration and Field trials 81734 76972
Financial institutions 20214 71112
Travel 52967 45237
Insurance 35064 35887
Other 356937 419429
12488491656216
(3) Cash paid relating to other investing activities
Six months ended June 30
20262025
Increase in short and long term investments 631 47825
63147825
- 78 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
56. Notes to items in the cash flow statements - (cont'd)
(4) Cash received from other financing activities
Six months ended June 30
20262025
Proceeds in respect of hedging transactions on debentures 683858 246992
Deposit for issuing bills payables 94970 46148
Borrowing from related party * - 789364
7788281082504
* For more detailes regarding the borrowing from related party – see note X. related parties and related
parties transactions.
(5) Cash paid relating to other financing activities
Six months ended June 30
20262025
Repayment of lease liability 117586 93276
Deposit for issuing bills payable 85016 181047
Payment in respect of hedging transactions on debentures - 165934
202602440257
57. Supplementary Information on Cash Flow Statement
(1) Supplementary information on Cash Flow Statement
a. Reconciliation of net profit to cash flows from operating activities:
Six months ended June 30
20262025
Net income (loss) 432567 (80352)
Add: Impairment provisions for assets 152029 27617
Credit impairment losses 28205 93679
Depreciation of fixed assets and investment property 519339 520896
Depreciation of right-of-use asset 87228 94218
Amortization of intangible asset 398276 447594
Gains on disposal of fixed assets intangible assets and other long-
term assets net (306349) (5054)
Losses (gain) from changes in fair value (213451) 6493
Financial expenses 1040649 1214335
Investment income net (6593) (5261)
Increase in deferred tax assets net (280584) (226093)
Increase (decrease) in deferred tax liabilities net 12173 (18988)
Increase in inventories net (32067) (365063)
Increase in operating receivables net (2375183) (1431729)
Increase in operating payables net 1213670 1466286
Net cash flow provided by operating activities 669909 1738578
- 79 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
57. Supplementary Information on Cash Flow Statement - (cont'd)
(1) Supplementary information on Cash Flow Statement - - (cont'd)
b. Net Decrease in cash and cash equivalents
Six months ended June 30
20262025
Closing balance of cash and cash equivalents 2819032 3315685
Less: Opening balance of cash and cash equivalents 3353326 3583963
Decrease in cash and cash equivalents (534294) (268278)
(2) Details of cash and cash equivalents
June 30 December 31
20262025
Cash on hand 1091 1107
Bank deposits available on demand without restrictions 2817941 3352219
28190323353326
58. Assets with Restricted Ownership or Right of Use
June 30
2026 Reason
Cash 87020 Pledged
Other non-current assets 171328 Guarantees
258348
- 80 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(1) Foreign currencies denominated items - (cont'd)
As at June 30 2026
RMB at the
Exchange end of the
Foreign currency at the end of the period rate period
Cash and bank balances
EUR 41519 7.76 322312
USD 20261 6.81 137999
BRL 90379 1.32 118939
ILS 51444 2.29 117653
ZAR 117935 0.42 48943
RUB 388144 0.09 34157
GBP 3693 9.01 33271
Other 193170
Total 1006444
Bills and Accounts receivable
BRL 783036 1.316 1030476
EUR 49157 7.763 381606
RON 214723 1.48 317790
HUF 8977385 0.022 197502
ILS 69910 2.287 159884
CAD 19754 4.784 94501
CZK 294910 0.320 94358
GBP 10464 9.009 94270
Other 369255
Total 2739642
Other receivables
EUR 73131 7.763 567716
CAD 20660 4.784 98836
PLN 34753 1.806 62764
BRL 26121 1.316 34375
Other 64197
Total 827888
Other current assets
ILS 70584 2.287 161425
EUR 11642 7.763 90374
BRL 61417 1.316 80825
UAH 238830 0.152 36302
CAD 2679 4.784 12818
Other 40334
Total 422078
- 81 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(2) Foreign currencies denominated items - (cont'd)
As at June 30 2026
RMB at the
Exchange end of the
Foreign currency at the end of the period rate period
Other current assets
Long-term receivables
BRL 154394 1.316 203183
Total 203183
Long-term investments loans
and other
BRL 228647 1.316 300899
Other 7396
Total 308295
Short-term loans
UAH 703345 0.152 106909
ARS 679728 0.005 3399
Total 110308
Bills and Accounts payable
ILS 344244 2.287 787286
EUR 51079 7.763 396524
BRL 146476 1.316 192762
USD 7570 6.811 51557
Other 62888
Total 1491017
Other payables
ILS 94432 2.287 215966
BRL 120102 1.316 158054
UAH 173768 0.152 26413
ILS CPI 10793 2.287 24683
ZAR 31281 0.415 12982
CNH 11880 1.005 11940
Other 35976
Total 486014
- 82 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(3) Foreign currencies denominated items - (cont'd)
As at June 30 2026
Foreign currency
at the end of the RMB at the end of
period Exchange rate the period
Contract liabilities
EUR 57223 7.763 444221
CAD 56142 4.784 268581
BRL 46616 1.316 61346
THB 98675 0.205 20228
TRY 72821 0.146 10632
Other 67346
Total 872354
Non-current liabilities due within one year
CNH 2000000 1.005 2010305
ILS CPI 257974 2.287 589986
EUR 1650 7.763 12811
Other 27966
Total 2641068
Other current liabilities
EUR 6950 7.763 53956
RON 17253 1.48 25534
Other 82
Total 79572
Debentures payable
ILS CPI 2246662 2.287 5138114
Total 5138114
Provision and Long-term payables
BRL 165169 1.316 217363
ILS 56575 2.287 129387
Total 346750
Lease liabilities
ILS CPI 33200 2.287 75928
EUR 4940 7.763 38352
ILS 11529 2.287 26366
Other 33292
Total 173938
- 83 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
V. Notes to the consolidated financial statements - (cont'd)
59. Foreign currencies denominated items - (cont'd)
(4) Major foreign operations
Registration &
Principal place of Functional
Name of the Subsidiary business Business nature currency
ADAMA France S.A.S France Distribution USD
ADAMA Brasil S/A Brazil Manufacturing; Distribution; USD
Registration
ADAMA Deutschland GmbH Germany Distribution; Registration USD
ADAMA India Private Ltd. India Manufacturing INR
Distribution; Registration
Makhteshim Agan of North United States Manufacturing; Distribution; USD
America Inc. Registration
Control Solutions Inc. United States Manufacturing; Distribution; USD
Registration
ADAMA Agan Ltd. Israel Manufacturing; Distribution; USD
Registration
ADAMAMakhteshim Ltd. Israel Manufacturing; Distribution; USD
Registration
ADAMA Australia Pty Australia Distribution AUD
Limited
ADAMA Italia SRL Italy Distribution USD
ADAMA Northern Netherlands Distribution USD
Europe B.V.Alligare LLC United States Manufacturing; Distribution; USD
Registration
The functional currency of the subsidiaries above is the main currency that represent the principal
economic environment.VI. Change in consolidation Scope
There is no change of consolidation scope during the period.- 84 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
VII. Interest in Other Entities
1. Interests in subsidiaries
Composition of the largest subsidiaries of the Group in respect of assets and operating income
Registration & Method of
Principal place of obtaining the
Name of the Subsidiary business Business nature Direct Indirect subsidiary
ADAMA France S.A.S France Distribution 100% Established
ADAMA Brasil S/A Brazil Manufacturing; Distribution; 100% Purchased
Registration
ADAMA Deutschland GmbH Germany Distribution; Registration; 100% Established
ADAMA India Private Ltd. India Manufacturing; 100% Established
Distribution; Registration
Makhteshim Agan of North America United States Manufacturing; Distribution; 100% Established
Inc. Registration
Control Solutions Inc. United States Manufacturing; Distribution; 100% Purchased
Registration
ADAMA Agan Ltd. Israel Manufacturing; Distribution; 100% Restructure
Registration
ADAMA Makhteshim Ltd. Israel Manufacturing; Distribution; 100% Restructure
Registration
ADAMA Australia Pty Limited Australis Distribution 100% Purchased
ADAMA Italia SRL Italy Distribution 100% Established
ADAMA Northern Europe B.V. Netherlands Distribution 55% Purchased
Alligare LLC United States Manufacturing; Distribution;Registration 100%
Purchased
Adama Anpon (Jiangsu) Ltd. China Manufacturing; Distribution 100% Purchased
Adama Huifeng (Jiangsu) Co. Ltd. China Manufacturing; Distribution 51% Purchased
2. Interests in joint ventures or associates
June 30 December 31
20262025
Joint venture 1956 2129
Associate 40864 37183
4282039312
3. Summarized financial information of joint ventures and associates
December 31 2025
June 30 2026 and six and six months ended
months then ended June 30 2025
Joint venture:
Total carrying amount 1956 2129
The Group's share of the following items:
Net profit (110) 137
Other comprehensive income (63) (9)
Total comprehensive income (173) 128
Associate:
Total carrying amount 40864 37183
The Group's share of the following items:
Net profit 6703 5124
Other comprehensive income 1134 3802
Total comprehensive income 7837 8926
- 85 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments
A. General
The Group has extensive international operations and therefore it is exposed to credit risks liquidity risks
and market risks (including currency risk interest risk and other price risk). In order to reduce the exposure
to these risks the Group uses financial derivatives instruments including forward transactions and options
(hereinafter - “derivatives”).Transactions in derivatives are undertaken with major financial institutions and therefore in the opinion of
Group Management the credit risk in respect thereof is low.This note provides information on the Group’s exposure to each of the above risks the Group’s objectives
policies and processes regarding the measurement and management of the risk. Additional quantitative
disclosure is included throughout the consolidated financial statements.The Board of Directors has overall responsibility for establishing and monitoring the framework of the
Group's risk management policy. The Finance Committee is responsible for establishing and monitoring the
Group's actual risk management policy. The Chief Financial Officer reports to the Finance Committee on a
regular basis regarding these risks.The Group’s risk management policy established to identify and analyze the risks facing the Group to set
appropriate risk limits and controls and to monitor risks and adherence to limits. The policy and methods for
managing the risks are reviewed regularly in order to reflect changes in market conditions and the Group's
activities. The Group through training and management standards and procedures aims to develop a
disciplined and constructive control environment in which all the employees understand their roles and
obligations.B. Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations and derives mainly from trade receivables and other receivables as
well as from cash and deposits in financial institutions.Accounts and other receivables
The Group’s revenues are derived from a large number of widely dispersed customers in many countries.Customers include multi-national companies and manufacturing companies as well as distributors
agriculturists agents and agrochemical manufacturers who purchase the products either as finished goods or
as intermediate products for their own requirements.The Company entered into an agreement for the sale of trade receivables in a securitization transaction for
details see note V.5.e. and f.In September 2025 a two-years agreement with an international insurance company was renewed. The
amount of the insurance coverage was fixed at $150 million cumulative per year. The indemnification is
limited to 90% of the debt.The Group’s exposure to credit risk is influenced mainly by the personal characterization of each customer
and by the demographic characterization of the customer’s base including the risk of insolvency of the
industry and geographic region in which the customer operates.- 86 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
B. Credit risk - (cont’d)
The Company management has prescribed a credit policy whereby the Company performs current ongoing
credit evaluations of existing and new customers and every new customer is examined thoroughly regarding
the quality of his credit before offering him the Group’s customary shipping and payment terms. The
examination made by the Group includes an outside credit rating if any and in many cases receipt of
documents from an insurance company. A credit limit is prescribed for each customer outstanding amount
of the accounts receivable balance. These limits are examined annually. Customers that do not meet the
Group’s criteria for credit quality may do business with the Group on the basis of a prepayment or against
furnishing of appropriate collateral.Most of the Group’s customers have been doing business with it for many years. In monitoring customer
credit risk the customers were grouped according to a characterization of their credit based on geographical
location industry aging of receivables maturity and existence of past financial difficulties. Customers
defined as “high risk” are classified to the restricted customer list and are supervised by management. In
certain countries mainly Brazil customers are required to provide property collaterals (such as agricultural
lands and equipment) against execution of the sales the value of which is examined on a current ongoing
basis by the Company. In these countries in a case of expected credit risk the Company records a provision
for the amount of the debt less the value of the collaterals provided and acts to realize the collaterals.The Group closely monitors the economic situation in Eastern Europe and in South America on an ongoing
basis.The Group recognizes an impairment provision which reflects its assessment regarding the credit risk of
account receivables Other receivables and investments on a lifetime expected credit loss basis. See also
notesⅢ.11 – Financial instrumentsⅢ.12 – Accounts receivables andⅢ.14 – Other receivables.Cash and deposits in banks
The Company holds cash and deposits in banks with a high credit rating. These banks are also required to
comply with capital adequacy or maintain a level of security based on different situations.Guarantees
The Company’s policy is to provide financial guarantees only to investee companies.Aging of receivables and expected credit risk
Presented below is the aging of the past due trade receivables:
June 30 2026
Past due by less than 90 days 631086
Past due by more than 90 days 533389
1184475
- 87 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
B. Credit risk - (cont’d)
The company measure the provision for credit losses on a collective group basis where receivables share
similar credit risk characteristics based on geographical locations. The examination for expected credit
losses is performed using model including aging analysis and historical loss experiences and adjusted by the
observable factors reflecting current and expected future economic conditions.When credit risk on a receivable has increased significantly since initial recognition the group records
specific provision or general provision which is determined for groups of similar assets in countries in which
there are large number of customers with immaterial balances.The Group has credit risk exposures for accounts receivables amounted to RMB 7431703 thousand relate to
category of "Lifetime expected credit losses (credit losses has not occurred)" and amounted to RMB 818246
thousand related to category of "Lifetime expected credit losses (credit losses occurred)". The Group has a
provision for other receivables amounted to RMB 12423 thousand related to category of "Lifetime expected
credit losses (credit losses occurred)". The credit risk exposures for all remaining balance of financial assets
at amortised cost and financial assets at FVTOCI are related to "12-month expected credit losses".C. Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligation when
they come due. The Group's approach to managing its liquidity risk is to assure to the extent possible an
adequate degree of liquidity for meeting its obligations timely under ordinary conditions and under pressure
conditions without sustaining unwanted losses or hurting its reputation.The cash- flow forecast is determined both at the level of the various entities as well as of the consolidated
level. The Company examines the current forecasts of its liquidity requirements in order to ascertain that
there is sufficient cash for the operating needs including the amounts required in order to comply with the
financial liabilities while taking strict care that at all times there will be unused credit frameworks so that
the Company will not exceed the credit frameworks granted to it and the financial covenants with which it is
required to comply with. These forecasts take into consideration matters such as the Company’s plans to use
debt for financing its activities compliance with required financial covenants compliance with certain
liquidity ratios and compliance with external requirements such as laws or regulation.The surplus cash held by the Group subsidiaries which is not required for financing the current ongoing
operations is invested in short- term interest- bearing investment channels.- 88 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
C. Liquidity risk - (cont’d)
(1) Presented below are the contractual maturities of the financial liabilities at undiscounted amounts
including estimated interest payments:
As at June 30 2026
Third- Fifth year Contractual Carrying
First year Second year Fourth year and above Cash flow amount
Non-derivative financial
liabilities
Short-term loans 5774429 - - - 5774429 5763384
Accounts payables 5048131 - - - 5048131 5048131
Bills payables 605314 - - - 605314 605314
Other payables 1523019 - - - 1523019 1523019
Other current liabilities 549492 - - - 549492 549492
Debentures payable 786026 783608 1485927 4347152 7402713 5651921
Long-term loans 806005 588729 607307 - 2002041 1913470
Long-term payables 8118 21372 38281 137581 205352 153307
Lease Liabilities 226496 188066 193334 869046 1476942 821792
Other non-current liabilities 2361330 - - - 2361330 2350850
Derivative financial liabilities
Foreign currency derivatives 237588 - - - 237588 237588
CPI/shekel forward transactions 12249 - - - 12249 12249
179381971581775232484953537792719860024630517
D. Market risks
Market risk is the risk that changes in market prices such as foreign exchange rates CPI interest rates and
prices of capital instruments will affect the Group’s revenues or the value of its holdings in its financial
instruments. The objective of market risk management is to manage and monitor the exposure to market
risks within acceptable parameters while optimizing the return.During the ordinary course of business the Group purchases and sells derivatives and assumes financial
liabilities for the purpose of managing market risks.
(1) CPI and foreign currency risks
Currency risk
The Group is exposed to currency risk from its sales purchases expenses and loans denominated in
currencies that differ from the Group’s functional currency. The main exposure is in Euro Brazilian real
USD and in NIS. In addition there are smaller exposures to various currencies such as the British pound
Polish zloty Australian dollar Indian rupee Argentine peso Canadian dollar South African Rand Ukraine
Hryunia and Chinese Yuan Renminbi.The Group uses foreign currency derivatives – forward transactions and currency options – in order to hedge
the cash flows risk which derive from existing monetary assets and liabilities and anticipated sales and
purchases which may be affected by exchange rate fluctuations.- 89 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
The Group hedged a part of the estimated currency exposure to anticipate sales and purchases for the
subsequent year. Likewise the Group hedges most of its monetary assets and liabilities denominated in a
non- U.S. dollar currency. The Group uses foreign currency derivatives to hedge its currency risk with
maturity dates of less than one year from the reporting date.Solutions debentures are linked to the NIS-CPI and therefore an increase in the NIS-CPI as well as
changes in the NIS exchange rate could cause significant impact with respect to the subsidiary functional
currency – the U.S. dollar. As of the approval date of the financial statements the subsidiary had hedged
most of its exposure deriving from issuance of the debentures in options and forward contracts.
(A) The Group’s exposure to NIS-CPI and foreign currency risk is as follows:
June 30 2026
Total assets Total liabilities
In US Dollar 3069647 1842486
In Euro 1466936 752152
In Brazilian real 1768697 412162
CPI-linked NIS - 5799298
In New Israeli Shekel 439237 1059033
Denominated in or linked to other foreign currency 2813192 3371619
955770913236750
(B) The exposure to CPI and foreign currency risk in respect of derivatives is as follows:
June 30 2026
Currency/ Currency/ Average USD RMB
linkage linkage expiration thousands thousands
receivable payable date Par value Par value Fair value
Forward foreign currency USD EUR 24/10/2026 209984 1430181 13925
Contracts and call options USD PLN 22/09/2026 8043 54777 (1180)
USD BRL 05/08/2026 173675 1182885 3374
USD GBP 28/07/2026 21047 143351 3288
USD ZAR 04/09/2026 32145 218936 (913)
ILS USD 15/08/2026 1081236 7364188 (33470)
USD OTHER 1034366 7044962 5341
CPI forward contracts CPI ILS 07/28/2026 537280 3659360 (11710)
- 90 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(1) CPI and foreign currency risks - (cont’d)
(C) Sensitivity analysis
The appreciation or depreciation of the Dollar against the following currencies as of December 31
2025 and the increase or decrease in the CPI would increase (decrease) the equity and profit or loss by
the amounts presented below. This analysis assumes that all the remaining variables among others
interest rates remains constant.June 30 2026
Decrease of 5% Increase of 5%
Equity Profit (loss) Equity Profit (loss)
New Israeli shekel 57222 26256 (15586) 6848
British pound 469 469 (469) (469)
Euro (6988) 23407 23320 (23407)
Brazilian real 10040 10040 (15501) (15501)
Polish zloty 5040 5040 (4774) (4774)
South African Rand (1073) (1073) 523 523
Chinese Yuan Renminbi 217880 217880 (196112) (196112)
CPI-linked NIS 130795 130795 (130795) (130795)
(2) Interest rate risks
The Group has exposure to changes in the variable interest rate. The Group has different assets and
liabilities in different countries which bear interest according to the economic environment in each
country. Most of the loans other than the debentures bear Dollar SOFR and Euro ESTER interest. As a
result most of the variable interest exposure of those loans is to the SOFR interest.The Company prepares a quarterly summary of exposure to a change in the SOFR interest rate. As at the
approval date of the financial statements the Company had not hedged this exposure.- 91 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
VIII. Risk Related to Financial Instruments - (cont’d)
D. Market risks - (cont’d)
(2) Interest rate risks - (cont’d)
(A) Type of interest
The interest rate profile of the Group’s interest-bearing financial instruments was as follows:
June 30 2026
Fixed-rate instruments – unlinked to the CPI
Financial assets
Other non-current assets 6634
Financial liabilities
Long-term loans (1) 1813470
Long-term payables 20835
Other non-current liabilities (1) 340545
(2168216)
Fixed-rate instruments – linked to the CPI
Financial liabilities
Debentures payable (1) 5651921
Variable-rate instruments
Financial assets
Cash at banks 491863
Financial assets at fair value through profit or loss 2711
Financial liabilities
Short-term loans and credit from banks 5763384
Long-term loans (1) 100000
Long-term payables 119596
Other non-current liabilities (1) 2010305
(7498711)
(1) Including current maturities.
92ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
IX. Fair Value
The fair value of forward contracts on foreign currency is based on their listed market price if available. In
the absence of market prices the fair value is estimated based on the discounted difference between the stated
forward price in the contract and the current forward price for the residual period until redemption using an
appropriate interest rate.The fair value of foreign currency options is based on bank quotes. The reasonableness of the quotes is
evaluated through discounting future cash flow estimates based on the conditions and duration to maturity of
each contract using the market interest rates of a similar instrument at the measurement date and in
accordance with the Black & Scholes model.
1. Financial instruments measured at fair value for disclosure purposes only
The carrying amount of certain financial assets and liabilities including cash at bank and on hand bills and
accounts receivable receivables financing other receivables short-term loans bills and accounts payable and
other payable are the same or proximate to their fair value.The following table details the carrying amount in the books and the fair value of groups of non- current
financial instruments presented in the financial statements not in accordance with their fair values:
June 30 2026
Carrying amount Fair value
Financial assets
Other non-current assets (a – Level 2) 30520 23987
Financial liabilities
Long-term loans and others (b – Level 2) 5240319 5211018
Debentures (c – Level 1) 5651921 6248795
a) The fair value of the other non-current assets is based on a discounted future cash flows using the acceptable
interest rate for similar investment having similar characteristics (Level 2).b) The fair value of the long-term loans and others is based on a discounted future cash flows using the acceptable
interest rate for similar loans having similar characteristics (Level 2).c) The fair value of the debentures is based on stock exchange quotes (Level 1).
2. The interest rates used in determining fair value
?
The interest rates used to discount the estimate of anticipated cash flows are:
June 30 2026
%
U.S. dollar interest 5.83 - 7.24
Chinese Yuan Renminbi 1.26 - 2.50
93ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
IX. Fair Value - (cont’d)
3. Fair value hierarchy of financial instruments measured at fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The table below presents an analysis of
financial instruments measured at fair value. The various levels have been defined as follows:
? Level 1: quoted prices (unadjusted) in active market for identical instrument.? Level 2: inputs other than quoted prices included within Level 1 that are observable either directly or indirectly.? Level 3: inputs that are not based on observable market data (unobservable inputs).The Company’s forward contracts and options are carried at fair value and are evaluated by observable inputs
and therefore are concurrent with the definition of level 2.June 30
2026
Forward contracts and options used for hedging the cash flow (Level 2) 60209
Forward contracts and options used for economic hedging (Level 2) (81554)
Other equity investment (Level 2) 127475
Receivables financing (Level 2) 78314
Other non-current assets (Level 2) 29171
Other (Level 2) 2711
Financial Instrument Fair value
Fair value measured on the basis of discounting the difference between the
Forward contracts stated forward price in the contract and the current forward price for theresidual period until redemption using an appropriate interest rates.Foreign currency options The fair value is measured based on the Black&Scholes model.No transfer between any levels of the fair value hierarchy in the reporting period.No change in the valuation techniques in the reporting period.- 94 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions
1. Information on parent Company
Company Registered Registered capital Shareholding Percentage
name place Business nature (Thousand RMB) percentage of voting rights
Production and
sales of
agrochemicals
Syngenta Shanghai fertilizers and GM
Group China seeds 11182127 78.47% 78.47%
The Company’s ultimate controlling shareholder is Sinochem Holdings .
2. Information on the largest subsidiaries of the Company
For information about the subsidiaries of the Company refer to Note VII.1.
3. Information on largest joint ventures and associates of the Company
For information about the joint ventures and associates of the Company refer to Note V.12.Other joint ventures and associates that have related party transactions with the Group during this period or
the previous periods are as follows:
Name of entity Relationship with the Company
Innovaroma SA Joint venture of the Group
- 95 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties - (cont’d)
Name of other related parties Related party relationship
Agro Jangada Ltda Common control
Anhui Chemical Research Institute Common control
Anhui Kelihua Chemistry Co. Ltd. Common control
Beijing Guangyuan Yinong Chemical Co. LTD Common control
Bluestar (Beijing) Chemical Machinery Co. Ltd. Common control
Bluestar Engineering Co. Ltd. Common control
Dipagro LTDA Common control
Elkem Silicones Brasil Ltd. Common control
Sinochem Hebei Fuding Chemical Technology Co. Ltd. Common control
Huaxia Hanhua Chemical Equipment Co. Ltd. Common control
Jiangsu Huaihe Chemical Co. Ltd. Common control
Jiangsu Ruiheng New Material Technology CO. LTD. Common control
Jiangsu Youjia Plant Protection Co. Ltd. Common control
Jiangsu Youshi Chemical Co. Ltd. Common control
YANGNONG SINGAPORE PTE. LTD. Common control
Jiangsu Yangnong Chemical Co. Ltd. Common control
Liaocheng Luxi Polyol New Material Technology Co. Ltd. Common control
Sino MAP Common control
Ningxia Ruitai Technology Co. Ltd. Common control
P.T. Syngenta Indonesia Common control
Produtécnica Nordeste Comércio de Insumos Agrícolas Ltda. Common control
Shandong Dacheng Agrochemical Company Limited Common control
Shenyang Sciencreat Chemicals Co. Ltd. Common control
Shenyang Chemical Research Institute Co. Ltd Common control
Shenyang Shenhua Institute Testing Technology Co. Ltd. Common control
Sinochem (Hainan) Agroecology Co. Common control
Sinochem (Linyi) Crop Nutrition Co. Ltd Common control
Sinochem International Crop Care (Overseas) Pte.Ltd. Common control
SinochemAgro Co. Ltd. Common control
Sinochem Digital Intelligence Technology Co . Ltd . Common control
Sinochem Fertilizer Company Limited and its branches Common control
Sinochem Finance Co. Ltd Common control
Sinochem Hebei Co. Ltd. Common control
Sinochem Modern Agriculture (Liaoning) Co. LTD Common control
Sinochem Modern Agriculture (Anhui) Co. LTD Common control
Sinochem Petrochemical Sales Co. Ltd. Common control
Sinochem India Company Private Limited Common control
Syngenta (Shanghai) Crop Protection Technology Company Limit Common control
- 96 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
4. Information on other related parties - (cont’d)
Name of other related parties Related party relationship
Syngenta Nantong Crop Protection Co.Ltd. Common control
Syngenta Agro (Argentina) S.A. Common control
Syngenta Agro GmbH Common control
Syngenta Agro SA de CV Common control
Syngenta Australia Pty Ltd Common control
Syngenta Canada Inc Common control
Syngenta Crop Protection A/S Common control
Syngenta Crop Protection AG Common control
Syngenta Crop Protection BV Common control
Syngenta Crop Protection Lda Common control
Syngenta Crop Protection LLC Common control
Syngenta Crop Protection Ltd. Common control
Syngenta Crop Protection NV Common control
Syngenta Czech s.r.o. Common control
Syngenta Espa?a S.A. Common control
Syngenta France SAS Common control
Syngenta Group Co. Ltd Common control
Syngenta Hellas AEBE Common control
Syngenta Italia SpA Common control
Syngenta Nantong Crop Protection Co Ltd Common control
Syngenta Protecao de Cultivos Ltda Common control
Syngenta SA. Common control
Taicang Zhonglan Environmental Protection Technology Common control
Service Co. Ltd.China Bluestar Chengrand Research Institute Chemical Common control
Industry
Zhonglan Lianhai Design & Research Institute Co. Ltd. Common control
Jiangsu Huifeng Agrochemical Co. Ltd. Minority shareholder and its subsidiary
Nongyi Net (Yangling) e-commerce Co. Ltd. Minority shareholder and its subsidiary
Shanghai focus supply chain Co. Ltd Minority shareholder and its subsidiary
Huifeng Biology (Shanghai) Co. Ltd Minority shareholder and its subsidiary
- 97 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
4. Transactions and balances with related parties
(1) Transactions with related parties
Six months ended
June 30
Type of purchase Related Party Relationship 2026 2025
Summary of purchase of goods/services:
Purchase of goods/services received Common control under
Sinochem Holdings 539227 651803
Minority shareholder and 510 14228
its subsidiary
Purchase of fixed assets and other assets Common control under 15042 49
Sinochem Holdings
Lease expenses Minority shareholder and 924 924
its subsidiary
Summary of Sales of goods:
Sale of goods/ Service rendered Common control under 396910 554642
Sinochem Holdings
Joint venture 35747 49323
Minority shareholder and
its subsidiary 5391 8948
Lease income Minority shareholder and 544 544
its subsidiary
(2) Guarantees
The Group as the guarantee receiver
Amount of Inception date Maturity date Guaranty
Guarantee provider guaranteed loan of guaranty of guaranty completed (Y / N)
Parent company 263000 21/04/2021 20/04/2028 Y
67971 01/06/2021 31/05/2028 Y
As at 30 June 2026 all guarantees provided by the parent company of the Group to the Group have been
fully discharged. No guarantee fees were incurred for the six months ended 30 June 2026 (six months
ended 30 June 2025: guarantee fees paid by the Group to its parent company amounted to RMB 197
thousand).- 98 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties - (cont'd)
(3) Remuneration of key management personnel and directors
Periods ended June 30
20262025
Remuneration of key management personnel and directors 28856 16533
(4) Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
20262025
Expected Expected
Related Party Book credit Book credit
Items Relationship Balance losses Balance losses
Trade receivables Common control under 248189 - 214960 -
Sinochem Holdings
Joint venture 17286 - 15063 -
Minority shareholder and 3735 - 5201 -
its subsidiary
Prepayments Common control under 2263 - 1629 -
Sinochem Holdings
Payable Items
June 30 December 31
Items Related Party Relationship 2026 2025
Trade payables Common control under Sinochem 296190 328410
Holdings
Minority shareholder and its subsidiary 320 63
Other payables Common control under Sinochem 53643 66612
Holdings
Minority shareholder and its subsidiary 517 517
Contractual liability Common control under Sinochem 12079 22912
Holdings
Short-term loans * Common control under Sinochem 3337340 3444112
Holdings
Other non-current Common control under Sinochem 2350850 2359991
liabilities (including Holdings
current maturities). *
* Include liabilities are loans from a related party the interest expenses for the Six months ended June 30
2026 is 108601 thousand RMB (six months ended June 30 2025: 134799 thousand RMB).
- 99 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
X. Related parties and related party transactions - (cont’d)
5. Transactions and balances with related parties - (cont'd)
(4) Receivables from and payables to related parties (including loans) (cont'd)
On October 27 2021 the Board of Directors first approved (following the pre-approval of the Company’s
independent directors dated October 25 2021) the Company through one of its subsidiaries entering into
committed credit facilities agreements in the aggregate amount of USD 100 million on market terms with
Syngenta Group or any of its subsidiaries including a long-term loan for 5 years of USD 50 million. As of
June 30 2026 the balance of this loan amounted to approximately RMB 341 million.On August 28 2023 the Board of Directors approved (following the pre-approval of the Company’s
independent directors dated August 22 2023) the Company through one of its subsidiaries entering into
an additional committed credit facility agreement in the amount of RMB 2000 million with Syngenta
Group or any of its subsidiaries. As of June 30 2026 a total of RMB 2000 million was utilized.On March 26 2026 the Board of Directors approved (following the pre-approval of the Company’s
independent directors dated March 24 2026) the Proposal on Consolidation of Credit Facilities from the
Related Party to consolidate the existing short- term annual revolving credit facilities of USD 350 million
and USD 400 million originally provided by Syngenta Group subsidiaries to the Group’s subsidiaries into
a single short- term annual revolving credit facility with an aggregate amount of USD 750 million. As of
June 30 2026 the Group’s cumulative utilisation of this credit facility amounted to USD 490 million
(equivalent to approximately RMB 3337 million).
(5) Other related party transactions
The closing balance of bank deposit in Sinochem Finance Corporation was 768225 thousand RMB
(31.12.25: 912869) Interest income of bank deposit for the current period was 8391 thousand RMB
(amount for six months ended June 2025 was 3197 thousand RMB).The closing balance of a loan received from Sinochem Finance Corporation was 249641 thousand RMB
(31.12.25: 209641) Interest expenses in the current period was 2852 thousand RMB (amount for six
months ended June 2025 was 398 thousand RMB).- 100 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies
1. Significant commitments
June 30 December 31
20262025
Investment in Fixed assets
105773125136
2. Commitments and Contingent Liabilities
On April 30 2026 the 3rd meeting of the 10th session of the Board of Directors of the Company approved the
engagement on the purchase of joint liability insurance policy for Directors Supervisors and Senior Executives
of the Company and its PRC subsidiaries by way of adding the Company to the Directors and Officers liability
insurance policy of Syngenta Group which shall provide shared coverage. On June 28 2024，the Company’s
2nd Interim Shareholders Meeting in 2024 approved the above engagement. The initial insurance period was
from July 1 2024 to June 30 2025.Based on the Shareholders meeting approval and authorization the Company's management renewed and
extended the Directors and Officers liability insurance policy such that the current insurance period ends on
April 30 2027.Environmental protection
The manufacturing processes of the Company and the products it produces and market entail environmental
risks that impact the environment. The Company invests substantial resources in order to comply with the
applicable environmental laws and attempts to prevent or minimize the environmental risks that could occur
as a result of its activities. To the best of the Company’s knowledge at the balance sheet date there are no
material environmental issues relating to the Company there are no material administrative penalties or
investigations related to environment health and safety imposed or initiated by regulatory authorities and
none of the material permits and licenses regarding environmental issues required for the Company’s day to
day operations have been revoked.Claims against subsidiaries
In the ordinary course of business legal claims were filed against subsidiaries including claims for patent
infringement. The Company inter alia like other companies operating in the crop protection market is
exposed to class actions for large amounts which it must defend against while incurring considerable costs
even if these claims have no basis in the first place. In the opinion of the Company’s management which is
based inter alia on the opinions of its legal advisors regarding the prospects of the proceedings the financial
statements include adequate provisions where necessary to cover the exposure resulting from the claims.On October 20 2020 a claim and a motion for its approval as a class action (the “Motion”) was filed against
Monsanto Company and Bayer AG (the “Manufacturers”) as well as against ADAMA Agan Ltd. a wholly-
owned subsidiary of Solutions with respect to an herbicide bearing the brand name Roundup which is
produced by the Manufacturers and distributed in Israel in small quantities by Solutions’ subsidiary. The
applicants argued that the product allegedly poses a risk to users or those who have been exposed to it.On August 7 2025 the court rendered a first-instance judgment dismissing the Motion. On November 9
2025 an appeal was submitted to the Supreme Court.
According to the Solutions' external counsels given the preliminary stages of the appeal it is too early to
assess the chances of the appeal and the Motion to be accepted.As Solutions is an authorized distributor of the Manufactures the Manufacturers undertook to fully indemnify
defend and hold harmless ADAMA Agan Ltd. for any monetary compensation or any other remedy it will
have to make in connection with the Motion.- 101 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XI. Commitments and contingencies - (cont’d)
2. Commitments and Contingent Liabilities - (cont’d)
Claims against subsidiaries (cont’d)
Therefore and based on the opinion of Solutions’ external counsels as of the date of the financial statements
it is the Company's estimation that this proceeding is not expected to have any non-negligible effect on the
Company’s financial results.In June 2021 a lawsuit was filed against a subsidiary of the Company alleging two patents owned by a large
competitor of the Company have been infringed by such subsidiary. Among the claims the plaintiff seeks
preliminary and permanent injunctions to prevent the subsidiary from manufacturing using or
commercializing a product that allegedly infringes the plaintiff’s patents and seeks actual damages and profits
loss. The said preliminary injunctions were granted by the court in favor of the plaintiff. The subsidiary has
filed appeals against such preliminary injunctions which were rejected. Prior to such claims the subsidiary
filed lawsuits seeking declarations that the said patents are invalid and not infringed. These proceedings
remain pending. In May 2023 the same competitor filed an additional lawsuit alleging infringement of the
same two patents by a different product and sought a preliminary injunction. The injunction was rejected at
first instance upheld on appeal and finally dismissed by the superior court - a decision that is now final and
unappealable. All these lawsuits are pending as of the approval date of the financial statements. At this stage
the claims filed by the plaintiff are not expected to have a material effect on the Company.Various immaterial claims have been filed against Group companies in courts throughout the world in
immaterial amounts for causes of action primarily involving employee-employer relations and various civil
claims for which the Company did not record a provision in the financial statements. The claims that in the
estimation of Company’s management based on its legal advisors’ opinion have lower chances of succeeding
than being rejected amount to a negligible amount. Furthermore claims were filed against the Company for
product liability damages for which the Company has adequate insurance coverage such that the Company’s
exposure in respect thereof is limited to the deductible amount or the amount thereof does not exceed the
deductible amount.XII. Events subsequent to the balance sheet date
The Company is not aware of any events subsequent to the balance sheet date.XIII. Share-based Payments
In September 2019 the remuneration committee and Solutions Board of Directors (and the General Meeting
with respect to the CEO and Vice President who also serves as a director) approved the cancellation of 2017
Plan against the allocation of 28258248 warrants in accordance with the long-term phantom compensation
plan (hereinafter - "The Alternative Warrants" and "The Alternative Plan"). The cancellation and allocation
date is September 26 2019. During 2019 an additional 90130 Alternative Phantom Warrants were granted.- 102 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIII. Share-based Payments - (cont’d)
The alternative warrants will vest in four equal portions where the first quarter is exercisable after one year
the second quarter after two years the third quarter after three years and the fourth quarter after four years
from October 1 2019. The warrants will be exercisable in whole or in part in accordance with the terms of
the Alternative Plan and subject to achieving financial targets as determined in the plan. The warrants will
be exercisable until October 1 2026.Upon exercise of each warrant the offeree will be entitled to receive cash payment equal to the difference
between the base price as determined at the time of the grant and the closing price of one share of the parent
company on the Shenzhen Stock Exchange as it will be on the exercise date up to the ceiling that was
determined under the plan.The fair value of the total granted alternative warrants at the allocated date is equal to the fair value of the
total warrants canceled from the 2017 plan.The cost of the benefit embodied in the warrants that were allocated as aforesaid based on the fair value at
the cancellation and allocation date amounted to a total of approximately 69 million RMB. The liability in
the financial statements at the end of the reporting period was recorded at the fair value estimated using the
binomial option pricing model and by the vesting period from the original grant date of the 2017 plan to the
end of the service period determined by the alternative plan taking into account the extent of the service that
the employees provided until that date and the stock price at the reporting date.Statement of share based payments in the period
Phantom warrants
Changes in the number of 2017 Plan:
Total number of Phantom warrants at the beginning of the period 3689544
Total number of Phantom warrants granted in current period -
Total number of Phantom warrants exercised in current period -
Total number of Phantom warrants forfeited in current period (1255300)
Total number of Phantom warrants at the end of the period 2434244
The range of the exercise prices and the remainder of the contractual period RMB 9.37 – 9.43
for Phantom warrants outstanding at the end of period 0.25 year
The parameters used in implementing the model at the grant date are as follows:
Stock price (RMB) 9.23
Exercise increment (RMB) 9.43
Expected volatility 40.29%
Risk-free interest rate 3.14%
Economic value as of September 26 2019 (in thousands RMB) 68836
The methods for the determination of the fair value of liabilities arising from
cash-settled share-based payments related to the alternative plan The binomial pricing model
Accumulated amount of liabilities arising from cash-settled share-based
payments related to the alternative plan (in thousands RMB) -
Expenses (income) arising from cash-settled share-based payments in
current period related to the alternative plan (in thousands RMB) (102)
- 103 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items
1. Segment reporting
The Company presents its segment reporting based on a format that is based on a breakdown by business
segments:
Crop Protection (Agro)
This is the main area of the Company’s operations and includes the manufacture and marketing of
conventional agrochemical products.Intermediates and ingredients
This field of activity includes a large number of sub-fields including: Lycopan (an oxidization retardant)
aromatic products and other chemicals. It combines all the Company’s activities not included in the Crop
Protection products segment.Segment results reported to the chief operating decision maker include items directly attributable to a
segment as well as items that can be allocated on a reasonable basis. Unallocated items comprise mainly
financing expenses net gains from changes in fair value investment income and tax expenses.All assets and liabilities that can be attributed to a specific segment were allocated accordingly. Attributed
assets include: accounts and bills receivables receivables financing inventory fixed assets right-of-use
assets construction in progress intangible assets goodwill non-current trade receivables and long-term
equity investments. Attributed liabilities include account payables bill payablesand lease liabilities. All
other assets and liabilities which are not attributable to a specific segment are presented as unallocated assets
and liabilities.- 104 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Information regarding the results and assets and liabilities of each reportable segment is included below:
Crop Protection Intermediates and ingredients Elimination among segments Total
Six months ended Six months ended Six months ended Six months ended
June 30 June 30 June 30 June 30
20262025202620252026202520262025
Operating income from external
customers 13497197 13656589 979343 1367611 - - 14476540 15024200
Inter-segment operating income - - 655 962 (655) (962) - -
Interest in the profit or loss of
associates and joint ventures - - 6593 5261 - - 6593 5261
Segment's results 1117325 776250 85315 129004 - - 1202640 905254
Financial expenses 1023706 1024340
Gain (loss) from changes in fair
value 213451 (6493)
Income (loss) before tax 392385 (125579)
Income tax expenses (40182) (45227)
Net (income) Loss 432567 (80352)
Crop Protection Intermediates and ingredients Unallocated assets and liabilities Total
June 30 December 31 June 30 December 31 June 30 December 31 June 30 December 31
20262025202620252026202520262025
Total assets 37997140 39011654 2043258 2092328 6608691 7359980 46649089 48463962
Total liabilities 7360638 7904219 208693 240167 21443739 22744150 29013070 30888536
- 105 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
1. Segment reporting - (cont’d)
Geographic information
The following tables sets out information about the geographical segments of the Group’s operating income
based on the location of customers (sales target) and the Group's non-current assets (including mainly fixed
assets right-of-use assets construction in progress investment properties intangible assets and goodwill). In
the case of investment property fixed assets right of used assets and construction in progress the
geographical location of the assets is based on its physical location. In case of intangible assets and goodwill
the geographical location of the company which owns the assets.Operating income from external
customers
Six months ended June 30
20262025
Europe Africa and Middle Eas 5041810 4811339
North America 3570492 3554544
Latin America 2431950 2609695
Asia Pacific 3432288 4048622
1447654015024200
Specified non-current assets
June 30 December 31
20262025
Europe Africa and Middle East 12548065 13319926
North America 1201899 1232186
Latin America 1760934 1905677
Asia Pacific 4372305 4606298
1988320321064087
2. The dependency on major customers
No single customer's proportion of the total amount of sales is over 10%.- 106 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XIV. Other significant items - (cont'd)
3. Calculation of losses per share and Diluted earnings per share
Amount for the Amount for the
current period prior period
Net loss from continuing operations attributable to ordinary
shareholders 432567 (80352)
Amount for the Amount for the
Shares current period prior period
Number of ordinary shares outstanding at the beginning of the
year 2329811766 2329811766
Add: weighted average number of ordinary shares issued during
the year - -
Less: weighted average number of ordinary shares repurchased
during the year - -
Weighted average number of ordinary shares outstanding at the
end of the year 2329811766 2329811766
Amount for Amount for
the current the prior
period period
Calculated based on net profit (loss) attributable to ordinary
shareholders
Basic losses per share 0.19 (0.03)
Diluted losses per share N/A N/A
Calculated based on net profit (loss) from continuing operations
attributable to ordinary shareholders:
Basic losses per share 0.19 (0.03)
Diluted losses per share N/A N/A
Calculated based on net profit (loss) from discontinued operations
attributable to ordinary shareholders:
Basic losses per share N/A N/A
Diluted losses per share N/A N/A
- 107 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements
1. Cash at bank and on hand
June 30 December 31
20262025
Deposits in banks 138892 58950
Other cash and bank balances 13686 6014
15257864964
As at June 30 2026 restricted cash and bank balances was 13686 thousand RMB (as at December 31 2025:
6014 thousand RMB).
2. Accounts receivable
a. By category
June 30 2026
Provision for expected
Book value credit losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 13893 1 13893 100 -
Account receivables assessed
collectively for impairment 2006832 99 902 - 2005930
20207251001479512005930
December 31 2025
Provision for expected credit
Book value losses
Carrying
Amount Percentage (%) Amount Percentage (%) amount
Account receivables assessed
individually for impairment 13893 1 13893 100 -
Account receivables assessed
collectively for impairment 1637510 99 902 - 1636608
16514031001479511636608
b. Aging analysis
June 30 2026
Within 1 year (inclusive) 1254429
Over 1 year but within 2 years 733188
Over 2 years but within 3 years 19215
Over 3 years but within 4 years -
Over 4 years but within 5 years -
Over 5 years 13893
2020725
- 108 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
2. Accounts receivable - (cont'd)
c. Addition written-back and written-off of provision for expected credit losses during the period
Six months ended June 30 2026
Balance as of January 1 14795
Addition during the period net -
Balance as of June 30.2026 14795
d. Five largest accounts receivable at June 30 2026:
Proportion of Allowance of
Accounts expected
Name Closing balance receivable (%) credit losses
Party 1* 1877059 93 -
Party 2 66481 3 -
Party 3 19965 1 902
Party 4 8140 0.5 -
Party 5 8000 0.5 -
197964598902
* Include intergroup balance with ADAMA Solutions.
3. Receivable financing
June 30 December 31
20262025
Bank acceptance draft 26915 10490
2691510490
As at June 30 2026 bank acceptance endorsed but not yet due amounts to 221975 thousand RMB.
4. Other Receivables
June 30 December 31
20262025
Dividends receivable - 2325
Other receivables 23722 24109
2372226434
- 109 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
4. Other Receivables - (cont'd)
(1) Other receivables
a. Other receivables by categories
June 30 December 31
20262025
Other 29188 29485
Provision for expected credit losses (5466) (5376)
2372224109
b. Other receivables by aging
June 30 2026
Within 1 year (inclusive) 90
Over 1 year but within 2 years 12111
Over 2 years but within 3 years -
Over 3 years but within 4 years 113
Over 4 years but within 5 years 91
Over 5 years 16783
29188
c. Additions recovery or reversal and written-off of provision for expected credit losses during the
period:
Six months ended June 30 2026
Balance as of January 1 2026 5376
Addition during the period 90
Balance as of June 30 2026 5466
d. Five largest other receivables at June 30 2026:
Proportion of other
Name Closing balance receivables (%) Credit loss provision
Party 1* 23722 81 -
Party 2 3125 11 3125
Party 3 548 2 548
Party 4 237 1 237
Party 5 221 1 221
27853964131
* Include intergroup balance with Anpon
- 110 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
5. Long-term equity investments
June 30 2026 December 31 2025
Impairment Impairment
Amount balance loss Book value Amount balance loss Book value
Invest in
subsidiaries 17511352 80636 17430716 17511352 80636 17430716
175113528063617430716175113528063617430716
Investments in subsidiaries
Provision of Balance of
Opening impairment Closing Impairment
Invested unit balance Increase Decrease loss balance loss
ADAMA Agricultural Solutions Ltd. 15890213 - - - 15890213 -
Adama Anpon (Jiangsu) Ltd. 450449 - - - 450449 -
ADAMA Hiufeng (Jiangsu) Co. Ltd. 789116 - - - 789116 (59024)
Hubei Sanonda Foreign Trade Co. 11993 - - - 11993 -
Ltd.Adama Huifeng (shanghai) 288945 - - - 288945 (21612)
Agricultural Technology Co. Ltd
17430716---17430716(80636)
6. Operating Income and operating costs
Six months ended June 30 2026 Six months ended June 30 2025
Operating Operating
Revenue costs Revenue costs
Main operations 1150645 953163 1068970 870381
Other operations 28952 10580 25602 9594
11795979637431094572879975
- 111 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
7. Notes to items in the cash flow statements
(1) Other cash received relevant to operating activities
Six months ended Six months ended
June 30 2026 June 30 2025
Interest income 1181 216
Government subsidies 2064 4201
Other 1789 10907
503415324
(2) Other cash paid relevant to operating activities
Six months ended Six months ended
June 30 2026 June 30 2025
Professional services 103854 11037
Other 9039 12890
11289323927
(3) Other cash received relevant to investing activities
Six months ended Six months ended
June 302026 June 302025
Other 757 803
757803
(4) Other cash paid relevant to investing activities
Six months ended Six months ended
June 302026 June 30 2025
Loans 20000 -
20000-
(5) Other cash received relevant to financing activities
Six months ended Six months ended
June 30 2026 June 30 2025
Deposit for issuing bills payables 4500 1858
45001858
- 112 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
7. Notes to items in the cash flow statements - (cont'd)
)6( Other cash paid relevant to financing activities
Six months ended Six months ended
June 30 2026 June 30 2025
Deposit for issuing bills payables 12172 14246
1217214246
XV. Notes to major items in the Company's financial statements - (cont'd)
8. Supplementary information to cash flow statement
(1) Reconciliation of net profit to net cash flows generated from operating activities:
Six months ended June 30
20262025
Net profit 84773 130151
Add: Asset Impairment losses 2099 3362
Credit impairment losses 90 1084
Depreciation of fixed assets and investment property 87847 98116
Depreciation of-right-of use assets 565 395
Amortization of intangible assets 6153 6067
Gain (losses) on disposal of fixed assets intangible assets and other 28 (3587)
long-term assets
Gains from changes in fair value - (30714)
Financial expenses 60000 13298
Investment income (20301) (32445)
Decrease in deferred income tax assets 11489 21449
Decrease in inventory 39881 43633
Increase in accounts receivable from operating activities (317594) (212970)
Increase in payables from operating activities 119260 148263
Net cash flows generated from operating activities 74290 186102
(2) Net increase in cash and cash equivalents
Six months ended June 30
20262025
Closing balance of cash 138892 65500
Less: Opening balance of cash 58950 39173
Net increase in cash and cash equivalents 79942 26327
- 113 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Related parties and related parties transactions
(1) Information on parent Company
Registered
capital
Company Registered (Thousand Shareholding Percentage
name place Business nature RMB) percentage of voting rights
Production and sales
of agrochemicals
Syngenta Shanghai fertilizers and GM
Group China seeds 11182127 78.47% 78.47%
The ultimate controlling shareholder is Sinochem Holdings .
(2) Information on the subsidiaries of the Company
For information about the subsidiaries of the Company refer to Note VII.1.
(3) Transactions with related parties
a. Transactions of goods and services
Six months ended June 30
20262025
Summary of Purchase of goods/services Related Party Relationship
received:
Purchase of goods/services received Common control
under Sinochem
Holdings 19205 37764
Subsidiary 50175 45789
Purchase of fixed assets and other assets Common control
under Sinochem 15042 -
Holdings
Subsidiary 1327 -
Summary of Sales of goods:
Sale of goods Common control under
Sinochem Holdings 177 347
Subsidiary 721560 645933
- 114 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
b. Guarantees
The Company as the guarantor
Amount of Inception Maturity Guaranty
guaranteed date of date of completed
loan guaranty guaranty (Y/ N)
57705 01.12.2021 28.11.2027 N
Subsidiary 23951 01.01.2026 31.12.2026 N
20000 20.05.2026 19.05.2027 N
10885 28.01.2026 28.07.2026 N
9000 03.04.2023 10.11.2027 N
10000 12.01.2022 10.11.2027 N
3000 28.07.2023 10.11.2027 N
50000 10.04.2024 26.04.2027 N
28000 25.03.2025 24.03.2028 N
7000 11.08.2022 22.06.2028 N
25000 23.11.2022 22.06.2028 N
11000 28.10.2022 22.06.2027 N
3000 04.04.2023 22.06.2028 N
10000 31.08.2022 22.06.2028 N
1500 26.04.2023 05.05.2028 N
8500 30.01.2024 05.05.2028 N
27623 26.12.2025 14.07.2026 N
4894 27.01.2026 27.07.2026 N
13385 10.02.2026 10.08.2026 N
11699 16.03.2026 15.09.2026 N
9507 29.06.2026 29.12.2026 N
19685 15.03.2026 16.09.2026 N
- 115 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
b. Guarantees - (cont'd)
The Company as the guarantee receiver
Amount of Inception date Maturity date Guaranty
Guarantee provider guaranteed loan of guaranty of guaranty completed (Y / N)
Parent company 263000 21.04.2021 20/04/2028 Y
Parent company 67971 01.06.2021 31/05/2028 Y
As at 30 June 2026 all guarantees provided by the parent company of the Group to the Group have
been fully discharged. No guarantee fees were incurred for the six months ended 30 June 2026 (six
months ended 30 June 2025: guarantee fees paid by the Group to its parent company amounted to
RMB 197 thousand).c. Intercompany borrowings/lending
Related Borrowing/ Commencement Termination Balance at
party Lending amount date date year end Interest rate
Lending
Subsidiary 50000 2025.12 2028.11 50000 2.4%
Subsidiary 20000 2026.2 2028.11 20000 2.4%
d. Receivables from and payables to related parties (including loans)
Receivable Items
June 30 December 31
20262025
Expected Expected
Related Party Book credit Book credit
Items Relationship Balance losses Balance losses
Trade receivables Subsidiary 1882791 - 1563401 -
Other non-current
assets Subsidiary 70000 - 50000 -
Other receivables Subsidiary 23722 - 24109 -
Prepayments Subsidiary 1500 - - -
Prepayments Common control under
Sinochem Holding 2146 - 83 -
- 116 -ADAMALtd.
(Expressed in RMB '000)
Notes to the Financial Statements
XV. Notes to major items in the Company's financial statements - (cont'd)
9. Transactions and balances with related parties - (cont'd)
(3) Transactions with related parties - (cont'd)
d. Receivables from and payables to related parties (including loans) - (cont'd)
Payable Items
June 30 December 31
Items Related Party Relationship 2026 2025
Trade payables Common control under Sinochem
Holdings 195 4665
Other payables Subsidiary 546251 587644
Common control under Sinochem
Holdings 471 471
e. Other related party transactions
As at June 302026 the closing balance of bank deposit in SinoChem Finance Corporation was
117976 thousand RMB (31.12.25: 41343 thousand RMB) Interest income of bank deposit for the
year was 1204 thousand RMB (amount for six months ended June 2025 was 157 thousand RMB).- 117 -ADAMALtd. Semi-Annual Report 2026
Supplementary information
(Expressed in RMB '000)
1. Extraordinary Gain and Loss
Six months ended
June 30 2026
Disposal of non-current assets 306349
Government grants recognized through profit or loss 3940
Custodian fees earned from entrusted operation 1746
Recovery or reversal of expected credit losses which is assessed individually during
the years 27827
Other profit or loss that meets the definition of non-recurring profit or loss 17102
Other non-operating income or expenses other than the above 5533
Tax effect (10567)
351930
2. Return on net assets and earnings per share (“EPS”)
The information of Return on net assets and EPS is in accordance with the Preparation Rules for
Information Disclosure by Companies Offering Securities to the Public No. 9 – Calculation and
Disclosure of Return on net assets and Earnings per share (2010 Amendment) issued by China
Securities Regulatory Commission.Weighted average
rate of return on net Basic EPS Diluted EPS
Profit during the reporting period assets (RMB/share) (RMB/share)
Net loss attributable to ordinary
shareholders of the Company 2.46% 0.19 N/A
Net loss after deduction of extraordinary
gains/losses attributable to ordinary
shareholders of the Company 0.46% 0.03 N/A
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