StockCode:000553(200553) Stockabbreviation:ADAMAA(B) AnnouncementNo.2019-8
ADAMALtd.
SupplementaryAnnouncementonthe2018PerformanceEstimation
TheCompanyandallthedirectorsconfirmthattheinformationdisclosedistrue,accurate,completeandwithnofalserecording,misleadingstatementormaterialomission.
Inthefourthquarter,asdescribedintheAnnouncementofFullYear2018PerformanceEstimationof24January2019(AnnouncementNumber2019-7),onanadjustedbasistheCompanyisexpectingtoreportasignificantincreaseinitsNetIncome,duetothestronggrowthinrevenuesandrobustoperatingperformanceofthebusiness.
Onareportedbasis,includingtheimpactofcertainonetimeornon-cash/non-operationalitems,theCompany’sNetIncomeinthefourthquarterisexpectedtobesomewhatlowerthanthatofQ42017.
TheAdjustedNetIncomepresentstoinvestorswhattheCompanybelievesisamoreusefulviewofthetrueeconomicperformanceofthebusinessonanongoingbasis.Itexcludesitemsthatareofaone-timeornon-cash/non-operationalnaturethatdonotimpacttheongoingperformanceofthebusiness.TheCompanybelievesthatexcludingtheeffectsoftheseitemsfromitsoperatingresultsallowsmanagementandinvestorstoeffectivelycomparethetrueunderlyingfinancialperformanceofitsbusinessfromperiodtoperiodandagainstitspeers.Therefore,intheabovestatedannouncementtheCompanynotonlyprovidedthereportednetprofit,butalsoprovidedtheAdjustedNetIncomeforthereferenceoftheinvestors.
SpecificAdjustmentsperformedto2018NetIncome:
Legacyamortizationofthe2011PPAfortheacquisitionofAdamaAgricultural
SolutionsLtd.byChemChina:
o TheacquisitionbyADAMALtd.ofAdamaAgriculturalSolutionsLtd.
(“Solutions”)in2017istreatedfromanaccountingperspectiveasa“Business
CombinationUnderCommonControl”.
o TheeffectofsuchaccountingtreatmentisthatADAMALtd.hasinheritedthe
historical“legacy”amortizationchargethatChemChinapreviouslywasincurring
inrespectofitsacquisitionofSolutionsin2011.
AmortizationofassetstransferredfromSyngenta,thevalueofwhichwaswritten-up,
relatedtothe2017ChemChinaacquisitionofSyngenta:
o Inthefirstquarterof2018,theCompanyearnedaone-timeprofitonthe
divestitureofseveralcropprotectionproductsinEuropeinconnectionwiththe
priorapprovalbytheEUCommissionoftheacquisitionofSyngentaby
ChemChina.Theproceedsofthisdivestiture,netoftaxesandtransaction
expenses,werepaidtoSyngentainreturnforthetransferofaportfolioof
productsinEuropeofsimilarnatureandeconomicvalue.
o SincetheproductsacquiredfromSyngentaareofthesamenatureandwiththe
sameneteconomicvalueasthosedivested,andsincetheCompanyexcludesthe
one-timegainthatitmadeonthedivestedproducts,theadditionalamortization
chargeincurredduetothewrite-upoftheacquiredassetsshouldbeexcludedin
ordertopresentatrueviewofDivestmentandTransfertransactions,whichhad
nonetimpactontheunderlyingeconomicperformanceoftheCompany.
Sanondafacilityrelocationandrelatednon-cashitems:
o TheCompanywillberequiredtorelocateitsproductionassetslocatedatthe
SanondafacilityinJingzhouCityinthecomingyears.Sincesomeoftheolder
productionassetsmaynotbeabletoberelocated,someoftheseassetswhichare
nolongeroperationalarebeingwrittenoff(orimpaired),whileforotherstheir
economiclifehasbeenshortenedandthereforewillbedepreciatedoverashorter
period.
o Sincetheseareolderassetsthatwereacquiredmanyyearsagoandwillbe
replacedbynewerproductionfacilitiesatthenewsite,andsincetheongoing
operationsofthebusinesswillnotbeimpacted,thereforetheCompanyadjusts
fortheimpactoftheimpairmentandaccelerateddepreciationoftheseassets.
Recordingofhistoricaltaxexpenses,themajoritythereofalreadyprovisioned,
resultingfromthefinalizationoftaxassessmentsrelatingtoperiodsconcludingin
2016:
o Sincethesetaxassessmentswereinrespectofhistoricalperiodsandnotthe
currentyearandnotimpactingtheongoingandfutureperformanceofthe
business,theCompanyadjustsits2018netincomeforthiseffect.
ByorderoftheBoard
ADAMALtd.
January25,2019
