--------------------------------------  --------  --------  --------  -------- 
 
Free Cash Flow                               179     (276)     1,276   (1,849) 
--------------------------------------  --------  --------  --------  -------- 
Numbers may not sum due to rounding 
 

Notes to Abridged Consolidated Financial Statements

Note 1: Basis of preparation

Basis of presentation and accounting policies: The abridged consolidated financial statements for the quarters ended September 30, 2024 and 2023 incorporate the financial statements of ADAMA Ltd. and of all of its subsidiaries (the "Company"), including Adama Agricultural Solutions Ltd. ("Solutions") and its subsidiaries.

The Company has adopted the Accounting Standards for Business Enterprises $(ASBE.UK)$ issued by the Ministry of Finance (the "MoF") and the implementation guidance, interpretations and other relevant provisions issued or revised subsequently by the MoF (collectively referred to as "ASBE").

The abridged consolidated financial statements contained in this release are presented in both Chinese Renminbi (RMB), as the Company's shares are traded on the Shenzhen Stock Exchange, as well as in United States dollars ($) as this is the major currency in which the Company's business is conducted. For the purposes of this release, a customary convenience translation has been used for the translation from RMB to US dollars, with Income Statement and Cash Flow items being translated using the quarterly average exchange rate, and Balance Sheet items being translated using the exchange rate at the end of the period.

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated.

Note 2: Abridged Financial Statements

For ease of use, the financial statements shown in this release have been abridged as follows:

Abridged Consolidated Income Statement:

   -- "Gross profit" in this release is revenue less costs of goods sold, taxes 
      and surcharges, inventory impairment and other idleness charges (in 
      addition to those already included in costs of goods sold); part of the 
      idleness charges is removed in the Adjusted financial statements 
 
   -- "Other operating expenses" includes impairment losses (not including 
      inventory impairment); gain (loss) from disposal of assets and 
      non-operating income and expenses 
 
   -- "Operating expenses" in this release differ from those in the formally 
      reported financial statements in that certain transportation costs have 
      been reclassified from COGS to Operating Expenses. 
 
   -- "Financial expenses" includes net financing expenses and gains/losses 
      from changes in fair value. 

Abridged Consolidated Balance Sheet:

   -- "Other current assets, receivables and prepaid expenses" includes 
      financial assets held for trading; financial assets in respect of 
      derivatives; prepayments; other receivables; and other current assets 
 
   -- "Fixed assets, net" includes fixed assets and construction in progress 
 
   -- "Intangible assets, net" includes intangible assets and goodwill 
 
   -- "Other non-current assets" includes other equity investments; long-term 
      equity investments; long-term receivables; investment property; and other 
      non-current assets 
 
   -- "Loans and credit from banks and other lenders" includes short-term loans 
      and non-current liabilities due within one year 
 
   -- "Other current liabilities" includes financial liabilities in respect of 
      derivatives; payables for employee benefits, taxes, interest, dividends 
      and others; advances from customers and other current liabilities 
 
   -- "Other long-term liabilities" includes long-term payables, provisions, 
      deferred income and other non-current liabilities 

Income Statement Adjustments

 
                                        Q3 2024   Q3 2023   Q3 2024   Q3 2023 
                                         USD (m)   USD (m)   RMB (m)   RMB (m) 
--------------------------------------  --------  --------  --------  -------- 
Reported Net Loss                          (133)     (112)     (943)     (800) 
--------------------------------------  --------  --------  --------  -------- 
 Adjustments to COGS & Operating 
 Expenses: 
-------------------------------------- 
1. Amortization of acquisition-related 
 PPA and other acquisition related 
 costs                                         6         4        42        30 
2. Amortization of Transfer assets 
 received and written-up due to 2017 
  ChemChina-Syngenta transaction 
 (non-cash)                                    5         5        37        34 
3. Accelerated depreciation                    1         1        10         6 
4. Incentive plans                             -       (2)         -      (16) 
5. ASBEs classifications COGS impact        (27)      (12)     (195)      (84) 
6. ASBEs classifications OPEX impact          27        12       195        84 
7. Measures to improve efficiencies            8         -        59         - 
8. Provisions such as legal claims, 
 registration impairment and update of 
 registration depreciation                    19         -       139         - 
9. Soil and water cleanup and 
 remediation                                   6         -        43         - 
Total Adjustments to Operating Income 
 $(EBIT)$                                       46         7       330        53 
Total Adjustments to EBITDA                   24       (2)       173      (14) 
Adjustments to Financing Expenses: 
-------------------------------------- 
10. Non-cash adjustment related to put 
 option revaluations                           3      (11)        21      (77) 
11. Other financing expenses                   1         -        10         - 
 Adjustments to Taxes: 
-------------------------------------- 
Taxes impact                                   4       (1)        27       (5) 
Total adjustments to Net loss                 55       (4)       388      (28) 
--------------------------------------  --------  --------  --------  -------- 
Adjusted Net Loss                           (78)     (115)     (555)     (829) 
--------------------------------------  --------  --------  --------  -------- 
 
 
                                        9M 2024   9M 2023   9M 2024   9M 2023 
                                         USD (m)   USD (m)   RMB (m)   RMB (m) 
--------------------------------------  --------  --------  --------  -------- 
Reported Net loss                          (259)     (146)   (1,838)   (1,042) 
--------------------------------------  --------  --------  --------  -------- 
 Adjustments to COGS & Operating 
 Expenses: 
-------------------------------------- 
1. Amortization of acquisition-related 
 PPA and other acquisition related 
 costs                                        14        13        97        88 
2. Amortization of Transfer assets 
 received and written-up due to 2017 
 ChemChina-Syngenta transaction 
 (non-cash)                                   15        16       109       109 
3. Accelerated depreciation                    3         2        22        16 
4. Incentive plans                             -       (7)         -      (48) 
5. ASBEs classifications COGS impact        (87)      (65)     (617)     (452) 
6. ASBEs classifications OPEX impact          87        65       617       452 
7. Measures to improve efficiencies           23         -       166         - 
8. Provisions such as legal claims, 
 registration impairment and update of 
 registration depreciation                    63         -       451         - 
9. Soil and water cleanup and 
 remediation                                  17         -       121         - 
Total Adjustments to Operating Income 
 (EBIT)                                      136        24       965       165 
Total Adjustments to EBITDA                   80       (6)       567      (41) 
Adjustments to Financing Expenses: 
-------------------------------------- 
10. Non-cash adjustment related to put 
 options revaluation                        (30)      (11)     (212)      (77) 
11. Other financing expenses                  10         -        69         - 
 Adjustments to Taxes: 
-------------------------------------- 
Taxes impact                                 (6)       (2)      (41)      (15) 
Total adjustments to Net loss                110        11       782        73 
--------------------------------------  --------  --------  --------  -------- 
Adjusted Net loss                          (149)     (135)   (1,057)     (969) 
--------------------------------------  --------  --------  --------  -------- 
 

Notes:

1. Amortization of acquisition-related PPA and other acquisition related costs:

a. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash): Under ASBE, since the third combined reporting for Q3 2017, the Company has inherited the historical "legacy" amortization charge that ChemChina previously was incurring in respect of its acquisition of Solutions in 2011. This amortization is done in a linear manner on a quarterly basis, most of which will have been completed by the end of 2020.

b. Amortization of acquisition-related PPA (non-cash) and other acquisition-related costs: Related mainly to the non-cash amortization of intangible assets created as part of the Purchase Price Allocation $(PPA)$ on acquisitions, with no impact on the ongoing performance of the companies acquired, as well as other M&A-related costs.

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October 30, 2024 05:22 ET (09:22 GMT)