安道麦A(000553)公司公告安道麦B：2021年年度报告（英文版）新浪财经

ADAMALtd.isagloballeaderincropprotection,providingsolutionstofarmersacrosstheworldtocombatweeds,insectsanddisease.ADAMAhasoneofthewidestandmostdiverseportfoliosofactiveingredientsintheworld,state-of-theartR&D,manufacturingandformulationfacilities,togetherwithaculturethatempowersourpeopleinmarketsaroundtheworldtolistentofarmersandideatefromthefield.ThisuniquelypositionsADAMAtoofferavastarrayofdistinctivemixtures,formulationsandhigh-qualitydifferentiatedproducts,deliveringsolutionsthatmeetlocalfarmerandcustomerneedsinover100countriesglobally.Forfurtherimportantadditionalinformationanddetails,pleaserefertotheAnnex.

March2022

SectionI-ImportantNotice,TableofContentsandDefinitions

TheCompany’sBoardofDirectors,BoardofSupervisors,directors,supervisorsandseniormanagersconfirmthatthecontentoftheReportistrue,accurateandcompleteandcontainsnofalsestatements,misleadingpresentationsormaterialomissions,andassumejointandseverallegalliabilityarisingtherefrom.

IgnacioDominguez,thepersonleadingtheCompany(PresidentandChiefExecutiveOfficer)aswellasitslegalrepresentativeandthepersonleadingtheaccountingfunction(actingChiefFinancialOfficer),herebyassertandconfirmthetruthfulness,accuracyandcompletenessoftheFinancialReport.

AlloftheCompany’sdirectorsattendedtheboardmeetingforthereviewofthisReport.

TheforwardlookinginformationdescribedintheReport,suchasfutureplans,developmentstrategyetc.,doesnotconstitute,inanymannerwhatsoever,asubstantialcommitmentoftheCompanytoinvestors.Investorsandotherrelevantpeoplearecautionedtobesufficientlymindfulofinvestmentrisksaswellasthedifferencebetweenplans,forecastsandcommitments.

TheCompanyhasdescribeditsfuturedevelopmentstrategies,workplanfor2022andpossiblerisksin“VIII.

OutlookoftheCompany’sfuturedevelopment”inSectionIII.ThemajorrisksoftheCompanyinclude,amongothers,exchangeratefluctuations;exposuretointerestrate,IsraelCPIandNISexchangeratefluctuations;fluctuationsinrawmaterialinputsandprices,andinsales.Investorsandotherrelevantpeoplearecautionedtobesufficientlymindfulofinvestmentrisks.Forthecomplete“Riskfactorsandcountermeasures”oftheCompany,pleaseseetherelevantsectionbelow.

Thepre-planofthedividenddistributionapprovedbythemeetingoftheBoardofDirectorsonMarch29,2022referstothetotaloutstanding2,329,811,766sharesoftheCompanyonFebruary28,2022asthebasisforthedistributionascashdividendofRMB0.08(beforetax)per10shares,toalltheshareholdersoftheCompany.Noshareswillbedistributedassharedividend,andnoreservewillbetransferredtoequitycapital.

ThisReportanditsabstracthavebeenpreparedinbothChineseandEnglish.Shouldtherebeanydiscrepanciesbetweenthetwoversions,theChineseversionshallprevail.

TableofContents

SectionI-ImportantNotice,TableofContentsandDefinitions......2

SectionII-CorporateProfileandFinancialResults......6

SectionIII-PerformanceDiscussionandAnalysis......12

SectionIV-CorporateGovernance......64

SectionV-EnvironmentandSocialResponsibilities......89

SectionVI-SignificantEvents......96

SectionVII-ChangeinShares&Shareholders......136

SectionVIII-Preferredstock......149

SectionIX-CorporateBonds......150

SectionX-FinancialReport......151

ContentsofDocumentsAvailableforReference

(I)DulysignedFinancialStatementsbytheLegalRepresentativeandAccountingPrincipalaswellasHeadoftheAccountingOrgan.(II)DulysignedAuditor’sReportandsealsthecertifiedpublicaccountants.(II)OriginalsofallCompany’sdocumentspreviouslydisclosedinmediadesignatedbytheCSRCaswellastheoriginalsofallthepublicnotices,weredepositedintheCompany’soffice.

DefinitionsInthisReport,thefollowingtermshavethemeaningappearingalongsidethem,unlessotherwisespecified:

Company,theCompany

AdamaSolutions

Anpon,ADAMAAnpon

BoardofDirectors/Board

BoardofSupervisors

ArticlesofAssociation/AOA

Group,theGroup,ADAMA

ChemChina

ChemChina-SyngentaTransaction

CNAC

CSRC

SZSE

SASAC

SyngentaGroup

SinochemHoldings

SinochemGroup

Report

FinancialReport

ReportingPeriod,thisPeriod,CurrentYear

CompanyLaw

SecuritiesLaw

ListingRules

SectionII-CorporateProfileandFinancialResults

I.Corporateinformation

II.Contactinformation

III.Informationdisclosure

IV.Companyregistrationandalteration

thecontrollingshareholderoftheCompanywaschangedfromJingzhouSanondaHoldingsCo.,Ltd.toCNAC.InJune,2020,CNACtransferred1,810,883,039sharesoftheCompanyheldbyittoSyngentaGroupfreeofchargeandcompletedtheregistrationproceduresfortheabovetransferredshares.Afterthecompletionofthesharetransfer,SyngentaGrouphasbecomethedirectcontrollingshareholderoftheCompany.Duringthereportingperiod,thecontrollingshareholderoftheCompanydidnotchange.

V.OtherinformationTheAccountingFirmEngagedbytheCompany

SponsorengagedbytheCompanytocontinuouslyperformitssupervisoryfunctionduringtheReportingPeriod

□Applicable√Notapplicable

FinancialadvisorengagedbytheCompanytocontinuouslyperformitssupervisoryfunctionduringtheReportingPeriod

VI.MainaccountingandfinancialresultsWhethertheCompanyperformedanyretroactiveadjustmentstoorrestatementofitsaccountingdata

□Yes√No

Thenetincomebeforeorafterdeductionofnon-recurringprofitorlossforthelastthreefiscalyearsisnegativenomatterwhichamountislessandtheauditreportforthemostrecentyearshowsthatthereisuncertaintyaboutthecompany'sabilitytocontinueitsoperation.

Thelessamountofthenetincomebeforeandafterextraordinarygainorlossisnegative

VII.Differencesinaccountingdataunderdomesticandforeignaccounting

standards

1.DifferencesinthenetprofitandthenetassetsdisclosedinthefinancialreportspreparedunderChineseandinternationalaccountingstandards

NoneduringtheReportingPeriod.

2.DifferencesinthenetprofitandthenetassetsdisclosedinthefinancialreportspreparedunderChineseandforeignaccountingstandards

3.Explanationonthedifferencesinaccountingdata

VIII.MainFinancialresultsbyquarter

Unit:RMB’000

Anymaterialdifferencesbetweenthefinancialindicatorsaboveortheirsummationsandthosewhichhavebeendisclosedinquarterlyorsemi-annualreports

IX.Non-Recurringprofit/loss

√Applicable□Notapplicable

Detailsofotherprofitandlossitemsthatmeetthedefinitionofnon-recurringprofitorloss.

MainlyprovisionforearlyretirementplanofemployeesattheCompany’sIsraelimanufacturingfacilitiesasexplainedaboveinthenote.

Explanationofnon-recurringitemsofprofitorlosslistedin"ExplanatoryAnnouncementNo.1onInformationDisclosureforCompaniesOfferingtheirSecuritiestothePublic-Non-RecurringProfitandLoss"reclassifiedasrecurringitemsofprofitorloss

NosuchcasesduringtheReportingPeriod.

SectionIII-PerformanceDiscussionandAnalysisI.IndustryinwhichtheCompanyoperatesduringthereportingperiod

Forfurtherimportantadditionalinformationanddetails,pleaserefertotheAnnex.Procurementmodelofmajorrawmaterials

*PricesinRMBarebasedonaverageexchangeratesfortherelevantperiod.

Reasonsforsignificantchangesinrawmaterialpricescomparedwiththepreviousreportingperiod

WhethertheCompanyspendsmorethan30%ofitstotalproductioncostonenergysupply

Reasonsthatthereismaterialchangetothemainenergytypesduringthereportingperiod

Productiontechnologiesofmainproducts

Capacityofmainproducts

CapacityfiguresintheabovetableisthesynthesiscapacityoftheGroup.Inaddition,theGrouphasapproximately590,000tonsofformulationcapacityglobally.

Productsproducedinmajorchemicalindustryparks

EIAapprovalstatusthatisbeingappliedornewlyobtainedduringthereportingperiod

Duringthereportingperiod,theCompanyreceivedthefollowingEIAapprovals:

“ReviewOpinionsontheReconstructionandExpansionofWastewaterDischargeattheEstuary”.“ApprovalofAmendmenttoEnvironmentalImpactReportoftheInsecticideRelocationandUpgradingProject”.“ReplytotheEnvironmentalImpactReportofSaltWellSurveyandDrillingProject”ADAMAAnpon,thesubsidiaryoftheCompany,receivedthefollowingEIAapprovals:

“ReplytotheEnvironmentalImpactReportofExpansionofUtilitiesandAuxiliaryFacilities”“ReplyontheEnvironmentalImpactReportoftheRelocationandUpgradingof1000t/aPymetrozine(convertedinto

100%)”ADAMAHuifeng,thesubsidiaryoftheCompany,receivedthefollowingEIAapprovals:

ReplytotheEnvironmentalImpactReportsofUpgradingofFlutriafolAI,EpoxiconazoleAI,GlufosinateAIand2,4-D

isooctylesterAI.

Abnormalproductionsuspensionduringthereportingperiod

Relevantapprovals,permitsandqualifications

Companyfocusedonoilprocessingandtrade

Companyfocusedonfertilizer

Companyfocusedonagrochemicals

Taxpolicies-TheGroupdevelops,purchases,manufacturesandmarketsitsproductsthroughmanycompaniesworldwide,andassuchoperatesthroughapproximately60subsidiaries.TothebestoftheGroup’sknowledge,itisinmaterialcompliancewithapplicabletaxlaws.

Companyfocusedonchlorinealkaliandcausticsodabusiness

Companyfocusedonchemicalfiberindustry

Companyfocusedonplasticandrubbermaking

III.Corecompetitivenessanalysis

Asaleadingoff-patentcropprotectionproviderintheglobalcropprotectionmarket,theGroupbelievesthatthefollowingstrengthsprovideitwithsustainablecompetitiveadvantagesandthefoundationtocapitalizeonfavorableunderlyingagricultureandcropprotectionindustrytrends:

Off-patentIndustryLeader.TheGroup’ssuccessasoneoftheworld’sleadingoff-patentcompanieshasgivenit

extensivemarketpresence.TheGroupenjoysbroadgeographicdiversificationbysellinginover100countrieswithabalancedregionalsplit,asevidencedbyits2021revenuebreakdownofapproximately22%inEurope,27%inLatinAmerica,19%inNorthAmerica,19%inAsiaPacific,and14%inIndia,theMiddleEastandAfrica.ThisregionalbalanceenhancestheGroup’sgrowthprofileandprovidesdiversificationacrossdifferentcountries,climates,cropsandplantingseasons.TheGrouphasaparticularlystrongpresenceinemergingmarkets,wheregrowthisexpectedtooutpacedevelopedmarkets,andfromwhichitderivedmorethanhalfofits2021sales.UniquePositioningandAccesstoChina.TheGroupbelievesthatthefoundationprovidedbytheintegrationof

withintheSyngentaGrouptocreatevalueforitselfandtheSyngentaGroupthroughincreasingtheGroup’ssales,reducingcostsandimprovingprocesses.Sucheffortsincludevariouscollaborationinitiativesforthesaleanddistributionoffinishedproducts,rawmaterialssupplyandprocurement,logisticsandsupplychain,aswellasintheR&Dandproducts’registrationfields.VerticallyIntegratedBusinesswithGlobalScale.TheGroupisoneofthefewoff-patentcropprotectionproviders

productsandsolutionsthataretailoredtothespecificneedsofeachgeographicregionandeachtypeofcrop.TheGrouputilizesanintegrated,solutions-basedapproachtoitsentireofferinginordertomeettheuniquedemandsofitsglobalcustomerbase.TheGroupstrivestoofferfarmersabrandedportfoliothatiscomprisedofbothhigh-valuedifferentiatedproductsaswellashigh-volumeoff-patentproducts,alongsideanincreasingnumberofuniquemixturesandformulationsandnovel,innovativeproductsandservices,aimedtoprovidesolutionstofarmersinnearlyeveryregion,andforallmajorcrops.TheGroup’sextensiveportfolioiscomposedofover200centrallymanagedAIsandover1,475mixturesandformulations.

ExperiencedandEmpoweredManagementTeam.Withadeepunderstandingofthecropprotectionindustryand

firmfocusonsustainingtheGroup’sleadershipandfinancialstrength,itsmanagementteamisacohesiveandintegratedteamthathastheknowledge,skillsandexperiencerequiredtoguidetheGrouponitspathtoachievingitsambitionofgloballeadership.TheGroupbelievesinempoweringitsteamsandcreatingleadersfromitsstrongestperformers,withtheresultthatitsmanagementteamiscomposedofthepeoplewhohavesuccessfullymanageditsbusiness,anddevelopedandexecuteditsstrategyoverthelastfewyears,continuingitstrackrecordofconsistent,profitablegrowth.

IV.MainbusinessanalysisI.OverviewForgeneralcropprotectionmarketenvironment,pleaserefertoI.MainbusinessoftheCompanyduringtheReportingPeriodofSectionIIIabove.

Note:SincethefunctionalcurrencyofmainoverseassubsidiariesistheUSD,andtheCompany’smanagementreviewoftheCompany’sperformanceisbasedontheUSDresults,followingexplanationsandanalysisarebasedonUSD-denominatednumbers.

2.Revenuesandcosts

(1)Operatingrevenues

Unit:USD’000

,aleadingtoolforthecontrolofstemborerinrice,aswellasSouthAfrica,wheretheCompanycontinuestobenefitfromfavorablecroppingconditionsandnewproductlaunches.InUSdollarterms,salesintheregiongrewby20.4%inthequarterandby13.7%inthefullyear,comparedtothecorrespondingperiodslastyear,reflectingtheimpactofthesomewhatweakercurrenciesinthequartercontrastedwiththestrengtheningofregionalcurrenciesoverthefullyearperiod,mostnotablytheIsraeliShekel.

(2)Listoftheindustries,products,regionsanddistributionmodelsexceed10%oftheoperatingrevenuesoroperatingprofitsoftheCompany

IntheeventthatthestatisticalmanneroftheCompany'smainbusinessdataisadjustedduringthereportingperiod,theCompany'smainbusinessdataforthemostrecentyearadjustedtothemannerattheendofthereportingperiod

WhethertheCompanygeneratesmorethan10%revenueornetprofitfromitsoverseasbusinessagainsttheauditedannualrevenueandnetprofitforthemostrecentaccountingyear

(3)WhethertheCompany’srevenuefromsaleofgoodsexceedtherevenuefromservices

√Yes□No

Reasonsforanyover-30%YoYmovementofthedataabove:

(4)ExecutionofthesignificantsalesandprocurementcontractssignedbytheCompanyuptotheReportingPeriod

(5)CompositionofOperatingCosts

Categoryoftheindustries

Explanations:

Excludingtheimpactoftheabovementioned,largelynon-recurringandrelocation-relatedcosts,overthefull-yearperiod,theincreasedgrossprofitwasdrivenbythehigherprices,atrendwhichstartedinthethirdquarterandacceleratedintothefourthquarter,alongsidethestrongvolumeincreasesseenineachofthefourquartersoftheyear,aswellasanetpositiveimpactfromportfoliomix,andgenerallyfavorablecurrencymovements.Thesecombinedtomorethanoffsethigherlogistics,procurementandproductioncosts,whichneverthelessresultedinasomewhatloweradjustedgrossmarginoverthefullyearperiod.Inaddition,pleasenotethatasaresultofrecentchangesintheASBEguidelines,certainitemsin2021(specificallycertaintransportationcostsandcertainidlenesscharges)havebeenreclassifiedfromOperatingExpensestoCOGS.

(6)HastheconsolidatedscopechangedduringtheReportingPeriod

Duringthereportingperiod,theGroupacquired51%oftheoutstandingsharesofAdamaHuifeng(Jiangsu)Co.,Ltd-

(7)Listofsignificantchangesoradjustmentoftheindustries,productsorservicesoftheCompanyduringthereportingperiod

(8)Listofmajortradedebtorsandmajorsuppliers

ListofthemajortradedebtorsoftheCompany

InformationoftheTop5Customers

Notesofothersituationofthemajorcustomers

ListofthemajorsuppliersoftheCompany

InformationoftheTop5Suppliers

Notesoftheothersituationofthemajorsuppliers

3.Expenses

Explanationsforthechangeofaboveexpenses:

Note:AsnotedaboveandsincefunctionalcurrencyofmainoverseassubsidiariesistheUSD,andtheCompany’smanagementreviewoftheCompany’sperformanceisbasedontheUSDresults,followingexplanationsandanalysisarebasedonUSD-denominatednumbers.

(1)SalesandMarketingExpenses

PleasealsonotethatasaresultofrecentchangesintheASBEguidelines,mosttransportationcostshavebeenreclassifiedfromOperatingExpensestoCOGS,whichoffsetthelevelofsalesandmarketingexpenses.Inrecentyears,theCompanyconductedvariouscorporatedevelopmentactivities,includingmergersandacquisitions,whichresultedintheinclusionwithinitssalesandmarketingexpensesofvariousnon-operational,mostlynon-cashchargesaffectingtheCompany’sreportednumbers,mainlyasfollows:

RMB149million($23million)in2021(2020:RMB211million($31million))innon-cashamortizationchargesin

respectofTransferassetsreceivedandwritten-uprelatedtothe2017ChemChina-Syngentaacquisition.TheproceedsfromtheDivestmentofcropprotectionproductsinconnectionwiththeapprovalbytheEUCommissionoftheacquisitionofSyngentabyChemChina,netoftaxesandtransactionexpenses,werepaidtoSyngentain

returnforthetransferofaportfolioofproductsinEuropeofsimilarnatureandeconomicvalue.SincetheproductsacquiredfromSyngentaareofthesamenature,andwiththesameneteconomicvalueasthosedivested,theDivestmentandTransfertransactionshadnonetimpactontheunderlyingeconomicperformanceoftheCompany.Theseadditionalamortizationchargeswillcontinueuntil2032butatareducingrate,yetwillstillbeatameaningfulleveluntil2028;RMB86million($13million)in2021(2020:RMB72million($11million))inchargesrelatedmainlytothenon-cash

amortizationofintangibleassetscreatedaspartofthePurchasePriceAllocation(PPA)onacquisitions,withnoimpactontheongoingperformanceofthecompaniesacquired,aswellasotherM&A-relatedcosts.Excludingtheabovementionednon-operationalcharges,thelevelofsellingandmarketingexpensesreflectedthestronggrowthofthebusiness,theadditionalexpensesofthenewlyacquiredcompanies,generallystrongerglobalcurrenciesagainsttheUSdollar,andthegenerallyinflationaryenvironmentbeingseengloballyinrecentquarters.PleasealsonotethatasaresultofrecentchangesintheASBEguidelines,mosttransportationcostshavebeenreclassifiedfromOperatingExpensestoCOGS,whichpartiallyoffsettheincrease.

(2)GeneralandAdministrativeExpenses

TheCompanycontinuestomaintainstrongoperatingcostdiscipline.Nevertheless,thehighergeneralandadministrativeexpensesareaffectedbytheadditionalexpensesofthenewlyacquiredcompanies,generallystrongerglobalcurrenciesagainsttheUSdollar,andthegenerallyinflationaryenvironmentbeingseengloballyinrecentquarters.Inaddition,inthefullyear,alongsidethemanybenefitstheCompanyenjoysfromthecollaborationwithothercompaniesintheSyngentaGroup,mostnotablyincommercialcross-salesaswellasintheareasofprocurementandoperations,ADAMArecordedcertainrelatedexpenses.

(3)R&DExpenses

(4)FinancialExpenses:

“FinancialExpenses”alonemainlyreflectinterestpaymentsoncorporatebondsandbankloansaswellasforeignexchangegains/lossesonthebondsandothermonetaryassetsandliabilitiesbeforetheCompanycarriesoutanyhedging.TheimpactofFinancialExpenses(beforehedging)isRMB1,939million($301million)for2021comparedwithRMB1,847million($269million)for2020.Giventheglobalnatureofitsoperationalactivitiesandthecompositionofitsassetsandliabilities,theCompany,intheordinarycourseofitsbusiness,usesforeigncurrencyderivatives(forwardsandoptions)tohedgethecashflowrisksassociatedwithexistingmonetaryassetsandliabilitiesthatmaybeaffectedbyexchangeratefluctuations.Netgains/lossesfromhedgingofthosepositions,arerecordedin“Gains/LossesfromChangesinFairValue”,andarethentransferred

to“InvestmentIncome”uponrealization.ThecombinedimpactofGains/LossesfromChangesinFairValueandInvestmentIncomeisanetgainofRMB602million($94million)in2021comparedwithanetgainRMB681million($100million)in2020.Inaddition,InvestmentIncomealsomainlyincludesanamountofRMB6million($1million)inrespectofequityaccountedinvesteesin2021comparedwithRMB16million($2million)andRMB59million($9million)capitalgainfromgainingcontroloveranequityinvesteein2020,bringingthetotalGains/LossesfromChangesinFairValueandInvestmentIncometoRMB608million($95million)in2021comparedwithRMB747million($110million)in2020.

TheaggregateofFinancialExpenses,Gains/LossesfromChangesinFairValueandInvestmentIncome(hereinafteras“TotalNetFinancialExpensesandInvestmentIncome”),whichmorecomprehensivelyreflectsthefinancialexpensesoftheCompanyinsupportingitsmainbusinessandprotectingitsmonetaryassets/liabilities,amountstoRMB1,337million($206million)in2021comparedwithRMB1,166million($169million)in2020.ThehigherTotalNetFinancialExpensesandInvestmentIncomeinthefullyearperiodweremainlydrivenbytheneteffectoftheincreaseintheIsraeliCPIontheILS-denominated,CPI-linkedbonds,andhighernon-cashchargesrelatedtoputoptionsinrespectofminorityinterests.ItalsoreflectincreasedhedgingcostsontheBRL,whichweresomewhatmitigatedbythebenefitfromhedgesinrespectoftheRMB.

(5)IncomeTaxexpenses:

ThesignificantlyhighertaxexpensesoverthefullyearperiodreflectstheincurringofhighertaxesbytheCompany'shigh-growthsellingentitiesinend-markets.TheywerepartiallymitigatedbytherelativelylowerweakeningoftheBRLduring2021ascomparedtoitsmoresignificantweakeningduring2020,whichthenresultedinrelativelyhigherBRL-relatedtaxexpensesduring2020.

4.R&DInvestment

R&DPersonnel

Note:Thefiguresunder“CompositionofEducationalBackground”and“CompositionofAge”representthoseoftheCompanyandthedomesticsubsidiariesheldbyitanddonotcovertheGroup’soverseasR&Demployees.

R&DInvestmentoftheCompany

ReasonsforandeffectsofsignificantchangestothecompositionoftheCompany'sR&Dpersonnel

ReasonofnotablechangesoverthelastyearintheratiooftotalR&Dinvestmentamounttooperatingincome

ReasonofnotablechangeintheratioofR&Dinvestmentcapitalizationanditsreasonableexplanation

5.Cashflow

NotesofthemajoreffectsontheYoYsignificantchangesoccurredofthedataabove

Notestothereasonofthesignificantdifferencesbetweenthenetcashflowfromtheoperatingactivitiesandthenetprofitsof2021oftheCompanyduringtheReportingPeriod

Pleaserefertothenotesprovidedaboveunderthisitem.

II.Analysisofthenon-corebusiness

III.ListandAnalysisoftheassetsandliabilities

1.Listofsignificantchangesofassets

2.Mainoverseasassets

3.Assetsandliabilitiesmeasuredatfairvalue

SignificantchangesinthemeasurementattributesofthemainassetsintheReportingPeriod

4.Restriction/limitationonassetrights

AttheendoftheReportingPeriod,restrictedassetsincludingCompany’sbankbalanceofRMB59,355,000ascashdepositforbillsreceivable;andothernon-currentassetsofRMB122,849,000asdepositforassetsecuritizationandlegalsuits.IV.ListandAnalysisoftheinvestment

1.Overallcondition

2.ListofthesignificantequityinvestmentduringtheReportingPeriod

Note:TheinvestmentamountinthetableistheamountactuallypaidforADAMAHuifengbytheendofthereportingperiod.

3.Listofthesignificantnon-equityinvestmentsexecutedduringtheReportingPeriod

4.Investmentonthefinancialassets

(1)Listinvestmentsinsecurities

NosuchinvestmentswereexecutedduringtheReportingPeriod.

(2)Investmentinderivativefinancialinstruments

5.Useofraisedfunds

(1)OverallSituationofUseoftheFundsRaised

RMB’0000

of51%equitystakeinAdamaHuifeng(Shanghai)AgriculturalTechnologyCo.,Ltd(formername:ShanghaiDibaiPlantProtectionCo.,LTD.,hereinafter:“AdamaShanghai”)and51%equitystakeinAdamaHuifeng(Jiangsu)Co.,Ltd(formername:JiangsuKelinongAgrochemicalCo.Ltd,hereinafter:“AdamaHuifeng”)fromJiangsuHuifengAgrochemicalCo.,Ltd.(“JiangsuHuifeng”).Thisproposalhadbeenapprovedbythe4thInterimShareholdersMeetingon16November,2020.

(2)TheStatusofDesignatedProjectsofRaisedFunds

Note1:TheCompanyintendstoraisefundsofnomorethan198,291RMB’0000inthesupportingfinanceprogram,whiletheactualfundsraisedwas155,999.99RMB’0000onDecember27,2017.Note2:Theutilizedamountduringtheyearwas62,471RMB’0000,includinginterestincomeof681RMB’0000.Therefore,theaccumulatedinvestmentamountasattheendofthereportingperiodwasslightlyhigherthanthetotalinvestmentamount.

(3)ChangetotheDesignatedProjectsofRaisedFunds

Unit:RMB’0000

V.Saleofsignificantassetsandequities

1.Saleofsignificantassets

Nosellingofsignificantassetsoccurredduringthereportingperiod.

2.Saleofsignificantequities

VI.Analysisofmajorcontrollingandstock-participatingcompanies

Listofstock-participatingcompaniesresponsibleforover10%ofthenetprofitsoftheCompany:

SubsidiariesacquiredordisposedduringtheReportingPeriod

DescriptionofmajorholdingandequityparticipatingcompaniesDuringtheReportingPeriod,totalsalesofSolutions,awholly-ownedsubsidiaryoftheCompany,amountedtoUSD4,384million,anincreaseof13%,drivenby10%volumegrowthalongside2%higherprices,andfurtheraided

somewhatbystrongercurrencies.Solutions’full-yearnetincomewasUSD31millioninthefullyearperiod,lowerthanthecorrespondingperiodlastyear.Fordetailedexplanationoftheperformancemovement,seeaboveexplanationoftheSection.VII.ListofthestructuredmainentitiescontrolledbytheCompany

VIII.OutlookoftheCompany’sfuturedevelopment(I)Industrystructureandtrends

1.Thecompetitivestructureofcropprotectionindustry

(1)ThecompetitivestructureoftheglobalcropprotectionindustryTheglobalcropprotectionmarketisdominatedbysevenmultinationalcompanies,includingtheGroup,fiveofwhichareoriginatorcompanies.Inthepastdecade,anumberofmergersandacquisitionswerecompletedamongthelargestplayersinthecropprotectionindustry.Nonetheless,thecropprotectionindustryasawholeisrelativelydecentralized,withanumberoflocalmanufacturerscompetingineachcountryagainsttheglobalmultinationalcompanies.TheGroupbelievesthatentrybarriersforthecropprotectionmarketarerelativelyhigh,althoughtheyvaryfromregiontoregion.

ADAMAisaleadingcompany(insalesterms)amongthecrop-protectioncompaniesthatfocusonoff-patentcropprotectionsolutions.TheGroup’sglobalcropprotectionmarketsharewasapproximately6%in2021,basedonAgBioInvestor’spreliminaryestimationoftheglobalagrochemicalindustryin2020.TheGroup'scompetitorsaremultinationalOriginatorCompaniesthatcontinueproducingandmarketingtheiroriginalproductsaftertheirpatentexpiry(“OriginatorCompanies”),aswellasothercropprotectioncompanies.IntheGroup'sexperience,inmostcasestheOriginatorCompany’smarketshareinaparticularproductfalltoapproximately30%-70%withinanumberofyearsfollowingtheexpiryoftherelevantpatent,leavingtheremainingmarketshareopentocompetitionamongoff-patentcropprotectioncompanies,inadditiontotheircompetitionwiththeOriginatorCompany(whichcontinuesmanufacturingtheproductandevenleadsitsmarketpricesandsalesterms).

TheGroupcompeteswithOriginatorCompaniesandotherinternationaloff-patentcropprotectioncompaniesinallthemarketsinwhichitoperates,asthesecompaniesgenerallyalsohaveglobalmarketinganddistributionnetworks.Inaddition,thereareseveralsmallerOriginatorCompaniesthatalsocompetewiththeGroup.Asarule,otheroff-patentcropprotectioncompaniesthatdonothaveinternationalmarketinganddistributionnetworkscompetewiththeGrouplocallyinthosegeographicalmarketsinwhichtheyoperate.

(2)Thecompetitivestructureofthecrop-protectionindustryinChina

years.TheCompanybelievesthatpricesformanyActiveIngredientswillremaingenerallyelevatedatleastduringthefirsthalfof2022.

2.Thedevelopmenttrendsofthecrop-protectionindustry

Inthelastfewyears,somenewemergingtrendsthatmayaffectthenatureofcompetitioninthissectorcanbeidentified:(1)Themarketshareofproductswhosepatentshaveexpiredcontinuestoriserelativetothatofpatentedoriginalproducts,primarilyduetothefactthattherateofpatentexpiryexceedsthatofthelaunchingofnewpatent-protectedproducts;(2)atrendofsomeoff-patentcompaniesexpandingandbecomingstronger(interalia,asaresultofcorporatemergersandacquisitionsaswellasproductacquisitions),whichmayleadtothemcompetingwiththeGroupingeographicmarketsinwhichtheyhavenotoperateduptonow;(3)smallercompanieshavebegunoperating,inlimitedscale,incertainmarketswithrelativelylowentrybarriers;(4)improvementoftheagrochemicalsindustryinChinainteralia,increasingmarketentrybarriers;(5)pricecompetitionincertainmarketsbymultinationalOriginatorCompaniesand/orincreasingthecreditdaystoitscustomers;and(6)largemergersandacquisitionsamongleadingcompaniesinthesector.

TheGroupbelievesthatinviewoftheindustry'sdevelopmenttrends,thefollowingarecriticalsuccessfactors:(i)reputation,branding,expertiseandaccumulatedknowledgeinthesectorinthevariouscountriesandamongcustomersandsuppliers;(ii)financialstrengthandresiliencecombinedwithconsistentgrowth,allowingtheGrouptorealizeacorporatedevelopmentstrategyincludingthepotentialformergersandacquisitionswithothercompaniesinthesphere,andbeingabletorespondefficientlytoattractivebusinessopportunitiesinordertoexpanditsproductportfolioandthescaleofitsoperations;and(iii)accesstofundingsourcesandreasonablefundingtermsallowingtheGrouptomakeinvestmentsthatearnapositivereturn.(II)DevelopmentstrategyoftheCompany

TheGroupstrivestobeagloballeaderintheCropProtectionindustry,andintendstoachievethisaimbyexecutionofthefollowingstrategies:

UtilizetheGroup’sDifferentiatedOfferingtoStrengthenandGrowitsMarketPosition.TheGroupintendsto

advantage–tobethefirsttomarketlaunchingnewproductsaftertheexpiryofthepatentontheAI,andtocapitalizeoncostleadershipthroughincreasedbackwardintegrationthroughtheGroup’sglobaloperationscapabilities.BridgeChinaandtheWorld.TheGroupisstrivingtobecomealeadingglobalcropprotectioncompanyinChina,both

engagedwithSyngentaincollaborationagreementsforsaleanddistributionoffinishedproducts,rawmaterialssupply,jointventuresinthefieldsofprocurement,logistics,productionandsupplychainaswellasintheR&Dandproducts’registrationfields,inordertoreducecosts,toimproveprocessesandtoincreasetheCompany’ssales.Suchcollaborationshaveandareexpectedtocontinuetogenerateadditionalrevenues,accelerategrowthandincreaseproductivity,fortheGroupaswellasSyngentaGroup.ContinuetoStrengthenPositioninEmergingMarkets.InadditiontodevelopingitsChinaplatform,theGroupenjoys

strongandleadingpositionsinkeyemergingagriculturalmarketssuchasLatinAmerica,India,AsiaandEasternEurope,witharoundhalfofitsglobalsalesachievedintheseemergingmarkets.Overthelastseveralyears,inordertoestablishdirectmarketaccessanddistributioncapabilitiesinthesemarkets,theGrouphassuccessfullyintegratedacquisitionsinColombia,Chile,Poland,Serbia,Romania,theCzechRepublic,Slovakia,andSouthKorea.Similarly,theGrouphasadirectgo-to-marketstrategyinmanyhigh-growthmarketsaroundtheworld,leveragingadirectsalesforceanddrivingdemandattheretailandfarmerlevel.TheGroupintendstocontinuetoinvestinitsgrowthinthekeyemergingmarketswithhighgrowthpotential.TheGroup’sstrongglobalplatformandleadingcommercialinfrastructureinsuchmarketswill

itshistory,theGrouphassuccessfullycompletedandintegratedseveraladd-onacquisitionsacrosstheglobe.TheGroup

intendstocontinuetopursueacquisitions,in-licensingagreementsandjointventuresthatofferattractiveopportunities

toenhanceitsmarketaccessandposition,aswellasstrengthenandfurtherdifferentiateitsproductportfolio.TheGroup

planstofocustheseeffortslargelyinhigh-growthgeographies,particularlyinemergingmarketswhereitaimstogain

marketshare,aswellasaccesstoselectedsourcesofinnovation.TheGroupcontinueswithitstrackrecordofmaking

andintegratingselective.(III)2022BusinessplanIn2022,theCompanyisexpectingmoderategrowth,supportedbyhighercropcommodityprices,whichinrecent

monthshavebolsteredfarmerprofitabilitylevels.Overall,theGroupisexpectingtoseerevenuegrowthdrivenbyvolume

growthandthecontinuedlaunchofnewproducts.Theoverallpricingenvironmentisexpectedtobepositive,asrelatively

highercroppricesandstrongfarmerdemandallowthepassingonofsomeofthehigherinputcosts.However,theextent

towhichthiswillmaterializewillbecounterbalancedbyintensivecompetitivedynamicsinmostkeymarketsacrossthe

globe.

RawmaterialandActiveIngredient(AI)procurementcostsareexpectedtoremainrelativelyhighresultingfrom

continuedtightsupplyconditionsthathavedrivenongoingelevatedcostsofrawmaterialsandAis.

TheGroupwillcontinuetoexercisedisciplineinmanagementofitsoperatingexpenses,whilefocusingoncontinued

Period

SectionIV-CorporateGovernance

I.BasicdetailsofcorporategovernanceDuringtheReportingPeriod,theCompanycontinuouslyimprovedtheawarenessofcorporategovernanceandcorporategovernancestructureandperfectedthecorporatesystemaswellasstandardizedtheoperationoftheCompany,promotedinternalcontrolactivities,andconstantlyimprovetheCompany'smanagementlevelsstringentlyaccordingtorequirementsofrelevantlawsandregulations,suchastheCompanyLaw,SecuritiesLaw,andCorporateGovernancePrincipleofListedCompany,aswellasRulesforListingSharesinShenzhenStockExchange.

1.AboutShareholdersandtheShareholders’meeting

DuringtheReportingPeriod,theCompanyhasensuredthatallshareholders,especiallysmallandmediumshareholders,aretreatedequalandabletofullyexercisetheirrights.Itheldoneannualgeneralmeetingofshareholders,duringwhich13proposalsintotalwerereviewedandapproved.Lawyerswereinvitedtoattendallthemeetingsmentionedabovefortestimonyandissuinglegalopinions.Onlinevotinghasbeenappliedduringallabove-mentionedmeetingstoensurethatallshareholders,especiallysmallandmediumshareholders,enjoyequalstatusandfullyexercisetheirrights.Noticesofshareholders'meeting,meetingproposals,discussionprocedures,votingonproposalsandinformationdisclosureallmeettherequirements.EverymajordecisionoftheCompanyhasbeendecidedbytheshareholders'meetingaccordingtolawsandregulationswithlawyersasthewitnesstoensurethattherighttoknow,toparticipateandvoteonmajorissuesofallshareholders,especiallythesmallandmediumshareholdersareproperlyprotected.

2.AboutDirectorsandtheBoardofDirectors

3.AboutSupervisorsandtheBoardofSupervisors

DuringtheReportingPeriod,theboardofsupervisorsoftheCompanyconsistedofthreesupervisors.Thenumber,compositionandqualificationsoftheBoardofSupervisorswereincompliancewithlawsandregulationsaswellastheArticlesofAssociationoftheCompany.DuringtheReportingPeriod,fivemeetingswereheldand13proposalswerereviewed.AllmeetingswereorganizedandconvenedinaccordancewiththeproceduresoftheArticlesofAssociationandtheRulesofProcedurefortheBoardofSupervisors.Allsupervisorshaveearnestlyperformedtheirdutiesbyreviewingthecompany'speriodicreportsandothermattersandissuingverificationopinionswithastrongsenseofresponsibilitiestotheshareholders.AllofthemhaveeffectivelyfulfilledtheirdutiesandsafeguardedthelegitimaterightsandinterestsoftheCompanyanditsshareholders.

4.AboutInvestors’Relations

TheCompanycommunicateswithinvestorsthroughpublicannouncements,consultationsbytelephone,interactive

platforms,e-mailsandothermultiplemediatoenhanceopinionexchange.IthasbeenmakingvariouseffortsondeepeningtheunderstandingofinvestorsabouttheCompany'soperationanddevelopmentoutlookandalsomaintaininggoodrelationswiththem.Meanwhile,ithasbeenserioustoreceiveinvestors'opinionsandsuggestionsandencouragedtheinteractionbetweeninvestorsanditself.DuringtheReportingPeriod,theCompanyhasbeenpatienttorespondinvestorsbyansweringcallsandquestionsthroughallinteractiveplatforms,whichhasguaranteedasoundandfairaccessforinvestorstoobtaininformation.WhetherthereisanydifferencebetweentheactualcorporategovernancesituationoftheCompanyandtheprovisionsofthelaws,administrativeregulationsandrelevantrulesofCSRCornot

ThereisnodifferencebetweentheactualcorporategovernancesituationoftheCompanyandtheprovisionsoftherelevantrulesofCSRC.II.ParticularsabouttheCompany’sindependencefromthecontrollingshareholder

andtheactualcontrollerinensuringthecompany’sassets,personnel,financials,institutionsandbusiness,etc.

1.Inrespectofassets:TheassetsrelationshipbetweentheCompanyandthecontrollingshareholderisclear.Thecompanyhascompletecontroloverallitsassets.Thereisnosuchthingasafreepossessionorusagebythecontrollingshareholder.

2.Inrespectofpersonnel:TheCompanyandcontrollingshareholderaremutuallyindependentinthelabor,personnelandsalarymanagement,theCompanyCEOandotherseniormanagementpersonnelgetthesalaryintheCompany,andnotperformadministrativeworkinthecontrollingshareholderunit.

3.Inrespectoffinancing,theCompanyownedindependentfinancialdepartment,establishedindependentaccountingsystemandfinancialmanagementsystem,openedindependentbankaccount,paidtaxinlinewithlaws.

4.Inrespectoforganization,theCompanyhassetuptheorganizationthatwasindependentfromthecontrollingshareholdercompletely,theBoardofDirectors,theSupervisoryCommitteeandinternalorganizationcouldoperateindependently.

5.Inrespectofbusiness:theCompanyhadacompletebusinesssystemandindependentoperation,andconductsitsindependentandcompletebusinesswithself-managementability.

III.Horizontalcompetition

IV.Particularsregardingtheannualshareholders’generalmeetingandspecial

shareholders’generalmeetingsheldduringtheReportingPeriod

1.Particularsregardingtheshareholders’generalmeetingduringReportingPeriod

2.SpecialShareholders’GeneralMeetingappliedbythepreferredstockholderwithrestitutionofvotingright

V.Directors,MembersoftheSupervisoryBoard,SeniorManagementStaff&

Employees

1.BasicInformation

VI.Whethertherewasanydepartureofdirectorsandsupervisorsanddismissalof

seniormanagementduringthereportingperiod

1.OnMay21,2021,duetotheexpirationofofficetermsoftheboardofsupervisors,Mr.LiDejunandMr.ClementTungnolongerservedassupervisorsoftheCompany.

2.OnSeptember30,2021,theBoardreceivednoticefromMr.AviramLahavinformingtheCompanyofhisresignationastheChiefFinancialOfficer(“CFO”)andDeputyChiefExecutiveOfficerduetopersonalreasons.Mr.AviramLahav’sresignationcameintoeffectuponthereceivingoftheabovenoticebytheBoard.Followinghisresignation,Mr.AviramLahavceasedtoholdanypositionintheCompanyanditswholly-ownedsubsidiary,ADAMASolutions.Fordetails,pleaserefertotheAnnouncementontheResignationoftheChiefFinancialOfficer&DeputyChiefExecutiveOfficer(AnnouncementNo.2021-41).

VII.ParticularsregardingchangesofDirectors,SupervisorsandSeniorExecutives

2.Resumesofimportantpersonnel

Professionalbackground,mainworkingexperienceandmainresponsibilitiesofcurrentdirectors,supervisorsandseniormanagementstaff

Mr.ErikFyrwald,American,servesastheChairmanoftheBoardofDirectorsoftheCompany.HeiscurrentlytheCEOofSyngentaGroup,CEOandExecutiveDirectorofSyngentaA.G.andChairmanofSyngentaFoundationforSustainableAgriculture.HecurrentlyalsoservesontheboardofdirectorsofCropLifeInternational,theSwiss-AmericanChamberofCommerceandthelistedentitiesBungeLimitedandEliLilly&Company.PreviouslyservedasPresidentandCEOof

Univar,aleadingdistributorofchemistryandrelatedservices,PresidentofEcolab,acleaningandsanitation,watertreatment,andoilandgasproductsandservicesprovider,andChairman,PresidentandCEOofNalco,awatertreatmentandoilandgasproductsandservicescompany,andGroupVicePresidentoftheAgricultureandNutritionDivisionoftheDuPontCompany.HegraduatedfromtheUniversityofDelawarewithabachelor'sdegreeinChemicalEngineeringandcompletedtheAdvancedManagementProgramatHarvardBusinessSchool.

Mr.ChenLichtenstein,Israeli,servesasaDirectoroftheCompanyanditswholly-ownedsubsidiary,AdamaSolutions,CFOoftheSyngentaGroup(withresponsibilityalsoforStrategy,IntegrationandProductivity),anditswholly-ownedsubsidiary-SyngentaAGandamemberoftheBoardofdirectorsoftheIsraeliDemocracyInstitute,andMemberoftheBoardofTrusteesofTelAvivUniversity..HeholdsjointdoctoraldegreesfromStanfordUniversity'sGraduateSchoolofBusinessandSchoolofLaw,andB.Sc.(Physics)andLL.B.fromtheHebrewUniversityofJerusalem.HepreviouslyservedasthePresident&CEOoftheCompanyanditswholly-ownedsubsidiary,AdamaSolutions,afterholdingseveralexecutivepositionsintheCompany(DeputyCEO,runningglobaloperationsandheadingcorporatedevelopmentandcapitalmarketactivities)andservingasthePresident&CEOofChinaNationalAgrochemicalCorporation(CNAC),SyngentaGroup’sparent.

Mr.AnLiru,servesasaDirectoroftheCompany.HeholdsamasterdegreeofchemicalengineeringandMBA,seniorengineering,senioreconomist.HeusedtobetheAssistantofGeneralManager,ViceGeneralManager,GeneralManager,DeputyPartySecretaryofJiangsuAnponElectrochemicalCo.,Ltd.,ChairmanofDirectors,PartySecretaryofJiangsuHuaiheChemicalsCo.,Ltd.,ExecutiveDirectorandCEOofJiangsuMaidaoAgrochemicalCo.,Ltd.,theChairmanoftheBoardofDirectorsoftheCompany,ExecutiveDirectorofJiangsuAnponElectrochemicalCo.,Ltd.,ChairmanofDirectorsandPartySecretaryofChinaNationalAgrochemicalCo.,Ltd.Currently,heservesalsoasaDirectorandtheSeniorVicePresidentofSolutions,DirectorandGeneralManagerofAdama(China)InvestmentCo.,Ltd.,ChairmanofDirectorsofAdama(Beijing)AgriculturalTechnologyCo.,Ltd.,ChairmanofDirectorsofAdamaAgrochemical(Jiangsu)Co.,Ltd.

Mr.GeMing,servesasanindependentdirectoroftheCompany.Heholdsamaster’sdegreeinwesternaccounting,andheisasenioraccountant,acertifiedChinesepublicaccountantaswellasanAustraliancertifiedpublicaccountant.HepreviouslyservedasthechairmanandchiefaccountantofErnst&YoungHuaMingCertifiedPublicAccountantsFirm,andasthemanagingpartner,chiefaccountantandsenioradvisorofErnst&YoungHuaMingCertifiedPublicAccountants(specialgeneralpartnership).Mr.GecurrentlyservesasanindependentdirectorontheboardsofAsiaInfo.HecurrentlyalsoservesonthesupervisoryboardsoftheBankofShanghai,BankofSuzhou,TencentFoundation,andservesastheexecutivedirectorandgeneralmanagerofBeijingHuamingFulongAccountingConsultingCo.,Ltd.

Mr.XiZhen,servesasanindependentdirectoroftheCompany.HeholdsaprofessordegreeandadoctorofBioorganicChemistrydegree.Mr.XiwasAssistantProfessorinHubeiMedicalSchoolwhichiscurrentlytheWuhanUniversitySchoolofMedicinefrom1983to1985,wasEngineerinBeijingInstituteofChemicalReagentsfrom1988to1990,wasaResearchAssociateinDepartmentofBiologicalChemistryandMolecularPharmacologyofHarvardMedicalSchoolfrom1997to2001.Mr.XiiscurrentlyCheungKongScholarofPesticideScienceoftheMinistryofEducationofthePRC,ChairmanofDepartmentofChemicalBiology,ProfessorofChemistryandChemicalBiology,FellowoftheUniversityCommitteeofNankaiUniversityinChina,andDirectorofNationalPesticideEngineeringResearchCenter(Tianjin).Mr.XiisalsoaCommitteeMemberofChineseChemicalSocietyandDeputyDirectorofitsDivisionofChemicalBiology,DeputyDirectorofthePesticideScienceDivisionofChineseChemicalIndustryandEngineeringSociety.Inaddition,heisadirectorofSuzhouRiboLifeScienceCo.,Ltd.

Mr.IgnacioDominguez,Spanish,servesasthePresident&ChiefExecutiveOfficeroftheCompany.HewastheCCOofSolutionsandhasbeenwithSolutionsformorethanadecade.PriortojoiningSolutions,IgnacioheldvariousmanagementpositionsincompaniessuchasSyngentaandAmericanCyanamid,boastingmorethan20yearsofexperienceintheagrochemicalindustry.Heholdsamaster'sdegreeinphysicsfromComplutenseUniversityofMadrid.

Ms.MichalArlosoroff,Israeli,servesastheCompany’sGeneralLegalCounsel.Ms.ArlosoroffalsoservesasSeniorVicePresident,GeneralLegalCounsel,CompanySecretaryandCSROfficerofSolutions.Ms.ArlosoroffholdsanLL.B.aswellasaB.A.inPoliticalScienceandLaborRelations(cumlaude)fromTelAvivUniversity,Israel.Ms.ArlosoroffalsograduatedfromtheAdvancedManagementProgramatHarvardBusinessSchool.PriortojoiningtheGroup,Ms.Arlosoroffservedfor22yearsasfullPartnerandGeneralManageroftheTelAvivbranchatE.S.Shimron,I.Molho,Persky&Co.,oneofthemostprominent,respectedandestablishedlawfirmsinIsrael.

Mr.JiangChenggang,servesastheChairmanoftheSupervisoryBoardoftheCompany.HeservedasaDeputyDirectoroftheOfficeandDeputySecretariesoftheDisciplineInspectionCommissionoftheCompany;actedastheChairmanoftheLaborUnion,Supervisor,DeputyDirectoroftheOfficeandDeputySecretariesoftheDisciplineInspectionCommissionoftheCompanyfromJun.2012toDec.2012;hasbeenactingastheDeputyPartyCommitteeSecretaryofJingzhouSanondaHoldingsCo.,Ltd.andSecretaryoftheDisciplineInspectionCommissionofthecompanysinceJanuary2017;andhehasbeentheChairmanoftheLaborUnion,SupervisorandSecretariesoftheDisciplineInspectionCommissionoftheCompanysinceJan.2013.

Mr.LiuJianhua,DoctorofEngineering,servesasamemberoftheSupervisoryBoardoftheCompanyandastheNonAgBusinessManagerofADAMAChina.HepreviouslyservedastheGMAssistantofHubeiSanondaCo.Ltd.,astheCOOofJiangsuAnponElectrochemicalCo.,Ltd.,andasthememberofCPCCommitteeofChinaNationalAgrochemicalCorporation.

Ms.YuanYuan,servesasamemberoftheSupervisoryBoardoftheCompanyandasStrategy&BusinessManagerofADAMAChina.Sheobtainedabachelor’sdegreeofinternationaltradefromZhongnanUniversityofEconomicsandLawandamasterdegreeofbusinessadministrationfromUniversityofInternationalBusinessandEconomics.BeforejoiningADAMA，sheservedasDeputyandExecutingDirectorofCommerceDept.inChinaNationalAgrochemicalCorporation.

Mr.GuoZhi,servesasthesecretaryoftheBoardofDirectorsandthelegalheadofADAMAChina.Mr.GuogothisMasterofLawsseverallyfromPekingUniversityandMelbourneUniversity.From2004to2017,hepracticedlawinCommerce&FinanceLawOffices(“C&F”)andhadbeenapartnerofC&Fforeightyears.HispracticingareacoversIPO,M&A,andForeignInvestment.FromMarch19,2018toNovember16,2020,hewasamemberoftheSupervisoryBoardoftheCompany.

Positionsinshareholderunits

Positionsinotherunits

ParticularsregardingtheCompany'scurrentdirectors,supervisorsandseniormanagerswhoreceivedpunishments,ifany,fromSecuritiesRegulatoryInstitutionduringtherecentthreeyears(includingtheReportingPeriod)

3.Remunerationofdirectors,supervisorsandseniormanagement

Decision-makingprocedures,basisfordeterminationandactualpaymentoftheremunerationtodirectors,supervisorsandseniorexecutivesRemunerationofofficeholdersisdecidedbytheauthorizedorgansoftheCompanyaccordingtotheRemunerationPolicy.Inaddition,globalprofessionalbenchmarks,implementationsofperformanceattheCompanylevel,andtheactualperformanceoftherespectivepersonarealsotakenintoaccountintheresolutionsregardingremuneration.IndependentdirectorsareentitledtoreceiveannualallowanceandwouldnotreceivesalarybytheCompany.TheCompanyalsoadoptedaremunerationplanofthenon-independentdirectors.Anon-independentdirectorwhoholdsamanagementpositionintheCompanyand/oranyofitssubsidiaries,shallreceivetheremunerationsetforsuchpositionandwillnotbeentitledtoanyadditionalremunerationforservingasadirector;Anon-independentdirectorwhodoesn’tholdamanagementpositionintheCompanyoranyofitssubsidiaries,mayreceiveamonthlyremuneration.Fordetails,pleaseseetheAnnouncementoftheResolutionsof25

thmeetingofthe7

thSessionoftheBoardofDirectors(Announcementno.2018-5)andtheAnnouncementoftheResolutionsof21

stmeetingofthe8

thSessionoftheBoardofDirectors(Announcementno.2020-7).Internalsupervisors,whoarefull-timeemployeesoftheCompany(oranyofitssubsidiaries),willbeentitledtoreceivearemunerationsetfortheirpostsandwillnotbeentitledtoanyadditionalremunerationforservingassupervisors.Externalsupervisors,whoarenotemployeesoftheCompany(oranyofitssubsidiaries),willbeentitledtoreceiveannualallowanceandwouldnotreceivesalarybytheCompany.Fordetails,pleaseseetheAnnouncementoftheResolutionsof4

thmeetingofthe8

thSessionoftheBoardofSupervisors(Announcementno.2018-25).Totalremunerationofthedirectors,supervisorsandseniormanagementoftheCompanyduringtheReportingPeriodisasfollow:

UnitRMB’0000

GeMing

VIII.PerformanceofDirectorsoftheBoardduringtheReportingPeriod

1.ParticularsregardingtheBoardmeetingduringReportingPeriod

2.Particularsregardingdirectors’attendancetoboardsessionsandshareholders’generalmeetings

Note:Astwodirectorsareabroad,theCompany’sboardmeetingsin2021wereallconductedbymeansofcommunication,includingvideoconference.

3.Particularsregardingdirectors’objections

Whetherdirectorsobjectedtovariousevents

DuringtheReportingPeriod,nodirectorsproposedanyobjectiononrelevanteventsoftheCompany.

4.Otherexplanationsregardingthedirectors’dutyperformance

Whetherdirectors’advicewereadopted

Explanationregardingadvicesofdirectors:

AccordingtotheCompanyLaw,theListedCorporateGovernanceStandards,and"ArticlesofAssociation",thedirectors,ingeneral,duringtheReportingPeriod,focusactivelyoverCompany’soperation,andearnestlyperformstheirduties,renderprofessionalsuggestionstotheCompany'sinformationdisclosureanddailymanagementdecision-making,etc.Thedirectorsplayaproperroleinimprovingthesupervision,andsafeguardthelegitimaterightsandinterestsoftheCompanyanditsshareholders.Thedirectorsespeciallypayattention(andpaidattention-duringtheReportingPeriod)totheCompany’soperationstate,dynamicstateoftheindustry,publicopinionanddynamicstatereportoftheCompany.TheyactivelyandeffectivelyperformthedutiesofdirectorsandwellmaintainedoverallbenefitsoftheCompanyandthelegalinterestsofallshareholders,especiallythemiddleandsmallshareholders.Theirrollisrequiredforpositive,normal,stableandhealthydevelopmentoftheCompany.

IX.PerformanceoftheSpecialCommitteesundertheBoardduringtheReporting

X.PerformanceoftheSupervisoryCommitteeHastheSupervisoryCommittee,duringtheReportingPeriod,foundariskintheCompanywithinitssupervisoryactivity

TheSupervisoryCommitteehadnoobjectiononthesupervisedeventsduringtheReportingPeriod.

XI.ParticularsregardingGroup’semployees

1.Numberofemployees,professionalcompositionandeducationalbackground

Note:Thefiguresunder“ProfessionalComposition”representthoseoftheCompanyandthedomesticsubsidiariesheldbyitanddonotcovertheGroup’s5,498overseasemployees.

2.Employee’sremunerationpolicy

TheCompany'sremunerationpolicyin2021isthesameasin2020.Itisstillasalarystructurethatintegratespostsalary,quarterlyperformancebonusandannualperformancebonus.

TheCompanyestablishedanonlineandofflineassessmentmodel.OnlineassessmentiscarriedoutbySFsystem.Individualgoalsaresetatthebeginningoftheyearandareassessedattheendoftheyear.

3.Employee’strainingplan

TheGroupusuallyconductsseminars,trainings,exercisesandrefreshofprocedures(includingwithrespecttoincreasingsafetyawareness)toitsvariousemployeesinitsvariousentities,asneededand/orrequiredunderitsapplicableprocedures.

4.Laboroutsourcing

DetailsofADAMALtd.onlaborsourcingareasfollows.

X.SituationsfordividenddistributionandturningcapitalreserveintosharecapitalDividenddistributionpolicies,especiallytheformulation,executionortheadjustmentofthecashdividendpoliciesduringtheReportingPeriod

TheCompanydidnotreviseitsdividenddistributionpolicyovertheReportingPeriod.The2020AnnualGeneralMeetingwhichwasheldonMay21,2021approvedthedividenddistributionplanfortheyear2020.TheCompanyaccordinglypublishedanAnnouncementofDividendDistributionfortheYear2020onJuly3,2021(announcementNo.2021-30).

Listofthedividenddistributionproposals(preplan)ofthecommonshares,andtheproposal(preplan)ofturningcapitalreserveintosharecapitaloftheCompanyoftherecent3years:

2019profitdistributionproposal:basedonthetotalsharecapitalonFebruary28,2020,afterobtainingtheapprovalofBoardofDirectors,theCompanydeclaredacashdividendofRMB0.12(beforetax)forevery10sharestotheall

shareholders.Nosharewillbedistributedassharedividend,aswellasnoreservewillbetransferredtoequitycapital.2020profitdistributionproposal:basedonthetotalsharecapitalof2,329,811,766whichareentitledtothedividendsasoftherecorddaywhenthisprofitdistributionproposalisimplemented,afterobtainingtheapprovalofBoardofDirectors,theCompanydeclaredacashdividendofRMB0.16(beforetax)forevery10sharestotheallshareholders.Nosharewillbedistributedassharedividend,aswellasnoreservewillbetransferredtoequitycapital.

2021profitdistributionproposal:basedonthetotalsharecapitalof2,329,811,766onFebruary28,2022,afterobtainingtheapprovalofBoardofDirectors,theCompanyplanstodeclareacashdividendofRMB0.08(beforetax)forevery10sharestotheallshareholders.Nosharewillbedistributedassharedividend,aswellasnoreservewillbetransferredtoequitycapital.CashdividenddistributionofthecommonsharesoftheCompanyinthelast3years(includingtheReportingPeriod):

Unit:RMB

TheCompany(includingitssubsidiaries)madeprofitinthereportingperiodandtheprofitsdistributionofthecommonsharesheldbytheshareholdersoftheCompany(withoutsubsidiaries)waspositive,butitdidnotputforwardapreplanforcashdividenddistributionofthecommonshares:

SituationsfordividenddistributionandturningcapitalreserveintosharecapitalfortheReportingPeriod

TheCompanyplanstodistributecashdividendsfortheyear2021,anddoesnotintendtoissuebonussharesortransfercapitalreservetosharecapital.

XII.Stockincentiveplans,ESOPsorotheremployeeincentives

Tothedateofthereport,theCompanydoesnothavestockincentiveplans,ESOPorotherstaffincentives.Itshallbenoted,thatAdamaSolutionscurrentlyhasseverallong-termincentiveplansaccordingtowhichithasgrantedlong-termcashrewardstoexecutiveofficersandemployees.Theselong-termincentiveplansarebasedeitherontheperformanceoftheCompany'sshares(phantomcashincentives)and/ortheCompany'sperformance..AdamaSolutionshasfurtheradoptedanincentiveplanlinkedtotheincreaseintheSyngentaGroupEBITDA.

XIII.SystemEstablishmentandImplementationforInternalControlduringthe

ReportingPeriod

1.SystemEstablishmentandImplementation

TheGroup'sexistinginternalcontrolsystemadaptstothemanagementrequirements.Italsoprovidesareasonablebasisforthepreparationoftrueandfairfinancialstatements,andensuresthehealthyoperationoftheGroup'svariousbusinessactivities,aswellastheimplementationandcomplianceofrelevantlawsandregulationsandtheGroup'sowninternalrules.WiththechangesintheexternalenvironmentandthedevelopmentoftheGroup'sbusiness,theCompanyplanstotakethefollowingmeasurestofurtherimprovetheinternalcontrolsystem:

(1)Furtherimprovetheinternalcontrolsystembystrengtheningtheresearchandimplementationofinternalcontrolmanagementandriskmanagement.BasedontheriskassessmentresultandtheneedsoftheGroup,adjustandimprove

therelevantbusinessprocessesinatimelymannertoestablisheffectiveinternalcontrolsystemwhichwouldimproveworkefficiency.

(2)EmphasizingontheimportanceandeducationoftheinternalcontrolsystemwithintheGroup.Providingtrainingtomanagerialpersonnelontherelatedlawsandregulationsregardinginternalcontrols.Thiswouldenhancetheawarenessandlevelofstandardizationofoperation,whichcouldfurtherimprovethecorporategovernancestructure.

(3)Regularlyevaluatingkeycontrolsinthebusinessprocesses.Throughtherectificationofissuesidentified,themanagementandoperationriskswouldbereducedwhichcouldleadtoabetteroperation.

(4)Continuouslyimprovingtheexecutionofinternalcontrols.Constructingtheinternalcontrolsystemsincludinginternalenvironment,riskassessment,controlactivities,informationandcommunication,andinternalsupervisioninaccordancewiththerequirementsbythe"BasicStandardsforEnterpriseInternalControl",inordertoimprovethesystematizationandeffectivenessoftheinternalcontrol.

(5)Strengtheningthemanagementandcontrolofhigh-riskareasthrougheffectiveintegrationwiththeinternalcontrolevaluationsystemtoensurethattheGroup'smajorrisksareundercontrol.Atthesametime,theexistinginternalcontrolsystemiscontinuouslyreviewedandimprovedalongwiththeoptimizationofmanagementprocesses,whichistominimizebusinessrisksandensuretheGroup'ssustainable,stableandhealthydevelopment.Fordetails,pleaserefertothe"2021AnnualInternalControlSelf-AssessmentReport"publishedbytheCompanyonwww.cninfo.com.cnonMarch31,2022.

2.DetailsoftheMaterialdeficienciesininternalcontrolidentifiedduringthereportingperiod

XIV.Managementcontroloversubsidiariesduringthereportingperiod

XV.Self-assessmentReportorAuditReportonInternalControl

1.Self-assessmentreportoninternalcontrol

Referencewebsiteofself-assessmentreportoninternalcontrol

2.Auditreportoninternalcontrol

Doestheaccountingfirmissuenon-standardauditopiniononinternalcontrol

Istheopinionissuedbyaccountingfirmconsistentwiththeopinionintheself-assessmentreportbytheBoard

XVI.RectificationofProblemsIdentifiedduringtheSelf-examinationAction

DedicatedforCorporateGovernanceofListedCompaniesInJanuary2021,HubeiRegulatoryBureauofCSRCissuedtheNoticeonSpecialActionsofCorporateGovernanceofListedCompaniesunderitsJurisdiction.TheCompanyattachedgreatimportancetothisself-inspectionandcarriedoutrelevantwork.Throughself-inspection,theCompanyidentifiedfollowingareasthatitneedstofurtherimproveandstrengthenthelevelofcorporategovernance:

Updaterelevantpoliciesandproceduresofcorporategovernanceandinternalcontrolaccordingtolatestlaws,

regulationsandregulatoryrequirementsandincombinationwiththeactualsituationoftheCompany;FurtherstrengthentrainingoftheCompany'sdirectors,supervisorsandseniormanagementofrelevantlawsand

regulations,andfurtherstandardizetheirworkandraiseself-disciplineawareness;NewBoardofDirectorsandBoardofSupervisorswerenotelectedwhenthe8

th

BoardofDirectorsandBoardof

Supervisorsexpired.TheCompanycarriedoutthefollowingrectificationmeasures:

OnApril28,2021,theCompanyheldthe33rdmeetingofthe8thBoardofDirectorsapprovingtheproposalonthe

electionoftheboardofdirectorsandthenominationofnon-independentdirectorsandindependentdirectors,aswell

astheproposalontheChairmanofthe9thBoardofDirectorsandmembersofthespecialcommitteeoftheBoard.

The17thmeetingofthe8thBoardofSupervisorsapprovedtheproposalontheelectionoftheBoardofSupervisors

andthenominationofnon-employeerepresentativesupervisors.OnMay21,2021,the2020annualgeneralmeeting

ofshareholderswasheldapprovingtheaboveproposalsandelectedthe9

Supervisorsofthecompany.The9

meetingofthe9

thBoardofDirectorswasheldonMarch29,2022,approvingtheupdateoftheManagement

PolicyofRelated-PartyTransactions,theManagementPolicyofRegistrationofInsidersInformationandthe

ManagementPolicyofInformationDisclosure.TheCompanyactivelyorganizedthedirectors,supervisorsandseniormanagementparticipateintherelevanttrainings

organizedbythedispatchedorgansofCSRCandShenzhenStockExchange.Itregularlycompiledtrainingmaterial

andlatestdevelopmentofChina'scapitalmarketlaws,regulationsandhoteventsintoChineseandEnglishregulatory

reports,whicharesenttodirectors,supervisorsandseniormanagement,toenhancetimelystudyandin-depth

implementationofChina'spoliciesbyforeigndirectorsandseniormanagers.

SectionV-EnvironmentandSocialResponsibilities

I.MajorEnvironmentalProtectionIssuesIstheCompanylistedaskeypollutingentitiesbyenvironmentalprotectionagencies

ADAMALtdAnnualReport2021

1.DevelopmentandOperationofEnvironmentalFacilities

(1)DevelopmentandOperationofWasteWaterFacilities

TheCompanyhasa20,000tons/Dwastewatertreatmentstation,adoptingtheprocessof"two-layerA/O+MBR+ozonesynergisticoxidation+MBBR+calciumremovalofphosphorus".Thewastewatertreatmentfacilitiesarerunningnormally.Aftertreatment,theCOD,ammonianitrogenandtotalphosphorusinthedischargedwastewaterarewithinthelimit.ADAMAAnpon,thesubsidiaryoftheCompany,hasa11,000tons/Dwastewatertreatmentstation.Asallitsfacilitiesareoperatingwell,COD,ammonianitrogen,andtotalphosphorousdischargedafterthetreatmentarewithinthelimit.ADAMAHufieng,thesubsidiaryoftheCompanyhasa5000tons/Dwastewatertreatmentstation.Asallitsfacilitiesareoperatingwell,COD,ammonianitrogen,totalnitrogenandtotalphosphorousdischargedafterthetreatmentarewithinthelimit.

(2)DevelopmentandOperationofWasteGasFacilities

(3)TheCompanyanditssubsdiaries,ADAMAAnponandADAMAHuifengdiscloseproductionandpollutioninformationaccordingtheInterimMeasuresonEnvironmentalInformationDisclosureandtransferinformationofmainwastewaterandairpollutantstotheinformationplatformofthelocalenvironmentalbureausonadailybasis.

2.EIAofconstructionprojectsandotherenvironmentaladministrativepermitsDuringthereportingperiod,theCompanyobtained“ReviewOpinionsontheReconstructionandExpansionofWasteWaterDischargeattheEstuary”,“ApprovalofAmendmenttoEnvironmentalImpactReportoftheInsecticideRelocationandUpgradingProject”and“ReplytotheEnvironmentalImpactReportofSaltWellSurveyandDrillingProject”.Italsoreneweditswastedischargepermitwhichisnowvalid.ADAMAAnpon,thesubsidiaryoftheCompany,received“ReplytotheEnvironmentalImpactReportofExpansionofUtilitiesandAuxiliaryFacilities”and“ReplyontheEnvironmentalImpactReportoftheRelocationandUpgradingof1000t/aPymetrozine(convertedinto100%)”.ItsMaidaobranchchangeditswastedischargepermitwhichisnowvalid.ADAMAHuifeng,thesubsidiaryoftheCompany,receivedapprovalsofYanchengEcologicalEnvironmentBureauonupgradingofFlutriafolAI,EpoxiconazoleAI,GlufosinateAIand2,4-DisooctylesterAI.Italsoreneweditswastedischargepermit.

3.ContingencyPlanofEnvironmentalAccidents

TheCompanyanditsrelevantsubsidiarieshaveformulatedtheContingencyPlanforEnvironmentalEmergenciesaccordingtotheirproductionfacilitiesandindustryfeatures,andthensubmittedfilestothelocalenvironmentalprotectionauthoritiesasrecord.

4.Environmentself-monitoringplan

ADAMAattributesgreatimportancetoprotectingtheenvironment,outofasenseofresponsibilitytosocietyandtheenvironmentandstrivestomeettherelevantregulatoryrequirementsandtoevengobeyondmerecompliance,engaginginconstantdialoguewithstakeholders,includingtheauthoritiesandthecommunity.Inordertoimprovetheenvironmentalmanagement,trackthedischargeofvariouspollutants,evaluatetheimpactonthesurroundingenvironment,strengthenthedischargemanagementofpollutantsintheproductionprocess,acceptthesupervisionandinspectionofenvironmentalauthoritiesandprovidereferenceforpollutionpreventionandcontrol,thecompanyanditssubsidiariesAnponandHuifenghaveformulatedaself-monitoringplan,whichconductsregulartestsinstrictaccordancewiththerequirements.Themajormonitoredindicatorsandfrequencyareasthefollowing:

1.MonitoredIndicators

Wastewater:COD,NH3-N,PH,SS,Petroleum,TP.AirPollutant:SO2,Nitrogenoxide,FumeandDust,NonMethaneHydrocarbonNoise:NoiseattheSiteBorder

2.Frequency

FumeanddustandNMHCinboileremission,SO2,NOx,fumeanddustofRTO,andwastewaterdischargedfromthecentralizedpoint(COD,AmmoniaNitrogenandtotalphosphorous):continuousautomonitoringManualsampling:particlesfromcertainairemissions,suspendedparticlesfromwastewaterandPetroleumonceamonth.Noise:onceaquarter.

5.Administrativepunishmentforenvironmentalproblemsduringthereportingperiod

6.Otherenvironmentalinformationthatshouldbedisclosed

None

7.Measurestakentoreduceitscarbonemissionsduringthereportingperiodandtheireffects

Duringthereportingperiod,theCompanyestablishedtheworkinggrouponenergyconservationandcarbonreduction,formulatedtheindicatorsofenergyconservationandcarbonreductioninthefuture,completedcarbonemissionverificationandcompliance,andcarriedoutanumberofenergyconservationandemissionreductionwork,suchasrecoveringthewasteheatofhydrogenbrinebyaddingheatexchangers,savingsteamconsumption,andreasonablyallocatingresourcesthroughthecombinedtransformationofutilities(refrigerationstationandcompressedairstation),reducingenergyconsumptionandmaintainingfacilities,changingthemodelofwaterpumpsandmotors,addingfrequencyconvertermakewaterpumpmotorsbettermatchtheactualdemand,optimizingthedesignofchlor-alkalibrineprocesspipelinetoreduceenergyconsumptionandCO2emission,etc.

8.Otherenvironmentalrelatedinformation

II.SocialResponsibilities

SectionVI-SignificantEvents

I.Performanceofcommitments

1.CommitmentscompletedbytheCompany,theshareholders,theactualcontrollers,thepurchasers,ortheotherrelatedpartiesduringtheReportingPeriodandthosehadn’tbeencompletedexecutionuptotheperiod-end

2.Assetsorprojectswithprofitforecast,stillrelevantforforecastperiod

II.InadequateuseofCompany’scapitalbythecontrollingshareholderorbyits

relatedpartiesfornon-operatingpurposes

NosuchsituationoccurredduringtheReportingPeriod.

III.Non-compliancewithexternalguarantees

Nosuchcasesduringthereportingperiod.

IV.Explanationbytheboardofdirectorsonthelatest"non-standardauditreport"

V.ExplanationbytheBoardofDirectors,theSupervisoryBoardandindependent

directors(ifany)regarding“non-standardauditreport”issuedbyCompany’sauditorfortheReportingPeriod

VI.Changesinaccountingstandards,accountingestimatesorcorrectionsof

significantaccountingerrorscomparedtolastfinancialreport

"AccountingStandardsforBusinessEnterprisesInterpretationNo.15"On30December2021,theMinistryofFinanceissued"AccountingStandardsforBusinessEnterprisesInterpretationNo.15”(hereinafterreferredtoas“InterpretationNo.15”)whichclarifiedthefollowingaccountingtreatments:

(1)Theaccountingtreatmentofthesaleoftheproductsorby-productsproducedbeforetheassetsbeingcapable

ofoperatinginapredeterminedmannerorproducedduringtheresearchanddevelopmentprocess;

(2)Disclosurerequirementsforcentralizedmanagementoffunds;and

(3)costsacompanyshouldincludeasthecostoffulfillingacontractwhenassessingwhetheracontractis

onerous.

AccordingtotheInterpretationNo.15,thesecondclarificationwaseffectivefrom30December2021.AdoptionoftheinterpretationhasnosignificantimpactontheGroup’sfinancialstatements.

VII.Changeoftheconsolidationscopeascomparedwiththefinancialreportingof

lastyear

Duringthereportingperiod,theGroupacquiredAdamaHuifeng(Jiangsu)Co.,Ltdthroughbusinesscombinationnotundercommoncontrol.

VIII.EngagementofCompany’sAuditorAuditorengagedatpresent

ChangeoftheAuditoratReportingPeriod

EngagementoftheAuditorforinternalcontrol,financialadviserorsponsor

IntheReportingPeriod,theCompanycontinuedtoengageDeloitteToucheTohmatsuCertifiedPublicAccountantsLLPastheauditoroftheCompanyfor2021annualfinancialreportsand2021annualinternalcontroloftheCompany.TotalremunerationfortheAuditorwasRMB3.2million.

IX.TradingterminationofCompany’ssecuritiesthattheCompanywillfaceafterthe

disclosureofthisannualreport

X.Bankruptcyandreorganization

NosuchcasesintheReportingPeriod.XI.MaterialLegalClaims/proceedings

NosuchcasesintheReportingPeriod.XII.Punishmentandrectification

XIII.CredibilityoftheCompany,itscontrollingshareholdersandactualcontroller

TheCompany’scontrollingshareholderandactualcontrollerareingoodcredibilitystatus.Theyarenotinthesituationthattheeffectivejudgmentofthecourtwasnotexecutedandthelargeamountofdebtwasnotrepaidwhendueduringthereportingperiod.

XIV.Significantrelated-partytransactions

1.Related-partytransactionsintheordinarycourseofbusiness

2.Related-partytransactionsarisingfromassetacquisitionorsale

Therewerenorelated-partytransactionsarisingfromassetacquisitionorsaleintheReportingPeriod.

3.Related-partytransitionswithjointinvestments

TheCompanywasnotinvolvedinanysignificantrelated-partytransactionwithjointinvestmentsduringtheReportingPeriod.

4.Creditsandliabilitieswithrelatedparties

Whethertherewasnon-operatingcreditandliabilitywithrelatedparties

TheCompanywasnotinvolvedinanynon-operatingcreditandliabilitywithrelatedparties.

5.Transactionswithfinancecompanieswithrelatedrelationships

Depositbusiness

InRMB’0000

Loans

FacilitiesandOtherFinancialServices

6.TransactionsbetweenthefinancecompanycontrolledbytheCompanyandrelatedparties

Thecompanydoesnotholdanyequityinterestinanyfinancecompany.

7.Othermaterialrelated-partytransactions

(1)The2020AnnualGeneralMeetingapprovedtheexpectedrelated-partytransactionsintheordinarybusinesscourseoftheCompanyin2021.PleaserefertoItem5ofSectionX“in“FinancialReport”fordetailsoftherelated-partytransactionsintheordinarybusinesscourse.

(2)The5

Meetingofthe9

thSessionoftheBoardofDirectorsapprovedtheProposalonCreditFacilitiesof$100mfromtheRelatedParty.

(3)The1

stInterimShareholdersMeetingin2022approvedtheproposalontheSigningofaFinancialServiceAgreementwithSinochemFinanceCo.,Ltd.

(4)The7

thMeetingofthe9

thSessionoftheBoardofDirectorsapprovedtheProposalonSigningofEntrustedOperationandManagementAgreementonAnhuiPetro&Chemical.

Thewebsitetodisclosetheinterimannouncementsonsignificantrelated-partytransactions:

XV.Particularsregardingmaterialcontractsandexecutionthereof

1.Particularsabouttrusteeship,contractandlease

(1)Trusteeship

TherewasnotrusteeshipoftheCompanyinthereportingperiod.

(2)ContractOperation

TherewasnocontractoperationoftheCompanyinthereportingperiod.

(3)Lease

Thereisnomajorleaseinthereportingperiod.

2.Significantguarantees

(1)Guarantees

Unlessotherwisespecified,theunithereunderisRMB‘0000

3.Cashassetsmanagemententrustment

(1)Wealthmanagemententrustment

NosuchcasesintheReportingPeriod.

(2)Entrustmentloans

4.Othersignificantcontracts

XVI.Othersignificantevents

TherewerenoothersignificanteventsduringtheReportingPeriod.

XVII.Significanteventsofsubsidiaries

SectionVII-ChangeinShares&ShareholdersI.Changesinshares

Unit:share

Reasonforthechangeinshares

FromSeptember16,2020,thefirstdaytheCompanystartedrepurchase,toDecember6,2020,whentherepurchaseperiodexpired,theCompanyrepurchased14,309,536sharesofB-Sharesbymeansofacentralizedpricebiddingtransaction.OnJune17,2021,theCompanycompletedcancellationofaboveBsharesattheShenzhenBranchofChinaSecuritiesDepositoryandClearingCo.,Ltd.Afterthecancellationiscompleted,thetotalsharecapitaloftheCompanydecreasedfrom2,344,121,302sharesto2,329,811,766shares.Approvalofthechangeinshares

The26thMeetingofthe8thSessionoftheBoardofDirectorsheldonAugust19,2020andthe3rdInterimShareholdersMeetingin2020heldonSeptember7,2020oftheCompanyapprovedtheRepurchasePlanforPartoftheCompany’sDomesticallyListedForeignShares(Bshare),approvingtheCompanytorepurchasepartofitsdomesticallylistedforeignshares(Bshares).Afteraboverepurchaseiscompleted,the31stMeetingofthe8thSessionoftheBoardofDirectorsheldonMarch29,2021andthe2020AnnualGeneralMeetingoftheCompanyheldonMay21

st,2021,approvedtheProposalontheCancellationoftheRepurchasedSharesandtheSubsequentDecreaseoftheRegisteredCapitalandProposalonRevisionstotheArticlesofAssociationoftheCompany,approvingcancellationofrepurchasedsharesandsubsequentdecreaseoftheCompany’sregisteredcapital,aswellasrevisionoftheArticlesofAssociationaccordingly.

Theregisteredstatusforthechangeinshares

FromSeptember16,2020,thefirstdaytheCompanystartedrepurchase,toDecember6,2020,whentherepurchaseperiodexpired,theCompanyrepurchased14,309,536sharesofB-Shares.OnJune17,2021,theCompanycompletedcancellationofaboveBsharesattheShenzhenBranchofChinaSecuritiesDepositoryandClearingCo.,Ltd.PleaserefertoAnnouncementontheCompletionofCancellingRepurchasedSharesandShareCapitalChange(AnnouncementNo.2021-26)fordetails.

EffectsofthechangeinsharesonthebasicEPS,dilutedEPS,netassetspershareattributabletocommonshareholdersoftheCompanyandotherfinancialindexesoverthelastyearandlastperiod.

OthercontentsthattheCompanyconsiderednecessaryorwererequiredbythesecuritiesregulatoryauthoritiestodisclose

2.Changesinrestrictedshares

II.Issuanceandlistingofsecurities

1.Issuanceofsecurities(excludingpreferredstock)duringtheReportingPeriod

2.Explanationonchangesinsharecapital&thestructureofshareholders,thestructureofassetsandliabilities

FromSeptember16,2020,thefirstdaytheCompanystartedrepurchase,toDecember6,2020,whentherepurchaseperiodexpired,theCompanyrepurchased14,309,536sharesofB-Sharesbymeansofacentralizedpricebiddingtransaction.OnJune17,2021,theCompanycompletedcancellationofaboveBsharesattheShenzhenBranchofChinaSecuritiesDepositoryandClearingCo.,Ltd.Afterthecancellationiscompleted,thetotalB-sharecapitaloftheCompanydecreasedfrom167,049,341sharesto152,739,805shares,thetotalsharecapitaloftheCompanydecreasedfrom2,344,121,302sharesto2,329,811,766sharesandtheregisteredcapitaloftheCompanydecreasedfrom2,344,121,302RMBto2,329,811,766RMB.TheCompanycompletedindustrialandcommercialregistrationproceduresfortheabovechange.

3.SharesheldbyinternalstaffsoftheCompanyasameasureofthereformofState-OwnedEnterprises

III.Particularsabouttheshareholdersandactualcontroller

1.Totalnumberofshareholdersandtheirshareholding

Didanytop10commonshareholdersorthetop10commonshareholdersnotsubjecttotradingmoratoriumoftheCompanycarryoutanagreedbuy-backintheReportingPeriod

Thetop10commonshareholdersorthetop10commonshareholdersoftheCompanywerenotsubjecttotradingmoratoriumoftheCompanycarryoutanagreedbuy-backinthereportingperiod

2.Particularsaboutthecontrollingshareholder

Natureofcontrollingshareholder:Thecentralstate-ownedTypeofcontrollingshareholder:legalpersonBytheendoftheReportingPeriod,theparticularsoftheCompany’scontrollingshareholderareasfollows:

ChangeofthecontrollingshareholderduringtheReportingPeriod

,2021.Afterthecompletionofthetransfer,SyngentaGroupholds1,828,137,961shares(accountingfor78.47%oftheCompany’stotalsharecapital).ThecontrollingshareholderandtheactualcontrolleroftheCompanyremainunchanged.PleaserefertoAnnouncementontheCompletionoftheRegistrationoftheTransferofState-ownedSharesheldbytheControllingShareholder(AnnouncementNo.2021-40)fordetails.

3.ParticularsregardingactualcontrollerandthepersonsactinginconcertNatureofactualcontroller:State-ownedAssetsSupervisionandAdministrationCommissionTypeofactualcontroller:Legalperson

ChangeoftheactualcontrollerduringtheReportingPeriod

TheactualcontrollerdidnotchangeduringtheReportingPeriod.BlockdiagramofequityandcontrolrelationshipbetweentheCompanyandactualcontroller:

TheactualcontrollercontrolstheCompanyviatrustorotherwaysofassetmanagement

4.ThecontrollingshareholderorthelargestshareholderoftheCompanyanditsconcertpartieshavepledged80%oftheirsharesintheCompany

5.Particularsregardingothercorporateshareholderswithover10%holdings

6.Particularsregardingrestrictionofreducingholding-sharesofcontrollingshareholders,actualcontroller,restructuringpartiesandothercommitmententities

IV.SpecificimplementationofsharerepurchasesduringthereportingperiodProgressofimplementationofsharerepurchase

Note:TherepurchaseoftheBsharesbytheCompanyexpiredonDecember6

,2020.FromSeptember16,2020toDecember6,2020,theCompanyrepurchased14,309,536sharesofB-SharesbymeansofacentralizedpricebiddingtransactionthroughaspecialsecuritiesrepurchaseaccountforB-Shares,whichaccountsfor0.61%oftheCompany’stotalsharecapital.Thehighesttransactionpriceis5.22HKD/share,thelowesttransactionpriceis4.27HKD/share,andthetotalpaymentamountisHKD69,747,209(includingtransactionfees).PleaserefertoAnnouncementontheExpiryoftheRepurchasePeriodandtheResultsoftheB-SharesRepurchase(AnnouncementNo.2020-71)fordetails.

Afteraboverepurchaseiscompleted,the31stMeetingofthe8thSessionoftheBoardofDirectorsheldonMarch29,2021andthe2020AnnualGeneralMeetingoftheCompanyheldonMay21st,2021,approvedtheProposalontheCancellationoftheRepurchasedSharesandtheSubsequentDecreaseoftheRegisteredCapitalandProposalonRevisionstotheArticlesofAssociationoftheCompany,approvingcancellationofrepurchasedsharesandsubsequentdecreaseoftheCompany’sregisteredcapital,aswellasrevisionoftheArticlesofAssociationaccordingly.OnJune17,2021,theCompanycompletedcancellationofaboveBsharesattheShenzhenBranchofChinaSecuritiesDepositoryandClearingCo.,Ltd.PleaserefertoAnnouncementontheCompletionofCancellingRepurchasedSharesandShareCapitalChange(AnnouncementNo.2021-26)fordetails.

Statusofreducingholdingofrepurchasedsharesinthewayofcentralizedbidding

SectionVIII-Preferredstock

TherewasnopreferredstockduringReportingPeriod.

SectionIX-CorporateBonds

SectionX-FinancialReport

AUDITOR'SREPORT

DeShiBao(Shen)Zi(22)No.P02154

(Page1of6)

TotheshareholdersofADAMALtd.:

I.Opinion

WehaveauditedthefinancialstatementsofADAMALtd.(hereinafterreferredtoasthe"Company"),whichcomprisetheconsolidatedandtheCompany'sbalancesheetsasat31December2021,andtheconsolidatedandtheCompany'sincomestatements,theconsolidatedandtheCompany'sstatementsofchangesinshareholders'equityandtheconsol-idatedandtheCompany'sstatementsofcashflowsfortheyearthenended,andnotestothefinancialstatements.

Inouropinion,theaccompanyingfinancialstatementspresentfairly,inallmaterialrespects,theconsolidatedandtheCompany'sfinancialpositionasof31December2021,andtheconsolidatedandtheCompany'sresultsofoperationsandcashflowsfortheyearthenendedinaccordancewithAccountingStandardsforBusinessEnterprises.

II.BasisforOpinion

WeconductedourauditinaccordancewithChinaStandardsonAuditing.OurresponsibilitiesunderthosestandardsarefurtherdescribedintheAuditor'sResponsibilitiesfortheAuditoftheFinancialStatementssectionofourreport.WeareindependentoftheCompanyinaccordancewiththeCodeofEthicsforChineseCertifiedPublicAccountants(the"Code"),andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeCode.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.

III.KeyAuditMatters

Keyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceinourauditofthefinancialstatementsforthecurrentyear.Thesematterswereaddressedinthecontextofourauditofthefinancialstatementsasawhole,andinformingouropinionthereon,andwedonotprovideaseparateopiniononthesematters.Thefollowingsarekeyauditmattersthatwehavedeterminedtocommunicateintheauditor'sreport.

AUDITOR'SREPORT-continued

(Page2of6)

III.KeyAuditMatters-continued

(I)Cut-offofrevenuerecognition

Description

ADAMA'ssalerevenueismainlycontributedbythesalesofgoodsinabout100countriesallovertheworld.AsstatedinNote(V),42operatingincome,ADAMA'sconsolidatedprincipalactivitiesrevenuefor2021wasRMB30,971,009,000,whichwassignificanttothefinancialstatements.AsstatedinNote(III),24,ADAMArecognizesrevenuewhenthecustomerobtainscontroloverrelevantcommodities,andtheCompanyhasariskofoverstatingtherevenuebylatecutoffs.Therefore,weconsideredtheappropriatenessofcutoffsandcorrectnessofaccountingperiodsforprincipalactivitiesrevenuerecognitionasakeyauditmatter.

Auditresponse

Ourproceduresinrelationtothismattermainlyinclude:

1.Testingandassessingthedesign,implementationandoperatingeffectivenessofinternalcontrolsrelatingtothe

cut-offofprincipalactivitiesrevenuerecognition;

2.Reviewingthecontractswithkeycustomersforthetermsandconditionsrelatingtothetransferofcontrolsof

goodsandservices,andassessingwhetherthetimingofprincipalactivitiesrevenuerecognitioncomplieswiththeAccountingStandardsforBusinessEnterprises;

3.Performingcut-offtestbyselectingsamplesfromsalesofgoodsrecordedinthecurrentyear,checkingthesup-

portingdocumentssuchassalesinvoicesandinventorytransferdocuments,andcheckingwhethertheincomeisrecordedinthecorrectaccountingperiod;

4.Performinganalyticproceduresandcomparingwhetherthereisabnormalfluctuationinthesalesofthemajorsalesregionsinthecurrentperiodandthepreviousperiod,andanalyzingwhetherthereisanyabnormalityinthesalesreturnoftheproducts.

(Page3of6)

(II)ProvisionforImpairmentofGoodwillonCropProtectionUnits

AsstatedinNote(V),18,thecarryingamountofgoodwillwasRMB4,409,599,000asof31December2021,whichwasmainlyallocatedtoCropProtectionunit.AsdisclosedinNoteIII,19and20,ADAMA’sgoodwillarisingfrombusinesscombinationismeasuredatthecostlesstheaccumulatedimpairmentlossafterinitialrecognition,andshouldbeentitledtoimpairmenttestatleastattheendofeachyear.WhenperformingimpairmenttestofCropProtectionunitwithgoodwillallocated,themanagementdeterminedtherecoverableamountofrelevantassetsgroupofunitsbasedonthemodelofpresentvaluedeterminedonfuturecashflows,whichdependonthejudgementofthemanage-ment,itrequiresthemanagementtoestimatethecashflowsfromrelevantassetsgroupofunitsandselectanappro-priatediscountratethatreflectsthetimevalueofmoneyinthecurrentmarketandthespecificriskoftheassets.AssignificantaccountingestimatesandjudgmentsareinvolvedandthegoodwillallocatedtoCropProtectionunitissignificantinamount,weconsideredtheprovisionforimpairmentofgoodwillonCropProtectionunitasakeyauditmatter.

provisionforimpairmentofgoodwillonCropProtectionunit;

2.CheckingthebasisonwhichthemanagementallocatedgoodwilltoCropProtectionunitandassessingtherea-

sonableness;

3.Reviewingandassessingthereasonablenessofthemanagement'sadoptionofdiscountcashflowmodelfortheCropProtectionunitcontaininggoodwill;

4.Analyzingandreviewingthesignificantaccountingestimatesandjudgementsusedinestimationoffuturecashflows,includingthekeyparameterssuchasdiscountrateandgrowthrate,etc.,withassistancefrominternalvaluationspecialist;

5.Checkingtheexpectedfuturecashflowstohistoricaldataandothersupportingevidence,andassessthereasona-bleness;

6.Performingsensitivityanalysisonpossiblechangesinrelevantkeyassumptionsinimpairmenttestmodels.

(Page4of6)

IV.OtherInformation

ManagementoftheCompanyisresponsiblefortheotherinformation.Theotherinformationcomprisestheinfor-mationincludedinthe2021annualreport,butdoesnotincludethefinancialstatementsandourauditor'sreportthereon.

Ouropiniononthefinancialstatementsdoesnotcovertheotherinformationandwedonotexpressanyformofassuranceconclusionthereon.

Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadtheotherinformationand,indoingso,considerwhethertheotherinformationismateriallyinconsistentwiththefinancialstatementsorourknowledgeobtainedintheauditorotherwiseappearstobemateriallymisstated.

If,basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation;wearerequiredtoreportthatfact.Wehavenothingtoreportinthisregard.

V.ResponsibilitiesofManagementandThoseChargedwithGovernancefortheFinancialStatements

ThemanagementoftheCompanyisresponsibleforthepreparationandfairpresentationofthefinancialstatementsinaccordancewithAccountingStandardsforBusinessEnterprises,anddesigning,implementingandmaintaininginternalcontrolthatisnecessarytoenablethefinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Inpreparingthefinancialstatements,managementisresponsibleforassessingtheCompany'sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofac-countingunlessmanagementeitherintendstoliquidatetheCompanyortoceasesoperations,orhasnorealisticalter-nativebuttodoso.

ThosechargedwithgovernanceareresponsibleforoverseeingtheCompany'sfinancialreportingprocess.

VI.Auditor'sResponsibilitiesfortheAuditoftheFinancialStatements

Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditor'sreportthatincludesouropinion.Rea-sonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewithChinaStandardsonAuditingwillalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.

(Page5of6)

VI.Auditor'sResponsibilitiesfortheAuditoftheFinancialStatements-continued

AspartofanauditinaccordancewithChinaStandardsonAuditing,weexerciseprofessionaljudgmentandmaintainprofessionalskepticismthroughouttheaudit.Wealso:

(1)Identifyandassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror,designandperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientandappropriatetoprovideabasisforouropinion.Theriskofnotdetectingamaterialmisstatementresultingfromfraudishigherthanforoneresultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,misrepresentations,ortheoverrideofinternalcontrol;

(2)Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareap-

propriateinthecircumstances;

(3)Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesandrelateddisclosuresmadebythemanagement;

(4)Concludeontheappropriatenessofthemanagement'useofthegoingconcernbasisofaccountingand,basedontheauditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmaycastsignificantdoubtontheCompany'sabilitytocontinueasagoingconcern.Ifweconcludethatamaterialuncer-taintyexists,wearerequiredtodrawattentioninourauditor'sreporttotherelateddisclosuresinthefinancialstatementsor,ifsuchdisclosuresareinadequate,tomodifyouropinion.Ourconclusionsarebasedontheauditevidenceobtaineduptothedateofourauditor'sreport.However,futureeventsorconditionsmaycausetheCompanytoceasetocontinueasagoingconcern;

(5)Evaluatetheoverallpresentation(includingthedisclosures),structureandcontentofthefinancialstatements,andwhetherthefinancialstatementsrepresenttheunderlyingtransactionsandeventsinamannerthatachievesfairpresentation;

(6)Obtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivi-tieswithintheCompanytoexpressanopiniononthefinancialstatements.Weareresponsibleforthedirection,supervisionandperformanceofthegroupaudit.Weremainsolelyresponsibleforourauditopinion.

Wecommunicatewiththosechargedwithgovernanceregarding,amongothermatters,theplannedscopeandtimingoftheauditandsignificantauditfindings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit.

(Page6of6)

Wealsoprovidethosechargedwithgovernancewithastatementthatwehavecompliedwithrelevantethicalrequire-mentsregardingindependence,andtocommunicatewiththemallrelationshipsandothermattersthatmayreasonablybethoughttobearonourindependence,andwhereapplicable,relatedsafeguards.

Fromthematterscommunicatedwiththosechargedwithgovernance,wedeterminethosemattersthatwereofmostsignificanceintheauditofthefinancialstatementsofthecurrentyearandarethereforethekeyauditmatters.Wedescribethesemattersinourauditor'sreportunlesslaworregulationprecludespublicdisclosureaboutthematterorwhen,inextremelyrarecircumstances,wedeterminethatamattershouldnotbecommunicatedinourreportbecausetheadverseconsequencesofdoingsowouldreasonablybeexpectedtooutweighthepublicinterestbenefitsofsuchcommunication.

DeloitteToucheTohmatsuCPALLPChineseCertifiedPublicAccountant

ShanghaiChinaMouZhengfei(EngagementPartner)

ChineseCertifiedPublicAccountantJiYuting

29March2022

Thisindependentauditor'sreportofthefinancialstatementsandtheaccompanyingfinancialstatementsareEnglishtranslationsoftheindependentauditor'sreportandthefinancialstatementspreparedunderaccountingprinciplesandpracticesgenerallyacceptedinthePeople'sRepublicofChina.Thesefinancialstatementsarenotintendedtopresentthebalancesheetandresultsofoperationsandcashflowsinaccordancewithaccountingprinciplesandpracticesgen-erallyacceptedinothercountriesandjurisdictions.IncasetheEnglishversiondoesnotconformtotheChineseversion,theChineseversionprevails

(ExpressedinRMB'000)

ConsolidatedBalanceSheet

ConsolidatedBalanceSheet(continued)

IgnacioDominguez

LegalrepresentativeChiefoftheaccountingworkChiefoftheaccountingorgan

ThesefinancialstatementswereapprovedbytheBoardofDirectorsoftheCompanyonMarch29,2022.

Thenotesformpartofthesefinancialstatements.

(ExpressedinRMB'000)BalanceSheet

(ExpressedinRMB'000)ConsolidatedIncomeStatement

IncomeStatement

(ExpressedinRMB'000)ConsolidatedCashFlowStatement

(ExpressedinRMB'000)CashFlowStatement

ConsolidatedStatementofChangesinShareholders’Equity

FortheyearendedDecember31,2021

*ForfurtherinformationofthechangesduringtheperiodseeNoteV.37–Sharecapital.

(ExpressedinRMB'000)StatementofChangesinShareholders’Equity

FortheyearendedDecember31,2020

*ForfurtherinformationofthechangesduringtheyearseeNoteV.37–Sharecapital.

StatementofChangesinShareholders’Equity

IBASICCORPORATEINFORMATION

ADAMALtd.(hereinafterthe“Company”orthe“Group”)isacompanylimitedbysharesestablishedinChinawithitsheadofficelocatedinHubeiJingzhou.

InJune2020,thecontrollingshareholderoftheCompanychangedfromChinaNationalAgrochemicalCo,.Ltd.(hereinafter–“CNAC")toSyngentaGroupCo.,Ltd.(hereinafter“SyngentaGroup”).AsofAugust2021,followingthecombinationbetweenChinaNationalChemicalCo.,Ltd.(hereinafter-“ChemChina”)andSinochemHoldingsCorporationLtd.(hereinafter-“SinochemHoldings”),SyngentaGroup,andsubse-quentlytheCompany,areultimatelycontrolledbySinochemHoldings-parentofbothChemChinaandSinochemGroupCo.,Ltd.(hereinafter“SinochemHoldings”),subordinatedtoSASAC.

TheprincipalactivitiesoftheCompanyanditssubsidiaries(togetherreferredtoasthe“Group”)areengagedindevelopment,manufacturingandmarketingofagrochemicals,intermediatematerialsforotherindustries,foodadditivesandsyntheticaromaticproducts,mainlyforexport.Forinformationaboutthelargestsubsid-iariesoftheCompany,refertoNoteVII.

TheCompany’sconsolidatedfinancialstatementshadbeenapprovedbytheBoardofDirectorsoftheCom-panyonMarch29,2022.

DetailsofthescopeofconsolidatedfinancialstatementsaresetoutinNoteVII"Interestinotherentities",whereasthechangesofthescopeofconsolidationaresetoutinNoteVI"Changesinconsolidationscope".

IIBASISOFPREPARATION

1.Basisofpreparation

TheGrouphasadoptedtheAccountingStandardsforBusinessEnterprisesissuedbytheMinistryofFinance(the"MoF").Inaddition,theGrouphasdisclosedrelevantfinancialinformationinthesefinancialstatementsinaccordancewithInformationDisclosureandPresentationRulesforCompaniesOfferingSecuritiestothePublicNo.15－GeneralProvisionsonFinancialReporting(revisedbyChinaSecuritiesRegulatoryCom-mission(hereinafter"CSRC”)in2014).

2.Accrualbasisandmeasurementprinciple

TheGrouphasadoptedtheaccrualbasisofaccounting.Exceptforcertainfinancialinstrumentswhicharemeasuredatfairvalue,deferredtaxassetsandliabilities,assetsandliabilitiesrelatingtoemployeebenefits,provisions,andinvestmentsinassociatedcompaniesandjointventures,theGroupadoptsthehistoricalcostastheprincipleofmeasurementinthefinancialstatements.Whereassetsareimpaired,provisionsforassetimpairmentaremadeinaccordancewithrelevantrequirements.

Inthehistoricalcostmeasurement,assetsobtainedshallbemeasuredattheamountofcashorcashequiva-lentsorfairvalueoftheconsiderationpaid.Liabilitiesshallbemeasuredattheactualamountofcashorassetsreceived,orthecontractualamountinapresentobligation,ortheprospectiveamountofcashorcashequivalentspaidtodischargetheliabilities.

Fairvalueistheamountforwhichanassetcouldbeexchanged,oraliabilitysettled,betweenknowledgeable,willingmarketparticipantsinanarm’slengthtransactionatthemeasurementdate.Fairvaluemeasuredanddisclosedinthefinancialstatementsaredeterminedonthisbasiswhetheritisobservableorestimatedbyvaluationtechniques.

IIBASISOFPREPARATION-(cont’d)

2.Accrualbasisandmeasurementprinciple-(cont’d)

Thefollowingtableprovidesananalysis,groupedintoLevels1to3basedonthedegreetowhichthefairvalueinputisobservableandsignificanttothefairvaluemeasurementasawhole:

Level1-basedonquotedprices(unadjusted)inactivemarkets;

Level2-basedonvaluationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvalue

measurementisobservable(otherthanquotedpricesincludedwithinLevel1),eitherdirectlyorindirectly;

Level3-basedonvaluationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvalue

measurementisunobservable.

3.Goingconcern

Thefinancialstatementshavebeenpreparedonthegoingconcernbasis.

TheGrouphasperformedgoingconcernassessmentforthefollowing12monthsfromDecember31,2021andhavenotidentifiedanysignificantdoubtfulmatteroreventonthegoingconcern,assuchthefinancialstatementhavebeenpreparedonthegoingconcernbasis.

IIISIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES

1.Statementofcompliance

ThesefinancialstatementsareincompliancewiththeAccountingStandardsforBusinessEnterprisestotrulyandcompletelyreflecttheCompany'sconsolidatedfinancialpositionasatDecember31,2021andtheCom-pany'sconsolidatedoperatingresults,changesinshareholders'equityandcashflowsforthetwelvemonthsthenended.

2.Accountingperiod

TheGrouphasadoptedthecalendaryearasitsaccountingyear,i.e.from1Januaryto31December.

3.Businesscycle

Thecompanytakestheperiodfromtheacquisitionofassetsforprocessingtotheirrealisationincashorcashequivalentsasanormaloperatingcycle.Theoperatingcycleforthecompanyis12months.

4.Reportingcurrency

TheCompanyanditsdomesticsubsidiarieschooseRenminbi(hereinafter"RMB")astheirfunctionalcur-rency.Functionalcurrenciesofoverseassubsidiariesaredeterminedonthebasisoftheprincipaleconomicenvironmentinwhichtheoverseassubsidiariesoperate.ThefunctionalcurrencyoftheoverseassubsidiariesismainlytheUnitedStatesDollar(hereinafter"USD").Thepresentationcurrencyofthesefinancialstate-mentsisRenminbi.

IIISIGNIFICANTACCOUNTINGPOLICIESANDACCOUNTINGESTIMATES-(cont’d)

5.Businesscombinations

5.1Businesscombinationsinvolvingenterprisesundercommoncontrol

Abusinesscombinationinvolvingenterprisesundercommoncontrolisabusinesscombinationinwhichallofthecombiningenterprisesareultimatelycontrolledbythesamepartyorpartiesbothbeforeandafterthecombination,andthatcontrolisnottransitory.Assetsandliabilitiesobtainedshallbemeasuredattheirrespectivecarryingamountsasrecordedbythecombiningentitiesatthedateofthecombination.Thedif-ferencebetweenthecarryingamountofthenetassetsobtainedandthecarryingamountoftheconsiderationpaidforthecombinationisadjustedtothesharepremiumincapitalreserve.Ifthesharepremiumisnotsufficienttoabsorbthedifference,anyexcessshallbeadjustedagainstretainedearnings.Coststhataredirectlyattributabletothecombinationarechargedtoprofitorlossintheperiodinwhichtheyareincurred.

5.2Businesscombinationsnotinvolvingenterprisesundercommoncontrolandgoodwill.

Abusinesscombinationnotinvolvingenterprisesundercommoncontrolisabusinesscombinationinwhichallofthecombiningenterprisesarenotultimatelycontrolledbythesamepartyorpartiesbeforeandafterthecombination.

Thecostsofbusinesscombinationarethefairvalueoftheassetspaid,liabilitiesincurredorassumedandequityinstrumentsissuedbytheacquirerforthepurposeofachievingthecontrolrightsovertheacquiree.

Theintermediarycostssuchasaudit,legalservicesandassessmentconsultingcostsandotherrelatedman-agementcoststhataredirectlyattributabletothecombinationbytheacquirerarechargedtoprofitorlossintheperiodinwhichtheyareincurred.Directcapitalissuancecostsincurredinrespectofequityinstrumentsorliabilitiesissuedpursuanttothebusinesscombinationshouldbechargedtotherespectequityinstrumentsorliabilitiesuponinitialrecognitionoftheunderlyingequityinstrumentsorliabilities.

Theacquiree’sidentifiableassets,liabilitiesandcontingentliabilitiesacquiredbytheacquirerinabusinesscombination,thatmeettherecognitioncriteriashallbemeasuredatfairvalueattheacquisitiondate.Wherethecostofcombinationexceedstheacquirer’sinterestinthefairvalueoftheacquiree’sidentifiablenetassets,thedifferenceistreatedasanassetandrecognizedasgoodwill,whichismeasuredatcostoninitialrecognition.Wherethecostofcombinationislessthantheacquirer’sinterestinthefairvalueoftheac-quiree’sidentifiablenetassets,theremainingdifferenceisrecognizedimmediatelyinprofitorlossforthecurrentyear.

Thegoodwillraisedbecauseofthebusinesscombinationshouldbeseparatelydisclosedintheconsolidatedfinancialstatementandmeasuredbytheinitialamountlessanyaccumulativeimpairmentprovision.

Inabusinesscombinationachievedinstages,theGroupremeasureitspreviouslyheldequityinterestintheacquireeatitsacquisition-datefairvalueandrecognisetheresultinggainorloss,ifany,inprofitorloss.

6.Basisforpreparationofconsolidatedfinancialstatements

Thescopeofconsolidationinconsolidatedfinancialstatementsisdeterminedonthebasisofcontrol.ControlisachievedwhentheCompanyhaspowerovertheinvestee;isexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeinvestee;andhastheabilitytouseitspowertoaffectitsreturns.

ForasubsidiarydisposedofbytheGroup,theoperatingresultsandcashflowsbeforethedateofdisposal(thedatewhencontrolislost)areincludedinconsolidatedincomestatementandconsolidatedstatementofcashflows.

Forasubsidiaryacquiredthroughabusinesscombinationnotinvolvingenterprisesundercommoncontrol,theoperatingresultsandcashflowsfromtheacquisitiondate(thedatewhencontrolisobtained)areincludedinconsolidatedincomestatementandconsolidatedstatementofcashflows.

Forasubsidiaryacquiredthroughabusinesscombinationinvolvingenterprisesundercommoncontrol,itwillbefullyconsolidatedintoconsolidatedfinancialstatementsfromthedateonwhichthesubsidiarywasultimatelyundercommoncontrolbythesamepartyorparties.

ThesignificantaccountingpoliciesandaccountingyearsadoptedbythesubsidiariesaredeterminedbasedontheuniformaccountingpoliciesandaccountingyearssetoutbytheCompany.

Allsignificantintra-groupbalances,transactionsandunrealizedprofitsareeliminatedonconsolidation.

Theportionofsubsidiaries'equitythatisnotattributabletotheCompanyistreatedasnon-controllinginter-estsandpresentedas"non-controllinginterests"intheshareholders’equityinconsolidatedbalancesheet.Theportionofnetprofitsorlossesofsubsidiariesfortheperiodattributabletonon-controllinginterestsispresentedas"non-controllinginterests"inconsolidatedincomestatementbelowthe"netprofit"lineitem.Totalcomprehensiveincomeattributabletonon-controllingshareholdersispresentedseparatelyinthecon-solidatedincomestatementbelowthetotalcomprehensiveincomelineitem.

Whentheamountoflossfortheperiodattributabletothenon-controllingshareholdersofasubsidiaryex-ceedsthenon-controllingshareholders'portionoftheopeningbalanceofowners'equityofthesubsidiary,theexcessamountisstillallocatedagainstnon-controllinginterests.

Acquisitionofnon-controllinginterestsordisposalofequityinterestinasubsidiarythatdoesnotresultinthelossofcontroloverthesubsidiaryisaccountedforasequitytransactions.ThecarryingamountsoftheCompany'sinterestsandnon-controllinginterestsareadjustedtoreflectthechangesintheirrelativeinterestsinthesubsidiary.Thedifferencebetweentheamountbywhichthenon-controllinginterestsareadjustedandthefairvalueoftheconsiderationpaidorreceivedisadjustedtocapitalreserveunderowners'equity.Ifthecapitalreserveisnotsufficienttoabsorbthedifference,theexcessisadjustedagainstretainedearnings.Othercomprehensiveincomeattributedtothenon-controllinginterestisreattributedtotheshareholdersofthecompany.

6.Basisforpreparationofconsolidatedfinancialstatements-(cont’d)

AputoptionissuedbytheGrouptoholdersofnon-controllingintereststhatissettledincashorotherfinan-cialinstrumentisrecognizedasaliabilityatthepresentvalueoftheexerciseprice(accordingtothe"antic-ipatedacquisitionmethod").TheGroup’sshareofasubsidiary’sprofitsincludestheshareoftheholdersofthenon-controllingintereststowhichtheGroupissuedaputoption.

IncaseswhichtheGrouphasaCalloptioninadditiontothePutoptionabove,duetotheanticipatedacqui-sitionmethodimplementationnovalueisgiventotheCalloptionintheconsolidatedfinancialstatements.

WhentheGrouplosescontroloverasubsidiaryduetodisposalofcertainequityinterestorotherreasons,anyretainedinterestisre-measuredatitsfairvalueatthedatewhencontrolislost.Thedifferencebetween(i)theaggregateoftheconsiderationreceivedondisposalandthefairvalueofanyretainedinterestand(ii)theshareoftheformersubsidiary'snetassetscumulativelycalculatedfromtheacquisitiondateaccordingtotheoriginalproportionofownershipinterestisrecognizedasinvestmentincomeintheperiodinwhichcontrolislost.Othercomprehensiveincomeassociatedwiththedisposedsubsidiaryisreclassifiedtoinvest-mentincomeintheperiodinwhichcontrolislost.

7.Classificationandaccountingmethodsofjointarrangement

Jointarrangementinvolvesbytwoormorepartiesjointlycontrol.Jointcontrolisthecontractuallyagreedsharingofcontroloveraneconomicactivity,andexistsonlywhenthestrategicfinancialandoperatingdecisionsrelatingtotheactivityrequiretheunanimousconsentofthepartiessharingcontrol(theventures).

TheGroupmakestheclassificationofthejointarrangementsaccordingtotherightsandobligationsinthejointarrangementstoeitherjointoperationsorjointventures.

Ajointventureisajointarrangementwherebythepartiesthathavejointcontrolofthearrangementhaverightstothenetassetsofthejointarrangement.Jointventuresareaccountedforusingtheequitymethod.

8.Cashandcashequivalents

Cashcomprisescashonhandanddepositsthatcanbereadilywithdrawnondemand.CashequivalentsaretheGroup'sshort-term,highlyliquidinvestmentsthatarereadilyconvertibletoknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue.

9.Translationoftransactionsandfinancialstatementsdenominatedinforeigncurrencies

9.1Transactionsdenominatedinforeigncurrencies

Oninitialrecognition,foreigncurrencytransactionsaretranslatedintofunctionalcurrencyusingthespotexchangerateprevailingatthedateoftransaction.

Atthebalancesheetdate,foreigncurrencymonetaryitemsaretranslatedintofunctionalcurrencyusingthespotexchangeratesatthebalancesheetdate.Exchangedifferencesarisingfromthedifferencesbetweenthespotexchangeratesprevailingatthebalancesheetdateandthoseoninitialrecognitionoratthepreviousbalancesheetdatearerecognizedinprofitorlossfortheperiod,exceptthat(i)exchangedifferencesrelatedtoaspecific-purposeborrowingdenominatedinforeigncurrencythatqualifyforcapitalizationarecapital-izedaspartofthecostofthequalifyingassetduringthecapitalizationperiod.(ii)exchangedifferencesrelatedtohedginginstrumentsforthepurposeofhedgingagainstforeigncurrencyrisksareaccountedforusinghedgeaccounting.

Whenpreparingfinancialstatementsinvolvingforeignoperations,ifthereisanyforeigncurrencymonetaryitems,whichinsubstanceformspartofthenetinvestmentintheforeignoperations,exchangedifferencesarisingfromthechangesofforeigncurrencyarerecordedasothercomprehensiveincome,andwillbere-classifiedtoprofitorlossupondisposaloftheforeignoperations.

Foreigncurrencynon-monetaryitemsmeasuredathistoricalcostaretranslatedtotheamountsinfunctionalcurrencyatthespotexchangeratesonthedatesofthetransactionsandtheamountsinfunctionalcurrencyremainunchanged.

9.2Translationoffinancialstatementsdenominatedinforeigncurrency

Theopeningbalancesandthecomparativefiguresofprioryeararepresentedatthetranslatedamountsintheprioryear'sfinancialstatements.

OndisposaloftheGroup'sentireequityinterestinaforeignoperation,oruponalossofcontroloveraforeignoperationduetodisposalofcertainequityinterestinitorotherreasons,theGrouptransferstheaccumulatedtranslationdifferences,whichareattributabletotheowners'equityoftheCompanyandpre-sentedunderothercomprehensiveincometoprofitorlossintheperiodinwhichthedisposaloccurs.

9.Translationoftransactionsandfinancialstatementsdenominatedinforeigncurrencies-(cont’d)

9.2Translationoffinancialstatementsdenominatedinforeigncurrency-(cont’d)

IncaseofadisposalorotherreasonthatdoesnotresultintheGrouplosingcontroloveraforeignoperation,theproportionateshareofaccumulatedtranslationdifferencesarere-attributedtonon-controllinginterestsandarenotrecognizedinprofitandloss.Forpartialdisposalsofequityinterestinforeignoperations,whichareassociatesorjointventures,theproportionateshareoftheaccumulatedtranslationdifferencesarereclas-sifiedtoprofitorloss.

10.Financialinstruments

TheGrouprecognizesafinancialassetorafinancialliabilitywhenitbecomesapartytothecontractualprovisionsoftheinstrument.Atinitialrecognition,theGroupmeasuresafinancialassetorfinancialliabilityatitsfairvalueplusorminus(whichisnotmeasuredatfairvaluethroughprofitorloss)transactioncoststhataredirectlyattributabletotheacquisitionorissueofthefinancialassetorfinancialliability.Initialrecognitionintradereceivableswhichdonotcontainasignificantfinancingcomponent,shallbemadeac-cordingtotheirtransactionprice.

10.1Classificationandmeasurementoffinancialassets

Afterinitialrecognition,anentityshallmeasureafinancialassetat:(a)amortisedcost;(b)fairvaluethroughothercomprehensiveincome(“FVTOCI”);or(c)fairvaluethroughprofitorloss(“FVTPL”).

10.1.1Financialassetsatamortisedcost

Afinancialassetismeasuredatamortisedcostifbothofthefollowingconditionsaremet:(a)thefinancialassetisheldwithinabusinessmodelwhoseobjectiveistoholdfinancialassetsinordertocollectcontractualcashflows;and(b)thecontractualtermsofthefinancialassetgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandinterestontheprincipalamountoutstanding.

Suchfinancialassetsaresubsequentlymeasuredatamortisedcost,usingeffectiveinterestmethod.Gainsorlossesuponimpairmentandderecognitionarerecognizedinprofitorloss.

10.1.1.1Effectiveinterestmethodandamortisedcost

Effectiveinterestmethodrepresentsthemethodforcalculatingtheamortizedcostsandinterestincomeorexpenseofeachperiodinaccordancewiththeeffectiveinterestrateoffinancialassetsorfinancialliabilities(inclusiveofasetoffinancialassetsorfinancialliabilities).Effectiveinterestraterepresentstheratethatdiscountsthefuturecashflowovertheexpectedsubsistingperiodorshorterperiod,ifappropriate,ofthefinancialassetorfinancialliabilitytothecurrentcarryingvalueofsuchfinancialassetorfinancialliability.

Whencalculatingtheeffectiveinterestrate,theGroupwillconsidertheanticipatedfuturecashflow(notconsideringthefuturecreditloss)onthebasisofallcontractclausesoffinancialassetsorfinancialliabilities,aswellasconsiderallkindsofchargeswhichareanintegralpartoftheeffectiveinterestrate,includingtransactionfeesanddiscountorpremiumpaidorreceivedbetweenbothpartiesoffinancialassetorfinancialliabilitycontract.

10.Financialinstruments-(cont’d)

10.1Classificationandmeasurementoffinancialassets-(cont’d)

10.1.2FinancialassetsatFVTOCI

Afinancialassetismeasuredatfairvaluethroughothercomprehensiveincomeifbothofthefollowingconditionsaremet:(a)thefinancialassetisheldwithinabusinessmodelwhoseobjectiveisachievedbybothcollectingcontractualcashflowsandsellingfinancialassetsand(b)thecontractualtermsofthefinan-cialassetgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandinterestontheprincipalamountoutstanding.

Againorlossonafinancialassetmeasuredatfairvaluethroughothercomprehensiveincomeisrecognizedinothercomprehensiveincome,exceptforimpairmentgainsorlosses,foreignexchangegainsandlossesandinterestcalculatedusingtheeffectiveinterestmethod,untilthefinancialassetisderecognizedorreclas-sified.Whenthefinancialassetisderecognizedthecumulativegainorlosspreviouslyrecognizedinothercomprehensiveincomeisreclassifiedfromequitytoprofitorlossasareclassificationadjustment.

10.1.3FinancialassetsatFVTPL

FinancialassetsatFVTPLareeitherthosethatareclassifiedasfinancialassetsatFVTPLordesignatedasfinancialassetsatFVTPL.

AfinancialassetismeasuredatFVTPLunlessitismeasuredatamortisedcostoratFVTOCI.

TheGroupmay,atinitialrecognition,irrevocablydesignateafinancialassetasmeasuredatFVTPLifdoingsoeliminatesorsignificantlyreducesameasurementorrecognitioninconsistency(sometimesreferredtoasan‘accountingmismatch’)thatwouldotherwisearisefrommeasuringassetsorliabilitiesorrecognizingthegainsandlossesonthemondifferentbases.

AgainorlossonafinancialassetthatismeasuredatFVTPLisrecognizedinprofitorlossunlessitispartofahedgingrelationship.Dividendsarerecognizedinprofitorloss.

10.1.4DesignatedfinancialassetsatFVTOCI

Atinitialrecognition,theGroupmakesanirrevocableelectiontodesignatetoFVTOCIaninvestmentinanequityinstrumentthatisnotheldfortrading.

Whenanon-tradingequityinstrumentinvestmentisdesignatedasafinancialassetthatismeasuredatfairvaluethroughothercomprehensiveincome,thechangesinthefairvalueofthefinancialassetarerecognisedinothercomprehensiveincome.Uponrealizationtheaccumulatedgainsorlossesfromothercomprehensiveincomearetransferredfromothercomprehensiveincomeandincludedinretainedearnings.Duringthepe-riodinwhichtheGroupholdsthesenon-tradinginvestmentinstruments,therighttoreceivedividendsintheGrouphasbeenestablished,andtheeconomicbenefitsrelatedtodividendsarelikelytoflowintotheGroup,andwhentheamountofdividendscanbereliablymeasured,thedividendincomeisrecognizedinthecurrentprofitandloss.

10.2Impairmentoffinancialassets

TheGrouprecognizesalossallowanceforexpectedcreditlossesonfinancialassetsthatareclassifiedtoamortisedcostandFVTOCI.

TheGroupalwaysmeasuresthelossallowanceatanamountequaltolifetimeexpectedcreditlossesfortradereceivables.

Forfinancialassetsotherthantradereceivables,theGroupinitiallymeasurethelossallowanceforthatfinancialinstrumentatanamountequalto12-monthexpectedcreditlosses.Ateachbalancesheetdate,ifthecreditriskonthatfinancialinstrumenthasincreasedsignificantlysinceinitialrecognition,theGroupmeasuresthelossallowanceforafinancialinstrumentatanamountequaltothelifetimeexpectedcreditlosses.TheGrouprecognizesinprofitorloss,asanimpairmentgainorloss,theamountofexpectedcreditlosses(orreversal)thatisrequiredtoadjustthelossallowancetotheamountthatisrequiredtoberecognized.

10.2.1Significantincreasesincreditrisk

Ateachbalancesheetdate,theGroupassesseswhetherthecreditriskonafinancialinstrumenthasin-creasedsignificantlysinceinitialrecognition.

TheGroupmainlyconsidersthefollowinglistofinformationinassessingchangesincreditrisk:

(a)significantchangesininternalpriceindicatorsofcreditriskasaresultofachangeincreditrisksinceinception.(b)significantchangesinexternalmarketindicatorsofcreditriskforaparticularfinancialinstrument

orsimilarfinancialinstrumentswiththesameexpectedlife.(c)asignificantchangeinthedebtors’abilitytomeetitsdebtobligations.(d)anactualorexpectedsignificantchangeintheoperatingresultsofthedebtor.(e)significantincreasesincreditriskonotherfinancialinstrumentsofthesamedebtor.(f)anactualorexpectedsignificantadversechangeintheregulatory,economic,ortechnologicalenvi-

ronmentofthedebtor.(g)significantchangesinthevalueofthecollateralsupportingtheobligationorinthequalityofthird-

partyguaranteesorcreditenhancements,whichareexpectedtoreducethedebtor’seconomic

incentivetomakescheduledcontractualpaymentsortootherwisehaveaneffectontheprobability

ofadefaultoccurring.(h)significantchangesthatareexpectedtoreducethereceivable’seconomicincentivetomake

scheduledcontractualpayments.(i)significantchangesintheexpectedperformanceandbehaviourofthedebtor.(j)pastdueinformation.

TheGroupassumesthatthecreditriskonafinancialinstrumenthasnotincreasedsignificantlysinceinitialrecognitionifthefinancialinstrumentisdeterminedtohavelowcreditriskatthereportingdate.

10.2Impairmentoffinancialassets-(cont’d)

10.2.2Credit-impairedfinancialasset

Afinancialassetiscredit-impairedwhenoneormoreeventsthathaveadetrimentalimpactontheestimatedfuturecashflowsofthatfinancialassethaveoccurred.Evidencethatafinancialassetiscredit-impairedincludeobservabledataaboutthefollowingevents:

(a)significantfinancialdifficultyoftheissuerorthereceivable;(b)abreachofcontract,suchasadefaultorpastdueevent;(c)thelender(s)ofthereceivable,foreconomicorcontractualreasonsrelatingtothereceivable’sfinan-cialdifficulty,havinggrantedtothereceivableaconcession(s)thatthelender(s)wouldnototherwiseconsider;(d)itisbecomingprobablethatthereceivablewillenterbankruptcyorotherfinancialreorganization;

10.2.3Recognitionofexpectedcreditlosses

Forthepurposeofdeterminingsignificantincreasesincreditriskandrecognizingalossallowanceonacollectivebasis,financialinstrumentsaregroupedonthebasisofsharedcreditrisk.Examplesofsharedcreditriskcharacteristicsmayinclude,butarenotlimitedto,the:(a)instrumenttype;(b)creditriskratings;(c)collateraltype;(d)industry;(e)geographicallocationofthedebtor;and(f)thevalueofcollateralrela-tivetothefinancialassetifithasanimpactontheprobabilityofadefaultoccurring.

Expectedcreditlossesoffinancialinstrumentsaredeterminedasthepresentvalueofthedifferencebe-tween:(a)thecontractualcashflowsthatareduetoanentityunderthecontract;and(b)thecashflowsthattheentityexpectstoreceive.

Forafinancialassetthatiscredit-impairedatthereportingdate,anentityshallmeasuretheexpectedcreditlossesasthedifferencebetweentheasset’sgrosscarryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedatthefinancialasset’soriginaleffectiveinterestrate.Anyadjustmentisrecognizedinprofitorlossasanimpairmentgainorloss.

TheGroupmeasuresexpectedcreditlossesofafinancialinstrumentinawaythatreflects:

(a)anunbiasedandprobability-weightedamountthatisdeterminedbyevaluatingarangeofpossibleoutcomes;(b)thetimevalueofmoney;and(c)reasonableandsupportableinformationthatisavailablewithoutunduecostoreffortatthereportingdateaboutpastevents,currentconditionsandforecastsoffutureeconomicconditions.

10.2.4Written-offoffinancialassets

TheGroupdirectlyreducesthegrosscarryingamountofafinancialassetwhentheentityhasnoreasonableexpectationsofrecoveringafinancialassetinitsentiretyoraportionthereof.Awrite-offconstitutesaderecognitionevent.

10.3Transferoffinancialasset

TheGroupderecognizesafinancialassetifoneofthefollowingconditionsissatisfied:(i)thecontractualrightstothecashflowsfromthefinancialassetexpire;or(ii)thefinancialassethasbeentransferredandsubstantiallyalltherisksandrewardsofownershipofthefinancialassettransferredtothetransferee;or(iii)althoughthefinancialassethasbeentransferred,theGroupneithertransfersnorretainssubstantiallyalltherisksandrewardsofownershipofthefinancialassetbuthasnotretainedcontrolofthefinancialasset.

IftheGroupneithertransfersnorretainssubstantiallyalltherisksandrewardsofownershipofafinancialasset,anditretainscontrolofthefinancialasset,itrecognizesthefinancialassettotheextentofitscontin-uinginvolvementinthetransferredfinancialassetandrecognizesanassociatedliability.TheextentoftheGroup’scontinuinginvolvementinthetransferredassetistheextenttowhichitisexposedtochangesinthevalueofthetransferredasset.

Whenthecompanyisderecognizingafinancialassetinitsentirety,exceptforequityinstrumentdesignatedtoFVTOCI,thedifferencebetween(i)thecarryingamountofthefinancialassettransferred;and(ii)thesumoftheconsiderationreceivedfromthetransferisrecognizedinprofitorloss.

10.4Classificationandmeasurementoffinancialliabilities

Debtandequityinstrumentsareclassifiedaseitherfinancialliabilitiesorasequityinaccordancewiththesubstanceofthecontractualarrangementsandthedefinitionsofafinancialliabilityandanequityinstrument.

AllfinancialliabilitiesaresubsequentlymeasuredatFVTPLorotherfinancialliabilities.

FinancialliabilitiesareclassifiedasatFVTPLwhenthefinancialliabilityis(i)heldfortradingor(ii)itisdesignatedasatFVTPL.Thefinancialliabilityotherthanderivativefinancialliabilitiesarestatedasliabil-itiesheldfortrading.

Otherfinancialliabilitiesaresubsequentlymeasuredatamortizedcostbyusingeffectiveinterestmethod.Gainorlossarisingfromderecognitionoramortizationisrecognizedincurrentprofitorloss.

10.5Derecognitionoffinancialliabilities

Financialliabilitiesarederecognizedinfullorinpartonlywhenthepresentobligationisdischargedinfullorinpart.AnagreemententeredintoforcebetweentheGroup(debtor)andacreditortoreplacetheoriginalfinancialliabilitieswithnewfinancialliabilitieswithsubstantiallydifferentterms,derecognizetheoriginalfinancialliabilitiesaswellasrecognizethenewfinancialliabilities.Whenfinancialliabilitiesisderecog-nizedinfullorinpart,thedifferencebetweenthecarryingamountofthefinancialliabilitiesderecognizedandtheconsiderationpaid(includingtransferrednon-cashassetsornewfinancialliability)isrecognizedinprofitorlossforthecurrentperiod.

10.6Derivatives

Derivativefinancialinstrumentsincludeforwardexchangecontracts,currencyswapsandforeignexchangeoptions,etc.Derivativesareinitiallymeasuredatfairvalueatthedatewhenthederivativecontractsareenteredintoandaresubsequentlyre-measuredatfairvalue.Theresultinggainorlossisrecognizedinprofitorlossunlessthederivativeisdesignatedandhighlyeffectiveasahedginginstrument,inwhichcasethetimingoftherecognitioninprofitorlossdependsonthenatureofthehedgerelationship(NoteIII28.1).

10.7Offsettingfinancialassetsandfinancialliabilities

Financialassetsandfinancialliabilitiesshallbepresentedseparatelyinthebalancesheetandshallnotbeoffset,exceptforcircumstanceswheretheGrouphasalegalrightthatiscurrentlyenforceabletooffsettherecognizedfinancialassetsandfinancialliabilities,andintendseithertosettleonanetbasis,ortorealizethefinancialassetandsettlethefinancialliabilitysimultaneously,afinancialassetandafinancialliabilityshallbeoffsetandthenetamountispresentedinthebalancesheet.

10.8Equityinstruments

Theconsiderationreceivedfromtheissuanceofequityinstrumentsnetoftransactioncostsisrecognizedinshareholders’equity.ConsiderationandtransactioncostspaidbytheCompanyforrepurchasingself-issuedequityinstrumentsaredeductedfromshareholders’equity.

WhentheCompanyrepurchasesitsownshares,thosesharesaretreatedastreasuryshares.Allexpendituresrelatingtotherepurchasearerecordedinthecostofthetreasuryshares,withthetransactionenteringintothesharecapital.Treasurysharesareexcludedfromprofitdistributionsandarestatedasadeductionundershareholders’equityinthebalancesheet.

11.Receivables

Receivablesareassessedforimpairmentonacollectivegroupand/oronanindividualbasisasfollows:

Expectedcreditlossesinrespectofareceivablesismeasuredatanamountequaltolifetimeexpectedcreditlosses.Theassessmentismadecollectivelyforaccountreceivables,wherereceivablessharesimilarcreditriskcharacteristicsbasedongeographicallocation,usingtheexpectedcreditlossesmodelincludinginter-aliaaginganalysis,historicallossexperiencesadjustedbytheobservablefactorsreflectingcurrentandex-pectedfutureeconomicconditions.Theratiooftheaccountreceivablescollectiveprovisionforexpectedcreditlossesinwhichcreditlosseshasnotoccurredisbetween0%-4.36%.

Whencreditriskonareceivablehasincreasedsignificantlysinceinitialrecognition,thegrouprecordsspe-cificprovisionorcollectiveprovision,whichisdeterminedforgroupsofsimilarassetsincountriesinwhichtherearelargenumberofcustomerswithimmaterialbalances.

Inassessingwhetherthecreditriskonareceivablehasincreasedsignificantlysinceinitialrecognition,theGroupcomparestheriskofadefaultoccurringonthereceivableatthereportingdatewiththeriskofadefaultoccurringonthereceivableatthedateofinitialrecognitionandconsidersbothquantitativeandqualitativeinformationthatisreasonableandsupportable,includingobservabledatathatcomestotheatten-tionoftheGroupaboutlosseventssuchasasignificantdeclineinthesolvencyofanindividualdebtorortheportfolioofdebtors,andsignificantchangesinthefinancialconditionthathaveanadverseeffectonthedebtor.

12.Inventories

12.1Categoriesofinventoriesandinitialmeasurement

TheGroup'sinventoriesmainlyincluderawmaterials,workinprogress,semi-finishedgoods,finishedgoodsandreusablematerials.Reusablematerialsincludelow-valueconsumables,packagingmaterialsandothermaterials,whichcanbeusedrepeatedlybutdonotmeetthedefinitionoffixedassets.

Inventoriesareinitiallymeasuredatcost.Costofinventoriescomprisesallcostsofpurchase,costsofcon-versionandotherexpendituresincurredinbringingtheinventoriestotheirpresentlocationandconditionincludingdirectlaborcostsandanappropriateallocationofproductionoverheads.

12.2Valuationmethodofinventoriesupondelivery

Theactualcostofinventoriesupondeliveryiscalculatedusingtheweightedaveragemethod.

12.3Basisfordeterminingnetrealizablevalueofinventoriesandprovisionmethodsfordeclineinvalueofin-

ventories

Atthebalancesheetdate,inventoriesaremeasuredatthelowerofcostandnetrealizablevalue.Ifthenetrealizablevalueisbelowthecostofinventories,aprovisionfordeclineinvalueofinventoriesismade.Netrealizablevalueistheestimatedsellingpriceintheordinarycourseofbusinesslesstheestimatedcostsofcompletion,theestimatedcostsnecessarytomakethesaleandrelevanttaxes.

12.Inventories-(cont’d)

Aftertheprovisionfordeclineinvalueofinventoriesismade,ifthecircumstancesthatpreviouslycausedinventoriestobewrittendownbelowcostnolongerexistsothatthenetrealizablevalueofinventoriesishigherthantheircarryingamount,theoriginalprovisionfordeclineinvalueisreversedandthereversalisincludedinprofitorlossfortheperiod.

12.4Theperpetualinventorysystemismaintainedforstocksystem.

13.Long-termequityinvestments

Long-termequityinvestmentsincludeinvestmentsinsubsidiaries,jointventuresandassociates.

SubsidiariesarethecompaniesthatarecontrolledbytheCompany.AssociatesarethecompaniesoverwhichtheGrouphassignificantinfluence.JointventuresarejointarrangementsoverwhichtheGrouphasjointcontrolalongwithotherinvestorsandhasrightstothenetassetsofthejointarrangement.

TheCompanyaccountsfortheinvestmentinsubsidiariesathistoricalcostintheCompany'sfinancialstate-ments.Investmentsinassociatesandjointventuresareaccountedforunderequitymethod.

13.1Determinationofinvestmentcost

Foralong-termequityinvestmentacquiredthroughabusinesscombinationinvolvingenterprisesundercommoncontrol,theinvestmentcostofthelong-termequityinvestmentistheshareofthecarryingamountoftheshareholders'equityoftheacquireeattributabletotheultimatecontrollingpartyatthedateofcombi-nation.Thedifferencebetweeninitialinvestmentcostandcashpaid,non-cashassetstransferredandbookvalueofliabilitiesassumed,isadjustedincapitalreserve.Ifthebalanceofcapitalreserveisnotsufficienttoabsorbthedifference,anyexcessisadjustedtoretainedearnings.

Foralong-termequityinvestmentacquiredthroughbusinesscombinationnotinvolvingenterprisesundercommoncontrol,theinvestmentcostofthelong-termequityinvestmentisthecostofacquisition.Forabusinesscombinationnotinvolvingenterprisesundercommoncontrolachievedinstagesthatinvolvesmul-tipleexchangetransactions,theinitialinvestmentcostiscarriedattheaggregateofthecarryingamountoftheacquirer’spreviouslyheldequityinterestintheacquireeandthenewinvestmentcostincurredontheacquisitiondate.

Regardingthelong-termequityinvestmentacquiredotherwisethanthroughabusinesscombination,ifthelong-termequityinvestmentisacquiredbycash,thehistoricalcostisdeterminedbasedontheamountofcashpaidandpayable;ifthelong-termequityinvestmentisacquiredthroughtheissuanceofequityinstru-ments,thehistoricalcostisdeterminedbasedonthefairvalueoftheequityinstrumentsissued.

13.Long-termequityinvestments-(cont’d)

13.2Subsequentmeasurementandrecognitionofprofitorloss

Ifthelong-termequityinvestmentisaccountedforatcost,itshouldbemeasuredathistoricalcostlessaccumulatedimpairmentlosses.Dividenddeclaredbytheinvesteeshouldbeaccountedforasinvestmentincome.

Undertheequitymethod,wherethelong-termequityinvestmentinitialinvestmentcostexceedstheGroup’sshareofthefairvalueoftheinvestee’sidentifiablenetassetsatthetimeofacquisition,noadjustmentismadetotheinitialinvestmentcost.WheretheinitialinvestmentcostislessthantheGroup’sshareofthefairvalueoftheinvestee’sidentifiablenetassetsatthetimeofacquisition,thedifferenceisrecognizedinprofitorlossfortheperiod,andthecostofthelong-termequityinvestmentisadjustedaccordingly.

Undertheequitymethod,theGrouprecognizesitsshareofthenetprofitorlossandothercomprehensiveincomeoftheinvesteefortheperiodasinvestmentincomeorlossandothercomprehensiveincomefortheperiod.TheGrouprecognizesitsshareoftheinvestee’snetprofitorlossbasedonthefairvalueoftheinvestee’sindividualseparatelyidentifiableassets,etc.attheacquisitiondateaftermakingappropriatead-justmentstobeconfirmedwiththeGroup'saccountingpoliciesandaccountingperiod.TheGroupdiscon-tinuesrecognizingitsshareofnetlossesoftheinvesteeafterthecarryingamountofthelong-termequityinvestmenttogetherwithanylong-termintereststhatinsubstanceformpartofitsnetinvestmentintheinvesteeisreducedtozero.IftheGrouphasincurredobligationstoassumeadditionallossesoftheinvestee,aprovisionisrecognizedaccordingtotheexpectedobligation,andrecordedasinvestmentlossfortheperiod.

13.3Basisfordeterminingcontrol,jointcontrolandsignificantinfluenceoverinvestee

ControlisachievedwhentheCompanyhaspowerovertheinvestee;isexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeinvestee;andhastheabilitytouseitspowertoaffectitsreturns.

Jointcontrolisthecontractuallyagreedsharingofcontroloveraneconomicactivity,andexistsonlywhenthestrategicfinancialandoperatingpolicydecisionsrelatingtotheactivityrequiretheunanimousconsentofthepartiessharingcontrol.

Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvesteebutisnotcontrolorjointcontroloverthosepolicies.

Whendeterminingwhetheraninvestingenterpriseisabletoexercisecontrolorsignificantinfluenceoveraninvestee,theeffectofpotentialvotingrightsoftheinvestee(forexample,warrantsandconvertibledebts)heldbytheinvestingenterprisesorotherpartiesthatarecurrentlyexercisableorconvertibleshallbecon-sidered.

13.4Methodsofimpairmentassessmentanddeterminingtheprovisionforimpairmentloss

Iftherecoverableamountsoftheinvestmentstosubsidiaries,jointventuresandassociatesarelessthantheircarryingamounts,animpairmentlossshouldberecognizedtoreducethecarryingamountstotherecoverableamounts(NoteIII20).

13.5Thedisposaloflong-termequityinvestment

Ondisposalofalongtermequityinvestment,thedifferencebetweentheproceedsactuallyreceivedandreceivableandthecarryingamountisrecognizedinprofitorlossfortheperiod.

14.Investmentproperties

Investmentpropertyreferstorealestateheldtoearnrentalsorforcapitalappreciation,orboth,includingleasedlanduserights,landuserightsheldandprovidedfortransferringafterappreciationandleasedcon-structions,etc.

Investmentpropertyisinitiallymeasuredatcost.SubsequentexpendituresrelatedtoaninvestmentpropertyshallbeincludedincostofinvestmentpropertyonlywhentheeconomicbenefitsassociatedwiththeassetwilllikelyflowtotheGroupanditscostcanbemeasuredreliably.Allothersubsequentexpendituresoninvestmentpropertyshallbeincludedinprofitorlossforthecurrentperiodwhenincurred.

TheGroupadoptscostmethodforsubsequentmeasurementofinvestmentproperty,whichisdepreciatedoramortizedusingthesamepolicyasthatforbuildingsandlanduserights.

Whenaninvestmentpropertyissold,transferred,retiredordamaged,theamountofproceedsondisposalofthepropertynetofthecarryingamountandrelatedtaxesandsurchargesisrecognizedinprofitorlossforthecurrentperiod.

15.Fixedassets

15.1Recognitioncriteriaforfixedassets

FixedassetsincludelandownedbytheGroupandbuildings,machineryandequipment,motorvehicles,officeequipmentandothers.

Fixedassetsaretangibleassetsthatareheldforuseintheproductionorsupplyofgoodsorforadministrativepurposes,andhaveusefullivesofmorethanoneaccountingyear.AfixedassetisrecognizedonlywhenitisprobablethateconomicbenefitsassociatedwiththeassetwillflowtotheGroupandthecostoftheassetcanbereliablymeasured.Purchasedorconstructedfixedassetsareinitiallymeasuredatcostwhenacquired.

SubsequentexpendituresincurredforthefixedassetareincludedinthecostofthefixedassetandifitisprobablethateconomicbenefitsassociatedwiththeassetwillflowtotheGroupandthesubsequentexpend-iturescanbemeasuredreliably.Othersubsequentexpendituresarerecognizedinprofitorlossintheperiodinwhichtheyareincurred.

15.Fixedassets-(cont’d)

15.2Depreciationofeachcategoryoffixedassets

Fixedassetisdepreciatedbasedonthecostoffixedassetrecognizedlessexpectednetresidualvalueoveritsusefullifeusingthestraight-linemethodsincethemonthsubsequenttotheoneinwhichitisreadyforintendeduse.Depreciationiscalculatedbasedonthecarryingamountofthefixedassetafterimpairmentovertheestimatedremainingusefullifeoftheasset.

TheGroupreviewstheusefullifeandestimatednetresidualvalueofafixedassetandthedepreciationmethodappliedatleastonceateachfinancialyear-end,andaccountforanychangeasachangeinanac-countingestimate.

Theestimatedusefullife,estimatednetresidualvalueandannualdepreciationrateofeachcategoryoffixedassetsareasfollows:

OverseasLandownedbytheGroupisnotdepreciated.

15.3Otherexplanations

Ifafixedassetisupondisposalornofutureeconomicbenefitsareexpectedtobegeneratedfromitsuseordisposal,thefixedassetisderecognized.Whenafixedassetissold,transferred,retiredordamaged,theamountofanyproceedsondisposaloftheassetnetofthecarryingamountandrelatedtaxesisrecognizedinprofitorlossfortheperiod.

Thedifferencebetweenrecoverableamountsofthefixedassetsunderthecarryingamountisreferredtoasimpairmentloss(NoteIII20).

16.Constructioninprogress

Constructioninprogressismeasuredatitsactualcosts.Theactualcostsincludevariousconstruction,instal-lationcosts,borrowingcostscapitalizedandotherexpendituresincurreduntilsuchtimeastherelevantassetsarecompletedandreadyforitsintendeduse.Whentheassetconcernedisreadyforitsintendeduse,thecostoftheassetistransferredtofixedassetsanddepreciatedstartingfromthefollowingmonth.

Thedifferencebetweenrecoverableamountsoftheconstructioninprogressunderthecarryingamountisreferredtoasimpairmentloss(NoteIII20).

17.Borrowingcosts

Borrowingcostsdirectlyattributabletotheacquisition,constructionorproductionofqualifyingassetarecapitalizedwhenexpendituresforsuchassetandborrowingcostsareincurredandactivitiesrelatingtotheacquisition,constructionorproductionoftheassetthatarenecessarytopreparetheassetforitsintendeduseorsalehavecommenced.Capitalizationofborrowingcostsceaseswhenthequalifyingassetbeingacquired,constructedorproducedbecomesreadyforitsintendeduseorsale.Borrowingcostsincurredsubsequentlyshouldbechargedtoprofitorloss.Capitalizationofborrowingcostsissuspendedduringperiodsinwhichtheacquisition,constructionorproductionofaqualifyingassetissuspendedabnormallyandwhenthesus-pensionisforacontinuousperiodofmorethan3months.Capitalizationissuspendeduntiltheacquisition,constructionorproductionoftheassetisresumed.

Wherefundsareborrowedunderaspecific-purposeborrowing,theamountofinteresttobecapitalizedistheactualinterestexpensesincurredonthatborrowingfortheperiodlessanybankinterestearnedfromdepositingtheborrowedfundsbeforebeingusedontheassetoranyinvestmentincomeonthetemporaryinvestmentofthosefunds.

Wherefundsareborrowedundergeneral-purposeborrowings,theGroupdeterminestheamountofinteresttobecapitalizedonsuchborrowingsbyapplyingacapitalizationratetotheweightedaverageoftheexcessofcumulativeexpendituresontheassetovertheamountsofspecific-purposeborrowings.Thecapitalizationrateistheweightedaverageoftheinterestratesapplicabletothegeneral-purposeborrowings.

Duringthecapitalizationperiod,exchangedifferencesonforeigncurrencyspecific-purposeborrowingarefullycapitalizedwhereasexchangedifferencesonforeigncurrencygeneral-purposeborrowing,chargedtoprofitorloss.

18.Intangibleassets

18.1Valuationmethods,usefullife,impairmenttest

TheGroup’sintangibleassetsincludeproductregistrationassets,intangibleassetsuponpurchaseofproducts,marketingrightsandrightstousetradenamesandtrademarks,landuserights,softwareandcustomerrela-tions.Intangibleassetsarestatedatcostlessaccumulatedamortizationandimpairmentlosses.

Whenanintangibleassetwithafiniteusefullifeisavailableforuse,itsoriginalcostlessanyaccumulatedimpairmentlossesisamortizedoveritsestimatedusefullifeusingthestraight-linemethod.Anintangibleassetwithanindefiniteusefullifeisnotamortized.

Foranintangibleassetwithafiniteusefullife,theGroupreviewstheusefullifeandamortizationmethodattheendoftheyear,andmakesadjustmentswhennecessary.Therespectiveamortizationperiodsforsuchintangibleassetsareasfollows:

Thedifferencebetweenrecoverableamountsoftheintangibleassetsunderthecarryingamountisreferredtoasimpairmentloss(seeNoteIII20–Impairmentoflong-termassets).

18.Intangibleassets-(cont’d)

18.2Researchanddevelopmentexpenditure

Internalresearchanddevelopmentprojectexpenditureswereclassifiedintoresearchexpendituresandde-velopmentexpendituresdependingonitsnatureandthegreateruncertaintywhethertheresearchactivitiesbecomingtointangibleassets.

Expenditureduringtheresearchphaseisrecognizedasanexpenseintheperiodinwhichitisincurred.Expenditureduringthedevelopmentphasethatmeetsallofthefollowingconditionsatthesametimeisrecognizedasintangibleasset:

-Itistechnicallyfeasibletocompletetheintangibleassetsothatitwillbeavailableforuseorsale;-TheGrouphastheintentiontocompletetheintangibleassetanduseorsellit;-TheGroupcandemonstratethewaysinwhichtheintangibleassetwillgenerateeconomicbenefits;-Theavailabilityofadequatetechnical,financialandotherresourcestocompletethedevelopmentandtheabilitytouseorselltheintangibleasset;-Theexpenditureattributabletotheintangibleassetduringitsdevelopmentphasecanbereliablymeas-ured.Expendituresthatdonotmeetalloftheaboveconditionsatthesametimearerecognizedinprofitorlosswhenincurred.Iftheexpenditurescannotbedistinguishedbetweentheresearchphaseanddevelopmentphase,theGrouprecognizesalloftheminprofitorlossfortheperiod.Expendituresthathavepreviouslybeenrecognizedintheprofitorlosswouldnotberecognizedasanassetinsubsequentyears.Thoseexpend-iturescapitalizedduringthedevelopmentstagearerecognizedasdevelopmentcostsincurredandwillbetransferredtointangibleassetwhentheunderlyingprojectisreadyforanintendeduse.

19.Goodwill

Theinitialcostofgoodwillrepresentstheexcessofcostofacquisitionovertheacquirer’sinterestinthefairvalueoftheidentifiablenetassetsoftheacquireeunderabusinesscombinationnotinvolvingenterprisesundercommoncontrol.

Goodwillisnotamortizedandisstatedinthebalancesheetatcostlessaccumulatedimpairmentlosses(seeNoteIII20–Impairmentoflong-termassets).Ondisposalofanassetgroup

orasetofassetgroups,anyattributablegoodwilliswrittenoffandincludedinthecalculationoftheprofitorlossondisposal.

20.Impairmentoflong-termassets

TheCompanyassessesateachbalancesheetdatewhetherthereisanyindicationthatthefixedassets,con-structioninprogress,rightofuseassets,intangibleassetswithfiniteusefullives,investmentpropertiesmeasuredathistoricalcost,investmentsinsubsidiaries,jointventuresandassociatesmaybeimpaired.Ifthereisanyindicationthatsuchassetsmaybeimpaired,recoverableamountsareestimatedforsuchassets.Therecoverableamountofanassetisthehigherofitsfairvaluelesscoststosellandthepresentvalueofthefuturecashflowestimatedtobederivedfromtheasset.TheGroupestimatestherecoverableamountonanindividualbasis.Ifitisnotpossibletoestimatetherecoverableamountoftheindividualasset,theGroupdeterminestherecoverableamountoftheassetgrouptowhichtheassetbelongs.Identificationofanassetgroupisbasedonwhethermajorcashinflowsgeneratedbytheassetgrouparelargelyindependentofthecashinflowsfromotherassetsorassetgroups.

20.Impairmentoflong-termassets-(cont’d)

Goodwillarisingfromabusinesscombinationistestedforimpairmentatleastateachyearend,irrespectiveofwhetherthereisanyindicationthattheassetmaybeimpaired.Forthepurposeofimpairmenttesting,thecarryingamountofgoodwillacquiredinabusinesscombinationisallocatedfromtheacquisitiondateonareasonablebasistoeachoftherelatedassetgroups;ifitisimpossibletoallocatetotherelatedassetgroups,itisallocatedtoeachoftherelatedsetofassetgroups.EachoftherelatedassetgroupsorsetofassetgroupsisanassetgrouporsetofassetgroupthatisabletobenefitfromthesynergiesofthebusinesscombinationandshallnotbelargerthanareportablesegmentdeterminedbytheGroup.Ifthecarryingamountoftheassetgrouporsetofassetgroupsishigherthanitsrecoverableamount,theamountoftheimpairmentlossfirstreducedbythecarryingamountofthegoodwillallocatedtotheassetgrouporsetofassetgroups,andthenthecarryingamountofotherassets(otherthanthegoodwill)withintheassetgrouporsetofassetgroups,proratabasedonthecarryingamountofeachasset.

Oncetheimpairmentlossofsuchassetsisrecognized,itwillnotbereversedinanysubsequentperiod.

21.Employeebenefits

21.1Short-termemployeebenefits

Employeewagesorsalaries,bonuses,socialsecuritycontributions,measuredonanon-discountedbasis,andtheexpenseisrecordedwhentherelatedserviceisprovided.Aprovisionforshort-termemployeebenefitsinrespectofcashbonusesisrecognizedintheamountexpectedtobepaidwheretheGrouphasacurrentlegalorconstructiveobligationtopaythesaidamountforservicesprovidedbytheemployeeinthepastandtheamountcanbeestimatedreliably.

21.2Post-employmentbenefits

Post-employmentbenefitsareclassifiedintodefinedcontributionplansanddefinedbenefitplans.

Adefinedcontributionplanisapost-employmentbenefitplanunderwhichtheGrouppayscontributionstoaseparateentityandhasnolegalorconstructiveobligationtopayfurtheramounts.Obligationsforcontri-butionstodefinedcontributionplansarerecognizedasanexpenseinprofitorlossintheperiodsduringwhichrelatedservicesarerenderedbyemployees.

DefinedbenefitplansoftheGrouparepost-employmentbenefitplansotherthandefinedcontributionplans.Inaccordancewiththeprojectedunitcreditmethod,theGroupmeasurestheobligationsunderdefinedben-efitplansusingunbiasedandmutuallycompatibleactuarialassumptionstoestimaterelateddemographicvariablesandfinancialvariables,anddiscountobligationsunderthedefinedbenefitplanstodeterminethepresentvalueofthedefinedbenefitliability.Thediscountrateusedistheyieldonthereportingdateonhighly-ratedcorporatedebenturesdenominatedinthesamecurrency,thathavematuritydatesapproximatingthetermsoftheGroup’sobligation.

TheGroupattributesbenefitobligationsunderadefinedbenefitplantoperiodsofserviceprovidedbyre-spectiveemployees.Servicecostandinterestexpenseonthedefinedbenefitliabilityarechargedtoprofitorlossandremeasurementsofthedefinedbenefitliabilityarerecognizedinothercomprehensiveincome.

21.Employeebenefits-(cont’d)

21.3Terminationbenefits

WhentheGroupterminatestheemploymentwithemployeesorprovidescompensationunderanoffertoencourageemployeestoacceptvoluntaryredundancy,aprovisionisrecognizedwithacorrespondingex-penseinprofitorlossattheearlierofthefollowingdates:

-WhentheGroupcannotunilaterallywithdrawtheofferofterminationbenefitsbecauseofanemployeeterminationplanoracurtailmentproposal.-WhentheGrouphasaformaldetailedrestructuringplaninvolvingthepaymentofterminationbenefitsandhasraisedavalidexpectationinthoseaffectedthatitwillcarryouttherestructuringbystartingtoimplementthatplanorannouncingitsmainfeaturestothoseaffectedbyit.Ifthebenefitsarepayablemorethan12monthsaftertheendofthereportingperiod,theyarediscountedtotheirpresentvalue.Thediscountrateusedistheyieldonthereportingdateonhighly-ratedcorporatede-benturesdenominatedinthesamecurrency,thathavematuritydatesapproximatingthetermsoftheGroup’sobligation.

21.4Otherlong-termemployeebenefits

TheGroup’snetobligationforlong-termemployeebenefits,whicharenotattributabletopost-employmentbenefitplans,isfortheamountofthefuturebenefittowhichemployeesareentitledforservicesthatwereprovidedduringthecurrentandpriorperiods.

Theamountofthesebenefitsisdiscountedtoitspresentvalueandthefairvalueoftheassetsrelatedtotheseobligationsisdeductedtherefrom.Thediscountrateusedistheyieldonthereportingdateonhighly-ratedcorporatedebenturesdenominatedinthesamecurrency,thathavematuritydatesapproximatingthetermsoftheGroup’sobligation.

22.Share-basedpayment

Share-basedpaymentreferstothetransactioninordertoacquiretheserviceofferedbytheemployeesorotherpartiesthatgrantsequityinstrumentsorliabilitiesonthebasisoftheequityinstruments.Share-basedpaymentclassifiedintoequity-settledshare-basedpaymentandcash-settledshare-basedpayment.

22.1Cash-settledshare-basedpayment

Thecash-settledshare-basedpaymentshouldbemeasuredaccordingtothefairvalueoftheliabilitiesrec-ognizedbasedonthesharesorotherequityinstrumentundertakenbytheCompany.Forcash-settledshare-basedpaymentmadeinreturnfortherenderingofemployeeservicesthatcannotbeexerciseduntiltheservicesarefullyprovidedduringthevestingperiodorspecifiedperformancetargetsaremet,oneachbal-ancesheetdatewithinthevestingperiod,theservicesacquiredinthecurrentperiodshall,basedonthebestestimateofthenumberofexercisableinstruments,berecognizedinrelevantexpensesandthecorrespondingliabilitiesatthefairvalueoftheliabilityincurredbytheCompany.

Oneachbalancesheetdateandthesettlementdatebeforethesettlementoftherelevantliabilities,theCom-panyshouldre-measurethefairvalueoftheliabilitiesandthechangesshouldbeincludedinthecurrentperiodprofitandloss.

23.Provisions

ProvisionsarerecognizedwhentheGrouphasapresentobligationrelatedtoacontingency,itisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligation,andtheamountoftheobligationcanbemeasuredreliably.

Theamountrecognizedasaprovisionisthebestestimateoftheconsiderationrequiredtosettlethepresentobligationatthesettlementdate,takingintoaccountfactorspertainingtoacontingencysuchastherisks,uncertaintiesandtimevalueofmoney.Wheretheeffectofthetimevalueofmoneyismaterial,theamountoftheprovisionisdeterminedbydiscountingtherelatedfuturecashoutflows.Theincreaseintheprovisionduetopassageoftimeisrecognizedasinterestexpense.

Ifallorpartoftheprovisionsettlementsisreimbursedbythirdparties,whentherealizationofincomeisvirtuallycertain,thentherelatedassetshouldberecognized.However,theamountofrelatedassetrecog-nizedshouldnotbeexceedingtherespectiveprovisionamount.

Atthebalancesheetdate,theamountofprovisionshouldbere-assessedtoreflectthebestestimationthen.

24.Revenue

RevenueoftheGroupismainlyfromsaleofgoods.

TheGrouprecognizesrevenuewhentransferringgoodstoacustomer,attheamountofthetransactionprice.Goodsareconsideredtransferredwhenthecustomerobtainscontrolofthegoods.Transactionpriceistheamountofconsiderationtowhichanentityexpectstobeentitledinexchangefortransferringgoodstoacustomer,excludingamountscollectedonbehalfofthirdparties.

Significantfinancingcomponent

Foracontractwithasignificantfinancingcomponent,theGrouprecognizerevenueatanamountthatreflectsthepricethatacustomerwouldhavepaidforthegoodsifthecustomerhadpaidcashforthosegoodsatreceipt.Thedifferencebetweentheamountofconsiderationandthecashsellingpriceofthegoods,isamor-tizedinthecontractperiodusingeffectiveinterestrate.TheGroupdoesnotadjusttheamountofconsider-ationfortheeffectsofasignificantfinancingcomponentiftheGroupexpects,atcontractinception,thattheperiodbetweenwhentheentitytransfersagoodtoacustomerandwhenthecustomerpaysforthatgoodwillbeoneyearorless.

Salewitharightofreturn

Forsalewitharightofreturn,theGrouprecognizesrevenueattheamountofconsiderationtowhichtheGroupexpectstobeentitled(ieexcludingtheproductsexpectedtobereturned).Foranyamountsreceived(orreceivable)forwhichanentitydoesnotexpecttobeentitled,theentityshallnotrecognizerevenuewhenittransfersproductstocustomersbutshallrecognizethoseamountsreceived(orreceivable)asarefundliability.AnassetrecognizedfortheGroup’srighttorecoverproductsfromacustomeronsettlingarefundliabilityshallinitiallybemeasuredbyreferencetotheformercarryingamountoftheproductlessanyex-pectedcoststorecoverthoseproducts.

25.Governmentgrants

Governmentgrantsaretransferofmonetaryassetsandnon-monetaryassetsfromthegovernmenttotheGroupatnoconsideration,includingtaxreturns,financialsubsidiesandsoon.Agovernmentgrantisrec-ognizedonlywhentheGroupcancomplywiththeconditionsattachedtothegrantandtheGroupwillreceivethegrant.

Ifagovernmentgrantisintheformofatransferofamonetaryasset,itismeasuredattheamountreceivedorreceivable.Ifagovernmentgrantisintheformofanon-monetaryasset,itismeasuredatfairvalue.Ifthefairvaluecannotbereliablydetermined,itismeasuredatanominalamount.

Governmentgrantsareeitherrelatedtoassetsorincome.

(1)Thebasisofjudgmentandaccountingmethodofthegovernmentgrantsrelatedtoassets

Governmentgrantsobtainedforacquiringlong-termassetsaregovernmentgrantsrelatedtoassets.Agov-ernmentgrantrelatedtoanassetisoffsetwiththecostoftherelevantasset.

(2)Thebasisofjudgmentandaccountingmethodofthegovernmentgrantsrelatedtoincome

Foragovernmentgrantrelatedtoincome,ifthegrantisacompensationforrelatedexpensesorlossestobeincurredinsubsequentperiods,thegrantisrecognizedasdeferredincome,andrecognizedinprofitorlossovertheperiodsinwhichtherelatedcostsarerecognized.Ifthegrantisacompensationforrelatedexpensesorlossesalreadyincurred,thegrantisrecognizedimmediatelyinprofitorlossfortheperiod.

GovernmentgrantsrelatedtotheGroup’snormalcourseofbusinessareoffsetwithrelatedcostsandex-penses.GovernmentgrantsrelatedthatareirrelevantwiththeGroups’snormalcourseofbusinessarein-cludedinnon-operatinggains.

26.Currentanddeferredtax

Theincometaxexpensesincludecurrentincometaxanddeferredincometax.

26.1Currentincometax

Atthebalancesheetdate,currentincometaxliabilities(orassets)forthecurrentandpriorperiodsaremeas-uredattheamountexpectedtobepaid(orrecovered)accordingtotherequirementsoftaxlaws.

26.2Deferredtaxassetsanddeferredtaxliabilities

Temporarydifferencesaredifferencesbetweenthecarryingamountsofcertainassetsorliabilitiesandtheirtaxbase.

Alltaxabletemporarydifferencesarerecognizedasrelateddeferredtaxliabilities.Deferredtaxassetsarerecognizedtotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichthedeductiblelossesandtaxcreditscanbeutilized.

26.Currentanddeferredtax-(cont’d)

26.2Deferredtaxassetsanddeferredtaxliabilities-(cont’d)

Fordeductiblelossesandtaxcreditsthatcanbecarriedforward,deferredtaxassetsarerecognizedtotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichthedeductiblelossesandtaxcreditscanbeutilized.However,fordeductibletemporarydifferencesassociatedwiththeinitialrecog-nitionofgoodwillandtheinitialrecognitionofanassetorliabilityarisingfromatransaction(notabusinesscombination)thataffectsneithertheaccountingprofitnortaxableprofits(ordeductiblelosses)atthetimeoftransaction,nodeferredtaxassetorliabilityisrecognized.

Atthebalancesheetdate,deferredtaxassetsandliabilitiesaremeasuredatthetaxrates,accordingtotaxlaws,thatareexpectedtoapplyintheperiodinwhichtheassetisrealizedortheliabilityissettled.

Deferredtaxliabilitiesarerecognizedfortaxabletemporarydifferencesassociatedwithinvestmentsinsub-sidiariesandassociates,andinterestsinjointventures,exceptwheretheGroupisabletocontrolthetimingofthereversalofthetemporarydifferenceanditisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture.

TheGroupmayberequiredtopayadditionaltaxincaseofdistributionofdividendsbytheGroupcompanies.Thisadditionaltaxwasnotincludedinthefinancialstatements,sincethepolicyoftheGroupisnottodistributeintheforeseeablefutureadividendwhichcreatesasignificantadditionaltaxliability.

Exceptforthosecurrentincometaxanddeferredtaxchargedtocomprehensiveincomeorshareholders’equityinrespectoftransactionsoreventswhichhavebeendirectlyrecognizedinothercomprehensivein-comeorshareholders’equity,anddeferredtaxrecognizedonbusinesscombinations,allothercurrentin-cometaxanddeferredtaxitemsarechargedtoprofitorlossinthecurrentperiod.

Atthebalancesheetdate,thecarryingamountofdeferredtaxassetsisreviewedandreducedifitisnolongerprobablethatsufficienttaxableprofitswillbeavailableinthefuturetoallowthebenefitofdeferredtaxassetstobeutilized.Suchreductionisreversedwhenitbecomesprobablethatsufficienttaxableprofitswillbeavailable.

26.3Offsetofincometax

WhentheGrouphasalegalrighttosettlecurrenttaxassetsandliabilitiesonanetbasis,andtaxassetsandtaxliabilitiesrelatetoincometaxesleviedbythesametaxationauthorityoneitherthesametaxableentityordifferenttaxableentitieswhichintendtorealizetheassetsandliabilitiessimultaneously,currenttaxassetsandliabilitiesareoffsetandpresentedonanetbasis.

WhentheGrouphasalegalrighttosettledeferredtaxassetsandliabilitiesonanetbasiswhichrelatestoincometaxesleviedbythesametaxationauthority,oneitherthesametaxableentityordifferenttaxableentitieswhichintendeithertosettlecurrenttaxassetsandliabilitiesonanetbasisortorealizetheassetsandliabilitiessimultaneously,ineachfutureperiodinwhichsignificantamountsofdeferredtaxassetsorliabil-itiesareexpectedtobereversed,deferredtaxassetsanddeferredtaxliabilitiesareoffsetandpresentedonanetbasis.

27.Leases

Leaseisacontract,thatconveystherighttouseanassetforaperiodoftimeinexchangeforconsideration.

27.1Determiningwhetheranarrangementcontainsalease

Ontheinceptiondateofthelease,theGroupdetermineswhetherthearrangementisaleaseorcontainsalease,whileassessingifitconveystherighttocontroltheuseofanidentifiedassetforaperiodoftimeinexchangeforconsideration.Initsassessmentofwhetheranarrangementconveystherighttocontroltheuseofanidentifiedasset,theGroupassesseswhetherithasthefollowingtworightsthroughouttheleaseterm:

(a)Therighttoobtainsubstantiallyalltheeconomicbenefitsfromuseoftheidentifiedasset;and(b)Therighttodirecttheidentifiedasset’suse.Anarrangementdoesnotcontainaleaseifanassetisleasedforaperiodoflessthan12months,ortoleaseofassetwithloweconomicvalue.

27.2Initialrecognitionofleasedassetsandleaseliabilities

Uponinitialrecognition,theGrouprecognizesaliabilityatthepresentvalueoffutureleasepayments(ex-cludecertainvariableleasepayments,asdetailedinnoteIII27.4),andconcurrentlytheGrouprecognizesaright-of-useassetatthesameamount,adjustedforanyprepaidleasepaymentspaidattheleasedateorbefore,plusinitialdirectcostsincurredinrespectofthelease.

Whentheinterestrateimplicitintheleaseisnotreadilydeterminable,theincrementalborrowingrateofthelesseeisused.TheGrouppresentsright-of-useassetsseparatelyfromotherassetsinthebalancesheet.

27.3Theleaseterm

Theleasetermisthenon-cancellableperiodoftheleaseplusperiodscoveredbyanextensionorterminationoption,ifitisreasonablycertainthatthelesseewillexerciseornotexercisetheoption,respectively.

Ifthereisachangeintheleaseterm,orintheassessmentofanoptiontopurchasetheunderlyingasset,theGroupremeasurestheleaseliability,onthebasisoftherevisedleasetermandthereviseddiscountrateandadjusttheright-of-useassetsaccordingly.

27.4Variableleasepayments

Variableleasepaymentsthatdependonanindexorarate,areinitiallymeasuredusingtheindexorrateexistingatthecommencementofthelease.Whenthecashflowsoffutureleasepaymentschangeastheresultofachangeinanindexorarate,thebalanceoftheliabilityisadjustedwithacorrespondencechangeintheright-of-useasset.

Othervariableleasepaymentsthatarenotincludedinthemeasurementoftheleaseliabilityarerecognizedinprofitorlossintheperiodinwhichtheconditionthattriggerspaymentoccurs.

27.Leases(cont’d)

27.5Subsequentmeasurement

Afterleasecommencement,aright-of-useassetismeasuredonacostbasislessaccumulateddepreciationandaccumulatedimpairmentlossesandisadjustedforre-measurementsoftheleaseliability.Theassetisdepreciatedonastraight-linebasisovertheusefullifeorcontractualleaseperiod,whicheverearlier.

TheGroupappliesASBE8ImpairmentofAssets,todeterminewhethertheright-of-useassetisimpairedandtoaccountforanyimpairmentlossidentified.

Aleaseliabilityismeasuredaftertheleasecommencementdateatamortizedcostusingtheeffectiveinterestmethod.

28.Othersignificantaccountingpoliciesandaccountingestimates

28.1Hedging

TheGroupusesderivativefinancialinstrumentstohedgeitsrisksrelatedtoforeigncurrencyandinflationrisksandderivativesthatarenotusedforhedging.

Hedgeaccounting

TheGroupmakesanassessment,bothattheinceptionofthehedgerelationshipaswellasonanongoingbasis,whetherthehedgeisexpectedtobeeffectiveinoffsettingthechangesinthefairvalueofcashflowsthatcanbeattributedtothehedgedriskduringtheperiodforwhichthehedgeisdesignated.

Aneffectivehedgeexistswhenallofthebelowconditionsaremet:

Thereisaneconomicrelationshipbetweenthehedgeditemandthehedginginstrument;theeffectofcreditriskdoesnotdominatethevaluechangesthatresultfromthateconomicrelation-ship;thehedgeratioofthehedgingrelationshipisthesameasthatresultingfromthequantityofthehedgeditemthattheentityactuallyhedgesandthequantityofthehedginginstrumentthattheentityactuallyusestohedgethatquantityofhedgeditem.

Onthecommencementdateoftheaccountinghedge,theGroupformallydocumentstherelationshipbetweenthehedginginstrumentandhedgeditem,includingtheGroup’sriskmanagementobjectivesandstrategyinexecutingthehedgetransaction,togetherwiththemethodsthatwillbeusedbytheGrouptoassesstheeffectivenessofthehedgingrelationship.

Withrespecttoacash-flowhedge,aforecastedtransactionthatconstitutesahedgeditemmustbehighlyprobableandmustgiverisetoexposuretochangesincashflowsthatcouldultimatelyaffectprofitorloss.

28.Othersignificantaccountingpoliciesandaccountingestimates-(cont’d)

28.1Hedging(cont’d)

Measurementofderivativefinancialinstruments

Derivativefinancialinstrumentsarerecognizedinitiallyatfairvalue;attributabletransactioncostsarerec-ognizedinprofitorlossasincurred.

Cash-flowhedges

Subsequenttotheinitialrecognition,changesinthefairvalueofderivativesusedtohedgecashflowsarerecognizedthroughothercomprehensiveincomedirectlyinahedgingreserve,withrespecttothepartofthehedgethatiseffective.Regardingtheportionofthehedgethatisnoteffective,thechangesinfairvaluearerecognizedinprofitandloss.Theamountaccumulatedinthehedgingreserveisreclassifiedtoprofitandlossintheperiodinwhichthehedgedcashflowsimpactprofitorlossandispresentedinthesamelineiteminthestatementofincomeasthehedgeditem.

Ifthehedginginstrumentnolongermeetsthecriteriaforhedgeaccounting,expiresorissold,terminatedorexercised,thehedgeaccountingisdiscontinued.Thecumulativegainorlosspreviouslyrecognizedinahedgingreservethroughothercomprehensiveincomeremainsinthereserveuntiltheforecastedtransactionoccursorisnolongerexpectedtooccur.Iftheforecastedtransactionisnolongerexpectedtooccur,thecumulativegainorlossinrespectofthehedginginstrumentinthehedgingreserveisreclassifiedtoprofitorloss.

Economichedge

HedgeaccountingisnotappliedwithrespecttoderivativeinstrumentsusedtoeconomicallyhedgefinancialassetsandliabilitiesdenominatedinforeigncurrencyorCPIlinked.Changesinthefairvalueofsuchderiv-ativesarerecognizedinprofitorlossasgain(loss)fromchangesinfairvalueorinvestmentincome.

Derivativesthatarenotusedforhedging

Changesinthefairvalueofderivativesthatarenotusedforhedgingarerecognizedinprofitorlossasgain(loss)fromchangesinfairvalueorinvestmentincome.

28.2Securitizationofassets

DetailsofthesecuritizationofassetagreementsandaccountingpolicyaresetoutinNoteV.5-Accountreceivables.

28.3Segmentreporting

ReportablesegmentsareidentifiedbasedonoperatingsegmentswhicharedeterminedbasedonthestructureoftheGroup’sinternalorganization,managementrequirementsandinternalreportingsystem.

28.3Segmentreporting-(cont’d)

Twoormoreoperatingsegmentsmaybeaggregatedintoasingleoperatingsegmentifthesegmentshavesimilareconomiccharacteristicsandaresameorsimilarinrespectofthenatureofeachproductandservice,thenatureofproductionprocesses,thetypeorclassofcustomersfortheproductsandservices,themethodsusedtodistributetheproductsorprovidetheservices,andthenatureoftheregulatoryenvironment.

Inter-segmentrevenuesaremeasuredonthebasisofactualtransactionpriceforsuchtransactionsforseg-mentreporting.Segmentaccountingpoliciesareconsistentwiththosefortheconsolidatedfinancialstate-ments.

28.4Profitdistributionstoshareholders

Dividendswhichareapprovedafterthebalancesheetdatearenotrecognizedasaliabilityatthebalancesheetdatebutaredisclosedinthenotesseparately.

29.Changesinsignificantaccountingpoliciesandaccountingestimates

29.1Changesinsignificantaccountingpolicies

"AccountingStandardsforBusinessEnterprisesInterpretationNo.15"

On30December2021,theMinistryofFinanceissued"AccountingStandardsforBusinessEnterprisesIn-terpretationNo.15”(hereinafterreferredtoas“InterpretationNo.15”)whichclarifiedthefollowingac-countingtreatments:

(4)Theaccountingtreatmentofthesaleoftheproductsorby-productsproducedbeforetheassetsbeingcapableofoperatinginapredeterminedmannerorproducedduringtheresearchanddevelopmentpro-cess;

(5)Disclosurerequirementsforcentralizedmanagementoffunds;and

(6)costsacompanyshouldincludeasthecostoffulfillingacontractwhenassessingwhetheracontractisonerous.

AccordingtotheInterpretationNo.15,thesecondclarificationwaseffectivefrom30December2021.Adop-tionoftheinterpretationhasnosignificantimpactontheGroup’sfinancialstatements.

29.2Changesinsignificantaccountingestimates

Therearenosignificantchangesinaccountingestimatesinthereportingperiod.

30.Significantaccountingestimatesandjudgments

Thepreparationofthefinancialstatementsrequiresmanagementtomakeestimatesandassumptionsthataffecttheapplicationofaccountingpoliciesandthereportedamountsofassets,liabilities,incomeandex-penses.Actualresultsmaydifferfromtheseestimates.Estimatesaswellasunderlyingassumptionsanduncertaintiesinvolvedarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognizedintheperiodinwhichtheestimateisrevisedandinanyfutureperiodsaffected.

NotesV.34,NoteVIII,NoteIXandNoteXIIIcontaininformationabouttheassumptionsandtheirriskfactorsrelatingtopost-employmentbenefits–definedbenefitplans,fairvalueoffinancialinstrumentsandshare-basedpayments.Otherkeysourcesofestimationuncertaintyareasfollows:

30.1Expectedcreditlossoftradereceivables

AsdescribedinNoteIII.11,tradereceivablesarereviewedateachbalancesheetdatetodeterminewhethercreditriskonareceivablehasincreasedsignificantlysinceinitialrecognition,lifetimeexpectedlossesisaccruedforimpairmentprovision.Evidenceofimpairmentincludesobservabledatathatcomestotheatten-tionoftheGroupaboutlosseventssuchasasignificantdeclineinthesolvencyofanindividualdebtorortheportfolioofdebtors,andsignificantchangesinthefinancialconditionthathaveanadverseeffectonthedebtor.Ifthereisobjectiveevidenceofarecoveryinthevalueofreceivableswhichcanberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognized,thepreviouslyrecognizedimpairmentlossisreversed.

30.2Provisionforimpairmentofinventories

AsdescribedinNoteIII.12,thenetrealisablevalueofinventoriesisundermanagement’sregularreview,andasaresult,provisionforimpairmentofinventoriesisrecognizedfortheexcessofinventories’carryingamountsovertheirnetrealisablevalue.Whenmakingestimatesofnetrealisablevalue,theGrouptakesintoconsiderationtheuseofinventoriesheldonhandandotherinformationavailabletoformtheunderlyingassumptions,includingtheinventories’marketpricesandtheGroup’shistoricaloperatingcosts.Theactualsellingprice,thecostsofcompletionandthecostsnecessarytomakethesaleandrelevanttaxesmayvarybasedonthechangesinmarketconditionsandproductsaleability,manufacturingtechnologyandtheactualuseoftheinventories,resultinginthechangesinprovisionforimpairmentofinventories.Thenetprofitorlossmaythenbeaffectedintheperiodwhentheimpairmentofinventoriesisadjusted.

30.Significantaccountingestimatesandjudgments-(cont’d)

30.3Impairmentofassetsotherthaninventoriesandfinancialassets

AsdescribedinNoteIII.20,ifimpairmentindicationexists,assetsotherthaninventoriesandfinancialassetsareassessedatbalancesheetdatetodeterminewhetherthecarryingamountexceedstherecoverableamountoftheassets.Ifanysuchcaseexists,animpairmentlossisrecognized.

Therecoverableamountofanasset(oranassetgroup)isthegreaterofitsfairvaluelesscoststosellanditspresentvalueofexpectedfuturecashflows.Sinceamarketpriceoftheasset(ortheassetgroup)cannotbeobtainedreliably,thefairvalueoftheassetcannotbeestimatedreliably,therecoverableamountiscalculatedbasedonthepresentvalueofestimatedfuturecashflows.Inassessingthepresentvalueofestimatedfuturecashflows,significantjudgementsareexercisedovertheasset’sproduction,sellingprice,relatedoperatingexpensesanddiscountratetocalculatethepresentvalue.Allrelevantmaterialswhichcanbeobtainedareusedforestimationoftherecoverableamount,includingtheestimationoftheproduction,sellingpriceandrelatedoperatingexpensesbasedonreasonableandsupportableassumptions.

30.4Depreciationandamortisationofassetssuchasfixedassetsandintangibleassets

AsdescribedinNoteIII.15andIII.18,assetssuchasfixedassetsandintangibleassetsaredepreciatedandamortisedovertheirusefullivesaftertakingintoaccountresidualvalue.Theestimatedusefullivesoftheassetsareregularlyreviewedtodeterminethedepreciationandamortisationcostschargedineachreportingperiod.Theusefullivesoftheassetsaredeterminedbasedonhistoricalexperienceofsimilarassetsandtheestimatedtechnicalchanges.Iftherehavebeensignificantchangesinthefactorsusedtodeterminethede-preciationoramortisation,therateofdepreciationoramortisationisrevisedprospectively.

30.5Incometaxesanddeferredincometax

TheCompanyandGroupcompaniesareassessedforincometaxpurposesinalargenumberofjurisdictionsand,therefore,Companymanagementisrequiredtouseconsiderablejudgmentindeterminingthetotalpro-visionfortaxesandattributionofincome.

Whenassessingwhethertherewillbesufficientfuturetaxableprofitsavailableagainstwhichthedeductibletemporarydifferencescanbeutilised,theGrouprecognizesdeferredtaxassetstotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichthedeductibletemporarydifferencescanbeutilised,usingtaxratesthatwouldapplyintheperiodwhentheassetwouldbeutilised.Indeterminingtheamountofdeferredtaxassets,theGroupmakesreasonablejudgementsandestimatesaboutthetimingandamountoftaxableprofitstobeutilisedinthefollowingperiods,andofthetaxratesapplicableinthefutureaccordingtotheexistingtaxpoliciesandotherrelevantregulations.Iftheactualtimingandamountoffuturetaxableprofitsortheactualapplicabletaxratesdifferfromtheestimatesmadebymanagement,thedifferencesaffecttheamountoftaxexpenses.

30.6Contingentliabilities

WhenassessingthepossibleoutcomesoflegalclaimsfiledagainsttheCompanyanditsinvesteecompanies,thecompanypositionsarebasedontheopinionsoftheirlegaladvisors.Theseassessmentsbythelegaladvisorsarebasedontheirprofessionaljudgment,consideringthestageoftheproceedingsandthelegalexperienceaccumulatedregardingthevariousmatters.Sincetheresultsoftheclaimswillbedeterminedbythecourts,theoutcomescouldbedifferentfromtheassessments.

Inadditiontothesaidclaims,theGroupisexposedtounassertedclaims,interalia,wherethereisdoubtastointerpretationoftheagreementand/orlegalprovisionand/orthemanneroftheirimplementation.ThisexposureisbroughttotheCompany’sattentioninseveralways,amongothers,bymeansofcontactsmadetoCompanypersonnel.Inassessingtheriskderivingfromtheunassertedclaims,theCompanyreliesoninternalassessmentsbythepartiesdealingwiththesemattersandbymanagement,whoweighassessmentoftheprospectsofaclaimbeingfiled,andthechancesofitssuccess,iffiled.Theassessmentisbasedonexperiencegainedwithrespecttothefilingofclaimsandtheanalysisofthedetailsofeachclaim.Bytheirnature,inviewofthepreliminarystageoftheclarificationofthelegalclaim,theactualoutcomecouldbedifferentfromtheassessmentmadebeforetheclaimwasfiled.

30.7Employeebenefits

TheGroup’sliabilitiesforlong-termpost-employmentandotherbenefitsarecalculatedaccordingtotheestimatedfutureamountofthebenefittowhichtheemployeewillbeentitledinconsiderationforhisservicesduringthecurrentperiodandpriorperiods.Thebenefitisstatedatpresentvaluenetofthefairvalueoftheplan’sassets,basedonactuarialassumptions.Changesintheactuarialassumptionscouldleadtomaterialchangesinthebookvalueoftheliabilitiesandintheoperatingresults.

30.8Derivativefinancialinstruments

TheGroupentersintotransactionsinderivativefinancialinstrumentsforthepurposeofhedgingrisksrelatedtoforeigncurrencyandinflationaryrisks.Thederivativesarerecordedattheirfairvalue.Thefairvalueofderivativefinancialinstrumentsisbasedonquotesfromfinancialinstitutions.Thereasonablenessofthequotesisexaminedbydiscountingthefuturecashflows,basedonthetermsandlengthoftheperiodtomaturityofeachcontract,whileusingmarketinterestratesofasimilarinstrumentasofthemeasurementdate.Changesintheassumptionsandthecalculationmodelcouldleadtomaterialchangesinthefairvalueoftheassetsandliabilitiesandintheresults.

IV.Taxation

1.Maintypesoftaxesandcorrespondingtaxrates

TheincometaxrateinChinais25%(2020:25%).ThesubsidiariesoutsideofChinaareassessedbasedonthetaxlawsinthecountryoftheirresidence.

SetforthbelowarethetaxratesoutsideChinarelevanttothesubsidiarieswithsignificantsalestothirdparty:

TheVATrateoftheGroup'ssubsidiariesisintherangebetween2.5%to27%.

IV.Taxation-(cont’d)

1.Maintypesoftaxesandcorrespondingtaxrates-(cont’d)

(1)BenefitsfromHigh-TechCertificate

TheCompany,wasjointlyapprovedasnewandhigh-techenterprise,bytheHubeiProvincialDepartmentofScienceandTechnology,DepartmentofFinanceofHubeiProvinceandHubeiProvincialOfficeoftheStateAdministrationofTaxation.Theapplicableincometaxratefrom2020to2022is15%.

AdamaAnpon(Jiangsu)Ltd.(FormallyknowasJiangsuAnponElectrochemicalCo.Ltd,hereinafter-“Anpon"),asubsidiaryoftheCompany,wasjointlyapprovedasnewandhigh-techenterprise,bytheJiangsuProvincialDepartmentofScienceandTechnology,DepartmentofFinanceofJiangsuProvinceandJiangsuProvincialOfficeoftheStateAdministrationofTaxation.Theapplicableincometaxratefrom2021to2023is15%.

(2)BenefitsundertheLawfortheEncouragementofCapitalInvestments

IndustrialenterprisesofsubsidiariesinIsraelweregranted“ApprovedEnterprise”or“BeneficiaryEnterprise”statusundertheIsraeliLawfortheEncouragementofCapitalInvestments,1959.Shouldadividendbedistributedfromtheretainedearningproducedinwhichthecompanywasconsideredasan“ApprovedEn-terprise”or“BeneficiaryEnterprise”,thecompanymaybeliablefortaxatthetimeofdistribution.

OnDecember29,2010theKnessetapprovedtheEconomicPolicyLawfor2011-2012,whichincludesanamendmenttotheLawfortheEncouragementofCapitalInvestments-1959(hereinafter-“theAmend-ment”).TheAmendmentiseffectivefromJanuary1,2011anditsprovisionsapplytopreferredincomederivedoraccruedin2011andthereafterbyapreferredcompany,perthedefinitionofthesetermsintheAmendment.

TheAmendmentprovidesthatonlycompaniesinDevelopmentAreaAwillbeentitledtothegrantstrackandthattheywillbeentitledtoreceivebenefitsunderthistrackandunderthetaxbenefitstrackatthesametime.Thetaxbenefittracksunderthelawconstituteapreferredenterpriseandaspecialpreferredenterprise,whichmainlyprovideauniformandreducedtaxrateforallthecompany’sincomeentitledtobenefits.Taxratesonpreferredincomeasfrom2017taxyearareasfollows:7.5%forDevelopmentAreaAand16%fortherestofthecountry.

TheamendmentfurtherdeterminedthatnotaxshallapplytodividenddistributedoutofpreferredincometoIsraelresidentcompanyshareholder.

Asofthedateofthereport,allsubsidiariesinIsraeladoptedtheamendmentandthedeferredtaxeswerecalculatedaccordingly.

(2)BenefitsundertheLawfortheEncouragementofCapitalInvestments-(cont’d)

OnDecember21,2016theKnessetplenumpassedthesecondandthirdreadingoftheEconomicEfficiencyLaw(LegislativeAmendmentsforAchievingBudgetObjectivesintheYears2017and2018)–2016inwhichtheEncouragementLawwasalsoamended(hereinafter:“theAmendment”).TheAmendmentisef-fectiveasfromJanuary1,2017andaddednewtaxbenefittracksfora“preferredtechnologicalenterprise”anda“specialpreferredtechnologicalenterprise”whichawardreducedtaxratestoatechnologicalindustrialenterpriseforthepurposeofencouragingactivityrelatingtothedevelopmentofqualifyingintangibleassets.

Thebenefitswillbeawardedtoa“preferredcompany”thathasa“preferredtechnologicalenterprise”ora“specialpreferredtechnologicalenterprise”withrespecttotaxable“preferredtechnologicalincome”peritsdefinitionintheEncouragementLaw.

Preferredtechnologicalincomethatmeetstheconditionsrequiredinthelaw,willbesubjecttoareducedcorporatetaxrateof12%,andifthepreferredtechnologicalenterpriseislocatedinDevelopmentAreaAtoataxrateof7.5%.Specialpreferredtechnologicalenterprisewillbesubjecttoareducedcorporatetaxrateof6%regardlessofthedevelopmentareainwhichtheenterpriseislocated.

Inaddition,aspartoftheamendment,atemporaryprovisionwasenacted,validuntilJune30,2021,whichsettlestaxbenefitscontinuationonincomethatiseligibletothePreferredEnterprisetaxbenefitsasatJune30,2016.ADAMAAgriculturalSolutionsLtd.(hereinafter:“Solutions”)implementandactinaccordancewiththetemporaryprovision.

OnMay16,2017theKnessetFinanceCommitteeapprovedEncouragementofCapitalInvestmentRegula-tions(PreferredTechnologicalIncomeandCapitalGainofTechnologicalEnterprise)–2017(hereinafter:

“theRegulations”),whichprovidesrulesforapplyingthe“preferredtechnologicalenterprise”and“specialpreferredtechnologicalenterprise”taxbenefittracksincludingtheNexusformulathatprovidesthemecha-nismforallocatingthetechnologicalincomeeligibleforthebenefits.

Solutions,throughasubsidiary,filedanapplicationtotheIsraeliTaxAuthorityforsettlingitseligibilitytothetaxbenefitsinaccordancewiththeamendmenttotheEncouragementLaw.

OnNovember15,2021theEconomicEfficiencyLaw(LegislativeAmendmentsforthe2021and2022BudgetYears)–2021waspublishedaswellasaTemporaryOrdertotheLawfortheEncouragementofCapitalInvestments–1959(hereinafter:“thetemporaryorder”),whichoffersareducedtaxratearrangementtocompaniesthatreceivedanexemptionfromcorporatetaxundertheaforesaidlaw.Thetemporaryorderprovidedthatcompaniesthatchoosetoapplythetemporaryorder,whichiseffectiveuntilNovember14,2022,willbeentitledtoareducedtaxrateonthe“release”ofexemptprofits(hereinafter:“thebeneficiarycorporatetaxrate”).Thereleaseofexemptprofitsmakesitpossibletodistributethematareducedrateofcorporatetaxatthecompanylevelbasedontherateoftheprofitsbeingdistributedpursuanttothecondi-tionssetforthintheAmendment.

Thereducedcorporatetaxratewillbedeterminedaccordingtotherateofexemptprofitsthecompanychoosestoreleasefromitsentireexemptprofits,andwillbebetween40%and70%ofthecorporatetaxratethatwouldhaveappliedtotherevenueintheyearitwasproducedifithadnotbeenexempt,butinanyeventnolessthan6%.Furthermore,acompanythatchoosestoreleaseitsexemptprofitsandpayabeneficiarycorporatetaxratewillberequiredtoinvestinitsenterprise,withinaperiodof5yearsbeginningfromthetaxyearitelected,anamountcalculatedaccordingtoaformulaprovidedinthetemporaryorder(30%oftheexemptincomemultipliedbythecorporatetaxrateandmultipliedbythereleaserate).Theinvestmentwillbemadeinproductiveassets(withtheexclusionofbuildings),researchanddevelopmentinIsraelandsala-riestonewemployeesoftheenterprise.Failuretocomplywiththisconditionwillrequirethecompanytopayadditionalcorporatetax.

Inaddition,anamendmentwasmadetoSection74oftheLawfortheEncouragementofCapitalInvestments–1959withrespecttoidentifyingthesourcesofdividenddistributionsasfromAugust15,2021.

Theamendmentrequirescompaniestoallocatethesourcesofdividendsbetweenexemptprofitsandotherprofits,pro-rata,aswellastheimpositionofcorporatetaxandwithholdingtaxondividendsaccordingly.Itisnotedthattheamendmenttothesectionmaycontradictsection72aoftheLaw,whichprovidesforstabilityinthebenefitsawardedtocompaniesthatchosethistrack.

Asofthisdate,Solutionsisexaminingtheeffectoftheamendmentonitsfinancialpositionandfinancialresults.Solutionshasnotyetdecidedwhetherandhowmuchaccumulatedprofitswillbe“released”.Thus,inthesefinancialstatementstheaforementionedamendmenthadnoeffectonSolutionscurrentanddeferredtaxbalances.

(3)BenefitsundertheLawfortheEncouragementofIndustry(Taxes),1969

UndertheIsraeliLawfortheEncouragementofIndustry(Taxes)1969,SolutionsisanIndustrialHoldingCompanyandsomeofthesubsidiariesinIsraelare“IndustrialCompanies”.Themainbenefitunderthislawisthefilingofconsolidatedincometaxreturns(SolutionsfilesaconsolidatedincometaxreturnwithAdamaMakhteshimandsubmissionofaconsolidatedreporttogetherwithAdamaAganasof2017),amortizationofknow-howover8yearsandhigherratesofdepreciation.

V.Notestotheconsolidatedfinancialstatements

1.CashatBankandOnHand

AsatDecember31,2021restrictedcashandbankbalanceswas59,355thousandRMB(asatDecember31,202028,815thousandRMB)mainlyincludingdepositsthatguaranteebankacceptancedrafts.

2.Financialassetsheldfortrading

3.Derivativefinancialassets

4.BillsReceivable

Allbillsreceivablesareduewithin1year.

V.Notestotheconsolidatedfinancialstatements–(cont'd)

5.AccountsReceivable

a.Bycategory

b.Aginganalysis

5.AccountsReceivable–(cont'd)

Maingroupsofaccountreceivablesassessedcollectivelyforimpairmentbasedongeographicalloca-tion:

GeographicallocationA:

AccountreceivablesingeographicallocationAaregroupedbasedonsimilarcreditrisk:

GeographicallocationB:

AccountreceivablesingeographicallocationBaregroupedbasedonaginganalysis:

Othergeographicallocations:

c.Addition,written-backandwritten-offofprovisionforexpectedcreditlossesduringtheperiod

Additionofprovisionforexpectedcreditlossduringtheperiod

d.FivelargestaccountsreceivableatDecember31,2021:

e.Derecognitionofaccountsreceivableduetotransferoffinancialassets

CertainsubsidiariesofthegroupenteredintoasecuritizationtransactionwithRabobankInternationalforsaleoftradereceivables(hereinafter–“theSecuritizationProgram”and/or“theSecuritizationTransaction”).

PursuanttotheSecuritizationProgram,thecompanieswillselltheirtradereceivablesdebts,invariousdif-ferentcurrencies,toaforeigncompanythatwassetupforthispurposeandthatisnotownedbytheAdamaLtd.(hereinafter–“theAcquiringCompany”).AcquisitionofthetradereceivablesbytheAcquiringCom-panyisfinancedbyCooperativeRabobankU.A..

ThetradereceivablesincludedaspartoftheSecuritizationTransactionaretradereceivablesthatmeetthecriteriaprovidedintheagreement.

EveryyearthecreditfacilityisreapprovedinaccordancewiththeSecuritizationProgram.Asatthereportdate,theSecuritizationagreementwasapproveduptoOctober31,2022.

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e.Derecognitionofaccountsreceivableduetotransferoffinancialassets-(cont'd)

ThemaximumscopeofthesecuritizationisadjustedfortheseasonalchangesinthescopeoftheCompany’sactivities,asfollows:duringthemonthsMarchthroughJunethemaximumscopeofthesecuritizationis$350million(asofDecember31,2021–2,225millionRMB),duringthemonthsJulythroughSeptemberthemaximumscopeofthesecuritizationis$300million(asofDecember31,2021–1,913millionRMB)andduringthemonthsOctoberthroughFebruarythemaximumscopeofthesecuritizationis$250million(asofDecember31,2021-1,594millionRMB).Inadditionthecompanyhasuncommittedfacilityof$50million(asofDecember31,2021-319millionRMB)whichwillbeapplicableeachperiod.Theproceedsreceivedfromthosecustomerswhosedebtsweresoldareusedforacquisitionofnewtradereceivables.

Thepriceatwhichthetradereceivablesdebtsaresoldistheamountofthedebtsoldlessadiscountcalculatedbasedon,amongotherthings,theexpectedlengthoftheperiodbetweenthedateofsaleofthetradereceiv-ableanditsanticipatedrepaymentdate.Inthemonthfollowingacquisitionofthedebt,theAcquiringCom-panypaysincashmostofthedebtwhiletheremainderisrecordedasasubordinatednoteandascontinuinginvolvementthatispaidaftercollectionofthedebtsold.Ifthecustomerdoesnotpayitsdebtontheantici-patedrepaymentdate,theCompanybearsinterestuptotheearlierofthedateonwhichthedebtisactuallyrepaidorthedateonwhichdebtcollectionistransferredtotheinsurancecompany(theactualcostsarenotsignificantandarenotexpectedtobesignificant).

TheAcquiringCompanybears95%ofthecreditriskinrespectofthecustomerswhosedebtsweresoldandwillnothavearightofrecoursetotheCompanyinrespectoftheamountspaidincash,exceptregardingdebtswithrespecttowhichacommercialdisputearisesbetweenthecompaniesandtheircustomers,thatis,adisputethesourceofwhichisaclaimofnon-fulfillmentofanobligationofthesellerinthesupplyagree-mentcoveringtheproduct,suchas:afailuretosupplythecorrectproduct,adefectintheproduct,delin-quencyinthesupplydate,andthelike.

TheAcquiringCompanyappointedapolicymanagerwhowillmanageforitthecreditriskinvolvedwiththetradereceivablessold,includinganundertakingwithaninsurancecompany.

PursuanttotheReceivablesServicingAgreement,theGroupsubsidiarieshandlecollectionofthetradere-ceivablesaspartoftheSecuritizationTransactionforthebenefitoftheAcquiringCompany.

Aspartoftheagreement,Solutionsiscommittedtocomplywithcertainfinancialcovenants,mainlytheratiooftheliabilitiestoequityandprofitratios.AsofDecember31,2021,Solutionswasincompliancewiththefinancialcovenants.

TheaccountingtreatmentofsaleofthetradereceivablesincludedaspartoftheSecuritizationProgramis:

TheCompanyisnotcontrollingtheAcquiringCompany,thereforetheAcquiringCompanyisnotconsoli-datedinthefinancialstatements.

TheCompanycontinuestorecognizethetradereceivablesincludedintheSecuritizationProgrambasedontheextentofitscontinuinginvolvementtherein.

InrespectofthepartofthetradereceivablesincludedinthesecuritizationProgramwithrespecttowhichcashproceedswerenotyetreceived,howeverregardingwhichtheCompanyhastransferredthecreditrisk,asubordinatednoteisrecorded.

Thecontinuinginvolvementandsubordinatednoterecordedinthebalancesheetaspartofthe“otherreceiv-ables”lineitem.

Thelossfromsaleofthetradereceivablesisrecordedatthetimeofsaleinthestatementofincomeinthe“financingexpenses”.

TheCompany’ssubsidiaryinBrazil(hereinafter-“thesubsidiary”)enteredintoasecuritizationagreementwithRabobankBrazilforsaleoftradereceivables.Undertheagreement,thesubsidiarywillsellitstradereceivablestoasecuritizationstructure(hereinafter-“theentity”)thatwasformedforthispurposewherethesubsidiaryhassubordinaterightsof5%oftheentity'scapital.

Asatthereportdate,thesubsidiaryagreementwasapproveduptoSeptember1,2022.Themaximumsecu-ritizationscopeasofDecember31,2021isBRL364million(RMB470million).

Onthedateofthesaleofthetradereceivables,theentitypaysthefullamountwhichisthedebtamountsoldnetofdiscountcalculated,amongothers,overtheexpectedlengthoftheperiodbetweenthedateofsaleofthecustomerreceivableanditsanticipatedrepaymentdate.

Theentitybears95%ofthecreditriskinrespectofthecustomerswhosedebtsweresoldsuchthattheentityhastherightofrecourseof5%oftheunpaidamount.Thesubsidiaryhasapledgeddepositwithregardstotheentity'srightofrecourse.

Thesubsidiarycontinuestorecognizethetradereceivablessoldtotheentitiybasedontheextentofitscontinuinginvolvementtherein(5%rightofrecourse)andalsorecognizesanassociatedliabilityinthesameamount.

Duringthefourthquarterof2021,thesubsidiaryhasenteredintoanadditionalsecuritizationagreementwithItauBankandFarminvestments,forsaleoftradereceivablestoasecuritizationstructurethatwasformedforthispurposewherethesubsidiaryhasmezzaninequotesof10.5%oftheentity'scapital.

Asatthereportdate,thesubsidiaryagreementwasapproveduptoNovember10,2025.TheagreementhasamaximumscopeofBRL306million(RMB342million).

Theentitybears100%ofthecreditriskinrespectofthecustomerswhosedebtsweresold(non-recourse),thereforethesubsidiaryhasnocontinuinginvolvementinthethoseaccountreceivablessold.

Inbothagreements,thesubsidiaryhandlesthecollectionofreceivablesincludedinthesecuritizationfortheentities.

Thesubsidiarydoesnotcontroltheentitiesandthereforetheentitiesarenotconsolidatedinthegroup'sfinancialstatements.

Thelossfromthesaleofthetradereceivablesisrecordedatthetimeofsaletoprofitandlossunderfinancingexpenses.

f.Derecognitionofaccountsreceivableduetotransferoffinancialassets-(cont'd)

6.Receivablesfinancing

AsatDecember31,2021,bankacceptanceendorsedbutnotyetdueamountsto670,411thousandsRMB.

7.Prepayments

(1)Theaginganalysisofprepaymentsisasfollows:

(2)Totaloffivelargestprepaymentsbydebtorattheendoftheperiod:

8.OtherReceivables

(1)Otherreceivablesbynature

a.Othersbreakdownbycategories

b.Otherreceivablesbyaging

8.OtherReceivables-(cont'd)

(2)Additions,recoveryorreversalandwritten-offofprovisionforexpectedcreditlossesduringtheperiod:

(3)FivelargestotherreceivablesatDecember31,2021:

9.Inventories

(1)Inventoriesbycategory:

9.Inventories-(cont'd)

(2)Provisionforimpairmentofinventories:

10.OtherCurrentAssets

11.Long-TermReceivables

12.Long-TermEquityInvestments

(1)Long-termequityinvestmentsbycategory:

*Theassociatewasliquidatedin2020.

(2)Movementsoflong-termequityinvestmentsfortheperiodareasfollows:

13.Otherequityinvestments

Otherequityinvestmentsarenon-corebusinessesthatareintendedtobeheldintheforeseeablefuture.

14.Fixedassets

ThelandsreportedasfixedassetsareownedbythegroupsubsidiariesandarelocatedoutsideofChina.

V.Notestotheconsolidatedfinancialstatements-(cont'd)

15.ConstructioninProgress

(1)Constructioninprogress

(2)DetailsandMovementsofmajorconstructionprojectsinprogressduringyearendedDecember31,2021

*AsofDecember31,2021ProjectEincludeimpairmentofRMB21million.

16.Right-of-useassets

17.IntangibleAssets

(1)IncludelandparcelinIsraelthathasnotyetbeenregisteredinthenameoftheGroupsubsidiariesattheLandRegistryOffice,mostlyduetoregistrationproceduresortechnicalproblems.

(2)Mainlynon-competeandexclusivityagreements.

(3)ForfurtherinformationrefertonoteVI.–Changesinconsolidationscope.

18.Goodwill

Changesingoodwill

TheGroupallocatesgoodwilltotwocashgeneratingunits("CGU"),CropProtection(Agro)andanon-coreac-tivityincludedintheIntermediatesandingredientssegment.Attheendoftheyear,ormorefrequentlywhetherindicatorsforimpairmentexists,theGroupestimatestherecoverableamountofeachCGUforwhichgoodwillhasbeenallocatedtousingtheDCFmodelbasedontheGroupbusinessplan.ThediscountrateusedintheDCFmodelisdeterminedbasedonthecompany'scostofequityandcostofdebt,takingintoaccountthecomprehensiveriskfactors.

ThecarryingamountofgoodwillismainlyallocatedtoAgrounits,whichincludesRMB127millionfromtheacquisitionsofAdamaHuifeng(shanghai)AgriculturalTechnologyCo.,LtdandAdamaHuifeng(Jiangsu)Co.Ltd.TotalamountofgoodwillallocatedtotheAgrounitsamountstoRMB4,346thousand.Thegoodwillallo-catedtonon-coreCGUisnotsignificant.

AsofDecember31,2021thefairvalueofthecashgeneratingunitstowhichgoodwillhasbeenallocatedtoexceedsitscarryingamount.

*ForfurtherinformationregardingthechangesingoodwillduringtheperiodseenoteVI.–Changesinconsoli-dationscope.

19.DeferredTaxAssetsandDeferredTaxLiabilities

(1)Deferredtaxassetswithouttakingintoconsiderationoftheoffsettingofbalanceswithinthesame

taxjurisdiction

19.DeferredTaxAssetsandDeferredTaxLiabilities-(cont’d)

(2)Deferredtaxliabilitieswithouttakingintoconsiderationoftheoffsettingofbalanceswithinthe

sametaxjurisdiction

(3)Deferredtaxassetsanddeferredtaxliabilitiespresentedonanetbasisafteroffsetting

(4)Detailsofunrecognizeddeferredtaxassets

(5)Expirationofdeductibletaxlossescarryforwardforunrecognizeddeferredtaxassets

19.DeferredTaxAssetsandDeferredTaxLiabilities-(cont'd)

(6)Unrecognizeddeferredtaxliabilities

Whencalculatingthedeferredtaxes,taxesthatwouldhaveappliedintheeventofrealizinginvestmentsinsubsidiarieswerenottakenintoaccountsinceitistheCompany’sintentiontoholdtheseinvestmentsandnotrealizethem.

20.OtherNon-CurrentAssets

21.Short-TermLoans

Short-termloansbycategory:

22.Derivativefinancialliabilities

23.BillsPayables

AsatDecember31,2021,noneofthebillspayableareoverdue.

24.Accountspayable

Therearenosignificantaccountspayablesagingoveroneyear.

25.Contractliabilities

26.EmployeeBenefitsPayable

27.TaxesPayable

28.OtherPayables

(1)Otherpayables

AsatDecember31,2021,theGroupdidnothaveanysignificantotherpayablesoverdue.

29.Non-CurrentLiabilitiesDueWithinOneYear

Non-currentliabilitiesduewithinoneyearbycategoryareasfollows:

30.OtherCurrentLiabilities

31.Long-TermLoans

Long-termloansbycategory

*Formoredetailesregardingtheguaranteedloans–seenoteX.relatedpartiesandrelatedpartiestransac-tions.Forthematurityanalysis,seenoteVIII.C-Liquidityrisk.

32.DebenturesPayable

32.DebenturesPayable-(cont'd)

Movementsofdebenturespayable:

FortheyearendedDecember31,2021:

SeriesBdebentures,inamountofNIS3,810millionparvalue(3,730millionparvalue,netofself-purchased),linkedtotheCPIandbearinterestatthebaseannualrateof

5.15%.Thedebentureprincipalshallberepaidin17equalpaymentsintheyears2020through2036.

OnMay5,2020,theCompanyissueddebenturesthroughanexpansionofSeriesBtotalingNIS246.5millionparvalue,inconsiderationfor115.6%oftheirparvalue.Thetotalnetproceedsamountedto$98million.Theissuancecostswere$341thousand.

OnNovember30,2020through2021,theCompanyrepaidatotalofNIS438.8millionparvalueSeriesBdebentures,whichamountedtoabout$165.7million,aspaymentsofthedebentureprincipalofSeriesB(approximatelyRMB1,000million).

33.Leaseliabilities

34.Long-TermEmployeeBenefitsPayable

Post-employmentbenefitplans–definedbenefitplanandearlyretirement

(1)Movementinthenetliabilityandassetsinrespectofdefinedbenefitplans,earlyretirementandtheircomponents

34.Long-TermEmployeeBenefitsPayable-(cont'd)

Post-employmentbenefitplans–definedbenefitplanandearlyretirement-(cont'd)

(2)Actuarialassumptionsandsensitivityanalysis

Theprincipalactuarialassumptionsatthereportingdatefordefinedbenefitplan

*Accordingtothedemographicandthebenefitcomponents.

Theassumptionsregardingthefuturemortalityratearebasedonpublishedstatisticaldataandacceptablemortalityrates.

Possiblereasonablechangesasofthedateofthereportinthediscountrate,assumingtheotherassumptionsremainunchanged,wouldhaveaffectedthedefinedbenefitobligationasfollows:

35.Provisions

*Liabilitiesinrespectofcontingenciesincludesobligationsofpendinglitigations,whereanoutflowofre-

sourceshadbeenreliablyestimated.

36.OtherNon-CurrentLiabilities

*ForfurtherinformationseenoteVI.1–ChangeinconsolidationScope.

37.ShareCapital

*FollowingtheapprovalandexecutionoftherepurchaseplanforpartoftheCompany’sdomesticallylistedforeignshares(Bshare)on2020andtherepurchaseof14,309,536B-Shares,theCompanycancelledsaidamountofB-SharesattheShenzhenBranchofChinaSecuritiesDepositoryandClearingCo.,Ltd.onJune17,2021.

38.CapitalReserve

*Seenote37above.

39.OtherComprehensiveIncome,netoftax

40.Surplusreserve

41.RetainedEarnings

Note1:

OnApril27,2020,followingapprovalofthe25thmeetingoftheCompany's8thsessionoftheBoardofDirectors,theCompanydeclaredRMB0.12(beforetax)per10sharesascashdividendtoallshareholders,resultinginatotalcashdividendof29,359thousandsRMB(beforetax).Nosharesweredistributedassharedividendandnoreservewastransferredtoequitycapital.Theproposalwasapprovedbythe2019AnnualGeneralMeetingoftheCompanyheldonMay20,2020andwasfullypaidduringthethirdquarterof2020.

Note2:

OnMarch29,2021,afterobtainingtheapprovalofthe31stmeetingoftheCompany's8thBoardofDirectors,theCompanydeclaredRMB0.16(beforetax)per10sharesascashdividendtoallshareholders,resultinginatotalcashdividendof37,277thousandsRMB(beforetax).Nosharesweredistributedassharedividendandnoreservewastransferredtoequitycapital.Theproposalwasapprovedbythe2020AnnualGeneralMeetingoftheCompanyheldonMay21,2021andwasfullypaidduringthethirdquarterof2021.

Note3:

OnMarch29,2022,afterobtainingtheapprovalofthe9thmeetingoftheCompany's9thBoardofDirectors,theCompanydeclaredRMB0.08(beforetax)per10sharesascashdividendtoallshareholders,resultinginatotalcashdividendof18,638thousandRMB(beforetax).Nosharesweredistributedassharedividendandnoreservewastransferredtoequitycapital.

42.OperatingIncomeandCostofSales

*AccordingtotheQ&AissuedbytheMinistryofFinanceduringtheyear,thetransportationexpensesin-curredbeforethetransferofcontrolovergoodstocustomersinordertofulfilthecontractdoesnotconsti-tuteaseparateperformanceobligationandshallberegardedasthecosttofulfilthecontract.Therefore,startingfrom2021,thetransportationexpensesarerecordedascostofsales.

43.TaxesandSurcharges

44.SellingandDistributionExpenses

*Seenote42above.

45.GeneralandAdministrativeExpenses

46.Researchanddevelopmentexpenses

47.Financialexpenses,net

48.Investmentincome,net

49.Gain(loss)fromChangesinFairValue

50.Creditimpairmentreversal(losses)

51.Assetimpairmentreversal(losses)

52.GainfromDisposalofAssets

53.IncomeTaxExpenses

(1)Reconciliationbetweenincometaxexpenseandaccountingprofitisasfollows:

54.Othercomprehensiveincome

DetailsoftheOthercomprehensiveincomearesetoutinNoteV.39

55.Governmentgrants

56.Notestoitemsinthecashflowstatements

(1)Cashreceivedrelatingtootheroperatingactivities

(2)Cashpaidrelatingtootheroperatingactivities

(3)Cashreceivedrelatingtootherinvestingactivities

56.Notestoitemsinthecashflowstatements-(cont'd)

(4)Cashpaidrelatingtootherinvestingactivities

(5)Cashreceivedfromotherfinancingactivities

*Formoredetailesregardingtheborrowingfromrelatedparty–seenoteX.relatedpartiesandrelatedpar-tiestransactions.

(6)Cashpaidrelatingtootherfinancingactivities

57.SupplementaryInformationonCashFlowStatement

(1)SupplementaryinformationonCashFlowStatement

a.Reconciliationofnetprofittocashflowsfromoperatingactivities:

b.Netincrease(decrease)incashandcashequivalents

(2)Informationonacquisitionordisposalofsubsidiariesandotherbusinessunits

57.SupplementaryInformationonCashFlowStatement-(cont'd)

(3)Detailsofcashandcashequivalents

58.AssetswithRestrictedOwnershiporRightofUse

59.Foreigncurrenciesdenominateditems

(1)Foreigncurrenciesdenominateditems

59.Foreigncurrenciesdenominateditems-(cont'd)

(1)Foreigncurrenciesdenominateditems-(cont'd)

(2)Majorforeignoperations

Thefunctionalcurrencyofthesubsidiariesaboveisthemaincurrencythatrepresenttheprincipaleconomicenvironment.

VI.ChangeinconsolidationScope

1.Businesscombinationsinvolvingenterprisesnotundercommoncontrol

(1)Businesscombinationsinvolvingenterprisesnotundercommoncontrolduringcurrentperiod

(2)Acquisitioncostandgoodwill

InMay28th2021,theCompanyacquired51%stakeinADAMAHuifeng(Jiangsu)Co.,Ltd(hereinafter–"ADAMAHuifeng"),awhollyownedsubsidiaryofJiangsuHuifengBioAgricultureCo.,Ltd(hereinaf-ter–"JiangsuHuifeng").ADAMAHuifengwasestablishedtoincorporateJiangsuHuifeng'skeycropprotectionsynthesisandformulationfacilities.Thisacquisitionfollowstheacquisitionof51%stakeinAdamaHuifeng(Shanghai)AgriculturalTechnologyCo.Ltd,awhollyownedsubsidiaryofJiangsuHuifengfocusedonthesaleanddistributionofkeyformulatedcropprotectionproductsinChina,whichtookplaceonDecember31

st

,2020.

ThetotalcashconsiderationforbothacquisitionamountedtoapproximatelyRMB1,229million(includingRMB254millionheldbacktosecurethepost-acquisitionclosingobligationsofJiangsuHuifeng).Theacquisitionagreementalsoincludepotentialearn-outpaymenttoJiangsuHuifengdependingontheper-formanceoftheacquiredcompaniesforthe5-yearperiodstartingfromJanuary1

2021andanoptionwasgrantedtotheCompanyandJiangsuHuifengtobuy(sell)theremaining49%equityinterestsoftheac-quiredcompanieswithinacertainperiodoftime.

Inpreviousperiods,theaccountingtreatmentoftheacquisitionswasbasedon"provisionalamounts"(asthistermisdefinedinASBE20Businesscombination).Thefinancialreportsof2021reflectthefinalresultsofthepurchasepriceallocation.

TheGroupconsolidatedADAMAShanghaiandADAMAHuifengstartingfromtherespectiveacquisitiondatesonwhichdatestheGroupobtainedcontroloverthecompanies.Thecontingentconsiderationwhichislinkedtotheperformanceoftheacquiredcompanieswasmeasuredatfairvalueonthedateofacquisition.TheputoptionissuedtoJiangsuHuifeng,astheholderofnon-controllinginterests,wasrecognizedasaliabilityatpresentvalueoftheexerciseprice(accordingtothe"anticipatedacquisitionmethod").

VI.ChangeinconsolidationScope-(cont'd)

1.Businesscombinationsinvolvingenterprisesnotundercommoncontrol-(cont'd)

(2)Identifiableassetsandliabilitiesoftheacquiree,atacquisitiondate

VII.InterestinOtherEntities

1.Interestsinsubsidiaries

CompositionofthelargestsubsidiariesoftheGroupinrespectofassetsandoperatingincome

2.Interestsinjointventuresorassociates

3.Summarizedfinancialinformationofjointventuresandassociates

VIII.RiskRelatedtoFinancialInstruments

A.General

TheGrouphasextensiveinternationaloperations,and,therefore,itisexposedtocreditrisks,liquidityrisksandmarketrisks(includingcurrencyrisk,interestriskandotherpricerisk).Inordertoreducetheexposuretotheserisks,theGroupusesfinancialderivativesinstruments,includingforwardtransactionsandoptions(here-inafter-“derivatives”).

Transactionsinderivativesareundertakenwithmajorfinancialinstitutions,andtherefore,intheopinionofGroupManagementthecreditriskinrespectthereofislow.

ThisnoteprovidesinformationontheGroup’sexposuretoeachoftheaboverisks,theGroup’sobjectives,policiesandprocessesregardingthemeasurementandmanagementoftherisk.Additionalquantitativedis-closureisincludedthroughouttheconsolidatedfinancialstatements.

TheBoardofDirectorshasoverallresponsibilityforestablishingandmonitoringtheframeworkoftheGroup'sriskmanagementpolicy.TheFinanceCommitteeisresponsibleforestablishingandmonitoringtheGroup'sactualriskmanagementpolicy.TheChiefFinancialOfficerreportstotheFinanceCommitteeonaregularbasisregardingtheserisks.

TheGroup’sriskmanagementpolicy,establishedtoidentifyandanalyzetherisksfacingtheGroup,tosetappropriaterisklimitsandcontrols,andtomonitorrisksandadherencetolimits.Thepolicyandmethodsformanagingtherisksarereviewedregularly,inordertoreflectchangesinmarketconditionsandtheGroup'sactivities.TheGroup,throughtraining,andmanagementstandardsandprocedures,aimstodevelopadisci-plinedandconstructivecontrolenvironmentinwhichalltheemployeesunderstandtheirrolesandobligations.

B.Creditrisk

CreditriskistheriskoffinanciallosstotheGroupifacustomerorcounterpartytoafinancialinstrumentfailstomeetitscontractualobligations,andderivesmainlyfromtradereceivablesandotherreceivablesaswellasfromcashanddepositsinfinancialinstitutions.

Accountsandotherreceivables

TheGroup’srevenuesarederivedfromalargenumberofwidelydispersedcustomersinmanycountries.Customersincludemulti-nationalcompaniesandmanufacturingcompanies,aswellasdistributors,agricul-turists,agentsandagrochemicalmanufacturerswhopurchasetheproductseitherasfinishedgoodsorasin-termediateproductsfortheirownrequirements.

TheCompanyenteredintoanagreementforthesaleoftradereceivablesinasecuritizationtransaction,fordetailsseenoteV.5.e.

InApril2021,atwo-yearsagreementwithaninternationalinsurancecompanywasrenewed.Theamountoftheinsurancecoveragewasfixedat$150millioncumulativeperyear.Theindemnificationislimitedtoabout90%ofthedebt.

TheGroup’sexposuretocreditriskisinfluencedmainlybythepersonalcharacterizationofeachcustomer,andbythedemographiccharacterizationofthecustomer’sbase,includingtheriskofinsolvencyoftheindus-tryandgeographicregioninwhichthecustomeroperates.Nosinglecustomeraccountedforgreaterthan5%oftotalaccountsreceivable.

VIII.RiskRelatedtoFinancialInstruments-(cont’d)

B.Creditrisk-(cont’d)

TheCompanymanagementhasprescribedacreditpolicy,wherebytheCompanyperformscurrentongoingcreditevaluationsofexistingandnewcustomers,andeverynewcustomerisexaminedthoroughlyregardingthequalityofhiscredit,beforeofferinghimtheGroup’scustomaryshippingandpaymentterms.Theexami-nationmadebytheGroupincludesanoutsidecreditrating,ifany,andinmanycases,receiptofdocumentsfromaninsurancecompany.Acreditlimitisprescribedforeachcustomer,outstandingamountoftheaccountsreceivablebalance.Theselimitsareexaminedannually.CustomersthatdonotmeettheGroup’scriteriaforcreditqualitymaydobusinesswiththeGrouponthebasisofaprepaymentoragainstfurnishingofappropriatecollateral.

MostoftheGroup’scustomershavebeendoingbusinesswithitformanyyears.Inmonitoringcustomercreditrisk,thecustomersweregroupedaccordingtoacharacterizationoftheircredit,basedongeographicallocation,industry,agingofreceivables,maturity,andexistenceofpastfinancialdifficulties.Customersdefinedas“highrisk”areclassifiedtotherestrictedcustomerlistandaresupervisedbymanagement.Incertaincountries,mainly,Brazil,customersarerequiredtoprovidepropertycollaterals(suchasagriculturallandsandequip-ment)againstexecutionofthesales,thevalueofwhichisexaminedonacurrentongoingbasisbytheCom-pany.Inthesecountries,inacaseofexpectedcreditrisk,theCompanyrecordsaprovisionfortheamountofthedebtlessthevalueofthecollateralsprovidedandactstorealizethecollaterals.

TheGroupcloselymonitorstheeconomicsituationinEasternEuropeandSouthAmericaonanongoingbasis.AsaresultoftheCovid-19pandemic,theGroupalsocloselymonitorstheeconomicsituationworldwide.Wherenecessary,theGroupoperatestolimititsexposuretocustomers.

Cashanddepositsinbanks

TheCompanyholdscashanddepositsinbankswithahighcreditrating.Thesebanksarealsorequiredtocomplywithcapitaladequacyormaintainalevelofsecuritybasedondifferentsituations.

Guarantees

TheCompany’spolicyistoprovidefinancialguaranteesonlytoinvesteecompanies.

Agingofreceivablesandexpectedcreditrisk

Presentedbelowistheagingofthepastduetradereceivables:

C.Liquidityrisk

LiquidityriskistheriskthattheGroupwillencounterdifficultyinmeetingitsfinancialobligationwhentheycomedue.TheGroup'sapproachtomanagingitsliquidityriskistoassure,totheextentpossible,anadequatedegreeofliquidityformeetingitsobligationstimely,underordinaryconditionsandunderpressureconditions,withoutsustainingunwantedlossesorhurtingitsreputation.

Thecash-flowforecastisdeterminedbothatthelevelofthevariousentitiesaswellasoftheconsolidatedlevel.TheCompanyexaminesthecurrentforecastsofitsliquidityrequirementsinordertoascertainthatthereissufficientcashfortheoperatingneeds,includingtheamountsrequiredinordertocomplywiththefinancialliabilities,whiletakingstrictcarethatatalltimestherewillbeunusedcreditframeworkssothattheCompanywillnotexceedthecreditframeworksgrantedtoitandthefinancialcovenantswithwhichitisrequiredtocomplywith.TheseforecaststakeintoconsiderationmatterssuchastheCompany’splanstousedebtforfinancingitsactivities,compliancewithrequiredfinancialcovenants,compliancewithcertainliquidityratiosandcompliancewithexternalrequirementssuchaslawsorregulation.

ThesurpluscashheldbytheGroupsubsidiaries,whichisnotrequiredforfinancingthecurrentongoingop-erations,isinvestedinshort-terminterest-bearinginvestmentchannels.

C.Liquidityrisk-(cont’d)

(1)Presentedbelowarethecontractualmaturitiesofthefinancialliabilitiesatundiscountedamounts,includingestimatedinterestpayments:

D.Marketrisks

Marketriskistheriskthatchangesinmarketprices,suchasforeignexchangerates,CPI,interestratesandpricesofcapitalinstruments,willaffecttheGroup’srevenuesorthevalueofitsholdingsinitsfinancialin-struments.Theobjectiveofmarketriskmanagementistomanageandmonitortheexposuretomarketriskswithinacceptableparameters,whileoptimizingthereturn.

Duringtheordinarycourseofbusiness,theGrouppurchasesandsellsderivativesandassumesfinanciallia-bilitiesforthepurposeofmanagingmarketrisks.

(1)CPIandforeigncurrencyrisks

Currencyrisk

TheGroupisexposedtocurrencyriskfromitssales,purchases,expensesandloansdenominatedincurrenciesthatdifferfromtheGroup’sfunctionalcurrency.ThemainexposureisinEuro,Brazilianreal,USDandinNIS.Inaddition,therearesmallerexposurestovariouscurrenciessuchastheBritishpound,Polishzloty,Australiandollar,Indianrupee,Argentinepeso,Canadiandollar,SouthAfricanRand,UkraineHryunia,theTurkishliraandChineseYuanRenminbi.

TheGroupusesforeigncurrencyderivatives–forwardtransactionsandcurrencyoptions–inordertohedgethecashflowsrisk,whichderivefromexistingmonetaryassetsandliabilitiesandanticipatedsalesandpur-chases,whichmaybeaffectedbyexchangeratefluctuations.

D.Marketrisks-(cont’d)

(1)CPIandforeigncurrencyrisks-(cont’d)

TheGrouphedgedapartoftheestimatedcurrencyexposuretoanticipatesalesandpurchasesforthesubse-quentyear.Likewise,theGrouphedgesmostofitsmonetaryassetsandliabilitiesdenominatedinanon-U.S.dollarcurrency.TheGroupusesforeigncurrencyderivativestohedgeitscurrencyrisk,mostlywithmaturitydatesoflessthanoneyearfromthereportingdate.

SolutionsdebenturesarelinkedtotheNIS-CPIand,therefore,anincreaseintheNIS-CPI,aswellaschangesintheNISexchangerate,couldcausesignificantexposurewithrespecttothesubsidiaryfunctionalcurrency–theU.S.dollar.Asoftheapprovaldateofthefinancialstatements,thesubsidiaryhadhedgedmostofitsexposurederivingfromissuanceofthedebentures,inoptionsandforwardcontracts.

(A)TheGroup’sexposuretoNIS-CPIandforeigncurrencyrisk,exceptinrespectofderivativefinancial

instrumentsisasfollows:

(B)TheexposuretoCPIandforeigncurrencyriskinrespectofderivativesisasfollows:

(C)Sensitivityanalysis

TheappreciationordepreciationoftheDollaragainstthefollowingcurrenciesasofDecember31,2021andtheincreaseordecreaseintheCPIwouldincrease(decrease)theequityandprofitorlossbytheamountspresentedbelow.Thisanalysisassumesthatalltheremainingvariables,amongothersinterestrates,remainsconstant.

(2)Interestraterisks

TheGrouphasexposuretochangesinthevariableinterestrate.TheGrouphasdifferentassetsandliabil-itiesindifferentcountrieswhichbearinterestaccordingtotheeconomicenvironmentineachcountry.Mostoftheloans,otherthanthedebentures,bearDollarandEuroLiborinterest.Asaresult,mostofthevariableinterestexposureofthoseloansistotheLiborinterest.Duetomarketconditions,thevariableinterestratesoncasharerelativelylow.

TheCompanypreparesaquarterlysummaryofexposuretoachangeintheLiborinterestrate.Asattheapprovaldateofthefinancialstatements,theCompanyhadnothedgedthisexposure.

(2)Interestraterisks-(cont’d)

(A)Typeofinterest

TheinterestrateprofileoftheGroup’sinterest-bearingfinancialinstrumentswasasfollows:

(1)Includingcurrentmaturities.

(B)Sensitivityanalysisofcashflowsregardingvariable-interestinstruments

Achangeof5%intheinterestratesonthereportingdatewouldincreaseorreduceequityandprofitorlossbytheamountspresentedbelow.Thisanalysisassumesthatalltheremainingvariables,amongothersex-changerates,remainedfixed.

IX.FairValue

Thefairvalueofforwardcontractsonforeigncurrencyisbasedontheirlistedmarketprice,ifavailable.Intheabsenceofmarketprices,thefairvalueisestimatedbasedonthediscounteddifferencebetweenthestatedforwardpriceinthecontractandthecurrentforwardpricefortheresidualperioduntilredemption,usinganappropriateinterestrate.

Thefairvalueofforeigncurrencyoptionsisbasedonbankquotes.Thereasonablenessofthequotesisevaluatedthroughdiscountingfuturecashflowestimates,basedontheconditionsanddurationtomaturityofeachcontract,usingthemarketinterestratesofasimilarinstrumentatthemeasurementdateandinaccordancewiththeBlack&Scholesmodel.

1.Financialinstrumentsmeasuredatfairvaluefordisclosurepurposesonly

Thecarryingamountofcertainfinancialassetsandliabilities,includingcashatbankandonhand,billsandaccountsreceivable,receivablesfinancing,otherreceivables,derivativesfinancialassets,short-termloans,billsandaccountspayableandotherpayable,arethesameorproximatetotheirfairvalue.

Thefollowingtabledetailsthecarryingamountinthebooksandthefairvalueofgroupsofnon-currentfinancialinstrumentspresentedinthefinancialstatementsnotinaccordancewiththeirfairvalues:

a)Thefairvalueoftheothernon-currentassetsisbasedonadiscountedfuturecashflows,usingtheacceptableinterestrateforsimilarinvestmenthavingsimilarcharacteristics(Level2).b)Thefairvalueofthelong-termloansandothersisbasedonadiscountedfuturecashflows,usingtheacceptableinterestrateforsimilarloanshavingsimilarcharacteristics(Level2).c)Thefairvalueofthedebenturesisbasedonstockexchangequotes(Level1).

2.Theinterestratesusedindeterminingfairvalue

Theinterestratesusedtodiscounttheestimateofanticipatedcashflowsare:

IX.FairValue-(cont’d)

3.Fairvaluehierarchyoffinancialinstrumentsmeasuredatfairvalue

Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.Thetablebelowpresentsananalysisoffinancialinstru-mentsmeasuredatfairvalue.Thevariouslevelshavebeendefinedasfollows:

Level1:quotedprices(unadjusted)inactivemarketforidenticalinstrument.Level2:inputsotherthanquotedpricesincludedwithinLevel1thatareobservable,eitherdirectlyorindirectly.Level3:inputsthatarenotbasedonobservablemarketdata(unobservableinputs).

TheCompany’sforwardcontractsandoptionsarecarriedatfairvalueandareevaluatedbyobservableinputsandthereforeareconcurrentwiththedefinitionoflevel2.

Notransferbetweenanylevelsofthefairvaluehierarchyinthereportingperiod.

Nochangeinthevaluationtechniquesinthereportingperiod.

X.Relatedpartiesandrelatedpartytransactions

1.InformationonparentCompany

TheCompany’sultimatecontrollingshareholderisSinochemHoldings.

2.InformationonthelargestsubsidiariesoftheCompany

ForinformationaboutthesubsidiariesoftheCompany,refertoNoteVII.1.

3.InformationonlargestjointventuresandassociatesoftheCompany

ForinformationaboutthejointventuresandassociatesoftheCompany,refertoNoteV.12.OtherjointventuresandassociatesthathaverelatedpartytransactionswiththeGroupduringthisperiodorthepreviousperiodsareasfollows:

X.Relatedpartiesandrelatedpartytransactions-(cont’d)

4.Informationonotherrelatedparties

4.Informationonotherrelatedparties-(cont’d)

5.Transactionsandbalanceswithrelatedparties

(1)Transactionswithrelatedparties

(2)Guarantees

TheGroupastheguaranteereceiver

*Duringtheyear,theCompanypaidaguaranteefeeamountingto141thousandRMB(2020:nil)totheparentcompany.

(3)Remunerationofkeymanagementpersonnelanddirectors

5.Transactionsandbalanceswithrelatedparties-(cont'd)

(4)Receivablesfromandpayablestorelatedparties(includingloans)

ReceivableItems

PayableItems

*Theliabilityisaloanfromarelatedparty,theinterestexpensefortheyearendedDecember31,2021is3,897thousandRMB(twelvemonthsendedDecember31,2020:2,096thousandRMB).Theloanwasfullyrepaidduring2021.Seeotherrelatedpartytransactionsnotebelow(5)regardingthenewcreditfacilityreceivedduring2021(RMB319million).

6.Transactionsandbalanceswithrelatedparties-(cont'd)

(5)Otherrelatedpartytransactions

TheclosingbalanceofbankdepositinChemChinaFinanceCorporationwas358,881thousandRMB(31.12.20:370,141thousandRMB)Interestincomeofbankdepositforthecurrentperiodwas2,725thou-sandRMB(amountfortwelvemonthsendedDecember31,2020is1,422thousandRMB).TheclosingbalanceofaloanreceivedfromChemChinaFinancecorporationwas0thousandRMB(2031.12.:0thousandRMB).Interestexpensesinthecurrentperiodwas1,571thousandRMB(amountfortwelvemonthsendedDecember31,2020is665thousandRMB).

FollowingtheapprovalsfromSolutionsBoardofDirectorsandtheAuditCommitteedatedOctober25,2021,onOctober27,2021,Solutions,throughoneofitssubsidiaries,enteredintoacommittedcreditfacil-itiesagreementsintheaggregateamountofUSD100million(RMB638million)onmarkettermswithSyngentaGroup,oranyofitssubsidiaries.AsofDecember31,2021theamountutilizedisUSD50million(RMB319million).

XI.Commitmentsandcontingencies

1.Significantcommitments

2.CommitmentsandContingentLiabilities

OnDecember10,2018the9thmeetingofthe8thsessionoftheBoardofDirectorsoftheCompanyapprovedtheextensionoftheengagementinannualliabilityinsurancepoliciesfordirectors,supervisorsandseniorof-ficersoftheCompany(“D&OLiabilityInsurance)asoriginallyapprovedbythe22ndmeetingofthe7thsessionofBoardofDirectorsandthe4thInterimShareholdersMeetingin2017,andauthorizedthemanagementtoannuallydealwithallmattersrelatingtorenewal/extensionofthecustomaryD&OLiabilityInsurancepolicies,withupto20%flexibilityintherelevanttermsoftheoriginalpolicy.OnDecember26,2018the3rdInterimShareholdersMeetingapprovedtheaboveresolution.ThecurrentD&OLiabilityInsurancewasrenewedforanadditionalone-yeartermcommencingNovember15,2021.

EnvironmentalprotectionThemanufacturingprocessesoftheCompanyandtheproductsitproducesandmarket,entailenvironmentalrisksthatimpacttheenvironment.TheCompanyinvestssubstantialresourcesinordertocomplywiththeap-plicableenvironmentallawsandattemptstopreventorminimizetheenvironmentalrisksthatcouldoccurasaresultofitsactivities.TothebestoftheCompany’sknowledge,atthebalancesheetdate,therearenomaterialenvironmentalissuesrelatingtotheCompany,therearenomaterialadministrativepenaltiesorinvestigationsrelatedtoenvironment,healthandsafetyimposedorinitiatedbyregulatoryauthorities,andnoneofthematerialpermitsandlicensesregardingenvironmentalissuesrequiredfortheCompany’sdaytodayoperationshavebeenrevoked.

OtherFortwooftheCompany’sproductionsitesinChinathathavebeenintheprocessofrelocation,JingzhousiteinJingzhou,HubeiProvincecompleteditsrelocationandupgradeprogramandcontinuesonitspathofgradu-allyrampingupproductionandAnponoldsiteinHuai’An,JiangsuProvinceisintheprocessofrelocatingtothenewsite.Aspartoftherelocationprocess,theCompanyexecutedinpreviousyearsareductionplantoreducethenumberofemployeesduringtherelocationperiod.

ClaimsagainstsubsidiariesIntheordinarycourseofbusiness,legalclaimswerefiledagainstsubsidiaries,includingclaimsforpatentin-fringement.TheCompany,interalia,likeothercompaniesoperatinginthecropprotectionmarket,isexposedtoclassactionsforlargeamounts,whichitmustdefendagainstwhileincurringconsiderablecosts,eveniftheseclaimshavenobasisinthefirstplace.IntheopinionoftheCompany’smanagement,whichisbased,interalia,ontheopinionsofitslegaladvisorsregardingtheprospectsoftheproceedings,thefinancialstatementsincludeadequateprovisionswherenecessarytocovertheexposureresultingfromtheclaims.

XI.Commitmentsandcontingencies-(cont’d)

2.CommitmentsandContingentLiabilities-(cont’d)

Claimsagainstsubsidiaries(cont’d)OnOctober20,2020,aclaimandamotionforitsapprovalasaclassaction(the“Motion”)wasfiledagainstMonsantoCompanyandBayerAG(the“Manufacturers”)aswellasagainstADAMAAganLtd.,awholly-ownedsubsidiaryoftheCompany,withrespecttoanherbicidebearingthebrandnameRoundup,whichisproducedbytheManufacturersanddistributedinIsraelinsmallquantitiesbythesubsidiary.Theapplicantsarguethattheproductallegedlyposesarisktousersorthosewhohavebeenexposedtoit.TheCompanyandthesubsidiaryrejecttheallegationsagainstthesubsidiaryintheMotionandinthestatementofclaim.AstheCompanyisanauthorizeddistributoroftheManufactures,whichundertooktofullyindemnify,defendandholdharmlessADAMAAganLtd.,foranymonetarycompensationoranyotherremedyitwillhavetomakeinconnectionwiththeMotion,theMotionandclaimarenotexpectedtohaveanynon-negligibleeffectontheCompany’sfinancialresults.

InJune2021,alawsuitwasfiledagainstasubsidiaryoftheCompany,allegingtwopatentsownedbyalargecompetitoroftheCompany,havebeeninfringedbysuchsubsidiary.Amongtheclaims,theplaintiffseekspreliminaryandpermanentinjunctionstopreventthesubsidiaryfrommanufacturing,usingorcommercializinganyproductthatinfringestheplaintiff’spatents,andseeksactualdamagesandprofitsloss.Thesaidpreliminaryinjunctionsweregrantedbythecourtinfavoroftheplaintiff.Thesubsidiaryhasfiledappealsagainstsuchpreliminaryinjunctions,whicharestillpending.Priortosuchclaims,andon-going,thesubsidiaryfiledseverallawsuitsagainstthesaidplaintiffseekingtodeclarethesaidpatentsareinvalidandthesubsidiarydoesnotinfringethem.Alltheselawsuitsarependingasoftheapprovaldateofthefinancialstatements.Atthisstage,theclaimsfiledbytheplaintiffarenotexpectedtohaveamaterialeffectontheCompany.

VariousimmaterialclaimshavebeenfiledagainstGroupcompaniesincourtsthroughouttheworld,inimma-terialamounts,forcausesofactionprimarilyinvolvingemployee-employerrelationsandvariouscivilclaims,forwhichtheCompanydidnotrecordaprovisioninthefinancialstatements.TheclaimsthatintheestimationofCompany’smanagement,basedonitslegaladvisors’opinion,havelowerchancesofsucceedingthanbeingrejected,amounttoanegligibleamount.Furthermore,claimswerefiledagainsttheCompanyforproductlia-bilitydamages,forwhichtheCompanyhasadequateinsurancecoverage,suchthattheCompany’sexposureinrespectthereofislimitedtothedeductibleamountortheamountthereofdoesnotexceedthedeductibleamount.

XII.EventssubsequenttothebalancesheetdateWithrespecttothecurrenteventsinUkraine,atthisstage,theCompanycannotdefinitivelyestimatethepoten-tialimpactoftheseeventsonthefinancialperformanceoftheCompany.TheCompanyiscontinuouslyreview-ingthesituationonthegroundandassessingthepotentialrisksinvolved,andwillprovideafurtherupdateinduecourse.

XIII.Share-basedPayments

1.InFebruary2019,theremunerationcommitteeandSolutionsBoardofDirectors(aswellastheGeneralMeet-

ingwithrespecttotheformerCEOandVicePresidentwhoalsoservesasadirector)approvedtheallocationof77,864,910phantomwarrantstoofficersandemployeesinaccordancewiththelong-termphantomcom-pensationplan(hereinafter-"the2019Plan"),outofwhich75,814,897phantomwarrantsweregrantedatthegrantdateofFebruary21,2019.During2019,1,206,081additionalPhantomwarrantsweregranted.

Thewarrantswillvestinfourequalportions,wherethefirstandsecondquartersareexercisableaftertwoyears,thethirdquarterafterthreeyearsandthefourthquarterafterfouryearsfromJanuary1,2019.Thewarrantswillbeexercisable,inwholeorinpart,inaccordancewiththetermsofthe2019plan,andsubjecttoachievingfinancialtargetsasdeterminedintheplan.Thewarrantswillbeexercisableuntiltheendof2025.

Uponexerciseofeachwarrant,theoffereewillbeentitledtoreceivecashpaymentequaltothedifferencebetweenthebasepriceasdeterminedatthetimeofthegrantandtheclosingpriceofoneshareoftheCompanyontheShenzhenStockExchange,asitwillbeontheexercisedateup,totheceilingthatwasdeterminedundertheplan.

Thefairvalueofthegrantedwarrantsasaforesaidwasestimatedusingthebinomialpricingmodel.

Thecostofthebenefitembodiedinthewarrantsthatwereallocatedasaforesaid,basedonthefairvalueatthegrantdate,amountedtoatotalofapproximately186millionRMB.Theliabilityattheendofthereportingperiodwasrecordedaccordingtothevestingperiodasdeterminedintheplan,takingintoaccounttheextentoftheservicethattheemployeesprovideduntilthatdateandtheCompany’ssharepriceattheendofthereportingperiod.

XIII.Share-basedPayments-(cont’d)

2.InSeptember2019,theremunerationcommitteeandSolutionsBoardofDirectors(andtheGeneralMeeting

withrespecttotheCEOandVicePresidentwhoalsoservesasadirector)approvedthecancellationof2017Planagainsttheallocationof28,258,248warrantsinaccordancewiththelong-termphantomcompensationplan(hereinafter-"TheAlternativeWarrants"and"TheAlternativePlan").ThecancellationandallocationdateisSeptember26,2019.During2019,anadditional90,130AlternativePhantomWarrantsweregranted.

Thealternativewarrantswillvestinfourequalportions,wherethefirstquarterisexercisableafteroneyear,thesecondquarteraftertwoyears,thethirdquarterafterthreeyearsandthefourthquarterafterfouryearsfromOctober1,2019.Thewarrantswillbeexercisable,inwholeorinpart,inaccordancewiththetermsoftheAlternativePlan,andsubjecttoachievingfinancialtargetsasdeterminedintheplan.ThewarrantswillbeexercisableuntilOctober1,2026.

Uponexerciseofeachwarrant,theoffereewillbeentitledtoreceivecashpaymentequaltothedifferencebetweenthebasepriceasdeterminedatthetimeofthegrantandtheclosingpriceofoneshareoftheparentcompanyontheShenzhenStockExchange,asitwillbeontheexercisedateuptotheceilingthatwasdeter-minedundertheplan.

Thefairvalueofthetotalgrantedalternativewarrantsattheallocateddateisequaltothefairvalueofthetotalwarrantscanceledfromthe2017plan.

Thecostofthebenefitembodiedinthewarrantsthatwereallocatedasaforesaid,basedonthefairvalueatthecancellationandallocationdate,amountedtoatotalofapproximately69millionRMB.Theliabilityinthefinancialstatementsattheendofthereportingperiodwasrecordedatthefairvalueestimatedusingthebino-mialoptionpricingmodelandbythevestingperiodfromtheoriginalgrantdateofthe2017plantotheendoftheserviceperioddeterminedbythealternativeplan,takingintoaccounttheextentoftheservicethattheemployeesprovideduntilthatdateandthestockpriceatthereportingdate.

Statementofsharebasedpaymentsintheperiod

XIV.Othersignificantitems

1.Segmentreporting

TheCompanypresentsitssegmentreportingbasedonaformatthatisbasedonabreakdownbybusinesssegments:

CropProtection(Agro)

ThisisthemainareaoftheCompany’soperationsandincludesthemanufactureandmarketingofconven-tionalagrochemicalproducts.

Intermediatesandingredients

Thisfieldofactivityincludesalargenumberofsub-fields,including:Lycopan(anoxidizationretardant),aromaticproducts,andotherchemicals.ItcombinesalltheCompany’sactivitiesnotincludedintheCropProtectionproductssegment.

Segmentresultsreportedtothechiefoperatingdecisionmakerincludeitemsdirectlyattributabletoasegmentaswellasitemsthatcanbeallocatedonareasonablebasis.Unallocateditemscomprisemainlyfinancingexpenses,net,gainsfromchangesinfairvalue,investmentincomeandtaxexpenses.

Allassetsandliabilitiesthatcanbeattributedtoaspecificsegmentwereallocatedaccordingly.Attributedassetsinclude:accountsandbillsreceivables,receivablesfinancing,inventory,fixedassets,right-of-useassets,constructioninprogress,intangibleassets,goodwill,non-currenttradereceivablesandlong-termequityin-vestments.Attributedliabilitiesincludeaccountpayables,billpayablesandleaseliabilities.Allotherassetsandliabilitieswhicharenotattributabletoaspecificsegmentarepresentedasunallocatedassetsandliabilities.

XIV.Othersignificantitems-(cont'd)

1.Segmentreporting-(cont’d)

Informationregardingtheresultsandassetsandliabilitiesofeachreportablesegmentisincludedbelow:

Geographicinformation

ThefollowingtablessetsoutinformationaboutthegeographicalsegmentsoftheGroup’soperatingincomebasedonthelocationofcustomers(salestarget)andtheGroup'snon-currentassets(includingfixedassets,right-of-useassets,constructioninprogress,investmentpropertiesintangibleassetsandgoodwill).Inthecaseofinvestmentproperty,fixedassets,rightofusedassetsandconstructioninprogress,thegeographicallocationoftheassetsisbasedonitsphysicallocation.Incaseofintangibleassetsandgoodwill,thegeographicallocationofthecompanywhichownstheassets.

2.Thedependencyonmajorcustomers

Nosinglecustomer'sproportionofthetotalamountofsalesisover10%.

3.CalculationofEarningspershareandDilutedearningspershare

XV.NotestomajoritemsintheCompany'sfinancialstatements

1.Cashatbankandonhand

AsatDecember31,2021,restrictedcashandbankbalanceswas6,124thousandRMB(asatDecember31,2020:12,054thousandRMB).

2.Accountsreceivable

XV.NotestomajoritemsintheCompany'sfinancialstatements-(cont'd)

2.Accountsreceivable-(cont'd)

*TheamountsareintergroupbalanceswithSolutions'subsidiaries.

3.Receivablefinancing

AsatDecember31,2021,bankacceptanceendorsedbutnotyetdueamountsto193,436thousandRMB.

4.OtherReceivables

(1)Otherreceivables

a.Otherreceivablesbycategories

*IncludeintergroupbalancewithAnpon.

4.OtherReceivables-(cont'd)

(2)Otherreceivables-(cont'd)

c.Additions,recoveryorreversalandwritten-offofprovisionforexpectedcreditlossesduringtheperiod:

d.FivelargestotherreceivablesatDecember312021:

*IntergroupbalancewithAnpon.

5.Long-termequityinvestments

Investmentsinsubsidiaries

6.OperatingIncomeandoperatingcosts

7.Notestoitemsinthecashflowstatements

(1)Othercashreceivedrelevanttooperatingactivities

(2)Othercashpaidrelevanttooperatingactivities

(3)Othercashreceivedrelevanttofinancingactivities

(4)Othercashpaidrelevanttofinancingactivities:

8.Supplementaryinformationtocashflowstatement

(1)Reconciliationofnetprofittonetcashflowsgeneratedfromoperatingactivities:

(2)Netincreaseincashandcashequivalents

9.Relatedpartiesandrelatedpartiestransactions

(1)InformationonparentCompany

TheultimatecontrollingshareholderisSinochemHoldings.

(2)InformationonthesubsidiariesoftheCompany

(3)Transactionswithrelatedparties

a.Transactionsofgoodsandservices

9.Transactionsandbalanceswithrelatedparties-(cont'd)

(3)Transactionswithrelatedparties-(cont'd)

b.Guarantees

TheCompanyastheguarantor

TheCompanyastheguaranteereceiver

*Duringtheyear,theCompanypaidaguaranteefeeamountingto141thousandRMB(2020:nil)totheparentcompany

c.Receivablesfromandpayablestorelatedparties(includingloans)

*loansfromrelatedparty,theinterestexpensefortheyearendedDecember31,2021was2,865

thousandRMB(2,096thoussandRMBin2020).Theloanwasfullyrepaidduring2021.

d.OtherrelatedpartytransactionsTheclosingbalanceofbankdepositinChemChinaFinanceCorporationwas189,978thousandRMB(2031.12.:170,210thousandRMB).Interestincomeofbankdepositforthecurrentperiodwas1,019thousandRMB(amountfortheyearendedDecember31,2020is776thousandRMB).TheclosingbalanceofaloanreceivedfromChemChinaFinancecorporationwas0thousandRMB(2031.12.:0thousandRMB).Interestexpenseinthecurrentperiodwas0thousandRMB(amountfortheyearendedendedDecember31,2020is370thousandRMB).

Supplementaryinformation(ExpressedinRMB'000)

1.ExtraordinaryGainandLoss

Note1:Extraordinarygainandlossitemslistedabovearepresentedintheamountbeforetaxation

2.Returnonnetassetsandearningspershare(“EPS”)

TheinformationofReturnonnetassetsandEPSisinaccordancewiththePreparationRulesforInfor-mationDisclosurebyCompaniesOfferingSecuritiestothePublicNo.9–CalculationandDisclosureofReturnonnetassetsandEarningspershare(2010Amendment)issuedbyChinaSecuritiesRegulatoryCommission.