ADAMA REPORTS BEST EVER RESULTS FOR COMBINED COMPANY Strong final quarter drives 2017 sales above$3.5bn mark,15% EBITDA growth to$646m and44% Net Income growth over the year
 Q4 Sales up13.0% to$821 million; driven by robust11.3% volume growth
‒ Full year sales up5.8% to$3,523 million, driven by8.0% growth in volume
 Gross Profit up20.2% to$265 million in Q4; gross margin up 1.9 percentage points to32.3%
‒ Full year gross profit up14.8% to$1,237 million, with an increase of 2.8 percentage points in gross margin to35.1%
 EBIT up45.9% to$45 million in Q4; EBIT margin up 1.2 percentage points to5.5%‒ Full year EBIT up25.7% to$436 million, with an increase of 2.0 percentage points in EBIT margin to12.4%
 Net income up to$26 million in Q4; net income margin up 3.3 percentage points to3.1%
‒ Full year net income up44.3% to$280 million, with an increase of 2.2 percentage points in net income margin to8.0%
 EBITDA up19.2% to$100 million in Q4; EBITDA margin up 0.7 percentage points to12.2%
‒ Full year EBITDA up15.0% to$646 million, with an increase of 1.4 percentage points in EBITDA margin to18.3%
 Strong cash flow generation drives ongoing debt reduction
‒ Working capital further reduced
‒ Operating Cash Flow in the quarter of$217 million and of$586 million in the year‒ Free Cash Flow in the quarter of$115 million and of$310 million in the year
‒ Major$427 million reduction in balance sheet net debt over the last 12 months to$442 million
‒ Reaching net debt / EBITDA ratio of 0.7x
 Key business highlights
‒ Adama-Sanonda Combination completed, with name of Combined Company to change to ADAMA, subject to required approvals
‒ Build-up and integration of China commercial and operational activities well underway, including the launch of a state-of-the-artR&D center
‒$240m in new equity raised from six ofChina’s leading institutional investors
‒ Shares included on the Shenzhen-Hong Kong Stock Connect, providing access to international investors
BEIJING, CHINA and TEL AVIV, ISRAEL, March 28, 2018– Adama Agricultural Solutions Ltd. (“Solutions”), together with Hubei Sanonda Co., Ltd. (the “Listed Entity”), to be named ADAMA (together, “ADAMA” or “the Combined Company”), today reported their combined consolidated financial results for the fourth quarter and the full year ended December 31, 2017.
||
|-|
|Adjusted|

||||
|-|-|-|
|Q4 2017|Q4 2016||
|||% Change|
|$m|$m||

||||
|-|-|-|
|FY 2017|FY 2016||
|||% Change|
|$m|$m||

Revenues 821 726 +13.0% 3,523 3,331 +5.8% Gross profit 265 221 +20.2% 1,237 1,077 +14.8% Gross margin 32.3% 30.4% 35.1% 32.3%
Operating income (EBIT) 45 31 +45.9% 436 347 +25.7% EBIT margin 5.5% 4.3% 12.4% 10.4%
Net income 26 -2 NM 280 194 +44.3% Net income margin 3.1% -0.2% 8.0% 5.8%
EBITDA 100 84 +19.2% 646 561 +15.0% EBITDA margin 12.2% 11.5% 18.3% 16.9%
Earnings per share– USD 0.0109 0.0003 0.1196 0.0692
– RMB 0.0720 0.0018 0.8153 0.4530
The results of the Combined Company are presented after restatement of prior periods to include the financial position, results of operations and cash flow of Solutions. All income statement items contained in this release are presented on a combined, adjusted basis, reflecting the performance of the Combined Company. For a detailed description and analysis of the differences between the adjusted income statement items and the items as reported in the financial statements, see “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements” in the appendix to this release. 2016 Net income items are shown before allocation to non-controlling interests; see appendix for such 2016 allocation.
Revenues grew by10.0% in constant currency terms in the quarter and by5.0% in the full year period.
Earnings per share are the same for basic and diluted. The number of shares used to calculate earnings per share in 2017 is 2,341.9 million shares, including the issuance of shares as part of the combination transaction. The number of shares used to calculate earnings per share in 2016 is 1,677.9 million shares, reflecting the issuance of shares as part of the combination transaction in 2017, yet excluding the portion of the 2016 non-controlling interest.
Commenting on the results, Yang Xingqiang, Chairman of ADAMA, said, “Our continued growth across the globe and robust performance in the fourth quarter capped off our strongest year to date. During 2017, we achieved the milestone of becoming the only publically traded, integrated, Global- China crop protection leader. Our recent successful private placement, in which we raised$240m in new equity from key institutional investors, reflects the warm welcome we received from the capital markets, and will be used to support our strategic growth initiatives in the coming years. Our business momentum in recent years, together with our strong foundations and unique positioning in the global and Chinese crop protection markets, provide confidence that we will be able to capitalize on the exciting opportunities that lie ahead.”
Chen Lichtenstein, President and CEO of ADAMA, added, “We are pleased to conclude another record year for ADAMA. With strong market share gains in all key markets worldwide, we delivered robust top-line, bottom-line and EBITDA growth. This performance has been accompanied by continued improvement in working capital, where we now reach industry-leading metrics, driving the generation of significant cash flow, which leads to our lowest debt and leverage levels ever. We
continue to make significant investments in all areas of our business, moving along our strategic
direction, engaging with our customers, enhancing our portfolio, leveraging our integrated
commercial and operational platforms, and propelling our business forward.”
Market Environment
Continued subdued demand for crop protection products due to ongoing low soft commodity prices and farmer incomes, combined with certain re-opening of distribution channels– while most agricultural commodities' prices are generally stable, grain inventories continued to remain high, keeping pressure on prices. This environment continued to impactfarmers’ incomes for the third consecutive year. In some regions, the inventory levels in the crop protection distribution channels are lower in comparison to 2016, which allow customary market activity levels to resume. Despite these overall uneven market conditions, the Combined Company delivered robust volume growth in the fourth quarter and in the full year, driven by the introduction of new and differentiated products, and increased penetration in markets across the globe.
Containment of manufacturing and reduction of procurement costs– continued control of manufacturing costs, combined with reduced raw material costs in the latter part of 2016 and in some cases also in 2017, improved the costs of goods sold over the full year. However, due to shortages in certain raw materials and intermediates, mostly owing to increased environmental focus in China, procurement costs in the second half of 2017 were higher in comparison to 2016, which is expected to impact production costs going forward.
Financial Highlights
Revenues grew by13.0% in the quarter and by5.8% in the full year, compared to the corresponding periods last year. This robust growth was driven by an increase in volumes of an increasingly differentiated product portfolio of11.3% in the quarter and8.0% in the full year, despite generally subdued agricultural market conditions. The strong volume growth was offset to a certain extent in the quarter and in the full year by a softer pricing environment.
Over the full year, the net impact of currency movements was relatively muted, with the strengthening of certain currencies against the US dollar in a number of key regions such as Brazil and India being balanced out by the weakening of other currencies, most notably the British Pound, as well as the lower contribution of currency hedging. In the quarter, sales benefited somewhat from the strengthening of local currencies against the dollar, mainly in Europe and China, compared to the corresponding quarter last year.
Gross profit increased by a significant20.2% in the quarter to$265.4 million, with gross margin up by 1.9 percentage points to32.3%, compared to the corresponding period last year. In the full year, gross profit increased by14.8% to$1,236.6 million, with gross margin up by 2.8 percentage points to35.1%. The strong increase in profitability, both in the quarter and in the full year, resulted from a combination of the robust volume growth, a continued improvement in portfolio mix towards a more differentiated offering, as well as the continued reduction of costs. These trends were somewhat aided by the strengthening of local currencies against the US dollar, and partially offset by the softer pricing environment.
Operating expenses. Total operating expenses were$220.2 million(26.8% of sales) in the quarter and$800.5 million(22.7% of sales) in the full year, compared to$189.8 million(26.1% of sales) and$730.1 million(21.9% of sales) in the corresponding periods last year.
Within the total operating expenses, Sales and Marketing expenses in the quarter and in the full year were$163.2 million(19.9% of sales) and$595.3 million(16.9% of sales), respectively, compared to$147.2 million(20.3% of sales) and$565.5 million(17.0% of sales) in the corresponding periods last year. The increase in this component in the quarter and the full year compared to the corresponding periods last year resulted primarily from an increase in sales-related personnel in growing geographies and an increase in other variable expenses as a result of the increase in sales volumes.
R&D, General and Administrative expenses in the quarter and in the full year were$46.5 million(5.7% of sales) and$186.3 million(5.3% of sales), respectively, compared to$36.7 million(5.0% of sales) and$155.1 million(4.7% of sales) in the corresponding periods last year. The increases in this component in the quarter and the full year resulted primarily from increased spend on strategic research and development projects, reclassification of certain expenses from Cost of Sales toR&D expenses, and an increase in labor related expenses, partially offset by an improvement in capacity utilization.
In addition to the abovementioned factors, part of the increase in operating expenses stemmed from the impact of the strengthening of most currencies against the US dollar.
Operating income increased by45.9% in the quarter to$45.2 million, with an increase of 1.2 percentage points in operating margin to5.5%, compared to the corresponding period last year. In the full year, operating income rose by25.7% to$436.1 million, with an increase of 2.0 percentage points in operating margin to12.4%.
EBITDA increased by19.2% in the quarter to$99.8 million, with an increase of 0.7 percentage points in EBITDA margin to12.2%, compared to the corresponding period last year. In the full year, EBITDA rose by15.0% to$645.6 million, with an increase of 1.4 percentage points in EBITDA margin to18.3%.
Financial expenses and investment income. Total net financing expenses increased in the quarter to$32.7 million compared to$27.6 million in the corresponding period last year. This increase was primarily due to an increase in financial expenses on CPI-linked bonds as a result of the increase in the Israeli CPI over the quarter, compared to a decrease in the index in the corresponding quarter last year.
Total net financing expenses in the full year decreased to$127.7 million, compared to$133.7 million last year. This decrease was primarily due to the decrease in costs of currency hedging, as well as the reduction in financial debt, which were partially offset by an increase in financial expenses as a result of the increase in the Israeli CPI over the full year.
Tax expenses. Net tax income of$13.0 million was registered in the quarter, compared to tax expenses of$5.0 million in the corresponding period last year. The tax income in the quarter derived mainly from the creation of deferred tax assets in respect of losses carried-forward and temporary differences, in anticipation of their expected utilization.
Tax expenses in the full year were$28.2 million, compared to$19.1 million last year, mainly a result of higher pre-tax income. The low effective tax rate in 2017 derives mainly from the creation of deferred tax assets, while the low effective tax rate in 2016 resulted mainly from the strengthening of the Brazilian Real against the US dollar, which created tax income due to the non-cash revaluation of tax assets.
Net income in the quarter rose to$25.5 million from a seasonal loss of$1.7 million in the corresponding period last year. In the full year, net income grew by44.3% to$280.1 million, with an increase of 2.2 percentage points in net income margin to8.0%.
Working capital. Balance sheet working capital decreased by$29.8 million compared to the corresponding period last year, reflecting improved supplier credit management and collection discipline, which more than compensated for somewhat higher inventory in preparation for the 2018 season.
Cash Flow. Operating cash flow of$217.4 million was generated in the quarter, compared to$191.3 million in the corresponding quarter last year. This increase is mainly due to the significant
improvement in the results of operations, partially offset by a more moderate contribution from the release of working capital in comparison with the corresponding period last year.
The strong profit generation resulted in operating cash flow of$586.2 million over the full year, compared to$635.9 million last year, reflecting the more moderate contribution from the release of working capital this year, in comparison with the release of working capital last year that emanated from supply chain alignment.
Net cash used in investing activities in the quarter and in the full year amounted to$66.6 million and$191.5 million, respectively, compared to$72.8 million and$214.1 million in the corresponding periods last year. The investments included primarily product registrations and other intangible and fixed assets, net of one-time proceeds resulting from the divestment of products in the US and minor non-core activities. Investments in fixed assets, net of investment grants, amounted to$38.0 million and$115.6 million in the quarter and over the full year, respectively, compared to$41.9 million and$112.1 million in the corresponding periods last year.
Free cash flow of$115.4 million was generated in the quarter, compared to$81.2 million in the corresponding quarter last year, largely reflecting the improvement in operating cash flow.
Free cash flow over the full year amounted to$309.5 million compared to$335.7 million in the corresponding period last year. The higher cash flow in 2016 reflects the significant release of working capital achieved as a result of the supply chain alignment.
Leverage. The strong cash generation, together with the proceeds of the recent equity offering, drove a substantial reduction in leverage, with balance sheet net debt at the end of the year of$441.8 million, down by almost half compared to$869.3 million as of December 31, 2016. This has resulted in the Net Debt/EBITDA ratio dropping to approximately 0.7x.
Total financial debt including bank credit and debentures was$1,686.7 million as of December 31, 2017 (of which24.8% was short term), compared to$1,413.1 million as of December 31, 2016 (of which14.1% was short term). Cash and short-term investments were$1,207.8 million as of December 31, 2017, compared to$558.9 million as of December 31, 2016.
Dividend. On March 27, 2018, after obtaining the approval of the Board of Directors, the Combined Company declared a cash dividend of RMB 0.63 per 10 shares to all shareholders, resulting in a total cash dividend of RMB 154.1 million (approximately$24.5 million).
Business Update
 Marketing and Product Strategy
To further enhance marketing capabilities, a tailor-made advanced marketing program based onADAMA’s distinctive commercial approach, developed together with a leading academic institution, was rolled out globally.
ADAMA continues to implement its go-to-market approach in key markets, including Europe and Asia Pacific, facilitating more direct contact with end customers and increasing proximity to farmers.
As part of the build-up and integration of its commercial layout in China, ADAMA implemented a unified and comprehensive distribution network for its products and brands, driving significant growth.
Global sales of key products containing backward-integrated active ingredients, such as Acephate and Paraquat, are being performed throughADAMA’s sales teams worldwide,
especially in North America, India, Australia and South Africa, achieving significant growth and increased profitability.
 Innovation, Development, Research and Registration (IDR)
ADAMA continues to strengthen its capabilities across all IDR functions to drive continued product innovation and development. Substantial resources are being allocated toR&D capabilities, with the recruitment of dozens of scientists, development professionals, and other experts– globally, as well as in China.
ADAMA’s state-of the-artR&D Center in Nanjing became fully operational and will form a key pillar in supporting the CombinedCompany’s commercial and operational activities. Together with the upcoming launch of the advanced globalR&D Center in Neot Hovav and the enhancement of pilot, process scale-up and technology transfer capabilities, the development ofADAMA’s future product pipeline will be bolstered.
During 2017, the Combined Company obtained 223 new product registrations, including 22 new product launches worldwide. Regulatory approval forNIMITZ®,ADAMA’s novel non-fumigant nematicide, was granted in additional markets including Canada and Japan, and most recently in Chile and Brazil, theproduct’s largest expected market.
 AgTech
ADAMA has engaged in key partnerships with innovative AgTech developers, to provide farmers with a range of solutions aimed at allowing agronomic decision-making with quantifiable data, reducing operating costs and uncertainty, minimizing potential negative environmental impact and agronomic risks, as well as increasing the efficiency of the CombinedCompany’s products.
With more than 20 AgTech solutions already deployed in key markets across the globe, technologies include sensors, software, robotics and drones, and are directed towards different fields of application, including irrigation, spray monitoring, early detection, disease and weather forecasting, and monitoring of planting gaps.
 Operations
ADAMA continues to improve its supply chain and inventory management, bringing inventory metrics down to industry leading levels. An advanced planning approach across the organization has driven improved utilization and plant loading.
The Combined Company completed plans for its global operations layout, including the consolidation of activities in the advanced sites of Neot Hovav and Jingzhou City. In China, ADAMA finalized the establishment of its operations, with the build-up of combined supply chain, quality, procurement and manufacturing teams, integrated with Global Operations.
Joe Krkoska joined as Executive Vice President of Global Operations.
 Adama-Sanonda combination and flotation
The combination of Solutions and the Listed Entity was successfully completed in July 2017. On September 29, 2017, the board of directors and management of the Combined Company were appointed. The Combined Company will operate under the ADAMA name and brand, following required approvals.
ADAMA completed a capital raise of approximately RMB 1.5 billion($240 million) from equity investors. The Combined Company will utilize the funds for the further development of its global products portfolio, as well as the establishment and expansion of advanced operational capabilities.
 Transfers and divestments relating toChemChina’s acquisition of Syngenta
In the context of developing its business and to facilitate the obtaining by ChemChina of the regulatory approvals for the acquisition of Syngenta AG, ADAMA agreed with ChemChina and Syngenta to effect the divestment of a number of its products, while receiving products of similar nature and economic value from Syngenta.
The receipt of the transferred products from Syngenta and concurrent divestment ofADAMA’s products in the US were concluded in 2017, whereas the receipt and divestment of the relevant products in Europe were concluded in the first quarter of 2018.
Regional Highlights
Regional Sales Performance
|||||
|-|-|-|-|
|Q4 2017|Q4 2016|% Change|% Change|
|USD(m)|USD(m)|USD|CER|

|||||
|-|-|-|-|
|FY 2017|FY 2016|% Change|% Change|
|USD(m)|USD(m)|USD|CER|

 Europe 154 129 +18.9% +12.9% 1,046 1,047 -0.1% +0.9% Latin America 254 252 +1.1% -0.4% 751 747 +0.5% -2.5% North America 159 149 +6.6% +6.4% 646 608 +6.3% +6.2% Asia Pacific 141 103 +36.8% +31.6% 584 478 +22.2% +21.5% Of which China 68 43 +59.8% +52.5% 255 180 +41.6% +42.7% India, Middle East& Africa 113 93 +20.9% +15.9% 496 451 +10.0% +7.6% Total 821 726 +13.0% +10.0% 3,523 3,331 +5.8% +5.0% Europe: Sales in Europe were higher by21.9% in the fourth quarter and by0.9% over the full year, in constant currency terms, compared with the corresponding periods last year. The strong increase in the quarter was driven by significant volume growth of an increasingly differentiated portfolio. Adverse weather conditions impacted the overall level of demand in Europe, keeping pressure on prices, somewhat moderating the strong volume growth. Over the full year, the Combined Company saw moderate volume growth, which was mostly offset by the passing on to customers of a portion of the reduction in product costs.
In Northern Europe, exceptionally wet weather conditions in Scandinavia, the Baltic countries, Poland and Germany caused a reduction in planted areas of winter crops, particularly in cereals, which led to reduced demand for cereal and oilseed rape herbicides and for aphid insecticides in cereals. These adverse conditions led to high channel inventories, maintaining pressure on pricing. However, the Combined Company continues to perform well, increasing its market share in almost all markets of Northern Europe. Ukraine and Russia saw a strong performance resulting from the
combination of a differentiated product offering and tailor-made services to local farmers.
In Southern Europe, dry conditions in many countries in the fourth quarter resulted in late planting for cereals, and therefore a reduced autumn cereals herbicide campaign. These conditions were most notable in Spain, which saw drought conditions for most of the second half of the year.
In France, the dry start to the season was followed by particularly cold and wet conditions, further challenging farmers. Despite these adverse conditions, the Combined Company continued to increase its market share and improve its offering with two successful product launches in France in the fourth quarter–ELYSIUM®, a differentiated mixture herbicide for orchards and grapes, andKANTIK®, a new 3-way fungicide for powdery mildew and eyespot in cereals.
The Combined Company saw strong performances from certain countries in Central and Eastern Europe, most notably Romania and Hungary, where increasing proximity to farmers and the provision of more differentiated, tailored solutions has led to a strengthening in the quality of the business. In the Czech Republic and Slovakia, the three-way herbicideTRINITY® performed well and markedly increased its market share.
In US dollar terms, sales in Europe in the fourth quarter grew by a significant18.9% compared with the corresponding period last year, reflecting also the strengthening of the Euro and the GBP. Over the full year, sales in Europe were flat in US dollar terms, reflecting also the impact of lower contribution of currency hedging compared with last year.
Latin America: Notwithstanding a strong performance in Brazil and most countries in the Andean region and Central America in both the fourth quarter and the full year, due to difficult market conditions and performance in Argentina, sales in Latin America were lower by0.4% in the fourth quarter and by2.5% over the full year, in constant currency terms, compared with the corresponding periods last year.
In the fourth quarter, although the Combined Company saw its business continue to grow in volume terms in most markets, this moderate volume growth was offset by pricing pressure as a result of constrained demand due to drought conditions in Argentina and Central America, as well as reduced insect pressure in Brazil, alongside still elevated channel inventories across the region. In Brazil, the fourth quarter saw good performances from a number of key products, among them the unique mixture insecticideGALIL®, as well asPOQUER®, a systemic, highly selective graminicide herbicide for the post-emergence control of a wide range of annual and perennial grasses in a wide range of crops, andARREIO®, a selective and systemic mixture herbicide for the control of a variety of weeds in pastures. The Combined Company continues to enhance its offering of innovative tools and services to distributors and farmers, also assisting them with gaining access to credit and improving their collection. These initiatives, alongside a continually improving product offering, drove a significant increase of share in this key market over the quarter and the full year. The Combined Company performed well in most countries in the Andean region and Central America, most notably in Colombia, Mexico, Chile and Peru, with good performances from a number of key products, includingNIMITZ®, the CombinedCompany’s novel, non-fumigant nematicide with higher user safety and sustainability,MASTERCOP®, a preventative fungicide for use in a wide range of fruit and vegetables, andACADIA-BIO®, an innovative fungicide with anti- stress technology. Tough market and weather conditions in Argentina weighed down on the performance of the entire region.
In US dollar terms, sales in the region were up by1.1% in the quarter and by0.5% in the full year, compared with the corresponding periods last year, reflecting also the impact of the appreciation of local currencies, primarily the Brazilian Real over the full year, against the US dollar.
North America: Sales in North America increased by6.4% in the fourth quarter and by6.2% over the full year, in constant currency terms, compared with the corresponding periods last year, driven
by strong volume growth, including of backward integrated products such as ACEPHATE97® and ETHEPHON, which was partially offset by a somewhat softer pricing environment.
The hurricanes experienced in the southern US in the third quarter significantly impacted growers in the region. In addition, manufacturing facilities of certain local suppliers were disrupted, exacerbating an already tight global intermediate supply environment.
The Combined Company continues to perform well in Canada, where it is focused on enhancing brand awareness and deepening its relationships with retailers and farmers.
In US dollar terms, sales in North America increased by6.6% in the fourth quarter and by6.3% over the full year, compared with the corresponding periods last year.
Asia-Pacific: Sales increased by a significant31.6% in the quarter and by21.5% in the full year, in constant currency terms, compared with the corresponding periods last year.
The robust growth in the quarter was driven by a significant increase in differentiated product volumes, with strong performances in China, Vietnam, Indonesia, Australia and Korea, which were partially offset by record dry conditions in New Zealand and Indonesia, as well as low insect pressure affecting cotton insecticides in Australia.
During the quarter, the Combined Company obtained registrations for a number of new and differentiated products, includingCORMORAN® for insect control in coffee in Vietnam, the herbicideIMPOSE® for peanut, sugarcane and fallow in Australia and the ready-mix herbicideKRAGAN® for pineapple in Thailand. New marketing initiatives in Thailand, focusing on fostering farmer engagement, successfully led to an increase in brand awareness and demand creation.
In China, ADAMA is growing its distinctive portfolio with dozens of new product registrations achieved over the past year, including BANGCHAO®, a mixture fungicide for late blight in potatoes,APROPO®, a broad-spectrum systemic fungicide for rice, andJICHU™, a differentiated herbicide for wheat, with multiple additional product launches underway. It is already seeing strong demand for its wheat herbicides as well as for other key backward-integrated products, and a significant increase in sales and profitability. This strong performance was driven by an increase in both volumes and prices, partly due to the tightened supply environment as a result of the increasingly stringent regulatory requirements.
In US dollar terms, sales increased by36.8% in the quarter and by22.2% in the full year, compared to the corresponding periods last year, reflecting also the appreciation of the local currencies, primarily the Australian dollar, against the US dollar.
India, Middle East& Africa: Sales in the region increased by a robust15.9% in the fourth quarter and by7.6% over the full year, in constant currency terms, compared with the corresponding periods last year. These strong performances in both the quarter and the full year were achieved despite a change in the domestic tax regime in India, in terms of which general sales tax is no longer added to sales prices, thereby reducing top-line while not impacting profit. Adjusting for this change in the Indian tax regime, sales in the region increased by20.8% in the quarter and by12.8% in the full year, in constant currency terms.
The strong performance in the quarter was driven by significant volume growth, with good performances in India fromACEMAIN®, a broad spectrum systemic insecticide benefiting from the CombinedCompany’s end-to-end value chain, as well as from South Africa, where better rains in the corn areas in the north of the country compensated for the ongoing severe drought in the Western Cape.
Over the full year, the increase in volumes was achieved despite largely unfavorable weather conditions, with an unstable monsoon season in India and drought in South Africa which impacted wheat and vine products.
In US dollar terms, sales increased by20.9% in the quarter and by10.0% in the full year, and by25.8% and15.3%, respectively, adjusting for the effect of the change in the tax regime in India. This reflects also the impact of the strengthening of several currencies, including the Indian Rupee, the South African Rand, and the Israeli Shekel, both in the quarter and in the full year, compared to the corresponding periods last year.
Revenues by operating segment
Fourth quarter sales
|||||
|-|-|-|-|
|Q4 2017||Q4 2016||
||%||%|
|USD(m)||USD(m)||

Crop Protection 748 91.1% 665 91.5% Intermediates and Ingredients 73 8.9% 62 8.5% Total 821 100% 726 100% Full year sales
|||||
|-|-|-|-|
|FY 2017||FY 2016||
||%||%|
|USD(m)||USD(m)||

Crop Protection 3,259 92.5% 3,084 92.6% Intermediates and Ingredients 264 7.5% 248 7.4% Total 3,523 100% 3,331 100% Further Information
All filings of the Combined Company, together with a presentation of the key financial highlights of the period, can be accessed through the websites of the Combined Company at www.adama.com and www.sanonda.cn.
##
About the Combined Company
The Combined Company, which will be named ADAMA subject to required approvals, is comprised of Adama Agricultural Solutions Ltd. and Hubei Sanonda Ltd., and is one of the world's leading crop protection companies. We strive to Create Simplicity in Agriculture– offering farmers effective products and services that simplify their lives and help them grow. With one of the most comprehensive and diversified portfolios of differentiated, quality products, our 6,600 strong team reaches farmers in over 100 countries, providing them with solutions to control weeds, insects and disease, and improve their yields. For more information, visit us at www.adama.com and follow us on
Twitter®
at@AdamaAgri.
Contact
Wayne Rudolph Yanlai Xu
Head of Investor Relations China Investor Relations
Email:ir@adama.com Email:irchina@adama.com
Abridged Consolidated Financial Statements
The following abridged consolidated financial statements and notes have been prepared as described in Note 1. While prepared based on the principles of PRC GAAP, they do not contain all of the information which either PRC GAAP or IFRS would require for a complete set of financial statements and should be read in conjunction with the consolidated financial statements of both Hubei Sanonda Co., Ltd and Adama Agricultural Solutions Ltd. as filed with the Shenzhen and Tel Aviv Stock Exchanges, respectively.
Abridged Consolidated Income Statement for the Quarter
||||||
|-|-|-|-|-|
||Q4 2017|Q4 2016|Q4 2017|Q4 2016|
|Adjusted1|||||
||USD(m)|USD(m)|RMB(m)|RMB(m)|

 Revenues 821 726 5,425 4,965 Cost of Sales 553 502 3,657 3,430 Business taxes and surcharges 2 4 13 26 Gross profit 265 221 1,755 1,508% of revenue 32.3% 30.4% 32.3% 30.4% Operating expenses 220 190 1,456 1,297 Operating income (EBIT) 45 31 299 211% of revenue 5.5% 4.3% 5.5% 4.3% Financial expenses and investment income 33 28 216 189 Income before taxes 12 3 83 23 Taxes on Income -13 5 -86 34 Net income 26 -2 169 -12% of revenue 3.1% -0.2% 3.1% -0.2% Attributable to:
Owners of the Company 26 1 169 3 Non-controlling Interests - -2 - -15 EBITDA 100 84 656 581% of revenue 12.2% 11.5% 12.2% 11.5% Earnings per Share– Basic 0.0109 0.0003 0.0720 0.0018– Diluted 0.0109 0.0003 0.0720 0.0018 The number of shares used to calculate earnings per share in 2017 is 2,341.9 million shares, including the issuance of shares as part of the combination transaction. The number of shares used to calculate earnings per share in 2016 is 1,677.9 million shares, reflecting the issuance of shares as part of the combination transaction in 2017, yet excluding the portion of the 2016 non-controlling interest.
1
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the
financial statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
Abridged Consolidated Income Statement for the Full Year
||||||
|-|-|-|-|-|
||FY 2017|FY 2016|FY 2017|FY 2016|
|Adjusted1|||||
||USD(m)|USD(m)|RMB(m)|RMB(m)|

 Revenues 3,523 3,331 23,820 22,070 Cost of Sales 2,277 2,245 15,393 14,879 Business taxes and surcharges 9 9 62 60 Gross profit 1,237 1,077 8,364 7,132% of revenue 35.1% 32.3% 35.1% 32.3% Operating expenses 800 730 5,399 4,848 Operating income (EBIT) 436 347 2,965 2,284% of revenue 12.4% 10.4% 12.4% 10.4% Financial expenses and investment income 128 134 862 886 Income before taxes 308 213 2,103 1,398 Taxes on Income 28 19 193 128 Net income 280 194 1,909 1,270% of revenue 8.0% 5.8% 8.0% 5.8% Attributable to:
Owners of the Company 280 116 1,909 760 Non-controlling Interests - 78 - 510 EBITDA 646 561 4,374 3,716% of revenue 18.3% 16.9% 18.3% 16.9% Earnings per Share – Basic 0.1196 0.0692 0.8153 0.4530– Diluted 0.1196 0.0692 0.8153 0.4530 The number of shares used to calculate earnings per share in 2017 is 2,341.9 million shares, including the
issuance of shares as part of the combination transaction. The number of shares used to calculate earnings per
share in 2016 is 1,677.9 million shares, reflecting the issuance of shares as part of the combination transaction
in 2017, yet excluding the portion of the 2016 non-controlling interest.
Abridged Consolidated Balance Sheet
|||||
|-|-|-|-|
|December 31|December 31|December 31|December 31|
|2017 USD(m)|2016 USD(m)|2017 RMB(m)|2016 RMB(m)|

 Assets
Current assets:
Cash at bank and on hand 1,204 554 7,869 3,842 Bills and accounts receivable 801 803 5,237 5,573 Inventories 1,146 1,076 7,488 7,464 Assets held for sale 62 - 403 - Other current assets, receivables and 357 293 2,333 2,036 prepaid expenses
Total current assets 3,570 2,727 23,330 18,915 Non-current assets:
Fixed assets, net 1,063 1,050 6,945 7,282 Intangible assets, net 1,213 1,315 7,927 9,121 Deferred tax assets 136 93 891 647 Other non-current assets 80 76 521 529 Total non-current assets 2,492 2,534 16,284 17,578 Total assets 6,063 5,261 39,614 36,493 Liabilities
Current liabilities:
Loans and credit from banks and other 418 199 2,729 1,383 lenders
Bills and accounts payable 646 545 4,218 3,780 Other current liabilities 665 665 4,348 4,611 Total current liabilities 1,729 1,409 11,295 9,774 Long-term liabilities:
Long-term loans from banks and other
79 144 514 1,002 lenders
Debentures 1,190 1,069 7,777 7,417 Deferred tax liabilities 34 43 225 296 Employee benefits 93 74 611 511 Other long-term liabilities 63 83 413 574 Total long-term liabilities 1,460 1,413 9,540 9,801 Total liabilities 3,189 2,822 20,836 19,575 Equity
Total equity 2,874 2,439 18,778 16,918 Total equity 2,874 2,439 18,778 16,918 Total liabilities and equity 6,063 5,261 39,614 36,493
Abridged Consolidated Cash Flow Statement
|||||
|-|-|-|-|
|Q4 2017|Q4 2016|Q4 2017|Q4 2016|
|USD(m)|USD(m)|RMB(m)|RMB(m)|

 Cash flow from operating activities:
Cash flow from operating activities 217 191 1,437 1,307 Cash flow from operating activities 217 191 1, 437 1,307 Investing activities:
Additions to fixed and intangible assets -67 -65 -442 -442 Proceeds from disposal of fixed and intangible assets - 1 2 5 Other investing activities - -9 - -60 Cash flow used for investing activities -67 -73 -440 -497 Financing activities:
Receipt of loans from banks and other lenders 307 11 2,031 76 Repayment of loans from banks and other lenders -86 -143 -571 -974 Other financing activities 175 -33 1,159 -227 Cash flow from (used for) financing activities 396 -165 2,619 -1,126 Effects of exchange rate movement on cash and cash 3 -2 -88 139 equivalents
Net change in cash and cash equivalents 550 -48 3,528 -177 Cash and cash equivalents at the beginning of the period 653 600 4,337 4,010 Cash and cash equivalents at the end of the period 1,204 553 7,864 3,833 Free Cash Flow 115 81 763 555
|||||
|-|-|-|-|
|FY 2017|FY 2016|FY 2017|FY 2016|
|USD(m)|USD(m)|RMB(m)|RMB(m)|

 Cash flow from operating activities:
Cash flow from operating activities 586 636 3,958 4,237 Cash flow from operating activities 586 636 3,958 4,237 Investing activities:
Additions to fixed and intangible assets -223 -207 -1,503 -1,381 Proceeds from disposal of fixed and intangible assets 14 11 97 71 Other investing activities 17 -17 118 -115 Cash flow used for investing activities -192 -214 -1,288 -1,426 Financing activities:
Receipt of loans from banks and other lenders 334 88 2,212 577 Repayment of loans from banks and other lenders -185 -329 -1,247 -2,211 Other financing activities 104 -83 671 -552 Cash flow from (used for) financing activities 253 -324 1,636 -2,185 Effects of exchange rate movement on cash and cash 3 -3 -276 234 equivalents
Net change in cash and cash equivalents 651 95 4,031 860 Cash and cash equivalents at the beginning of the period 553 458 3,834 2,973 Cash and cash equivalents at the end of the period 1,204 553 7,864 3,834
Free Cash Flow 310 336 2,097 2,237
Notes to Abridged Consolidated Financial Statements
Note 1: Basis of preparation
Basis of presentation and accounting policies: The abridged consolidated financial statements for the years ended December 31, 2017 and 2016 incorporate the financial statements of Hubei Sanonda Ltd. (so called prior to its expected name change) and of all of its subsidiaries (“The Combined Company”), including Adama Agricultural Solutions Ltd. (“Solutions”) and its subsidiaries.
The Combined Company has adopted the Accounting Standards for Business Enterprises issued by the Ministry of Finance (the "MoF") and the implementation guidance, interpretations and other relevant provisions issued or revised subsequently by the MoF (collectively referred to as "CASBE"). In addition, the Combined Company has disclosed relevant financial information in the financial statements in accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the Public No.15－ General Provisions on Financial Reporting (revised by China Securities Regulatory Commission in 2014).Solutions’ consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
The abridged consolidated financial statements contained in this release are presented in both Chinese Renminbi (RMB) as the CombinedCompany’s shares are traded on the Shenzhen Stock Exchange as well as in United States dollars($) as this is the major currency in which the CombinedCompany’s business is conducted. For the purposes of this release, a customary convenience translation has been used for the translation from RMB to US dollars, with Income Statement and Cash Flow items being translated using the quarterly average exchange rate, and Balance Sheet items being translated using the exchange rate at the end of the period.
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated.
Note 2: Abridged Financial Statements
For ease of use, the Financial Statements shown in this release have been abridged as follows:
Abridged Consolidated Income Statement:
 “Operating expenses” includes selling and distribution expenses; general and administrative (including research and development); impairment losses; gain (loss) from disposal of assets and non-operating income and expenses
 “Financial expenses and investment income” includes net financing expenses; gains from changes in fair value; and investment income (including share of income of equity accounted investees)
Abridged Consolidated Balance Sheet:
 “Other current assets, receivables and prepaid expenses” includes financial assets at fair value through profit or loss; financial assets in respect of derivatives; prepayments; other receivables; and other current assets
 “Fixed assets, net” includes fixed assets and construction in progress
 “Intangible assets, net” includes intangible assets and goodwill
 “Other non-current assets” includes assets available for sale; long-term equity investments; long-term receivables; investment property; and other non-current assets
 “Loans and credit from banks and other lenders” includes short-term loans and non-current liabilities due within one year
 “Other current liabilities” includes financial liabilities in respect of derivatives; payables for employee benefits, taxes, interest, dividends and others; advances from customers and other current liabilities “Other long-term liabilities” includes long-term payables, provisions, deferred income and other non- current liabilities
Analysis of Gaps between Adjusted Income Statement and
Reported Income Statement in Financial Statements
||||||||
|-|-|-|-|-|-|-|
|Q4|Adjusted||Adjustments||Reported||
|USD(m)|Q4 2017|Q4 2016|Q4 2017|Q4 2016|Q4 2017|Q4 2016|

 Revenues 821 726 - - 821 726 Gross profit 265 221 -9 7 275 214 Operating expenses 220 190 -51 -34 271 224 Operating income (EBIT) 45 31 41 41 4 -10 Income before taxes 12 3 41 53 -29 -50 Net income 26 -2 34 51 -8 -53 EBITDA 100 84 27 21 72 63 Earnings per share 0.0109 0.0003 0.0144 0.0237 -0.0035 -0.0234
||||||||
|-|-|-|-|-|-|-|
|FY|Adjusted||Adjustments||Reported||
|USD(m)|FY 2017|FY 2016|FY 2017|FY 2016|FY 2017|FY 2016|

 Revenues 3,523 3,331 - - 3,523 3,331 Gross profit 1,237 1,077 2 7 1,235 1,070 Operating expenses 800 730 -63 -65 864 795 Operating income (EBIT) 436 347 65 72 371 275 Income before taxes 308 213 65 84 243 129 Net income 280 194 54 76 226 118 EBITDA 646 561 20 18 625 544 Earnings per share 0.1196 0.0692 0.0232 0.0344 0.0964 0.0348
||||||||
|-|-|-|-|-|-|-|
|Q4|Adjusted||Adjustments||Reported||
|RMB(m)|Q4 2017|Q4 2016|Q4 2017|Q4 2016|Q4 2017|Q4 2016|

 Revenues 5,425 4,965 - - 5,425 4,965 Gross profit 1,755 1,508 -61 46 1,815 1,462 Operating expenses 1,456 1,297 -334 -232 1,790 1,529 Operating income (EBIT) 299 211 273 278 25 -67 Income before taxes 83 23 273 364 -191 -341 Net income 169 -12 222 350 -54 -362 EBITDA 656 581 181 152 475 429 Earnings per share 0.0720 0.0018 0.0949 0.1618 -0.0229 -0.1600
||||||||
|-|-|-|-|-|-|-|
|FY|Adjusted||Adjustments||Reported||
|RMB(m)|FY 2017|FY 2016|FY 2017|FY 2016|FY 2017|FY 2016|

 Revenues 23,820 22,070 - - 23,820 22,070 Gross profit 8,364 7,132 11 45 8,354 7,087 Operating expenses 5,399 4,848 -424 -436 5,824 5,284 Operating income (EBIT) 2,965 2,284 435 482 2,530 1,803 Income before taxes 2,103 1,398 435 567 1,668 831 Net income 1,909 1,270 363 515 1,546 755
EBITDA 4,374 3,716 131 129 4,243 3,587
Earnings per share 0.8153 0.4530 0.1552 0.2330 0.6601 0.2200
Income Statement Adjustments
||||||
|-|-|-|-|-|
|USD (m)|Q4 2017|Q4 2016|FY 2017|FY 2016|

 Net Income (as Reported) -8.1 -53.0 225.8 117.7 Non-cash legacy amortization of 2011 PPA for acquisition of Solutions, net of tax 9.5 9.5 38.0 38.0 Cancellation of 2014 employee options plan (net of compensation) due to replacement of formerly - -2.8 - -6.1 planned IPO by Combination Transaction
Combination Transaction– one-time professional services fees 2.4 10.7 2.4 10.7 Combination Transaction– one-time award made to employees not included in option plan 1.3 7.6 7.1 7.6 Adjustment of 2017 LTI provision made in Q4 to accrual over the full year 6.3 - - - One-time capital gain from sale of US registrations, related to ChemChina acquisition of Syngenta - - -8.6 - Reinstatement of depreciation expenses due to classification of to-be-divested European registrations -3.5 - -7.7 - as “Held-for-Sale”, related to ChemChina acquisition of Syngenta
Other non-recurring corporate development activity related to ChemChina affiliate - - 2.8 - Creation of deferred tax asset on losses carried forward in anticipation of their expected utilization in -28.7 - -28.7 - 2018, due to expected capital gain on divestments due to ChemChina acquisition of Syngenta
One-time non-cash reduction of historical tax asset and provision for 2012 onward tax assessment 25.4 - 25.4 - One-time non-cash fixed assets impairment, mostly in China due to new operations layout 8.8 8.3 8.8 8.3 One-time non-cash provision for post-employment and early retirement of Sanonda employees, net of 12.0 - 12.0 - tax
One-time non-cash impairment of non-core production facility due to discontinued JV from 2009 - 17.9 - 17.9 Net expense related to conclusion of 1985 tax claim in Brazil - - 2.8 - Total adjustments 33.6 51.3 54.3 76.4 Net Income (as Adjusted) 25.5 -1.7 280.1 194.2
||||||
|-|-|-|-|-|
|RMB (m)|Q4 2017|Q4 2016|FY 2017|FY 2016|

 Net Income (as Reported) -53.6 -362.2 1,545.9 754.6 Non-cash legacy amortization of 2011 PPA for acquisition of Solutions, net of tax 62.8 64.9 256.8 252.3 Cancellation of 2014 employee options plan (net of compensation) due to replacement of formerly
- -19.1 - -41.3 planned IPO by Combination Transaction
Combination Transaction– one-time professional services fees 16.1 73.4 16.1 73.4 Combination Transaction– one-time award made to employees not included in option plan 8.6 51.9 47.1 51.9 Adjustment of 2017 LTI provision made in Q4 to accrual over the full year 41.9 - - - One-time capital gain from sale of US registrations, related to ChemChina acquisition of Syngenta - - -59.0 - Reinstatement of depreciation expenses due to classification of to-be-divested European registrations
-22.8 - -51.5 - as “Held-for-Sale”, related to ChemChina acquisition of Syngenta
Other non-recurring corporate development activity related to ChemChina affiliate - - 18.7 - Creation of deferred tax asset on losses carried forward in anticipation of their expected utilization in
-190.0 - -190.0 - 2018, due to expected capital gain on divestments due to ChemChina acquisition of Syngenta
One-time non-cash reduction of historical tax asset and provision for 2012 onward tax assessment 167.9 - 167.9 - One-time non-cash fixed assets impairment, mostly in China due to new operations layout 58.6 57.0 58.6 57.0 One-time non-cash provision for post-employment and early retirement of Sanonda employees, net of
79.4 - 79.4 - tax
One-time non-cash impairment of non-core production facility due to discontinued JV from 2009 - 122.1 - 122.1
Net expense related to conclusion of 1985 tax claim in Brazil - - 19.3 -
Total adjustments 222.5 350.4 363.3 515.4
Net Income (Adjusted) 168.7 -11.8 1,909.3 1,270.0
Exchange Rate Data for the Combined Company's Principal
Functional Currencies
||||||||||
|-|-|-|-|-|-|-|-|-|
|December 31|||Q4 Average|||FY Average|||
|2017|2016|Change|2017|2016|Change|2017|2016|Change|

 EUR/USD 1.198 1.052 13.9% 1.178 1.080 9.1% 1.198 1.107 8.2% USD/BRL 3.308 3.259 -1.5% 3.248 3.293 1.4% 3.192 3.490 8.5% USD/PLN 3.481 4.179 16.7% 3.594 4.057 11.4% 3.779 3.943 4.2% USD/ZAR 12.380 13.720 9.8% 13.580 13.917 2.4% 13.264 14.710 9.8% AUD/USD 0.781 0.722 8.1% 0.769 0.750 2.6% 0.766 0.743 3.1% GBP/USD 1.350 1.229 9.9% 1.328 1.244 6.7% 1.287 1.351 -4.7% USD/ILS 3.467 3.845 9.8% 3.507 3.825 8.3% 3.596 3.836 6.2% USD LIBOR
2..1% 1.00% .1.8% 2.46% 0.92% 85.6% 2.26% 0.74% .1.6% 3M
||||||||||
|-|-|-|-|-|-|-|-|-|
|December 31|||Q4 Average|||FY Average|||
|2017|2016|Change|2017|2016|Change|2017|2016|Change|

 USD/RMB 6.534 6.937 -5.8% 6.611 6.833 -3.3% 6.755 6.640 1.7% EUR/RMB 7.826 7.296 7.3% 7.785 7.377 5.5% 7.612 7.348 3.6% RMB/BRL 0.506 0.470 -7.8% 0.491 0.482 -1.9% 0.473 0.541 12.6% RMB/PLN 0.533 0.577 7.7% 0.544 0.583 6.8% 0.559 0.526 -6.4% RMB/ZAR 1.885 1.978 4.7% 1.885 2.037 7.5% 1.878 2.215 15.2% AUD/RMB 5.103 5.010 1.9% 5.083 5.123 -0.8% 5.176 4.936 4.9% GBP/RMB 8.906 8.525 4.5% 8.726 8.499 2.7% 8.670 8.974 -3.4% RMB/ILS 0.531 0.554 4.3% 0.531 0.560 5.2% 0.532 0.578 7.8% RMB
4.91% 3.27% 50.1% 4.60% 2.98% 54.7% 4.37% 2.91% 50.0% SHIBOR 3M