安道麦B：2026年半年度报告（英文版）

ADAMA

ADAMA LTD.

SEMI-ANNUAL REPORT 2026

August 2026

Section I - Important Notice, Table of Contents and Definitions

The Company’s Board of Directors, directors and senior managers confirm that the content of the Report is true, accurate and complete and contains no false statement, misleading presentations or material omissions, and assume joint and several legal liability arising therefrom.

Gaël Hili, the person in charge of the Company (President and Chief Executive Officer) as well as its legal representative, and Efrat Nagar, the person leading the accounting function (Chief Financial Officer), hereby assert and confirm the truthfulness, accuracy and completeness of the Financial Report.

• All the Company’s directors attended the board meeting for the review of this Report.

The forward-looking information described in this Report, such as future plans, development strategy, market trends and their effect etc., does not constitute, in any manner whatsoever, a substantial commitment of the Company to investors. Investors and other relevant people are cautioned to be sufficiently mindful of investment risks as well as the difference between plans, forecasts and commitments.

The Company has described its possible risks in “X - Risks Facing the Company and Countermeasures” under Section III herein. The major risks of the Company include, among others, exchange rate fluctuations; exposure to interest rate, Israel CPI and NIS exchange rate fluctuations; fluctuations in raw material inputs and prices, and in sales. Investors and other relevant people are cautioned to be sufficiently mindful of investment risks. For the complete “Risks Facing the Company and Countermeasures” of the Company, please see the relevant section below.

For the Reporting Period, the Company does not plan to distribute cash dividends or bonus shares or convert capital reserve into share capital.

This Report and its Abstract have been prepared in both Chinese and English. Should there be any discrepancies between the two versions, the Chinese version shall prevail.

Table of Contents

Section I - Important Notice, Table of Contents and Definitions....2

Section II - Corporate Profile and Financial Results....6

Section III - Performance Discussion and Analysis....9

Section IV - Corporate Governance, Environment and Society....32

Section V - Significant Events....34

Section VI - Share Changes and Shareholders....67

Section VII - Bonds....72

Section VIII - Financial Report....73

Documents Available for Reference

(I) Duly signed Financial Statements by the Legal Representative and Accounting Principal as well as Head of the Accounting Organ;

(II) Originals of all Company’s documents previously disclosed in media designated by the CSRC as well as the originals of all the public notices, were deposited in the Company’s office.

Definitions

Section II - Corporate Profile and Financial Results

I. Corporate Information

II. Contact Information

III. Other Information

1. Ways to Contact the Company

Indicate by tick mark whether any changes occurred to the registered address, office address and their postal codes, website address and email address of the Company during the Reporting Period.

□ Applicable √ Not applicable

No changes occurred to the said information during the Reporting Period, which can be found in the 2025 Annual Report.

2. Information Disclosure Media and Place where this Report is Kept

Indicate by tick mark whether any changes occurred to the information disclosure media and the place where this Report is kept during the Reporting Period.

□ Applicable √ Not applicable

The newspapers designated by the Company for information disclosure, the website designated by the CSRC for the publication of this Report and the location where this Report is kept did not change during the Reporting Period. Said information can be found in the 2025 Annual Report.

3. Other Relevant Documents

Indicate by tick mark whether any changes occurred to the relevant documents during the Reporting Period.

□ Applicable √ Not applicable

IV. Main Accounting Data and Financial Results

Indicate by tick mark whether the Company needs to retroactively adjust or restate any of its accounting data.

□ Yes √ No

V. Differences in Accounting Data under Domestic and Foreign Accounting Standards

1. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under Chinese and International Accounting Standards

□ Applicable √ Not applicable

None during the Reporting Period.

2. Differences in Net Profit and Net Assets Disclosed in Financial Reports Prepared under Chinese and Foreign Accounting Standards

□ Applicable √ Not applicable

None during the Reporting Period.

3. Reason for accounting data differences under Chinese and Foreign Accounting Standards

□ Applicable √ Not applicable

VI. Non-Recurring Profit/Loss

√ Applicable □ Not applicable

Unit: RMB’000

Details of other profit and loss items that meet the definition of non-recurring profit or loss.

□ Applicable √ Not applicable

Mainly compensation received related to limited and localized damage caused by falling debris following missile interceptions at one of the Company’s Israeli manufacturing sites as explained above in the note.

Explanation of non-recurring items of profit or loss listed in "Explanatory Announcement No. 1 on Information Disclosure for Companies Offering their Securities to the Public-Non-Recurring Profit and Loss" reclassified as recurring items of profit or loss

□ Applicable √ Not applicable

No such cases in the Reporting Period.

Section III - Performance Discussion and Analysis

I. Main Business of the Company during the Reporting Period

The Company is a corporation incorporated in the People's Republic of China.

The Group is a global leader in crop protection, engaging in the development, manufacturing and commercialization of a wide range of crop protection products, that are largely off-patent. The Group provides solutions to farmers to combat weeds, insects and disease, and sells its products in dozens of countries globally, with direct presence in all top 20 markets.

The Group's business model integrates end-customer access, regulatory expertise, state-of-the art global R&D, production and formulation facilities, thereby providing the Group a significant competitive edge and allowing it to launch new and differentiated products that meet local farmers and customer needs in key markets.

The Group's primary operations are global, spanning activities in North America, Latin America, Asia-Pacific (including China) and Europe, Africa and the Middle East.

The Group also utilizes its expertise to adapt such products also for the development, manufacturing and commercialization of similar products for non-agricultural purposes (Consumer and Professional Solutions).

In addition, the Group leverages its core capabilities in the agricultural and chemical fields and operates in several other non-agricultural areas, none of which, individually, is material for the Group. These activities, collectively reported as Intermediates and Ingredients, include primarily, (a) the manufacturing and marketing of dietary supplements, food colors, texture and flavor enhancers, and food fortification ingredients; (b) fragrance products for the perfume, cosmetics, body care and detergents industries; (c) the manufacturing of industrial products and (d) other non-material activities.

ADAMA Group is a distinctive member of Syngenta Group, a world leader in agricultural inputs, spanning crop protection, seeds, additional agricultural and digital technologies, as well as an advanced distribution network in China.

The General Crop Protection Market Environment

Despite healthy underlying crop protection demand supported by low channel inventories, crop protection pricing remains under pressure in H1 2026. This is mainly due to lower farmer profitability, as well as persistently low active ingredient prices resulting from structural production overcapacity in China.

Farmer profitability remains low despite some easing in input costs, supporting continued just-in-time purchasing behavior. This is mainly due to crop commodity prices expected to remain broadly stable at relatively normal levels, although still sensitive to geopolitical and weather-related risks (e.g El Niño), limiting upside to farmer income. While geopolitical tensions continue to contribute to market uncertainties, inflation and energy prices have stabilized towards more normal levels.¹

Crop Protection Products

As described within the Company’s 2025 Annual Report, the Group is focused on the development, manufacturing and commercialization of largely off-patent crop protection products, which are generally herbicides, insecticides and fungicides, which protect agricultural and other crops against weeds, insects and disease, respectively. Since the publication of the 2025 Annual Report, no major changes occurred with that respect. For details, please refer to 2025 Annual Report.

Please see important additional information and further details included in the Annex.

II. Core Competitiveness Analysis

No significant changes occurred to the core competitiveness of the Company during the Reporting Period.

III. Analysis of Main Business

General Description

Whether it is the same as main business of the Company during the Reporting Period disclosed or not?

√ Yes □ No

Please refer to the relevant information in section “I. Main Business of the Company during the Reporting Period” above.

Year-on-year changes of main financial data:

Major changes to the profit structure or sources of the Company in the Reporting Period: □ Applicable √ Not applicable None during the Reporting Period.

Analysis of Financial Highlights

(1) Operating Revenues

Revenues in the second quarter decreased by approximately 3% (-7% in RMB; -5% in CER) to \$1,063 million compared to last year, reflecting a decline of 1% in volumes and 3% in prices, partially compensated by positive foreign exchange impacts.

The lower volumes resulted from the Company’s strategic decision to reduce the manufacture and sale of certain basic chemicals and low-margin products, partially compensated by new product introductions and healthy demand in the market. Lower prices reflected the overall lower market pricing and weaker farmer purchasing power.

These results brought the revenues in the first half of 2026 to \$2,100 million, flat compared to last year (-4% in RMB terms; -3% in CER terms), reflecting a decrease of 4% in prices, offset by a 1% increase in volumes and positive foreign exchange impacts.

Excluding the Company's decision to reduce the manufacture and sale of certain basic chemicals, sales would have decreased by 1% in the second quarter and in the first half year period increased by 3% in comparison to the corresponding periods in 2025.

Unit: RMB’000

Note: the sales split per product category is provided for convenience purposes only, and is not representative of the way the Company is managed or in which it makes its operational decisions.

Regional Sales Performance in USD

Note: the following analysis of regional sales performance is based on USD results, and the numbers in this table may not sum due to rounding.

Europe, Africa & Middle East (EAME):

Sales increased in the second quarter and first half of 2026 despite extremely dry weather, low disease pressure and a difficult spring season. Competitive pressure, farmer liquidity constraints and selective application decisions contributed to lower market consumption and higher channel inventories. Against this backdrop, ADAMA outperformed the underlying market, supported by strong channel execution and favorable foreign exchange conditions.

North America:

Sales increased both in the second quarter and first half year, presenting mixed performance across the businesses.

In US Ag, sales slightly declined in a competitive and price-sensitive crop protection market, as disciplined inventory management and leaner customer inventories continued to weigh on channe replenishment. Canada delivered sales growth supported by a balanced portfolio. In the Professiona Solutions business unit, sales increased in the second quarter and first half year supported by higher volumes, favorable spring weather, despite continuous price erosion in weed control segments. In the Consumer business overall sales declined in the second quarter and increased in the first half year following lower pricing and lower private label demand, while supported by favorable spring weather across the US and improved distribution in key channels.

Latin America:

In Brazil, higher volumes reflected solid commercial execution across key crop seasons, including soybean and corn. However, sales in the second quarter and first half year were impacted by lower market prices, which more than offset the benefit from higher volumes, as lower farmer profitability and increased competition, particularly in commodity products, weighed on pricing.

In the rest of LATAM, sales in the second quarter and first half year increased, mainly driven by higher volumes and continued commercial momentum, offset by weak pricing in a highly competitive market. Growth was supported by deeper market penetration and strengthened positions in key markets, and was partly tempered by El Niño impacts and the normalization of channel inventories in parts of the region.

Asia-Pacific:

The sales in India in the second quarter and first half year increased in CER terms driven by higher volume and pricing reflecting continued commercial momentum despite uneven seasonal conditions, including delayed monsoon rainfall and El Niño-related effects on crop protection demand. Significan adverse foreign exchange impacts led to broadly stable sales in dollar terms.

In Pacific, sales in the second quarter and first half year increased despite the continued impact of E Niño-related weather conditions, particularly in Northern Australia, where dry conditions affected planting decisions and crop protection demand. Stronger demand in Southern and Western Australia helped offset regional weakness, demonstrating resilient commercial performance in a challenging market environment. Retailers and growers continued to favor just-in-time purchasing patterns amid intense market competition.

In China, sales declined, reflecting the Company’s decision to reduce manufacturing and sale of certain basic chemicals and low-margin products, and time-phasing of customized products. The decline was partially compensated by higher sales of brand formulations, driven by product launches and improved market penetration.

(2) Cost of Goods Sold:

List of the industries, products or regions which exceed 10% of the operating revenues or

operating profits of the Company as at the Reporting Period

If the scope of the Company's main business was adjusted during the Reporting Period, the Company's financial data of main business according to the adjusted scope at the end of the reporting period is disclosed as follows:

□ Applicable √ Not applicable

Gross profit and margin improved in the first half, mainly reflecting favorable foreign exchange impacts, higher volumes and improved quality of the business, more than compensating for lower prices, mild cost increases, and an increase in expenses supporting business growth.

(3) Operating Expenses:

Operating expenses include Sales and Marketing, General and Administration and R&D.

Operating expenses in the first half of the year reflected the negative impact of exchange rates and an increase in employee compensation. In the first half of both 2026 and 2025, the Company continued recording following charges in its sales and marketing expenses at a similar amount, which incurred due to mergers and acquisitions in recent years, mainly: (i) non-cash amortization charges in respect o transfer assets received from Syngenta related to the 2017 ChemChina-Syngenta acquisition; and (ii) non-cash amortization net charges related to intangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions. The general and administrative expenses decreased as the restructuring costs significantly reduced compared to last year.

Non-operational charges affected the Company’s reported operating expenses amounting to RMB 167 million (\24 million) in H12026 in comparison to RMB 338 million ( 47 million) in H1 2025. For details of the non-operational charges, please refer to the Annex to the Report.

(4) Financial Expenses:

“Financial Expenses” alone mainly reflect interest payments on corporate bonds and bank loans as well as foreign exchange gains/losses on the bonds and other monetary assets and liabilities before the Company carries out any hedging. The impact of Financial Expenses (before hedging) is RMB 1,024 million (\149 million) for the first half of 2026 compared to RMB 1,024 million ( 142 million) for the corresponding period in 2025.

Given the global nature of its operational activities and the composition of its assets and liabilities, the Company, in the ordinary course of its business, uses foreign currency derivatives (forwards and options) to hedge the cash flow risks associated with existing monetary assets and liabilities that may be affected by exchange rate fluctuations. “Gains/Losses from Changes in Fair Value”, which recorded the hedging costs and impacts among others amounted to a net gain of RMB 213 million (\$ 31 million) in the first hal of 2026, compared with a net loss of RMB 6 million (\$ 1 million) in the corresponding period in 2025.

The aggregate of Financial Expenses and Gains/Losses from Changes in Fair Value (hereinafter as “Total Net Financial Expenses”), which more comprehensively reflects the financial expenses of the Company in supporting its main business and protecting its monetary assets/liabilities, amounts to RMB 810 million (\118 million) in the first half of 2026 compared with RMB 1,031 million ( 143 million) in the corresponding period in 2025.

The lower Total Net Financial Expenses in the first half mainly reflected the better debt structure, which also reflects the buyback of bonds in Q2 2025, lower hedging costs related to foreign exchange, positive impact of the CPI and the benefits of continued positive cash flow. In addition, an expense was recorded in Q2 2025 in bond repurchase by a controlled subsidiary as part of strengthening the debt structure.

(5) Cash Flow:

Net cash flow from (used in) operating activities: Operating cash flow of RMB 670 million (\$ 100 million) was generated in the half-year period, compared to RMB 1,739 million (\$ 242 million) generated in the corresponding period last year. The lower operating cash flow was mainly due to higher receivables which reflected lower sales of basic chemicals with shorter collection terms, lower collections due to timing differences mainly in Q1 2025, and lower procurement in comparison to last year, in which the Company increased procurement and inventory in order to provide business continuity during the merging of entities in Israel.

Net cash flow from investing activities was an inflow of RMB 137 million (\$ 20 million) in the half-year period, compared to an outflow of RMB 635 million (\$ 88 million) in the corresponding period last year. The Company continued the execution of its strategy to prioritize the most critical investments in infrastructure, portfolio and innovation. Meanwhile, as part of optimizing its existing assets to enable new growth projects, the Company disposed fixed assets, resulting into the proceeds from asset disposal, mainly a logistics center in Israel. The higher cash used in investing activities last year also reflected the payment for earn out related to Agrinova, a controlled subsidiary of the Company.

Cash Flow from Financing Activities was RMB 1,251 million (\184 million) consumed in the half-year period,compared to RMB 1,367 million ( 190 million) consumed in the corresponding periods last year, mainly reflecting lower borrowings supported by continued positive cash flow while less cash was utilized to reduce debts compared to last year.

IV. Analysis of Non-Core Business

√ Applicable □ Not applicable

Unit: RMB’000

V. Analysis of Assets and Liabilities

1. Significant Changes in Asset Composition

Unit: RMB’000

N/A

2. Main Overseas Assets

√ Applicable □ Not applicable

Other explanations

3. Assets and Liabilities Measured at Fair Value

√ Applicable □ Not applicable

Unit: RMB’000

Significant changes in the measurement attributes of the main assets in the Reporting Period □ Yes √ No

4. Limitation on Asset Rights as of End of the Reporting Period

At the end of this Reporting Period, restricted assets included RMB 87,020,000 - restricted cash, most of which as guarantee for bank acceptance bills; and RMB 171,328,000 of other non-current assets, mainly as guarantee for lawsuits.

VI. Investments Made

1. Overall Condition of the Total Investments Made

√ Applicable □ Not applicable

2. Significant Equity Investments during the Reporting Period

□ Applicable √ Not applicable

3. Significant Non-Equity Investments executed during the Reporting Period

□ Applicable √ Not applicable

4. Financial Investments

(1) Investments in Securities

□ Applicable √ Not applicable

None during the Reporting Period.

(2) Investments in Derivative Financial Instruments

√ Applicable □ Not applicable

(1) Investment in Derivative Financial Instruments for Hedging during the Reporting Period

√ Applicable □ Not Applicable

Unit: 000 RMB

The company is required to comply with the “Self-regulatory Guidelines for Listed Companies on Shenzhen Stock Exchange: No. 3 - Disclosure of Industry Information”.

The derivative transactions carried out by the Group were mainly through options and forward in order to mitigate the currency exposure and the fluctuation in Israeli CPI. Fo more details, please refer to the section above.

(2) Investment in Derivative Financial Instruments for Speculation during the Reporting Period □ Applicable √ Not Applicable

No such situation occurred during the Reporting Period.

5. Use of Raised Fund

□ Applicable √ Not applicable

None during the Reporting Period.

VII. Sale of Major Assets and Equity Interests

1. Sale of Significant Assets

□ Applicable √ Not applicable

None during the Reporting Period.

2. Sale of Significant Equities

□ Applicable √ Not applicable

VIII. Main Controlled and Joint Stock Companies

√ Applicable □ Not applicable

List of main subsidiaries and stock-participating companies influencing over 10% of the net profits on the Company

Unit: RMB’000

Subsidiaries acquired or disposed during the Reporting Period

□ Applicable √ Not applicable

Explanations on the main controlled and joint stock companies

√ Applicable □ Not applicable

During the Reporting Period, total sales of Solutions, a wholly-owned subsidiary of the Company, amounted to \$1,930 million, an increase of 5% compared to last year, reflecting an increase of 5% in volumes and positive foreign exchange impacts, offset by a decrease of 4% in prices. Solutions’ net income was \45 million in the first half of the year,compared with net loss of34 million in the corresponding period last year. For detailed explanation of the performance movement, see above explanation of the Section.

IX. Structured Entities Controlled by the Company

□ Applicable √Not applicable

X. Risks Facing the Company and Countermeasures

The Group is exposed to several major risk factors, resulting from its economic environment, the industry and the Group's unique characteristics, as follows (the order below does not indicate priority):

Exchange rate fluctuations

Although the Company reports its consolidated financial statements in RMB, the Company’s materia subsidiary Solutions reports its consolidated financial statements in US dollars, which is its functional currency, while its operations, sales and purchases of raw materials are carried out in various currencies. Therefore, fluctuations in the exchange rate of the selling currency against the purchasing currency impact the Company’s results. The Group's most significant exposures are to the Euro, the Israeli Sheke and the Brazilian Real. The Group has lesser exposures to other currencies. The strengthening of the US dollar against other currencies in which the Company operates reduces the dollar value of such sales and vice versa.

On an annual basis, approximately 23% of the Group’s sales are to the European market and therefore the impact of long-term trends on the Euro may affect the Company's results and profitability.

Analyses of currency exposure from foreign currency exchange rate fluctuations against assets, liabilities and cash flow denominated in foreign currencies are done constantly. High volatility of the exchange rates of these currencies could increase the costs of transactions to hedge against currency exposure, thereby increasing the Company's financing costs.

The Group uses commonly accepted financial instruments to hedge most of its substantial net balance sheet exposure to any particular currency. Nonetheless, since as part of these operations the Group hedges against most of its balance sheet exposure and only against part of its economic exposure, exchange rate volatility might impact the Group’s results and profitability. As of the date of publication of this Report, the Group has hedged most of its balance sheet exposure.

In addition, as the Company’s product sales depend directly on the cyclical nature of the agricultural seasons, therefore the Company’s income and its exposure to the various currencies is not evenly distributed over the year. Countries in the northern hemisphere have similar agricultural seasons and therefore, in these countries, the highest sales are usually during the first half of the calendar year. During this period, the Company is most exposed to the Euro. In the southern hemisphere, the seasons are opposite and most of the local sales are carried out during the second half of the year. During these months, most of the Company's exposure pertains to the Brazilian Real.

Exposure to Interest rate, Israel CPI and NIS exchange rate fluctuations

The debentures issued by Solutions, the material subsidiary of the Company, are Israeli Shekel based and linked to the Israel Consumer Price Index “CPI” and therefore an increase in the CPI and an appreciation of the shekel rate against the dollar might lead to a significant increase in its financing expenses. In addition, high volatility of the exchange rate of USD/NIS and expectations of material changes in the inflation rate, may increase the costs of hedging transactions on currency exposure, and as a result, may lead to a further increase in the company's financing costs. As of the date of approval of the financial statements, Solutions hedged most of its exposure to these risks on an ongoing basis, through CPI hedging and USD-ILS exchange rate hedging transactions.

In addition, inflation in several global markets has a cross effect on the business results of the Group, since on one hand, it contributes to the Group's ability to increase the sale price of its products, but on the other hand, it may increase the Group's production costs and operating expenses. As of the date o the Report, the Group is unable to isolate the influence of inflation on its sale prices and its costs. The Group estimates that the cumulative cross influence of inflation does not have a material effect on to its financial results.

In addition, the effect of interest changes on the debt that serves the Group’s working capital is seasonal. Such debt bears a variable interest, but has no material effect on the Group’s financing expenses. As a result, the net increase in interest rate does not have a material effect on the Group’s business.

Business operations in emerging markets

The Group conducts business - mainly product sales and raw material procurement - inter alia, in emerging markets such as Latin America (particularly in Brazil, the largest market, country wise, in which the Group operates), Eastern Europe, Southeast Asia and Africa. The Group's activity in emerging markets is exposed to risks typical of those markets, including: political and regulatory instability; volatile exchange rates; economic and fiscal instability and frequent revisions of economic legislation; relatively high inflation and interest rates; terrorism or war; restrictions on import and trade; differing business cultures; uncertainty as to the ability to enforce contractual and intellectual property rights; foreign currency controls; governmental price controls; restrictions on the withdrawal of money from the country; barter deals and potential entry of international competitors and accelerated consolidations by large-scale competitors in these markets. Developments in these regions may have a significant effect on the Group's operations. Distress to the economies of these markets could impair the ability of the Group's customers to purchase its products or the ability to market them at international market prices, as well as harm the Group's ability to collect customer debts, in a way that could have a significant adverse effect on the Group's operating results.

The Group’s operations in multiple regions allows for the diversification of such risks and for the reduction of its dependency on particular economies. In addition, changes in registration requirements or customers' preferences in developed western countries, which may limit the use of raw materials purchased from emerging economies, may require redeployment of the Group's procurement organization, which might negatively affect its profitability for a certain period.

Operating in a competitive market

The crop protection products industry is highly competitive. Currently, seven multinational companies, including the Company, lead the global industry. Five of these, Bayer, Syngenta, Corteva, BASF and FMC, are Originator Companies, which develop, manufacture and market both patent-protected as well as off-patent products. The Group competes with the original products with the aim of maintaining and increasing its market share.

The Originator Companies possess resources enabling them to compete aggressively, in the short-tomedium term, on price and profit margins, so as to protect their market share. Loss of market share or inability to acquire additional market share from the Originator Companies can affect the Group's position in the market and adversely affect its financial results. For details regarding the Group’s competitive advantages see section III - subsection III. Core competitiveness analysis in 2025 Annual Report.

Similarly, the Group also competes in the more decentralized off-patent segment of the market, agains other off-patent companies and smaller-scale Originator Companies, which have significantly grown in number in recent years and are materially changing the face of the crop protection industry, the majority of whom have not yet deployed global distribution networks, and are only active locally. These companies often price their products aggressively and at times have lower profit margins than the Group, which may adversely impact the Group's sales and product prices. The Group's ability to maintain its revenues and profitability from a specific product in the long term is affected by the number of companies producing and selling comparable off-patent products and the timing of their entrance to the relevant market.

Any delay in developing or obtaining registrations for products and/or delayed penetration into markets and/or growth of competitors that focus on off-patent active ingredients (whether by the expansion of their product portfolio, granting registrations to other manufacturers (including manufacturers in China and India) to operate in additional markets, transforming their distribution network to a global scale or increasing the competition for distribution access), and/or difficulty in purchasing low cost raw materials, may harm the Group’s sales, affect its global position and lead to price erosion.

Decline in scope of agricultural activities; Climate change and exceptional changes in weather conditions

The scope of general agricultural activities worldwide may be negatively affected by many exogenous factors, some resulting from climate change, including but not limited to extreme weather conditions, natural disasters, a decrease in agricultural commodity prices, government policies and the economic condition of farmers. A material decline in the scope of agricultural activities would by necessary implication cause a decline in the demand for the Group’s products, erosion of its prices and collection difficulties, which may have a significant adverse effect on the Group's results. Extreme weather conditions, both chronic and acute, as well as other damages caused by nature may have an impact on the demand for the Group's products, as well as to price thereof. For example, drought may reduce the need for fungicides, which could result in fewer sales and greater unsold inventories in the market, whereas excessive rain could lead to increased plant disease or weed growth requiring growers to purchase and use more crop protection products. Drought and/or increased temperatures may change insect pest pressures, requiring growers to use more, less, or different insecticides. Climate change may increase the frequency or intensity of extreme weather such as storms, floods, heat waves, droughts and other events that could affect the demand for the Company’s products. The Group believes, that should extreme weather conditions or a number of such bad seasons occur in succession, without favorable seasons in the interim, its results may sustain significant harm.

Environmental, health and safety legislation, standards, regulation and exposure

Many aspects of the Group's operations are strictly regulated, including in relation to production and trading, and particularly in relation to the storage, treatment, manufacturing, transport, usage and disposa of its products, their ingredients and byproducts, some of which are considered hazardous. The Group's activities involve hazardous materials. Defective storage or handling of hazardous materials may cause harm to human life or to the environment in which the Group operates. The regulatory requirements regarding the environment, health and safety could, inter alia, include soil and groundwater clean-up requirements; as well as restrictions on the volume of the hazardous materials permitted to be stored in the Group’s facilities and type of emissions the Group is permitted to discharge into the air and water.

The regulatory requirements applicable to the Group vary from product to product and from market to market, and tend to become stricter with time. In recent years, both government authorities and environmental protection organizations have been applying increasing pressure, including through investigations and indictments as well as increasingly stricter legislative proposals and class action suits related to companies and products that may potentially pollute the environment. Compliance with these legislative and regulatory requirements and protection against such legal actions requires the Group to commit considerable human and financial resources (both in terms of substantial ongoing costs and in terms of material one-time investments) to meet mandatory environmental standards. In some instances, this may result in delaying the introduction of products into new markets or in adverse effects on the Group’s profitability. In addition, the toughening, material alteration or revocation of environmenta licenses or permits, or their stipulations, or the inability to obtain such licenses and permits, may significantly affect the Group's ability to operate its production facilities, which in turn may have a materia adverse effect on the financial and business results of the Group. The Group may be required to bear significant civil liabilities (including due to class actions) or criminal liabilities (including high penalties and/or high compensation payments and/or costs of environmental monitoring and rehabilitation), resulting from violation of environmental, health and safety regulations, while some of the existing legislation may impose “strict liability” regime on the Group, i.e. the Group will be held liable, regardless of proof of negligence or malice.

While the Group invests material sums in adapting its facilities and in constructing special facilities in accordance with environmental requirements, it is currently unable to assess with any certainty whether these investments (current and future) and their outcomes may satisfy current or future requirements, should these be significantly increased or changed. In addition, the Group is unable to predict with any certainty the extent of future costs and investments it may incur in order to meet the requirements of the environmental authorities in the relevant countries in which it operates since, inter alia, the Group is unable to estimate the extent of potential pollutions, their duration, the extent of the measures required to be taken by the Group in handling them, the division of responsibility among other parties and the amounts recoverable from third parties.

Furthermore, the Group may be the target of bodily injury claims and property damage claims caused by exposure to hazardous materials, which are largely covered under the Group’s insurance policies.

The Group is evaluating both transition and physical risks related to climate change. Physical chronic and acute risks to ADAMA production assets, activities and products are being evaluated with the PCRAM methodology. The Company has been assessing the transition risks, including the carbon taxes. Additional transition risks include the adaptation of novel technologies aimed at reducing carbon emissions.

In addition, regarding products that are exported to Europe, the Group may be subject to the EU Carbon Border Adjustment Mechanism (CBAM). As of this date, the Group’s products are not subject to the first phase of the CBAM.

Legislative, standard and regulatory changes in product registration

The majority of the substances and products marketed by the Group require registration at various stages of their development, production, import, utilization and marketing, and are also subject to strict regulatory supervision by the regulatory authorities in each country. Compliance with the regulatory requirements that vary from country to country and which are becoming more stringent with time, involves significant time and costs, and rigorous compliance with individual registration requirements for each product. Noncompliance with these regulatory requirements might materially adversely affect the Group’s expenses, cost structure and profit margins, as well as penetration of its products in the relevant market, and may even lead to suspension of sales of the relevant product, and recall of those products already sold, or to legal action. Moreover, to the extent new regulatory requirements are imposed on existing registered products (requiring additional investment or leading to the existing registration's revocation) and/or the Group is required to compensate another company for its use of the latter's product registration data, these might amount to significant sums, considerably increasing the Group's costs and adversely affecting its results and reputation. In recent years the industry has been suffering from revocation of registration for many products around the world. This trend is particularly evident in European countries as well as in many other countries worldwide.

Nevertheless, the Group believes that, in countries where the Group maintains a competitive edge, any toughening of registration requirements may actually increase this edge, since this will make it difficult for its competitors to penetrate the same market, whereas in countries in which the Group possesses a small market share, if any, such toughening may make further penetration of the Group's products into that market more difficult.

Product liability

Product and producer liability are a risk for the Group. Regardless of their prospects or actual results, product liability lawsuits might involve considerable costs as well as tarnish the Group's reputation, thus potentially impacting its profits. The Group has a third-party and defective product liability insurance cover. However, there is no certainty that the scope of insurance cover is sufficient. Any future product liability lawsuit or series of lawsuits could materially affect the Group’s operations and results, should the Group lose the lawsuit or should its insurance cover not suffice or apply in a particular instance. In addition, while the Group has not currently encountered any difficulty renewing such insurance policy, it is possible that it will encounter future difficulties in renewing an insurance policy for third party liability and defective products on terms acceptable to the Group.

Successful market penetration and product diversification

The Group’s growth and profit margins are affected, inter alia, by the extent of its success in developing differentiated products and obtaining registrations for them, so as to enable it to gain market share at the expense of its competitors. Usually, being the first to launch a certain off-patent product affords the Group continuing advantage, even after other competitors penetrate the same market. As such, the Group's revenues and profit margins from a certain new off-patent product could be materially affected by its ability to launch such product ahead of the launch of a comparable product by its competitors.

Should new products fail to meet registration requirements in the different countries or should it take a long period of time to obtain such registrations, the Group's ability to successfully introduce a new product to the relevant market in the future may be affected, since entry into the market prior to other competitors is important for successful market penetration. Furthermore, successful market penetration involves, inter alia, product diversification in order to suit each market's changing needs. Therefore, if the Group fails to adapt its product mix by developing new products and obtaining the required regulatory approvals, its future ability to penetrate that market and to maintain its existing market share could be affected. Failure to introduce new products to given markets and meet Group objectives (given the considerable time and resources invested in their development and registration) might affect the sales of the product in question in the relevant market, the Group’s results and margins.

Intellectual property rights of the Group and of third parties

The Group's ability to develop off-patent products is dependent, inter alia, on its ability to oppose patents or patent application of Originator Companies or other third parties, or to develop products that do not otherwise infringe intellectual property rights in a manner that may involve significant legal and other costs. Originator Companies tend to vigorously defend their products and may attempt to delay the launch of competing off-patent products by registering patents on slightly different versions of products for which the original patent protection is about to expire or has expired, with the aim of competing against the offpatent versions of the original product. The Originator Companies may also change the branding and marketing of their products. Such actions may increase the Group's costs and the risk it entails, and harm or even prevent its ability to launch new products.

The Group is also exposed to legal claims that its products or production processes infringe on third-party intellectual property rights. Such claims may involve time, costs, substantial damages and management resources, impair the value of the Group's brands and its sales and adversely affect its results. Such lawsuits that were concluded involved non-material amounts.

Furthermore, although the Group protects its brands and trade secrets with patents, trademarks and other methods of intellectual property protection, these protective means may not be sufficient for fully safeguarding its intellectual property. Any unlawful or other unauthorized use of the Group's intellectual property rights could adversely affect the value of its intellectual property and goodwill. In addition, the Group may be required to take legal actions involving financial costs and resources to safeguard its intellectual property rights.

Fluctuations in raw material inputs and prices, and in sales costs

Significant percentage of the Groups’ cost of sales derives from raw material costs. Hence, significant increases or decreases in raw material costs affect the cost of goods sold, and are, due to the length of the Company’s inventory cycle, generally reflected in the Company’s financials. Most of the Group's raw materials are distant derivatives of oil prices and therefore, extreme changes or decrease in oil prices may affect the costs of raw materials, although only partially.

To reduce exposure to fluctuations in the prices of raw materials, the Group customarily engages in longterm purchase contracts for key raw materials, wherever possible. Similarly, the Group acts to adjust its sales prices, wherever possible, to reflect the changes in the costs of raw materials.

As of the date of approval of the financial statements, the Group has not engaged in any hedging transactions against increases in oil and other raw material costs.

Exposure due to recent developments in the genetically modified seeds market

Any significant development in the market of genetically modified seeds for agricultural crops, including as a result of regulatory changes in certain countries currently prohibiting the use of genetically modified seeds, and/or any significant increase in the sales of genetically modified seeds and/or to the extent new crop protection products are developed for further crops that would be widely used (substituting traditional products), will affect demand for crop protection products, requiring the Group to respond by adapting its product portfolio to the new demand structure. Consequently, to the extent that the Group fails to adapt its product mix accordingly, this may reduce demand for its products, erode their sales price and by implication affect the Group’s results and market share.

Nevertheless, the fact that the Group itself markets some of the products for which herbicide tolerance traits have been developed, acts to mitigate this exposure (albeit only in terms of marketing margins).

In addition, natural and/or biological substances that attack weeds, pests and diseases are potential alternatives for the Company’s products, though as of the date of the report, their efficiency is relatively limited, and they are commercialized in a relatively small volumes.

Operational risks

The Group’s operations, including its manufacturing activities, rely, inter alia, on state-of-the-art computer systems. The Group continually invests in upgrading and protecting these systems from malfunctions and attack. Any unexpected failure of these systems, as well as the integration of new systems, could involve substantial costs and adversely affect the Group's operations until completion of the repair or integration.

The potential occurrence of a substantial failure that cannot be repaired within a reasonable time frame may also affect the Group's operations and its results. Currently, the Group has a property and loss-ofprofit insurance policy.

The Group's production capacity is affected, among others, by its facilities’ output and individual area and time allocation at full capacity. The Group's Multi-purpose facilities provide manufacturing flexibility and enable the Group to prepare for the manufacturing of new products. Although the Group believes that its existing sites have sufficient facilities and land areas to expand its production capacity, if necessary, in the case of immediate or short-term increases in demand for new products supply may be delayed due to lack of capacity to meet demand for such new products.

Data protection and cyber security

During its activity, the Group may be exposed to risks and threats, related to the stability of its information technologies systems, data protection and cyber security, which could appear in many different forms (such as service denial, misleading employees, malfunction, encryption or data erasing and other cyber attacks via E-mail or malicious software). An attack on such computerized systems, mainly network based systems may cause the group material damages and expenses and even partial suspension and disruption of their proper functioning. In order to minimize the abovementioned risks, the group invests resources in its technological resilience and in proper protection of its systems.

Raw material supply and/or shipping, port service disruptions and inventory

Lack of raw materials or other inputs utilized in the manufacture of the Group’s products may prevent the Group from supplying its products or significantly increase production costs. Moreover, the Group imports raw materials to its production facilities worldwide, from where it then exports the technical or formulated products to its subsidiaries around the world for formulation and/or commercialization purposes. Disruptions in the supply of raw materials from regular suppliers may adversely affect operations until an alternative supplier is engaged. If any of the Group's suppliers are unable to supply raw materials for a prolonged period, including due to ongoing disruptions and/or prolonged strikes and/or infrastructure defects in the operating of a relevant port, and if the Group is unable to engage with an alternative supplier at similar terms and in accordance with the relevant product registration requirements, this may adversely affect the Group's results, significantly affect its ability to obtain raw materials in general, or obtain them at reasonable prices, as well as limit its ability to supply products and/or meet customer supply deadlines. These might negatively affect the Group, its finances and operating results. In order to reduce this risk, it is the Group's practice to occasionally adjust the volume of its product inventories or in certain scenarios, to increase the levels of inventory held by the Company to overcome possible supply shortages, logistic challenges and increases in cost of inventory, as mentioned above, in order to support expected future sales. Additionally, in the case of fluctuations in the market prices for inventory held by the Company, this may affect its finances and operating results. In addition, war, regional conflicts, acts of terror and/or governmental instability around the world may negatively impact the Company's operations. This may result, among others, in the suspension of operations or the shutdown of affected facilities, hence causing production and distribution delays, loss of property, injury to employees, and increased insurance premiums.

Failed mergers and acquisitions; difficulties in integrating acquired operations

The Group's strategy may include selective mergers, acquisitions, investments and collaborations to enhance and strengthen its presence in certain markets. When pursuing such opportunities, effective integration with market conditions, profitability forecasts and competition are key considerations.

Challenges in implementation or deviations from forecasts may impact the expected value, customer retention, liability exposure and the valuation of intangible assets related to a merger or acquisition, as well as affect the retention of skilled personnel resources.

Production concentration in limited plants

A large portion of the Group’s production operations is concentrated in a relatively small number of locations. Natural disasters, hostilities, labor disputes, substantial operational malfunction or any other material damage might significantly affect Group operations, as a result of the difficulty, the time and investment required for relocating the production operation or any other activity.

International taxation

Most of the Group’s sales are global, through its consolidated subsidiaries worldwide. These individua companies are assessed in accordance with the tax laws effective in each respective location. The Group’s effective tax rate could be significantly affected by different classification or attribution of the profits arising from the proportional value of the components of each of the companies in the Group in the various countries, as is recognized in each tax jurisdiction; changes in the characteristics (including regarding the location of control and management) of these companies; changes in the breakdown of the Group's profits into regions where differing tax rates apply; changes in statutory tax rates and other legislative changes; changes in assessment of the Group's deferred tax assets or deferred tax liabilities; changes in determining the areas in which the Group is taxed; and potential changes in the Group's organizational structure.

Changes in tax regulations and the manner of their implementation, including with regard to the implementation of BEPS, may lead to a substantial increase in the Group's applicable tax rates and have a material adverse effect on its financial position, results and cash flows.

Risks arising from the Group’s debt

The Group finances its business operations by means of its own equity and loans from external sources (primarily traded debentures issued by Solutions, bank credit and credit from related parties). The Group's main source for servicing the debt and its operating expenses is by means of the profits from the Group companies’ operations. Restrictions applying to the Group companies regarding distribution of dividends to the Group, or the tax rate applicable on these dividends, may affect the Group's ability to finance its operations and service its debt.

In addition, the Group's Finance Documents, as contained in the bank credit agreements, require meeting certain Financial Covenants. Failure to meet these covenants due to an exogenous event or nonmaterialization of Group forecasts, and insofar as the financing parties refuse to extend or update these Financial Covenants as per the Group’s capabilities, may lead the financing parties to demand the immediate payment of these liabilities (or part thereof).

Exposure to customer credit risks

The Group’s sales to customers worldwide usually involve customer credit as is customary in each market. A portion of these credit lines is insured, while the remainder are exposed to risk, particularly during economic slowdowns in the relevant markets. The Group’s aggregate credit, however, is diversified among many customers in dozens of countries, mitigating this risk. In addition, in certain regions, particularly in South America, credit days are particularly long (compared to those extended to customers in regions such as Europe), and on occasion, inter alia, owing to agricultural seasons or economic downturns in those countries, the Group may encounter difficulty in timely collection of customer debts, with the collection period being extended over several years.

Generally, such issues arise more often in developing countries where the Group may be less familiar with its customers, the collaterals might be in double until actual repayment and the insurance cover of these customers is likely to be limited. Credit default by any of the customers may negatively impact the Group's cash flow and financial results.

The Group’s working capital and cash flow needs

Similar to other companies operating in the crop protection industry, the Group has substantial cash flow and working capital requirements in the ordinary course of operations. In view of the Group's growth and considering its primary growth regions, the Group’s broad product portfolio and the Group’s investments in manufacturing infrastructures, the Group has significant financing and investment needs. The Group acts continually to improve the state and management of its working capital. While currently the Group is in compliance with all its financial covenants, significant deterioration of its operating results may in the future lead the Group to fail to comply with its financial covenants and fail to meet its financial needs. As a result, the Group's ability to meet its goals and growth plans, as well as its ability to meet its financia obligations, may be harmed.

Contagious disease outbreak

Outbreak of a contagious disease and pandemics, or other adverse public health developments, in territories where significant production activity is taking place or from which raw materials are supplied to a significant extent, may have a material adverse effect on the Company’s activity, such that the Company may encounter difficulties with procurement of raw materials and intermediates, experience a certain decrease of activity within its production facilities due to governmental instructions, and be constrained with respect to its logistics and supply lines. In addition, the Company sales could be potentially impacted by a temporary decrease in demand for its products, as well as by temporary disruption of the Company’s ability to sell and distribute products as mentioned above.

XI. Development and Implementation of Market Cap Management Policy and Valuation Enhancement Plan

Has the Company developed Market Cap Management Policy

□Yes √ No

Has the Company disclosed Valuation Enhancement Plan

√Yes □No

On March 12^th, 2025 the 10th Meeting of the 10th Session of the BOD approved the Valuation Enhancement Plan which was disclosed at www.cninfo.com.cn on March 14^th, 2025 at Announcement No. 2025-13.

On March 26^th, 2026, the 18th Meeting of the 10th Session of the BOD deliberated and reviewed the Report on Effectiveness of the Valuation Enhancement Plan in 2025.

The Company has been focusing on improving its business efficiency, quality and profitability first and foremost, and on this basis, improving investor relations management and enhancing the quality and transparency of information disclosure, etc., with an aim to strengthen the confidence of investors, and enhance the market value of the Company and investor returns.

XII. Implementation and enforcement of the ‘Action Campaign to Upgrade Both Business Quality and Return’

Whether the Company has disclosed the announcement about the ‘Action Campaign to Upgrade Both Business Quality and Return

□ Yes √ No

Section IV - Corporate Governance, Environment and Society

I. Changes in Directors and Senior Management

□Applicable √ Not applicable

There were no changes in directors and senior management during the Reporting Period, please refer to the 2025 Annual Report for details.

II. Basic Information on the Profit Distribution and Converting Capital Reserve into Share Capital in the Reporting Period

□ Applicable √ Not applicable

For the Reporting Period, the Company does not plan to distribute cash dividends or bonus shares or convert capital reserve into share capital.

III. Stock Incentive Plans, ESOP or Other Employee Incentives

□ Applicable √ Not applicable

To the date of the report, the Company does not have stock incentive plans, ESOP or other staff incentives. It shall be noted, that the Company’s subsidiary, Adama Solutions, currently has cash rewards incentive plans to executive officers and employees. These incentive plans are based either on the financial performance and/or the Company's shares (phantom cash incentives).

IV. Environmental Information Disclosure

Whether the listed company and its main subsidiaries are included in the list of enterprises that are required to disclose environmental information by the law

√ Yes □No

The Company must comply with the disclosure requirements for ‘businesses related to the chemical industry’ set out in the Self-Regulatory Guidance No. 3 for Listed Companies – Industry Information Disclosure of Shenzhen Stock Exchange.

Details regarding environmental incidents involving the listed company

In the first half of 2026, the Company did not have material environmental pollution incidents.

V. Social Responsibilities

In serving China’s national rural revitalization strategy, ADAMA actively fulfills its corporate socia responsibilities. In the first half of 2026, the Company’s subsidiary, ADAMA Anpon assisted Yuanzhuang Village of Huai’an City, which is the designated assistance target, with infrastructure repairs and the clearing of ditches to ensure the unobstructed flow of waterways; it also carried out lighting renovation on rural roads to improve the living environment.

Section V - Significant Events

Commitments completed by the Company, the shareholders, the actual controllers, the purchasers, or other related parties during the Reporting Period, and those which should have been completed failed to be fulfilled during the Reporting Period

□ Applicable√ Not applicable

Note: No commitment that should have been completed during the Reporting Period failed to be timely fulfilled.

II. Inadequate use of Company’s capital by the controlling shareholder or its related parties for non-operating purposes

□ Applicable √ Not applicable

No such situation occurred during the Reporting Period.

III. Illegal guarantee

□ Applicable √ No

None during the Reporting Period.

IV. Engagement and Disengagement of CPA Firm

Has the semi-annual financial report been audited?

□ Yes √ No

This Semi-Annual Report is unaudited.

V. Explanations Given by the Board of Directors Regarding “Modified Auditor’s Report” Issued by CPA Firm for the Reporting Period

□ Applicable √ Not applicable

VI. Explanations Given by Board of Directors Regarding “Modified Auditor’s Report” Issued for Last Year

□ Applicable √ Not applicable

VII. Bankruptcy and Restructuring

□ Applicable √ Not applicable

None during the Reporting Period.

VIII. Litigation and Arbitration Matters

Material litigations or arbitrations:

□Applicable √Not applicable

The Company didn’t have material litigation or arbitration during the reporting period.

Other litigations or arbitrations:

√Applicable □Not applicable

IX. Punishment and Rectification

□Applicable √Not applicable

None during the Reporting Period.

X. Integrity of the Company, its controlling shareholders and actual controller

□ Applicable √ Not applicable

XI. Material Related-Party Transactions

1. Related-Party Transactions in the ordinary course of business

√ Applicable □ Not applicable

Semi-Annual Report 2026

2. Related-Party Transactions arising from Asset/Equity acquisition or sale

□ Applicable √ Not applicable

The Company was not involved in any related-party transactions arising from asset/equity acquisition or sale during the Reporting Period.

3. Related-Party Transactions with Joint Investments

□ Applicable √ Not applicable

The Company was not involved in any related-party transaction with joint investments during the Reporting Period.

4. Credits and Liabilities with Related Parties

√ Applicable □ Not applicable

Whether non-operating credits and liabilities with related parties exist or not?

□ Yes √ No

The Company was not involved in any non-operating credit and liability with related parties in the Reporting Period.

5. Transactions with financial companies with related relationships

√ Applicable □ Not applicable

Deposit Business

In RMB ’0000

Loans

In RMB ’0000

6. Transactions between the finance company controlled by the Company and related parties

□ Applicable √ Not applicable

The Company does not hold any equity interest in any finance company.

7. Other material related-party transactions

√Applicable □Not applicable

The 18th Meeting of the 10th Session of the Board of Directors and the 2025 Annual General Meeting approved the Proposal on Consolidation of Credit Facilities from the Related Party.

The website to disclose the interim announcements on significant related-party transactions:

XII. Particulars regarding material contracts and execution thereof

1. Particulars about trusteeship, Contract and Lease

(1) Trusteeship

√Applicable □Not applicable

Explanation on Trusteeship

1) Entrusted Management of Anhui Petrochemical

On December 31, 2021, the Company entered into an Entrusted Operation and Management Agreement with CNAC. Pursuant to this Agreement, during the entrusted management period, the Company is entrusted to exercise the management rights that CNAC holds over Anhui Petrochemical Group Co., Ltd. (hereinafter referred to as "Anhui Petrochemical"). For specific details, please refer to the Announcement on Signing an Entrusted Operation and Management Agreement with a Related Party (Announcement No. 2022-2), Announcement on the Resolution of the 29^th Meeting of the 9^th Board of Directors (Announcement No. 2023-46), and the Announcement on the Resolution of the 8^th Meeting of the 10^th Board of Directors (Announcement No. 2024-59) and the Announcement on the Progress of Related Party Transaction (Announcement No. 2025-37).

2) Entrusted Management of Overlapping Products Between Syngenta AG and the Company, and Mutual Entrusted Management of Different Overlapping Products with Yangnong Chemical

On December 31, 2024, the Company entered into entrusted management agreements with Syngenta AG (hereinafter referred to as "SAG") and Jiangsu Yangnong Chemical CoI td(hereinafter referred to as "Yangnong Chemical") respectively. Regarding the overlapping products between the Company and SAG, SAG has entrusted the Company to exercise and undertake the entrusted management business of such overlapping products. Regarding the overlapping products between the Company and Yangnong Chemical, the Company and Yangnong Chemical have mutually entrusted each other to exercise and undertake the entrusted management business of different overlapping products. For specific details, please refer to the Announcement on the Signing of the Entrusted Management Agreement with Related Parties (Announcement No. 2024-55) and the Announcement on the Resolution of the 9^th Meeting of the 10^th Board of Directors (Announcement No. 2025-1).

Projects Whose Profits and Losses for the Company Account for More Than 10% of the Company’s Total Profits in the Reporting Period

□Applicable √Not Applicable

During the reporting period, the Company did not have entrusted management projects whose profits and losses account for more than 10% of the Company’s total profits in the reporting period.

(2) Contract operation

□ Applicable √ Not applicable

There was no contract operation of the Company in the Reporting Period.

(3) Lease

□Applicable√ Not applicable

There is no major lease in the Reporting Period.

2. Significant Guarantees

(1) Details of guarantees

√Applicable □ Not applicable

Unless otherwise specified, the unit hereunder is RMB ‘0000

ADAMA Ltd. Semi-Annual Report 2026

3. Wealth management entrustment

□ Applicable √ Not applicable

No such cases in the Reporting Period.

4. Other Significant Contracts

□ Applicable √ Not applicable

None during the Reporting Period.

XIII. Information regarding communication with investors during the Reporting Period

√ Applicable □ Not applicable

XIV. Other Significant Events

□ Applicable√ Not applicable

XV. Significant Events of Subsidiaries

□ Applicable √ Not applicable

Section VI - Share Changes and Shareholders

I. Changes in shares

1. Changes in shares

Unit: share

Reasons for the change in shares

□ Applicable √ Not applicable

Approval of the change in shares

□ Applicable √ Not applicable

The registered status for the change in shares

□ Applicable √ Not applicable

Status of share buyback

□ Applicable √ Not applicable

Status of share buyback in the way of centralized bidding

□ Applicable √Not applicable

Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the Company and other financial indexes over the last year and last period.

□ Applicable √Not Applicable

Other contents that the Company considered necessary or is required by securities regulatory authorities to disclose

□ Applicable √ Not applicable

2. Changes in Restricted Shares

□Applicable √Not applicable

II. Issuance and Listing of Securities

□ Applicable √ Not applicable

III. Total Number of Shareholders and Their Shareholdings

Unit: share

Details of Shares Held by Top 10 Shareholders Not Subject to Trading Moratorium (Excluding Shares Lending through Refinancing and Restricted Shares of Executives)

Shareholders holding more than 5% of shares, top ten shareholders and top ten shareholders with unlimited shares in circulation participating in the shares lending through refinancing arrangement □Applicable √ Not applicable

Top ten shareholders and top ten shareholders with unlimited shares in circulation change from the previous period due to the shares lending/returning through refinancing arrangement

□ Applicable √ Not applicable

Did any top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company carry out a promissory buy-back in the Reporting Period?

□ Yes √ No

The top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company had not carried out any agreed buy-back in the Reporting Period.

IV. Changes in Shareholdings of Directors and Senior Management

□ Applicable √ Not applicable

No such cases in the Reporting Period. For details, see Annual Report 2025.

V. Change of the Controlling Shareholder or the Actual Controller

Change of the controlling shareholder in the Reporting Period

□ Applicable √ Not applicable

There was no change of the controlling shareholder of the Company in the Reporting Period.

Change of the actual controller in the Reporting Period

□ Applicable √ Not applicable

There was no change of the actual controller of the Company in the Reporting Period.

VI. Preferred Stocks

□ Applicable √ Not applicable

The Company doesn’t have preferred stocks during the reporting period.

Section VII - Bonds

□ Applicable √ Not applicable

Section VIII - Financial Report

I. Audit report

Was the half-year report audited?

□ Yes √ No

The half-year report was not audited.

II. Financial Statements

Notes to the financial statements are presented in RMB’000.

Consolidated Balance Sheet

Legal representative

Efrat Nagar

Chief Financial Officer

These financial statements were approved by the Board of Directors of the Company on August 17, 2026.

The notes form part of these financial statements.

Company's Balance Sheet

Consolidated Income Statement

Company's Income Statement

Consolidated Cash Flow Statement

Company's Cash Flow Statement

Consolidated Statement of Changes in Shareholders’ Equity

For the Six months ended June 30, 2026

Statement of Changes in Shareholders’ Equity

For the Six months ended June 30, 2025

Company's Statement of Changes in Shareholders’ Equity

For the Six months ended June 30, 2026

For the Six months ended June 30, 2025

BASIC CORPORATE INFORMATION

ADAMA Ltd. (hereinafter the “Company” or the “Group”) is a company limited by shares established in China with its head office located in Hubei Jingzhou.

In June 2020, the controlling shareholder of the Company changed from China National Agrochemical Co,. Ltd. (hereinafter – “CNAC") to Syngenta Group Co., Ltd. (hereinafter “Syngenta Group”). As of August 2021, following the combination between China National Chemical Co., Ltd. (hereinafter - “ChemChina”) and Sinochem Holdings Corporation Ltd. (hereinafter - “Sinochem Holdings”), Syngenta Group, and subsequently the Company, are ultimately controlled by Sinochem Holdings - parent of both ChemChina and Sinochem Group Co., Ltd. (hereinafter “Sinochem Holdings”), subordinated to SASAC.

The principal activities of the Company and its subsidiaries (together referred to as the “Group”) are engaged in development, manufacturing and marketing of agrochemicals, intermediate materials for other industries, food additives and synthetic aromatic products, mainly for export. For information about the largest subsidiaries of the Company, refer to Note VII.

The Company’s consolidated financial statements had been approved by the Board of Directors of the Company on August 17, 2026.

Details of the scope of consolidated financial statements are set out in Note VII "Interest in other entities", whereas the changes of the scope of consolidation are set out in Note VI "Changes in consolidation scope".

II BASIS OF PREPARATION

Basis of preparation

The Group has adopted the Accounting Standards for Business Enterprises issued by the Ministry of Finance (the "MoF"). In addition, the Group has disclosed relevant financial information in these financial statements in accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the Public No. 15 － General Provisions on Financial Reporting (revised by China Securities Regulatory Commission (hereinafter "CSRC”) in 2023).

1. Basis of preparation The Group has adopted the Accounting Standards for Business Enterprises issued by the Ministry of Finance (the "MoF"). In addition, the Group has disclosed relevant financial information in these financial statements in accordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the Public No. 15－General Provisions on Financial Reporting (revised by China Securities Regulatory Commission (hereinafter "CSRC”) in 2023).

2. Accrual basis and measurement principle

The Group has adopted the accrual basis of accounting.

In the historical cost measurement, assets obtained shall be measured at the amount of cash or cash equivalents or fair value of the consideration paid. Liabilities shall be measured at the actual amount of cash or assets received, or the contractual amount in a present obligation, or the prospective amount of cash or cash equivalents paid to discharge the liabilities.

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing market participants in an arm’s length transaction at the measurement date. Fair value measured and disclosed in the financial statements are determined on this basis whether it is observable or estimated by valuation techniques.

II BASIS OF PREPARATION - (cont’d)

1. Statement of compliance These financial statements are in compliance with the Accounting Standards for Business Enterprises to truly and completely reflect the Company's consolidated financial position as at June 30, 2026 and the Company's consolidated operating results, changes in shareholders' equity and cash flows for the six months then ended.

2. Accrual basis and measurement principle - (cont’d)

The following table provides an analysis, grouped into Levels 1 to 3 based on the degree to which the fair value input is observable and significant to the fair value measurement as a whole:

Level 1 - based on quoted prices (unadjusted) in active markets;

Level 2 - based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable (other than quoted prices included within Level 1), either directly or indirectly;

Level 3 - based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

3. Going concern

The financial statements have been prepared on the going concern basis.

The Group has performed going concern assessment for the following 12 months from June 30, 2026 and have not identified any significant doubtful matter or event on the going concern, as such the financial statement have been prepared on the going concern basis.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

1. Statement of compliance

These financial statements are in compliance with the Accounting Standards for Business Enterprises to truly and completely reflect the Company's consolidated financial position as at June 30, 2026 and the Company's consolidated operating results, changes in shareholders' equity and cash flows for the six months then ended.

Accounting period

The Group has adopted the calendar year as its accounting year, i.e. from 1 January to 31 December.

2. Accrual basis and measurement principle - (cont’d) The following table provides an analysis, grouped into Levels 1 to 3 based on the degree to which the fair value input is observable and significant to the fair value measurement as a whole: Level 1 - based on quoted prices (unadjusted) in active markets; Level 2 - based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable (other than quoted prices included within Level 1), either directly or indirectly; Level 3 - based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

3. Business cycle

The company takes the period from the acquisition of assets for processing to their realisation in cash or cash equivalents as a normal operating cycle. The operating cycle for the company is 12 months.

4. Reporting currency

The Company and its domestic subsidiaries choose Renminbi (hereinafter "RMB") as their functional currency. Functional currencies of overseas subsidiaries are determined on the basis of the principal economic environment in which the overseas subsidiaries operate. The functional currency of the overseas subsidiaries is mainly the United States Dollar (hereinafter "USD"). The presentation currency of these financial statements is Renminbi.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

5. Criteria of determining material item in the report and its benchmark

6. Business combinations

6.1 Business combinations not involving enterprises under common control and goodwill

A business combination not involving enterprises under common control is a business combination in which all of the combining enterprises are not ultimately controlled by the same party or parties before and after the combination.

The costs of business combination are the fair value of the assets paid, liabilities incurred or assumed and equity instruments issued by the acquirer for the purpose of achieving the control rights over the acquiree.

The intermediary costs such as audit, legal services and assessment consulting costs and other related management costs that are directly attributable to the combination by the acquirer are charged to profit or loss in the period in which they are incurred. Direct capital issuance costs incurred in respect of equity instruments or liabilities issued pursuant to the business combination should be charged to the respect equity instruments or liabilities upon initial recognition of the underlying equity instruments or liabilities.

The acquiree’s identifiable assets, liabilities and contingent liabilities acquired by the acquirer in a business combination, that meet the recognition criteria shall be measured at fair value at the acquisition date.

The consideration transferred includes the fair value of any contingent consideration. (such as earnout arrangements with the former shareholders). After the acquisition date, the Group recognizes changes in the fair value of contingent consideration classified as a financial liability at fair value through profit or loss.

Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on initial recognition. Where the cost of combination is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the remaining difference is recognized immediately in profit or loss for the current year.

The goodwill raised because of the business combination should be separately disclosed in the consolidated financial statement and measured by the initial amount less any accumulative impairment provision.

In a business combination achieved in stages, the Group remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognise the resulting gain or loss, if any, in profit or loss.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

7. Basis for preparation of consolidated financial statements

The scope of consolidation in consolidated financial statements is determined on the basis of control. Control is achieved when the Company has power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns.

For a subsidiary disposed of by the Group, the operating results and cash flows before the date of disposal (the date when control is lost) are included in consolidated income statement and consolidated statement of cash flows.

For a subsidiary acquired through a business combination not involving enterprises under common control, the operating results and cash flows from the acquisition date (the date when control is obtained) are included in consolidated income statement and consolidated statement of cash flows.

The significant accounting policies and accounting years adopted by the subsidiaries are determined based on the uniform accounting policies and accounting years set out by the Company.

All significant intra-group balances, transactions and unrealized profits are eliminated on consolidation.

The portion of subsidiaries' equity that is not attributable to the Company is treated as non-controlling interests and presented as "non-controlling interests" in the shareholders’ equity in consolidated balance sheet. The portion of net profits or losses of subsidiaries for the period attributable to non-controlling interests is presented as "non-controlling interests" in consolidated income statement below the "net profit" line item. Total comprehensive income attributable to non-controlling shareholders is presented separately in the consolidated income statement below the total comprehensive income line item.

When the amount of loss for the period attributable to the non-controlling shareholders of a subsidiary exceeds the non-controlling shareholders' portion of the opening balance of owners' equity of the subsidiary, the excess amount is still allocated against non-controlling interests.

Acquisition of non-controlling interests or disposal of equity interest in a subsidiary that does not result in the loss of control over the subsidiary is accounted for as equity transactions. The carrying amounts of the Company's interests and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. The difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is adjusted to capital reserve under owners' equity. If the capital reserve is not sufficient to absorb the difference, the excess is adjusted against retained earnings. Other comprehensive income attributed to the non-controlling interest is reattributed to the shareholders of the company.

A put option issued by the Group to holders of non-controlling interests that is settled in cash or other financial instrument is recognized as a liability at the present value of the exercise price (according to the "anticipated acquisition method"). The Group’s share of a subsidiary’s profits includes the share of the holders of the non-controlling interests to which the Group issued a put option.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

6. Basis for preparation of consolidated financial statements - (cont’d)

In cases which the Group has a Call option in addition to the Put option above, due to the anticipated acquisition method implementation no value is given to the Call option in the consolidated financial statements.

When the Group loses control over a subsidiary due to disposal of certain equity interest or other reasons, any retained interest is re-measured at its fair value at the date when control is lost. The difference between (i) the aggregate of the consideration received on disposal and the fair value of any retained interest and (ii) the share of the former subsidiary's net assets cumulatively calculated from the acquisition date according to the original proportion of ownership interest is recognized as investment income in the period in which control is lost. Other comprehensive income associated with the disposed subsidiary is reclassified to investment income in the period in which control is lost.

7. Classification and accounting methods of joint arrangement

There are two types of joint arrangements – joint operations and joint ventures. The type of joint arrangements is determined based on the rights and obligations of joint operator to the joint arrangements by considering the factors, such as the structure, the legal form of the arrangements, and the contractual terms, etc. A joint operation is a joint arrangement whereby the joint operators have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the joint ventures have rights to the net assets of the arrangement.

8. Cash and cash equivalents

Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are the Group's short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

9. Translation of transactions and financial statements denominated in foreign currencies

10.1 Transactions denominated in foreign currencies

On initial recognition, foreign currency transactions are translated into functional currency using the spot exchange rate prevailing at the date of transaction.

At the balance sheet date, foreign currency monetary items are translated into functional currency using the spot exchange rates at the balance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the previous balance sheet date are recognized in profit or loss for the period, except that (i) exchange differences related to a specific-purpose borrowing denominated in foreign currency that qualify for capitalization are capitalized as part of the cost of the qualifying asset during the capitalization period. (ii) exchange differences related to hedging instruments for the purpose of hedging against foreign currency risks are accounted for using hedge accounting.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

10. Translation of transactions and financial statements denominated in foreign currencies - (cont’d)

10.1 Transactions denominated in foreign currencies - (cont’d)

When preparing financial statements involving foreign operations, if there is any foreign currency monetary items, which in substance forms part of the net investment in the foreign operations, exchange differences arising from the changes of foreign currency are recorded as other comprehensive income, and will be reclassified to profit or loss upon disposal of the foreign operations.

Foreign currency non-monetary items measured at historical cost are translated to the amounts in functional currency at the spot exchange rates on the dates of the transactions and the amounts in functional currency remain unchanged.

10.2 Translation of financial statements denominated in foreign currency

For the purpose of preparing consolidated financial statements, financial statements of a foreign operation are translated from the foreign currency into RMB using the following method: assets and liabilities on the balance sheet are translated at spot exchange rate prevailing at the balance sheet date; shareholders' equity items, except for retained earnings, are translated at the spot exchange rates at the dates on which such items arose; all items in the income statement as well as items reflecting the distribution of profits are translated at average rate or at spot exchange rates on the dates of the transactions; the retained earnings opening balance is previous year's translated retained earnings closing balance; the closing balance of retained earnings is calculated and presented on the basis of each translated income statement and profit distribution item. The difference between the translated assets and the aggregate of liabilities and shareholders' equity items is recorded as other comprehensive income. Cash Flows arising from transaction in foreign currency and the cash flows of a foreign subsidiary are translated at the spot exchange rate on the date of the cash flow, the effect of exchange rate changes on the cash and cash equivalents is regarded as a reconciling item and present separately in the statement “effect of foreign exchange rate changes on the cash and cash equivalents".

The opening balances and the comparative figures of prior year are presented at the translated amounts in the prior year's financial statements.

On disposal of the Group's entire equity interest in a foreign operation, or upon a loss of control over a foreign operation due to disposal of certain equity interest in it or other reasons, the Group transfers the accumulated translation differences, which are attributable to the owners' equity of the Company and presented under other comprehensive income to profit or loss in the period in which the disposal occurs.

In case of a disposal or other reason that does not result in the Group losing control over a foreign operation, the proportionate share of accumulated translation differences are re-attributed to non-controlling interests and are not recognized in profit and loss. For partial disposals of equity interest in foreign operations, which are associates or joint ventures, the proportionate share of the accumulated translation differences are reclassified to profit or loss.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

10. Financial instruments

The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual provisions of the instrument. At initial recognition, the Group measures a financial asset or financial liability at its fair value plus or minus (which is not measured at fair value through profit or loss) transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Initial recognition in trade receivables which do not contain a significant financing component, shall be made according to their transaction price.

11.1 Classification and measurement of financial assets

After initial recognition, an entity shall measure a financial asset at: (a) amortised cost; (b) fair value through other comprehensive income (“FVTOCI”); or (c) fair value through profit or loss (“FVTPL”).

11.1.1 Financial assets at amortised cost

A financial asset is measured at amortised cost if both of the following conditions are met: (a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Such financial assets are subsequently measured at amortised cost, using effective interest method. Gains or losses upon impairment and derecognition are recognized in profit or loss.

11.1.1.1 Effective interest method and amortised cost

Effective interest rate represents the rate that discounts the future cash flow over the expected subsisting period or shorter period, if appropriate, of the financial asset or financial liability to the current carrying value of such financial asset or financial liability.

When calculating the effective interest rate, the Group will consider the anticipated future cash flow (not considering the future credit loss) on the basis of all contract clauses of financial assets or financial liabilities, as well as consider all kinds of charges which are an integral part of the effective interest rate, including transaction fees and discount or premium paid or received between both parties of financial asset or financial liability contract.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

11. Financial instruments - (cont’d)

11.1 Classification and measurement of financial assets - (cont’d)

11.1.2 Financial assets at FVTOCI

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met: (a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A gain or loss on a financial asset measured at fair value through other comprehensive income is recognized in other comprehensive income, except for impairment gains or losses, foreign exchange gains and losses and interest calculated using the effective interest method, until the financial asset is derecognized or reclassified. When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.

11.1.3 Financial assets at FVTPL

Financial assets at FVTPL are either those that are classified as financial assets at FVTPL or designated as financial assets at FVTPL.

A financial asset is measured at FVTPL unless it is measured at amortised cost or at FVTOCI.

The Group may, at initial recognition, irrevocably designate a financial asset as measured at FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.

A gain or loss on a financial asset that is measured at FVTPL is recognized in profit or loss unless it is part of a hedging relationship. Dividends are recognized in profit or loss.

11.1.4 Designated financial assets at FVTOCI

At initial recognition, the Group makes an irrevocable election to designate to FVTOCI an investment in an equity instrument that is not held for trading.

When a non-trading equity instrument investment is designated as a financial asset that is measured at fair value through other comprehensive income, the changes in the fair value of the financial asset are recognised in other comprehensive income. Upon realization the accumulated gains or losses from other comprehensive income are transferred from other comprehensive income and included in retained earnings. During the period in which the Group holds these non-trading investment instruments, the right to receive dividends in the Group has been established, and the economic benefits related to dividends are likely to flow into the Group, and when the amount of dividends can be reliably measured, the dividend income is recognized in the current profit and loss.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

11. Financial instruments - (cont’d)

11.2 Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets that are classified to amortised cost and FVTOCI.

The Group always measures the loss allowance at an amount equal to lifetime expected credit losses for trade receivables and notes receivables.

For financial assets other than trade receivables, the Group initially measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. At each balance sheet date, if the credit risk on that financial instrument has increased significantly since initial recognition, the Group measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses. The Group recognizes in profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance to the amount that is required to be recognized.

11.2.1 Significant increases in credit risk

At each balance sheet date, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition.

The Group mainly considers the following list of information in assessing changes in credit risk:

(a) significant changes in internal price indicators of credit risk as a result of a change in credit risk since inception.

(b) significant changes in external market indicators of credit risk for a particular financial instrument or similar financial instruments with the same expected life.

(c) a significant change in the debtors’ ability to meet its debt obligations.

(d) an actual or expected significant change in the operating results of the debtor.

(e) significant increases in credit risk on other financial instruments of the same debtor.

(f) an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor.

(g) significant changes in the value of the collateral supporting the obligation or in the quality of thirdparty guarantees or credit enhancements, which are expected to reduce the debtor’s economic incentive to make scheduled contractual payments or to otherwise have an effect on the probability of a default occurring.

(h) significant changes that are expected to reduce the receivable’s economic incentive to make scheduled contractual payments.

(i) significant changes in the expected performance and behaviour of the debtor.

The Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

11. Financial instruments - (cont’d)

11.2 Impairment of financial assets - (cont’d)

11.2.2 Credit-impaired financial asset

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired include observable data about the following events:

(a) significant financial difficulty of the issuer or the receivable;

(b) a breach of contract, such as a default or past due event;

(c) the lender(s) of the receivable, for economic or contractual reasons relating to the receivable’s financial difficulty, having granted to the receivable a concession(s) that the lender(s) would not otherwise consider;

(d) it is becoming probable that the receivable will enter bankruptcy or other financial reorganization;

11.2.3 Recognition of expected credit losses

Expected credit losses of financial instruments are determined as the present value of the difference between: (a) the contractual cash flows that are due to an entity under the contract; and (b) the cash flows that the entity expects to receive.

For a financial asset that is credit-impaired at the reporting date, an entity shall measure the expected credit losses as the difference between the asset’s gross carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. Any adjustment is recognized in profit or loss as an impairment gain or loss.

The Group measures expected credit losses of a financial instrument in a way that reflects:

(a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;

(b) the time value of money; and

(c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

11. Financial instruments - (cont’d)

11.2 Impairment of financial assets - (cont’d)

11.2.4 Written-off of financial assets

The Group directly reduces the gross carrying amount of a financial asset when the entity has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. A write-off constitutes a derecognition event.

11.3 Transfer of financial asset

The Group derecognizes a financial asset if one of the following conditions is satisfied: (i) the contractual rights to the cash flows from the financial asset expire; or (ii) the financial asset has been transferred and substantially all the risks and rewards of ownership of the financial asset transferred to the transferee; or (iii) although the financial asset has been transferred, the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset but has not retained control of the financial asset.

If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, and it retains control of the financial asset, it recognizes the financial asset to the extent of its continuing involvement in the transferred financial asset and recognizes an associated liability. The extent of the Group’s continuing involvement in the transferred asset is the extent to which it is exposed to changes in the value of the transferred asset.

When the company is derecognizing a financial asset in its entirety, the difference between (i) the carrying amount of the financial asset transferred; and (ii) the sum of the consideration received from the transfer is recognized in profit or loss.

11.4 Classification and measurement of financial liabilities

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

All financial liabilities are subsequently measured at FVTPL or other financial liabilities.

Financial liabilities are classified as at FVTPL when the financial liability is (i) held for trading or (ii) it is designated as at FVTPL. The financial liability other than derivative financial liabilities are stated as liabilities held for trading.

Other financial liabilities are subsequently measured at amortized cost by using effective interest method. Gain or loss arising from derecognition or amortization is recognized in current profit or loss.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

11. Financial instruments - (cont’d)

11.5 Derecognition of financial liabilities

Financial liabilities are derecognized in full or in part only when the present obligation is discharged in full or in part. An agreement entered into force between the Group (debtor) and a creditor to replace the original financial liabilities with new financial liabilities with substantially different terms, derecognize the original financial liabilities as well as recognize the new financial liabilities. When financial liabilities is derecognized in full or in part, the difference between the carrying amount of the financial liabilities derecognized and the consideration paid (including transferred non-cash assets or new financial liability) is recognized in profit or loss for the current period.

11.6 Derivatives

Derivative financial instruments include forward exchange contracts, currency swaps and foreign exchange options, etc. Derivatives are initially measured at fair value at the date when the derivative contracts are entered into and are subsequently re-measured at fair value. The resulting gain or loss is recognized in profit or loss unless the derivative is designated and highly effective as a hedging instrument, in which case the timing of the recognition in profit or loss depends on the nature of the hedge relationship (Note III 32.1).

11.7 Offsetting financial assets and financial liabilities

Financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset, except for circumstances where the Group has a legal right that is currently enforceable to offset the recognized financial assets and financial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall be offset and the net amount is presented in the balance sheet.

11.8 Equity instruments

The consideration received from the issuance of equity instruments net of transaction costs is recognized in shareholders’ equity. Consideration and transaction costs paid by the Company for repurchasing self-issued equity instruments are deducted from shareholders’ equity.

When the Company repurchases its own shares, those shares are treated as treasury shares. All expenditures relating to the repurchase are recorded in the cost of the treasury shares, with the transaction entering into the share capital. Treasury shares are excluded from profit distributions and are stated as a deduction under shareholders’ equity in the balance sheet.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

11. Accounts receivables

Accounts receivables are assessed for impairment on a collective group and/or on an individual basis as follows:

Expected credit losses in respect of accounts receivables is measured at an amount equal to lifetime expected credit losses. The assessment is made collectively for account receivables, where receivables share similar credit risk characteristics based on geographical location, using the expected credit losses model including inter-alia aging analysis, historical loss experiences adjusted by the observable factors reflecting current and expected future economic conditions. The ratio of the account receivables collective provision for expected credit losses in which credit losses has not occurred is between 0%-2.81%.

When credit risk on accounts receivable has increased significantly since initial recognition, the group records specific provision or collective provision, which is determined for groups of similar assets in countries in which there are large number of customers with immaterial balances.

In assessing whether the credit risk on accounts receivables has increased significantly since initial recognition, the Group compares the risk of a default occurring on the accounts receivables at the reporting date with the risk of a default occurring on the accounts receivables at the date of initial recognition and considers both quantitative and qualitative information that is reasonable and supportable, including observable data that comes to the attention of the Group about loss events such as a significant decline in the solvency of an individual debtor or the portfolio of debtors, and significant changes in the financial condition that have an adverse effect on the debtor.

12. Receivables financing

All receivbales financing are bank acceptance notes due within 1 year. From the past experience, the possibility of significant losses due to banks default is low, the Group believes that there is no significant credit risk in the bank acceptances notes held.

13. Other receivables

The Group determines expected credit losses for other receivables on an individual basis.

14. Inventories

15.1 Categories of inventories and initial measurement

The Group's inventories mainly include raw materials, work in progress, semi-finished goods, finished goods and reusable materials. Reusable materials include low-value consumables, packaging materials and other materials, which can be used repeatedly but do not meet the definition of fixed assets.

Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversion and other expenditures incurred in bringing the inventories to their present location and condition including direct labor costs and an appropriate allocation of production overheads.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

15. Inventories - (cont’d)

15.2 Valuation method of inventories upon delivery

The actual cost of inventories upon delivery is calculated using the weighted average method.

15.3 Basis for determining net realizable value of inventories and provision methods for decline in value of inventories

At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the net realizable value is below the cost of inventories, a provision for decline in value of inventories is made. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes. In determining the realizable value of inventory, it is based on solid evidence obtained, while also considering the purpose of holding the inventory and the impact of events after the balance sheet date.

After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that the net realizable value of inventories is higher than their carrying amount, the original provision for decline in value is reversed and the reversal is included in profit or loss for the period.

15.4 The perpetual inventory system is maintained for stock system.

15. Long-term equity investments

Long-term equity investments include investments in subsidiaries, joint ventures and associates.

16.1 Basis for determining control, joint control and significant influence over investee

Control is achieved when the Company has power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns.

Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating policy decisions relating to the activity require the unanimous consent of the parties sharing control.

Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

When determining whether an investing enterprise is able to exercise control or significant influence over an investee, the effect of potential voting rights of the investee (for example, warrants and convertible debts) held by the investing enterprises or other parties that are currently exercisable or convertible shall be considered.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

16. Long-term equity investments - (cont’d)

16.2 Determination of investment cost

Subsidiaries are the companies that are controlled by the Company. Associates are the companies over which the Group has significant influence. Joint ventures are joint arrangements over which the Group has joint control along with other investors and has rights to the net assets of the joint arrangement.

The Company accounts for the investment in subsidiaries at historical cost in the Company's financial statements. Investments in associates and joint ventures are accounted for under equity method.

For a long-term equity investment acquired through a business combination involving enterprises under common control, the investment cost of the long-term equity investment is the share of the carrying amount of the shareholders' equity of the acquiree attributable to the ultimate controlling party at the date of combination. The difference between initial investment cost and cash paid, non-cash assets transferred and book value of liabilities assumed, is adjusted in capital reserve. If the balance of capital reserve is not sufficient to absorb the difference, any excess is adjusted to retained earnings.

For a long-term equity investment acquired through business combination not involving enterprises under common control, the investment cost of the long-term equity investment is the cost of acquisition. For a business combination not involving enterprises under common control achieved in stages that involves multiple exchange transactions, the initial investment cost is carried at the aggregate of the carrying amount of the acquirer’s previously held equity interest in the acquiree and the new investment cost incurred on the acquisition date.

Regarding the long-term equity investment acquired otherwise than through a business combination, if the long-term equity investment is acquired by cash, the historical cost is determined based on the amount of cash paid and payable; if the long-term equity investment is acquired through the issuance of equity instruments, the historical cost is determined based on the fair value of the equity instruments issued.

16.3 Subsequent measurement and recognition of profit or loss

If the long-term equity investment is accounted for at cost, it should be measured at historical cost less accumulated impairment losses. Dividend declared by the investee should be accounted for as investment income.

Under the equity method, where the long-term equity investment initial investment cost exceeds the Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, no adjustment is made to the initial investment cost. Where the initial investment cost is less than the Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, the difference is recognized in profit or loss for the period, and the cost of the long-term equity investment is adjusted accordingly.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

16. Long-term equity investments - (cont’d)

16.3 Subsequent measurement and recognition of profit or loss - (cont’d)

Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive income of the investee for the period as investment income or loss and other comprehensive income for the period. The Group recognizes its share of the investee’s net profit or loss based on the fair value of the investee’s individual separately identifiable assets, etc. at the acquisition date after making appropriate adjustments to be confirmed with the Group's accounting policies and accounting period. The Group discontinues recognizing its share of net losses of the investee after the carrying amount of the long-term equity investment together with any long-term interests that in substance form part of its net investment in the investee is reduced to zero. If the Group has incurred obligations to assume additional losses of the investee, a provision is recognized according to the expected obligation, and recorded as investment loss for the period.

16.4 Methods of impairment assessment and determining the provision for impairment loss

If the recoverable amounts of the investments to subsidiaries, joint ventures and associates are less than their carrying amounts, an impairment loss should be recognized to reduce the carrying amounts to the recoverable amounts (Note III 23).

16.5 The disposal of long-term equity investment

On disposal of a long term equity investment, the difference between the proceeds actually received and receivable and the carrying amount is recognized in profit or loss for the period.

17. Investment properties

Investment property refers to real estate held to earn rentals or for capital appreciation, or both, including leased land use rights, land use rights held and provided for transferring after appreciation and leased constructions, etc.

Investment property is initially measured at cost. Subsequent expenditures related to an investment property shall be included in cost of investment property only when the economic benefits associated with the asset will likely flow to the Group and its cost can be measured reliably. All other subsequent expenditures on investment property shall be included in profit or loss for the current period when incurred.

The Group adopts cost method for subsequent measurement of investment property, which is depreciated or amortized using the same policy as that for buildings and land use rights.

When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal of the property net of the carrying amount and related taxes and surcharges is recognized in profit or loss for the current period.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

18. Fixed assets

18.1 Recognition criteria for fixed assets

Fixed assets include land owned by the Group and buildings, machinery and equipment, motor vehicles, office equipment and others.

Fixed assets are tangible assets that are held for use in the production or supply of goods or for administrative purposes, and have useful lives of more than one accounting year. A fixed asset is recognized only when it is probable that economic benefits associated with the asset will flow to the Group and the cost of the asset can be reliably measured. Purchased or constructed fixed assets are initially measured at cost when acquired.

Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is probable that economic benefits associated with the asset will flow to the Group and the subsequent expenditures can be measured reliably. Other subsequent expenditures are recognized in profit or loss in the period in which they are incurred.

18.2 Depreciation of each category of fixed assets

Fixed asset is depreciated based on the cost of fixed asset recognized less expected net residual value over its useful life using the straight-line method since the month subsequent to the one in which it is ready for intended use. Depreciation is calculated based on the carrying amount of the fixed asset after impairment over the estimated remaining useful life of the asset.

The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied at least once at each financial year-end, and account for any change as a change in an accounting estimate.

The estimated useful life, estimated net residual value and annual depreciation rate of each category of fixed assets are as follows:

Overseas Land owned by the Group is not depreciated.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

18. Fixed assets - (cont’d)

18.3 Other explanations

If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or disposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, the amount of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognized in profit or loss for the period.

The difference between recoverable amounts of the fixed assets under the carrying amount is referred to as impairment loss (Note III 23).

19. Construction in progress

Construction in progress is measured at its actual costs. The actual costs include various construction, installation costs, borrowing costs capitalized and other expenditures incurred until such time as the relevant assets are completed and ready for its intended use. When the asset concerned is ready for its intended use, the cost of the asset is transferred to fixed assets and depreciated starting from the following month.

The difference between recoverable amounts of the construction in progress under the carrying amount is referred to as impairment loss (Note III 23).

20. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are capitalized when expenditures for such asset and borrowing costs are incurred and activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced. Capitalization of borrowing costs ceases when the qualifying asset being acquired, constructed or produced becomes ready for its intended use or sale. Borrowing costs incurred subsequently should be charged to profit or loss. Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is suspended abnormally and when the suspension is for a continuous period of more than 3 months. Capitalization is suspended until the acquisition, construction or production of the asset is resumed.

Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is the actual interest expenses incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the temporary investment of those funds.

Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interest to be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excess of cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The capitalization rate is the weighted average of the interest rates applicable to the general-purpose borrowings.

During the capitalization period, exchange differences on foreign currency specific-purpose borrowing are fully capitalized whereas exchange differences on foreign currency general-purpose borrowing, charged to profit or loss.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

21. Intangible assets

21.1 Valuation methods, useful life, impairment test

The Group’s intangible assets include product registration assets, intangible assets upon purchase of products, marketing rights and rights to use tradenames and trademarks, land use rights, software and customer relations. Intangible assets are stated at cost less accumulated amortization and impairment losses.

When an intangible asset with a finite useful life is available for use, its original cost less any accumulated impairment losses is amortized over its estimated useful life using the straight-line method. An intangible asset with an indefinite useful life is not amortized.

For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method at the end of the year, and makes adjustments when necessary.

The respective amortization periods for such intangible assets are as follows:

The difference between recoverable amounts of the intangible assets under the carrying amount is referred to as impairment loss (see Note III 23).

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

21. Intangible assets - (cont’d)

21.2 Research and development expenditure

Internal research and development project expenditures were classified into research expenditures and development expenditures depending on its nature and the greater uncertainty whether the research activities becoming to intangible assets.

Expenditure during the research phase is recognized as an expense in the period in which it is incurred. Expenditure during the development phase that meets all of the following conditions at the same time is recognized as intangible asset:

\- It is technically feasible to complete the intangible asset so that it will be available for use or sale;

\- The Group has the intention to complete the intangible asset and use or sell it;

\- The Group can demonstrate the ways in which the intangible asset will generate economic benefits;

\- The availability of adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset;

\- The expenditure attributable to the intangible asset during its development phase can be reliably measured.

Expenditures that do not meet all of the above conditions at the same time are recognized in profit or loss when incurred. If the expenditures cannot be distinguished between the research phase and development phase, the Group recognizes all of them in profit or loss for the period. Expenditures that have previously been recognized in the profit or loss would not be recognized as an asset in subsequent years. Those expenditures capitalized during the development stage are recognized as development costs incurred and will be transferred to intangible asset when the underlying project is ready for an intended use.

The research and development expenditure includes salaries and welfare expenses of personnel directly engaged in research and development activities, depreciation expenses of instruments and equipment used in research and development activities, expenses for field trial and professional services, materials consumed and lease and maintenance expenses related to research and development activities.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

22. Goodwill

The initial cost of goodwill represents the excess of cost of acquisition over the acquirer’s interest in the fair value of the identifiable net assets of the acquiree under a business combination not involving enterprises under common control.

Goodwill is not amortized and is stated in the balance sheet at cost less accumulated impairment losses (see Note III 23). On disposal of an asset group or a set of asset groups, any attributable goodwill is written off and included in the calculation of the profit or loss on disposal.

23. Impairment of long-term assets

The Company assesses at each balance sheet date whether there is any indication that the fixed assets, construction in progress, right of use assets, intangible assets with finite useful lives, investment properties measured at historical cost, investments in subsidiaries, joint ventures and associates may be impaired. If there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets. The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value of the future cash flow estimated to be derived from the asset. The Group estimates the recoverable amount on an individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the asset group to which the asset belongs. Identification of an asset group is based on whether major cash inflows generated by the asset group are largely independent of the cash inflows from other assets or asset groups.

Goodwill arising from a business combination is tested for impairment at least at each year end, irrespective of whether there is any indication that the asset may be impaired. For the purpose of impairment testing, the carrying amount of goodwill acquired in a business combination is allocated from the acquisition date on a reasonable basis to each of the related asset groups; if it is impossible to allocate to the related asset groups, it is allocated to each of the related set of asset groups. Each of the related asset groups or set of asset groups is an asset group or set of asset group that is able to benefit from the synergies of the business combination and shall not be larger than a reportable segment determined by the Group. If the carrying amount of the asset group or set of asset groups is higher than its recoverable amount, the amount of the impairment loss first reduced by the carrying amount of the goodwill allocated to the asset group or set of asset groups, and then the carrying amount of other assets (other than the goodwill) within the asset group or set of asset groups, pro rata based on the carrying amount of each asset.

Once the impairment loss of such assets is recognized, it will not be reversed in any subsequent period.

24. Contract liabilities

Contract liabilities refer to the Group’s obligation to transfer goods or services to a customer for which the Group has received consideration from the customer.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

25. Employee benefits

25.1 Short-term employee benefits

Employee wages or salaries, bonuses, social security contributions, measured on a non-discounted basis, and the expense is recorded when the related service is provided. A provision for short-term employee benefits in respect of cash bonuses is recognized in the amount expected to be paid where the Group has a current legal or constructive obligation to pay the said amount for services provided by the employee in the past and the amount can be estimated reliably.

25.2 Post-employment benefits

Post-employment benefits are classified into defined contribution plans and defined benefit plans.

A defined contribution plan is a post-employment benefit plan under which the Group pays contributions to a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognized as an expense in profit or loss in the periods during which related services are rendered by employees.

Defined benefit plans of the Group are post-employment benefit plans other than defined contribution plans. In accordance with the projected unit credit method, the Group measures the obligations under defined benefit plans using unbiased and mutually compatible actuarial assumptions to estimate related demographic variables and financial variables, and discount obligations under the defined benefit plans to determine the present value of the defined benefit liability. The discount rate used is the yield on the reporting date on highly-rated corporate debentures denominated in the same currency, that have maturity dates approximating the terms of the Group’s obligation.

The Group attributes benefit obligations under a defined benefit plan to periods of service provided by respective employees. Service cost and interest expense on the defined benefit liability are charged to profit or loss and remeasurements of the defined benefit liability are recognized in other comprehensive income.

25.3 Termination benefits

When the Group terminates the employment with employees or provides compensation under an offer to encourage employees to accept voluntary redundancy, a provision is recognized with a corresponding expense in profit or loss at the earlier of when the Group can no longer withdraw the offer of the termination benefit and when it recognises any related restructuring costs.

If the benefits are payable more than 12 months after the end of the reporting period, they are discounted to their present value. The discount rate used is the yield on the reporting date on highly-rated corporate debentures denominated in the same currency, that have maturity dates approximating the terms of the Group’s obligation.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

25. Employee benefits - (cont’d)

25.4 Other long-term employee benefits

The Group’s net obligation for long-term employee benefits, which are not attributable to post-employment benefit plans, is for the amount of the future benefit to which employees are entitled for services that were provided during the current and prior periods.

The amount of these benefits is discounted to its present value and the fair value of the assets related to these obligations is deducted therefrom. The discount rate used is the yield on the reporting date on highly-rated corporate debentures denominated in the same currency, that have maturity dates approximating the terms of the Group’s obligation.

26. Share-based payment

Share-based payment refers to the transaction in order to acquire the service offered by the employees or other parties that grants equity instruments or liabilities on the basis of the equity instruments. Share-based payment classified into equity-settled share-based payment and cash-settled share-based payment.

26.1 Cash-settled share-based payment

The cash-settled share-based payment should be measured according to the fair value of the liabilities recognized based on the shares or other equity instrument undertaken by the Company. For cash-settled share-based payment made in return for the rendering of employee services that cannot be exercised until the services are fully provided during the vesting period or specified performance targets are met, on each balance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the number of exercisable instruments, be recognized in relevant expenses and the corresponding liabilities at the fair value of the liability incurred by the Company.

On each balance sheet date and the settlement date before the settlement of the relevant liabilities, the Company should re-measure the fair value of the liabilities and the changes should be included in the current period profit and loss.

27. Provisions

Provisions are recognized when the Group has a present obligation related to a contingency, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be measured reliably.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the settlement date, taking into account factors pertaining to a contingency such as the risks, uncertainties and time value of money. Where the effect of the time value of money is material, the amount of the provision is determined by discounting the related future cash outflows. The increase in the provision due to passage of time is recognized as interest expense.

If all or part of the provision settlements is reimbursed by third parties, when the realization of income is virtually certain, then the related asset should be recognized. However, the amount of related asset recognized should not be exceeding the respective provision amount.

At the balance sheet date, the amount of provision should be re-assessed to reflect the best estimation then.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

28. Revenue

Revenue of the Group is mainly from sale of goods.

The Group recognizes revenue when transferring goods to a customer, at the amount of the transaction price. The timing of transferring the control of goods changes according to the specific terms of the sale contract. Regarding sales of products, transfer of the control of goods generally occurs when the products arrive at the customer’s warehouse, while for certain overseas shipments the transfer occurs when the products are loaded on the shipper’s transport vehicles.

Transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring goods to a customer, excluding amounts collected on behalf of third parties.

Variable consideration

Variable consideration includes sales with a right of return (see below), refunds, discounts, volume rebates etc. The amounts of variable consideration are estimated using the Group’s past experience in the relevant markets. The Group includes in the transaction price the amounts of variable consideration only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Significant financing component

For a contract with a significant financing component, the Group recognize revenue at an amount that reflects the price that a customer would have paid for the goods if the customer had paid cash for those goods at receipt. The difference between the amount of consideration and the cash selling price of the goods, is amortized in the contract period using effective interest rate. The Group does not adjust the amount of consideration for the effects of a significant financing component if the Group expects, at contract inception, that the period between when the entity transfers a good to a customer and when the customer pays for that good will be one year or less.

Sale with a right of return

For sale with a right of return, the Group recognizes revenue at the amount of consideration to which the Group expects to be entitled (ie excluding the products expected to be returned). For any amounts received (or receivable) for which an entity does not expect to be entitled, the entity shall not recognize revenue when it transfers products to customers but shall recognize those amounts received (or receivable) as a refund liability. An asset recognized for the Group’s right to recover products from a customer on settling a refund liability shall initially be measured by reference to the former carrying amount of the product less any expected costs to recover those products.

Advance receipts for the sale of goods

When the Group receives advance payments from customers for the sale of goods, it first recognizes such payments as liabilities and then transfers them to revenue when the relevant performance obligations are fulfilled.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

29. Government grants

Government grants are transfer of monetary assets and non-monetary assets from the government to the Group at no consideration, including tax returns, financial subsidies and so on. A government grant is recognized only when the Group can comply with the conditions attached to the grant and the Group will receive the grant.

If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount.

Government grants are either related to assets or income.

(1) The basis of judgment and accounting method of the government grants related to assets

Government grants obtained for acquiring long-term assets are government grants related to assets. A government grant related to an asset is offset with the cost of the relevant asset.

(2) The basis of judgment and accounting method of the government grants related to income

For a government grant related to income, if the grant is a compensation for related expenses or losses to be incurred in subsequent periods, the grant is recognized as deferred income, and recognized in profit or loss over the periods in which the related costs are recognized. If the grant is a compensation for related expenses or losses already incurred, the grant is recognized immediately in profit or loss for the period.

Government grants related to the Group’s normal course of business are offset with related costs and expenses. Government grants related that are irrelevant with the Groups’s normal course of business are included in non-operating gains.

30. Current and deferred tax

The income tax expenses include current income tax and deferred income tax.

30.1 Current income tax

At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are measured at the amount expected to be paid (or recovered) according to the requirements of tax laws.

30.2 Deferred tax assets and deferred tax liabilities

Temporary differences are differences between the carrying amounts of certain assets or liabilities and their tax base.

All taxable temporary differences are recognized as related deferred tax liabilities. Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the deductible losses and tax credits can be utilized.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

30. Current and deferred tax - (cont’d)

30.2 Deferred tax assets and deferred tax liabilities - (cont’d)

For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the deductible losses and tax credits can be utilized. However, for deductible temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is recognized.

At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to tax laws, that are expected to apply in the period in which the asset is realized or the liability is settled.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The Group may be required to pay additional tax in case of distribution of dividends by the Group companies. This additional tax was not included in the financial statements, since the policy of the Group is not to distribute in the foreseeable future a dividend which creates a significant additional tax liability.

Except for those current income tax and deferred tax charged to comprehensive income or shareholders’ equity in respect of transactions or events which have been directly recognized in other comprehensive income or shareholders’ equity, and deferred tax recognized on business combinations, all other current income tax and deferred tax items are charged to profit or loss in the current period.

At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer probable that sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilized. Such reduction is reversed when it becomes probable that sufficient taxable profits will be available.

30.3 Offset of income tax

When the Group has a legal right to settle current tax assets and liabilities on a net basis, and tax assets and tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend to realize the assets and liabilities simultaneously, current tax assets and liabilities are offset and presented on a net basis.

When the Group has a legal right to settle deferred tax assets and liabilities on a net basis which relates to income taxes levied by the same taxation authority, on either the same taxable entity or different taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

Leases

Lease is a contract, that conveys the right to use an asset for a period of time in exchange for consideration.

31.1 Determining whether an arrangement contains a lease

On the inception date of the lease, the Group determines whether the arrangement is a lease or contains a lease, while assessing if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In its assessment of whether an arrangement conveys the right to control the use of an identified asset, the Group assesses whether it has the following two rights throughout the lease term:

(a) The right to obtain substantially all the economic benefits from use of the identified asset; and

(b) The right to direct the identified asset’s use.

An arrangement does not contain a lease if an asset is leased for a period of less than 12 months, or to lease of asset with low economic value.

31.2 Initial recognition of leased assets and lease liabilities

Upon initial recognition, the Group recognizes a liability at the present value of future lease payments (exclude certain variable lease payments, as detailed in Note III 31.4), and concurrently the Group recognizes a right-of-use asset at the same amount, adjusted for any prepaid lease payments paid at the lease date or before, plus initial direct costs incurred in respect of the lease.

When the interest rate implicit in the lease is not readily determinable, the incremental borrowing rate of the lessee is used.

The Group presents right-of-use assets separately from other assets in the balance sheet.

31.3 The lease term

The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option, if it is reasonably certain that the lessee will exercise or not exercise the option, respectively.

If there is a change in the lease term, or in the assessment of an option to purchase the underlying asset, the Group remeasures the lease liability, on the basis of the revised lease term and the revised discount rate and adjust the right-of-use assets accordingly.

31.4 Variable lease payments

Variable lease payments that depend on an index or a rate, are initially measured using the index or rate existing at the commencement of the lease. When the cash flows of future lease payments change as the result of a change in an index or a rate, the balance of the liability is adjusted with a correspondence change in the right-of-use asset.

Other variable lease payments that are not included in the measurement of the lease liability are recognized in profit or loss in the period in which the condition that triggers payment occurs.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

31. Leases - (cont’d)

31.5 Subsequent measurement

After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation and accumulated impairment losses and is adjusted for re-measurements of the lease liability. The asset is depreciated on a straight-line basis over the useful life or contractual lease period, whichever earlier.

The Group applies ASBE8 Impairment of Assets, to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

A lease liability is measured after the lease commencement date at amortized cost using the effective interest method.

32. Other significant accounting policies and accounting estimates

32.1 Hedging

The Group uses derivative financial instruments to hedge its risks related to foreign currency and inflation risks and derivatives that are not used for hedging.

Hedge accounting

The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedge is expected to be effective in offsetting the changes in the fair value of cash flows that can be attributed to the hedged risk during the period for which the hedge is designated

An effective hedge exists when all of the below conditions are met:

• There is an economic relationship between the hedged item and the hedging instrument;

• the effect of credit risk does not dominate the value changes that result from that economic relationship;

• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item.

On the commencement date of the accounting hedge, the Group formally documents the relationship between the hedging instrument and hedged item, including the Group’s risk management objectives and strategy in executing the hedge transaction, together with the methods that will be used by the Group to assess the effectiveness of the hedging relationship.

With respect to a cash-flow hedge, a forecasted transaction that constitutes a hedged item must be highly probable and must give rise to exposure to changes in cash flows that could ultimately affect profit or loss.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

32. Other significant accounting policies and accounting estimates - (cont’d)

32.1 Hedging - (cont’d)

Cash-flow hedges

Subsequent to the initial recognition, changes in the fair value of derivatives used to hedge cash flows are recognized through other comprehensive income directly in a hedging reserve, with respect to the part of the hedge that is effective. Regarding the portion of the hedge that is not effective, the changes in fair value are recognized in profit and loss. The amount accumulated in the hedging reserve is reclassified to profit and loss in the period in which the hedged cash flows impact profit or loss and is presented in the same line item in the statement of income as the hedged item.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, the hedge accounting is discontinued. The cumulative gain or loss previously recognized in a hedging reserve through other comprehensive income remains in the reserve until the forecasted transaction occurs or is no longer expected to occur. If the forecasted transaction is no longer expected to occur, the cumulative gain or loss in respect of the hedging instrument in the hedging reserve is reclassified to profit or loss.

Economic hedge

Hedge accounting is not applied with respect to derivative instruments used to economically hedge financial assets and liabilities denominated in foreign currency or CPI linked. Changes in the fair value of such derivatives are recognized in profit or loss as gain (loss) from changes in fair value.

32.2 Securitization of assets

Details of the securitization of asset agreements and accounting policy are set out in Note V.5 - Account receivables.

32.3 Segment reporting

Reportable segments are identified based on operating segments which are determined based on the structure of the Group’s internal organization, management requirements and internal reporting system.

Two or more operating segments may be aggregated into a single operating segment if the segments have similar economic characteristics and are same or similar in respect of the nature of each product and service, the nature of production processes, the type or class of customers for the products and services, the methods used to distribute the products or provide the services, and the nature of the regulatory environment.

Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment reporting. Segment accounting policies are consistent with those for the consolidated financial statements.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

32. Other significant accounting policies and accounting estimates - (cont’d)

32.4 Profit distributions to shareholders

Dividends which are approved after the balance sheet date are not recognized as a liability at the balance sheet date but are disclosed in the notes separately.

33. Changes in significant accounting policies and accounting estimates

33.1 Changes in significant accounting policies

There are no significant changes in accounting policies in the reporting period.

33.2 Changes in significant accounting estimates

There are no significant changes in accounting estimates in the reporting period.

34. Significant accounting estimates and judgments

The preparation of the financial statements requires management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates as well as underlying assumptions and uncertainties involved are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

Notes V.34, Note VIII, Note IX and Note XIII contain information about the assumptions and their risk factors relating to post-employment benefits – defined benefit plans, fair value of financial instruments and share-based payments. Other key sources of estimation uncertainty are as follows:

34.1 Expected credit loss of trade receivables

As described in Note III.12, trade receivables are reviewed at each balance sheet date to determine whether credit risk on a receivable has increased significantly since initial recognition, lifetime expected losses is accrued for impairment provision. Evidence of impairment includes observable data that comes to the attention of the Group about loss events such as a significant decline in the solvency of an individual debtor or the portfolio of debtors, and significant changes in the financial condition that have an adverse effect on the debtor. If there is objective evidence of a recovery in the value of receivables which can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

34. Significant accounting estimates and judgments - (cont’d)

34.2 Provision for impairment of inventories

As described in Note III.15, the net realisable value of inventories is under management’s regular review, and as a result, provision for impairment of inventories is recognized for the excess of inventories’ carrying amounts over their net realisable value. When making estimates of net realisable value, the Group takes into consideration the use of inventories held on hand and other information available to form the underlying assumptions, including the inventories’ market prices and the Group’s historical operating costs. The actual selling price, the costs of completion and the costs necessary to make the sale and relevant taxes may vary based on the changes in market conditions and product saleability, manufacturing technology and the actual use of the inventories, resulting in the changes in provision for impairment of inventories. The net profit or loss may then be affected in the period when the impairment of inventories is adjusted.

34.3 Impairment of assets other than inventories and financial assets

As described in Note III.23, if impairment indication exists, assets other than inventories and financial assets are assessed at balance sheet date to determine whether the carrying amount exceeds the recoverable amount of the assets. If any such case exists, an impairment loss is recognized.

If it is not practical to estimate the recoverable amount of an individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. Impairment exists if the carrying amount of an asset or asset group is higher than recoverable amount, the higher of its fair value less costs of disposal and the present value of the future cash flows expected to be derived from the asset or asset group. In assessing the present value of estimated future cash flows, significant judgements are exercised over the asset’s production, selling price, related operating expenses and discount rate to calculate the present value. All the parameters used for estimation of the recoverable amount are based on reasonable and supportable assumptions.

34.4 Depreciation and amortisation of assets such as fixed assets and intangible assets

As described in Note III.18 and III.21, assets such as fixed assets and intangible assets are depreciated and amortised over their useful lives after taking into account residual value. The estimated useful lives of the assets are regularly reviewed to determine the depreciation and amortisation costs charged in each reporting period. The useful lives of the assets are determined based on historical experience of similar assets and the estimated technical changes. If there have been significant changes in the factors used to determine the depreciation or amortisation, the rate of depreciation or amortisation is revised prospectively.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

34. Significant accounting estimates and judgments - (cont’d)

34.5 Income taxes and deferred income tax

The Company and Group companies are assessed for income tax purposes in a large number of jurisdictions and, therefore, Company management is required to use considerable judgment in determining the total provision for taxes and attribution of income.

When assessing whether there will be sufficient future taxable profits available against which the deductible temporary differences can be utilised, the Group recognizes deferred tax assets to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences can be utilised, using tax rates that would apply in the period when the asset would be utilised. In determining the amount of deferred tax assets, the Group makes reasonable judgements and estimates about the timing and amount of taxable profits to be utilised in the following periods, and of the tax rates applicable in the future according to the existing tax policies and other relevant regulations. If the actual timing and amount of future taxable profits or the actual applicable tax rates differ from the estimates made by management, the differences affect the amount of tax expenses.

34.6 Contingent liabilities

When assessing the possible outcomes of legal claims filed against the Company and its investee companies, the company positions are based on the opinions of their legal advisors. These assessments by the legal advisors are based on their professional judgment, considering the stage of the proceedings and the legal experience accumulated regarding the various matters. Since the results of the claims will be determined by the courts, the outcomes could be different from the assessments.

In addition to the said claims, the Group is exposed to unasserted claims, inter alia, where there is doubt as to interpretation of the agreement and/or legal provision and/or the manner of their implementation. This exposure is brought to the Company’s attention in several ways, among others, by means of contacts made to Company personnel. In assessing the risk deriving from the unasserted claims, the Company relies on internal assessments by the parties dealing with these matters and by management, who weigh assessment of the prospects of a claim being filed, and the chances of its success, if filed. The assessment is based on experience gained with respect to the filing of claims and the analysis of the details of each claim. By their nature, in view of the preliminary stage of the clarification of the legal claim, the actual outcome could be different from the assessment made before the claim was filed.

34.7 Employee benefits

The Group’s liabilities for long-term post-employment and other benefits are calculated according to the estimated future amount of the benefit to which the employee will be entitled in consideration for his services during the current period and prior periods. The benefit is stated at present value net of the fair value of the plan’s assets, based on actuarial assumptions. Changes in the actuarial assumptions could lead to material changes in the book value of the liabilities and in the operating results.

III SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - (cont’d)

34. Significant accounting estimates and judgments - (cont’d)

34.8 Derivative financial instruments

The Group enters into transactions in derivative financial instruments for the purpose of hedging risks related to foreign currency and inflationary risks. The derivatives are recorded at their fair value. The fair value of derivative financial instruments is based on quotes from financial institutions. The reasonableness of the quotes is examined by discounting the future cash flows, based on the terms and length of the period to maturity of each contract, while using market interest rates of a similar instrument as of the measurement date. Changes in the assumptions and the calculation model could lead to material changes in the fair value of the assets and liabilities and in the results.

IV. Taxation

1. Main types of taxes and corresponding tax rates

The income tax rate in China is 25% (2025: 25%). The subsidiaries outside of China are assessed based on the tax laws in the country of their residence.

Set forth below are the tax rates outside China relevant to the largest subsidiaries of the Group in respect of assets and operating income:

The VAT rate of the Group's subsidiaries is in the range between 2.6% to 27%.

(1) Benefits from High-Tech Certificate

The Company, was jointly approved as new and high-tech enterprise, by the Hubei Provincial Department of Science and Technology, Department of Finance of Hubei Province and Hubei Provincial Office of the State Administration of Taxation. The applicable income tax rate for 2026 and 2025 is 15%.

Adama Anpon (Jiangsu) Ltd. (Formally know as Jiangsu Anpon Electrochemical Co. Ltd, hereinafter - “Anpon"), a subsidiary of the Company, was jointly approved as new and high-tech enterprise, by the Jiangsu Provincial Department of Science and Technology, Department of Finance of Jiangsu Province and Jiangsu Provincial Office of the State Administration of Taxation. The applicable income tax rate for 2026 and 2025 is 15%.

(2) Amendment to the Law for the Encouragement of Capital Investments, 1959

Since 2013 the Israeli enterprises are taxed under the "Preferred Enterprise" regime. The benefits include a grants track for enterprises located in Area A. Tax rates on preferred income as from 2017 tax year are as follows: 7.5% for Development Area A and 16% for the rest of the country. The amendment further determined that no tax shall apply to dividend distributed out of preferred income to Israel resident company shareholder.

IV. Taxation - (cont’d)

1. Main types of taxes and corresponding tax rates - (cont’d)

(3) Amendment to the Law for the Encouragement of Capital Investments, 1959 - (cont’d)

As of January 1, 2017 the law includes new tax benefit tracks for a “preferred technological enterprise” and a “special preferred technological enterprise” which award reduced tax rates to a technological industrial enterprise for the purpose of encouraging activity relating to the development of qualifying intangible assets.

The benefits will be awarded to a “preferred company” that has a “preferred technological enterprise” or a “special preferred technological enterprise” with respect to taxable “preferred technological income” per its definition in the Encouragement Law. Regulations that provide a nexus formula for allocating eligible profits govern these regimes.

Income of a Preferred Technological Enterprise a Special Preferred Technological Enterprise will be subject to a reduced corporate tax rate of 6% regardless of the development area in which the enterprise is located.

V. Notes to the consolidated financial statements

1. Cash at Bank and On Hand

As at June 30, 2026 restricted cash and bank balances was 87,020 thousand RMB (as at December 31, 2025 96,974 thousand RMB) mainly including deposits that guarantee bank acceptance drafts.

2. Financial assets held for trading

3. Derivative financial assets

4. Bills Receivable

V. Notes to the consolidated financial statements – (cont'd)

5. Accounts Receivable

a. By category

December 31, 2025

b. Aging analysis

V. Notes to the consolidated financial statements – (cont'd)

5. Accounts Receivable – (cont'd)

Main groups of account receivables assessed collectively for impairment based on geographical location:

Geographical location A:

Account receivables in geographical location A are grouped based on similar credit risk:

Geographical location B:

Account receivables in geographical location B are grouped based on aging analysis:

Other geographical locations:

V. Notes to the consolidated financial statements – (cont'd)

5. Accounts Receivable – (cont'd)

c. Addition, written-back and written-off of provision for expected credit losses during the period

d. Five largest accounts receivable at June 30, 2026:

e. Derecognition of accounts receivable due to transfer of financial assets

Certain subsidiaries of the group entered into a securitization transaction with Rabobank International for sale of trade receivables (hereinafter – “the Securitization Program” and/or “the Securitization Transaction”).

Pursuant to the Securitization Program, the companies will sell their trade receivables debts, in various different currencies, to a foreign company that was set up for this purpose and that is not owned by the Adama Ltd. (hereinafter – “the Acquiring Company”). Acquisition of the trade receivables by the Acquiring Company is financed by Cooperative Rabobank U.A..

The trade receivables included as part of the Securitization Transaction are trade receivables that meet the criteria provided in the agreement.

Every year the credit facility is re-approved in accordance with the Securitization Program. As at 30 June 2026, the Securitization agreement was approved up to October 24, 2026.

V. Notes to the consolidated financial statements – (cont'd)

5. Accounts Receivable – (cont'd)

e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)

The maximum scope of the securitization is adjusted for the seasonal changes in the scope of the Company’s activities, as follows: during January -350m\$ (as of June-2026 2,384 million RMB ), during the months of February through July – 400m\$ (as of June-2026 2,724 million RMB ), during the months of August through September – 300m\$ (as of June-2026 2,043 million RMB), during the months of October through November-275m\(as of June-20261,873 million RMB) and during the month of December – 300m (as of June-2026 2,043 million RMB). In addition the company has a permanent uncommitted facility of 50\$ million (as of June-2026 -341 million RMB) which will be applicable each period. The proceeds received from those customers whose debts were sold are used for acquisition of new trade receivables.

The price at which the trade receivables debts are sold is the amount of the debt sold less a discount calculated based on, among other things, the expected length of the period between the date of sale of the trade receivable and its anticipated repayment date. In the month following acquisition of the debt, the Acquiring Company pays in cash most of the debt while the remainder is recorded as a subordinated note and as continuing involvement that is paid after collection of the debt sold. If the customer does not pay its debt on the anticipated repayment date, the Company bears interest up to the earlier of the date on which the debt is actually repaid or the date on which debt collection is transferred to the insurance company (the actual costs are not significant and are not expected to be significant)

The Acquiring Company bears 95% of the credit risk in respect of the customers whose debts were sold and will not have a right of recourse to the Company in respect of the amounts paid in cash, except regarding debts with respect to which a commercial dispute arises between the companies and their customers, that is, a dispute the source of which is a claim of non-fulfillment of an obligation of the seller in the supply agreement covering the product, such as: a failure to supply the correct product, a defect in the product, delinquency in the supply date, and the like.

The Acquiring Company appointed a policy manager who will manage for it the credit risk involved with the trade receivables sold, including an undertaking with an insurance company.

Pursuant to the Receivables Servicing Agreement, the Group subsidiaries handle collection of the trade receivables as part of the Securitization Transaction for the benefit of the Acquiring Company.

As part of the agreement, Solutions is committed to comply with certain financial covenants, mainly the ratio of the liabilities to equity and profit ratios. As of June 30 2026, Solutions was in compliance with the financial covenants.

The accounting treatment of sale of the trade receivables included as part of the Securitization Program is:

The Company is not controlling the Acquiring Company, therefore the Acquiring Company is not consolidated in the financial statements.

The Company continues to recognize the trade receivables included in the Securitization Program based on the extent of its continuing involvement therein.

A subordinated note is recorded in respect of the portion of trade receivables included in the Securitization Program with respect to outstanding cash proceeds, however the Company has transferred the credit risk. The continuing involvement and subordinated note recorded in the balance sheet as part of the “other receivables” line item.

V. Notes to the consolidated financial statements – (cont'd)

5. Accounts Receivable – (cont'd)

e. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)

The loss from sale of the trade receivables is recorded at the time of sale in the statement of income in the “financing expenses”.

f. A subsidiary in Brazil (hereinafter - “the subsidiary”) entered into the following securitization agreements:

Since 2016, a securitization transaction with Rabobank Brazil for sale of customer receivables (hereinafter "FIDC-Donegal agreement"). Under the FIDC-Donegal agreement, the subsidiary will sell its receivables to a securitization structure (hereinafter - “the entity”) that was formed for this purpose where the subsidiary has subordinate rights of 5% of the entity's capital.

As at June 17, 2024 the FIDC-Donegal agreement was approved up to September 30, 2027. The maximum securitization scope as of June, 2026 is BRL 350 million (460 million RMB).

On the date of the sale of the customer receivables, the entity pays the full amount which is the debt amount sold net of discount calculated, among others, over the expected length of the period between the date of sale of the customer receivable and its anticipated repayment date.

The entity bears 95% of the credit risk in respect of the customers whose debts were sold such that the entity has the right of recourse to 5% of the unpaid amount. The subsidiary has a pledged deposit with regards to the entity’s right of recourse.

The subsidiary continues to recognize the trade receivables sold to the entity based on the extent of its continuing involvement therein (5% right of recourse) and also recognizes an associated liability in the same amount.

In "FIDC-Donegal agreement" the subsidiary handles the collection of receivables included in the securitization for the entity.

In the agreement above, the subsidiary does not control the entities and therefore the entities are not consolidated in the Group's financial statements.

The loss from the sale of the trade receivables is recorded at the time of sale in the statement of income in the “financing expenses” category.

V. Notes to the consolidated financial statements – (cont'd)

5. Accounts Receivable – (cont'd)

f. Derecognition of accounts receivable due to transfer of financial assets - (cont'd)

6. Receivables financing

As at June 30, 2026, bank acceptance endorsed but not yet due amounts to 297,560 thousands RMB.

7. Prepayments

(1) The aging analysis of prepayments is as follows:

(2) Total of five largest prepayments by debtor at the end of the period:

V. Notes to the consolidated financial statements – (cont'd)

8. Other Receivables

(1) Other receivables by nature

a. Others breakdown by categories

b. Other receivables by aging

(2) Additions, recovery or reversal and written-off of provision for expected credit losses during the period:

V. Notes to the consolidated financial statements – (cont'd)

8. Other Receivables – (cont'd)

(3) Five largest other receivables at June 30, 2026:

9. Inventories

(1) Inventories by category:

December 31, 2025

V. Notes to the consolidated financial statements – (cont'd)

9. Inventories - (cont'd)

(2) Provision for impairment of inventories:

For the Six months ended June 30, 2026

10. Other Current Assets

11. Long-Term Receivables

1) Additions, recovery or reversal of provision for expected credit losses during the period:

12. Long-Term Equity Investments

(1) Long-term equity investments by category:

(2) Movements of long-term equity investments for the period are as follows:

13. Other equity investments

Other equity investments are non-core businesses that are intended to be held in the foreseeable future.

V. Notes to the consolidated financial statements – (cont'd)

14. Fixed assets

The lands reported as fixed assets are owned by the group subsidiaries and are located outside of China.

V. Notes to the consolidated financial statements - (cont'd)

15. Construction in Progress

(1) Construction in progress

(2) Details and Movements of major construction projects in progress during period ended June 30, 2026

\* As of June 30, 2026 Project A include impairment of RMB 17 million.

V. Notes to the consolidated financial statements - (cont'd)

16. Right-of-use assets

V. Notes to the consolidated financial statements - (cont'd)

17. Intangible Assets

(2) Mainly exclusivity agreements. (1) Include land parcel in Israel that has not yet been registered in the name of the Group subsidiaries at the Land Registry Office, mostly due to registration procedures or technical problems.

V. Notes to the consolidated financial statements - (cont'd)

18. Goodwill

Changes in goodwill

The Group allocates goodwill to two cash generating units ("CGU "), Crop Protection (Agro) and a non-core activity included in the Intermediates and ingredients segment. At the end of the year, or more frequently whether indicators for impairment exists, the Group estimates the recoverable amount of each CGU for which goodwill has been allocated to using the DCF model. As of June 30, 2026 no indicators of impairment existed. The 2025 DCF model was based on:

• The actual results of 2025, 2026 workplan and the forecast results for the next 4 years. The key assumptions contains projected revenue growth rate and gross margin.

• The discount rate (8.6% WACC) based on the company's cost of equity and cost of debt, taking into account the comprehensive risk factors.

• The annual growth rate (1.5%) based on the management projections and market expectations.

As of December 31, 2025 the value in use of the cash generating units to which goodwill has been allocated to exceeds its carrying amount.

19. Deferred Tax Assets and Deferred Tax Liabilities

(1) Deferred tax assets without taking into consideration of the offsetting of balances within the same tax jurisdiction

V. Notes to the consolidated financial statements - (cont'd)

19. Deferred Tax Assets and Deferred Tax Liabilities - (cont’d)

(2) Deferred tax liabilities without taking into consideration of the offsetting of balances within the same tax jurisdiction

(3) Deferred tax assets and deferred tax liabilities presented on a net basis after offsetting

(4) Details of unrecognized deferred tax assets

(5) Expiration of deductible tax losses carry forward for unrecognized deferred tax assets

V. Notes to the consolidated financial statements - (cont'd)

19. Deferred Tax Assets and Deferred Tax Liabilities - (cont'd)

(6) Unrecognized deferred tax liabilities

When calculating the deferred taxes, taxes that would have applied in the event of realizing investments in subsidiaries were not taken into account, since it is the Company’s intention to hold these investments and not realize them.

20. Other Non-Current Assets

21. Short-Term Loans

Short-term loans by category:

V. Notes to the consolidated financial statements – (cont'd)

22. Derivative financial liabilities

23. Bills Payables

As at June 30, 2026, none of the bills payable are overdue.

24. Accounts payable

There are no significant accounts payables aging over one year.

As at June 30, 2026, the amount of the accounts payable included under the supplier financing arrangements was 892,228 thousand RMB (as at December 31,2025: 1,040,262). Accounts payables under financing arrangements have payment due dates ranging from 90 to 180 days from the invoice date. Comparable accounts payable that are not part of supplier financing arrangements have similar payment terms.

Under supplier finance arrangements, participating suppliers may elect, to receive early payment from the financial institutions for invoices owed and the company makes a payment to the financial institutions on the original invoice due date, regardless of whether the supplier has elected to receive early payment or not.

V. Notes to the consolidated financial statements - (cont'd)

24. Accounts payable - (cont'd)

The company may provide guarantees to the financial institutions (as may be provided to suppliers directly as well) but incurs no interest or other charges payable to the financial institutions on the payments made.

The balance of the accounts payable is not derecognized from the balance sheet because the original liability is not substantially modified on entering the arrangements as it continues to carry the characteristic of accounts payable and represent liabilities to pay for goods and services. The settlements to the financial institutions are included within operating cash flows because they continue to be part of the normal operating cycle.

Supplier financing arrangements have no impact on the company's liquidity risk.

25. Contract liabilities

26. Employee Benefits Payable

V. Notes to the consolidated financial statements - (cont'd)

27. Taxes Payable

28. Other Payables

(1) Other payables

29. Non-Current Liabilities Due Within One Year

Non-current liabilities due within one year by category are as follows:

V. Notes to the consolidated financial statements - (cont'd)

30. Other Current Liabilities

31. Long-Term Loans

Long-term loans by category

\* For more detailes regarding the guaranteed loans – see note X. related parties and related parties transactions.

For the maturity analysis, see note VIII.C - Liquidity risk.

32. Debentures Payable

V. Notes to the consolidated financial statements - (cont'd)

32. Debentures Payable - (cont'd)

Movements of debentures payable:

For the Six months ended June 30, 2026: