ICL - Israel Chemicals Ltd.

07/28/2021 | Press release | Distributed by Public on 07/28/2021 04:06

in our 2020 Annual Report on Form 20-F provides disclosure regarding the arbitration proceedings between the Company's subsidiary ICL Europe Coöperatief U.A. ('ICL Europe') and[...]

in our 2020 Annual Report on Form 20-F provides disclosure regarding the arbitration proceedings between the Company's subsidiary ICL Europe Coöperatief U.A. ('ICLEurope') and the Federal Democratic Republic of Ethiopia ('Ethiopia'), that were administrated by the Hague-based Permanent Court of Arbitration. ICL Europe commenced this arbitration to assert claims against Ethiopia under the Netherlands-Ethiopia Bilateral Investment Treaty ('BIT') seeking compensation for losses to its investment in its Ethiopian potash project due to mistreatment by the Ethiopian Government. ICL Europe claimed that the Ethiopian tax authority imposed a discriminatory, arbitrary and baseless tax on ICL Europe's Ethiopian project company, Allana Potash Afar Plc ('AllanaAfar'). On July 9, 2021, the arbitration tribunal rendered its award. Despite indications that Ethiopia's tax assessment was flawed, the tribunal interpreted the BIT as significantly limiting the BIT's protections in relation to disputes regarding taxation. Among other things, this had the significant effect of precluding ICL Europe's claims that Ethiopia violated the requirement to accord fair and equitable treatment to ICL Europe's investments in Ethiopia. Consequently, the tribunal rejected ICL Europe's claims and ordered ICL Europe to pay an amount of approximately $2.5 million as reimbursement of arbitration costs in accordance with the applicable arbitration rules. Since 2017, Allana Afar is not included in ICL's consolidated financial statements. This award does not have a material impact on the Company's Financial Statements.

(2)
The Annual reports provides disclosure regarding the agreement with Energean to supply natural gas (NG) and its announcement from June 2020, regarding postponement of the gas supply until the first quarter of 2022. In May 2021, Energean announced that the gas supply is expected to be further postponed until mid-2022. The Company reserves all of its rights in relation with Energean's announcements. No significant impact is expected on the Company following the said delay.

For further information regarding legal proceedings and other contingencies, see Note 6 to the Company's Interim Financial Statements.
Other Information
The Inter-Ministry Directors General Committee recommendations on the Haifa Bay
In connection with our subsidiary, Fertilizers & Chemicals (F&C), in April, 2021, the Inter-Ministry Directors General Committee published its recommendations on the Haifa Bay, which aim to promote and develop the Haifa Bay area, and realize its potential by rezoning of the Bay and determining land designations that will enable the development of the area for the welfare of its residents, and remove all petrochemical and other industrial plants within a decade. The Committee recommended the establishment of a government team to negotiate with companies operating in the Haifa Bay, including F&C, in order to reach agreements regarding the possibility of changing their operations in Haifa Bay, as part of the aforesaid land rezoning, through mutual understanding, to the extent possible, in a manner that is as compatible as possible with the needs of the employees and the interests of the companies.
It should be noted that the Committee's recommendations constitute a preliminary stage in this proposed initiative, which requires government's approval if the aforesaid plan or any other plan is to be implemented.
ICL Group Limited Q2 2021 Results 30
Forward-looking Statements
This announcement contains statements that constitute 'forward‑looking statements', many of which can be identified by the use of forward‑looking words such as 'anticipate', 'believe', 'could', 'expect', 'should', 'plan', 'intend', 'estimate', 'strive', 'forecast', 'targets' and 'potential', among others.
Forward‑looking statements appear in a number of places in this announcement and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward‑looking statements are based on our management's beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and the actual results may differ materially from those expressed or implied in the forward‑looking statements due to various factors, including, but not limited to:

Changes in exchange rates or prices compared to those we are currently experiencing; loss or impairment of business licenses or mineral extractions permits or concessions; volatility of supply and demand and the impact of competition; the difference between actual reserves and our reserve estimates; natural disasters; failure to 'harvest' salt which could lead to accumulation of salt at the bottom of the evaporation Pond 5 in the Dead Sea; construction of a new pumping station; disruptions at our seaport shipping facilities or regulatory restrictions affecting our ability to export our products overseas; general market, political or economic conditions in the countries in which we operate; price increases or shortages with respect to our principal raw materials; delays in the completion of major projects by third party contractors and/or termination of engagements with contractors and/or governmental obligations; the inflow of significant amounts of water into the Dead Sea could adversely affect production at our plants; labor disputes, slowdowns and strikes involving our employees; pension and health insurance liabilities; the ongoing COVID-19 pandemic, which has impacted, and may continue to impact our sales, operating results and business operations by disrupting our ability to purchase raw materials, by negatively impacting the demand and pricing for some of our products, by disrupting our ability to sell and/or distribute products, impacting customers' ability to pay us for past or future purchases and/or temporarily closing our facilities or the facilities of our suppliers or customers and their contract manufacturers, or restricting our ability to travel to support our sites or our customers around the world; changes to governmental incentive programs or tax benefits, creation of new fiscal or tax related legislation; changes in our evaluations and estimates, which serve as a basis for the recognition and manner of measurement of assets and liabilities; higher tax liabilities; failure to integrate or realize expected benefits from mergers and acquisitions, organizational restructuring and joint ventures; currency rate fluctuations; rising interest rates; government examinations or investigations; disruption of our, or our service providers', information technology systems or breaches of our, or our service providers', data security; failure to retain and/or recruit key personnel; inability to realize expected benefits from our cost reduction program according to the expected timetable; inability to access capital markets on favorable terms; cyclicality of our businesses; changes in demand for our fertilizer products due to a decline in agricultural product prices, lack of available credit, weather conditions, government policies or other factors beyond our control; sales of our magnesium products being affected by various factors that are not within our control; our ability to secure approvals and permits from the authorities in Israel to continue our phosphate mining operations in Rotem; volatility or crises in the financial markets; uncertainties surrounding the withdrawal of the United Kingdom from the European Union; hazards inherent to mining and chemical manufacturing; the failure to ensure the safety of our workers and processes; cost of compliance with environmental regulatory legislative and licensing restrictions; laws and regulation related to, and physical impacts of climate change and greenhouse gas emissions; litigation, arbitration and regulatory proceedings; exposure to third party and product liability claims; product recalls or other liability claims as a result of food safety and food-borne illness concerns; insufficiency of insurance coverage; closing of transactions, mergers and acquisitions; war or acts of terror and/or political, economic and military instability in Israel and its region; filing of class actions and derivative actions against the Company, its executives and Board members; The Company is exposed to risks relating to its current and future activity in emerging markets; and other risk factors discussed under 'Item 3 - Key Information- D. Risk Factors' in the Company's Annual Report on Form 20-F for the year ended December 31, 2020, filed with the U.S. Securities and Exchange Commission (the 'SEC') on March 2, 2021 (the 'Annual Report').
Forward‑looking statements speak only as at the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.
This report for the second quarter of 2021 (the 'Quarterly Report') should be read in conjunction with the Annual Report and the report for the first quarter of 2021 published by the Company (the 'prior quarterly report'), including the description of the events occurring subsequent to the date of the statement of financial position, as filed with the U.S.SEC.
ICL Group Limited Q2 2021 Results 31

Consolidated Financial Statements (Unaudited)
As at June 30, 2021 in Millions of U.S. Dollars



ICL Group Limited Q2 2021 Results 32

Condensed Consolidated Statements of Financial Position as at (Unaudited)

June 30,
2021
June 30,
2020
December 31, 2020
$ millions
$ millions
$ millions
Current assets
Cash and cash equivalents
318
323
214
Short-term investments and deposits
92
86
100
Trade receivables
1,097
831
883
Inventories
1,207
1,202
1,250
Investments at fair value through other comprehensive income
180
38
53
Prepaid expenses and other receivables
344
384
341
Total current assets
3,238
2,864
2,841
Non-current assets
Investments at fair value through other comprehensive income
-
76
83
Deferred tax assets
143
116
127
Property, plant and equipment
5,601
5,228
5,550
Intangible assets
725
634
670
Other non-current assets
373
308
393
Total non-current assets
6,842
6,362
6,823
Total assets
10,080
9,226
9,664
Current liabilities
Short-term debt
630
544
679
Trade payables
801
720
740
Provisions
55
51
54
Other payables
659
576
704
Total current liabilities
2,145
1,891
2,177
Non-current liabilities
Long-term debt and debentures
2,212
2,297
2,053
Deferred tax liabilities
368
305
326
Long-term employee liabilities
622
579
655
Long-term provisions and accruals
278
227
267
Other
76
69
98
Total non-current liabilities
3,556
3,477
3,399
Total liabilities
5,701
5,368
5,576
Equity
Total shareholders' equity
4,201
3,722
3,930
Non-controlling interests
178
136
158
Total equity
4,379
3,858
4,088
Total liabilities and equity
10,080
9,226
9,664

The accompanying notes are an integral part of these condensed consolidated financial statements.

ICL Group Limited Quarterly Report 33
Condensed Consolidated Statements of Income (Unaudited)
(In millions except per share data)

For the three-month
period ended
For the six-month
period ended
For the year ended
June 30, 2021
June 30, 2020
June 30, 2021
June 30, 2020
December 31, 2020
$ millions
$ millions
$ millions
$ millions
$ millions
Sales
1,617
1,203
3,127
2,522
5,043
Cost of sales
1,047
883
2,062
1,802
3,553
Gross profit
570
320
1,065
720
1,490
Selling, transport and marketing expenses
246
183
475
371
766
General and administrative expenses
67
56
129
120
232
Research and development expenses
14
10
29
24
54
Other expenses
25
244
30
246
256
Other income
(25)
(4)
(26)
(4)
(20)
Operating income (loss)
243
(169)
428
(37)
202
Finance expenses
64
54
62
88
219
Finance income
(34)
(23)
(12)
(5)
(61)
Finance expenses, net
30
31
50
83
158
Share in earnings of equity-accounted investees
1
1
1
2
5
Income (loss) before income taxes
214
(199)
379
(118)
49
Provision for income taxes
64
(33)
87
(13)
25
Net income (loss)
150
(166)
292
(105)
24
Net income attributable to the non-controlling interests
10
2
17
3
13
Net income (loss) attributable to the shareholders of the Company
140
(168)
275
(108)
11
Earnings per share attributable to the shareholders of the Company:
Basic earnings (loss) per share (in dollars)
0.11
(0.13)
0.22
(0.08)
0.01
Diluted earnings (loss) per share (in dollars)
0.11
(0.13)
0.22
(0.08)
0.01
Weighted-average number of ordinary shares outstanding:
Basic (in thousands)
1,281,977
1,280,524
1,281,192
1,279,977
1,280,026
Diluted (in thousands)
1,285,658
1,280,721
1,284,873
1,280,175
1,280,273

The accompanying notes are an integral part of these condensed consolidated financial statements.

ICL Group Limited Quarterly Report 34
Condensed Consolidated Statements of Comprehensive Income (Unaudited)

For the three-month period ended
For the six-month period ended
For the year ended
June 30, 2021
June 30, 2020
June 30, 2021
June 30, 2020
December 31, 2020
$ millions
$ millions
$ millions
$ millions
$ millions
Net income (loss)
150
(166)
292
(105)
24
Components of other comprehensive income that will be reclassified subsequently to net income
Currency translation differences
46
29
(18)
(35)
118
Change in fair value of cash flow hedges transferred to the statement of income
(13)
(20)
16
(2)
(54)
Effective portion of the change in fair value of cash flow hedges
11
42
(26)
(9)
53
Tax relating to items that will be reclassified subsequently to net income
-
(5)
2
3
-
44
46
(26)
(43)
117
Components of other comprehensive income that will not be reclassified to net income
Net changes of investments at fair value through other comprehensive income
91
(22)
119
(14)
18
Gains (losses) from defined benefit plans
8
(6)
18
12
(15)
Tax relating to items that will not be reclassified to net income
(13)
-
(15)
(5)
(6)
86
(28)
122
(7)
(3)
Total comprehensive income (loss)
280
(148)
388
(155)
138
Comprehensive income attributable to the non-controlling interests
14
5
20
-
23
Comprehensive income (loss) attributable to the shareholders of the Company
266
(153)
368
(155)
115

The accompanying notes are an integral part of these condensed consolidated financial statements.

ICL Group Limited Quarterly Report 35
Condensed Consolidated Statements of Cash Flows (Unaudited)

For the three-month period ended
For the six-month period ended
For the year ended
June 30, 2021
June 30, 2020
June 30, 2021
June 30, 2020
December 31, 2020
$ millions
$ millions
$ millions
$ millions
$ millions
Cash flows from operating activities
Net income (loss)
150
(166)
292
(105)
24
Adjustments for:
Depreciation and amortization
124
119
241
237
489
(Reversal of) Impairment of fixed assets
(9)
90
(9)
90
90
Exchange rate, interest and derivative, net
-
14
53
97
90
Tax expenses (income)
64
(33)
87
(13)
25
Change in provisions
12
153
(9)
128
113
Other
8
4
10
8
5
199
347
373
547
812
Change in inventories
(3)
34
27
62
54
Change in trade receivables
(27)
111
(174)
(75)
(89)
Change in trade payables
36
(4)
75
67
84
Change in other receivables
(31)
(8)
(40)
(14)
5
Change in other payables
(17)
(87)
(29)
(59)
54
Net change in operating assets and liabilities
(42)
46
(141)
(19)
108
Interests paid
(37)
(36)
(55)
(56)
(109)
Income taxes paid, net of refund
(28)
(14)
(21)
(24)
(31)
Net cash provided by operating activities
242
177
448
343
804
Cash flows from investing activities
Proceeds from deposits and investments, net
90
17
98
29
34
Business combinations
-
-
(64)
(27)
(27)
Purchases of property, plant and equipment and intangible assets
(151)
(161)
(298)
(300)
(626)
Proceeds from divestiture of businesses net of transaction expenses
-
17
-
17
26
Other
3
4
3
5
10
Net cash used in investing activities
(58)
(123)
(261)
(276)
(583)
Cash flows from financing activities
Dividends paid to the Company's shareholders
(67)
(30)
(101)
(53)
(118)
Receipt of long-term debt
187
355
497
877
1,175
Repayments of long-term debt
(144)
(408)
(455)
(551)
(1,133)
Receipts (repayments) of short-term debt, net
25
(99)
(16)
(108)
(52)
Receipts (payments) from transactions in derivatives
(32)
14
(18)
(2)
24
Other
-
-
-
-
(1)
Net cash provided by (used in) financing activities
(31)
(168)
(93)
163
(105)
Net change in cash and cash equivalents
153
(114)
94
230
116
Cash and cash equivalents as at the beginning of the period
157
434
214
95
95
Net effect of currency translation on cash and cash equivalents
8
3
10
(2)
3
Cash and cash equivalents as at the end of the period
318
323
318
323
214

The accompanying notes are an integral part of these condensed consolidated financial statements.

ICL Group Limited Quarterly Report 36
Condensed Consolidated Statements of Changes in Equity (Unaudited)

Attributable to the shareholders of the Company
Non-controlling interests
Total
equity
Share
capital
Share premium
Cumulative translation adjustments
Capital reserves
Treasury shares,
at cost
Retained earnings
Total shareholders' equity
$ millions
For the three-month period ended June 30, 2021
Balance as at April 1, 2021
546
207
(397)
43
(260)
3,861
4,000
164
4,164
Share-based compensation
1
10
-
(9)
-
-
2
-
2
Dividends
-
-
-
-
-
(67)
(67)
-
(67)
Comprehensive Income
-
-
42
77
-
147
266
14
280
Balance as at June 30, 2021
547
217
(355)
111
(260)
3,941
4,201
178
4,379

Attributable to the shareholders of the Company
Non-controlling interests
Total
equity
Share
capital
Share premium
Cumulative translation adjustments
Capital reserves
Treasury shares,
at cost
Retained earnings
Total shareholders' equity
$ millions
For the three-month period ended June 30, 2020
Balance as at April 1, 2020
546
199
(500)
(12)
(260)
3,930
3,903
131
4,034
Share-based compensation
-
1
-
1
-
-
2
-
2
Dividends
-
-
-
-
-
(30)
(30)
-
(30)
Comprehensive Income (loss)
-
-
26
(5)
-
(174)
(153)
5
(148)
Balance as at June 30, 2020
546
200
(474)
(16)
(260)
3,726
3,722
136
3,858

The accompanying notes are an integral part of these condensed consolidated financial statements.

ICL Group Limited Quarterly Report 37
Condensed Consolidated Statements of Changes in Equity (Unaudited) (cont'd)

Attributable to the shareholders of the Company
Non-controlling interests
Total
equity
Share
capital
Share premium
Cumulative translation adjustments
Capital reserves
Treasury shares,
at cost
Retained earnings
Total shareholders' equity
$ millions
For the six-month period ended June 30, 2021
Balance as at January 1, 2021
546
204
(334)
22
(260)
3,752
3,930
158
4,088
Share-based compensation
1
13
-
(10)
-
-
4
-
4
Dividends
-
-
-
-
-
(101)
(101)
-
(101)
Comprehensive income
-
-
(21)
99
-
290
368
20
388
Balance as at June 30, 2021
547
217
(355)
111
(260)
3,941
4,201
178
4,379

Attributable to the shareholders of the Company
Non-controlling interests
Total
equity
Share
capital
Share premium
Cumulative translation adjustments
Capital reserves
Treasury shares,
at cost
Retained earnings
Total shareholders' equity
$ millions
For the six-month period ended June 30, 2020
Balance as at January 1, 2020
546
198
(442)
3
(260)
3,880
3,925
136
4,061
Share-based compensation
-
2
-
3
-
-
5
-
5
Dividends
-
-
-
-
-
(53)
(53)
-
(53)
Comprehensive loss
-
-
(32)
(22)
-
(101)
(155)
-
(155)
Balance as at June 30, 2020
546
200
(474)
(16)
(260)
3,726
3,722
136
3,858

The accompanying notes are an integral part of these condensed consolidated financial statements.

ICL Group Limited Quarterly Report 38
Condensed Consolidated Statements of Changes in Equity (Unaudited) (cont'd)

Attributable to the shareholders of the Company
Non-controlling interests
Total
equity
Share
capital
Share premium
Cumulative translation adjustments
Capital reserves
Treasury shares,
at cost
Retained earnings
Total shareholders' equity
$ millions
For the year ended December 31, 2020
Balance as at January 1, 2020
546
198
(442)
3
(260)
3,880
3,925
136
4,061
Share-based compensation
-
6
-
2
-
-
8
-
8
Dividends
-
-
-
-
-
(118)
(118)
(1)
(119)
Comprehensive income
-
-
108
17
-
(10)
115
23
138
Balance as at December 31, 2020
546
204
(334)
22
(260)
3,752
3,930
158
4,088

The accompanying notes are an integral part of these condensed consolidated financial statements.

ICL Group Limited Quarterly Report 39

Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 1 - General


A.
The Reporting Entity

ICL Group Ltd. (hereinafter - the Company), is a company domiciled and incorporated in Israel. The Company's shares are traded on both the Tel-Aviv Stock Exchange (TASE) and the New York Stock Exchange (NYSE) under the ticker: ICL. The address of the Company's registered headquarters is 23 Aranha St., Tel Aviv, Israel. The Company is a subsidiary of Israel Corporation Ltd., a public company traded on the TASE under the ticker: ILCO:TA. The State of Israel holds a Special State Share in ICL and in some of its subsidiaries, entitling the State the right to safeguard the State of Israel vital interests.
The Company together with its subsidiaries, associated companies and joint ventures (hereinafter ‑ the Group or ICL), is a leading specialty minerals group that operates a unique, integrated business model. The Company competitively extracts certain minerals as raw materials and utilizes processing and product formulation technologies to add value to customers in two main end-markets: agriculture and Industrial (including food additives). ICL's products are used mainly in the areas of agriculture, electronics, food, fuel and gas exploration, water purification and desalination, constructions, detergents, cosmetics, pharmaceuticals and automotive.


B.
Material events in the reporting period

The COVID-19 pandemic continues to create business and economic uncertainty and volatility in the global markets. At the same time, there is a recovery trend in the volume of economic activity around the world. Despite the ongoing struggle with the pandemic around the world and the uncertainty about its duration, there has been a considerable recovery in Israel and a significant decrease in morbidity rates, which have led to removal of most restrictions. The Company continues to take measures to ensure the health and safety of its employees, suppliers, business partners and the communities in which it operates in order to ensure, among others, the operation level, the proper functioning of its facilities around the world and to minimize the pandemic's potential impact on its business.
Manufacturing continues at the Company's sites around the world without interruptions. However, there is still a difficulty in assessing the future impacts of the pandemic on the Company's operations, inter alia, in light of the uncertainty of its duration, the extent of its intensity and effects on the markets, including Europe, India and Brazil, in which the Company operates and additional countermeasures that may be taken by the governments and central banks.
ICL Group Limited Quarterly Report 40
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 2 - Significant Accounting Policies


A.
Basis of Preparation

The Company's financial statements are prepared in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board (IASB) and the Company uses IFRS as its generally accepted accounting principles ('GAAP').
The condensed consolidated interim financial statements were prepared in accordance with IAS 34, 'Interim Financial Reporting' and do not include all the information required in complete, annual financial statements. These condensed consolidated interim financial statements and notes are unaudited and should be read together with the Company's audited financial statements included in its Annual Report on Form 20-F for the year ended December 31, 2020 (hereinafter - the Annual Financial Statements), as filed with the Securities and Exchange Commission ('SEC').
The accounting policies and assumptions used in preparation of these condensed consolidated interim financial statements are consistent with those used in preparation of the Company's Annual Financial Statements and in the Company's opinion include all the adjustments necessary to fairly present such information. Interim results are not necessarily indicative of the Company's expected results for the entire year.
Classifications
The Company made a number of insignificant classifications in comparative figures in order to adjust them to the manner of classification in the financial statements as of December 31, 2020. The aforesaid classifications had no effect on the total profit (loss).
ICL Group Limited Quarterly Report 41
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 3 - Operating Segments

A. General

1. Information on operating segments
ICL is a global specialty minerals and chemicals company operating bromine, potash and phosphate mineral value chains in a unique, integrated business model. Our operations are organized under four segments: Industrial Products, Potash, Phosphate Solutions and Innovative Ag Solutions.
Industrial Products - Industrial Products segment produces bromine out of a solution that is a by‑product of the potash production process in Sodom, Israel, as well as bromine‑based compounds. Industrial Products uses most of the bromine it produces for self‑production of bromine compounds at its production sites in Israel, the Netherlands and China. In addition, the Industrial Products segment produces several grades of salt, magnesium chloride and some other products. Industrial Products is also engaged in the production and marketing of phosphorous-based flame retardants and additional phosphorus‑based products.
Potash - The Potash segment produces and sells mainly potash, salt, Polysulphate®, magnesium and electricity. Potash is produced in Israel and Spain, usingevaporation process to extract potash from the Dead Sea in Israel and conventional mining from an underground mine in Spain. In its Boulby mine in the UK, the Company produces Polysulphate®, which is composed of sulphur, potash, calcium and magnesium. The Company's FertilizerpluS product line is based mainly on Polysulphate®. The segment also includes magnesium activity under which it produces, markets and sells pure magnesium and magnesium alloys, and also produces chlorine and sylvinite. In addition, the segment sells salt produced in its potash and Polysulphate® underground mines in Spain and the UK, respectively. The Company has a power plant in Sodom, which supplies electricity to ICL companies in Israel (electricity surplus is sold to external customers) and steam to all facilities in the Sodom site.
Phosphate Solutions - The Phosphate Solutions segment is based on a phosphate value chain which uses phosphate commodity products, such as phosphate rock and fertilizer-grade phosphoric acid ('green phosphoric acid'), to produce specialty products with higher added value. The segment also produces and markets phosphate-based fertilizers. Phosphate rock is mined and processed from open pit mines, three of which are located in the Negev Desert in Israel, while the fourth is situated in Yunnan province in China. Sulphuric acid, green phosphoric acid and phosphate fertilizers are produced in facilities in Israel, China and Europe.
The Phosphate Solutions segment manufactures pure phosphoric acid by purifying green phosphoric acid. Pure phosphoric acid and green phosphoric acid are used to manufacture downstream products with high added value, such as phosphate salts and acids, for a wide range of food and industrial applications. Phosphate salts and acids are used in various industrial end markets, such as oral care, cleaning products, paints and coatings, water treatment, asphalt modification, construction, metal treatment and more. The segment's products for the food industry include functional food ingredients and phosphate additives, which provide texture and stability solutions for processed meat, meat alternatives, poultry, seafood, dairy, beverage and baked goods. In addition, the segment supplies pure phosphoric acid to ICL's specialty fertilizers business and produces milk and whey proteins for the food ingredients industry.
ICL Group Limited Quarterly Report 42
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 3 - Operating Segments (cont'd)

A. General (cont'd)

1. Information on operating segments (cont'd)

Innovative Ag Solutions - The Innovative Ag Solutions segment aims to achieve global leadership in specialty agriculture markets by enhancing its global positions in its core markets of specialty agriculture, ornamental horticulture, turf and landscaping, targeting high-growth markets such as Brazil, India and China, by leveraging its unique R&D capabilities, vast agronomic experience, global footprint, backward integration to potash and phosphate and chemistry know-how, as well as seeking M&A opportunities. ICL is working to expand its broad product portfolio of controlled release fertilizers (CRF), water soluble fertilizers (WSF), liquid fertilizers and straights (MKP/MAP/PeKacid).
The Innovative Ag Solutions segment develops, manufactures, markets and sells fertilizers that are based primarily on nitrogen, potash (potassium chloride) and phosphate. It produces water soluble specialty fertilizers in Belgium, liquid fertilizers and soluble fertilizers in Israel, Spain and China, and controlled‑release fertilizers in the Netherlands and the United States. ICL's specialty fertilizers business markets its products worldwide, mainly in Europe, Asia, North America, Brazil and Israel.
Other Activities - Business activities which include, among other things, ICL's innovative arm, promoting innovation, developing new products and services, as well as digital platforms and technological solutions for farmers and agronomists. These activities are not presented as reportable segments, since they do not meet the required quantitative thresholds.

2. Segment capital investments

The capital investments made by the segments, for each of the reporting periods, include mainly property, plant and equipment, as well as intangible assets acquired in the ordinary course of business and as part of business combinations.
3. Inter-segment transfers and unallocated income (expenses)

Segment's revenue, expenses and results include inter-segment transfers, which are based on transactions' prices in the ordinary course of business. This being aligned with the reports that are regularly reviewed by the Chief Operating Decision Maker. The inter-segment transfers are eliminated as part of the financial statements' consolidation process.
ICL Group Limited Quarterly Report 43
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 3 - Operating Segments (cont'd)

B. Operating segment data

Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
$ millions
For the three-month period ended June 30, 2021
Sales to external parties
406
370
599
235
7
-
1,617
Inter-segment sales
4
42
24
2
-
(72)
-
Total sales
410
412
623
237
7
(72)
1,617
Segment profit (loss)
114
43
77
20
(2)
(16)
236
Other expenses not allocated to the segments
7
Operating income
243
Financing expenses, net
(30)
Share in earnings of equity-accounted investees
1
Income before income taxes
214
Depreciation, amortization and impairment
14
42
57
7
1
(6)
115
Capital expenditures
14
72
68
5
2
3
164

ICL Group Limited Quarterly Report 44
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 3 - Operating Segments (cont'd)

B. Operating segment data (cont'd)

Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
$ millions
For the three-month period ended June 30, 2020
Sales to external parties
281
301
421
193
7
-
1,203
Inter-segment sales
4
39
18
3
2
(66)
-
Total sales
285
340
439
196
9
(66)
1,203
Segment profit (loss)
70
38
8
15
(2)
(1)
128
Other expenses not allocated to the segments
(297)
Operating loss
(169)
Financing expenses, net
(31)
Share in earnings of equity-accounted investees
1
Loss before income taxes
(199)
Depreciation, amortization and impairment
18
42
52
7
-
131
250
Capital expenditures
24
55
63
4
-
-
146
Capital expenditures as part of business combination
-
-
-
-
(2)
-
(2)

ICL Group Limited Quarterly Report 45
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 3 - Operating Segments (cont'd)

B. Operating segment data

Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
$ millions
For the six-month period ended June 30, 2021
Sales to external parties
800
716
1,124
473
14
-
3,127
Inter-segment sales
8
81
44
5
1
(139)
-
Total sales
808
797
1,168
478
15
(139)
3,127
Segment profit (loss)
219
72
117
42
(4)
(25)
421
Other expenses not allocated to the segments
7
Operating income
428
Financing expenses, net
(50)
Share in earnings of equity-accounted investees
1
Income before income taxes
379
Depreciation, amortization and impairment
31
79
111
14
1
(4)
232
Capital expenditures
31
137
119
9
3
6
305
Capital expenditures as part of business combination
-
-
-
70
-
-
70

ICL Group Limited Quarterly Report 46
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 3 - Operating Segments (cont'd)

B. Operating segment data (cont'd)

Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
$ millions
For the six-month period ended June 30, 2020
Sales to external parties
642
572
904
389
15
-
2,522
Inter-segment sales
7
82
37
6
2
(134)
-
Total sales
649
654
941
395
17
(134)
2,522
Segment profit (loss)
173
52
17
29
(2)
(9)
260
Other expenses not allocated to the segments
(297)
Operating loss
(37)
Financing expenses, net
(83)
Share in earnings of equity-accounted investees
2
Loss before income taxes
(118)
Depreciation, amortization and impairment
35
81
101
12
7
132
368
Capital expenditures
45
116
124
7
4
1
297
Capital expenditures as part of business combination
-
-
-
-
25
-
25

ICL Group Limited Quarterly Report 47
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 3 - Operating Segments (cont'd)

B. Operating segment data (cont'd)

Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
$ millions
For the year ended December 31, 2020
Sales to external parties
1,242
1,183
1,871
715
32
-
5,043
Inter-segment sales
13
163
77
16
3
(272)
-
Total sales
1,255
1,346
1,948
731
35
(272)
5,043
Segment profit (loss)
303
120
66
40
(5)
(15)
509
Other expenses not allocated to the segments
(307)
Operating income
202
Financing expenses, net
(158)
Share in earnings of equity-accounted investees
5
Income before income taxes
49
Depreciation, amortization and impairment
77
166
210
25
3
98
579
Capital expenditures
84
296
275
20
6
15
696
Capital expenditures as part of business combination
-
-
-
-
26
-
26

ICL Group Limited Quarterly Report 48
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 3 - Operating Segments (cont'd)
C. Information based on geographical location
The following table presents the distribution of the operating segments sales by geographical location of the customer:

4-6/2021
4-6/2020
1-6/2021
1-6/2020
1-12/2020
$
millions
% of
sales
$
millions
% of
sales
$
millions
% of
sales
$
millions
% of
sales
$
millions
% of
sales
China
255
16
216
18
500
16
357
14
806
16
USA
245
15
173
14
520
17
405
16
793
16
Brazil
230
14
122
10
316
10
216
9
447
9
Germany
94
6
76
6
189
6
177
7
327
6
United Kingdom
88
5
73
6
215
7
189
7
336
7
Israel
75
5
71
6
138
4
130
5
260
5
France
67
4
59
5
141
5
124
5
238
5
Spain
66
4
52
4
148
5
124
5
243
5
India
61
4
34
3
86
3
82
3
194
4
Austria
44
3
31
3
71
2
57
2
103
2
All other
392
24
296
25
803
25
661
27
1,296
25
Total
1,617
100
1,203
100
3,127
100
2,522
100
5,043
100

ICL Group Limited Quarterly Report 49
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 3 - Operating Segments (cont'd)

C. Information based on geographical location (cont'd)
The following tables present the distribution of the operating segments sales by geographical location of the customer:
Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
$ millions
For the three-month period ended June 30, 2021
Europe
142
96
185
113
6
(23)
519
Asia
148
128
150
39
-
(3)
462
North America
87
32
125
28
-
(1)
271
South America
22
112
116
12
-
-
262
Rest of the world
11
44
47
45
1
(45)
103
Total
410
412
623
237
7
(72)
1,617

Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
$ millions
For the three-month period ended June 30, 2020
Europe
99
84
154
89
7
(17)
416
Asia
98
132
93
36
-
(4)
355
North America
66
14
83
26
1
(2)
188
South America
6
64
62
4
-
-
136
Rest of the world
16
46
47
41
1
(43)
108
Total
285
340
439
196
9
(66)
1,203
ICL Group Limited Quarterly Report 50
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 3 - Operating Segments (cont'd)

C. Information based on geographical location (cont'd)
The following tables present the distribution of the operating segments sales by geographical location of the customer:
Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
$ millions
For the six-month period ended June 30, 2021
Europe
286
276
372
242
13
(42)
1,147
Asia
278
203
292
80
-
(7)
846
North America
182
89
239
59
1
(4)
566
South America
35
141
174
22
-
(1)
371
Rest of the world
27
88
91
75
1
(85)
197
Total
808
797
1,168
478
15
(139)
3,127

Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
$ millions
For the six-month period ended June 30, 2020
Europe
226
232
342
196
15
(35)
976
Asia
204
197
201
68
-
(7)
663
North America
173
33
181
52
1
(3)
437
South America
17
98
124
9
-
-
248
Rest of the world
29
94
93
70
1
(89)
198
Total
649
654
941
395
17
(134)
2,522

ICL Group Limited Quarterly Report 51
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 3 - Operating Segments (cont'd)
C. Information based on geographical location (cont'd)
The following table presents the distribution of the operating segments sales by geographical location of the customer:
Industrial Products
Potash
Phosphate Solutions
Innovative Ag Solutions
Other
Activities
Reconciliations
Consolidated
$ millions
For the year ended December 31, 2020
Europe
458
411
665
334
30
(76)
1,822
Asia
405
433
480
127
1
(14)
1,432
North America
299
86
372
105
2
(5)
859
South America
40
230
227
21
-
(1)
517
Rest of the world
53
186
204
144
2
(176)
413
Total
1,255
1,346
1,948
731
35
(272)
5,043

ICL Group Limited Quarterly Report 52
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 4 - Financial Instruments and Risk Management
A. Fair value of financial instruments

The carrying amounts in the financial statements of certain financial assets and financial liabilities, including cash and cash equivalents, investments, short-term deposits and loans, receivables and other debit balances, long-term investments and receivables, short-term credit, payables and other credit balances, long-term loans bearing variable interest and other liabilities, and derivative financial instruments, correspond to or approximate their fair value.
The following table details the carrying amount and fair value of financial instrument groups presented in the financial statements not in accordance with their fair value:

June 30, 2021
June 30, 2020
December 31, 2020
Carrying amount
Fair value
Carrying amount
Fair value
Carrying amount
Fair value
$ millions
$ millions
$ millions
$ millions
$ millions
$ millions
Loans bearing fixed interest
106
112
73
78
89
96
Debentures bearing fixed interest
Marketable
1,495
1,713
1,451
1,590
1,625
1,870
Non-marketable
196
210
281
292
281
296
1,797
2,035
1,805
1,960
1,995
2,262

B. Fair value hierarchy

The following table presents an analysis of the financial instruments measured by fair value, using the valuation method.
The following levels were defined:
Level 1: Quoted (unadjusted) prices in an active market for identical instruments
Level 2: Observed data (directly or indirectly) not included in Level 1 above.

Level 1
June 30,
2021
June 30,
2020
December 31, 2020
$ millions
$ millions
$ millions
Investments at fair value through other comprehensive income (1)
180
115
136

Level 2
June 30,
2021
June 30,
2020
December 31, 2020
$ millions
$ millions
$ millions
Derivatives designated as economic hedge, net
(3)
(35)
(32)
Derivatives designated as cash flow hedge, net
77
47
87
74
12
55


(1)
In the second quarter of 2021, the Company sold about 57 million of its shares in YYTH for a consideration of $70 million. As at June 30, 2021, the remaining balance of the shares was about 4.5% of YYTH's share capital. Subsequent to the date of the report, the remaining holding is about 2%, following an additional sale of 46 million shares for a consideration of $90 million.
ICL Group Limited Quarterly Report 53
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 4 - Financial Instruments and Risk Management (cont'd)
C. Foreign currency risks

The Company is exposed to changes in the exchange rate of the shekel against the dollar in respect of principal and interest in certain debentures and loans. The Company's risk management strategy is to hedge the changes in cash flows deriving from liabilities in shekels by using derivatives. These exposures are hedged from time to time, according to the assessment of the exposure and inherent risks against which the Company chooses to hedge, in accordance with the Company's risk management strategy.
Note 5 - Long Term Compensation Plans and Dividend Distributions

A.
Share based payments - Non-marketable options

1.
In May 2021 and July 2021, the Company's HR & Compensation Committee and the Board of Directors, approved an equity grant of about 647 thousand options in the form of non‑marketable and non-transferable options for no consideration, under the 2014 Equity Compensation Plan to two senior employees. The Fair value at the grant date (June 30, 2021) is about $859 thousand.

2.
In the second quarter, 7.2 million options were exercisedfor about $ 10 million.

B.
Dividend Distributions
Decision date for dividend distribution by the Board of Directors
Actual date of dividend distribution
Distributed amount
($ millions)
Dividend per share ($)
February 11, 2021
March 16, 2021
34
0.03
May 6, 2021
June 16, 2021
67
0.05
July 28, 2021(after the reporting date)*
September 1, 2021
68
0.05

* The dividend will be distributed on September 1, 2021, with a record date for eligibility of August 18, 2021.
ICL Group Limited Quarterly Report 54
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 6 - Provisions, Contingencies and Other Matters


1.
On March 18, 2021, an application for a class action was filed with the district court in Tel Aviv against the Company, Israel Corporation Ltd. and the controlling shareholder of Israel Corporation (hereinafter - the Respondents). The application includes a series of allegations concerning, among others, alleged misleading and violation of the Company's reporting and disclosure obligations to the public under the Israeli Securities Law, 5728-1968, relating the implications of the royalties claim filed in 2011 by the State of Israel against its subsidiary, Dead Sea Works Ltd., pursuant to the Dead Sea Concession Law, 5721-1961 and which was conducted and concluded within an arbitration proceeding. The applicant is a shareholder of the Company acting on behalf of a represented class including all those who acquired Company shares or Israel Corp. shares from August 17, 2011 and held them until May 27, 2014. According to the application, such a group incurred alleged damages by the Respondents, and accordingly, the Court is requested to rule in favor of the group the entire sum of damage allegedly caused to group members who are shareholders of the Company, in the amount of about NIS 133 million (about $40 million) and to group members who are shareholders of Israel Corp. the additional amount of NIS 57 million (about $17 million), as of May 27, 2014.
The Company rejects the claims made in the application and accordingly is preparing to file its response within the framework of the legal proceeding. Considering the preliminary stage of the proceeding there is a difficulty in estimating its outcome. No provision has been recorded in the Company's books.

2.
Note 18 to the Company's Annual Financial Statements provides disclosure regarding the regulatory aspects, which are essential in securing the future of Rotem phosphate mining and production operations in Israel. Following are the main developments:

a.
In June 2021, the Company's emission permit under the Israeli Clean Air Act (hereinafter - the Law) was renewed until September 2023. The renewed permit reflects an updated outline of requirements. As for a limited number of projects, their postponement was granted within the framework of an administrative order under section 45 of the Law, received inJuly 2021.

b.
The Company's license for oil shale production expired in May 2021. In the second quarter of 2021, the Ministry of Energy approved the Company's plan to regulate the license areas in terms of safety and ecology, including removal of exposed oil shales. In order to ensure the continuity of energy production in Rotem Israel, and in accordance with the policy of the Ministry of Energy and the Ministry of Environmental Protection, the Company is working to accelerate the completion of a project to replace the natural gas-based steam boiler so it will be completed before the mined reserves of the oil shale are utilized.

c.
The Company acts to promote the plan for mining phosphates in Barir field (within the framework of NOP 14B). The approval of NOP 14B is subject to legal proceedings in the Israeli Supreme Court. In June 2021, following the resolution in another petition which the Court was obligated to wait for, and the requests of the Company and the State to renew the proceedings, the hearing deadline on the case was brought forward to 28 July 2021.
ICL Group Limited Quarterly Report 55
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 6 - Provisions, Contingencies and Other Matters (cont'd)

2.
(cont'd)

d.
Dry and wet phosphogypsum storage - the Company is working with the relevant authorities to obtain the new required Urban Building Plan. As part of the renewal process, the Company submitted a plan which is expected to be approved in October 2021. According to the new Plan, once approved, the Company will be required to pay a permit tariff for the Dry and wet phosphogypsum. Since the guidelines regarding the calculation method of the tariff are unclear, there is a difficulty in estimating the future required outflows.
The Company estimates that it is more likely than not that the said approvals, permits and future phosphate rock sources will be granted within a timeframe which will not materially impact the Company's results. Nevertheless, there is no certainty as to the receipt of such approvals, permits and future phosphate rock sources and/or the date of their receipt. Failure to obtain these approvals, permits and future phosphate rock resources, or a significant delay in receiving them can lead to a material impact on the Company's business, financial position and results of operations.

3.
The production process in YPH JV in China requires the Company to operate gypsum and flotation ponds that accumulate phosphogypsum fluid and other materials formed in the production processes. YPH is planning to expand its ponds area as part of its ongoing operational plan beyond 2021. The Company obtained most of the required certifications, and is working, with the support and coordination of the Yunnan government, to resolve the remaining issues and to reach an appropriate solution. The Company believes that it is more likely than not that an amicable solution will be found, within the required timeframe, in order to maintain the regular operation of the site. Failure to obtain a solution or significant delay in obtaining it may have a material impact on YPH's operation.

4.
Note 15 to the Annual Financial Statements provides disclosure regarding the Law for Taxation of Profits from Natural Resources in Israel and the Company's tax position. In March 2021, the Israeli Tax Authority (ITA) issued an assessment for the years 2016‑2017, which includes a demand for payment of surplus profit levy, in the amount of approximately $81 million, including interest. The amount mainly represents the different interpretation regarding the measurement of operational property, plant and equipment. The Company submitted its objection to the ITA. The Company believes it is more likely than not that its position will be accepted.

5.
Note 17 to the Annual Financial Statements provides disclosure regarding the renewal of DSW's water production license for 2021, which includes a reference to the production of drilled saline water and the intention of the Government Authority Director to examine the change in the Company's definition from 'Supplier-Producer' to 'Consumer-Producer'. In March 2021, a decision was made by the Water Authority, whereby DSW does not constitute a 'supplier', as defined in the Water Regulations, and should be considered as a 'consumer' for the purpose of charging water fees, starting with the production license for 2021.
ICL Group Limited Quarterly Report 56
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 6 - Provisions, Contingencies and Other Matters (cont'd)

5.
(cont'd)
The main implication of this change is an increase in future water rates of about $9 million per year for water drawn from all its drillings, including within the concession area. In the Company's view, such charges should not apply to water drilling within the Dead Sea concession area (which constitute about 65%), for various reasons, most notably the provisions of the Concession Law. The Company believes it is more likely than not that the charges will not apply to water drillings within the concession area. The Company filed an appeal against the decision and on June 10, 2021, a preliminary hearing was held in which the Company and the State presented their claims on the matter. A hearing for evidence presentation is scheduled for October 2021. The Company has a sufficient provision in its accounts for the water drilled outside the concession area.

6.
Note 18 to the Annual Financial Statements provides disclosure regarding the application for certification of a claim as a class action against the subsidiaries, Rotem Israel and Periclase, according to which severe and extreme environmental hazards, allegedly caused pollution of the groundwater aquifer and the Ein Bokek spring by industrial wastewater. In June 2021, the petitioners notified the Court on the decision to cease the mediation process and requested to renew the court proceedings.

7.
Note 18 to the Company's Annual Financial Statements provides disclosure regarding an application for certification of a class action against the Company, Israel Corporation, and office holders with respect to the manner in which the IT (the Harmonization) project was managed and terminated. In July 2021, the Tel Aviv District Court ruled that the Applicants may file a reply as well as an application for disclosure of documents and in November 2021, instructions will be given regarding the continuation of the proceedings. Following this decision, in July 2021, the Applicants requested the Supreme Court to suspend the decision on the application to appeal, pending the aforementioned District Court's ruling. Considering the proceedings are in early stages and even suspended, there is a difficulty in estimating the chances the application will be accepted. No provision has been recorded in the Company's books.

8.
As part of the collaboration between ICL's subsidiary in Spain (ICL Iberia) and the government of Catalonia to achieve environmental sustainability goals, the Company has undertaken to carry out restoration of the salt piles in its sites, mainly by processing and removing them to the sea via a Collector. In April 2021, the Company signed an agreement with the Catalan Water Agency for the construction and operation of the Collector. The main highlights of the agreement include, among others, the way in which the project will be managed, the financing aspects of the project, the definition of project costs and the determination of the operational maintenance mechanism, including usage costs. Based on the said agreement and the Spanish Water law, it was determined that ICL Iberia's share will be up to 90% of the project's cost (approximately $110 million), to be paid throughout the construction and operation period. The construction period is expected to extend over four years and the operation period is expected to be 25 years.
ICL Group Limited Quarterly Report 57
Notes to the condensed consolidated interim financial statements as at June 30, 2021 (Unaudited)

Note 6 - Provisions, Contingencies and Other Matters (cont'd)

9.
Note 18 to the Annual Financial Statements provides disclosure regarding the arbitration proceeding conducted between Iberpotash, a Spanish subsidiary (IBP), and AkzoNobel (hereinafter - Nobian) for the termination of the partnership agreement between them. In March 2021, a final arbitration award was rendered dismissing Nobian's compensation claims. The Arbitral Tribunal determined that the agreement between IBP and Nobian remains in force, that IBP did not breach the agreement and therefore is not liable to Nobian for any damages, and that only Nobian can determine, within a reasonable time and in good faith, whether it prefers to terminate the agreement. Based on the Company's estimation, the arbitration award has no material impact on its Financial Statements. On April 30, 2021, Nobian filed a claim with the Spanish Court for full enforcement of the arbitration award according to its understanding thereof. The Company believes that it is in compliance with the arbitration award. This is further demonstrated by the Company declaring completion of the salt production facility on July 13, 2021. Despite Nobian's objection against the Company's announcement, the Company is of the opinion that all the necessary requirements for completion have been fulfilled. The Company believes that the challenges Nobian poses, despite the Company's compliance with the arbitration award, provides the Company with further rights under its agreement with Nobian, including a right to terminate the partnership agreement and accordingly, on July 23 2021, the Company notified Nobian of the termination of the agreement.

10.
In accordance with the Company's policy regarding the periodic examination of the estimated useful life of Property, Plant and Equipment, in the first quarter of 2021, the Company conducted an examination of the estimated remaining useful life of Property, Plant and Equipment at its facilities in Israel, which was based on the Group's experience, level of maintenance and operation of the facilities over the years. According to the examination, it was found that following the increase in maintenance activity and the implementation of operational excellence processes, the life expectancy of certain Property, Plant and Equipment is higher than their current remaining useful life. Based on the assessment, the estimated useful life of the said assets was extended by 5-10 years, as of January 2021. The impact on the first half of 2021, is a reduction in depreciation expenses, with $16 million in earnings and the balance of $9 million as a change in inventory value.

11.
One of the Company's strategic goals is to achieve leadership positions in Brazil, a high‑growth specialty plant nutrition market. On March 24, 2021, the Company entered into a definitive agreement to acquire Compass Minerals America Do Sul LTDA (Hereinafter - Compass Minerals), which includes the South American Plant Nutrition business of Compass Minerals. On July 1, 2021, the Company completed the transaction for a total consideration of about $420 million, including Compass Minerals' net debt of about $107 million. The transaction may include a performance‑based earnout of up to $18 million. Compass Minerals offers a broad range of solutions for plant nutrition and stimulation, soil treatment, seed treatment and plant health, covering all key Brazilian crops and as such, will significantly expand ICL's product portfolio and profitability, while providing further seasonal balance between the Northern and Southern hemispheres.

12.
As part of the Company's strategy to expand the specialty fertilizer business and focus on growing markets, in January 2021, the Company completed the acquisition of Agro Fertiláqua Participações S.A., one of Brazil's leading specialty plant nutrition companies, for a consideration of $122 million (before deduction of Fertiláqua's net debt of $40 million).

13.
In April 2021, the Company entered into a definitive agreement with China Sanjiang Fine Chemicals Company Limited to sell Jiaxing ICL Chemical Co. Ltd (ICL Zhapu), which is part of the Industrial Products segment, for a consideration of about $25 million. The transaction was completed in July 2021. As a result, in the third quarter of 2021, the Company will recognize a capital gain of about $15 million.
ICL Group Limited Quarterly Report 58