Stock Code: 000553(200553)    Stock Abbreviation: ADAMA A (B)      Announcement No. 2020-2



      Announcement on the Provision for Relocation-related Asset
       Impairment and Employee Severance Costs of ADAMA Ltd.


The Company and all members of its Board of Directors confirm that all the information
disclosed herein is true, accurate, and complete with no false or misleading statement
or material omission.


I. Overview and Financial Impact of Provision for Relocation-related Asset
Impairment and Employee Severance Costs
In accordance with Accounting standards for Business Enterprises, ADAMA Ltd.
(hereinafter referred to as the “Company”), is expected to record a total of RMB 598
million ($85 million) in provisions for asset impairments and employee severance costs
during 2019 due to the upgrading and relocation of the facilities at the old sites in
Jingzhou (Hubei) and Huai’An (Jiangsu).
The provisions, net of tax, are expected to lead to a reduction of the net profit
attributable to the owners of the Company by RMB 540 million ($77 million). Further
details as follows:
                                                                    Unit: ‘000,000 RMB
Item                                            Provision Amount
Fixed Assets                                    355
Employee severance costs                        243
In Total                                        598

The aforementioned expected provisions related to the upgrading and relocation of the
old sites in 2019 are not audited. Please refer to the audited 2019 annual report for the
final provision number.
II. Explanation on the Provisions for Asset Impairments and Employee Severance
Costs
The Company has made significant progress on the upgrade and relocation of its
production and environmental facilities at both its Jingzhou (Hubei Province) and
Huai’An (Jiangsu Province) sites, a process in which it expects to realize significant
operational efficiencies from upgrading of processes and technology, including
automated control and data systems, machinery and laboratory equipment, as well as
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the termination of less profitable production lines. As the Company is reaching the final
stage of relocation of the old sites, and expecting to commence production of the
relocated products at the new Jingzhou site in Q3 2020, in its fourth quarter 2019
financial reports, the Company is expecting to record a one-time non-cash asset
impairment related to terminated facilities at the old sites in both Jingzhou and Huai’An
of approximately RMB 355 million ($50 million). In addition, the upgraded sites and
their level of automation will allow for a more skilled, smaller workforce, a process
which is expected to be largely completed by the end of 2020. As such, the Company
is expecting to record a one-time provision for employee severance costs of
approximately RMB 243 million ($35 million) in the fourth quarter of 2019. Going
forward, these actions are expected to deliver ongoing annual pre-tax savings of RMB
235-330 million ($34-47 million) per year, commencing in 2020, including the
elimination of most reported idleness charges, which were approximately RMB 329
million ($47 million) in 2019. Furthermore, the ongoing ramp-up of production at the
Jingzhou site, as well as the expected return to regular production by some of the
Company’s key suppliers in China, is expected in 2020 to relieve part of the supply
constraints experienced during 2019.

The Company is aiming to complete most of the relocations and be operational with
improved cost and efficiency at its new sites at Jingzhou by Q3 2020 and at Huai’An
by mid-2021. The transformed new sites are designed to be more profitable than the
old ones, and ready to accommodate additional new molecules emerging from the
Company’s strong development pipeline. Over the longer term, the Company is
working towards the commercialization of all its vacated old sites, subject to receipt of
the required approvals. As a result, the Company aims to be able to recover the
remainder of its upgrade and relocation investments, with the anticipated gains from
the realization of this significant value expected to be included in the Company’s
reported net income in the coming years.

Risk warning
Regarding the information in this announcement that constitutes forward-looking
statements, it 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.

                                                                    By order of the Board
                                                                            ADAMA Ltd.
                                                                        January 23, 2020



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