Stock Code: 000553(200553) Stock Abbreviation: ADAMA A (B) NO. 2019-11
ADAMA Ltd.
Announcement on Expected Related-Party Transactions in the Ordinary
Course of Business in 2019
The Company and all members of the Company’s Board of Directors confirm that all information
disclosed herein is true, accurate and complete, with no false or misleading statement or material
omission.
I. Basic Information on Related Party Transactions in the ordinary course of business
(I) Overview of related-party transactions in the ordinary course of business
The Company expects that in 2019 it and/or its subsidiaries (together the "Group
Companies") will purchase raw materials/products, receive certain services, in a total
amount that will not exceed RMB 1,198.78million, from subsidiaries controlled by China
National Chemical Co., Ltd (“ChemChina”); and that the Group Companies will sell
products, provide services, and be entrusted to sell products, in a total amount that will not
exceed RMB715.65 million, to subsidiaries controlled by ChemChina. Such transactions
hereinafter referred as the "related-party transactions".
These estimations were performed based on the current available data and may change,
inter alia, as a result of changes to the Group Companies` business and/or due to market
conditions as well as due to further cooperation to be negotiated between the Group
Companies and Syngenta.
Related-party transactions of the above type performed by the Company in 2018 in the
ordinary course of business amounted to RMB 1,143.51 million. The said amount is based
on the current data available to the Company and has not been audited or reviewed by the
Company's independent auditors. Please refer to the report for the full year and fourth
quarter of 2018 to be duly disclosed by the Company.
The related-party transactions matter has been reviewed and approved at the 11th Meeting
of the 8th session of the Board of Directors of the Company. Among the five directors of
the Company, there were three affirmative votes, zero negative votes and zero abstentions,
while the two related-party directors (Mr. Yang Xingqiang and Mr. An Liru) refrained
from voting.
The related-party transactions matter shall be further approved by the Shareholders
Meeting. China National Agrochemical Co., Ltd., and Jingzhou Sanonda Holdings Co., Ltd.
will refrain from voting.
(II) The types and amounts of expected related-party transactions in the ordinary course
of business
RMB10,000
The pricing Contract amount
Type of Content of Amount
principle of or estimated
related-party Related party related-party incurred in the
related-party amount not to
transaction transaction previous year
transaction exceed
Purchase of raw
Jiangsu Anpon
materials/products
Electrochemical Market price 31,904 25,721
( including the
Co., Ltd.
designated products)
Syngenta AG
Purchase of raw
and its Market price 82,800 42,394
materials/products
subsidiaries
Shandong
Purchasing Dacheng Purchase of raw
raw materials Market price 690 388
Agrochemical materials/products
and products Co., Ltd
from related
Bluestar
parties
(Beijing)
Purchase of raw
Chemical Market price 2,415 1,541
materials/products
Machinery Co.,
Ltd.
Beijing Grand Market price
Purchase of raw
AgroChem Co., 1,800 1,028
materials/products
Ltd.
Sub-total - - 119,609 71,072
Selling raw Syngenta AG
materials and and its Selling products Market price 69,000 40,608
products to subsidiaries
related parties Sub-total - - 69,000 40,608
China National
Value-added OA
Chemical Market price 65 62
services
Information
Center
Jiangsu
Lianhai Testing Testing Services Market price 60 11
Receiving
Co., Ltd.
services from
Zhonglan
related parties
Lianhai
(Shanghai)
Chemical Testing Services Market price 144 119
Engineering
Technology
Co., Ltd.
Sub-total - - 269 192
Jiangsu Anpon
Providing Electrochemical Consultancy and
Market price 1,996 1,172
services to Co., Ltd. management services
related parties
Sub-total - - 1,996 1,172
Accepting the Jiangsu Anpon
Entrusted Sale Market price 569 1,065
entrustment Electrochemical
of the related Co., Ltd.
party to sell
Sub-total - - 569 1,065
its products
(III) Actual related-party transactions in the ordinary course of business performed in the
previous year
RMB10,000
Type of Actually
related-par Content of related incurred Estimated
Related party Difference
ty transaction amount amount
proportion
transaction
Jiangsu Anpon
Purchase of raw
Electrochemical Co., 25,523 31,660 19.38%
materials/products
Ltd.
Purchasing designated
Jiangsu Anpon
products manufactured 96.95%
Electrochemical Co., 198 6,500
only for the Company
Purchasing Ltd.
Group
raw
materials Syngenta AG and its Purchase of raw
42,394 95,000 55.37%
and subsidiaries materials/products
products
from related Beijing Grand Purchase of raw
1,028 2,250 54.31%
parties AgroChem Co., Ltd. materials
Shandong Dacheng Purchase of raw -
388 -
Agrochemical Co., Ltd materials/products
Bluestar (Beijing)
Purchase of raw
Chemical Machinery 1,541 - -
materials/products
Co., Ltd
Sub-total - 71,072 135,410 47.51%
Selling
Syngenta AG and its
products Selling products 40,608 46,000 11.72%
subsidiaries
and goods
to related 11.72%
Sub-total - 40,608 46,000
parties
China National 55%
Value-added OA 62 40
Chemical Information
services
Center
Receiving
Jiangsu Lianhai -
services Testing Services 11 -
Testing Co., Ltd.
from related
Zhonglan Lianhai
party
(Shanghai) Chemical -
Testing Services 119 -
Engineering Technology
Co., Ltd.
Sub-total - 192 40 380%
Providing Jiangsu Anpon
Consultancy and
services to Electrochemical Co., 1,172 1,500 21.87%
management services
related Ltd.
parties Sub-total - 1,172 1,500 21.87%
Accepting Jiangsu Anpon
the Electrochemical Co., Entrusted Sale 1,065 925 15.13%
entrustment Ltd.
of the Research Institute of 150 64.67%
Entrusted Sale 53
related Chemical Industry
party to sell
Anhui Kelihua Chemical
its products Entrusted Sale 189 600 68.5%
Co., Ltd.
Sub-total - 1,307 1,675 21.97%
An
explanation
by the board
of directors
for the
major
To ensure the stable operation of its normal business and improve efficiency, the Company
difference
estimated the cap of the related party transactions in 2018, and then submitted the proposal to the
between the
shareholders’ meeting for consideration and approval. The actual amount recorded was lower by
actual
more than 20% of the estimated amount, as a result of normal business operations, according to
occurred
which the Company and its relevant related parties determined the levels of sales and/or the
amount of
procurement of products and services from one another based on to their actual business demands.
daily related
transactions
and the
estimated
amount
An
explanation
by the
independent The transactions between related parties that have occurred in 2018 are all needed by the normal
directors for and daily operation of the Company. All the transactions were conducted in line with market
the major practice and the laws and regulations; They have served the Company's long-term interests and met
difference requirement of development strategies. The gap between the actual amount and the estimation of
between the the transactions between related parties in 2018, is a reasonable and proper result of the market
actual conditions and the actual needs of the Company. Such gap will neither trigger any major impact on
occurred production and operation, nor harm the interests of the Company and its minority shareholders, as
amount of well as will not compromise the independency of the Company.
daily related
transactions
and the
expected
amount
Notes:
1. Please refer to the announcement on June 8, 2018 for the 2018 expected related-party transactions
of the Company (Announcement number 2018-28).
2. The Company is a global crop protection company, with sales amounting to RMB 23,819 million
in 2017, such that the total related party transactions performed in 2018 represents only a relatively
low proportion of the overall business of the Company, 4.8% of its total 2017 sales.
In 2018 the total cost of procurement of raw materials and products amounted to RMB 14,212
million out of which only 5% was from related parties.
II. Introduction to Related Parties and Their Relationships with the Company
1. Jiangsu Anpon Electrochemical Co., Ltd. (legal representative: An Liru; registered
address: No. 30, Huagong Road, Huai’an City) has registered capital of RMB51.38
million and mainly undertakes the businesses related to basic chemical engineering,
pesticide products and thermoelectric steam. The main financial data as of September
30, 2018 are: operating revenue of RMB1,182.7 million , net profit of RMB
67.41million, total assets of RMB1,586.29 million, net assets of RMB503.39million.
Relationship with the Company: It is a legal person controlled by ChemChina, the
actual control holder of the Company. According to the Article 10.1.3(2) of the Rules
of Shenzhen Stock Exchange for the Listing of Stocks, it is a related party of the
Company.
Analysis of performance capability: To the best knowledge of the Company, Jiangsu
Anpon Electrochemical Co., Ltd. produces and operates normally and is in good
operational and financial conditions and thus has a good performance capability. After
searching on the website of disclosure of enforcement information of China, it is not a
dishonest party subject to enforcement.
2. Beijing Grand AgroChem Co., Ltd. (legal representative: Yang Lin; registered address:
No. 66, Anding Street North, Daxing District, Beijing) has registered capital of RMB
10.5 million and mainly undertakes the development, production and sales of new
special pesticide adjuvants and the development and process study of
environmentally-friendly pesticide preparations and provides relevant technical
services and consultations for pesticide enterprises. The main financial data as of
September 30, 2018 are: operating revenue of RMB105.48 million, net profit of RMB
7.05million, total assets of RMB54.22 million, net assets of RMB39 million.
Relationship with the Company: It is a legal person controlled by ChemChina, the
actual control holder of the Company. According to the Article 10.1.3(2) of the Rules
of Shenzhen Stock Exchange for the Listing of Stocks, it is a related party of the
Company.
Analysis of contract performance capability: To the best knowledge of the Company,
Beijing Grand AgroChem Co., Ltd. produces and operates normally and is in good
operational and financial conditions and thus has a good contract performance
capability. After searching on the website of disclosure of enforcement information of
China, it is not a dishonest party subject to enforcement.
3. China National Chemical Information Center (legal representative:Shui Min;
registered address: No. 53 Anwai Xiaoguan Street, Chaoyang District, Beijing) has
registered capital of RMB150 million and mainly undertakes the businesses related to
chemical information analysis and consultation, software development and network
technologies and services. The main financial data as of the date September 30, 2018
are: operating revenue of RMB177.86 million, net profit of RMB 18.48 million, total
assets of RMB764.4 million, net assets of RMB639.26 million.
Relationship with the Company: It is a legal person controlled by ChemChina, the
actual control holder of the Company. According to the Article 10.1.3(2) of the Rules
of Shenzhen Stock Exchange for the Listing of Stocks, it is a related party of the
Company.
Analysis of contract performance capability: To the best knowledge of the Company,
China National Chemical Information Center operates normally and is in good
operational and financial conditions and thus has a good contract performance
capability. After searching on the website of disclosure of enforcement information of
China, it is not a dishonest party subject to enforcement.
4. Syngenta AG (legal representative: n/a; registered address: Schwarzwaldallee 215
4058 Basel) has the registered capital of RMB 41.33 million and mainly undertakes
the businesses related to crop protection, seeds. The main financial data as of the date
September 30, 2018 are: operating revenue of RMB65,181.59 million, total assets of
RMB151,631.32 million, net assets of RMB28,424.85million.
Relationship with the Company: It is a legal person controlled by ChemChina, the
actual control holder of the Company. According to the Article 10.1.3(2) of the Rules
of Shenzhen Stock Exchange for the Listing of Stocks, it is a related party of the
Company.
Analysis of contract performance capability: Syngenta AG and its subsidiaries produce
and operate normally andare in good operational and financial conditions and thus
have a good contract performance capability. After searching on the website of
disclosure of enforcement information of China, it is not a dishonest party subject to
enforcement.
5. Shandong Dacheng Agrochemical Co., Ltd (legal representative:Huang Jianjun;
registered address: No. 25 Honggou Road, Zhangdian District, Zibo City) has
registered capital of RMB540 million and mainly undertakes the businesses related to
sales of fertilizer, manufacture and sale of chemical equipment and parts, import and
export of goods, wholesale and retail of chemical products (excluding dangerous and
preventable chemicals). The main financial data as of the date September 30, 2018 are:
operating revenue of RMB9.33 million, net profit of RMB 7.72 million, total assets of
RMB858.89 million, net assets of RMB-911.49 million.
Relationship with the Company: It is a legal person controlled by ChemChina, the
actual control holder of the Company. According to the Article 10.1.3(2) of the Rules
of Shenzhen Stock Exchange for the Listing of Stocks, it is a related party of the
Company.
Analysis of contract performance capability: To the best knowledge of the Company,
Shandong Dacheng Agrochemical Co., Ltd. operates normally and can perform its
obligations under the contract. After searching on the website of disclosure of
enforcement information of China, it is not a dishonest party subject to enforcement.
6. Bluestar (Beijing) Chemical Machinery Co., Ltd. (legal representative:Kang Jianzhong;
registered address: No. 5, Xingye Street, Beijing Economic and Development Zone)
has registered capital of RMB955.55 million and mainly undertakes the businesses
related to production of chemical machinery and equipment, production of type III
pressure vessels, design, maintenance and installation of chemical machinery and
equipment, technical consultation, technical services, technical training. The main
financial data as of the date September 30, 2018 are: operating revenue of RMB470.21
million, net profit of RMB 31.29 million, total assets of RMB1,192.89 million, net
assets of RMB 721.54 million.
Relationship with the Company: It is a legal person controlled by ChemChina, the
actual control holder of the Company. According to the Article 10.1.3(2) of the Rules
of Shenzhen Stock Exchange for the Listing of Stocks, it is a related party of the
Company.
Analysis of contract performance capability: To the best knowledge of the Company,
Bluestar (Beijing) Chemical Machinery Co., Ltd. operates normally and is in good
operational and financial conditions and thus has a good contract performance
capability. After searching on the website of disclosure of enforcement information of
China, it is not a dishonest party subject to enforcement.
7. Jiangsu Lianhai Testing Co., Ltd. (legal representative: Wang Yanning; registered
address: No. 51, Chaoyang West Street, Haizhou District, Lian Yungang City) has
registered capital of RMB 6 million and mainly undertakes the businesses related to
development of testing and analysis technology, R&D, sales and installation of testing
instruments, testing equipment and environmental protection equipment, integration of
testing software and environmental protection software, operation and maintenance of
automatic monitoring equipment. The main financial data as of the date September 30,
2018 are: operating revenue of RMB15.98 million, net profit of RMB 1.57 million,
total assets of RMB12.57 million, net assets of RMB 12.59 million.
Relationship with the Company: It is a legal person controlled by ChemChina, the
actual control holder of the Company. According to the Article 10.1.3(2) of the Rules
of Shenzhen Stock Exchange for the Listing of Stocks, it is a related party of the
Company.
Analysis of contract performance capability: To the best knowledge of the Company,
Jiangsu Lianhai Testing Co., Ltd. operates normally and is in good operational and
financial conditions and thus has a good contract performance capability. After
searching on the website of disclosure of enforcement information of China, it is not a
dishonest party subject to enforcement.
8. Zhonglan Lianhai (Shanghai) Chemical Engineering Technology Co., Ltd. (legal
representative: Liu Zhikui; registered address: No. 5656, Huaxia West Street, Pudong,
Shanghai) has registered capital of RMB 5 million and mainly undertakes the
businesses related to potassium salt, potassium chemical technology and products,
project investment and other professional technologies and product technology
development, technology transfer, technology design, technical training, production
and sales of self-developed products, project management, chemical engineering
survey and design. The main financial data as of the date September 30, 2018 are:
operating revenue of RMB680 thousand, net profit of RMB 5 thousand, total assets of
RMB2.91 million, net assets of RMB 2.62 million.
Relationship with the Company: It is a legal person controlled by ChemChina, the
actual control holder of the Company. According to the Article 10.1.3(2) of the Rules
of Shenzhen Stock Exchange for the Listing of Stocks, it is a related party of the
Company.
Analysis of contract performance capability: To the best knowledge of the Company,
Zhonglan Lianhai (Shanghai) Chemical Engineering Technology Co., Ltd. operates
normally and is in good operational and financial conditions and thus has a good
contract performance capability. After searching on the website of disclosure of
enforcement information of China, it is not a dishonest party subject to enforcement.
III. Main Content of Related-Party Transactions
1. Main content
(1) All related-party transactions between the Group Companies and the relevant
related parties should be carried out based on market terms and according to the
principles of voluntariness, equality, mutual benefit, justice and fairness and
without prejudice to the interests of the Company.
(2) If there is any available state fixed price, then the state fixed price shall prevail; if
the state fixed price is inapplicable or not applicable any more, then the market
price shall prevail; if the market price is inapplicable or not applicable any more,
then both parties shall determine the exact and fair pricing standards they believe
to be based on relevant data.
2. Signing of transaction agreement
The Group Companies will conclude contracts with the relevant related parties
according to their production and operation requirements and their ordinary course
business practices.
IV. Purpose of Related-Party Transaction and its Impact on the Company
These related-party transactions are necessary for the daily business operation of the Group
Companies. They mainly aim to capitalize on the Group Companies’ unique positioning
and profile, achieve cost savings, increase the Company’s sales and market share and to
drive its profitable growth. Based on the understanding of the related-parties’ business
performance, credit status and performance capability, the Group Companies have selected
them to conduct transactions in the ordinary course of business. The related-party
transaction activities follow the principle of fairness and justice, they will not adversely
affect the Company and its non-related party shareholders. The Board of Directors of the
Company holds that the related-party transactions benefit the continuity and stability of the
Company’s business operations, and has a positive impact on the normal operations of the
Company. Those transactions will not impact the independence of the Company.
V. Independent Directors’ Opinions
The Company’s independent directors have given separate opinions on the related party
transactions matter: The Group's related-party transactions performed in the ordinary
course of business are mainly to purchase or sell goods, materials and services from/to the
related parties based on the principles of justice and fairness and the pricing standards
consistent with those of non-related parties, in order to capitalize on the Group’s unique
positioning and profile, achieve cost savings, increase the Company’s sales and market
share and to drive its profitable growth. All such transactions shall conform to relevant
national laws and regulations, as applicable, and market-oriented principles, and shall not
influence the independence of the Company or damage the interests of the Group
Companies and their other shareholders. The decision-making procedures for these related
party transactions conform to the Company Law of the People’s Republic of China, the
Rules of Shenzhen Stock Exchange for the Listing of Stocks, the Articles of Association and
other laws and regulations. We agree on this proposal and submit it to the General Meeting
of Shareholders for deliberation.
VI. Opinion of Guotai Jun’an Securities Co., Ltd as the Financial Consultant
After verification, the independent financial consultant is of the opinion that the estimated
related-party transactions in the ordinary course of business of ADAMA Ltd. are necessary
for the daily business operation of the Company. Pricing of these related-party transactions
follows the market price. These transactions do not harm the interest of small and medium
shareholders of the Company or affect independence of the Company. Aforementioned
transaction matters have been approved at the 11th Meeting of the 8th session of the Board
of Directors of the Company, on which occasion related directors withdrew from the
voting, independent directors expressed affirmative opinions and necessary procedures
were implemented. The related-party transaction matter is subject to approval of the
General Meeting of Shareholders. CNAC and Jingzhou Sanonda Holding Co., Ltd as
related shareholders will withdraw from the voting. Above deliberation procedures are in
line with the Company Law, AoA of the Company and relevant rules. The independent
financial consultant does not have objection to the matter of estimated related-party
transactions for 2019 in the ordinary course of business of ADAMA Ltd..
VII. Documents for Future Reference
1. The resolution made at the 11th Meeting of the 8th session of the Board of Directors of
the Company;
2. Independent directors’ prior written approval;
3. Independent directors’ opinions;
4. Opinion of Guotai Junan Securities Co., Ltd on the Expected Related Party
Transactions in the Ordinary Course of Business in 2019 of the Company.
The Announcement is hereby given.
The Board of Directors of ADAMA Ltd.
February 21, 2019
