ADAMA Ltd.
Special Report on Fund-raising and Actual Use of Funds
For the year ended December 31, 2019
Note： The Accountant's Report will be issued in Chinese. This Accountant's Report is English
translations prepared for the Company's management review purpose only and cannot be provided
to third parties for other purpose. If there is any conflict between the Chinese and English version,
the Chinese version shall prevail.
Accountant's Report for Special Report on Fund-raising and Actual Use of Funds
for
ADAMA Ltd.
De Shi Bao (He) Zi (20) No. E00152
(Page 1 of 2 pages)
To the Board of Directors of ADAMA Ltd.:
We have attested the accompanying special report on fund-raising and actual use of funds for
ADAMA Ltd. ((Former name: Hubei Sanonda Co., Ltd. hereinafter referred to as "ADAMA") as
at 31 December 2019 (hereinafter referred to as 'Report on fund-raising and actual use of funds').
1. Board of directors’ responsibilities for the report on fund-raising and actual use of funds
The board of directors of ADAMA is responsible for the preparation of the report on fund-raising
and actual use of funds in accordance with ‘Regulatory Guidelines for Listed Companies No.2-
Regulatory Requirements for the Management and Use of Funds Raised by Listed Companies’ of
China Securities Regulatory Commission (CSRC Notice [2012] No.44), ‘Guidelines for the
Standard Operation of the Companies Listed in Shenzhen Stock Exchange’ issued by Shenzhen
Stock Exchange and ensuring the contents in the report true, accurate and complete, no false
records, misleading statements or major omissions.
2. Auditor's responsibilities
Our responsibility is to issue an attestation opinion for the report on fund-raising and actual use of
funds on the basis of our special procedures. We conducted our certain procedures in accordance
with China Standard on Other Assurance Engagements No.3101- Assurance Engagements Other
Than Audits or Reviews of Historical Financial Information, which requires us to comply with the
code of professional ethics and design and implement the special procedures to obtain reasonable
assurance about whether the report on fund-raising and actual use of funds are free from material
misstatement.
During the attestation, we performed the procedures that we deem necessary to obtain the
evidence on the amounts and disclosures in the report on fund-raising and actual use of funds. We
believe that our procedures provide a reasonable basis for our opinion.
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Accountant's Report for Special Report on Fund-raising and Actual Use of Funds
for
ADAMA Ltd.
De Shi Bao (He) Zi (20) No. E00152
(Page 2 of 2 pages)
3. Attestation Opinion
We believe that the report on fund-raising and actual use of funds for ADAMA is prepared in
accordance with 'Regulatory Guidelines for Listed Companies No.2-Regulatory Requirements for
the Management and Use of Funds Raised by Listed Companies’ of China Securities Regulatory
Commission (CSRC Notice [2012] No.44), ‘Guidelines for the Standard Operation of the
Companies Listed in Shenzhen Stock Exchange’ issued by Shenzhen Stock Exchange and present
fairly, in all material respects, the fund-raising and actual use of funds of ADAMA as at 31
December 2019.
4. Scope of the report
This report can be only used by ADAMA to report the fund-raising and actual use of funds to
relevant regulatory authorities this time, and cannot be used for other purposes.
Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant: Hu Ke
Shanghai, China
Chinese Certified Public Accountant: Ma Renjie
27 April 2020
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Board of Directors of ADAMA Ltd.
Special Report on Annual Fund-raising and Actual Use of Funds
For the year ended December 31, 2019
The Company and Board of Directors ensure that the contents of information disclosures true, accurate
and complete, with no false records, misleading statements or major omissions.
The Board of Directors of ADAMA Ltd. (hereinafter referred to as the “Company”) prepared the
Special Report on Deposit and Actual Use of Funds Raised from Non-Public Offerings as at 31
December 2019 in accordance with 'Regulatory Guidelines for Listed Companies No.2-Regulatory
Requirements for the Management and Use of Funds Raised by Listed Companies' of China
Securities Regulatory Commission (CSRC Notice [2012] No.44), 'Guidelines for the Standard
Operation of the Companies Listed in Shenzhen Stock Exchange' (2015 Amendment) issued by
Shenzhen Stock Exchange. Below is the special explanation for the deposit and actual use of
raised funds as at 31 December 2019:
1. General information about the raised funds
1. Amount and date of Receiving the Raised Funds
After approval of China Securities Regulatory Commission on agreeing Hubei Sanonda Co., Ltd.
to issue shares to China National Agrochemical Co., Ltd. to acquire assets and raise supporting
funds (CSRC Permits [2017] No.1096), the Company issued 104,697,982 ordinary shares
domestically in December 2017, with the price of RMB14.90 per share. The total raised amount
was RMB1,559,999,931.80, and the Company actually received RMB1,531,919,933.02 after
deducting the underwriting fees of RMB28,079,998.78. The net amount was received on 27
December 2017 and was verified by Deloitte Touche Tohmatsu Certified Public Accountant LLP
which issued a capital verification report LLP (De Shi Bao (Yan) Zi (17) No.00540).
2. The Used Amount of the Raised Funds in the Reporting Period
In the reporting period, the Company used RMB400,080,000.00, and received tax refund
RMB3,090,630.60 from tax authority. As at 31 December 2019, the Company has utilized the
raised fund with a cumulative value of RMB717,372,647.40, and the balance that hasn’t been used
yet is RMB883,606,873.56, including interest income after deducting bank charges
RMB37,888,958.56.
2. Deposit and management of the raised funds
In order to standardize the management and use of the raised funds and protect the rights of
investors, the Company established a Management System for Raised Funds of Hubei Sanonda
Co., Ltd. (hereinafter referred to as ‘Management System for Raised Funds’) in accordance with
the laws and regulations and regulatory documents such as Management Measures for Initial
Public Offering of Shares and Listing, Notice on Further Standardize the Use of Raised Funds for
Listing Companies and Listing Rules of Shenzhen Stock Exchange etc. and the actual conditions of
the Company. The management system has been approved at the 25th Meeting of the Seventh
Board of Directors, which provides detailed regulations on the deposit, use, change of committed
investment project, management and supervision of raised funds.
The Company signed Regulatory Agreement on the Special Account of Raised Funds among the
Three Parties with Sanwan sub-branch Jingzhou Branch China Construction Bank Co. Ltd. and
Guotai Junan Securities Co., Ltd. Respectively on 22 January, 2018. And signed Regulatory
Agreement on the Special Account of Raised Funds among the Four Parties with Guotai Junan
Securities Co., Ltd. , Shanghai branch of HSBC Bank(China) Company Limited, ADAMA AGAN
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Board of Directors of ADAMA Ltd.
Special Report on Annual Fund-raising and Actual Use of Funds
For the year ended December 31, 2019
LTD and ADAMA MAKHTESHIM LTD on 25 June, 2018. All the parties are in strict
compliance with the agreement mentioned above in current year.
As at 31 December 2019, the special accounts of raised funds are as follows:
Bank Account number Balance (RMB)
Sanwan sub-branch Jingzhou Branch China Construction Bank Co. Ltd. 42050162610109000999 883,606,873.56
Shanghai branch of HSBC Bank(China) Company Limited 715-039582-001 -
Shanghai branch of HSBC Bank(China) Company Limited 715-039574-001 -
3. Actual use of the raised funds in the current year
During the reporting period, the Company has actually used RMB400,080,000.00 of the raised A-
share funds. For the detailed information, please refer to Appendix 1. Comparison Table for the Use of
Raised Funds
4. Changes in the use of funds for fund-raising investment projects
On April 10, 2019, the Annual Shareholders Meeting approved a proposal on the change of certain
designated projects included in the Project of Share Issuance for Assets Purchase and Supporting
Finance. The Company will no longer use the raised funds on the project of the construction of
Huai’an pesticide formulation center (RMB 249.80 million) and the project of fixed-assets investment-
product A 600t/a (RMB 150.28 million). Instead, the Company will use the above amount (aggregated
number RMB 400.08million) to pay the consideration of the equity transfer of Jiangsu Anpon
Electrochemical Co., Ltd. The Company has finished the payment process before 28 August, 2019.
For the detailed information of changes in the use of funds for fund-raising investment project, please
refer to the Appendix 2.
5. Terminating the use of raised funds on certain designated projects subsequent to the
balance sheet date
On April, 27, the 25th meeting of the 8th session of the Board of Directors of the Company approved a
Proposal on Terminating the Use of Raised Funds on Certain Designated Projects Included in the
Project of Share Issuance for Assets Purchase and Supporting Finance. The Company plans to stop
using the raised funds on the projects of products development and registration, and fixed-asset
Investment of ADAMA. After the further approval by the shareholders of the Company, the remaining
raised funds will not be used in certain designated projects. For details, please see the Announcement
on Terminating the Use of Raised Funds on Certain Designated Projects published by the Company on
April 28, 2020.
For the detailed information, please refer to Appendix 1. Comparison Table for the Use of Raised
Funds.
4
Board of Directors of ADAMA Ltd.
Special Report on Annual Fund-raising and Actual Use of Funds
For the year ended December 31, 2019
6. Problems in use and disclosure of raised funds
The Company has disclosed relevant information timely, truly, accurately and completely. There are
no situations where the management of raised funds violates the rules.
Board of Directors of ADAMA Ltd.
27 April 2020
5
Board of Directors of ADAMA Ltd.
Special Report on Annual Fund-raising and Actual Use of Funds
For the year ended December 31, 2019
Appendix 1: Comparison Table for the Use of Raised Funds
Comparison Table for the Use of Raised Funds
Unit: RMB'0000
Total investment of
Total amount of raised funds 155,999.99 raised funds for the 40,008
current period
Total amount of raised funds with change of purpose
40,008
during the reporting period
Accumulated
Accumulated amount of raised funds with change of
purpose
40,008 investment amount 71,737
of raised funds
Percentage of accumulated amount of raised funds
26%
with change of purpose
Whether the
Whether the Total Accumulated feasibility
Committed fund-
projects has Total investment Investment investment amount Investment progress Date of projects Realized Whether the of the
raising investment
been changed, committed amount after amount for as at the end of the as at the end of reaching benefits of expected project has
projects
including part investment adjustment the current current period period (%) intended useable the current benefits are changed
change (if any) amount (1) period (2) (3) = (2) / (1) condition period achieved significantly
Consideration of the
acquisition of Anpon
No - 40,008 40,008 40,008 100% 2019 N/A N/A No
Huai’an pesticide
preparation center Yes 24,980 - - - - N/A N/A N/A Yes
project
Product development
and registration No 93,507 93,507 - 13,103 14% 2019 N/A N/A Yes
project
ADAMA fixed asset
Yes 66,204 51,176 - 5,913 12% 2019 N/A N/A Yes
investment project
Payment for
12,713
transaction cost, No 13,600 13,600 - 93% —— N/A N/A N/A
(Note1)
taxes and fees
Subtotal of
198,291 198,291
nonpublic offering 40,008 71,737 —— —— —— —— ——
(Note2) (Note2)
investment project
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Board of Directors of ADAMA Ltd.
Special Report on Annual Fund-raising and Actual Use of Funds
For the year ended December 31, 2019
Appendix 1: Comparison Table for the Use of Raised Funds – (cont’d)
1.Project of the Construction of Huai’an Pesticide Formulation Center
Since Adama Pesticide (Jiangsu) Co., Ltd., a subsidiary company of the third-tier
subsidiary of Solutions, is the entity to implement the construction project of
Huai’an Pesticide Formulation Center, the Company needs to increase the capital
of Solutions first, and then increase the capital of the subsidiaries by Solutions.
The time and process required for the relevant approval process, such as funds
entry and exist, is complicated. In order to avoid delays of the project, the
Company invested its own capital into the project. After the approval of 2018 the
Situations failing to meet the planned schedule or achieve
Annual Shareholders Meeting, the amount of this project had been used to pay
expected benefits and the reasons (according to the specific
the consideration of the equity transfer of Jiangsu Anpon Electrochemical Co.,
investment project)
Ltd.
2. Projects of Products Development and Registration
The project was planned to be implemented by ADAMA Makhteshim Ltd.,
ADAMA Agan Ltd., and ADAMA Brazil S/A, subsidiaries of Solutions. The
time and process required for the relevant approval process, such as funds entry
and exist, is complicated. In order to avoid delays of the project, the Company
invested its own capital into the project.
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Board of Directors of ADAMA Ltd.
Special Report on Annual Fund-raising and Actual Use of Funds
For the year ended December 31, 2019
Appendix 1: Comparison Table for the Use of Raised Funds – (cont’d)
3. ADAMA Fixed-Assets Investment
(1) Capacity Expansion Project for Pesticide Product A
Since Product A is the Company’s newly developed product, it takes time to
develop the market. In view of this, the management made changes to the time
schedule of original expansion plan and suspended the investment in the second
phase after careful deliberation. While adjusting the capacity expansion of the
first stage in accordance with the needs of the market, the process is optimized to
further enhance the product’s market advantage. Based on the changes in the
market environment and in order to reduce the investment risk of raised funds,
the Company decided that the follow-up investment of this project will be carried
Situations failing to meet the planned schedule or achieve out by the Company with its own capital.
expected benefits and the reasons (according to the specific
investment project) (2) Equipment Investment for Fungicide product B for Brazilian market & Project
on Capacity Expansion Investment for New Fragrance Ingredient Product C
The above two projects started in 2017. Both projects involve cross-border
investment by the Company, while the local approval process for cross-border
investment might take some time. In order to meet the increasing demand of the
market for Fungicide product B and New Fragrance Ingredient Product C as soon
as possible, after completing the replacement of the first raised funds , the
Company decided that its overseas subsidiaries shall be responsible for meeting
project investment needs through their own funds and local financing. The
fungicide project for Brazilian market was carried out in accordance with the
original investment plan and officially delivered for use in January 2020, and the
fragrance ingredient product project is expected to be completed in May 2020.
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Board of Directors of ADAMA Ltd.
Special Report on Annual Fund-raising and Actual Use of Funds
For the year ended December 31, 2019
Appendix 1: Comparison Table for the Use of Raised Funds – (cont’d)
(3) Project on the Investment of the Equipment of Liquid Product Packaging
The project aims to increase liquid packaging capacity to cope with expected
future incremental demand and make inventory management more flexible and
effective. However, due to the continuous climate change in Europe and North
America in the past two years, there has been some changes in the incremental
demand of the market. Based on the principle of prudence, the Company
postponed the investment progress of the project and planned not to use raised
funds on the project.
(4) Investment for the Relocation of Beer Shava Plant and Its Integration with
NeotHovav Plant in Israel
Situations failing to meet the planned schedule or achieve The purpose of this project is to improve the overall production efficiency and
expected benefits and the reasons (according to the specific product quality through the integration and optimization of the two plants in
investment project) production and operation. Since the integration of the plants involves a wide
range, it will take a long time to carry out master planning procedures in Israel.
At present, the project is in the planning and design stage. The Company believes
that there will be some differences in the implementation time of the project and
the schedule of use of raised funds. Therefore, the Company intends to terminate
the use of raised funds on this project.
The proposal on terminating the above projects has been approved by the 25th
meeting of the 8th session of the Board of Directors of the Company, pending
further approval by the shareholders of the Company. For details, please see the
Announcement on Terminating the Use of Raised Funds on Certain Designated
Projects on 28 April 2020.
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Board of Directors of ADAMA Ltd.
Special Report on Annual Fund-raising and Actual Use of Funds
For the year ended December 31, 2019
Appendix 1: Comparison Table for the Use of Raised Funds – (cont’d)
Explanation of projects whose feasibility changed Please refer to the explanations of situations failing to meet the planned schedule
significantly or achieve expected benefits above.
Amounts, usage and progress of the excess-raised funds N/A
Changes of location of investment programs N/A
Changes of implementation of the investment programs N/A
The company held the fifth session of the eighth meeting of the Board of
Directors on June 25th, 2018. During the session, it reviewed and approved the
Proposal on the Use of a Part of the Raised Funds to Replace the Self-Financed
Internal funds previously invested and replacement from the
Fund Pre-invested into the Fund-raising investment Project. Therefore, the
funds raised
company was allowed to replace its self-financed investment at the primary stage
with RMB276.53 million from the raised fund. As of June 30th, 2018, the
replacement has been completed.
Use of idle funds to temporarily supplement working funds N/A
Balance amount of raised funds and the reasons N/A
The remaining unused raised funds and interest will continue to be deposited in
the corresponding raised funds account. The company will actively deliberate
new investment projects to use the remaining raised funds. Under the premises of
Purpose and hereabouts of unused funds ensuring the good market prospects of new investment projects and being able to
effectively manage investment risks, the Company will perform the
corresponding approval procedures for use of the remaining raised funds in
accordance with relevant laws and regulations.
Other issues in the usage and disclosure of the raised funds N/A
Note 1: During the reporting period, the Company has received tax refund RMB3,090,630.60 from tax authority.
Note 2: The Company intends to raise funds of no more than 198,291 RMB’0000 in the supporting finance program, while the actual funds raised
was 155,999.99 RMB’0000 on December 27, 2017.
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Board of Directors of ADAMA Ltd.
Special Report on Annual Fund-raising and Actual Use of Funds
For the year ended December 31, 2019
Appendix 2: Detailed Information of Changes in the Use of Funds for Fund-Raising Investment Project
Detailed Information of Changes in the Use of Funds for Fund-Raising Investment Project
Unit: RMB'0000
Total Accumulated Investment Date of projects Whether the
Investment Whether the
New Committed committed investment amount progress as at reaching Realized feasibility of
amount for expected
fund-raising Original committed items investment as at the end of the the end of period intended benefits of the the project
the current benefits are
investment projects amount current period (%) useable current period has changed
period achieved
(1) (2) (3) = (2)/ (1) condition significantly
Huai’an pesticide
formulation center
Consideration of the project 40,008 40,008 40,008 100% 2019 N/A N/A No
acquisition of Anpon
ADAMA fixed asset
investment project
Total —— 40,008 40,008 40,008 —— —— —— —— ——
1.Project of the Construction of Huai’an Pesticide Formulation Center
Since Adama Pesticide (Jiangsu) Co., Ltd, which is an entity to implement the construction project of
Huai’an Pesticide Formulation Center, a third-tier subsidiary of Adama Agricultural Solutions LTD., a
subsidiary of the Company (hereinafter referred to as “Solutions”). The Company needs to make capital
injection to Solutions first, and further capital increase to the subsidiaries needs to be made by Solutions.
The reason for changes, decision- The time and process required for the relevant approval process, such as two-way cross-border funds
making procedure, and disclosure of transfers, is complicated. Besides, the actually raised funds is less than the planned amount. In order to
information (according to the specific avoid delays of the project, the Company invested its own capital into the project.
investment project)
2. Fixed Assets Investment-Product A 600t/a
The project also needs to be carried out through the Company’s capital injection to its subsidiaries,
involving the relevant approval process for outbound funds transfer, which takes a long time. Product A is
an innovative product. It takes a while for the market to accept innovative products. Additionally, due to
the
11
Board of Directors of ADAMA Ltd.
Special Report on Annual Fund-raising and Actual Use of Funds
For the year ended December 31, 2019
Appendix 2: Detailed Information of Changes in the Use of Funds for Fund-Raising Investment Project – (cont’d)
extreme weather in the European market, the project has been delayed. Therefore, the Company intends to
replace this original designated project.
The reason for changes, decision- Decision-making procedure: The change of certain designated projects has been approved on the 12th
making procedure, and disclosure of meeting of the 8th session of the Board of Directors and the 2018 Annual Shareholders Meeting. The
information (according to the specific independent Directors, the Board of Supervisors and sponsor institution have issued clear opinion.
investment project) – (cont’d)
Information disclosure of the Company: The detailed information please refer to Adama Announcement on
the Change of Certain Designated Projects, published on the Cninfo (http://www.cninfo.com.cn), 21st,
March, 2019.
Situations failing to meet the planned
schedule or achieve expected benefits
N/A
and the reasons (according to the
specific investment project)
Explanation of changed projects
whose feasibility changed N/A
significantly
12
