Stock Code:000553(200553) Stock Abbreviation: ADAMA A(B) Announcement No. 2021-37
ADAMA Ltd.
Special Report on the Deposit and Actual Usage of the Raised Funds
in the First Half of 2021
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.
This Special Report on the Deposit and Actual Usage of the Raised Funds in the First Half of 2021
was prepared in accordance with the '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) and the 'Guidelines for the
Standard Operation of the Companies Listed in Shenzhen Stock Exchange' issued by the Shenzhen
Stock Exchange. Below is an explanation regarding the deposit and actual use of the raised funds
in the first half of 2021 ( (the “Reporting Period”).
1. General information about the raised funds
(1) Amount and date of receiving the raised funds
After receiving the approval of China Securities Regulatory Commission for the issuance of
shares to China National Agrochemical Co., Ltd. acquire assets and raise supporting funds
(CSRC Permits [2017] No.1096), the Company issued 104,697,982 ordinary A shares in
December 2017, at the price of RMB14.90 per share, raising a total amount of RMB
1,559,999,931.80. After deducting the underwriting fees of RMB 28,079,998.78, the net amount
actually received was RMB 1,531,919,933.02. 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 (De Shi Bao (Yan) Zi (17) No.00540).
(2) The used amount of the raised funds in the Reporting Period
As at 30 June 2021, the Company has utilized a cumulative amount of RMB 1,618,081,782.44 of
the raised funds, including RMB 993,372,647.40 used in previous year, and RMB 624,709,135.04
for acquisition of a 51% equity stake in ADAMA Huifeng (Jiangsu) Co., Ltd. ( Former name：
Jiangsu Kelinong Agrochemical Co., Ltd. hereninafter: “Adama Huifeng”) from Jiangsu Huifeng
Agrochemical Co., Ltd. (“Huifeng”).
The balance as at 30 June, 2021, that hasn’t been used was RMB 890,781.48, According to
'Guidelines for the Standard Operation of the Companies Listed in Shenzhen Stock Exchange', if
the remaining raised funds (including interest income) are less than RMB 5 million or less than 1%
of the net raised funds, they can be exempted from the corresponding examination and approval
procedures, and the use of the funds shall be disclosed in the annual report. The balance of the
raised funds (RMB 890,781.48 as of June 30, 2021, including interest income, and the actual
amount transferred out shall be subject to the balance of bank settlement on the date of transfer),
will be transferred into other general bank account of the Company when the account of the raised
funds is closed, for the permanent supplement of working capital.
2. Deposit and manage ment of the raised funds
In order to standardize the management and use of the raised funds and protect the rights of
investors, the Company made a Management and Utilization Policy for the Raised Funds in
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accordance with the laws and regulations and regulatory documents, such as the Management
Measures for Initial Public Offering of Shares and Listing, the Notice on Further Standardization
of the Use of Raised Funds for Listing Companies and the Listing Rules of Shenzhen Stock
Exchange etc. The management policy, which was approved at the 25th Meeting of the Seventh
Board of Directors, provides detailed regulations on the deposit, use, change of designated
projects and the management and supervision of the raised funds.
The Company signed the Trilateral Supervision Agreement on the Special Account of Raised
Funds with Sanwan sub-branch Jingzhou Branch China Construction Bank Co. Ltd. and Guotai
Junan Securities Co., Ltd. on 22 January, 2018, and the four party Supervision Agreement on the
Special Account of Raised Funds with Guotai Junan Securities Co., Ltd. , Shanghai branch of
HSBC Bank (China) Company Limited, ADAMA AGAN LTD and ADAMA MAKHTESHIM
LTD on 25 June, 2018. All the parties were in strict compliance with the agreements mentioned
above during the Reporting Period.
As at 31 December 2020, the special accounts of the raised funds are as follows:
Bank Account number Balance (RMB)
Sanwan sub-branch Jingzhou Branch China Construction 42050162610109000999
890,781.48
Bank Co. Ltd.
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 Reporting Period
During the Reporting Period, the Company paid RMB 624,709,135.04 for acquisition of a 51% equity
stake in Adama Huifeng. For detailed information, please refer to Appendix 1 - Comparison Table for
the Use of Raised Funds.
4. Changes and termination of certain designated projects for the use of raised funds for
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
amount of RMB 400.08million) to pay the consideration of the equity transfer of Jiangsu Anpon
Electrochemical Co., Ltd. The Company completed the payment process on August 28, 2019.
On May 20, 2020, the Annual Shareholders Meeting approved a Proposal on the Termination of the
Use of Raised Funds for Certain Designated Projects included in the Project of Share Issuance for
Assets Purchase and Supporting Finance. The Company will no longer use of the raised funds for the
following previously designated projects: Projects of product development and registration, and fixed-
asset Investment of ADAMA Agricultural Solutions Ltd. (the “Solutions”).
The 4th Interim Shareholders Meeting on 16 November, approved a Proposal on the Use of the Raised
Funds for the Acquisition of the 51% Equity Stake in Jiangsu Kelinong Agrochemical Co., Ltd. as
well as that in Shanghai Dibai Plant Protection Co., Ltd.. In order to efficiently use the raised funds,
the Company plans to use the balance of the raised funds, in the amount of approximately RMB
893,731,302.67 (balance as at 30 September 2020, including interest income and the actual amount is
subject to the bank settlement balance on the date of transfer ), and which are no longer designated for
previously approved projects according to the resolutions of Shareholders meeting held on May 20,
2020, for the payment for the acquis itions of a 51% equity stake in Adama Huifeng (Shanghai)
Agricultural Technology Co., LTD (Formername: Shanghai Dibai Plant Protection Co., LTD.
Hereinafter: “Adama Shanghai”) and a 51% equity stake in Adama Huifeng from Huifeng.
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For the detailed information of the changes of certain designated projects, please refer to the Appendix
2.
5. Problems in the use and disclosure of raised funds
The Company has timely, truly, accurately and completely disclosed relevant information regarding
the raised funds. The management of the raised funds does not violate the regulations of China
Securities Regulatory Commission or Shenzhen Stock Exchange .
Board of Directors of ADAMA Ltd.
August 26th, 2021
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Appendix 1: Comparison Table for the Use of Raised Funds
Unit: RMB'0000
Total investment of raised funds for the
Total amount of raised funds 155,999.99
Reporting Period
62,471
Total amount of raised funds designated to a different
-
project during the Reporting Period
Accumulated amount of raised funds designated to a Accumulated investment amount of
different project
129,381
raised funds 161,808
Percentage of accumulated amount of raised funds
83%
designated to a different project
Accumulated
investment Date of Whether
Designated fund- Whether the Investment amount as at Investment projects Realized the Whether the
raising investment project has been Total amount for the end of the progress as at reaching benefits expected feasibility of
projects changed, committed Total investment amount after the Reporting the end of intended of the benefits the project
including partially investment adjustment Reporting Period period (%) useable current are has changed
changed (if any) amount (1) Period (2) (3) = (2) / (1) condition period achieved significantly
Consideration of the
acquisition of Anpon
No - 40,008 - 40,008 100% 2019 N/A N/A No
Acquisition of 51%
89,373
Adama Shanghai and No - 62,471 90,071 100% N/A N/A N/A No
51% Adama Huifeng (Note 1)
Huai’an pesticide
preparation center Yes 24,980 - - - - N/A N/A N/A Yes
project
Product development
and registration Yes 93,507 13,103 - 13,103 100% Terminated N/A N/A Yes
project
ADAMA fixed asset
Yes 66,204 5,913 - 5,913 100% Terminated N/A N/A Yes
investment project
Payment for
transaction cost, No 13,600 12,713 - 12,713 100% —— N/A N/A N/A
taxes and fees
Subtotal of
198,291
nonpublic offering 161,110 62,471 161,808 —— —— —— —— ——
(Note2)
investment project
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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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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
out by the Company with its own capital.
Situations failing to meet the planned schedule or achieve
expected benefits and the reasons (according to the specific
(2) Equipment Investment for Fungicide product B for Brazilian market & Project
investment 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 has been completed and delivered for use in
May 2020.
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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 would not to use raised
funds on the project.
(4) Investment for the Relocation of Beer Sheb Plant and Its Integration with
Neot Hovav Plant in Israel
The purpose of this project is to improve the overall production efficiency and
Situations failing to meet the planned schedule or achieve product quality through the integration and optimization of the two plants in
expected benefits and the reasons (according to the specific production and operation. Since the integration of the plants involves a wide
investment project) 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 terminates the use of
raised funds on this project.
The proposal on terminating the above projects has been approved by the
shareholders of the Company, on May 20, 2020. The Company will no longer use
of the raised funds for the following previously designated projects: Projects of
product development and registration and fixed-asset Investment of Solutions.
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Appendix 1: Comparison Table for the Use of Raised Funds – (cont’d)
On October 28, 2020, the 27th meeting of the 8th session of the Board of
Directors and the 14th meeting of the 8th session of the Board of Supervisors
approved a Proposal on the Use of the Raised Funds for the Acquisition of the
51% Equity Stake in Jiangsu Kelinong Agrochemical Co., Ltd. as well as that in
Shanghai Dibai Plant Protection Co., Ltd.. In order to efficiently use the raised
funds, the Company plans to use the balance of the raised funds, in the amount of
approximately RMB 893,731,302.67 (balance as at 30 September 2020, including
interest income and the actual amount is subject to the bank settlement balance on
the date of transfer ), and which are no longer designated for previously approved
Situations failing to meet the planned schedule or achieve projects according to the resolutions of the Company’s Board and Shareholders
expected benefits and the reasons (according to the specific meeting held on April 27, 2020 and May 20, 2020 respectively, for the payment
investment project) for the acquisitions of a 51% equity stake in Adama Shanghai and a 51% equity
stake in Adama Huifeng from Huifeng. This proposal had been approved by the
4th Interim Shareholders Meeting on 16 November, 2020. As of December 31,
2020, the Company has paid RMB 276 Million and already obtained 51% equity
interests in Adama Shanghai and has completed corresponding procedures with
competent administration for market regulation on the 51% Adama Shanghai
Transaction. As of May 28, 2021, the Company has already obtained 51% equity
interests in Adama Huifeng and has completed corresponding procedures with
competent administration for market regulation on the 51% Adama Huifeng
Transaction.
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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 was completed.
Use of idle funds to temporarily supplement working funds N/A
Balance amount of raised funds and the reasons N/A
According to 'Guidelines for the Standard Operation of the Companies Listed in
Shenzhen Stock Exchange', if the remaining raised funds (including interest
income) are less than RMB 5 million or less than 1% of the net raised funds, they
can be exempted from the corresponding examination and approval procedures,
and the use of the funds shall be disclosed in the annual report. The balance of the
Purpose and hereabouts of unused funds
raised funds (RMB 890,781.48 as of June 30, 2021, including interest income,
and the actual amount transferred out shall be subject to the balance of bank
settlement on the date of transfer), will be transferred into other general bank
account of the Company when the account of the raised funds is closed, for the
permanent supplement of working capital.
Other issues in the usage and disclosure of the raised funds N/A
Note 1: On October 28, 2020, the 27th meeting of the 8th session of the Board of Directors and the 14th meeting of the 8th session of the Board of
Supervisors approved a Proposal on the Use of the Raised Funds for the Acquisition of the 51% Equity Stake in Jiangsu Kelinong Agrochemical Co.,
Ltd. as well as that in Shanghai Dibai Plant Protection Co., Ltd.(announcement No. 2020-61). Approved the Company use the balance of the raised
funds, in the amount of approximately RMB 893,731,302.67 (balance as at 30 September 2020, including interest income and the actual amount is
subject to the bank settlement balance on the date of transfer ), for the payment for the acquisitions of a 51% equity stake in Adama Shanghai and a
51% equity stake in Adama Huifeng, with the gap to be filled by the Company’s own funds and bank loans.
9
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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Appendix 2: Detailed Information of Changes in the Use of the Funds for certain designated Project
Unit: RMB'0000
Investment
Total Accumulated Date of projects Whether the
Investment progress as at Realized Whether the
committed investment amount reaching feasibility of
New Designated Original designated amount for the end of the benefits of the expected
investment as at the end of the intended the project
projects project the Reporting Reporting Reporting benefits are
amount Reporting Period useable has changed
Period Period (%) Period achieved
(1) (2) condition significantly
(3) = (2)/ (1)
Huai’an pesticide
formulation center
Consideration of the project 40,008 - 40,008 100% 2019 N/A N/A N/A
acquisition of Anpon
ADAMA fixed asset
investment project
Product development and
Acquisition of 51%
registration project 90,071
Adama Shanghai and
ADAMA fixed asset
89,373 62,471 100% N/A N/A N/A N/A
51% Adama Huifeng
investment project
Total —— 129,381 62,471 130,079 —— —— —— —— ——
Consideration of the acquisition of Anpon
1.Project of the Construction of Huai’an Pesticide Formulation Center
Adama (Jiangsu) Agricultural Solutions Co., Ltd, which is an entity to implement the construction project
The reason for changes, decision-
of Huai’an Pesticide Formulation Center, a third-tier subsidiary of Adama Agricultural Solutions LTD., a
making procedure, and disclosure of
subsidiary of the Company (hereinafter referred to as “Solutions”). The Company needs to make capital
information (according to the specific
injection to Solutions first, and further capital increase to the subsidiaries needs to be made by Solutions.
investment project)
The time and process required for the relevant approval process, such as two-way cross-border funds
transfers, is complicated. Besides, the actually raised funds is less than the planned amount. In order to
avoid delays of the project, the Company invested its own capital into the project.
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Appendix 2: Detailed Information of Changes in the Use of Funds for Fund-Raising Investment Project – (cont’d)
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 extreme weather in the European market, the project has been delayed. Therefore, the Company
intends to replace this original designated project.
Decision-making procedure: The change of certain designated projects has been approved on the 12t h
meeting of the 8th session of the Board of Directors and the 2018 Annual Shareholders Meeting. The
independent Directors, the Board of Supervisors and sponsor institution have issued clear opinion.
Information disclosure of the Company: The detailed information please refer to Adama Announcement on
The reason for changes, decision- the Change of Certain Designated Projects, published on the Cninfo (http://www.cninfo.com.cn), 21st,
making procedure, and disclosure of March, 2019.
information (according to the specific
investment project) – (cont’d) Acquisition of 51% Adama Shanghai and 51% Adama Huifeng
On May 20, 2020, Annual Shareholding Meeting 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 termination of the use of
the raised funds for the certain designated projects, the remaining unused raised funds (including the
resulting interest) will continue to be deposited in the corresponding raised funds account. The Company
will actively deliberate on new investment projects which the remaining raised funds can be used for.
Under the premises of 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.
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Appendix 2: Detailed Information of Changes in the Use of Funds for Fund-Raising Investment Project – (cont’d)
Decision-making procedure:
On October 28, 2020, the 27th meeting of the 8th session of the Board of Directors and the 14th meeting
of the 8th session of the Board of Supervisors approved a Proposal on the Use of the Raised Funds for the
Acquisition of the 51% Equity Stake in Jiangsu Kelinong Agrochemical Co., Ltd. as well as that in
Shanghai Dibai Plant Protection Co., Ltd.. In order to efficiently use the raised funds, the Company plans
to use the balance of the raised funds, in the amount of approximately RMB 893,731,302.67 (balance as at
30 September 2020, including interest income and the actual amount is subject to the bank settlement
The reason for changes, decision- balance on the date of transfer ), and which are no longer designated for previously approved projects
making procedure, and disclosure of according to the resolutions of the Company’s Shareholders meeting held on May 20, 2020, for the
information (according to the specific payment for the acquisitions of a 51% equity stake in Adama Shanghai and a 51% equity stake in Adama
investment project) – (cont’d) Huifeng from Huifeng. This proposal had been approved by the 4th Interim Shareholders Meeting on 16
November, 2020.
Information disclosure of the Company: The detailed information please refer to Announcement on the
Use of the Raised Funds for the Acquisition of the 51% Equity Stake in Jiangsu Kelinong Agrochemical
Co., Ltd. as well as that in Shanghai Dibai Plant Protection Co., Ltd., published on the Cninfo
(http://www.cninfo.com.cn), 29, Octomber, 2020.
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
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