ADAMA Ltd.
2023 Working Report of the Board of Directors
In 2023, in accordance with the requirements of relevant laws and regulations,
including the Company Law of the People’s Republic of China, the Rules Governing
the Listing of Stocks on Shenzhen Stock Exchange and the Self-Regulatory Guidelines
of Shenzhen Stock Exchange for Listed Companies No. 1 - Standardized Operation of
Main Board Listed Companies as well as other scrutiny rules of CSRC and Shenzhen
Stock Exchange, the Board of Directors of ADAMA Ltd. (hereinafter referred to as the
“Company”) firmly performed its duties under the Articles of Association and the Rules
of Procedure of the Board of Directors and diligently implemented resolutions
approved by the general shareholders’ meeting in the spirit of responsibility to all
shareholders. During the reporting period, all directors well performed their duties and
gave full play to their critical role in the corporate governance. The work of the Board
of Directors of the Company for the year of 2023 is reported as follows.
I. Business Review of the Company
(I) Business Overview for 2023
The year of 2023 witnessed a healthy demand for crop protection products at the farmer
level thanks to the prices of key agricultural commodities which remained relatively
high despite substantial decline during 2023, supporting planted area and investment in
crops. However, the channel demand was weak in 2023 due to very high channel
inventory across all geographies. The high interest rate environment outside of China
coupled with low prices of active ingredient from China, also encouraged the just-in-
time purchasing approach adopted by the channel. As a result, sales into the channel
declined sharply across the entire industry.
The Company launched Turnaround Plan aimed at improving the quality of the
business and revaluing ADAMA amid challenging market situations. Sales for the full
year of 2023 declined by 12% in RMB terms to approximately RMB 32.8 billion
(approximately USD 4,661 million, -16% in USD terms), mainly reflecting an 8%
decrease in prices and a 7% decrease in volumes. Reported EBITDA for the full year
was around USD 417 million, a decrease of 43% in USD terms, mainly due to the weak
1
pricing, the high-cost inventory sold and the adverse impact of exchange rates.
Following focus on the quality of business the Company presented an improvement in
the sales mix of higher margin products. At the same time, the operating expenses were
lower due to OPEX management measures taken by the Company to address the market
conditions which partially offset aforementioned negative impacts. However, the
Company reported a full-year net loss of RMB 1.6 billion (USD -225 million), impacted
by lower operating income and increase in finance expenses. Despite lower sales, the
Company achieved significant improvement in cash flow primarily due to selective
procurement practices and intensive collection.
For detailed analysis about the operating results for 2023, please refer to the Company's
2023 Annual Report and its annexes disclosed on www.cninfo.com.cn on March 27th
2024.
(II) Execution of Long-Term Strategies
While proactively addressing short-term challenges, the Company continues to advance
in the firm execution of its long-term strategies, including the "Core Leap" strategy for
AI development and the "Formulation Mastery" strategy for end-products. By doing so,
it has kept enriching its AI portfolio and building a high-quality, diversified and
differentiated formulation offering. Differentiated products include products that are
based on recently off-patented active ingredients (AI's) that have been classified as high
commercial potential - "Core Leap" AI's and products that are based on unique
proprietary formulations, products with more than one mode of action, and biologicals.
In 2023, the Company launched 11 new differentiated products to various regional
markets around the world and obtained registrations for 20 new differentiated products.
New Product Introductions (NPI) percentage out of the full year sales of 2023 reached
22%, referring to products launched over the last five years.
II. Work of the Board of Directors
(I) Meetings of the Board of Directors
In 2023, the Board of Directors of the Company conscientiously performed its duties
and exercised its powers in accordance with the law and held a total of 12 Board
meetings. The Board of Directors sought to conduct in-depth analyses, full discussions
and prudent decision-making before considering the proposals to ensure scientific
decision-making and compliant operation of the Company. It considered and passed a
2
total of 37 proposals, and there was no proposal rejected, specifically as follows:
Session Meeting date Disclosure date Resolutions of the Meeting
The 18th Meeting The meeting considered and adopted,
of the 9th Session February 15th, February 16th, 1. Proposal on the Matters Relating to the Company’s Chief
of the Board of 2023 2023 Financial Officer
Directors 2. Proposal on Credit Facilities from the Related Party
The following resolutions were deliberated and adopted:
1. Proposal on the 2022 Annual Report and its Abstract
2. Proposal on the 2022 Financial Statements
3. Proposal on the Pre-Plan of the 2022 Dividend
Distribution
4. Proposal on the Self-Assessment report on the 2022
Internal Control of the Company
5. Proposal on the 2022 Working Report of the Board of
Directors
6. Proposal on the 2022 Risk Appraisal Report of Sinochem
Finance Co., Ltd.
7. Proposal on the Remuneration of Senior Executives
The 19th Meeting 8. Proposal on the Engagement with an Audit Firm for the
of the 9th Session March 21st, Audit of the Financial Statements and Internal Control of the
th, 2023
March 19
of the Board of 2023 Company for 2023
Directors 9. Proposal on the Expected Related Party Transactions in
the Ordinary Course of Business in 2023
10. Proposal on Revisions to the Articles of Association of
the Company and relevant Rules of Procedures
11. Proposal on Revisions to the Management Measures for
the Delegation of Certain Powers of the Board of Directors
to the Chief Executive Officer of ADAMA Ltd.
12. Proposal on the Company’s Work Plan on Supporting
External Directors to Perform Duties
13. Proposal on the Work Rules of the President and Chief
Executive Officer of ADAMA Ltd.
2022 Working Reports of the Independent Directors were
presented
the 20th Meeting
of the 9th Session March 21st, The meeting considered and approved Proposal on Calling
March 20th, 2023
of the Board of 2023 for the 2022 Annual General Meeting
Directors
the 21st Meeting
of the 9th Session The meeting considered and approved Proposal on Change
April 2nd, 2023 April 4th, 2023
of the Board of of the Senior Executive of the Company
Directors
The following resolutions were deliberated and adopted:
the 22nd Meeting 1. Proposal on the Q1 2023 Report
of the 9th Session 2. Proposal on Providing Guarantees in favor of the
April 24th, 2023 April 25th, 2023
of the Board of Company’s Wholly-owned Subsidiary
Directors 3. Proposal on Bank Loans for the Working Capital of
Jingzhou Site
rd Meeting
the 23
The meeting considered and approved the Proposal on
of the 9th Session
July 25th, 2023 July 26th, 2023 ADAMA’s 2022 Environmental, Social, and Governance
of the Board of
(ESG) Report
Directors
the 24th Meeting August 28th, August 31st, The following resolutions were deliberated and adopted:
of the 9th Session 1. Proposal on the 2023 Semi-Annual Report and its
2023 2023
of the Board of Abstract
3
Session Meeting date Disclosure date Resolutions of the Meeting
Directors 2. Proposal on the Risk Appraisal Report of Sinochem
Finance Co., Ltd.
3. Proposal on Bank Loans
4. Proposal on Credit Facility from the Related Party
5. Proposal on Calling for the 1st Interim Shareholders
Meeting in 2023
the 25th Meeting
of the 9th Session October 29th, October 31st, The meeting deliberated and adopted the proposal on the Q3
of the Board of 2023 2023 2023 Report.
Directors
The following resolution was deliberated and adopted:
the 26th Meeting
November 15th,
November 1. Proposal on the Nomination of a Non-Independent
16th,
of the 9th Session
Director of the 9th Session of the Board of Directors
of the Board of 2023 2023
2. Proposal on Calling for the 2nd Interim Shareholders
Directors
Meeting in 2023
The following resolution was deliberated and adopted:
1. Proposal on Revisions to the Articles of Association of the
the 27th Meeting
December 8 th, December 9 th, Company
of the 9th Session
2. Proposal on the Nomination of an Independent Director
of the Board of 2023 2023
of the 9th Session of the Board of Directors
Directors
3. Proposal on Calling for the 3rd Interim Shareholders
Meeting in 2023
The meeting considered and adopted:
the 28th Meeting
of the 9th Session December 18th, December 20th, 1. Proposal on the 2024 Work Plan
2. Proposal on Change of the Chairman of the Board and
of the Board of 2023 2023
Members of the Special Committees of the 9th Session of
Directors
the Board of Directors
The meeting considered and adopted:
1. Proposal on Salary Management Measures, External
Guarantee Management Rules, Liability Management
the 29th Meeting
of the 9th Session December 29th, December 30th, Measures and External Donation Management Measures
2. Proposal on Revisions to the Management Policy of
of the Board of 2023 2023
Investor Relations
Directors
3. Proposal on Signing of Supplemental Agreement to the
Entrusted Operation and Management Agreement on Anhui
Petro & Chemical
(II) Convening of the General Shareholders’ Meetings
In 2023, the Board of Directors of the Company convened 4 general meetings of
shareholders to consider 14 proposals. The meeting notice, proposals, proceedings,
voting on motions and information disclosure of the shareholders' meetings were in
compliance with the requirements of the regulations. All material decisions were
decided by the shareholders' meetings in accordance with the laws and witnessed by
lawyers, so as to ensure the rights of all shareholders, especially the minority
shareholders, to know, participate and vote on material matters of the Company. The
details are as follows.
4
Session Meeting Date Resolution
1. Proposal on the 2022 Annual Report and its Abstract
2. Proposal on the 2022 Financial Statements
3. Proposal on the Pre-Plan of the 2022 Dividend Distribution
4. Proposal on the Self-Assessment report on the 2022 Internal
Control of the Company
5. Proposal on the 2022 Working Report of the Board of Directors
6. Proposal on the Engagement with an Audit Firm for the Audit of
2022 Annual General
April 12th, 2023 the Financial Statements and Internal Control of the Company for
Meeting
2023
7. Proposal on the Expected Related Party Transactions in the
Ordinary Course of Business in 2023
8. Proposal on the 2022 Working Report of the Board of Supervisors
9. Proposal on Revisions to the Articles of Association of the
Company and relevant Rules of Procedures
10. Proposal on Credit
Facilities from the Related Party
The 1st Interim
September 15th,
Shareholder Meeting in 1. Proposal on Credit Facilities from the Related Party
2023
2023
The 2nd Interim
December 1st, 1. Proposal on the Nomination of a Non-Independent Director of the
Shareholder Meeting in
2023 9th Session of the Board of Directors
2023
1. Proposal on Revisions to the Articles of Association of the
The 3rd Interim
December 25th, Company
Shareholder Meeting in
2023 2. Proposal on the Nomination of an Independent Director of the 9th
2023
Session of the Board of Directors
(III) Performance of Duties of Special Committees of the Board of Directors
The Board of Directors has set up the Strategy Committee, the Nomination Committee,
the Audit Committee and the Remuneration and Evaluation Committee. In 2023, the
special committees, in line with the principle of diligence and responsibility, actively
carried out their work and provided decision-making advice to the Board of Directors,
which have played an active role in compliant operation of the Company and the
scientific decision-making of the Board of Directors.
In 2023, the Audit Committee held a total of six meetings to review the Company's
periodic reports, related-party transactions, renewal of the appointment of audit firms,
internal control, internal audit and dividend distribution, etc., ensuring effective
supervision of the Company's financial status, strictly controlling the risks of the
Company and safeguarding the legitimate rights and interests of the Company as well
as the small and medium-sized shareholders. The Remuneration and Evaluation
Committee held a total of three meetings during the year to review and issue opinions
on the remuneration and departure arrangements of the senior management of the
Company. The Nomination Committee of the Board of Directors held a total of four
5
meetings to carefully assess the candidates in accordance with the actual needs, to study
and make recommendations for submission to the Board for consideration in respect of
the Company's change and appointment of senior management, election of independent
directors and non-independent directors.
(IV) Performance of Independent Directors
The Company currently has two independent directors. The independent directors
performed their duties diligently, prudently and independently in accordance with the
Company Law and the Governance Rules for Listed Companies as well as other laws
and regulations such as the Company’s Articles of Association. They paid timely
attention to the Company's operation and finance progress, actively attended the
relevant meetings on time, carefully considered the proposals of the Board of Directors
and expressed fair and objective independent opinions on the relevant matters of the
Company. In addition to their meeting attendance, the independent directors paid
special visits to the production sites of the Company and its subsidiaries to gain an on-
site understanding of the production and operation status and management, and
conscientiously fulfilled their supervisory functions; they also participated in the annual
report roadshows to understand the concerns and demands of investors on the Company.
The participation details of independent directors for the year of 2023 are as follows.
Details of Independent Directors’ Attendance to Board Sessions
and Shareholders’ Meetings for 2023
Sessions required to
Name of the Actual Attendance to Attendance to
attend during the
Directors Board Sessions shareholder meetings
Reporting Period
GE Ming 12 12 4
Xi Zhen 11 11 4
YANG Guangfu 1 1 0
(V) Information Disclosure and Insider Information Management
The Company fulfils its information disclosure obligations in strict accordance with the
relevant regulations on information disclosure of the CSRC and the SZSE as well as
the requirements of the Company's "Information Disclosure Management System” and
continues to improve the level of information disclosure. In 2023, the Company issued
a total of 95 periodic reports and interim reports, and most of the announcements were
disclosed in both Chinese and English, which disclosed all its material matters and
6
production and operation information in a true, accurate, complete, timely and fair
manner. Meanwhile, the Company has strictly and effectively implemented the
"Management System for Registration of Persons Informed of Insider Information",
registered and reported persons informed of insider information in accordance with the
law, strengthened the management of insider information, standardized the information
transmission process, strengthened the awareness of employees on confidentiality and
compliance, and strictly prevented insider trading. During the reporting period, the
Company did not experience any stock price fluctuation due to leakage of insider
information.
(VI) Management of Investors’ Relations
The Board of Directors of the Company has attached great importance onto the
management of investors’ relations. The Company communicates with investors
through public announcements, telephone inquiries, interaction on digital platforms,
emails and other multimedia channels to promote the exchange of opinions. It held the
performance roadshow meetings after the disclosure of the regular reports to introduce
its business progress and industry overview to investors, and to take the opportunity to
focus on specific areas such as research and development, marketing and operations for
presentations, so as to deepen investors' understanding of the business operations and
development prospects. The Company's 2022 online performance roadshows won the
“Best Practice Award for 2022 Annual Report Performance Presentation” issued by the
China Listed Companies Association for 100 listed companies.
III. Work Highlights of the Board of Directors for 2024
Looking forward to 2024, the Board of Directors of the Company will continue to act
in a responsible manner to all shareholders with the objective of creating a high-quality
listed company. It will keep faithfully and diligently performing its duties, actively play
a central role in business operation and corporate governance, supervise the
management to effectively implement the work plan for 2024 and stick to the medium-
and long-term development plan by promoting value realization with innovation as the
fundamental driving force and comprehensively enhancing the management level.
Although the crop protection industry will remain challenging around the world in the
new year, the Board of Directors of the Company will supervise the management team
to take the adversity as an opportunity by enhancing the operational efficiency and
effectiveness while continuing to strengthen cost reduction and control and to improve
7
the product sales structure. Strive to achieve the profitable growth, it will support the
Company to optimize its medium- and long-term investment projects, focus on key
market segments of value, push forward innovation, and continue to enhance the
business quality. In addition, the Board of Directors will further improve various
corporate governance systems and enhance the level of internal control management in
accordance with the latest regulatory and operational requirements to ensure the
Company's compliance. Meanwhile, the Board of Directors will conscientiously fulfil
its information disclosure obligations to ensure that the information disclosed is true,
accurate, complete, timely, concise, clear and easy to understand; and it will hold up
the sound momentum in the management of investor relations, strengthen the contact
and communication with the investors through a variety of channels to provide
investors with ways to more conveniently and comprehensively understand the
situation of the Company, and work hard to safeguard the interests of the Company as
well as all shareholders.
Board of Directors of ADAMA Ltd.
March 25, 2024
8
