ADAMA Ltd.
Announcement on the Fulfillment of Performance Commitments
Related to a Controlled Subsidiary
The Company and all members of its board of directors hereby confirm that all informationdisclosed herein is true, accurate and complete with no false recording, misleading statementor material omission.
At the 30
th meeting of the 9
thsession of the Board of Directors of ADAMA Ltd. (hereinafter referredto as the “Company”) held on March 25
th
, 2024, the Resolution on the Fulfillment of PerformanceCommitments Related to a Controlled Subsidiary was considered and approved, and Deloitte ToucheTohmatsu Certified Public Accountants LLP (Special General Partnership) (hereinafter referred to asthe “Deloitte”) issued the Special Report on Difference between Actual and Promised Gross Profitsfor Purchase of ADAMA Huifeng (Shanghai) Agricultural Technology Co., Ltd (De Shi Bao (He) Zi
(24) No. E00116). Details are as follows:
I. Overview of the Acquisition TransactionPursuant to the resolutions of the 18
th, 21st and 27
th
Meetings of the 8
th
Session of the Board ofDirectors of the Company, the Company signed the Equity Purchase Agreement, the SupplementaryAgreement to Equity Purchase Agreement (“Supplementary Agreement (I)”) and the SupplementaryAgreement (II) to Equity Purchase Agreement (“Supplementary Agreement (II)”) with Jiangsu HuifengBio-agriculture Co., Ltd. (hereinafter referred to as “Jiangsu Huifeng”) to acquire from JiangsuHuifeng 50% of the equity interest in Shanghai Dibai Plant Protection Co. Ltd. (renamed to ADAMAHuifeng (Shanghai) Agricultural Technology Co., Ltd., hereinafter referred to as “ADAMA Huifeng(Shanghai)”) and signed the Equity Purchase Agreement in relation to the acquisition of 51% equityinterest in Jiangsu Kelinong Agrochemical Co., Ltd. and 1% equity interest of ADAMA Huifeng(Shanghai). Upon completion of the above agreements, the Company holds 51% equity interest inADAMA Huifeng (Shanghai).
For details of the above, please refer to the Announcement of Resolution of the 18th Meeting of the 8thSession of the Board of Directors(Announcement No. 2019-53), Announcement on the Acquisition of50% of the Equity Interests in Shanghai Dibai Plant Protection Co., Ltd. (Announcement No. 2019-
54), Announcement of the Resolutions of the 21st Meeting of the 8th Session of the Board ofDirectors(Announcement No. 2020-7), Announcement on Signing the Supplemental Agreement to theEquity Purchase Agreement(Announcement No. 2020-9), Announcement of the Resolutions of the 27thMeeting of the 8th Session of the Board of Directors(Announcement No. 2020-56), Announcement onthe Signing of the Second Supplemental Agreement to the Shanghai Dibai Equity PurchaseAgreement(Announcement No. 2020-60) and Announcement on the Acquisition of a 51% of the EquityStake in Jiangsu Kelinong Agrochemical Co., Ltd. and an Additional 1% in Shanghai Dibai PlantProtection Co., Ltd. (Announcement No. 2020-59), which are all disclosed by Company through
www.cninfo.com.cn separately on November 7, 2019, February 27, 2020 and October 29, 2020.
On December 31
st, 2020, the Company obtained 51% equity interest in ADAMA Huifeng (Shanghai)and completed corresponding registration procedures with relevant market supervision administration.The relevant details were presented in the “Announcement on the Closing of the Acquisition of 51%Equity Interests in Shanghai Dibai Plant Protection Co., Ltd.” (Announcement No. 2021-1) disclosedon the www.cninfo.com.cn on January 5
th
, 2021.
II. Performance Commitment and CompensationPursuant to the Supplementary Agreement (I) signed between the Company and Jiangsu Huifeng,Jiangsu Huifeng undertakes that the average annual gross profit of ADAMA Huifeng (Shanghai)generated by the business of Nongyi E-commerce (Beijing) Co., Ltd. (“Nongyi”), a minority-ownedcompany of itself and Nongyi’s subsidiaries (hereinafter referred to as the “Nongyi Business”) for theyear of 2021, 2022 and 2023 (“Gross Profit by Nongyi Business") should be at least RMB 8.6 million(Nongyi Business Benchmark).
If the Gross Profit by Nongyi Business fails to reach the Nongyi Business Benchmark, Jiangsu Huifengshould pay the price to the Company in accordance with the following formula: the payable value byJiangsu Huifeng ( “Price Adjustment Payment”) = (Nongyi Business Benchmark – Gross Profit byNongyi Business) x 13. In addition, Jiangsu Huifeng should be liable for all the taxes and expenseswhich the Company will bear due to the Price Adjustment Payment.
III. Fulfillment of Performance CommitmentsAccording to Special Report on Difference between Actual and Promised Gross Profits for Purchaseof ADAMA Huifeng (Shanghai) Agricultural Technology Co., Ltd (De Shi Bao (He) Zi (24) No. E00116)issued by Deloitte, the gross profit of ADAMA Huifeng (Shanghai) arising from the Nongyi Businessduring the period from 2021 to 2023 totaled RMB 10,907,117 yuan, with an average annual grossprofit of RMB 3,635,706 yuan.
The main reason for the aforesaid variance was that the volume purchased by Nongyi Business fromADAMA Huifeng (Shanghai) fell short of the expected benchmark, resulting in the Gross Profit byNongyi Business failing to meet Nongyi Business Benchmark.
IV. Performance compensation arrangementAs of the date disclosing this announcement, the Company and Jiangsu Huifeng have disputes on priceadjustment payment matters, and there is uncertainty in the final realization of the above-mentionedprice adjustment payment. The Company will take necessary measures to claim and recover the priceadjustment payment from Jiangsu Huifeng to safeguard the Company's interests. The Company willfulfill its information disclosure obligations to update the subsequent progress. Investors are advisedto make decisions with caution and pay attention to investment risks.
It is hereby announced.
Board of Directors of ADAMA Ltd.
March 27
th
, 2024