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 Governingthe Listing of Stocks on Shenzhen Stock Exchange and the Self-Regulatory Guidelinesof Shenzhen Stock Exchange for Listed Companies No. 1 - Standardized Operation ofMain Board Listed Companies as well as other scrutiny rules of CSRC and ShenzhenStock 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 Rulesof Procedure of the Board of Directors and diligently implemented resolutionsapproved by the general shareholders’ meeting in the spirit of responsibility to allshareholders. During the reporting period, all directors well performed their duties andgave full play to their critical role in the corporate governance. The work of the Boardof Directors of the Company for the year of 2023 is reported as follows.I. Business Review of the Company(I) Business Overview for 2023The year of 2023 witnessed a healthy demand for crop protection products at the farmerlevel thanks to the prices of key agricultural commodities which remained relativelyhigh despite substantial decline during 2023, supporting planted area and investment incrops. However, the channel demand was weak in 2023 due to very high channelinventory across all geographies. The high interest rate environment outside of Chinacoupled 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 channeldeclined sharply across the entire industry.The Company launched Turnaround Plan aimed at improving the quality of thebusiness and revaluing ADAMA amid challenging market situations. Sales for the fullyear 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 yearwas around USD 417 million, a decrease of 43% in USD terms, mainly due to the weak
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 inthe sales mix of higher margin products. At the same time, the operating expenses werelower due to OPEX management measures taken by the Company to address the marketconditions which partially offset aforementioned negative impacts. However, theCompany reported a full-year net loss of RMB 1.6 billion (USD -225 million), impactedby lower operating income and increase in finance expenses. Despite lower sales, theCompany achieved significant improvement in cash flow primarily due to selectiveprocurement practices and intensive collection.For detailed analysis about the operating results for 2023, please refer to the Company's2023 Annual Report and its annexes disclosed on www.cninfo.com.cn on March 27
th
2024.(II) Execution of Long-Term StrategiesWhile proactively addressing short-term challenges, the Company continues to advancein the firm execution of its long-term strategies, including the "Core Leap" strategy forAI 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 anddifferentiated formulation offering. Differentiated products include products that arebased on recently off-patented active ingredients (AI's) that have been classified as highcommercial potential - "Core Leap" AI's and products that are based on uniqueproprietary formulations, products with more than one mode of action, and biologicals.In 2023, the Company launched 11 new differentiated products to various regionalmarkets around the world and obtained registrations for 20 new differentiated products.New Product Introductions (NPI) percentage out of the full year sales of 2023 reached22%, referring to products launched over the last five years.II. Work of the Board of Directors(I) Meetings of the Board of DirectorsIn 2023, the Board of Directors of the Company conscientiously performed its dutiesand exercised its powers in accordance with the law and held a total of 12 Boardmeetings. The Board of Directors sought to conduct in-depth analyses, full discussionsand prudent decision-making before considering the proposals to ensure scientificdecision-making and compliant operation of the Company. It considered and passed a
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 of the 9th Session of the Board of Directors | February 15th, 2023 | February 16th, 2023 | The meeting considered and adopted, 1. Proposal on the Matters Relating to the Company’s Chief Financial Officer 2. Proposal on Credit Facilities from the Related Party |
| The 19th Meeting of the 9th Session of the Board of Directors | March 19th, 2023 | March 21st, 2023 | 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 8. Proposal on the Engagement with an Audit Firm for the Audit of the Financial Statements and Internal Control of the Company for 2023 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 of the Board of Directors | March 20th, 2023 | March 21st, 2023 | The meeting considered and approved Proposal on Calling for the 2022 Annual General Meeting |
| the 21st Meeting of the 9th Session of the Board of Directors | April 2nd, 2023 | April 4th, 2023 | The meeting considered and approved Proposal on Change of the Senior Executive of the Company |
| the 22nd Meeting of the 9th Session of the Board of Directors | April 24th, 2023 | April 25th, 2023 | The following resolutions were deliberated and adopted: 1. Proposal on the Q1 2023 Report 2. Proposal on Providing Guarantees in favor of the Company’s Wholly-owned Subsidiary 3. Proposal on Bank Loans for the Working Capital of Jingzhou Site |
| the 23rd Meeting of the 9th Session of the Board of Directors | July 25th, 2023 | July 26th, 2023 | The meeting considered and approved the Proposal on ADAMA’s 2022 Environmental, Social, and Governance (ESG) Report |
| the 24th Meeting of the 9th Session of the Board of | August 28th, 2023 | August 31st, 2023 | The following resolutions were deliberated and adopted: 1. Proposal on the 2023 Semi-Annual Report and its Abstract |
| 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 of the Board of Directors | October 29th, 2023 | October 31st, 2023 | The meeting deliberated and adopted the proposal on the Q3 2023 Report. |
| the 26th Meeting of the 9th Session of the Board of Directors | November 15th, 2023 | November 16th, 2023 | The following resolution was deliberated and adopted: 1. Proposal on the Nomination of a Non-Independent Director of the 9th Session of the Board of Directors 2. Proposal on Calling for the 2nd Interim Shareholders Meeting in 2023 |
| the 27th Meeting of the 9th Session of the Board of Directors | December 8th, 2023 | December 9th, 2023 | The following resolution was deliberated and adopted: 1. Proposal on Revisions to the Articles of Association of the Company 2. Proposal on the Nomination of an Independent Director of the 9th Session of the Board of Directors 3. Proposal on Calling for the 3rd Interim Shareholders Meeting in 2023 |
| the 28th Meeting of the 9th Session of the Board of Directors | December 18th, 2023 | December 20th, 2023 | The meeting considered and adopted: 1. Proposal on the 2024 Work Plan 2. Proposal on Change of the Chairman of the Board and Members of the Special Committees of the 9th Session of the Board of Directors |
| the 29th Meeting of the 9th Session of the Board of Directors | December 29th, 2023 | December 30th, 2023 | The meeting considered and adopted: 1. Proposal on Salary Management Measures, External Guarantee Management Rules, Liability Management Measures and External Donation Management Measures 2. Proposal on Revisions to the Management Policy of Investor Relations 3. Proposal on Signing of Supplemental Agreement to the Entrusted Operation and Management Agreement on Anhui Petro & Chemical |
(II) Convening of the General Shareholders’ MeetingsIn 2023, the Board of Directors of the Company convened 4 general meetings ofshareholders to consider 14 proposals. The meeting notice, proposals, proceedings,voting on motions and information disclosure of the shareholders' meetings were incompliance with the requirements of the regulations. All material decisions weredecided by the shareholders' meetings in accordance with the laws and witnessed bylawyers, so as to ensure the rights of all shareholders, especially the minorityshareholders, to know, participate and vote on material matters of the Company. Thedetails are as follows.
| Session | Meeting Date | Resolution |
| 2022 Annual General Meeting | April 12th, 2023 | 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 the Financial Statements and Internal Control of the Company for 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 Procedures10. Proposal on Credit Facilities from the Related Party |
| The 1st Interim Shareholder Meeting in 2023 | September 15th, 2023 | 1. Proposal on Credit Facilities from the Related Party |
| The 2nd Interim Shareholder Meeting in 2023 | December 1st, 2023 | 1. Proposal on the Nomination of a Non-Independent Director of the 9th Session of the Board of Directors |
| The 3rd Interim Shareholder Meeting in 2023 | December 25th, 2023 | 1. Proposal on Revisions to the Articles of Association of the Company 2. Proposal on the Nomination of an Independent Director of the 9th Session of the Board of Directors |
(III) Performance of Duties of Special Committees of the Board of DirectorsThe Board of Directors has set up the Strategy Committee, the Nomination Committee,the Audit Committee and the Remuneration and Evaluation Committee. In 2023, thespecial committees, in line with the principle of diligence and responsibility, activelycarried 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 thescientific decision-making of the Board of Directors.In 2023, the Audit Committee held a total of six meetings to review the Company'speriodic reports, related-party transactions, renewal of the appointment of audit firms,internal control, internal audit and dividend distribution, etc., ensuring effectivesupervision of the Company's financial status, strictly controlling the risks of theCompany and safeguarding the legitimate rights and interests of the Company as wellas the small and medium-sized shareholders. The Remuneration and EvaluationCommittee held a total of three meetings during the year to review and issue opinionson the remuneration and departure arrangements of the senior management of theCompany. The Nomination Committee of the Board of Directors held a total of four
meetings to carefully assess the candidates in accordance with the actual needs, to studyand make recommendations for submission to the Board for consideration in respect ofthe Company's change and appointment of senior management, election of independentdirectors and non-independent directors.(IV) Performance of Independent DirectorsThe Company currently has two independent directors. The independent directorsperformed their duties diligently, prudently and independently in accordance with theCompany Law and the Governance Rules for Listed Companies as well as other lawsand regulations such as the Company’s Articles of Association. They paid timelyattention to the Company's operation and finance progress, actively attended therelevant meetings on time, carefully considered the proposals of the Board of Directorsand expressed fair and objective independent opinions on the relevant matters of theCompany. In addition to their meeting attendance, the independent directors paidspecial 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, andconscientiously fulfilled their supervisory functions; they also participated in the annualreport 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 | |||
| Name of the Directors | Sessions required to attend during the Reporting Period | Actual Attendance to Board Sessions | Attendance to shareholder meetings |
| GE Ming | 12 | 12 | 4 |
| Xi Zhen | 11 | 11 | 4 |
| YANG Guangfu | 1 | 1 | 0 |
(V) Information Disclosure and Insider Information ManagementThe Company fulfils its information disclosure obligations in strict accordance with therelevant regulations on information disclosure of the CSRC and the SZSE as well asthe requirements of the Company's "Information Disclosure Management System” andcontinues to improve the level of information disclosure. In 2023, the Company issueda total of 95 periodic reports and interim reports, and most of the announcements weredisclosed in both Chinese and English, which disclosed all its material matters and
production and operation information in a true, accurate, complete, timely and fairmanner. 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 thelaw, strengthened the management of insider information, standardized the informationtransmission process, strengthened the awareness of employees on confidentiality andcompliance, and strictly prevented insider trading. During the reporting period, theCompany did not experience any stock price fluctuation due to leakage of insiderinformation.(VI) Management of Investors’ RelationsThe Board of Directors of the Company has attached great importance onto themanagement of investors’ relations. The Company communicates with investorsthrough public announcements, telephone inquiries, interaction on digital platforms,emails and other multimedia channels to promote the exchange of opinions. It held theperformance roadshow meetings after the disclosure of the regular reports to introduceits business progress and industry overview to investors, and to take the opportunity tofocus on specific areas such as research and development, marketing and operations forpresentations, so as to deepen investors' understanding of the business operations anddevelopment prospects. The Company's 2022 online performance roadshows won the“Best Practice Award for 2022 Annual Report Performance Presentation” issued by theChina Listed Companies Association for 100 listed companies.III. Work Highlights of the Board of Directors for 2024Looking forward to 2024, the Board of Directors of the Company will continue to actin a responsible manner to all shareholders with the objective of creating a high-qualitylisted company. It will keep faithfully and diligently performing its duties, actively playa central role in business operation and corporate governance, supervise themanagement 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 thefundamental driving force and comprehensively enhancing the management level.Although the crop protection industry will remain challenging around the world in thenew year, the Board of Directors of the Company will supervise the management teamto take the adversity as an opportunity by enhancing the operational efficiency andeffectiveness while continuing to strengthen cost reduction and control and to improve
the product sales structure. Strive to achieve the profitable growth, it will support theCompany to optimize its medium- and long-term investment projects, focus on keymarket segments of value, push forward innovation, and continue to enhance thebusiness quality. In addition, the Board of Directors will further improve variouscorporate governance systems and enhance the level of internal control management inaccordance with the latest regulatory and operational requirements to ensure theCompany's compliance. Meanwhile, the Board of Directors will conscientiously fulfilits information disclosure obligations to ensure that the information disclosed is true,accurate, complete, timely, concise, clear and easy to understand; and it will hold upthe sound momentum in the management of investor relations, strengthen the contactand communication with the investors through a variety of channels to provideinvestors with ways to more conveniently and comprehensively understand thesituation of the Company, and work hard to safeguard the interests of the Company aswell as all shareholders.
Board of Directors of ADAMA Ltd.
March 25, 2024