StockCode:000553(200553) StockAbbreviation:ADAMAA(B) AnnouncementNo.2019-17 ADAMALtd. AnnouncementontheChangeofCertainDesignatedProjects TheCompanyandallmembersofitsBoardofDirectorsconfirmthatalltheinformationdisclosedhereinistrue,accurate,andcompletewithnofalseormisleadingstatementormaterialomission. OnMarch19,2019,the12thmeetingofthe8thsessionoftheBoardofDirectors,andthe8thmeetingofthe8thsessionoftheBoardofSupervisorsofADAMALtd.(the“Company”)approvedaproposalonthechangeofcertaindesignatedprojectsincludedintheProjectofShareIssuanceforAssetsPurchaseandSupportingFinance(“DesignatedProject”).Itisherebyannouncedasfollows. I. OverviewoftheChangeofCertainDesignatedProjects 1.GeneralInformationAbouttheRaisedFunds AfterreceivingtheapprovalofChinaSecuritiesRegulatoryCommissionfortheissuanceofsharestoChinaNationalAgrochemicalCo.,Ltd.toacquireassetsandraisesupportingfunds(CSRCPermits[2017]No.1096),theCompanyissued104,697,982ordinaryAsharesinDecember2017,attheissuepriceofRMB14.90pershare,raisingatotalamountofRMB1,559,999,931.80.AfterdeductingtheunderwritingfeesofRMB28,079,998.78,thenetamountreceivedbytheCompanywasRMB1,531,919,933.02.Thenetamountwasreceivedon27December2017andwasverifiedbyDeloitteToucheTohmatsuCertifiedPublicAccountantLLP,whoissuedacapitalverificationreport(DeShiBao(Yan)Zi(17)No.00540). AccordingtotheReportoftheCompanyonShareIssuanceforAssetsPurchaseandSupportingFunds&ConnectedTransactionspublishedbytheCompanyonJuly5,2017,theCompanyplannedtoissuenomorethan118,784,644sharesandraisenomorethanRMB1,982.91millioninfunds.TheCompanyplannedtousetheraisedfundsonconstructionprojectsrelatedtothemainbusinessofADAMAAgriculturalSolutionsLtd.(hereinafterreferredtoas“Solutions”),R&Dprojectsandregistrations,andfeesfortheintermediaryagenciesandtransactiontaxes. 2.IntroductionontheDesignatedProjecttobeChanged Aftercarefulanalysis,theCompanyintendsnottousetheraisedfundsontheprojectoftheconstructionofHuai’anpesticideformulationcenterandtheprojectoffixed-assetsinvestment-productA600t/a.Thedetailsareasfollows. (1)ConstructionofHuai’anPesticideFormulationCenter ThecommittedinvestmentisRMB249.8millionandaccountsfor12.6%ofthetotalamountoftheplannedraisedfunds.Asofthedateofthisannouncement,theCompanyhasnotusedanyoftheraisedfundsonthisproject.TheremainingamountoftheraisedfundsfortheaforesaidprojectisthereforeRMB249.8million. (2)Fixed-AssetsInvestment-ProductA600t/a ThecommittedinvestmentisRMB150.28millionandaccountsfor7.58%ofthetotalamountoftheplannedraisedfunds.Asofthedateofthisannouncement,theCompanyhasnotusedanyoftheraisedfundsonthisproject.TheremainingamountoftheraisedfundsfortheaforesaidprojectisthereforeRMB150.28million. ThetotalamountoftheraisedfundsrelatingtothechangeddesignatedprojectsisRMB400.08millionandtogetheraccountsfor20.18%ofthetotalamountofthefundsraised.TheCompanyintendstousetheaboveamounttopaytowardstheconsiderationoftheequitytransferofJiangsuAnponElectrochemicalCo.,Ltd.(hereinafterreferredtoas“Anpon”). 3.ApprovalProceduresRelatetotheChangeoftheDesignatedProjects (1)The12thmeetingofthe8thsessionoftheBoardofDirectorsandthe8thmeetingofthe8thsessionoftheBoardofSupervisorsapprovedthechangeofthedesignatedprojectsonMarch19,2019.Theindependentdirectorsissuedtheindependentopinionsonthatmatter.Thechangeofthedesignatedprojectsissubjecttotheapprovaloftheshareholdersmeeting,andsinceitrelatestothepaymentoftheconsiderationfortheacquisitionofarelatedparty’sequity,itconstitutesarelated-partytransaction. (2)The12thmeetingofthe8thsessionoftheBoardofDirectorsandthe8thmeetingofthe8thsessionoftheBoardofSupervisorsapprovedtheProposalontheAcquisitionof100%oftheEquityInterestsinJiangsuAnponElectrochemicalCo.,Ltd.,inaRelated-PartyTransaction.TheCompanyintendstoacquire100%oftheequityinterestsofAnpon.TheacquisitionisnotsubjecttotheapprovaloftheCompany’sshareholders.ChinaNationalChemicalCorporationLtd.,asthesupervisingauthorityofthestate-ownedassets,itsworkingmeetingofthegeneralmanagerhasapprovedthisTransaction.Ithasalsocompletedthefillingprocedureoftheassetsappraisal. II. ReasonfortheChangeoftheDesignatedProject 1.SituationsofthePlannedandActualInvestmentontheFormerDesignatedProject(1)SituationofthePlannedInvestment 1.1ProjectoftheConstructionofHuai’anPesticideFormulationCenter TheprojectwasplannedtobeimplementedbyAdamaPesticide(Jiangsu)Co.,Ltd,anindirectlywholly-ownedsubsidiaryoftheCompany.ItplannedtoinvestRMB332.3milliontosetupaprojectofpesticideformulationswiththeannualproductioncapacityof45thousandtons(topotentiallybeexpandedto60thousandtons)inYanhuaNewMaterialIndustrialZoneofHuai’anJiangsuProvince.Therearetwomajorcategoriesofitsproducts: herbicideandfungicide/bactericide.TheplannedcapitalexpenditureofthisprojectwasRMB249.8million,andaccordinglytheCompanyplannedtouseRMB249.8millionoftheraisedfundsonthisproject.Thedetailedcompositionoftheinvestmentsisasfollows: Items Investment sumRaisedfundsplannedtobe (’0000) used(’0000) 1 Investmentonconstruction 31,145 24,980 1.1 Ofwhich:theexpenseon12,148 7,280 equipmentpurchasing 1.2 Theexpenseoninstallation3,948 12,600 engineering 1.3 Theexpenseonconstruction8,763 engineering 1.4 The other expenses on6,286 5,100 construction 2 The interest during the673 - constructionperiod 3 Thebasecirculatingfund 1,412 - Total 33,230 24,980 Thelocalgovernment’sapprovalandenvironmentalimpactreviewrelatestotheprojectoftheconstructionofHuai’anpesticideformulationcenterhasbeencompleted.Thedetailsareasfollows. AuthorityApproval Environmental Impact Review ProjectoftheconstructionApprovaloftheProjectofApproval on the of Huai’an pesticidePesticideFormulationsofEnvironmentImpactReport 60kt/aofAdamaPesticideoftheProjectofPesticide formulationcenter (Jiangsu)Co.,Ltd. Formulationsof60kt/aof (H.Y.G.T.Z.FuNo.[2014]1) AdamaPesticide(Jiangsu) Co.,Ltd. (H.H.B.FuNo.[2014]25) Theprojectwasoriginallyplannedtobefullyoperationalandreadyforusein2019.Afterbeingcompletedandputintooperation,thefutureannualaveragerevenue(excludingtax)isexpectedtobeRMB439.05million,averageannualprofitisexpectedtobeRMB32.57million,averageannualnetprofitisexpectedtobeRMB24.43million,annualaverageearningsbeforetaxandinterest(EBIT)isexpectedtobeRMB37.1millionandannualaverageEBITDAisexpectedtobeRMB56.16million.Totalrateofreturnoninvestmentisexpectedtobe11.17%,paybackperiodaftertaxoftheprojectisexpectedtobe7.61years(includingconstructionperiod),andtheloanrepaymentperiodisexpectedtobe6.87years(includingconstructionperiod). 1.2Fixed-AssetsInvestment-ProductA600t/a TheprojectwasplannedtobeimplementedbyADAMAMakhteshimLtd.,anindirectlywholly-ownedsubsidiaryoftheCompany.ItplannedtoinvestUS$26.5million(RMB150.28million)toexpandtheproductioncapacityofProductAto600tonsintheareawhereADAMAMakhteshimLtd.islocated.Thedetailedcompositionoftheinvestmentisasfollows: US$’0000 2017 2018 2019 Fixed-AssetsInvestment-ProductA600t/a - 1,000 1,650 Theprojectwasoriginallyplannedtobecompletedin2019.Afterbeingcompletedandputintooperation,thefutureannualaveragerevenue(excludingtax)isexpectedtobeUS$64.28million,averageannualprofit(EBIT)isexpectedtobeUS$24.16million,averageannualnetprofitisexpectedtobeRMB24.43million,annualaverageearningsbeforetaxandinterest(EBIT)isexpectedtobeUS$25.36million.IRRisexpectedtobe30%,and paybackperiodaftertaxoftheprojectisexpectedtobe6.8years(includingconstructionperiod). (2)SituationoftheActualInvestments Asofthedateofthisannouncement,theraisedfundshavenotbeenusedontheprojectoftheconstructionofHuai’anpesticideformulationcenter,andtheCompanyhasbeeninvestinginprojectswithitsownfunds,currentlywithanaccumulatedinvestmentamountof323.36million,accountingfor97%oftheinvestmentamount.Theprojectisexpectedtobefullyoperationalin2019. RegardingtheProjectoftheFixed-AssetsInvestment-ProductA600t/a,sinceProductAisaninnovativeproduct,themarketneedsacertainamountoftimeforthewideacceptanceofinnovativeproducts,andgiventheextremeweatherintheEuropeanmarket,whentheCompanyhasimplementedtheProductA300t/acapacityexpansionproject,ithasnotyetdecidedtoimplementthe600t/acapacityexpansionprojectimmediately,whichwillresultinadelayintheinvestmentofthisproject.Asofthedisclosuredateofthisannouncement,thecumulativeinvestmentamountofthisprojectiszero. 2.ReasonsfortheChangeoftheDesignatedProjects 1.ProjectoftheConstructionofHuai’anPesticideFormulationCenter SinceAdamaPesticide(Jiangsu)Co.,Ltd.,asubsidiarycompanyofthethird-tiersubsidiaryofSolutions,istheentitytoimplementtheconstructionprojectofHuai’anPesticideFormulationCenter,theCompanyneedstoincreasethecapitalofSolutionsfirst,andthenincreasethecapitalofthesubsidiariesbySolutions.Thetimeandprocessrequiredfortherelevantapprovalprocess,suchasfundsentryandexist,iscomplicated.Inordertoavoiddelaysoftheproject,theCompanyinvesteditsowncapitalintotheproject,andtheprojectisexpectedtobefullyoperationalandreadyforusein2019. 2.Fixed-AssetsInvestment-ProductA600t/a TheprojectalsoneedstobecarriedoutthroughtheCompany'scapitalincreaseforitssubsidiaries,involvingtherelevantapprovalprocessforfundsexit,whichtakesalongtime.ProductAisaninnovativeproduct.Themarketneedstoacceptinnovativeproductsforacertainperiod.Additionally,duetotheextremeweatherintheEuropeanmarket,theprojecthasbeendelayed.Therefore,theCompanyintendstoreplacethisoriginaldesignatedproject.III. SituationsoftheNewDesignatedProjects 1.Overview JiangsuAnponElectrochemicalCo.,Ltd.isawholly-ownedsubsidiaryofChinaNationalAgrochemicalCo.,Ltd.,thecontrollingshareholderoftheCompany.Itsmainbusinessistheproductionandsalesofpesticidesandfinechemicals.ItsregisteredcapitalisRMB251.38million,anditsnetassetvalueonDecember31,2018isRMB447.6474million. Basedontheassetsappraisalreport(ZhongFaPingBaoZi[2018]No.115)(“AppraisalReport”)issuedbyDeveChinaInternationalAppraisals(“DeveChina”)(whoisqualifiedtoconductbusinessinrelationtosecuritiesandfutures)forthisTransaction(thebenchmarkdateofwhichisDecember31,2017),theappraisalvaluationisalignedwiththeappraisalresultofasset-basedapproach.ThebookvalueofAnpon’snetassetsisRMB384,645,000andtheappraisalvalueofAnpon’snetassetsisRMB820,036,300. Thebenchmarkdateoftheabove-mentionedAppraisalReportisDecember31,2017,whichhasalreadyexpired.FortheinterestsoftheCompanyandallitsshareholders,theCompanyengagedDeveChinatoappraisethevalueofallAnponequityinterestsownedbyAnpon’sshareholders,andDeveChinaissuedanassetsappraisalreport(ZhongFaPingBaoZi[2019]No.013)(“UpdatedAppraisalReport”)(thebenchmarkdateofwhichisDecember31,2018). ThebenchmarkdateoftheUpdatedAppraisalReportisDecember31,2018,adoptingboththeasset-basedandincomeapproachesinthevaluation.Theappraisalvaluationisalignedwiththeappraisalresultoftheasset-basedapproach.BasedontheUpdatedAppraisalReport,asofDecember31,2018,Anpon’sbookvalueoftotalassetisRMB1,362,914,500,thebookvalueoftotaldebtisRMB915,267,100,thebookvalueofnet assetsisRMB447,647,400;theappraisedvalueoftotalassetsisRMB1,775,914,600,theappraisedvalueoftotaldebtisRMB895,976,500,theappraisedvalueofnetassetsisRMB879,938,100.Comparedwiththebookvalue,theappraisalvalueofnetassetsincreasedbyRMB432,290,700,anincreaseof96.57%. Basedontheappraisalvaluation(thebenchmarkdateofwhichisDecember31,2018),theappraisalvaluationofAnpondoesnothaveanyadverseeffectontheinterestsoftheCompanyanditsshareholders.Therefore,thepurchasepriceofthisTransactionwhichwasdeterminedtobealignedwiththeappraisalvaluation(thebenchmarkdateofwhichisDecember31,2017)willnotharmtheinterestsoftheCompanyanditsshareholders,especiallytheminorityshareholders.ThepurchasepriceofthisTransactionisdeterminedasRMB820,000,000. TheCompanywillpaytheaboveconsiderationintwoinstallments.ThefirstinstallmentisRMB415,000,000andshallbepaidbytheCompanyonApril15oranyotherdateagreedbytheCompanyandCNAC.ThesecondoneisRMB405,000,000andshallbepaidbytheCompanywhentherelevantconditionssetoutintheSharePurchaseAgreementaremet.TheCompanyintendstouseRMB400.08millionoftheraisedfundstopaypartofthefirstinstallment. FordetailsofthearrangementofthepaymentandthemaincontentsoftheSharePurchaseAgreement,pleaserefertotheAnnouncementontheAcquisitionof100%oftheEquityInterestsinJiangsuAnponElectrochemicalCo.,Ltd.,inaRelated-PartyTransactionpublishedbytheCompanyonwww.cninfo.com.cnonMarch21,2019. 2.FeasibilityoftheAnponAcquisitionProject AnponislocatedinHuai'anCity,JiangsuProvince,anditsbusinesscoverschlor-alkali,chemicalintermediates,pesticidesandotherfields.Themainproductsarechlor-alkaliproducts:causticsoda,liquidchlorine,hydrochloricacid;chemicalintermediates:o-toluidine,epichlorohydrin,hexachlorocyclopentadiene,isocyanateseries,flameretardantseries,etc.;pesticideproducts:insecticides(Pyridoxine,buprofezin,endosulfan,etc.); herbicides(glyphosate,ethersulfuron,etc.);growthregulators(ethene,etc.).Anpon’ssalesin2018wereRMB1.507billion,anditsnetprofitwasRMB48.01million. Anpon’sseriesofinsecticides,herbicidesandgrowthregulatorsaccountforabout34%ofannualsalesin2018;chlorineproductsandchemicalintermediatesaccountfor66%of2018annualsales.Anpon'sbusinessiscomplementarytotheCompany'smainbusiness. (1)ServestoEliminateHorizontalCompetition TheacquisitionofAnponservestoeliminatehorizontalcompetitionbetweentheCompanyanditscontrollingshareholder.ThisistheperformanceofthecommitmentsmadebythecontrollingshareholderoftheCompanyintheMajorAssetsRestructuringReportin2017.Thecontrollingshareholdercommitted:“Thecompany’ssubsidiariesJiangsuAnponElectrochemicalCo.,Ltd.,JiangsuHuaiheChemicalCo.,Ltd.,JiangsuMaidaoAgrochemicalCo.,Ltd.,AnhuiPetrochemicalGroupCo.,Ltd.andJiamusiHeilongPesticideCo.,Ltd.anditssubsidiariesarethesameorsimilartothoseofthemainbusinessoftheCompany.Inviewofthedomesticcompetitioninthesameindustry,thecompanypromisesthatinthenextfouryears,inaccordancewiththerequirementsofsecuritieslawsandregulationsandindustrypolicies,appropriatemethodsshallbeadoptedtograduallysolvethehorizontalcompetition." In2017and2018,theamountofrelated-partytransactiononthepurchaseofrawmaterialsbetweentheCompanyandAnponisRMB136millionandRMB242million.Afterthecompletionoftheacquisition,suchtransactionsbetweentheCompanyandAnponwillnolongerberelated-partytransactionswhichservestosolvethehorizontalcompetitionandprotecttheinterestsoftheCompanyandpublicinvestors. (2)HighSynergyintheMainBusiness Anpon'smainbusinesshasahighdegreeofsynergywiththeCompany'smainbusiness.SignificantsynergiesaregeneratedbysellingAnpon'sAgChemproductsthroughAdama'sChinadomesticdistributionchannelsaswellasAdama'sbroadglobalnetwork.Inaddition,theCompanyhasalmostcompletedtheHuai'anPesticideFormulationCenterprojectwhichisexpectedtobefullyoperationalin2019.TheFormulationCenterandAnponareinthesamecityHuai'an,whichwillformasupplychainsynergy,realizetheintegrationof upstreamanddownstreambusinessoftheCompanyfromrawmaterialstoproducts,andfurtherpromotetherealizationoftheCompany’scorestrategywhichregardsChinaasasignificantglobalbusinesssupplybase. TheacquisitionisinlinewiththeCompany'sbusinessdevelopmentstrategy,whichisconducivetotheCompany'sfurtherdevelopmentofthedomesticmarket,andfurtherenhancesitscorecompetitiveness.TheacquisitionisalsoinlinewiththeinterestsoftheCompanyandshareholders. 3.RisksandCounterMeasures 1、RisksoftheMarketandIndustryCompetition Anpon'smainbusinessistheproductionandsalesofactiveingredientsandchemicalintermediates,andtheCompanyhasafullrangeofhighqualityandefficientherbicides,pesticidesandfungicides.TheimplementationoftheacquisitionwillhelptheCompanyexpanditsproductrangeandimprovethedistributionofagrochemicalproductsdomesticallyandabroad.However,inthefragmentedoff-patentagrochemicalproductmarket,AnponandtheCompanyarealsofacingfiercecompetitionandrisksrelatingtocompetitors'productlaunchesandmarketenvironmentchanges.TheCompanywillpromotethesharingofmarketandcustomerchannelsbetweentheCompanyandAnponaccordingtotheadvantagesofAnpon'sproducts,theproductsdifferentiation,andtheCompany'smanagementsoastoimproveandprotecttheoverallcompetitiveadvantageandprofitabilityofrelatedbusinessesandproducts. 2.RisksofRegistrationPolicy Sincethetesting,productionandsalesofagrochemicalproductsaresubjecttostrictsupervision,includingtherequirementtoobtainandholdtheproductionlicensesrequiredforvariousproductsandtheregistrationcertificatesrequiredforthesale,andconsideringtheenvironmentalprotectionauthorityhastendedtoadoptmorestringentsurveillanceinrecentyears,thereforetheapplicableregulatoryrequirementsandregulatoryenvironmentmaychangefromtimetotimewhichmayresultintherisksthataffecttheproductionandsalesoftheproducts.TheCompanyhasbuiltacomprehensiveproductregistrationteamaroundtheworld,continuouslyassessingtheregulatorycomplianceofthecountriesinwhichthe productsaresold,andcontinuallymodifyingtheapplicableregistrationcontenttoavoidtheproductsaleswithoutcomplyingwithregulatoryrequirements.Thecompanywillcontinuetostrivetomeetenvironmentalregulatoryrequirementsbybuilding,operatingandtransformingitsproductionandenvironmentalprotectionfacilities. 3.RisksofFinancialIntegration Afterthecompletionofthistransaction,theCompanyandAnponneedtoalignintheaspectsoffinancialsystems,investment,financingmethods,fundmanagement,profitmanagement,whichwillentailrisks.Forreducingtheserisks,theCompanywillworkwithAnpontoactivelydefinethefinancialauthority,financialpositionsandfunctions,fundmanagementpolicyandinformationdisclosurepolicy,andprovidetheroleoftheChairmanoftheBoard,generalmanagerandfinancialcontroller,aswellasthescopeofthecoreissuesoftheAnpon. 4.RisksofFinanceIntegration Afterthecompletionofthistransaction,theCompanyandAnponneedtoalignintheaspectsoffinancialsystem,investment,financingmethods,fundmanagement,profitmanagement,whichwillentailuncertainrisks.Forreducingtherisks,thecompanywillworkwithAnpontoactivelydefinethefinancialauthority,financialpositionsandfunctions,fundmanagementpolicyandinformationdisclosurepolicy,andprovidetheroleofthechairmanoftheboard,generalmanagerandfinancialcontroller,aswellasthescopeofthecoreissuesoftheAnpon. 5.RisksofAssetsAppraisal SectionIIIofthisannouncementelaboratestheappraisalsituationofAnponassets.Althoughtheappraiser’sassumptionsonthevaluationofassetsfollowedtheprincipleofprudence,thereisstillariskthattheassetsvaluationmaybehigherthanthenetassetsvalueofthebook. IV．EconomicAnalysis Anponisacomprehensivechemicalenterprisemainlybasedonchlor-alkalichemicalindustryandsupplementedbypesticidesandrefinedproducts.Ithasitsownsalt-halogenmineandhasstrongresourceadvantages.TheCompany'srepresentativeagrochemicalproductsincludeethephonandchlorpyrifos.Theproductionscaleofethephoniscurrentlyamongthebestintheworld.TheconsolidatedfinancialstatusofAnponinthepastthreeyearsisshowninthefollowingtable: Unit:RMB‘0000 Items 2016 2017 2018 Revenue 136,441.19 164,345.59 150,747.17 TotalProfit 3,170.10 4,299.46 6,665.08 NetProfit 2,543.36 3,802.96 4,801.45 Anpon’stotalprofitandnetprofithaveincreasedinthepastthreeyears.In2018,thetotalprofitgrowthratewas55%,andthenetprofitgrowthratereached26%.Therefore,thetransactionwillincreasetheoverallsizeoftheCompany.Afterthecompletionofthetransaction,theCompany'sassetsizeandscalewillbeimproved,andtheCompany'soverallprofitabilitywillbeenhancedaswell. IV. OpinionsoftheIndependentDirectors,theBoardofSupervisors,andthe IndependentFinancialAdvisor 1.OpinionoftheIndependentDirectors TheIndependentDirectorsareoftheopinionthatthechangeofthedesignatedprojectsistheresultofaprudentdecisionmadeinlightoftheoperationalneedsofthecompany,takingintoaccounttheactualuseoftheoriginalfundraisingproject.Terminatingusingtheraisedfundsontherelevantprojectswillhelpimprovetheefficiencyoftheuseofraisedfunds,optimizethefinancialstructure,andpromotetheoverallefficiencyofthecompany.ItisinlinewiththeCompany'sdevelopmentstrategyandcancreategreaterbenefitsfortheCompanyandshareholders.Thechangefulfilledthenecessaryprocedures,inlinewiththerelevantprovisionsofthe“GuidelinesfortheStandardOperationofListedCompaniesontheMainBoardofShenzhenStockExchange”,anddidnotviolatetherelevantprovisionsof theChinaSecuritiesRegulatoryCommission,theShenzhenStockExchangeandtheCompany’sPolicyontheUseoftheRaisedFunds.WhentheBoardofDirectorsconsideredthismatter,thedeliberationprocedurewaslegalandeffective,andtherewasnosituationthatharmedthelegitimateinterestsoftheCompanyandminorityshareholders.Therefore,theindependentdirectorsagreedtothechangeofthedesignatedprojects,andagreedtosubmittherelevantproposaltotheShareholdersMeetingforapproval. 2.OpinionoftheBoardofSupervisors TheBoardofSupervisorsisoftheopinionthatthechangeofthedesignatedprojectsisbasedontheCompany'sdevelopmentneedsandtheactualsituationofthedesignatedprojects,whichisconducivetoimprovingtheefficiencyoftheuseofraisedfunds,promotingthelong-termdevelopmentoftheCompany,andinlinewiththeinterestsofallshareholdersoftheCompany.Thecontentsoftheproposalandthedecision-makingproceduresforthechangeareinaccordancewiththerequirementsoftherelevantlawsandregulationsandregulatorydocumentsoftheChinaSecuritiesRegulatoryCommissionandtheShenzhenStockExchange,andthereisnodamagetothelegitimateinterestsoftheCompanyandminorityshareholders. 3.OpinionoftheIndependentFinancialAdvisor Thechangeofthedesignatedprojectsfulfilledthenecessarydecision-makingproceduresandrelatedinformationdisclosureobligationsoftheCompany.TheBoardofDirectors,theBoardofSupervisors,andtheindependentdirectorsallissuedclearconsents.Thechangeofthedesignatedprojectsissubjecttotheapprovaloftheshareholdersmeeting.Theindependentfinancialadvisorhasnoobjectiontothechangeofthedesignatedprojects. V.DocumentsforReference 1.Resolutionofthe12thMeetingofthe8thSessionoftheBoardofDirectorsoftheCompany;2.Resolutionofthe8thMeetingofthe8thSessionoftheBoardofSupervisorsoftheCompany; 3.OpinionoftheIndependentDirectors; 4.VerificationReportissuedbyGuotaiJunanSecuritiesCo.,Ltd. BoardofDirectorsofADAMALtd. March21,2019