ADAMA Ltd.Announcement on the Engagement of an
Accounting Firm
I. Explanation on the Proposed Appointment of the Company’s AuditorADAMA Ltd. (hereinafter referred to as: the “Company”) intends to renew theappointment of Deloitte Touche Tohmatsu Certified Public Accountants LLP(hereinafter referred to as: “Deloitte Huayong” or the “Auditor”) as the Company’sAuditor for its 2023 financial statements and the annual internal control.As an accounting firm with qualifications in securities and futures related businesses,Deloitte Huayong is professionally competent and has warranted and represented thatwhile rendering the Company auditing services, Deloitte Huayong is, and shall remainat all time during the financial year sufficiently independent, according to all rules andregulations. While protecting investors, the Auditor has been committed to its dutiesand provided audit services to the Company. By following the code of practice ofindependence, objectiveness and fairness, it has accomplished the relevant workentrusted by the Company. Therefore, the Company decides to renew the engagementof the Auditor, among others, to ensure the auditing consistency. In 2022, DeloitteHuayong charged 3.2 million RMB yuan for auditing services of the financialstatements and internal control of the Company. The Company’s Auditor’s budget for2023 will be submitted to the shareholders’ meeting, in order to authorize the board ofdirectors to decide, based on the consultation with the firm.
Stock Code: 000553(200553) Stock Abbreviation: ADAMA A(B) Announcement No.2023-11The Company and all members of its board of directors hereby confirm that allinformation disclosed herein is true, accurate and complete with no false ormisleading statement or material omission.
II. Introduction of the Proposed AuditorDeloitte Huayong presented the following information to the Company.
1.Institution Information
1.1Basic Information
Deloitte Huayong was established in February 1993 and known as Hujiang DeloitteAccounting Limited. It was renamed Deloitte Huayong in September 2012 and wasapproved by the Ministry of Finance and other authorities to convert its businessproperty into a limited liability partnership. It is registered on the 30th Floor, No. 222East Yan’an Road, Huangpu District, Shanghai.Deloitte Huayong has the required approval issued by the Ministry of Finance to renderauditing services. It is also permitted by both the Ministry of Finance and the CSRC toengage in the auditing of H-share enterprises. Deloitte Huayong has put on record forthe securities and futures related businesses in accordance with the relevant documentssuch as the "Administrative Measures for the Recordation of Securities ServiceBusiness by Accounting Firms" issued by the Ministry of Finance and the CSRC. Assuch, the Auditor has accumulated extensive experience in securities services for thepast two decades.The chief partner of Deloitte Huayong is Mr. Fu Jian Chao. As of the end of 2022,Deloitte Huayong had 225 partners, 6,667 employees and 1,149 CPAs , of which morethan 250 CPAs have signed audit report on securities services business.Deloitte Huayong had a revenue of 4.2 billion RMB yuan for 2021, of which 3.3 billionRMB yuan were generated by auditing and 700 million RMB yuan by securitiesbusiness. Deloitte Huayong provides audit services on the 2021 annual reports for 61listed companies, with a total audit service fee of 280 million RMB yuan. The mainindustries of the listed companies that the Deloitte Huayong provides services aremanufacturing, finance, real estate, telecommunication, software and informationtechnology, transportation, storage and postal industries. Among the listed companiesDeloitte Huayong provides audit services, there are 23 listed companies in the sameindustry as the Company.
1.2 Investor Protection
The cumulative compensation limit of occupational insurance purchased by DeloitteHuayong exceeds 200 million RMB, which is in compliance with relevant regulations.In the past three years, Deloitte Huayong has not been assumed civil liability in relevantcivil lawsuits due to practice behaviors.
1.3 Integrity Record
As presented to the Company by the Auditor, neither Deloitte Huayong nor any of itsemployees, has been subject to any criminal penalty for their professional conduct, aswell as self-discipline regulatory measure or disciplinary punishment by self-regulatoryorganizations such as stock exchanges and industry associations in the past three years.Deloitte Huayong has received administrative penalty once and administrativeregulatory measures twice. Fourteen employees were given administrative penaltiesonce each and four employees were given administrative regulatory measures once each.A former employee who had resigned in 2021 was given administrative penalty by thelocal securities regulatory bureau in 2022 for his personal behavior, which did notinvolve the practicing quality of the audit engagement.
2. Engagement Information
2.1 Basic Information
Mr. Ji Yuting, the signing certified public accountant, joined Deloitte Huayong in 2020.Mr. Ji has been focusing on auditing and providing services for the capital market forquite a long time. He is currently a practicing member of the Chinese Institute ofCertified Public Accountants. With his experience in security-related services for morethan 15 years and professional competence, Mr. Ji has provided auditing services formany listed companies and served as the certified public accountant with the signingright.Ms. Fan Siwen, a quality control reviewer, joined Deloitte Huayong in 2000 and hasbeen devoted to auditing and professional services related to the capital market for along time. She is currently a practicing member of the Chinese Institute of CertifiedPublic Accountants. With her extensive experience for more than 22 years andprofessional competence, Ms. Fan has provided auditing services for many listedcompanies and functioned as the project partner and certified public accountant withthe signing right.
Ms. Zhao Jingyuan, the signing certified public accountant, joined Deloitte Huayong in2015. Ms. Zhao has been focusing on auditing and providing services for the capitalmarket and she is currently a practicing member of the Chinese Institute of CertifiedPublic Accountants. Ms. Zhao is professionally competent with more than 7 years’experience in security-related services and has provided auditing services to many listedcompanies.
2.2 Integrity Record
As presented to the Company by the Auditor, Deloitte Huayong and the recommendedsigning CPAs have not been subject to criminal penalties, administrative penalties,administrative supervision measures or any punishment due to the violation of self-discipline requirements published by the authorities .
2.3 Independence
Deloitte Huayong and abovementioned engagement partner, signing certified publicaccountants, and engagement quality control reviewer have no circumstances that mayaffect independence.
2.4 Audit Service Fee
The audit service fee is determined based on the time cost of the partners and otheremployees of Deloitte Huayong consumed in this audit engagement, which taking intoaccount the responsibilities and risks of professional services and other factors as well.In 2022, Deloitte Huayong charged 3.2 million RMB yuan for auditing services of thefinancial statements and internal control of the Company. The Company’s Auditor’sbudget for 2023 will be submitted to the shareholders’ meeting, in order to authorizethe board of directors to decide, based on the consultation with the firm.III. Procedures to be performed by the reappointment of the Auditor
1. The Company’s Audit Committee has relied Deloitte Huayong’s warrantiesregarding, among others, its professional qualifications, business capabilities,independence and investor protection capabilities. After receiving said warrants andrepresentations , the Audit Committee has agreed that Deloitte Huayong has thequalifications required to serve the Company, and that it can effectively perform itsduties as an audit institution. The Audit Committee has agreed to propose to the Boardof Directors to reengage Deloitte Huayong as Company’s Auditor for the 2023 financialstatements and internal control.
2. The pre-approval opinion of the Company’s independent directors is as follows: Inview of Deloitte Huayong’s warrants and representations regarding qualifications ofsecurities and futures related businesses, it has the ability to independently audit theCompany’s financial position and financial results. To ensure the auditing consistency,we pre-approve the reengagement of Deloitte Huayong as the Company’s Auditor forthe 2023 financial statements and internal control and agree to submit the proposal tothe Company’s Board of Directors for review.After providing the above pre-approval opinion, the independent directors furtherprovided the below opinion: The reengagement of the annual auditing accounting firmis conducive to ensuring the quality of the Company’s auditing work and protecting theinterests of the Company and shareholders, especially the interests of minorityshareholders. The firm to be engaged is independent, professional and has the ability toprotect the investors’ interests. The decision-making procedures for the reengagementof Deloitte Huayong is in compliance with relevant laws and regulations. Theindependent directors agree to submit the proposal to the Shareholders for approval.
3. The 19
th Meeting of the 9
thSession of the Board of Directors of the Company onMarch 19, 2023 approved the Engagement with the Company’s Auditor for the Auditof the Financial Statements and Internal Control of the Company. This proposal waspassed with 5 affirmative votes, 0 negative votes and 0 abstentions. The Board ofDirectors of the Company agreed to reengage Deloitte Huayong as the auditing agencyfor the Company’s 2023 financial statements and internal control.
4. The reengagement of Deloitte Huayong shall be submitted to the shareholders fordeliberation, and will take effect from the date of approval by the shareholders' meetingof the Company.IV. Documents available for reference
1. Resolutions of the 19
th
Meeting of the 9
thSession of the Board of Directors;
2. Resolutions of the 2
nd
Meeting of the Audit Committee in 2023；
3. Pre-approval and independent opinions of independent directors;
4. Copy of business license of the accounting firm to be engage; and the backgroundand contact information of the person in charge and the contact person for thesupervision business; and the certificate of identity, professional certificate and the
contact information of the certified public accountant who intends to be responsiblefor the specific audit business;
5. Other documents required by Shenzhen Stock Exchange.
It is hereby announced.
Board of Directors of ADAMA Ltd.
March 21, 2023