Securities code: 002475 securities abbreviation: Luxshare Precision Industry Co.Ltd(002475) Announcement No.: 2022-011 bond Code: 128136 bond abbreviation: Lixun convertible bond
Luxshare Precision Industry Co.Ltd(002475)
Announcement on the company’s foreign exchange derivatives trading
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Important content tips:
1. Investment type: Luxshare Precision Industry Co.Ltd(002475) (hereinafter referred to as ” Luxshare Precision Industry Co.Ltd(002475) ” or “the company”) the foreign exchange derivatives transactions mainly include forward, swap, option and other products or a combination of the above products, and the corresponding underlying assets include exchange rate, interest rate, currency or a combination of the above assets.
2. Investment amount: from the date of approval by the board of directors of the company, the company will carry out foreign exchange derivatives trading. The trading subjects include Luxshare Precision Industry Co.Ltd(002475) and its subsidiaries and subsidiaries. The foreign exchange derivatives trading business shall not exceed one year, and the cumulative equivalent at any time point shall not exceed us $2 billion.
3. Special risk warning: the company still has certain market risk, liquidity risk, performance risk, customer default risk and other risks in foreign exchange derivatives trading, which should be brought to the attention of investors.
1、 Overview of investment
1. Investment purpose: the company’s products are mainly sold for export and settled mainly in foreign currencies. The changes in RMB exchange rate policy and the fluctuations in the international foreign exchange market have a certain impact on the company’s operating performance. In order to further improve the company’s ability to deal with foreign exchange fluctuation risks, better avoid and prevent foreign exchange rate and interest rate fluctuation risks, and enhance the company’s financial stability, It is necessary for the company to appropriately carry out foreign exchange derivatives trading according to specific conditions.
2. Investment period and amount: from the date of approval by the board of directors of the company, the company will carry out foreign exchange derivatives trading. The trading subjects include Luxshare Precision Industry Co.Ltd(002475) and its subsidiaries and subsidiaries. The foreign exchange derivatives trading business shall not exceed one year, and the cumulative equivalent at any time point shall not exceed US $2 billion.
3. Investment method: the foreign exchange derivative transactions carried out by the company mainly include forward, swap, option and other products or a combination of the above products, and the corresponding underlying assets include exchange rate, interest rate, currency or a combination of the above assets. The varieties of transactions are simple foreign exchange derivatives closely related to the basic business, and the foreign exchange derivatives are matched with the basic business in terms of variety, scale, direction and term, so as to follow the company’s prudent and prudent risk management principles.
4. Source of funds: when the company carries out foreign exchange derivatives trading business, it does not need to invest other funds except that the agreement signed with the bank occupies the credit line or pays a certain proportion of the deposit. The company’s own funds will be used to pay the deposit, and the proportion of the deposit will be determined according to the agreement signed with the bank.
2、 Review procedure
The company held the 7th Meeting of the 5th board of directors on February 21, 2022, deliberated and passed the proposal on the company’s foreign exchange derivatives trading, and agreed that the company and its subsidiaries and subsidiaries should carry out foreign exchange derivatives trading business for no more than one year, and the cumulative equivalent at any time point should not exceed US $2 billion. This matter is within the deliberation authority of the board of directors and does not need to be submitted to the general meeting of shareholders for deliberation.
3、 Investment risk analysis and risk control measures
(I) investment risk analysis
The company follows the principle of locking exchange rate and interest rate risk in foreign exchange derivatives trading, and does not engage in speculative and arbitrage trading operations, but there are still certain risks in foreign exchange derivatives trading:
1. The difference between the interest rate of the derivative and the actual exchange rate on the trading date and the exchange rate of the contract; During the duration of foreign exchange derivatives, revaluation gains and losses will occur in each accounting period, and the cumulative value of revaluation gains and losses to the maturity date is equal to transaction gains and losses.
2. Liquidity risk: foreign exchange derivatives are based on the company’s foreign exchange assets and liabilities and match with the actual foreign exchange revenue and expenditure to ensure that there are sufficient funds for settlement at the time of delivery, or choose net delivery derivatives to reduce the capital demand on the maturity date.
3. Performance risk: the objects of the company’s foreign exchange derivatives transactions are banks with good credit and have established long-term business relations with the company, and the performance risk is low.
4. Customer default risk: the customer’s accounts receivable are overdue, and the payment cannot be recovered within the predicted recovery period, which will lead to delayed delivery and losses to the company.
5. Other risks: when conducting transactions, if the operators fail to conduct foreign exchange derivatives transactions according to the specified procedures or fail to fully understand the derivatives information, operational risks will be brought; If the terms of the transaction contract are not clear, it may face legal risks.
(II) risk control measures to be taken by the company
1. The foreign exchange derivatives transactions carried out by the company are aimed at locking in costs, avoiding and preventing exchange rate and interest rate risks, and any risk speculation is prohibited.
2. The company has formulated a strict financial derivatives trading business management system, which clearly stipulates the operating principles, approval authority, internal operating procedures, information isolation measures, internal risk control procedures and information disclosure of financial derivatives trading to control transaction risks.
3. The company will carefully review the contract terms signed with the bank and strictly implement the risk management system to prevent legal risks.
4. The company will continue to track the changes in the open market price or fair value of foreign exchange derivatives, timely evaluate the changes in the risk exposure of foreign exchange derivatives transactions, regularly report to the company’s management, timely report any abnormalities, prompt risks and implement emergency measures.
5. In order to prevent the delayed delivery of forward foreign exchange settlement, the company attaches great importance to the management of accounts receivable and formulates safety management measures to avoid the overdue phenomenon of accounts receivable.
6. The core Department of the company shall supervise and inspect the compliance of decision-making, management and execution of foreign exchange derivatives transactions.
4、 Impact of investment on the company
The company’s products are mainly exported and settled in foreign currencies. The changes in RMB exchange rate policy and the fluctuations in the international foreign exchange market have a certain impact on the company’s operating performance. Carrying out foreign exchange derivatives transactions can further improve the company’s ability to deal with foreign exchange fluctuation risks, better avoid and prevent foreign exchange rate and interest rate fluctuation risks, and enhance the company’s financial stability.
5、 Opinions of independent directors
All independent directors of the company believe that the company’s foreign exchange derivatives trading business is mainly to avoid the foreign exchange risk caused by the fluctuation of RMB exchange rate and effectively control the cost uncertainty caused by foreign exchange risk. The company has formulated the financial derivatives trading business management system, which is conducive to strengthening the risk management and control of foreign exchange derivatives trading. At the same time, the company guarantees that the margin of derivatives transactions to be carried out will use its own working capital and will not involve raised funds. The deliberation, voting and other procedures of this matter comply with the company law, the articles of association and other relevant provisions. We agree that the company will carry out the above business.
6、 Documents for future reference
1. Resolution of the 7th Meeting of the 5th board of directors of the company;
2. Resolution of the 7th Meeting of the 5th board of supervisors of the company;
3. Independent opinions of independent directors on relevant matters; 4. Feasibility analysis report on the company’s foreign exchange derivatives transactions. It is hereby announced.
Luxshare Precision Industry Co.Ltd(002475) board of directors
February 21, 2022
