Securities code: 300981 securities abbreviation: Zhonghong Pulin Medical Products Co.Ltd(300981) Announcement No.: 2022-008 Zhonghong Pulin Medical Products Co.Ltd(300981)
Announcement on carrying out foreign exchange derivatives trading business in 2022
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: including but not limited to foreign exchange forward transaction, foreign exchange swap transaction, foreign exchange option transaction, RMB foreign exchange forward transaction, RMB foreign exchange currency swap, RMB foreign exchange option transaction, RMB to foreign exchange option portfolio and other products or a combination of the above products. The basic targets of derivatives include exchange rate, interest rate, currency and other targets.
2. Investment amount: carry out foreign exchange derivatives trading business within the limit of no more than US $500 million at any time point in 2022, and the above limit can be recycled and rolled.
3. Special risk warning: the foreign exchange derivatives trading carried out follows the principles of legality, prudence, safety and effectiveness, and does not engage in speculative and arbitrage trading operations. However, there are still certain market risks, liquidity risks and performance risks in the foreign exchange derivatives trading operations. Please pay attention to investment risks.
Zhonghong Pulin Medical Products Co.Ltd(300981) (hereinafter referred to as the company) held the seventh meeting of the third board of directors on February 23, 2022, deliberated and adopted the proposal on carrying out foreign exchange derivatives trading business in 2022, and agreed that the company and its holding subsidiaries would carry out foreign exchange derivatives trading business within the amount of no more than US $500 million at any time point in 2022 according to the development of overseas business, The quota can be used circularly. The board of directors of the company requests the general meeting of shareholders to authorize the general manager as the general person in charge of foreign exchange derivatives investment business, which shall examine and approve the foreign exchange derivatives investment business within the limit, and authorize and handle relevant matters for the specific person in charge of the foreign exchange derivatives investment business of the company and its holding subsidiaries. The company and its holding subsidiaries plan to carry out foreign exchange derivatives trading business this time, which does not involve related party transactions. This proposal needs to be deliberated and approved by the general meeting of shareholders of the company. The details are as follows:
(I) investment purpose
The company’s import and export business mainly deals and sells foreign exchange in US dollars, as well as some transactions in other currencies such as euro, Hong Kong dollar and Japanese yen. The foreign exchange derivatives transactions carried out by the company and its holding subsidiaries are based on the needs of daily operation and the prevention of interest rate and exchange rate risks. The purpose is to reduce the impact of interest rate and exchange rate fluctuations on the company’s profits, reduce exchange losses and reduce financial expenses, which is conducive to the development of the company’s import and export business.
(II) investment mode
1. Types of trading business: the types of foreign exchange derivatives trading to be carried out by the company include but are not limited to foreign exchange forward trading, foreign exchange swap trading, foreign exchange option trading, RMB foreign exchange forward trading, RMB foreign exchange currency swap, RMB foreign exchange option trading, RMB to foreign exchange option combination and other products or combinations of the above products. The basic targets of derivatives include exchange rate, interest rate, currency and other targets.
2. Counterparty: banks, futures companies and other financial institutions (non related party institutions)
3. Liquidity arrangement: foreign exchange derivatives transactions are based on the normal domestic and foreign currency revenue and expenditure business, based on specific business operations, and the investment amount and investment period match the actual business needs, so as to reasonably arrange the use of funds.
(III) trading quota and investment term
In 2022, the company and its holding subsidiaries will carry out foreign exchange derivatives trading business, and the balance at any time point will not exceed US $500 million. The above trading quota can be recycled and rolled; The board of directors requests the general meeting of shareholders to authorize the general manager to act as the general person in charge of foreign exchange derivatives investment business, which shall examine and approve the foreign exchange derivatives investment business within the limit, and authorize and handle relevant matters for the specific person in charge of the foreign exchange derivatives investment business of the company and its holding subsidiaries.
(IV) source of funds
In the process of signing credit agreements with subsidiaries or stock holding companies, it is not necessary to pay a certain proportion of the margin for the use of the funds raised by subsidiaries or stock holding companies in the process of credit granting.
(V) information disclosure
The company will disclose the company’s foreign exchange derivatives trading in accordance with the relevant requirements of Shenzhen Stock Exchange GEM Listing Rules (revised in 2022), Shenzhen Stock Exchange listed companies self regulatory guidelines No. 2 – standardized operation of GEM listed companies, etc, Disclose the relevant progress and implementation of foreign exchange derivatives transactions in the regular report.
2、 Investment risk analysis and risk control measures for foreign exchange derivatives trading business
(I) investment risk
The company follows the principles of legality, prudence, safety and effectiveness in carrying out 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 operations.
1. Market risk: the difference between the exchange rate and interest rate of foreign exchange derivatives trading contract and the actual exchange rate and interest rate on the maturity date will produce trading profits and losses; 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: the risk that the transaction cannot be completed due to insufficient market liquidity.
3. Performance risk: there is a risk of default caused by failure to perform the contract when the contract expires.
4. 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
1. Clarify the trading principles of foreign exchange derivatives: the company does not conduct foreign exchange derivatives trading solely for the purpose of profit. The trading activities of foreign exchange derivatives carried out by the company are based on normal production and operation, based on specific business operations, and for the purpose of hedging, avoiding and preventing exchange rate risk and interest rate risk.
2. System and talent construction: the company has formulated the derivatives investment management system, which clearly stipulates the risk control, approval procedures, practical operation management, follow-up management and information disclosure, file management and information confidentiality of foreign exchange derivatives trading business, so as to control the trading risk; It shall be carried out by specialized personnel with rich experience and clear division of labor.
3. Transaction management: the company will carefully review the contract terms signed with the bank and strictly implement the risk management system to prevent legal risks.
4. Risk early warning management: the financial management department of 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, timely report abnormal conditions to the management, prompt risks and implement emergency measures.
5. Internal control management: the internal control audit department of the company shall supervise and inspect the compliance of the decision-making, management and execution of foreign exchange derivatives transactions.
3、 Impact of investment on the company
(I) the company’s foreign exchange derivatives trading business is based on specific business operations and matches the company’s daily business needs.
The company’s foreign exchange derivatives business makes full use of the hedging function of foreign exchange derivatives to hedge the exchange rate risk in business activities, effectively avoid the risk of foreign exchange market to a certain extent, and reduce the impact of large exchange rate fluctuations on the company. In view of the certain risks in the development of foreign exchange derivatives trading business and the uncertain impact on the company, the company will timely perform the obligation of information disclosure in strict accordance with relevant regulations.
(II) the company will conduct corresponding accounting treatment for the proposed foreign exchange derivatives trading business in accordance with the relevant provisions and guidelines such as accounting standards for Business Enterprises No. 22 – recognition and measurement of financial instruments, accounting standards for Business Enterprises No. 24 – hedge accounting and accounting standards for Business Enterprises No. 37 – presentation of financial instruments, which will be reflected in the relevant subjects of the balance sheet and income statement.
4、 Relevant review procedures and review opinions
(I) deliberation opinions of the board of directors
On February 23, 2022, the company held the 7th Meeting of the 3rd board of directors, deliberated and approved the proposal on carrying out foreign exchange derivatives trading business in 2022. According to the needs of business development, the company and its holding subsidiaries were agreed to carry out foreign exchange derivatives trading business in 2022, and the balance at any time point did not exceed US $500 million. The above trading quota can be recycled and rolled. This proposal needs to be deliberated and approved by the general meeting of shareholders.
(II) independent opinions expressed by independent directors
Since the company’s import and export business requires a large number of foreign exchange transactions, the company and its holding subsidiaries use reasonable financial instruments to lock in transaction costs, which is conducive to avoiding the risk of exchange rate fluctuations. The foreign exchange derivatives transactions carried out by the company and its holding subsidiaries are closely related to the daily business needs, and the company has established corresponding monitoring mechanisms, which comply with the provisions of relevant laws and regulations. After comprehensively considering the economic development and financial trend outside China, the expectation of exchange rate fluctuation and the business scale of the company, we agree to the proposal on carrying out foreign exchange derivatives trading business in 2022.
The deliberation and voting procedures of this proposal comply with the company law, Shenzhen Stock Exchange GEM Listing Rules (revised in 2022) and other relevant laws, regulations and the articles of association.
(III) verification opinions of the recommendation institution
After verification, the recommendation institution believes that:
1. It is necessary for the company to carry out foreign exchange derivatives trading business, which is closely related to its daily operation, in order to avoid the operational risks caused by exchange rate fluctuations;
2. The matter has been deliberated and adopted at the 7th Meeting of the third board of directors of the company, and the independent directors have expressed clear consent;
3. The sponsor draws the attention of investors: Although the company has taken corresponding risk control measures for foreign exchange derivatives trading business, the inherent exchange rate fluctuation risk of foreign exchange derivatives trading business and the inherent limitations of internal control may have an impact on the company’s business performance.
In conclusion, the recommendation institution has no objection to the company and its holding subsidiaries carrying out foreign exchange derivatives transactions within the approved limit.
5、 Documents for future reference
1. Resolutions of the seventh meeting of the third board of directors of the company;
2. Independent opinions of the company’s independent directors on matters related to the seventh meeting of the third board of directors;
3. Feasibility analysis report of the company on carrying out foreign exchange derivatives trading business in 2022;
4. Haitong Securities Company Limited(600837) verification opinions on carrying out foreign exchange derivatives trading business in Zhonghong Pulin Medical Products Co.Ltd(300981) 2022.
It is hereby announced.
Zhonghong Pulin Medical Products Co.Ltd(300981) board of directors February 23, 2002
