Securities code: Hitevision Co.Ltd(002955) securities abbreviation: Hitevision Co.Ltd(002955) Announcement No.: 2022007 Hitevision Co.Ltd(002955)
Announcement on increasing the amount of foreign exchange derivatives trading business
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 forward foreign exchange settlement and sales, currency swap, foreign exchange option and other products or product combinations, and the corresponding underlying assets include exchange rate, interest rate, currency, etc. or the above asset combinations.
2. Increase the amount and duration of foreign exchange derivatives trading business: on the premise of not affecting normal production and operation, Hitevision Co.Ltd(002955) (hereinafter referred to as ” Hitevision Co.Ltd(002955) ” or “the company”) and its subsidiaries will increase the total amount of foreign exchange derivatives trading business to no more than US $150 million (or equivalent foreign currency). The above amount can be used circularly and continuously within the approval period, However, the cumulative balance at any point in the period shall not exceed US $150 million (or equivalent foreign currency). The implementation period shall be valid within 12 months from the date of deliberation and approval by the board of directors. If the duration of a single transaction exceeds the validity of the resolution, the validity of the resolution shall be automatically extended to the termination of the single transaction.
3. Special risk warning: the company and its subsidiaries carry out foreign exchange derivatives trading in accordance with the principle of locking exchange rate and interest rate risk, and do not engage in speculative and arbitrage trading operations. However, there are still certain market risks, liquidity risks, performance risks, customer default risks, operational risks and legal risks in foreign exchange derivatives trading. Please pay attention to investment risks.
The company held the fourth meeting of the second board of directors on November 27, 2020, deliberated and passed the proposal on carrying out foreign exchange derivatives trading business, and agreed that the company and its subsidiaries carry out foreign exchange derivatives trading business with a transaction amount of no more than US $40 million (or equivalent foreign currency); The 9th meeting of the second board of directors was held on August 26, 2021. The proposal on increasing the amount of foreign exchange derivatives trading business was considered and approved, and the company and its subsidiaries were agreed to increase the amount of derivatives trading business to no more than US $80 million (or equivalent foreign currency). With the continuous development of the company’s overseas business, the original amount of foreign exchange derivatives trading business can no longer meet the needs of the existing business. In order to effectively avoid foreign exchange market risks and prevent the adverse impact of large exchange rate fluctuations on the company’s operation, the company and its subsidiaries plan to, Increase the business line of foreign exchange derivatives trading to no more than US $150 million (or equivalent foreign currency). The relevant matters are explained as follows:
1、 Overview of foreign exchange derivatives trading business
1. Purpose of increasing the amount of foreign exchange derivatives trading business: with the continuous expansion of the company’s overseas business, the exchange rate exposure risk faced by the company also increases. The original amount of foreign exchange derivatives trading business can no longer meet the needs of existing business. In order to further prevent the adverse impact of large exchange rate fluctuations on the company’s operation and enhance the company’s financial stability, Without affecting normal production and operation, it is necessary for the company to appropriately increase the amount of foreign exchange derivatives trading business according to specific conditions.
2. Types of foreign exchange derivatives transactions: including but not limited to forward settlement and sales of foreign exchange, currency swaps, foreign exchange options and other products or product combinations, and the corresponding underlying assets include exchange rate, interest rate, currency, etc. or the above asset combinations. 3. Increase the amount and term of foreign exchange derivatives trading business: on the premise of not affecting normal production and operation, the company and its subsidiaries will increase the total amount of foreign exchange derivatives trading business to no more than US $150 million (or equivalent foreign currency). The above amount can be used circularly and continuously within the approval period, However, the cumulative balance at any point in the period shall not exceed US $150 million (or equivalent foreign currency). The implementation period shall be valid within 12 months from the date of deliberation and approval by the board of directors. If the duration of a single transaction exceeds the validity of the resolution, the validity of the resolution shall be automatically extended to the termination of the single transaction.
4. Source of funds: self owned funds.
5. Foreign exchange derivatives counterparties: financial institutions approved by the State Administration of foreign exchange and the people’s Bank of China and qualified for foreign exchange derivatives business.
6. Authorization: authorize the company’s management to implement relevant matters.
7. Others: foreign exchange derivatives trading shall pay a certain proportion of initial margin and supplementary margin according to the requirements of financial institutions. The way is to occupy the comprehensive credit line of the bank or pay directly. At maturity, the way of principal delivery, differential delivery or reverse position closing extension is adopted.
2、 Review procedure
On March 1, 2022, the company held the 11th meeting of the second board of directors, deliberated and passed the proposal on increasing the amount of foreign exchange derivatives trading business. The board of directors of the company agreed that the company and its subsidiaries should, according to the actual development needs and without affecting the normal production and operation, Increase the amount of derivatives trading business to no more than US $150 million (or equivalent foreign currency). The implementation period shall be effective within 12 months from the date of deliberation and approval by the board of directors, and the above amount can be recycled and used within the approval period. According to the Listing Rules of Shenzhen Stock Exchange, self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 7 – transactions and related party transactions, the articles of association and other relevant provisions, this matter does not need to be submitted to the general meeting of shareholders for deliberation.
3、 Risk analysis and risk control measures of foreign exchange derivatives trading business
(I) risk analysis
The company and its subsidiaries carry out foreign exchange derivatives trading in accordance with the principle of locking exchange rate and interest rate risk, and do not carry out 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 profits and losses will occur in each accounting period, and the cumulative value of revaluation profits and losses to the maturity date is equal to transaction profits and losses;
2. Liquidity risk: foreign exchange derivatives are based on the foreign exchange assets and liabilities of the company and its subsidiaries 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 of derivatives to reduce the capital demand on the maturity date;
3. Performance risk: the company and its subsidiaries carry out foreign exchange derivatives transactions with banks with good credit and have established business relations with the company, so 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. Operational risk: when trading, if the operators fail to conduct foreign exchange derivatives trading according to the specified procedures or fail to fully understand the derivatives information, it will bring operational risk;
6. Legal risk: during the transaction, if the terms of the transaction contract are not clear, it may face legal risk, or the company may suffer losses due to the failure of normal execution of the contract due to changes in relevant laws or the counterparty’s violation of relevant legal systems.
(II) risk control measures
Strictly control the risk when conducting foreign exchange derivatives trading business. The specific risk control measures are as follows:
1. The company has formulated the internal control system of Hitevision Co.Ltd(002955) foreign exchange derivatives trading business, which clearly stipulates the operation principles, approval authority, management and internal operation process, information isolation measures, internal risk reporting system and risk handling procedures, information disclosure and file management of foreign exchange derivatives trading business, so as to control transaction risks.
2. The trading of foreign exchange derivatives follows the principles of legality, prudence, safety and effectiveness, and does not conduct foreign exchange transactions solely for the purpose of profit. All foreign exchange derivatives trading businesses are based on normal production and operation, based on the real trading background, and for the purpose of avoiding and preventing exchange rate or interest rate 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. After the review and approval of the board of directors, the management of the company will sign relevant contract documents within the above investment limit, which will be organized and implemented by the financial department of the company, continuously 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 management of the company, and timely report any abnormalities, Prompt risks and implement emergency measures.
5. The Audit Department of the company shall supervise and inspect the compliance of decision-making, management and execution of foreign exchange derivatives transactions.
4、 Impact of foreign exchange derivatives trading on the company
In accordance with the relevant provisions and guidelines of the Ministry of finance, such as the accounting standards for Business Enterprises No. 22 – recognition and measurement of financial instruments, the accounting standards for Business Enterprises No. 24 – hedge accounting, and the accounting standards for Business Enterprises No. 37 – presentation of financial instruments, the company conducts corresponding accounting treatment for the transactions of foreign exchange derivatives and reflects the relevant items of the balance sheet and income statement.
The company will pay close attention to the development of foreign exchange derivatives business and fulfill the obligation of information disclosure in time according to the requirements of relevant rules.
5、 Opinions of independent directors
After verification, we believe that the company’s increase in the amount of foreign exchange derivatives trading business is based on the company’s actual business development needs, with the purpose of reducing the risk of foreign exchange rate and interest rate fluctuation. There is no risk speculation, which is conducive to enhancing the company’s financial stability, and there is no damage to the interests of the company and shareholders, especially the interests of minority shareholders, The relevant approval procedures comply with the provisions of relevant laws, regulations and the articles of association. Therefore, we unanimously agree to increase the amount of foreign exchange derivatives trading business this time.
6、 Opinions of the sponsor
After verification, the sponsor believes that: on the premise of ensuring normal production and operation, the Hitevision Co.Ltd(002955) increase in the amount of foreign exchange derivatives trading business is helpful to improve the company’s ability to deal with foreign exchange fluctuation risk. It has been deliberated and approved by the board of directors of the company, the independent directors have expressed independent opinions and fulfilled the necessary internal approval procedures, Comply with the requirements of relevant laws and regulations such as the stock listing rules of Shenzhen Stock Exchange and the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 7 – transactions and related party transactions. Therefore, the sponsor agrees to increase the amount of foreign exchange derivatives trading business in Hitevision Co.Ltd(002955) this time.
7、 Documents for future reference
1. Resolution of the 11th meeting of the second board of directors;
2. Independent opinions of independent directors on matters related to the 11th meeting of the second board of directors;
3. Verification opinions of Dongxing Securities Corporation Limited(601198) on Hitevision Co.Ltd(002955) increasing the business quota of foreign exchange derivatives;
4. Feasibility analysis report on increasing the amount of foreign exchange derivatives trading business.
It is hereby announced.
Hitevision Co.Ltd(002955) board of directors March 2, 2022
