China Camc Engineering Co.Ltd(002051) feasibility analysis report on long-term foreign exchange settlement and sales business
China Camc Engineering Co.Ltd(002051)
Feasibility analysis report on long-term foreign exchange settlement and sales business
1、 Background of foreign exchange forward settlement and sales business
The overseas project contracting and import and export business of China Camc Engineering Co.Ltd(002051) (hereinafter referred to as “the company”) accounts for a large proportion of the company’s total business. In order to prevent the risk of exchange rate fluctuation and lock in the project profit, the company plans to carry out the long-term foreign exchange settlement and sales business for the purpose of hedging. II. Basic information of carrying out the long-term foreign exchange settlement and sales business
Forward settlement and sale of foreign exchange is a foreign exchange hedging financial product approved by the people’s Bank of China. Forward foreign exchange settlement and sales refers to the foreign exchange settlement and sales business that the bank signs a forward foreign exchange settlement and sales contract with the customer to agree on the foreign exchange currency, amount, exchange rate and time limit for foreign exchange settlement or sales in the future. When foreign exchange income or expenditure occurs on the due date, it will be handled according to the currency, amount and exchange rate agreed in the forward foreign exchange settlement and sales contract.
The company’s long-term foreign exchange settlement and sales business must be based on the signed and effective international engineering contracts and normal import and export business, for the purpose of locking the project profits and preventing the risk of exchange rate fluctuations, match the variety, scale, direction and term of the spot, and prohibit any form of speculative transactions. The company’s forward foreign exchange settlement and sales business shall be based on the prudent prediction of the company’s foreign exchange revenue and expenditure and time. The total amount and delivery period of the forward foreign exchange settlement and sales contract shall match the company’s prudent prediction of foreign exchange revenue and expenditure.
3、 Overview of carrying out forward foreign exchange settlement and sales business
1. Currencies mainly involved: USD, euro, ruble, etc.
2. Time limit for carrying out foreign exchange forward settlement and sales business: one year from the date of deliberation and approval by the board of directors
China Camc Engineering Co.Ltd(002051) feasibility analysis report on long-term foreign exchange settlement and sales business
Year.
3. Source and scale of funds: the source of funds is self owned funds and does not involve raised funds. The total amount of forward foreign exchange settlement and sales carried out by the company shall not exceed 800 million US dollars.
4. Counterparties: financial institutions approved by the State Administration of foreign exchange and the people’s Bank of China and qualified for long-term settlement and sales of foreign exchange.
5. Liquidity arrangement: all foreign exchange capital businesses correspond to normal and reasonable business background, match the collection and payment time, and will not affect the liquidity of the company.
4、 Risk analysis of carrying out forward foreign exchange settlement and sales business
The company shall follow the principles of legality, prudence, safety and effectiveness in carrying out forward foreign exchange settlement and sales business, but there are also certain risks in the forward foreign exchange settlement and sales business:
1. Exchange rate fluctuation risk: in the case of large changes in exchange rate, if the forward exchange rate agreed in the confirmation of forward exchange settlement and sales is lower than the real-time exchange rate on the delivery date, or the forward exchange rate agreed in the confirmation of forward exchange settlement and sales is higher than the real-time exchange rate on the delivery date, exchange losses will be caused. 2. Internal control risk: forward foreign exchange settlement and sales transactions are highly professional, which may cause risks due to imperfect internal control system.
3. Collection forecast risk: the company forecasts the collection of project funds and trade funds according to the project implementation plan and import and export trade contract. In the actual implementation process, the owner and customers may adjust the project progress and orders, resulting in inaccurate collection forecast of the company, resulting in default risk of forward foreign exchange settlement and delivery.
5、 Risk control measures taken by the company
1. The company will strengthen the research and analysis of exchange rate, timely adjust the transaction scheme, and equip professionals for business operation and risk control of forward foreign exchange settlement and sales.
2. The company has formulated the China Camc Engineering Co.Ltd(002051) long term foreign exchange settlement and sales management office
China Camc Engineering Co.Ltd(002051) feasibility analysis report on long-term foreign exchange settlement and sales business
The law has formulated strict decision-making procedures, reporting systems and monitoring measures, and defined the scope of authorization, key points of operation, information disclosure and other specific requirements. The company will strictly follow the management measures for China Camc Engineering Co.Ltd(002051) long-term foreign exchange settlement and sales when carrying out the business of long-term foreign exchange settlement and sales. 3. The company attaches great importance to the management of accounts receivable of engineering projects and trade business, and prevents and avoids the delayed delivery of forward foreign exchange settlement and sales.
4. The audit committee of the board of directors of the company is responsible for reviewing the necessity and risk control of forward foreign exchange settlement and sales business. The Audit Department of the company shall inspect the implementation of the long-term foreign exchange settlement and sales business at least once every six months, issue the inspection report and submit it to the audit committee, audit the long-term foreign exchange settlement and sales business of the company and its subsidiaries at least every year, and focus on the soundness and implementation effectiveness of the business system, the authenticity of accounting, etc.
6、 Conclusion of feasibility analysis on carrying out forward foreign exchange settlement and sales business
The company carries out forward foreign exchange settlement and sales business in order to make full use of forward foreign exchange settlement and sales hedging tools to reduce exchange rate risk caused by exchange rate fluctuation, lock in project profit and control operation risk. The company’s foreign exchange forward settlement and sales business is based on specific business operations, prohibits any form of speculative transactions, can effectively lock in transaction costs and benefits, deal with exchange rate risks brought to the company by exchange rate fluctuations, enhance the company’s financial stability, and meet the requirements of the company’s stable operation. China Camc Engineering Co.Ltd(002051) board of directors December 22, 2021
