Securities code: China Haisum Engineering Co.Ltd(002116) securities abbreviation: China Haisum Engineering Co.Ltd(002116) Announcement No.: 2022010 China Haisum Engineering Co.Ltd(002116)
Feasibility analysis report on forward foreign exchange settlement and sales business of wholly-owned subsidiary
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.
1、 Background of foreign exchange forward settlement and sales business
China Haisum Engineering Co.Ltd(002116) (hereinafter referred to as “the company”), a wholly-owned subsidiary of China Light Industry Nanning Design Engineering Co., Ltd. (hereinafter referred to as “Nanning company”), signed the EPC contract for the construction of a cocoa processing plant and a cocoa warehouse in Abidjan, C ô te d’Ivoire in December 2019, with a total contract amount of 190 million euros. After the formal implementation of the project, Nanning company expects to receive a large amount of Euro advance. In order to prevent the risk of exchange rate fluctuation and lock in the project profit, Nanning company plans to carry out forward foreign exchange settlement and sales business for the purpose of hedging.
2、 Basic information of carrying out forward 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, which stipulates 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 shall be handled according to the currency, amount and exchange rate agreed in the forward foreign exchange settlement and sales contract.
Nanning company carries out forward foreign exchange settlement and sales business on the basis of the signed and effective international engineering contract, for the purpose of locking the project profit and preventing the risk of exchange rate fluctuation, matching the variety, scale, direction and duration of the spot, and prohibiting any form of speculative trading.
Nanning company shall conduct forward foreign exchange settlement and sales business based on the prudent prediction of foreign exchange revenue and expenditure and time of international engineering contracts. The total amount and delivery period of forward foreign exchange settlement and sales contracts shall match the prudent prediction of foreign exchange revenue and expenditure.
3、 Overview of carrying out forward foreign exchange settlement and sales business
1. Currency mainly involved: Euro, etc.
Securities code: China Haisum Engineering Co.Ltd(002116) securities abbreviation: China Haisum Engineering Co.Ltd(002116) Announcement No.: 2022010
2. Business term: one year from the date of deliberation and approval by the board of directors.
3. Source and scale of funds: the source of funds is self owned funds, and the total amount of funds shall not exceed 50 million euros.
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
Nanning company will 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 loss 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. Prediction risk of payment collection: Nanning company predicts the recovery of project payment according to the international project implementation plan. In the actual implementation process, the owner may adjust the project progress, resulting in inaccurate prediction of payment collection and default risk of forward foreign exchange settlement and delivery.
5、 Risk control measures taken by the company
1. The company will strengthen the management and guidance for Nanning company to carry out the business of long-term settlement and sales of foreign exchange, strengthen the research and analysis of exchange rate, timely guide Nanning company to adjust the transaction plan, and equip professionals such as business operation and risk control to carry out the business of long-term settlement and sales of foreign exchange.
2. The company has formulated China Haisum Engineering Co.Ltd(002116) forward foreign exchange settlement and sales management measures, which stipulates the decision-making procedures, reporting system and monitoring measures of forward foreign exchange settlement and sales business, and defines the scope of authorization, key operating points, information disclosure and other specific requirements. Nanning company will strictly follow the measures for the administration of China Haisum Engineering Co.Ltd(002116) long-term foreign exchange settlement and sales when carrying out the business of long-term foreign exchange settlement and sales.
Securities code: China Haisum Engineering Co.Ltd(002116) securities abbreviation: China Haisum Engineering Co.Ltd(002116) Announcement No.: 2022010
3. The company attaches great importance to the management of accounts receivable of engineering projects, 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 Center shall be responsible for the implementation of the audit and settlement system of the subsidiary’s long-term business, and supervise the implementation of the risk management system of the subsidiary’s long-term business.
6、 Conclusion of feasibility analysis of carrying out forward foreign exchange settlement and sales business
Nanning company, a wholly-owned subsidiary of the company, carries out the forward foreign exchange settlement and sales business in order to make full use of the hedging tools of forward foreign exchange settlement and sales, reduce the exchange rate risk caused by exchange rate fluctuation, lock in the project profit and control the operation risk. Nanning company’s foreign exchange forward settlement and sales business is based on specific international engineering business. It prohibits any form of speculative transactions, which can effectively lock in transaction costs and benefits, deal with exchange rate risks brought by exchange rate fluctuations, enhance the company’s financial stability, and meet the requirements of the company’s stable operation.
It is hereby announced.
China Haisum Engineering Co.Ltd(002116) board of directors
March 9, 2022
