Securities code: Zjamp Group Co.Ltd(002758) securities abbreviation: Zjamp Group Co.Ltd(002758) Announcement No.: 2022020
Bond Code: 128040 bond abbreviation: Huatong convertible bond
Zjamp Group Co.Ltd(002758)
Announcement on the company’s hedging 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: the company plans to carry out foreign exchange hedging business and commodity futures hedging business. The types of foreign exchange hedging business include forward settlement and sales of foreign exchange, foreign exchange swap, RMB futures, etc. the commodity futures hedging business is limited to urea and sulfur closely related to the company’s production and operation.
2. Investment amount: in 2022, the company plans to carry out foreign exchange hedging business, with the maximum trading amount of US $231 million or equivalent currency, and the maximum margin of commodity futures hedging business of RMB 100 million Zjamp Group Co.Ltd(002758) (hereinafter referred to as “the company”) held the 20th meeting of the 4th board of directors and the 17th meeting of the 4th board of supervisors on February 28, 2022, deliberated and adopted the proposal on the company’s hedging business in 2022. In order to effectively avoid business risks caused by fluctuations in the foreign exchange market and operating commodity prices, the company and its holding subsidiaries plan to use their own funds to carry out foreign exchange hedging and commodity futures hedging business on the premise of ensuring the capital demand for daily operation, not affecting the development of the company’s main business and effectively controlling investment risks. According to the relevant provisions of the Listing Rules of Shenzhen Stock Exchange, the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 1 – standardized operation of listed companies on the main board and the articles of association, this matter does not need to be submitted to the general meeting of shareholders for deliberation. The relevant matters are hereby announced as follows:
1、 Overview of the company’s Hedging Business
(I) purpose of hedging business
The company is involved in import and export business and bulk commodity sales in the daily operation process. In order to effectively avoid the risk of commodity price fluctuation in the foreign exchange market and operation, and prevent the adverse impact of large price fluctuation on the company, the company plans to use its own funds to carry out foreign exchange hedging and commodity futures hedging business.
The above hedging business will not affect the development of the company’s main business.
(II) amount and term of hedging business
In 2022, the company plans to carry out foreign exchange hedging business, with the maximum trading amount of US $231 million or equivalent currency, and the maximum margin of commodity futures hedging business of RMB 100 million.
The above hedging business can be recycled within the limited amount, and the validity period is from the date of adoption of the resolution of the board of directors to the date of the meeting of the board of directors to consider the matter in the next year (no more than 12 months). The transaction amount at any point in the period (including the relevant amount of reinvestment of the income of the above investment) does not exceed the expected amount.
(III) ways to carry out hedging business
The types of foreign exchange hedging business include forward settlement and sales of foreign exchange, foreign exchange swaps, RMB futures, etc. Commodity futures are limited to urea and sulfur that are closely related to the production and operation of the company.
(IV) capital source for hedging business
The source of funds is the company’s own funds, which does not involve raised funds or bank credit funds.
2、 Review procedure
This matter has been deliberated and approved at the 20th meeting of the Fourth Board of directors of the company. The board of directors authorizes the chairman to exercise the decision-making power within the hedging amount of this proposal, and the relevant departments of the company and its subordinate enterprises are responsible for handling specific matters.
3、 Risk analysis of the company’s Hedging Business
(I) foreign exchange hedging business
The company’s foreign exchange hedging business follows the principle of locking in exchange rate risk and does not engage in speculative and arbitrage transactions to ensure the normal operation of the company’s foreign exchange business, but the foreign exchange hedging business itself may face certain risks. These include:
1. Market risk: exchange rate fluctuation risk caused by large changes in foreign exchange market.
2. Credit risk: the overdue of accounts receivable is inconsistent with the foreign exchange lock period, or the inaccurate collection forecast is caused by the customer’s adjustment of orders, resulting in the delayed delivery of forward foreign exchange settlement and sales.
3. Operational risk: foreign exchange hedging business is highly professional and may cause losses due to staff operation errors, system failures and other reasons.
4. Legal risk: due to the change of relevant laws and regulations or the counterparty’s violation of relevant laws and regulations, the contract may not be executed normally and bring losses to the company.
(II) commodity futures hedging business
The company’s commodity futures hedging business follows the basic principle of locking the purchase price or product sales price, and strictly implements the risk control system when selecting hedging contracts and closing positions to ensure the normal business operation of the company. However, the commodity futures hedging business itself may face certain risks. These include:
1. Market risk: when the futures market changes greatly, there will be price fluctuation risk and position closing risk under the margin system.
2. Credit risk: when the futures price fluctuates sharply, the customer may violate the relevant provisions of the contract and cancel the product order, resulting in losses to the company.
3. Operational risk: commodity futures hedging business is highly professional and may cause losses due to staff operation errors, system failures and other reasons.
4. Legal risk: major changes in relevant laws and regulations may cause the contract to be unable to be executed normally and bring losses to the company.
4、 Risk control measures for the company to carry out hedging business
(I) foreign exchange hedging business
In order to control the risk of foreign exchange hedging business, the company has formulated the management system of foreign exchange hedging business to control the risk points of each link. It mainly includes:
1. Pay close attention to the dynamic changes of the international foreign exchange market, strengthen the research and analysis of the exchange rate, and timely adjust the foreign exchange hedging strategy in case of major changes in the foreign exchange market to avoid exchange losses to the greatest extent.
2. In order to prevent the delayed delivery of foreign exchange hedging, the company will attach great importance to the management of accounts receivable and avoid the overdue phenomenon of accounts receivable.
3. According to the internal control system, strengthen the monitoring process of the company’s foreign exchange hedging business, strengthen the control of bank accounts and funds, and strictly implement the approval procedures for fund allocation and use.
4. Carefully choose to conduct business with commercial banks or other financial institutions with legal qualifications and strong strength. Based on specific business operations and for the purpose of avoiding and preventing exchange rate risks, select foreign exchange hedging products with clear product structure and market liquidity. At the same time, closely follow relevant laws and regulations to avoid possible legal risks.
(II) commodity futures hedging business
In order to control the risk of commodity futures hedging business, the company has formulated the management system of commodity futures hedging business to control the risk of commodity futures hedging business.
It mainly includes:
1. Match the commodity futures hedging business with the company’s production and operation to hedge the risk of price fluctuation to the greatest extent. Reasonably allocate its own funds for commodity futures hedging business, strictly control the capital scale of hedging, and close its positions in time in case of sharp market price fluctuations to avoid risks.
2. The company will establish a customer’s credit management system, review the credit of the counterparty before the transaction, and determine that the counterparty is capable of performing relevant contracts.
3. According to the internal control system, strengthen the monitoring process of the company’s commodity futures hedging business, strengthen management and prevent operational risks. Set up computer systems and related facilities that meet the requirements to ensure the normal operation of transactions.
4. Closely follow up the laws and regulations related to futures to avoid possible legal risks.
5、 Impact of hedging business on the company
When the company carries out foreign exchange and commodity futures hedging business, it can make full use of the hedging function, reasonably avoid the adverse impact of large fluctuations in the foreign exchange market and commodity prices on the company’s product sales, import and export business, control the company’s operating risks and achieve the goal of stable operation of the company. The above businesses are based on normal production and operation and implement various risk prevention systems, which will not have a significant impact on the company.
In accordance with the relevant provisions and guidelines of the Ministry of finance, such as accounting standards for Business Enterprises No. 22 – recognition and measurement of financial instruments, accounting standards for Business Enterprises No. 24 – hedge accounting, accounting standards for Business Enterprises No. 37 – presentation of financial instruments, the company conducts corresponding accounting treatment on hedging and reflects the relevant items of the balance sheet and income statement.
6、 Opinions of independent directors
The foreign exchange hedging and commodity futures hedging businesses carried out by the company are based on normal production and operation, relying on specific business operations, and do not carry out foreign exchange and commodity futures transactions for the purpose of speculation. On the premise of complying with national laws and regulations and ensuring that it does not affect the normal production and operation of the company, the company timely carries out foreign exchange and commodity futures hedging business, which is conducive to avoiding the risk of foreign exchange market and commodity price fluctuation, reducing the impact of market fluctuation on the company’s operation and profit and loss, and in line with the interests of the company and all shareholders, especially minority shareholders. The feasibility analysis report issued by the company’s management on hedging transactions meets the provisions of laws and regulations and the company’s business development needs, is feasible, and the relevant approval procedures are compliant and the internal control procedures are sound. It is agreed that the company will carry out foreign exchange and commodity futures hedging business according to the needs of business development on the premise of ensuring that it does not affect the capital demand and capital security of normal operation.
7、 Opinions of the board of supervisors
The relevant approval procedures for the company to carry out foreign exchange hedging and commodity futures hedging business comply with relevant national laws and regulations and the relevant provisions of the articles of association. The company has formulated foreign exchange hedging business management system and commodity futures hedging business management system to implement risk prevention measures by strengthening internal control. The company’s hedging business can effectively prevent and resolve the business risks caused by exchange rate fluctuations and commodity price fluctuations, which is in line with the interests of the company and all shareholders, and there is no situation that damages the interests of the company and all shareholders, especially small and medium-sized shareholders. The feasibility analysis report issued by the company’s management on hedging transactions meets the provisions of laws and regulations and the needs of the company’s business development, and is feasible. To sum up, we agree with the company to carry out foreign exchange and commodity futures hedging business.
8、 Documents for future reference
1. Resolutions of the 20th meeting of the 4th board of directors of the company;
2. Resolutions of the 17th meeting of the 4th board of supervisors of the company;
3. Independent opinions of independent directors on matters related to the 20th meeting of the Fourth Board of directors of the company.
It is hereby announced.
Zjamp Group Co.Ltd(002758) board of directors March 1, 2022
