Securities code: Svg Tech Group Co.Ltd(300331) securities abbreviation: Svg Tech Group Co.Ltd(300331) Announcement No.: 2022024 Svg Tech Group Co.Ltd(300331)
Announcement on launching financial 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.
Svg Tech Group Co.Ltd(300331) (hereinafter referred to as “the company” or “the company”) held the fourth meeting of the Fifth Board of directors and the fourth meeting of the Fifth Board of supervisors on March 11, 2022, reviewed and approved the proposal on carrying out financial derivatives trading business in 2022, and agreed to carry out financial derivatives trading business in 2022. The relevant matters are hereby announced as follows:
1、 Overview of financial derivatives trading business
In order to effectively avoid and prevent the fluctuation risk of exchange rate and interest rate during the company’s foreign trade and foreign currency borrowing, and reasonably control the impact of exchange risk on the company’s operating performance, combined with the daily operating needs of the company and its subsidiaries, the company plans to carry out specific financial derivatives trading business for the purpose of hedging; The maximum amount of funds used for financial derivatives trading business shall not exceed RMB 150 million or equivalent foreign currency, and the authorization period shall be valid within one year from the date of deliberation and approval by the board of directors; Within the authorized limit, the funds can be recycled. At the same time, the board of directors of the company authorizes the chairman or his authorized person to exercise the investment decision-making power of financial derivatives trading business and sign relevant documents within the above limit range and validity period. The specific implementation matters shall be in the charge of the Finance Department of the company. This financial derivatives trading business is not a related party transaction.
2、 Introduction to counterparty
The counterparties of the financial derivatives trading business to be carried out by the company are banks and other financial institutions with sound operation, good credit and qualified operation of financial derivatives trading business, which have no relationship with the company.
3、 Basic information of financial derivatives trading business
(I) types of financial derivatives trading business to be carried out
In order to reduce the impact of exchange rate fluctuations on the company’s operating performance, the company plans to carry out financial derivatives trading business, including but not limited to forward foreign exchange settlement and sales, options, forward foreign exchange trading, swaps (including currency swaps and interest rate swaps), currency swaps, etc.
(II) amount of financial derivatives trading business to be carried out
The company plans to carry out specific financial derivatives trading business for the purpose of hedging, and the maximum amount of funds used for financial derivatives trading business shall not exceed RMB 150 million or equivalent foreign currency; Within the authorized limit, the funds can be recycled.
4、 Purpose, existing risks and Countermeasures of carrying out financial derivatives trading business
(I) purpose of financial derivatives trading
The company does not conduct financial derivatives transactions solely for profit. All financial derivatives transactions are based on normal production and operation, based on specific business operations, and for the purpose of hedging, avoiding and preventing exchange rate and interest rate risks.
(II) risks of financial derivatives trading
1. Price fluctuation risk: the market risk of loss caused by the price change of financial derivatives due to the fluctuation of the underlying interest rate, exchange rate and market price.
2. Internal control risk: financial derivatives trading business is highly professional and complex, which may cause risks due to imperfect internal control mechanism.
3. Liquidity risk: the risk that the transaction cannot be completed due to insufficient market liquidity.
4. Performance risk: there is a risk of default caused by failure to perform the contract when the contract expires.
5. Legal risk: due to the change of relevant laws or the violation of relevant legal systems by counterparties, the contract may not be executed normally and bring losses to the company.
(III) risk response measures
1. Clarify the trading principles of financial derivatives: the trading of financial derivatives shall be based on the principle of hedging, and timely adjust the operation strategy in combination with the market conditions to improve the hedging effect.
2. System construction: the company has formulated the management system of financial derivatives trading business, which has made clear provisions on the operation specifications, approval authority, management process, information isolation measures, internal risk reporting system and risk handling procedures of financial derivatives trading business, which can effectively regulate the trading behavior of financial derivatives and control the trading risk of financial derivatives.
3. Product selection: before financial derivatives trading, conduct comparative analysis between multiple counterparties and multiple products, and select the financial derivatives most suitable for the company’s business background, strong liquidity and controllable risk to carry out business.
4. Counterparty Management: fully understand the business qualification, implementation team, involved trading personnel and authorization system of financial institutions handling financial derivatives, and carefully select banks and other financial institutions with good credit and long-term business contacts with the company. If necessary, professional institutions can be hired to analyze and compare the trading modes and counterparties of derivatives.
5. A specially assigned person shall be responsible for: a specially assigned person shall be assigned to continuously monitor the financial derivatives contracts held, timely report to the company’s decision-making level and formulate response plans in case of severe market fluctuations or increased risks, or major floating profits and losses.
5、 Accounting policies and accounting standards for financial derivatives business
In accordance with the relevant provisions and guidelines of 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 issued by the Ministry of finance, the company conducts corresponding accounting treatment for the proposed financial derivatives trading business, Reflect relevant items in the balance sheet and income statement.
6、 Impact on the company
On the premise of fully ensuring the demand for daily operating funds, not affecting normal business activities and effectively controlling risks, the company uses some of its own funds to carry out financial derivatives trading business, which is conducive to improving the company’s ability to deal with foreign exchange fluctuation risks and preventing the adverse impact of exchange rate fluctuations on the company’s operation; It is necessary to avoid the potential risks caused by the price fluctuation of raw materials to the company’s production and operation, lock in the cost by using reasonable financial instruments, reduce the product cost fluctuation caused by product price fluctuation, ensure the relative stability of the company’s operating performance and improve the company’s competitiveness.
The financial derivatives business to be carried out by the company matches the daily business needs of the company, and there is no speculative operation. The company has formulated the management system of financial derivatives trading business in accordance with the requirements of relevant laws and regulations, and formulated specific operation procedures for the company to engage in financial derivatives trading business by strengthening internal control and implementing risk prevention measures, which is feasible.
7、 Opinions of independent directors
The financial derivatives trading business carried out by the company and its subsidiaries is closely related to the daily business needs, which is conducive to avoiding the risk of exchange rate fluctuations, enhancing the company’s financial stability and meeting the needs of the company’s business development. Its relevant decision-making procedures comply with relevant national laws, regulations and the relevant provisions of the articles of association.
Based on normal operation and specific business, the company uses foreign exchange hedging tools to reduce exchange rate risk, reduce exchange loss and control operation risk under the framework of financial derivatives trading business management system, without damaging the interests of the company and all shareholders, especially small and medium-sized shareholders. Therefore, it is unanimously agreed that the company shall carry out financial derivatives trading business in accordance with the provisions of relevant systems.
8、 Verification opinions of the recommendation institution
Upon verification, Soochow Securities Co.Ltd(601555) believes that:
In order to effectively avoid the risks in the foreign exchange market and prevent the adverse impact of large exchange rate fluctuations on the company’s performance, the company has formulated risk control measures and adopted appropriate accounting policies and accounting principles. The above matters have been deliberated and approved by the board of directors and the board of supervisors of the company, and the independent directors have expressed their consent to the matter. The relevant examination and approval procedures comply with the provisions of relevant laws, regulations and normative documents such as the Listing Rules of GEM stocks of Shenzhen Stock Exchange, the guidelines for self discipline supervision of listed companies of Shenzhen Stock Exchange No. 2 – standardized operation of GEM listed companies, and there is no damage to the interests of the company and shareholders, especially the interests of minority shareholders.
9、 Documents for future reference
1. Resolutions of the 4th meeting of the 5th board of directors of the company;
2. Independent opinions of the company’s independent directors on matters related to the fourth meeting of the Fifth Board of directors;
3. Resolutions of the 4th meeting of the 5th board of supervisors of the company;
4. Verification opinions of the recommendation institution.
It is hereby announced
Svg Tech Group Co.Ltd(300331) board of directors
March 11, 2022
