Securities code: Zhejiang Satellite Petrochemical Co.Ltd(002648) securities abbreviation: Satellite chemistry Announcement No.: 2022023 satellite Chemistry Co., Ltd
Announcement on carrying out foreign exchange 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: foreign exchange hedging business in the same currency as the main settlement currency used in production and operation.
2. Investment amount: the investment shall not exceed RMB 5 billion (including this amount).
3. Special risk tip: in order to effectively control the operation risk and improve the company’s ability to resist market fluctuations, the company and its subsidiaries plan to conduct foreign exchange hedging business in the same currency as the main settlement currency used in production and operation. Please pay attention to the investment risk.
1、 Overview of investment
1. Investment purpose
The quantity of imported raw materials and export trade of satellite Chemical Co., Ltd. (hereinafter referred to as “the company”) and its subsidiaries is rising. The foreign currency settlement business of the company and its subsidiaries is very frequent. Overseas sales and purchases are mostly settled in US dollars, and the daily foreign exchange revenue and expenditure do not match. In order to avoid foreign exchange market risks and prevent the adverse impact of large exchange rate fluctuations on production, operation and cost control, the company and its subsidiaries plan to carry out foreign exchange hedging business, which will not affect the development of the company’s main business.
2. Investment amount
According to the actual scale of the import and export business of the company and its subsidiaries, the company and its subsidiaries plan to carry out foreign exchange hedging business in 2022, and the investment in this business scale shall not exceed RMB 5 billion (including this amount).
3. Investment mode
The hedging business of the company and its subsidiaries is limited to the foreign exchange hedging business in the same currency as the main settlement currency used in production and operation, with the delivery period consistent with the predicted collection period and the amount matching the predicted collection amount. The foreign exchange hedging, foreign exchange swap and other derivative business processes established by the company shall be conducted in accordance with the provisions of the foreign exchange hedging and foreign exchange settlement system, but not limited to the foreign exchange hedging, foreign exchange swap and other related business processes.
The main settlement foreign currencies of the company and its subsidiaries include US dollar, Japanese yen and euro.
4. Investment period
The investment period is from the deliberation and approval of the 2021 annual general meeting of shareholders to the convening of the 2022 annual general meeting of shareholders. The board of directors of the company requests the general meeting of shareholders to authorize the chairman of the company to sign the foreign exchange hedging business contract according to the business conditions and actual needs within this limit.
5. Source of funds
To carry out foreign exchange hedging business, there is no need to invest capital except to pay a certain proportion of margin in accordance with the agreement signed with the bank. The source of funds for foreign exchange hedging business is the company’s own funds, which does not involve the use of raised funds or bank credit funds. The proportion of margin paid is determined according to the specific agreement signed with the bank.
2、 Review procedure
On March 18, 2022, the 13th meeting of the Fourth Board of directors of the company deliberated and adopted the proposal on carrying out foreign exchange hedging business in 2022 with 7 affirmative votes, 0 negative votes and 0 abstention votes. According to relevant laws and regulations and the articles of association, the proposal needs to be submitted to the general meeting of shareholders for deliberation. This matter does not involve related party transactions, and there is no need to perform the decision-making procedures of related party transactions.
3、 Investment risk analysis and risk control measures
(I) risk analysis of foreign exchange hedging business
In carrying out foreign exchange hedging business, the principle of locking exchange rate risk and hedging shall be followed. Speculative and arbitrage trading operations shall not be carried out. When signing the contract, transactions shall be carried out in strict accordance with the company’s predicted payment (Collection) period and payment (Collection) amount. Foreign exchange hedging business can reduce the impact of exchange rate fluctuations on the company in case of large exchange rate fluctuations, but at the same time, foreign exchange hedging business will also have certain risks:
1. Exchange rate fluctuation risk: in case of large changes in exchange rate, the quotation of bank settlement and sales exchange rate may be lower than the quotation exchange rate of the company to customers (suppliers), so that the company and its subsidiaries cannot lock according to the quotation exchange rate, resulting in exchange losses;
2. Internal control risk: foreign exchange hedging business is highly professional and complex, which may cause risks due to imperfect internal control system;
3. Customer default risk: the customer’s accounts receivable are overdue, and the payment cannot be recovered within the predicted collection period, which will lead to delayed delivery and losses to the company;
4. Collection forecast risk: the foreign trade department forecasts the collection according to the customer’s orders and expected orders. In the actual implementation process, the customer may adjust the orders, resulting in inaccurate collection forecast of the company and its subsidiaries, resulting in the risk of delayed delivery.
(II) risk control measures taken by the company
1. Quote to customers or suppliers at the bank’s forward foreign exchange settlement and sales exchange rate, so that the company and subsidiaries can lock at the quotation exchange rate after confirming the order;
2. The internal control system for foreign exchange hedging has been formulated, a strict and effective risk management system has been established, and various risks have been prevented, found and resolved by using risk control measures in advance, during and after the event; 3. In strict accordance with the provisions of the long-term foreign exchange settlement plan, control the total amount of foreign exchange funds and the time of foreign exchange settlement and sales. In principle, the amount and time of exchange rate locking shall match the amount and time of foreign currency payment (withdrawal of foreign currency payment). At the same time, the company and its subsidiaries will attach great importance to the management of foreign currency accounts receivable to avoid overdue accounts receivable; 4. Carrying out foreign exchange hedging transactions must be strictly based on the foreign currency receipt and payment forecast of the company and its subsidiaries;
5. The internal audit department of the company and the audit committee of the board of directors shall regularly and irregularly check the signing and implementation of the actual transaction contract.
4、 Impact of investment 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. 23 – transfer of financial assets, the accounting standards for Business Enterprises No. 24 – hedge accounting, the accounting standards for business enterprises No. 37 – presentation of financial instruments, and the accounting standards for Business Enterprises No. 39 – fair value measurement, the company conducts corresponding accounting treatment for derivative transactions, Reflect relevant items in the balance sheet and income statement.
5、 Opinions of independent directors
After careful review, we believe that it is necessary for the company and its subsidiaries to carry out foreign exchange hedging business based on specific business, by means of hedging, for the purpose of avoiding and preventing the risk of exchange rate fluctuation, and for the purpose of protecting normal operating profits; The company has formulated the management system of foreign exchange hedging business and improved relevant internal control processes, and the targeted risk control measures taken are feasible and effective; At the same time, the margin of foreign exchange hedging business carried out by the company and its subsidiaries will use its own funds, not involving raised funds. The foreign exchange hedging business carried out by the company and its subsidiaries complies with relevant regulations, and its decision-making procedures are legal and effective, without harming the interests of the company and its shareholders, especially minority shareholders. We unanimously agree that the company will carry out foreign exchange hedging business in 2022, with an investment of no more than RMB 5 billion (including this amount), which will be recycled within this limit, and agree to submit it to the general meeting of shareholders for deliberation.
6、 Documents for future reference
1. Resolutions of the 13th meeting of the 4th board of directors of the company;
2. Resolutions of the 12th meeting of the 4th board of supervisors of the company;
3. Independent opinions of independent directors on matters related to the 13th meeting of the Fourth Board of directors;
It is hereby announced.
Board of directors of satellite Chemical Co., Ltd. March 22, 2002
