Securities code: Allwinnertech Technology Co.Ltd(300458) securities abbreviation: Allwinnertech Technology Co.Ltd(300458) Announcement No.: 20220325-008 Allwinnertech Technology Co.Ltd(300458)
Announcement on the company’s foreign exchange hedging business
The board of directors does not guarantee that the information disclosed by the company is true, complete or misleading.
Allwinnertech Technology Co.Ltd(300458) (hereinafter referred to as “the company”) convened the 14th meeting of the 4th board of directors and the 13th meeting of the 4th board of supervisors on March 24, 2022, deliberated and adopted the proposal on the company’s foreign exchange hedging business, and agreed that the company and its subsidiaries use their own funds to carry out foreign exchange hedging business with banks and other financial institutions with a total amount of no more than 900 million yuan or equivalent foreign currency. Within this limit, it can be used circularly. The authorization period is from April 1, 2022 to April 1, 2023. The details are as follows: first, the purpose of carrying out foreign exchange hedging business
In order to effectively avoid the risks in the foreign exchange market, prevent the adverse impact of large exchange rate fluctuations on the company, improve the use efficiency of foreign exchange funds, reasonably reduce financial expenses and increase exchange earnings, the company and its subsidiaries plan to carry out foreign exchange hedging business with banks and other financial institutions to reduce the impact of exchange rate fluctuations on the company’s performance.
2、 Basic information of foreign exchange hedging business
1. Mainly involving currency and business types
The foreign exchange hedging business to be carried out by the company and its subsidiaries is limited to the same currency as the main settlement currency used by the company, and the main foreign currency is US dollar.
The foreign exchange hedging business to be carried out by the company and its subsidiaries mainly includes forward foreign exchange settlement and sales, foreign exchange swaps, foreign exchange options and other foreign exchange derivatives.
2. Business scale and source of investment
According to the company’s asset scale and business demand, the company and its subsidiaries and banks and other financial institutions carry out foreign exchange hedging business with a total amount of no more than 900 million yuan or equivalent foreign currency. Within this limit, it can be used circularly.
The company’s investment in foreign exchange hedging business comes from the company’s own funds and does not involve raised funds.
3. Contract term
The duration of the company’s foreign exchange derivatives trading business shall not exceed two years.
4. Counterparty
Banks and other legal financial institutions at home and abroad.
5. Term and authorization
The authorization period is from April 1, 2022 to April 1, 2023. The maximum balance of foreign exchange trading business at any time point within the authorization period is RMB 900 million. In view of the close relationship between foreign exchange hedging business and the company’s operation, the board of directors of the company authorizes the chairman of the company to approve the daily foreign exchange hedging business plan and sign contracts related to foreign exchange hedging business.
3、 Risk analysis of foreign exchange hedging
The foreign exchange hedging business of the company and its subsidiaries follows the prudent principle and does not carry out foreign exchange and interest rate transactions for the purpose of speculation. All foreign exchange hedging businesses are based on normal production and operation, relying on specific business operations, and aiming at avoiding and preventing exchange rate and interest rate risks. However, foreign exchange hedging business also has certain risks:
When the exchange rate fluctuates sharply with the hedging direction of the company, the exchange rate will fluctuate significantly, which will cause exchange rate loss; If the exchange rate fluctuates in the future, a large deviation from the foreign exchange hedging contract will also cause 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. Transaction default risk: if the foreign exchange hedging counterparty defaults and fails to pay the hedging profit of the company as agreed, the actual exchange loss of the company cannot be hedged, which will cause the loss of the company;
4. Customer default risk: the overdue of customers’ accounts receivable and customers’ adjustment of orders will make the actual payment collection inconsistent with the expected payment collection, which may make the actual cash flow unable to fully match the term or amount of the operated foreign exchange hedging business, resulting in the loss of the company.
4、 Risk control measures to be taken by the company
1. The company has formulated the management system of foreign exchange hedging business, which clearly stipulates the operation specifications, approval authority, management process, information isolation measures, internal risk reporting system and risk handling procedures of foreign exchange hedging business;
2. In order to control the risk of large fluctuation of exchange rate, the company will strengthen the research and analysis of exchange rate, pay real-time attention to the changes of international market environment, adjust business strategy in time and avoid exchange loss to the greatest extent;
3. In order to avoid internal control risks, the company’s financial department is responsible for the unified management of the company’s foreign exchange hedging business. All foreign exchange transactions are based on normal production and operation and rely on specific business operations. Speculation and arbitrage transactions are not allowed, and business operations are carried out in strict accordance with the provisions of the management system of foreign exchange hedging business, so as to effectively ensure the implementation of the system;
4. In order to control the risk of transaction default, the company only carries out foreign exchange hedging business with banks and other financial institutions with relevant business operation qualifications to ensure the legitimacy of the company’s management of foreign exchange derivatives transactions.
5、 Accounting policies and accounting principles
According to 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 – hedging, accounting standards for Business Enterprises No. 37 – presentation of financial instruments, the company conducts corresponding accounting treatment for the proposed foreign exchange hedging business, reflecting the relevant items of the balance sheet and income statement.
6、 Opinions of the board of supervisors and independent directors
1. Opinions of the board of supervisors
The company and its subsidiaries carry out foreign exchange hedging business in order to make full use of foreign exchange hedging tools to reduce or avoid exchange rate risks caused by exchange rate fluctuations, reduce exchange losses and control business risks, which is necessary. The company has formulated the foreign exchange hedging business management system and improved the relevant internal control system. The targeted risk control measures taken by the company are feasible. In line with the actual situation of the company, there is no situation that damages the interests of the company and shareholders, especially minority shareholders. Agree to carry out foreign exchange hedging business.
2. Opinions of independent directors
Independent directors believe that the company and its subsidiaries use foreign exchange hedging tools to reduce exchange rate risks and exchange losses on the premise of ensuring normal production and operation based on normal production and operation and specific business operations. At the same time, the company has formulated the management system of foreign exchange hedging business, and formulated specific operating procedures for the company to engage in foreign exchange hedging business by strengthening internal control and implementing risk prevention measures. The company’s foreign exchange hedging business is feasible and the risk can be controlled. Relevant decision-making procedures comply with relevant laws, regulations and the relevant provisions of the articles of association, and there is no situation that damages the interests of the company and all shareholders, especially minority shareholders. Agree to carry out foreign exchange hedging business.
7、 Documents for future reference
1. Resolutions of the 14th meeting of the 4th board of directors;
2. Resolutions of the 13th meeting of the 4th board of supervisors;
3. Opinions of independent directors on relevant matters. It is hereby announced.
Allwinnertech Technology Co.Ltd(300458) board of directors March 25, 2022
