Shantui Construction Machinery Co.Ltd(000680) : 2021 annual risk assessment report of Shandong heavy industry group finance Co., Ltd

Securities code: Shantui Construction Machinery Co.Ltd(000680) securities abbreviation: Shantui Construction Machinery Co.Ltd(000680) Announcement No.: 2022017 Shantui Construction Machinery Co.Ltd(000680)

Risk assessment report of Shandong heavy industry group finance Co., Ltd. in 2021

According to the requirements of self regulatory guidelines for listed companies No. 7 – transactions and related party transactions of Shenzhen Stock Exchange, Shantui Construction Machinery Co.Ltd(000680) (hereinafter referred to as ” Shantui Construction Machinery Co.Ltd(000680) “) reviewed the financial statements of the financial company and evaluated the business qualification, business and risk status of the financial company by checking the financial license, business license and relevant materials of Shandong heavy industry group finance Co., Ltd. (hereinafter referred to as “financial company”), The details are reported as follows:

1、 Basic information of finance company

Finance company is a non bank financial institution established with the approval of Bank Of China Limited(601988) Insurance Regulatory Commission (hereinafter referred to as “cbcirc”) (YJF [2012] No. 269). The finance company obtained the financial license (Organization Code: l0151h2370010001) on June 11, 2012 and the business license (Unified Social Credit Code: 9137 North Huajin Chemical Industries Co.Ltd(000059) 7828707n) on the same day.

According to the requirements of the notice on the renewal of new financial licenses of financial companies stationed in Jinan issued by the finance company Department of Shandong banking and Insurance Regulatory Bureau on December 2, 2021, the finance company completed the renewal of financial licenses on December 7, 2021, and the issuing authority was changed from ” Bank Of China Limited(601988) Industry Regulatory Commission Shandong regulatory bureau” to ” Bank Of China Limited(601988) Insurance Regulatory Commission Shandong regulatory bureau”.

According to the reply of Shandong Banking Regulatory Bureau on increasing registered capital and adjusting equity structure of Shandong heavy industry group finance Co., Ltd. (lyjz [2017] No. 449) on December 26, 2017, the finance company completed the equity change registration of Shandong Administration for Industry and Commerce on December 27, 2017. Due to the replacement of the legal representative, the finance company completed the change registration of the legal representative of Shandong Administration for Industry and Commerce and renewed the business license on November 14, 2019 and May 20, 2021. The registered capital and equity composition of the finance company are as follows:

(I) Shandong Heavy Industry Group Co., Ltd. (hereinafter referred to as “Shandong heavy industry”) invested 600 million yuan, accounting for 37.5% of the registered capital of the finance company;

(II) Weichai Power Co.Ltd(000338) invested 500 million yuan (including 10 million US dollars), accounting for 31.25% of the registered capital of the finance company;

(III) Weichai Heavy Machinery Co.Ltd(000880) (hereinafter referred to as ” Weichai Heavy Machinery Co.Ltd(000880) “) contributed 200 million yuan, accounting for 12.5% of the registered capital of the finance company;

(IV) Shantui Construction Machinery Co.Ltd(000680) (hereinafter referred to as ” Shantui Construction Machinery Co.Ltd(000680) “) contributed 200 million yuan, accounting for 12.5% of the registered capital of the finance company; (V) Shaanxi fast Gear Co., Ltd. (hereinafter referred to as “Shaanxi fast”) invested 100 million yuan, accounting for 6.25% of the registered capital of the finance company.

Legal representative: Shen Chuandong

Registration and place of business: No. 40-1, yanzixi Road, Jinan City, Shandong Province

Business scope: handle financial and financing consulting, credit assurance and related consulting and agency business for member units; Assist member units to realize the receipt and payment of transaction funds; Approved insurance agency business; Provide guarantee to member units; Handle entrusted loans between member units; Handle bill acceptance and discount for member companies; Handle the internal transfer settlement between member units and the corresponding settlement and clearing scheme design; Absorbing deposits from member units; Handle loans and financial leases for member units; Engage in interbank lending; Underwriting corporate bonds of member units; Investment in marketable securities (excluding investment in the secondary stock market); Consumer credit, buyer’s credit and financial leasing of products of member units; Other businesses approved by the China Banking and Insurance Regulatory Commission.

2、 Basic information of the internal control system of the financial company

(I) control environment

In accordance with the relevant requirements of the guidelines for comprehensive risk management of banking financial institutions, the finance company has established a risk governance structure with sound organizational structure and clear responsibility boundary, defined the division of responsibilities of the party organization, the board of directors, the board of supervisors, senior management, functional departments, risk management departments and internal audit department in risk management and internal control, and continued to establish and improve a multi-level, interconnected and effective check and balance operation mechanism. The financial company sets up the company’s organizational structure according to the principle of mutual checks and balances among decision-making system, execution system and supervision and feedback system. The decision-making system includes the shareholders’ meeting and the board of directors; The executive system includes the senior management and its subordinate professional committees and functional departments; The supervision and feedback system includes the board of supervisors, the Risk Management Committee directly responsible to the board of directors, the risk compliance department and the audit department. The organizational structure design of the finance company is as follows:

Party Organizations: give full play to the leading role of taking direction, managing the overall situation and ensuring implementation, focus on managing political direction, leading groups, basic systems, major decisions and Party building, and assume the responsibility of strictly managing the party. Major business and management matters of the finance company must be studied and discussed by the party organization, and then decided by the board of directors or senior management.

Board of directors: responsible for formulating the overall business strategy and major policies of the finance company, and regularly inspecting and evaluating the implementation; Be responsible for formulating the company’s basic management system, formulating the company’s risk management, internal control and compliance policies, and supervising the implementation of the system; Be responsible for ensuring that the finance company operates prudently within the framework of laws and policies, and ensure that the senior management takes necessary measures to identify, measure, monitor and control risks.

Risk Management Committee of the board of directors: the risk management committee is the coordinating, deliberating and executing body of risk management and internal control of the board of directors. It exercises its functions and powers independently within the scope authorized by the board of directors and is directly responsible to the board of directors. Mainly responsible for reviewing the company’s risk strategy, risk management policy, risk management organization setting and division of responsibilities; Supervise the senior management’s control of credit risk, liquidity risk, market risk, operational risk, compliance risk, information technology risk, anti money laundering risk and reputation risk, evaluate the risk management status of the financial company, put forward opinions on improving the company’s risk management and internal control, and submit an annual report on comprehensive risk management to the board of directors.

Board of supervisors: inspect the company’s finance, supervise the performance of duties by the company’s directors and senior managers, and propose the removal or dismissal of directors and senior managers who violate laws, administrative regulations, the articles of association or the resolutions of the shareholders’ meeting to the shareholders’ meeting or the board of directors; Be responsible for requiring directors, chairman and senior managers to correct their behaviors that damage the interests of the financial company and supervise the implementation; Supervise the company’s business decision-making, risk management, internal control and other business management behaviors, and inspect and urge the effective implementation of the company’s internal control measures; Evaluate the annual performance of directors, supervisors and senior managers, and report to the shareholders’ meeting and regulatory authorities.

Senior management: execute the decisions of the board of directors according to the authorization and delegation of the company; Be responsible for formulating the specific rules of the finance company; Establish procedures and measures for identifying, measuring, monitoring and controlling risks; Be responsible for establishing and improving the internal organization to ensure the effective performance of various responsibilities of internal control.

There are professional committees under the senior management: the company sets up credit review committee, investment management committee, asset liability ratio management committee, price management working committee, financial audit working committee, information technology working committee, bidding committee, risk internal control and compliance Working Committee and work safety committee. Each committee is responsible to the general manager and is responsible for risk management, internal control The coordination, discussion and execution organization of compliance management and other matters provide reference for the decision-making of the company’s senior management.

Functional departments: the capital settlement department, customer service department, industrial chain business department, capital operation Department, international business department, credit management review center, risk compliance department, financial statistics department, information technology department, audit department and other functional departments set up by the finance company cover most of the assets and liabilities business and main management functions of the finance company. They directly face all kinds of risks in their daily work and are the front line of risk management of the finance company. Each business department undertakes the following risk management responsibilities: 1. Fully understand and analyze various risks of the Department, ensure that all businesses operate according to the established process, and effectively implement and implement various internal control measures. 2.

2. Record and archive the results of risk assessment and internal control measures, and accurately and timely report to the daily risk monitoring report required by the risk management department.

3. Test and evaluate the effectiveness of internal control measures, and put forward suggestions on the improvement of operation process and internal control measures to the risk compliance department.

4. Discover and report possible risk categories in time, and put forward risk management suggestions.

Risk and compliance department: its main responsibility is to formulate relevant policies for comprehensive risk management and compliance management of the finance company, and organize all functional departments to implement comprehensive risk management and compliance management; Organize risk identification, assessment, monitoring, early warning and reporting on the company’s business activities; Organize risk assessment of new business and new products; Organize the research and review of the company’s rules and regulations and operation processes, and supervise and assess the implementation of risk management, compliance management and internal control; Organize the implementation of asset risk classification and identification; Organize anti money laundering and case prevention management.

Audit department: responsible for internal audit of the company’s operation and management, post supervision of the company’s capital settlement business and investment operation business, supervision of the company’s risk management, internal control and compliance management, and annual internal control evaluation.

(II) risk identification and assessment

On the basis of summarizing and refining the practical experience of operation and management for many years, the finance company continued to establish and improve the comprehensive risk management system, and fully completed and operated the risk management system with corporate governance risk, credit risk, market risk, liquidity risk, operational risk and information technology risk as the main body in 2018 to guide and standardize the company’s risk management activities. The finance company combines the actual situation and adopts a combination of qualitative and quantitative methods to identify, measure, evaluate, monitor, report and control various risks. At the same time, it fully considers the correlation between risks, carefully evaluates the interaction of various risks, and explores the methods and procedures of risk aggregation. The risk compliance department is responsible for monitoring and assessing the operation of the company’s risk management system and various business management. The audit department regularly audits and evaluates the adequacy and effectiveness of the company’s comprehensive risk management.

(III) control activities

The finance company always adheres to the concept of “system first”, takes the construction of internal control system as an important part of the company’s development strategy and comprehensive risk management planning, and is committed to the continuous improvement and perfection of internal control system. Since 2016, the finance company has been guided by the full coverage of internal control, defined the system compliance standards, improved the system implementation standards, established inspection and supervision control standards, continuously improved the identification of key risk points and the internal control measures of key businesses, strengthened the internal control under the computer system environment, and continuously improved the emergency management mechanism of emergencies and business continuity. 1. Settlement business control

In accordance with various rules and regulations stipulated by relevant state departments and the people’s Bank of China, the finance company has formulated business management measures and business operation processes such as settlement business management measures, settlement account management measures, interbank account management measures, e-commerce bill business management measures, operating procedures for the accounting of interest receivable and payable, off balance sheet business accounting measures and important blank vouchers management measures, Firstly, specify the operation specifications and control standards in the procedures and processes to effectively control business risks, as shown below:

(1) In terms of fund plan management, the business operation of the finance company strictly follows the asset liability management requirements of the measures for the management of enterprise group financial companies, and establishes the operation liquidity management model through the formulation and implementation of fund plan management, cash flow analysis, asset liability ratio management and other systems, so as to ensure the safety, efficiency and liquidity of the company’s funds.

(2) In terms of deposit business of member units, the finance company strictly follows the principles of equality, voluntariness, fairness and good faith to ensure the safety of funds of member units and safeguard the legitimate rights and interests of all parties.

(3) In terms of centralized fund management and internal transfer settlement business, member units open settlement accounts in financial companies and realize fund settlement through private network transmission path, so as to strictly ensure the safety and quickness of settlement and high data security. The finance company strictly implements the internal control norms of monetary funds, and different personnel are in charge of cheques, reserved bank financial seals and reserved bank seals.

2. Credit business

The finance company adheres to steady operation and comprehensively uses risk aversion, risk dispersion, risk transfer, risk compensation and other means to realize effective credit risk management. By implementing one policy for each customer, the finance company guides the customer marketing of the credit operation Department to focus on customers in line with the group’s strategic planning to avoid customers with high credit risk; Through the implementation of quota management, expand the business scope and disperse business risks; Increase the second source of repayment and transfer credit risk through various risk mitigation measures such as mortgage and pledge guarantee; Balance risk and return through risk pricing strategy. At the same time, the company followed the principles of first rating, post credit and specific use, and established a credit business process with clear responsibilities, clear division of labor and moderate authorization. In accordance with the principle of “separation of loans and loans”, credit operations were carried out in strict accordance with the principle of “separation of loans and loans”. The risk compliance department shall carry out risk assessment as required.

3. Investment business

The finance company carries out investment business in accordance with regulatory requirements. The board of directors of the company deliberates and determines the types of business carried out every year and the access list of counterparties. The senior management establishes a credit review committee to approve the interbank credit line of counterparties within the access scope of the board of directors. In the process of specific business handling, the functions of investment decision-making, transaction execution, capital clearing and risk control are relatively separated.

4. Fund transaction business

The capital business of the finance company includes: deposit reserve payment, position allocation, interbank deposit, interbank lending, rediscount and rediscount, reverse repurchase, etc. the interbank lending business is approved by the national interbank lending center, and the counterparty is subject to interbank credit access management and limit management. capital

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