Suzhou Co., Ltd
Feasibility analysis report on the company and its subsidiaries to carry out long-term foreign exchange settlement and sales business I. purpose of carrying out long-term foreign exchange settlement and sales business
Kangping Technology (Suzhou) Co.Ltd(300907) (Suzhou) Co., Ltd. (hereinafter referred to as "the company") and its subsidiaries account for a large proportion of overseas sales in the overall business, while the main settlement currencies of overseas sales are US dollars and euros. Exchange rate fluctuations will have a certain impact on the company's performance. Therefore, in order to further improve the ability of the company and its subsidiaries to deal with foreign exchange fluctuation risks and enhance the company's financial stability, To reduce the impact of future exchange rate fluctuations between us dollar and euro against RMB on the company's operating performance, after careful consideration, the company and its subsidiaries plan to carry out forward foreign exchange settlement and sales business.
2、 Basic information of carrying out forward foreign exchange settlement and sales business
Forward foreign exchange settlement and sales business refers to the business of foreign exchange settlement and sales in accordance with the currency, amount, exchange rate and time limit of foreign exchange settlement or sales in the future when the bank signs the forward foreign exchange settlement and sales contract with the customer, and when the foreign exchange income or expenditure occurs on the due date, the foreign exchange settlement or sales business is handled according to the currency, amount and exchange rate agreed in the forward foreign exchange settlement and sales contract.
The forward foreign exchange settlement and sales business carried out by the company and its subsidiaries is limited to the main settlement currencies used by the company for production and operation, namely US dollars and euros. The company and its subsidiaries carry out forward foreign exchange settlement and sales business, follow the principle of hedging, do not engage in speculative arbitrage transactions, and the risk level is low.
The company and its subsidiaries intend to carry out forward foreign exchange settlement and sales business with a total amount of no more than 300 million yuan, which is effective within one year from the date of deliberation and approval by the general meeting of shareholders of the company. Within the above limit and period, the funds can be recycled. 3、 Feasibility analysis of carrying out forward foreign exchange settlement and sales business
At present, affected by the uncertain factors of international politics and economy, the foreign exchange market fluctuates frequently and the exchange rate amplitude is increasing. However, overseas sales account for a large proportion in the overall business of the company and its subsidiaries, and the main settlement currencies of overseas sales are US dollars and euros. The exchange rate fluctuation will bring some uncertainty to the operation and settlement of the company and its subsidiaries. Therefore, in order to prevent foreign exchange market risks, reduce exchange losses and further improve the financial stability of the company, it is necessary for the company and its subsidiaries to carry out forward foreign exchange settlement and sales business in a timely and appropriate manner according to their own actual situation. The company and its subsidiaries carry out forward foreign exchange settlement and sales business around their main business, not speculative arbitrage trading for the purpose of profit. In view of the possible risks in carrying out forward foreign exchange settlement and sales business, the company has formulated relevant rules and regulations, has perfect internal control processes, and the targeted risk control measures taken by the company are practical and feasible. Therefore, it is necessary and feasible for the company and its subsidiaries to carry out forward foreign exchange settlement and sales business.
4、 Risk analysis and risk control measures for carrying out forward foreign exchange settlement and sales business
1. Risk analysis
The company and its subsidiaries carry out forward foreign exchange settlement and sales business in accordance with the principle of hedging and do not engage in speculative arbitrage transactions, but there may still be certain risks:
(1) Exchange rate fluctuation risk: when the exchange rate changes greatly, if the forward exchange rate agreed in the confirmation of forward exchange settlement and sales is lower than the real-time exchange rate, exchange losses will be caused;
(2) Internal control risk: forward foreign exchange settlement and sales transactions are 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 cause the delay in the delivery of forward foreign exchange settlement and sales, resulting in the loss of the company;
(4) Collection forecast risk: the sales department forecasts the collection according to the customer's orders and expected orders. In the actual implementation process, the customer may adjust their own orders and forecasts, resulting in inaccurate collection forecast of the company, resulting in the risk of delayed delivery of forward foreign exchange settlement and sales.
2. Risk control measures
(1) Select the forward foreign exchange settlement and sales business with simple structure, strong liquidity and controllable risk;
(2) The company has formulated the financial derivatives trading management system, which clearly stipulates the internal audit process, decision-making procedures, information isolation measures, internal risk reporting system, risk handling procedures and information disclosure;
(3) In order to prevent the delayed delivery of forward settlement and sales of foreign exchange, the company attaches great importance to the management of accounts receivable, actively collects accounts receivable, avoids the overdue phenomenon of accounts receivable, and tries to control the risk of delayed delivery within the minimum range;
(4) The company will strengthen the research and analysis of the exchange rate, pay real-time attention to the changes in the international market environment, adjust the operation strategy in time, and minimize the exchange loss.
5、 Accounting policies and accounting principles for carrying out forward foreign exchange settlement and sales business
The company and its subsidiaries shall conduct corresponding financial accounting for the forward settlement and sales of foreign exchange in accordance with the relevant provisions and guidelines of the 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, accounting standards for Business Enterprises No. 39 - fair value measurement, etc, Reflect relevant items in the balance sheet and income statement.
6、 Conclusion of feasibility analysis of carrying out forward foreign exchange settlement and sales business
The forward foreign exchange settlement and sales business of the company and its subsidiaries is carried out around its main business, follows the principle of hedging, and is not a speculative arbitrage transaction for the purpose of profit. Timely and appropriate development of forward foreign exchange settlement and sales business can effectively prevent foreign exchange market risks, reduce exchange losses and further improve the financial stability of the company. At the same time, the company has formulated relevant rules and regulations and improved relevant internal control processes for the possible risks of carrying out long-term foreign exchange settlement and sales business. In conclusion, it is necessary and feasible for the company and its subsidiaries to carry out long-term foreign exchange settlement and sales business.
Board of directors of Kangping Technology (Suzhou) Co.Ltd(300907) (Suzhou) Co., Ltd. April 2, 2022
