Securities code: Hunan Aihua Group Co.Ltd(603989) securities abbreviation: Hunan Aihua Group Co.Ltd(603989) Announcement No.: 2022030 convertible bond Code: 113504 convertible bond abbreviation: Aihua convertible bond
Hunan Aihua Group Co.Ltd(603989)
Announcement on the company's foreign exchange hedging business
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents. Important content tips:
Hunan Aihua Group Co.Ltd(603989) (hereinafter referred to as "the company") intends to use its own funds to carry out foreign exchange hedging business with banks with a total amount of no more than US $200 million or other equivalent foreign currencies (the funds within the limit can be used in a rolling manner) in 2022, which is valid from January 1, 2022 to the date of the 2022 annual general meeting of shareholders.
The company's foreign exchange hedging business is based on normal production and operation, with the purpose of avoiding and preventing exchange rate risks, and does not carry out speculation and arbitrage transactions solely for the purpose of profit.
Deliberation procedure: on April 2, 2022, the company held the sixth meeting of the Fifth Board of directors and the sixth meeting of the Fifth Board of supervisors, deliberated and adopted the proposal on the company's foreign exchange hedging business respectively, and the independent directors issued written opinions. The proposal still needs to be submitted to the general meeting of shareholders of the company for deliberation and approval.
Hunan Aihua Group Co.Ltd(603989) held the 6th meeting of the 5th board of directors and the 6th meeting of the 5th board of supervisors on April 2, 2022, deliberated and adopted the proposal on the company's foreign exchange hedging business. With the development of foreign exchange business, the company needs to avoid the impact of frequent fluctuations in the foreign exchange market, hedge the performance of foreign exchange settlement institutions, and reasonably reduce the impact of foreign exchange market on the company's business development. It is agreed that the company will use its own funds to carry out foreign exchange hedging business with banks with a total amount of no more than US $200 million or other equivalent foreign currencies (the funds within the limit can be used in a rolling manner) in 2022, which is valid from January 1, 2022 to the date of the annual general meeting of shareholders in 2022. The details of foreign exchange hedging business are as follows:
1、 Purpose of foreign exchange hedging
In order to reasonably avoid exchange rate risks, reduce the adverse impact of exchange rate fluctuations on the company's cost control and operating performance, improve the use efficiency of foreign exchange funds and reasonably reduce financial expenses. The company plans to carry out foreign exchange hedging business. The business is based on normal production and operation, with the purpose of avoiding and preventing exchange rate risks, and does not carry out speculation and arbitrage transactions solely for the purpose of profit.
2、 Overview of foreign exchange hedging
(I) business type
The foreign exchange hedging business to be carried out by the company mainly includes but is not limited to forward foreign exchange settlement and sales, foreign exchange swap, foreign exchange option and related portfolio products.
(II) business currency
The company's foreign exchange hedging business is limited to the main settlement currencies used in the company's actual production and operation, mainly including US dollars, Hong Kong dollars, etc.
(III) business scale and term
The capital limit of the company's proposed foreign exchange hedging business shall not exceed US $200 million or other equivalent foreign currencies (the funds within the limit can be used on a rolling basis), and the limit shall be valid from January 1, 2022 to the date of the annual general meeting of shareholders in 2022.
(IV) source of funds
The company's foreign exchange hedging business is funded from its own funds and does not involve raised funds. (V) authorization matters
The company authorizes the chairman to examine and approve the specific operation plan of the company's daily foreign exchange hedging business and sign relevant agreements and documents within the above limit.
3、 Analysis of foreign exchange hedging risk
The company's foreign exchange hedging business follows the principle of soundness and neutrality, and does not carry out foreign exchange transactions for the purpose of speculation. All foreign exchange hedging business is based on normal production and operation, based on specific business operations, and for the purpose of avoiding and preventing exchange rate risks. However, foreign exchange hedging business also has certain risks:
(I) risk of large fluctuation of exchange rate: in the case of large fluctuation of exchange rate, the exchange rate quotation of forward settlement and sale of foreign exchange by the bank may deviate from the exchange rate at the time of actual receipt and payment of the company, resulting in exchange loss.
(II) internal control risk: foreign exchange hedging business is highly professional and complex, which may cause risks due to imperfect internal control system;
(III) default risk of customers or suppliers: the overdue accounts receivable of customers, the failure to recover the payment within the predicted collection period, or the delay of the payment to suppliers will affect the cash flow of the company, which may make the actual cash flow unable to fully match the term or amount of the operated foreign exchange hedging business.
4、 Risk control measures taken by the company
(I) the company conducts forward foreign exchange transactions in accordance with the principles of hedging and neutrality, and does not engage in speculative arbitrage transactions. When signing the contract, the company conducts transactions in strict accordance with the foreign exchange collection period, foreign exchange payment period and amount predicted by the company. All forward foreign exchange settlement and sales businesses have a normal trade background.
(II) the company has formulated perfect operation procedures. In order to avoid internal control risks, the company's financial center is responsible for the unified management of the company's foreign exchange hedging business, conducting business operations in strict accordance with the procedures and effectively ensuring the implementation of the system.
(III) the company strengthened the risk control of accounts receivable, strictly controlled overdue accounts receivable and bad debts, and made efforts to improve the accuracy of collection prediction and reduce the prediction risk.
(IV) the relevant personnel of the foreign exchange business of the company's financial center will continue to track the changes in the open market price or fair value of foreign exchange, timely evaluate the changes in the risk exposure of foreign exchange hedging transactions, and regularly report to the company's management.
(V) the Audit Department of the company shall check the actual operation, capital use and profit and loss of foreign exchange hedging business every quarter, check whether the transaction and information disclosure are implemented in accordance with relevant systems and processes, and report to the audit committee.
5、 Description of special opinions
(I) opinions of independent directors
After verification, we believe that the relevant decision-making procedures for the company to carry out foreign exchange hedging business comply with the relevant national laws and regulations and the relevant provisions of the articles of association. The company's foreign exchange hedging business is based on specific business operations. On the premise of ensuring normal production and operation, the company uses foreign exchange hedging tools to reduce exchange rate risks, reduce exchange losses and control business risks. There is no situation that damages the interests of the company and all shareholders, especially small and medium-sized shareholders. Therefore, we unanimously agree on the company's foreign exchange hedging business. (II) opinions of the board of supervisors
After review, the board of supervisors believes that the company's foreign exchange hedging business is 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. It is necessary and in line with the actual situation of the company, and there is no situation that damages the interests of the company and its shareholders, especially small and medium-sized shareholders. Agree to carry out foreign exchange hedging business.
It is hereby announced.
Hunan Aihua Group Co.Ltd(603989) board of directors
April 6, 2022
