Securities code: Loctek Ergonomic Technology Corp(300729) securities abbreviation: Loctek Ergonomic Technology Corp(300729) Announcement No.: 2022026 bond Code: 123072 bond abbreviation: lege convertible bond
Loctek Ergonomic Technology Corp(300729)
Announcement on continuing foreign exchange hedging business
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.
Loctek Ergonomic Technology Corp(300729) (hereinafter referred to as “the company”) held the 39th meeting of the 4th board of directors and the 32nd meeting of the 4th board of supervisors on April 11, 2022, deliberated and adopted the proposal on continuing to carry out foreign exchange hedging business. In order to reduce the risk of exchange rate fluctuation, according to the business development of the company, the board of directors The board of supervisors unanimously agreed that the company and its subsidiaries use their own funds and bank credit lines to carry out foreign exchange hedging business transactions with a total amount of no more than US $40 million (or equivalent in other foreign currencies). The above transaction lines can be recycled within one year from the date of deliberation and approval by the general meeting of shareholders, and authorized the chairman of the board of directors or his authorized person to specifically implement the above foreign exchange hedging business within the scope of the line. The relevant matters are hereby announced as follows:
1、 Purpose of foreign exchange hedging business
In order to effectively avoid the risk of 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 reduce the risk of exchange rate fluctuations in future debt repayment, the company and its subsidiaries plan to carry out foreign exchange hedging business.
2、 Basic information of foreign exchange hedging business
1. It mainly involves currency and business types
The foreign exchange hedging business to be carried out by the company is limited to the same currency as the main settlement currency used by the company. The main foreign currency currencies include but are not limited to US dollars, euros and Japanese yen.
The foreign exchange hedging business to be carried out by the company includes but is not limited to forward foreign exchange settlement and sales business, foreign exchange option business and other foreign exchange derivatives business.
2. Business scale and source of investment
According to the company’s asset scale and business needs, the total amount of foreign exchange hedging business carried out by the company and its subsidiaries shall not exceed US $400 million (or equivalent in other foreign currencies). The company’s investment in foreign exchange hedging business comes from the company’s own funds and bank credit lines, and does not involve raised funds. 3. Term and authorization
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. The authorization period is valid within 12 months from the date of deliberation and approval by the general meeting of shareholders, and the above amount can be recycled and used within the period. 4. Counterparty
Banks and other financial institutions.
3、 Risk analysis of foreign exchange hedging business
In carrying out foreign exchange hedging business, the company follows the principle of locking exchange rate and interest rate risk, and does not engage in speculative and arbitrage trading operations, but there are still certain risks in the trading operations of foreign exchange hedging business.
1. Exchange rate fluctuation risk: in case of significant deviation between the trend of foreign exchange rate and the direction of exchange rate fluctuation judged by the company, the cost incurred by the company after locking the exchange rate may exceed the cost incurred when it is not locked, resulting in losses to the company;
2. Credit risk: the counterparties of the company’s foreign exchange hedging business are financial institutions with good credit and have established long-term business transactions with the company, and there is basically no performance risk;
3. Internal operational risk: foreign exchange hedging business is highly professional, which may cause losses in the process of handling foreign exchange hedging business due to staff operation errors, system failures and other reasons.
4、 Risk management measures
1. Choose foreign exchange hedging business with simple structure, strong liquidity and low risk;
2. Foreign exchange hedging business takes hedging as the principle to avoid the risks caused by exchange rate fluctuations to the greatest extent. Authorized departments and personnel shall pay close attention to and analyze the market trend, and timely adjust the operation strategy in combination with the market situation to improve the hedging effect;
3. The company has formulated the derivatives trading management system, which clearly stipulates the operating principles, approval authority, internal operating procedures, information isolation measures, internal risk control procedures and information disclosure of foreign exchange hedging business transactions to control transaction risks.
4. The company will carefully review the contract terms signed with banks and other financial institutions and strictly implement the risk management system to prevent legal risks.
5、 Accounting policies and accounting principles
According to the relevant provisions and guidelines of 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 and accounting standards for Business Enterprises No. 39 – fair value measurement of the Ministry of finance, 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, independent directors and recommendation institutions
1. Opinions of the board of supervisors
On April 11, 2022, the 32nd meeting of the Fourth Board of supervisors of the company deliberated and approved the proposal on continuing to carry out foreign exchange hedging business. The board of supervisors held that it is necessary for the company to carry out foreign exchange hedging business in order to make full use of foreign exchange hedging tools to reduce or avoid exchange rate risk caused by exchange rate fluctuation, reduce exchange loss and control business risk. The company has formulated the derivatives trading management system and improved the relevant internal control system. The targeted risk control measures taken by the company are feasible. The company and its subsidiaries carry out foreign exchange hedging business, which is in line with the interests of the company and does not harm the interests of the company and all shareholders, especially small and medium-sized shareholders. It is agreed that the company, its subsidiaries and banks and other financial institutions carry out foreign exchange hedging business with a cumulative total amount of no more than US $40 million (or equivalent in other foreign currencies). The term of foreign exchange hedging business can be recycled within 12 months from the date of deliberation and approval by the general meeting of shareholders, and authorize the chairman or his authorized person to implement the above matters related to foreign exchange hedging business within the limit.
2. The independent directors of the company expressed the following opinions on the company’s foreign exchange hedging business: the company’s foreign exchange hedging business with banks and other financial institutions can effectively avoid foreign exchange market risks, prevent the adverse impact of large exchange rate fluctuations on the company’s production and operation, and ensure the relative stability of operating performance; The company has formulated the management system of derivatives transactions and formulated specific operating procedures for the company to engage in foreign exchange hedging business; The relevant decision-making procedures for the company and its subsidiaries to carry out foreign exchange hedging business comply with relevant national laws, regulations and the articles of association, and there is no situation that damages the interests of the company and shareholders, especially small and medium-sized shareholders. We agree to the motion.
3. Opinions of the sponsor
After verification, the recommendation institution believes that:
The company’s foreign exchange hedging business has been deliberated and approved at the 39th meeting of the Fourth Board of directors and the 32nd meeting of the Fourth Board of supervisors. The independent directors of the company have expressed their consent, fulfilled the necessary approval procedures and complied with the provisions of relevant laws and regulations.
The company has formulated reasonable internal control system and risk response measures for relevant businesses, and relevant risks can be effectively controlled. The company’s foreign exchange hedging business meets the needs of the company’s actual operation and can reduce the impact of exchange rate fluctuations on the company’s operation to a certain extent.
The recommendation institution draws the company’s attention: in the process of foreign exchange hedging business, it is necessary to strengthen the training and risk responsibility education of business personnel, implement specific risk control measures and accountability mechanism, put an end to profit-making speculation, and do not use the raised funds to hedge directly or indirectly.
The sponsor draws investors’ attention: Although the company has taken corresponding risk control measures for foreign exchange hedging business, the inherent exchange rate fluctuation risk of foreign exchange hedging business and the inherent limitations of internal control may have an impact on the company’s operating performance.
In conclusion, the recommendation institution has no objection to the company’s foreign exchange hedging business this time.
7、 Documents for future reference
1. Resolutions of the 39th meeting of the Fourth Board of directors of the company;
2. Resolutions of the 32nd meeting of the 4th board of supervisors of the company;
3. Independent opinions of independent directors on matters related to the 39th meeting of the Fourth Board of directors of the company; 4. Loctek Ergonomic Technology Corp(300729) feasibility analysis report on foreign exchange hedging business.
It is hereby announced.
Loctek Ergonomic Technology Corp(300729) board of directors April 13, 2022
