Securities code: Fujian Sunner Development Co.Ltd(002299) securities abbreviation: Fujian Sunner Development Co.Ltd(002299) Announcement No.: 2022022 Fujian Sunner Development Co.Ltd(002299)
Announcement on carrying out commodity futures hedging business in 2022
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.
Fujian Sunner Development Co.Ltd(002299) (hereinafter referred to as “the company”) deliberated and adopted the proposal on carrying out commodity futures hedging business in 2022 at the 7th Meeting of the 6th board of directors held on April 20, 2022, and agreed to carry out hedging business of production raw materials in 2022. The relevant information is hereby announced as follows:
1、 Purpose and necessity of hedging
Corn and soybean meal are the main raw materials for the company’s production, and their price fluctuations may have an important impact on the company’s operating performance and gross profit. Therefore, in order to lock in the company’s raw material purchase price and production cost, the company believes that it is necessary to hedge in the futures market to assist normal production and operation activities, make full use of the hedging function of the futures market, ensure the relative stability of product cost and reduce the impact on the company’s normal operation cost.
2、 Basic information of hedging
1. Scope of hedged futures varieties: the scope of hedged futures varieties of the company is the raw materials required by the company, namely corn and soybean meal.
2. Proposed investment and business period
According to the actual operation of the company, the maximum quantity of raw material contracts to be hedged shall not exceed 50% of the corresponding raw material consumption in 2022, and the maximum occupation of required margin is expected to not exceed RMB 50 million. If it is necessary to invest more than 50 million yuan, a specific implementation plan shall be formulated and implemented only after the approval procedures are performed in accordance with the provisions of the company’s internal control system for commodity futures hedging.
3. Meet the relevant conditions for the application of hedging accounting methods specified in the accounting standards for business enterprises: according to the actual operation of the company, the company will mainly take the fair value hedging specified in the accounting standards for business enterprises as the goal. In the actual operation process, the company will continuously evaluate the effectiveness of hedging to ensure that the relevant hedging business is highly effective, To comply with the risk management strategy initially determined by the enterprise for the hedging relationship.
3、 Risk analysis of hedging business
The commodity futures hedging business carried out by the company follows the principle of locking the price risk of raw materials and does not engage in speculative and arbitrage trading operations. Therefore, strict risk control shall be carried out when signing hedging contracts and closing positions, and the corresponding futures contracts shall be purchased with its own funds in due time according to the business scale of the company and the price and quantity of materials locked by customers. When the spot purchase contract takes effect, Make a corresponding number of futures positions.
Commodity futures hedging can reduce the impact of material price fluctuations on the company, enable the company to focus on production and operation, and maintain a stable profit level in case of material price fluctuations, but there will also be some risks:
1. Risk of abnormal price fluctuation: when the futures market changes greatly, the company may not be able to buy hedging contracts at or below the locked price of raw materials, resulting in losses.
2. Capital risk: futures trading issues operation instructions according to the authority specified in the company’s internal control system for commodity futures hedging. If the investment amount is too large, there may even be the risk of forced closing positions without timely replenishing the margin, resulting in actual losses.
3. Internal control risk: futures trading is highly professional and complex, which may cause risks due to imperfect internal control system.
4. Technical risk: due to uncontrollable and unpredictable system, network, communication and other failures, the trading system operates abnormally, resulting in the delay and interruption of trading instructions.
5. Customer default risk: when the futures price fluctuates unfavourably, the customer may violate the relevant provisions of the contract and cancel the product order, resulting in losses to the company.
6. Policy risk: due to the change of relevant laws or the violation of relevant legal systems by counterparties, the contract may not be executed normally and bring losses to the company.
4、 Risk control measures taken by the company
1. Match the hedging business with the company’s production and operation, strictly control the position of futures and options, conduct foreign exchange hedging transactions in strict accordance with the company’s predicted foreign exchange collection period, foreign exchange payment period and amount, and reasonably use futures, options, the above product combination, foreign exchange hedging and other tools to lock in the costs and expenses of the company’s feed raw materials or other raw materials required for production and operation.
2. Strictly control the capital scale of hedging, and reasonably plan and use margin. The operation instructions shall be issued in strict accordance with the authority specified in the company’s futures trading management system, and the operation can be carried out only after being approved according to the regulations. The company establishes a hedging transaction account in its own name, uses its own funds, and will not use the raised funds for hedging directly or indirectly.
3. In accordance with the Shenzhen Stock Exchange Stock Listing Rules (revised in 2022) and other relevant provisions, and in combination with the actual situation of the company, the company has formulated the hedging business internal control system, which clearly stipulates the hedging business quota, variety range, approval authority, internal audit process, responsible departments and persons, information isolation measures, internal risk reporting system and risk handling procedures, information disclosure, etc. The company will control all links in strict accordance with the internal control system for hedging business.
4. Set up computer systems and related facilities that meet the requirements to ensure the normal development of transactions. In case of failure, take corresponding treatment measures in time to reduce losses.
5. According to the needs of production and operation, it is used as the futures operation period to reduce the risk of futures price fluctuation.
6. In the process of business operation, strictly abide by the provisions of relevant national laws and regulations, prevent legal risks, and regularly supervise and inspect the standardization of hedging business, the effectiveness of internal control mechanism and the authenticity of information disclosure.
5、 Other matters to be announced
After the changes in the fair value of the commodity futures designated by the company for hedging are offset against the changes in the fair value of the hedged items, the company will timely disclose the amount of loss within two trading days after the amount of loss reaches or exceeds 10% of the absolute value of the audited net profit attributable to the shareholders of the listed company in the latest year and the amount of loss exceeds RMB 10 million.
It is hereby announced.
Fujian Sunner Development Co.Ltd(002299)
Board of directors
April 21, 2002
