China Securities Co.Ltd(601066)
About Xiamen Guang Pu Electronics Co.Ltd(300632) and its subsidiaries
Verification opinions on continuing foreign exchange derivatives transactions
China Securities Co.Ltd(601066) (hereinafter referred to as ” China Securities Co.Ltd(601066) ” and “sponsor”) as the sponsor of Xiamen Guang Pu Electronics Co.Ltd(300632) (hereinafter referred to as ” Xiamen Guang Pu Electronics Co.Ltd(300632) ” and “company”) for non-public issuance of A-Shares in 2020, in accordance with the administrative measures for securities issuance and listing sponsor business and the Listing Rules of Shenzhen Stock Exchange gem In accordance with the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 2 – standardized operation of companies listed on GEM, self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 13 – recommendation business and other relevant provisions, the company and its subsidiaries have conducted prudent verification on the continued trading of foreign exchange derivatives. The verification results and opinions are as follows:
1、 Purpose of carrying out foreign exchange derivatives trading business
The foreign exchange derivatives trading business carried out by the company and its subsidiaries is closely related to daily operation, with the purpose of locking profits and avoiding operational risks caused by exchange rate fluctuations.
2、 Basic information of foreign exchange derivatives trading business
1. Foreign exchange derivatives trading varieties
The foreign exchange derivative transactions carried out by the company and its subsidiaries mainly include foreign exchange forward, foreign exchange swap, foreign exchange option, structural forward, interest rate swap, currency swap and other products or a combination of the above products. The corresponding underlying assets include exchange rate, interest rate, currency or a combination of the above assets. The types of foreign exchange derivative transactions match with the company’s business in terms of variety, scale, direction and term, so as to comply with the company’s prudence Sound risk management principles.
2. Limit and term
After the approval of the general meeting of shareholders, the balance of the company’s proposed foreign exchange transaction and the subsidiary’s proposed foreign exchange transaction shall not exceed US $60 million in one year. The company and its holding subsidiaries sign foreign exchange derivatives trading contracts with domestic and foreign financial institutions in batches according to the trend of the foreign exchange market, the scale of import and export business and the time of foreign exchange collection and payment.
3. Estimated Occupied Funds
When the company and its subsidiaries carry out foreign exchange derivatives trading business, they do not need to invest other funds except that the agreement signed with the bank occupies the credit line or pays a certain proportion of the deposit. The company’s own funds will be used to pay the deposit, and the proportion of the deposit will be determined according to the agreement signed with the bank.
3、 Risk analysis of foreign exchange derivatives trading
The company follows the principle of locking exchange rate and interest rate risk in foreign exchange derivatives trading, and does not engage in speculative and arbitrage trading operations, but there are still certain risks in foreign exchange derivatives trading:
1. Exchange rate market risk: in the case of large exchange rate fluctuations, the foreign exchange derivatives trading business may bring large fair value fluctuations; When the price is locked in the market, it will cause exchange risk;
2. Credit risk: the counterparties of foreign exchange derivatives conducted by the company and its subsidiaries are financial institutions with good credit and have established long-term business contacts with the company, and there is basically no performance risk;
3. Liquidity risk: the current foreign exchange derivatives trading business of the company and its subsidiaries is based on the company’s import and export collection and payment business, which does not substantially occupy the available funds, so the liquidity risk is small;
4. Customer default risk: the customer’s accounts receivable are overdue, and the payment cannot be recovered within the predicted recovery period, which will lead to delayed delivery and losses to the company.
5. Internal operational risk: the foreign exchange derivatives trading business is highly professional. In the process of trading, if the operators fail to operate the foreign exchange derivatives trading according to the specified procedures or fail to fully understand the derivatives information, it will bring operational risk.
4、 Proposed risk management measures
1. The foreign exchange derivatives transactions carried out by the company are aimed at locking profits, avoiding and preventing exchange rate and interest rate risks, and any risk speculation is prohibited.
2. Carefully review the contract terms signed with the bank and strictly implement the risk management system to prevent legal risks.
3. The company will continue to track the changes in the open market price or fair value of foreign exchange derivatives, timely evaluate the changes in the risk exposure of foreign exchange derivatives transactions, regularly report to the company’s management, timely report any abnormalities, prompt risks and implement emergency measures.
4. The company has formulated the financial derivatives trading business management system, which stipulates that the company does not conduct financial derivatives trading for the purpose of speculation. All financial derivatives trading businesses are based on normal production and operation, relying on the real trade background, and aiming at avoiding and preventing exchange rate or interest rate risks. The system makes clear provisions on the company’s business operation principles, approval authority, internal audit process, information confidentiality and isolation measures, internal risk control procedures and information disclosure, which can effectively regulate the trading behavior of financial derivatives and control the trading risk of financial derivatives.
5. In order to prevent the delayed delivery of forward foreign exchange settlement, the company attaches great importance to the management of accounts receivable and formulates safety management measures to avoid the overdue phenomenon of accounts receivable.
5、 Accounting principles for foreign exchange derivatives transactions
The company conducts corresponding accounting and disclosure of foreign exchange derivatives trading business in accordance with 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 and accounting standards for Business Enterprises No. 37 – presentation of financial instruments.
6、 Verification opinions of independent directors, board of supervisors and recommendation institutions
1. Opinions of independent directors
It is verified that the company’s foreign exchange derivatives trading business is based on normal production and operation and relying on specific business operations. On the premise of ensuring normal production and operation, the company makes full use of financial instruments to lock profits, avoid and prevent exchange rate and interest rate risks, and there is no situation that damages the interests of the company and all shareholders, especially small and medium-sized shareholders. At the same time, the company has formulated the financial derivatives trading business management system and improved the relevant internal control system. The independent directors agree that the company and its subsidiaries continue to carry out foreign exchange derivatives trading business in accordance with the provisions of relevant systems.
2. Opinions of the board of supervisors
After deliberation, the board of supervisors held that it is necessary for the company to carry out foreign exchange derivatives trading business in order to make full use of financial instruments to lock in profits, avoid and prevent exchange rate and interest rate risks, and enhance the financial stability of the company. The company has formulated the financial derivatives trading business management system and improved the relevant internal control system. The company’s foreign exchange derivatives trading business does not harm the interests of the company and all shareholders, especially minority shareholders. The board of supervisors agreed that the company should carry out foreign exchange derivatives trading business with a balance of no more than US $60 million at any time within one year after the deliberation and approval of the general meeting of shareholders on the premise of ensuring normal production and operation.
7、 Verification opinions of the recommendation institution
The sponsor reviewed the company’s financial derivatives trading business management system, relevant proposals and resolutions of the fifth meeting of the Fourth Board of directors, resolutions of the fifth meeting of the Fourth Board of supervisors and opinions issued by independent directors. After verification, the recommendation institution believes that:
1. On the premise of ensuring normal production and operation, it is necessary for the company and its subsidiaries to carry out foreign exchange derivatives trading business, which is conducive to avoiding exchange rate risks caused by exchange rate fluctuations, reducing exchange losses and controlling business risks.
2. The company has formulated a strict management system for financial derivatives trading business in accordance with relevant laws and regulations, and established a relatively perfect internal control and risk management system for foreign exchange derivatives trading business.
3. The above matters have been deliberated and approved by the board of directors of the company. The independent directors and the board of supervisors have expressed their explicit consent to the matter and fulfilled the necessary approval procedures. The proposal needs to be submitted to the general meeting of shareholders of the company for deliberation. It complies with the company law, the stock listing rules of Shenzhen Stock Exchange (revised in December 2020), the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 2 – standardized operation of companies listed on GEM and other provisions.
4. The recommendation institution draws the attention of the company and its subsidiaries: in the process of foreign exchange derivatives trading, it is necessary to strengthen the training and risk responsibility education of business personnel, implement specific risk control measures and responsibility investigation mechanism, put an end to profit-making speculation, and do not use the raised funds to conduct derivatives trading directly or indirectly. 5. The sponsor draws investors’ attention: Although the company and its subsidiaries have taken corresponding risk control measures for foreign exchange derivatives trading business, the inherent exchange rate fluctuation risk, limitations of internal control and transaction default risk of foreign exchange derivatives trading business may have an impact on the company’s operating performance.
In conclusion, the sponsor has no objection to the foreign exchange derivatives trading business carried out by the company and its subsidiaries.
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(there is no text on this page, which is only the signature and seal page of China Securities Co.Ltd(601066) verification opinions on Xiamen Guang Pu Electronics Co.Ltd(300632) and its subsidiaries continuing to carry out foreign exchange derivatives transactions)
Sponsor representative:
Liu nengqing, Qiu Ronghui
China Securities Co.Ltd(601066) mm / DD / yyyy
