Securities code: Suzhou Chunxing Precision Mechanical Co.Ltd(002547) securities abbreviation: Suzhou Chunxing Precision Mechanical Co.Ltd(002547) Announcement No.: 2022022 Suzhou Chunxing Precision Mechanical Co.Ltd(002547)
Announcement on carrying out foreign exchange forward settlement and sale 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.
Suzhou Chunxing Precision Mechanical Co.Ltd(002547) (hereinafter referred to as “the company”) held the 9th meeting of the 5th board of directors on April 24, 2022, deliberated and adopted the proposal on carrying out foreign exchange forward settlement and sales business, and agreed that the company and its subsidiaries carry out foreign exchange forward settlement and sales business according to the actual business needs. The proposal still needs to be submitted to the 2021 annual general meeting of shareholders of the company for deliberation. The relevant information is hereby announced as follows:
1、 Purpose of carrying out forward foreign exchange settlement and sales business
In recent years, export accounts for a large proportion of the operating revenue of the company and its subsidiaries, and the settlement currencies are mainly US dollars and euros. Therefore, when the exchange rate fluctuates greatly, the exchange profit and loss will have a certain impact on the operating performance of the company. In order to reduce the impact of exchange rate fluctuations on the company’s profits and maintain a relatively stable financial expenses, the company and its subsidiaries plan to carry out long-term foreign exchange settlement and sales business with banks. Forward foreign exchange settlement and sales is a foreign exchange hedging financial product approved by the people’s Bank of China. Its transaction principle is: sign a forward foreign exchange settlement and sales contract with the bank to agree on the foreign exchange currency, amount, exchange rate and time limit for the settlement or sales of foreign exchange in the future. When the foreign exchange income or expenditure occurs on the due date, handle the settlement or sales of foreign exchange according to the currency, amount and exchange rate agreed in the forward foreign exchange settlement and sales contract, so as to lock in the cost of foreign exchange settlement and sales in the current period. In terms of specific operation, the company and its subsidiaries offer prices to customers based on the forward exchange rate of foreign exchange settlement, and sign forward exchange settlement contracts with banks according to the forecast of foreign currency collection, so as to reduce the exchange rate risk of the company.
2、 Varieties of long-term foreign exchange settlement and sales
The varieties of forward foreign exchange settlement and sales of the company and its subsidiaries are limited to the settlement foreign currencies used in the production and operation of the company and its subsidiaries. The delivery period is consistent with the predicted collection period, and the amount matches the predicted collection amount. 3、 Business scale and business period
According to the actual business needs of the company and its subsidiaries, the total amount of forward foreign exchange settlement and sales business to be carried out by the company and its subsidiaries in 2022 shall not exceed the equivalent of 660 million yuan, and the company’s management and / or its authorized persons are authorized to sign relevant transaction documents. The business period is from the date of deliberation and approval of the 2021 annual general meeting to the date of holding the 2022 annual general meeting.
To carry out forward foreign exchange settlement and sales business, the company / subsidiary may need to pay a certain proportion of deposit according to the agreement signed with the bank, and there is no need to invest other funds. The deposit will be paid by the company / subsidiary with its own funds.
4、 Risk analysis of forward settlement and sale of foreign exchange
The company and its subsidiaries carry out forward foreign exchange settlement and sales business to lock in exchange rate risk and do not engage in speculative and arbitrage trading operations, but there are still the following risks:
1. Exchange rate fluctuation risk: in the case of large changes in the exchange rate market, the bank’s forward foreign exchange settlement exchange rate quotation may be lower than the quotation exchange rate of the company and its subsidiaries to customers, so that the company and its subsidiaries cannot lock according to the quotation exchange rate of customers, resulting in exchange losses.
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 for goods cannot be recovered within the predicted collection period, which will cause the forward settlement of foreign exchange to be unable to be delivered on schedule, resulting in losses to the company.
4. Collection forecast risk: the business 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.
5、 Risk control measures taken by the company
1. The business department uses the bank’s forward foreign exchange settlement exchange rate provided by the capital department to quote to the customer, so that after the order is determined, the company and its subsidiaries can lock the customer’s quotation exchange rate; When the exchange rate fluctuates greatly, if the forward exchange rate is far lower than the exchange rate quoted to the customer, the company and its subsidiaries will negotiate with the customer to adjust the price.
2. The fifth meeting of the second board of directors of the company has reviewed and approved the management system of forward foreign exchange settlement and sales business, which stipulates that the company shall carry out forward foreign exchange settlement and sales business for the purpose of avoiding and preventing exchange rate risk, and prohibit speculation and arbitrage transactions. The system makes clear provisions on the company’s long-term foreign exchange settlement and sales business operation principles, approval authority, business management and internal operation processes, information isolation measures, internal risk reporting system and risk handling procedures. The system meets the relevant requirements of the regulatory authorities and the needs of actual operation. The risk control measures formulated are practical and effective.
3. In order to prevent the delayed delivery of forward foreign exchange settlement and sales, the company and its subsidiaries attach great importance to the management of accounts receivable, actively collect and try to avoid the overdue phenomenon of accounts receivable. At the same time, the company and its subsidiaries can purchase credit insurance for export loans, so as to reduce the risk of customer default and default.
4. The forward foreign exchange settlement transactions of the company and its subsidiaries must be based on the export business income of the company and its subsidiaries, and the foreign currency amount of the forward foreign exchange settlement contract shall not exceed 90% of the total predicted export business income.
6、 Opinions of independent directors
The company and its subsidiaries carry out forward foreign exchange settlement and sales business to lock in costs, reduce some exchange gains and losses, reduce financial expenses and reduce operational risks. The company has conducted strict internal evaluation for the operation of long-term foreign exchange settlement and sales business and established corresponding supervision mechanism, which can effectively control risks, which is in line with the interests of the company and all shareholders and conducive to the long-term development of the company.
We agree that the company and its subsidiaries shall carry out forward foreign exchange settlement and sales business, with a total scale of no more than the equivalent of RMB 660 million, and the business period is from the date of deliberation and approval of the 2021 annual general meeting to the date of holding the 2022 annual general meeting; And agreed to submit this proposal to the 2021 annual general meeting of shareholders of the company for deliberation after the deliberation and approval of the board of directors.
7、 Documents for future reference
1. Resolutions of the 9th meeting of the 5th board of directors;
2. Independent opinions of independent directors on matters related to the ninth meeting of the Fifth Board of directors.
It is hereby announced.
Suzhou Chunxing Precision Mechanical Co.Ltd(002547)
Board of directors
April 26, 2002
