Securities code: Polyrocks Chemical Co.Ltd(688669) securities abbreviation: Polyrocks Chemical Co.Ltd(688669) Announcement No.: 2022022 Polyrocks Chemical Co.Ltd(688669)
Announcement on carrying out futures option 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 legal responsibility for the authenticity, accuracy and integrity of its contents according to law.
Polyrocks Chemical Co.Ltd(688669) (hereinafter referred to as “the company”) held the 39th meeting of the 5th board of directors and the 23rd Meeting of the 5th board of supervisors on April 28, 2022, deliberated and adopted the proposal on developing futures option hedging business, and agreed that the company should make full use of the functions of futures and option markets to hedge the risk of sharp fluctuations in raw materials according to the actual production and operation needs, Use its own funds to carry out futures hedging business. After the futures option hedging business is deliberated and approved by the board of directors, it is not necessary to submit it to the general meeting of shareholders of the company for deliberation. The relevant information is hereby announced as follows:
1、 Purpose of hedging business
According to the production and operation of the company, in order to avoid the impact of raw material price changes, the company plans to carry out raw material futures and option hedging business, reduce the product cost fluctuations caused by raw material price fluctuations through the hedging hedging mechanism, and ensure the relative stability of the company’s profits. The company carries out hedging business for the purpose of normal production and operation, rather than speculation or arbitrage transactions for the purpose of profit.
2、 Basic information of hedging business to be carried out
(I) trading varieties: limited to bulk commodity raw materials related to production and operation, such as polypropylene (PP), polyethylene (PE), polyvinyl chloride (PVC), copper, liquefied petroleum gas, etc.
(II) amount of capital: the maximum balance of the margin for futures and options hedging proposed by the company (including subsidiaries) shall not exceed RMB 50 million, which can be recycled within the business term
(III) implementation period: within 12 months from the date of deliberation and approval by the board of directors of the company
(IV) source of funds: the company’s own funds
(V) implementation subject: the company or its holding subsidiary
3、 Accounting policies and assessment principles
The relevant accounting policies and accounting disclosure principles for the company’s futures and option hedging business will be implemented in strict accordance with the relevant provisions of the accounting standards for Business Enterprises No. 22 – recognition and measurement of financial instruments and the accounting standards for Business Enterprises No. 24 – hedge accounting issued by the Ministry of finance of the people’s Republic of China.
4、 Feasibility analysis of hedging business
The company’s futures and option hedging business is limited to the production and operation of relevant bulk commodity raw materials. It aims to avoid the risk caused by the price fluctuation of raw materials in production and operation, and does not carry out speculation and arbitrage transactions. In order to lock in the cost of raw materials and ensure the stability and sustainability of the company’s operating performance, the company plans to carry out futures and options hedging, and has established the management system of commodity futures and options hedging business, which has its own funds matching the transaction guarantee of futures and options hedging business. The company will strictly implement risk prevention measures and operate prudently.
To sum up, the company’s hedging business is feasible and beneficial to the company’s production and operation.
5、 Risk analysis of hedging business
The company does not carry out hedging business for the purpose of speculation, mainly to effectively avoid the impact of raw material price fluctuations on the company, but there will be certain risks at the same time:
(I) price fluctuation risk: when the price of futures and options fluctuates greatly, there may be price fluctuation risk and trading losses;
(II) capital risk: Futures and options trading adopts margin and mark to market system, which may bring corresponding capital risk;
(III) internal control risk: Futures and options trading is highly professional and complex. There may be risks caused by imperfect internal control system;
(IV) operational risk: the company suffers losses from wrong orders due to wrong or imperfect operations.
(V) technical risk: problems such as transaction instruction delay, interruption or data error may be caused by network failure, incomplete computer system and other factors.
6、 Risk control measures to be taken by the company
(I) strictly follow the management system of commodity futures option hedging business formulated by the company, control all links and implement risk prevention measures to make the business more safe, efficient and controllable. (II) strictly abide by the principle of hedging and eliminate speculative transactions. The company’s hedging business will match the company’s production and operation, hedge the risk of price fluctuation, and do not engage in any speculative transactions.
(III) the company will reasonably allocate its own funds for hedging business, strictly control the capital scale of hedging, and reasonably plan and use margin.
(IV) strengthen the understanding of relevant national policies and timely adjust hedging ideas and schemes.
7、 Opinions of independent directors
Independent directors believe that the company’s hedging business this time complies with relevant national laws and regulations and the provisions of the articles of Association; The company’s hedging business can prevent the operating risks caused by the price fluctuation of raw materials and avoid the possible adverse impact on the operation, without damaging the interests of the company and all shareholders. The company has formulated the management system of commodity futures option hedging business, established and improved the organizational structure, business operation process, approval process and risk control measures, and formed a relatively perfect risk management system. We unanimously agree that the company will carry out futures and option hedging business.
It is hereby announced.
Polyrocks Chemical Co.Ltd(688669) board of directors April 29, 2022
