Securities code: Profit Cultural & Creative Group Co.Ltd(300640) securities abbreviation: Profit Cultural & Creative Group Co.Ltd(300640) Announcement No.: 2022069 Profit Cultural & Creative Group Co.Ltd(300640)
Announcement on carrying out forward foreign exchange trading 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.
Important content tips:
1. Investment type: forward foreign exchange
2. Investment amount: the company and its subsidiaries intend to use the capital limit of no more than US $150 million for forward foreign exchange trading business. The service life is 12 months from the date when the proposal is adopted by the general meeting of shareholders (calculated based on the starting time of the transaction). The above limit can be used in a circular and rolling manner. 3. Special risk warning: the company follows the principle of locking exchange rate risk and hedging when carrying out forward foreign exchange trading business, does not carry out speculative and arbitrage trading operations, and carries out transactions in strict accordance with the company’s predicted collection period and collection amount when signing the contract. However, there are still certain exchange rate fluctuation risks, customer default risks, collection prediction risks and internal control risks in forward foreign exchange trading, The company will take corresponding measures to control risks. Please pay attention to investors.
Profit Cultural & Creative Group Co.Ltd(300640) (hereinafter referred to as “the company”) deliberated and approved the proposal on carrying out forward foreign exchange trading business at the 2020 annual general meeting held on May 18, 2021, and agreed that the company and its subsidiaries use the capital limit of no more than US $50 million for forward foreign exchange trading business. The service life is 12 months from the date of adoption by the general meeting of shareholders, and the above limit can be used in a circular and rolling manner.
In view of the fact that the proposal on the company’s long-term business limit and the proposal on the company’s long-term business limit have been considered and adopted at the fourth meeting of the board of directors on May 20, 2025, and the specific time limit for the company’s long-term business has been submitted to the fourth meeting of the board of directors as follows:
1、 The purpose of the company’s forward foreign exchange transactions
The company’s export business accounts for more than 90% of its main business income and is mainly settled in US dollars. When the exchange rate fluctuates greatly, the exchange profit and loss will have a great impact on the company’s operating performance. In order to cope with the risk of exchange rate fluctuations and reduce exchange gains and losses, the company plans to carry out forward foreign exchange trading business to effectively reduce the risk of exchange losses through reasonable RMB forward foreign exchange transactions. Through forward foreign exchange transactions, the company can effectively avoid exchange rate risks, lock in the transaction costs or benefits at the future time point, and realize asset preservation for the purpose of avoiding risks.
2、 Overview of forward foreign exchange trading business
The forward foreign exchange trading business to be carried out by the company is a forward foreign exchange trading business to avoid and prevent exchange rate risks handled in the bank in order to meet the needs of normal production and operation, with the forward settlement and sales of foreign exchange as the main business type.
Forward foreign exchange settlement and sales business refers to the business of signing a forward foreign exchange settlement and sales contract with a bank, agreeing on the foreign exchange currency, amount, exchange rate and time limit for foreign exchange settlement or sales in the future, and then handling foreign exchange settlement or sales according to the currency, amount and exchange rate agreed in the forward foreign exchange settlement and sales contract at the expiration.
3、 Expected forward foreign exchange transactions
1. Types of forward foreign exchange transactions
The forward foreign exchange trading business to be carried out by the company is limited to the main settlement currency used in the company’s production and operation – US dollar. The foreign exchange trading business with the delivery period consistent with the predicted collection period and the amount matching the predicted collection amount is carried out.
2. Estimated Occupied Funds
To carry out forward foreign exchange trading business, the company does not need to invest other funds except paying a certain proportion of deposit or occupying a certain proportion of bank credit line according to the agreement signed with the bank. The deposit will use the company’s own funds and does not involve raised funds. The proportion of deposit paid or the proportion of bank credit line occupied shall be determined according to the specific agreements signed with different banks.
3. Estimated business period and transaction amount
The company and its subsidiaries intend to use the capital limit of no more than US $150 million for forward foreign exchange trading business. The service life is 12 months from the date when the proposal is adopted by the general meeting of shareholders (calculated based on the starting time of the transaction). The above limit can be recycled and used on a rolling basis, and the management is authorized to sign the agreements and documents related to the company’s forward foreign exchange trading business within the above amount.
4、 Feasibility analysis of forward foreign exchange trading business
The forward foreign exchange trading business of the company and its subsidiaries is carried out around the company’s business. Based on normal production and operation, relying on specific business operations and hedging, it is conducive to avoiding and preventing the risk of exchange rate fluctuations and reducing the impact of exchange rate fluctuations on the company’s operating performance. The company has formulated the forward foreign exchange trading business management system and improved the relevant internal control processes. The targeted risk control measures taken by the company are feasible and effective; At the same time, the margin of forward foreign exchange trading business to be carried out by the company and its subsidiaries will use its own funds, not involving raised funds. Therefore, it is necessary and feasible for the company and its subsidiaries to carry out forward foreign exchange trading business, which can effectively reduce the risk of exchange rate fluctuation.
5、 Risk analysis of forward foreign exchange trading business
In carrying out forward foreign exchange trading business, the company follows the principle of locking exchange rate risk and hedging, does not carry out speculative and arbitrage trading operations, and carries out transactions in strict accordance with the company’s predicted collection period and collection amount when signing contracts. Forward foreign exchange transactions can reduce the impact of exchange rate fluctuations on the company in case of large exchange rate fluctuations, so that the company can focus on production and operation, but at the same time, forward foreign exchange transactions will also have certain 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 company’s quotation exchange rate to customers, so that the company cannot lock according to the quotation exchange rate to customers, resulting in exchange losses.
2. Customer default risk: the customer’s accounts receivable are overdue, and the payment cannot be recovered within the predicted collection period, which will cause delayed delivery and cause losses to the company.
3. Collection forecast risk: the business department forecasts the collection according to the customer’s order and expected order. In the actual implementation process, the customer may adjust the order, resulting in inaccurate collection forecast of the company, resulting in the risk of delayed delivery.
4. Internal control risk: forward foreign exchange transactions are highly professional and complex, which may cause risks due to imperfect internal control system.
6、 Risk control measures to be taken by the company
1. The business department of the company will quote to the customer at the forward exchange rate of the bank, so that after the order is confirmed, the company can lock the quotation exchange rate of the customer; When the exchange rate fluctuates greatly, if the forward exchange rate is far lower than the exchange rate quoted to the customer, the company will put forward requirements and negotiate with the customer to adjust the price.
2. Strictly implement the management system of forward foreign exchange trading business, implement the operation principles, internal operation processes and risk handling procedures of forward foreign exchange trading business, and do a good job in information isolation and internal risk report.
3. In order to prevent the delayed delivery of forward foreign exchange settlement, the company attaches great importance to the management of accounts receivable and actively collects accounts receivable to avoid the overdue phenomenon of accounts receivable.
4. The company’s forward foreign exchange transactions must be strictly based on the company’s foreign currency collection forecast to control the possible risks faced by the company within an acceptable range.
7、 Analysis of fair value
The forward foreign exchange transaction business will enter the risk monitoring scope of the company when it is completed on the operation day. If the forward settlement and sales of foreign exchange is selected, the maturity income can be basically determined, and there is no change in fair value; If it is interest rate swap, foreign exchange swap transaction and foreign exchange option transaction, there will be certain changes in fair value, and the company will calculate its value according to the corresponding fair value change formula.
8、 Accounting policies and accounting principles
The company conducts fair value evaluation and accounting for forward foreign exchange transactions in accordance with the relevant provisions and guidelines of the Ministry of finance, such as accounting standards for Business Enterprises No. 22 – recognition and measurement of financial instruments, accounting standards for Business Enterprises No. 24 – hedge accounting, accounting standards for Business Enterprises No. 37 – Presentation of financial instruments, etc.
9、 Opinions of independent directors
The company’s forward settlement and sale of foreign exchange is carried out around the company’s business. It is not a forward foreign exchange transaction solely for the purpose of profit, but based on specific business operations, with hedging as a means, and for the purpose of avoiding and preventing the risk of exchange rate fluctuation, which is of certain necessity; The company has formulated the forward foreign exchange trading business management system and improved the relevant internal control processes. The targeted risk control measures taken by the company are feasible; At the same time, the margin of the forward foreign exchange settlement and sales business to be carried out by the company will use its own funds, not involving the raised funds. The long-term settlement and sales of Foreign Exchange carried out by the company will comply with the provisions of relevant laws, regulations, normative documents and relevant systems of the company. The decision-making procedure of this matter complies with the provisions of relevant laws and regulations, and there is no situation that damages the interests of the company and minority shareholders. We agree to the matter and submit it to the general meeting of shareholders for deliberation. 10、 Opinions of the board of supervisors
The board of supervisors believes that the forward foreign exchange trading business carried out by the company and its subsidiaries meets the needs of the company’s actual operation, helps to reduce the risk of exchange rate fluctuation, meets the needs of the company’s development, and does not harm the interests of the company and shareholders.
11、 Verification opinions of the recommendation institution
Upon verification, the recommendation institution China Industrial Securities Co.Ltd(601377) believes that:
1. This matter has been deliberated and approved at the 19th meeting of the Fourth Board of directors of the company, and the voting procedures comply with laws, regulations, normative documents and relevant systems of the company. The independent directors of the company have expressed independent opinions on the above matters;
2. The company has formulated the management system of forward foreign exchange trading business according to relevant regulations and actual conditions. The internal management system of forward foreign exchange business is relatively complete and has corresponding risk control measures;
3. The company’s forward foreign exchange trading business meets the needs of the company’s actual operation, reduces the impact of exchange rate fluctuations on the company’s operating performance to a certain extent, meets the needs of the company’s development, and does not harm the interests of the company and shareholders;
4. The margin of forward foreign exchange transactions to be carried out by the company will use its own funds and does not involve raised funds.
In conclusion, the sponsor has no objection to the company’s forward foreign exchange trading business this time. 12、 Documents for future reference
1. Profit Cultural & Creative Group Co.Ltd(300640) the resolution of the 19th meeting of the 4th board of directors;
2. Profit Cultural & Creative Group Co.Ltd(300640) the resolution of the 15th meeting of the 4th board of supervisors;
3. Profit Cultural & Creative Group Co.Ltd(300640) independent directors’ independent opinions on matters related to the 19th meeting of the 4th board of directors;
4. China Industrial Securities Co.Ltd(601377) verification opinions on Profit Cultural & Creative Group Co.Ltd(300640) carrying out forward foreign exchange trading business.
It is hereby announced.
Profit Cultural & Creative Group Co.Ltd(300640) board of directors
May 20, 2022
