Securities code: 300577 securities abbreviation: Anhui Korrun Co.Ltd(300577) Announcement No.: 2022-012 bond Code: 123039 bond abbreviation: kairun convertible bond
Announcement on the company and its subsidiaries carrying out forward foreign exchange settlement and sales and foreign exchange option 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.
Anhui Korrun Co.Ltd(300577) (hereinafter referred to as “the company”, “the company” and ” Anhui Korrun Co.Ltd(300577) “) held the 33rd meeting of the third board of directors on January 25, 2022, deliberated and adopted the proposal on the company and its subsidiaries to carry out forward foreign exchange settlement and sales and foreign exchange options business. In order to reduce the risk of exchange rate fluctuation, according to the business development of the company, It is agreed that the company and its subsidiaries carry out forward foreign exchange settlement and sales and foreign exchange option business. The relevant matters are hereby announced as follows:
1、 Background and purpose of the transaction
At present, the company’s overseas sales business accounts for a large proportion of the company’s overall business. The main settlement currency of the company’s product export is US dollar. Exchange rate fluctuations will affect the company’s performance. In order to avoid and prevent the foreign exchange risk (including interest rate and exchange rate) caused by the above business, the company and its subsidiaries, on the premise of ensuring normal operation, Carrying out forward foreign exchange settlement and sales and foreign exchange options business is conducive to avoiding the risk of exchange rate changes and improving the company’s ability to resist exchange rate fluctuations, without damaging the interests of the company and all shareholders.
2、 Business type
The business of the company this time is forward foreign exchange settlement and sales and foreign exchange option business, and the transaction currencies are US dollar, Indian rupee, Indonesian rupiah, Hong Kong dollar and euro.
3、 Limit and validity of authorization
The company and its subsidiaries plan to carry out forward foreign exchange settlement and sales and foreign exchange option business with an amount not exceeding the equivalent of US $200 million in 2022. The term is 12 months from the date of deliberation and approval by the general meeting of shareholders of the company. It can be recycled and used within the above limit, and the management of the company is authorized to handle the implementation.
This matter has been deliberated and approved at the 33rd meeting of the third board of directors of the company and needs to be submitted to the general meeting of shareholders of the company for deliberation.
4、 Risk analysis of forward foreign exchange settlement and sale and foreign exchange option business and risk control measures taken by the company
(I) risk analysis of forward foreign exchange settlement and sale and foreign exchange option business
Forward settlement and sale of foreign exchange and foreign exchange option business can reduce the impact of exchange rate fluctuations on the company in case of large exchange rate fluctuations, but there may also be certain risks:
1. Market risk: in case of significant deviation between the exchange rate trend and the expectation, the cost expenditure of the company after locking the exchange rate cost may exceed the cost expenditure when it is not locked, resulting in potential losses.
2. Operational risk: when the company carries out the above business, if the operators fail to report and approve according to the specified procedures, or fail to accurately, timely and completely perform the relevant business, it may lead to transaction loss or loss of trading opportunities;
3. Legal risk: when the company signs the business agreement on forward settlement and sale of foreign exchange and foreign exchange options with the bank, it shall handle the business in strict accordance with the requirements of the agreement. At the same time, it shall pay attention to the company’s capital position and other financial conditions to avoid the loss of the company caused by breach of contract.
(II) risk control measures taken by the company
1. Select the forward foreign exchange settlement and sales and foreign exchange option business with simple structure, strong liquidity and controllable risk to carry out hedging business, which can only be carried out within the authorized limit, and strictly control its transaction scale.
2. Formulate standardized business operation process and authorization management system, allocate full-time personnel, clarify post responsibilities, and engage in the above businesses within the scope of authorization; At the same time, strengthen the business training and professional ethics of relevant personnel, improve the quality of relevant personnel, and establish a timely reporting system of abnormal conditions to avoid the occurrence of operational risks to the greatest extent.
3. Strengthen the management of bank accounts and funds, and strictly enforce the approval procedures for fund prediction, allocation and use. 4. The company regularly supervises and inspects the normalization of the above business hedging, the effectiveness of the internal control mechanism and the authenticity of information disclosure.
5、 Feasibility of the company to carry out forward foreign exchange settlement and sales and foreign exchange option business
In order to avoid and prevent the foreign exchange risk (including interest rate and exchange rate) caused by overseas sales business, the company and its subsidiaries carry out forward foreign exchange settlement and sales and foreign exchange option business on the premise of ensuring normal operation, which is conducive to avoiding the risk of exchange rate change and improving the company’s ability to resist exchange rate fluctuations, without damaging the interests of the company and all shareholders. At the same time, the company has formulated the management system of foreign exchange derivatives trading business according to relevant regulations and actual conditions, which can effectively control relevant risks. The company’s forward settlement and sale of foreign exchange and foreign exchange options business is based on the actual business, closely related to the company’s business, in line with the company’s business development needs, and can further improve the company’s financial stability.
6、 Accounting policies and principles
According to 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 – hedging, accounting standards for Business Enterprises No. 37 – presentation of financial instruments, accounting standards for Business Enterprises No. 39 – fair value measurement, Carry out financial accounting for the forward settlement and sale of foreign exchange and foreign exchange options, and reflect the relevant items of the balance sheet and income statement.
7、 Opinions of independent directors
The company and its subsidiaries carry out forward foreign exchange settlement and sales and foreign exchange option business on the basis of normal production and operation, relying on specific business operations, taking hedging as a means and aiming at reducing the risk of exchange rate fluctuation. The company has improved relevant internal control processes, and the targeted risk control measures taken by the company and its subsidiaries are practical. The decision-making procedure of this matter complies with the provisions of relevant laws and regulations and the articles of association, and there is no situation damaging the interests of the company and minority shareholders. It is agreed that the company and its subsidiaries carry out forward foreign exchange settlement and sales and foreign exchange options business and submit it to the general meeting of shareholders for deliberation. 8、 Opinions of the sponsor
Anhui Korrun Co.Ltd(300577) and its subsidiaries have deliberated and approved the business of forward foreign exchange settlement and sales and foreign exchange options at the 33rd meeting of the third board of directors of the company. The independent directors of the company have expressed their consent and fulfilled the necessary approval procedures, which is in line with the provisions of relevant laws and regulations. This matter needs to be deliberated and approved by the general meeting of shareholders of the company. Anhui Korrun Co.Ltd(300577) according to the relevant regulations and actual situation, the management system of foreign exchange derivatives trading business has been formulated, a relatively perfect internal control system has been formed for the forward settlement and sale of foreign exchange and foreign exchange options business, and practical risk response measures have been formulated, so that the relevant risks can be effectively controlled. Anhui Korrun Co.Ltd(300577) carrying out forward foreign exchange settlement and sales and foreign exchange option business meets the needs of the company’s actual operation and can reduce the risk of exchange rate fluctuation to a certain extent. The sponsor agrees to Anhui Korrun Co.Ltd(300577) carry out forward foreign exchange settlement and sales and foreign exchange options business this time.
9、 Documents for future reference
1. Resolutions of the 33rd meeting of the third board of directors of the company;
2. Independent opinions of the company’s independent directors on matters related to the 33rd meeting of the third board of directors; 3. China Merchants Securities Co.Ltd(600999) verification opinions on Anhui Korrun Co.Ltd(300577) and its subsidiaries carrying out forward foreign exchange settlement and sales and foreign exchange options business in 2022.
It is hereby announced.
Anhui Korrun Co.Ltd(300577) board of directors January 25, 2022
