Wuxi Lead Intelligent Equipment Co.Ltd(300450)
Feasibility analysis report on carrying out forward foreign exchange settlement and sales business
1、 Purpose of carrying out forward foreign exchange settlement and sales
Some businesses of Wuxi Lead Intelligent Equipment Co.Ltd(300450) (hereinafter referred to as " Wuxi Lead Intelligent Equipment Co.Ltd(300450) " or "the company") and its subsidiaries need to be settled in foreign currency. Therefore, when the exchange rate fluctuates greatly, it will not only affect the normal operation of the company's business, but also have a great impact on the company's operating performance. In order to improve the use efficiency of foreign exchange funds, reasonably reduce financial expenses and reduce the impact of exchange rate fluctuations on the company's operation, the company and its subsidiaries plan to carry out forward foreign exchange settlement and sales business in commercial banks. 2、 Basic information of forward foreign exchange settlement and sales business
Forward foreign exchange settlement and sales refers to the signing of a forward foreign exchange settlement and sales contract between the bank and the customer, which stipulates the foreign exchange currency, amount, exchange rate and time limit for the settlement and sales of foreign exchange in the future. When foreign exchange income or expenditure occurs on the due date, the settlement and sales of foreign exchange shall be handled according to the currency, amount and exchange rate agreed in the forward foreign exchange settlement and sales contract.
The long-term settlement and sales of foreign exchange of the company and its subsidiaries are based on normal business, reasonably arrange the use of funds, aim at fixing the cost of exchange, stabilizing and expanding business and preventing exchange rate risk, do not speculate, do not conduct foreign exchange transactions solely for profit, and do not affect the development of the main business of the company.
In 2022, the amount of forward foreign exchange settlement and sales transactions carried out by the company and its subsidiaries shall not exceed 3 billion yuan or equivalent in other currencies, and the above amount can be recycled and rolled. 3、 Feasibility analysis of carrying out forward foreign exchange settlement and sales business
Affected by international political and economic uncertainties, the foreign exchange market fluctuates more frequently, and the uncertainty of the company's operation increases. In order to prevent foreign exchange rate risks, it is necessary for the company to appropriately carry out forward foreign exchange settlement and sales business according to specific conditions. The forward foreign exchange settlement and sales business carried out by the company is closely related to the company's business. Based on the company's foreign exchange assets, liabilities and foreign exchange revenue and expenditure business, it can further improve the company's ability to deal with the risk of foreign exchange fluctuation, better avoid and prevent the risk of foreign exchange rate and interest rate fluctuation faced by the company, and enhance the company's financial stability. 4、 Risk analysis of long-term settlement and sale of foreign exchange and control measures taken by the company
In carrying out forward foreign exchange settlement and sales business, the company follows the principle of locking exchange rate risk and preserving value, does not engage in speculative and arbitrage trading operations, and strictly carries out transactions in accordance with the company's predicted collection period and collection amount when signing the contract. Forward foreign exchange transactions 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: (I) market risk
The difference between the exchange rate of the forward foreign exchange settlement and sale transaction contract and the actual exchange rate on the maturity date will produce transaction profits and losses; During the duration of the transaction contract interest rate, revaluation profit and loss will occur in each accounting period, and the cumulative value of revaluation profit and loss to the maturity date is equal to the transaction profit and loss. In view of this risk, the company will strengthen the research and analysis of exchange rate and timely adjust its business strategy to stabilize its business and avoid exchange losses to the greatest extent. (II) liquidity risk
The forward settlement and sale of foreign exchange shall be based on the company's foreign exchange assets and liabilities, match with the actual foreign exchange revenue and expenditure, and ensure that sufficient funds are available for liquidation at the time of delivery, so as to reduce the demand for cash flow on the due date. Secondly, due to business changes, market changes and other reasons, it is necessary to close positions or extend financial derivatives in advance, which has the risk of paying the price difference to the bank with its own funds temporarily. In view of this risk, the company will choose the forward foreign exchange settlement and sales business with simple structure, strong liquidity and controllable risk, and strictly control the transaction scale of forward foreign exchange settlement and sales. (III) operational risk
If the operator fails to communicate with banks and other financial institutions in time when the company carries out forward foreign exchange settlement and sales transactions, it may miss better trading opportunities; The operator fails to report and approve according to the specified procedures, or fails to accurately, timely and completely record the business information, which may lead to transaction loss or loss of transaction opportunities. In view of this risk, the company has formulated a standardized business operation process and authorization management system, equipped with full-time personnel, clarified the post responsibilities, and strictly engaged in the business of long-term settlement and sales of foreign exchange within the scope of authorization. At the same time, the company has formulated the management system for long-term foreign exchange settlement and sales, which clearly stipulates the operation principle, approval authority, organization and its responsibilities and implementation process of long-term foreign exchange settlement and sales, and plays a guarantee role in the risk control of long-term foreign exchange settlement and sales. (IV) performance risk
The counterparties of the company's forward foreign exchange settlement and sales transactions are financial institutions with good credit and have established long-term business contacts with the company, with low performance risk. In order to prevent this risk, the company will strengthen the management of bank accounts and funds, and strictly control the approval procedures for fund allocation and use.
(V) legal risks
If the operator fails to fully understand the terms of the financial derivatives trading contract and business information, it will bring legal risks and trading losses to the company. In view of this risk, the company will 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. 6、 Accounting principles for carrying out forward foreign exchange settlement and sales business
The company and its subsidiaries conduct corresponding accounting and disclosure of forward foreign exchange settlement and sales business in accordance with the relevant provisions and guidelines of accounting standards for Business Enterprises No. 24 - hedge accounting, accounting standards for Business Enterprises No. 22 - recognition and measurement of financial instruments and accounting standards for Business Enterprises No. 37 - presentation of financial instruments issued by the Ministry of finance. The final accounting treatment shall be subject to the accounting statements audited and confirmed by the company's annual audit institution. 7、 Feasibility analysis conclusion of the company's long-term foreign exchange settlement and sales business
The company's forward foreign exchange settlement and sales business is carried out around the company's main business. It is not a forward foreign exchange transaction solely for the purpose of profit, but based on specific business operations, with hedging as the means, with the purpose of avoiding and preventing the risk of exchange rate fluctuation and with the goal of protecting normal operating profits; The company has improved relevant internal control processes, and the targeted risk control measures taken by the company are feasible. By carrying out forward foreign exchange settlement and sales business, we can lock in the transaction cost or income at the future time point and realize asset preservation for the purpose of avoiding risks. Therefore, it is necessary and feasible for the company to carry out forward foreign exchange settlement and sales business, which can effectively reduce the risk of exchange rate fluctuation.
Wuxi Lead Intelligent Equipment Co.Ltd(300450) board of directors January 27, 2022
