Stock Code: 000055, 200055 Stock ID: Fangda Group, Fangda B Announcement No. 2014-15
China Fangda Group Co., Ltd.
Announcement on Using Self-Owned Idle Fund for
Securities Investment
The members of the Board and the Company acknowledge being responsible for the truthfulness, accuracy, and completeness of the announcement. Not any false record, misleading statement or significant omission carried in this announcement.
I. Overview
1. Purpose
The Company and its subsidiaries will use their self-owned idle capital to
purchase low-risk and fixed-turn securities products under the premise that the plan
does not affect business operation and risks are controllable. The plan will optimize
the utilization of capital and maximize the return for the Company and shareholders.
2. Use of the capital
The Company will use RMB300 million at most to invest in securities.
3. Method of investment
The securities investment capital will be mainly used to purchase low-risk and
flexible-return financial products issued by investment banks, newly issued stocks and reverse re-purchase treasury bonds.
4. Term
The term of the investment is two years after the proposal is approved by the
Board of Directors and the senior management of the Company is authorized to
implement the plan.
5. Approval right
This investment is within the scope of rights of the Board of Directors and does
not need to be reviewed at the shareholders' meeting.
II. Source of capital
The investment capital is the legal and self-owned idle capital of the Company
and its subsidiaries.
III. Risks and Impacts
The Company and its subsidiaries will comply with relevant securities
regulations and the Internal Control Regulations on Securities Investment and
Internal Control Regulations on New Stock Subscription to perform the following
securities investment:
1. The Company and its subsidiaries plan to purchase low-risk and
flexible-return RMB financial products issued by investment banks, which will create positive impacts on the production and operation of the Company and its subsidiaries. 2. The Company and its subsidiaries plan to invest in low-risk new stocks with
good liquidity and stick to a prudent investment principle. The Company will use an
independent securities account to optimize the utilization of capital and maximize the return for the Company and shareholders under the premise that the plan does not
affect business operation and risks are controllable.
3. The reserve re-purchase of treasury bonds is equal to lending money to
treasury bond holders (borrowers) at an agreed interest rate. The borrowers will
pledge the treasury bonds to the exchange, which will facilitate transactions. After
transactions, the Company will not bear the risks of fluctuation in the price of the
treasury bonds. The return is determined when the transaction is done. Therefore, the
investment faces no risk. After the transactions mature, the system will automatically
return the fund. If borrowers cannot return the fund, the settlement company will
return the fund to the Company in advance and claim for penalty and disposal the
pledged treasury bonds. Therefore, the investment has no credit risk. On the whole,
the reverse re-purchase of treasury bonds is free from the risk of loss in the capital.
The reverse re-purchase is also featured by a short period, high safety and high
returns. Currently, there are nine reverse re-purchase programs that last for 1, 2, 3, 4,
7, 14, 28, 91 and 182 days respectively. The interest rate is higher than that of the
same-period current deposit. The reverse re-purchase can optimize the utilization of
capital and maximize the return for the Company and shareholders under the premise
that the plan does not affect business operation. The Company can repurchase
treasury bonds at a good timing to create positive impacts on the future financial
condition and operation of the Company.
IV. Securities investment in the 12 months prior to this announcement
1. The Company purchased RMB20 million of the principal-protected financial
product "Jin Cheng Fortune No.1", which was launched on June 27, 2013 and
matured on August 27, 2013 and RMB100 million of the return-guaranteed financial
product "RMB Open Normal", which was launched on November 5, 2013 and
matured on November 13, 2013. So far, the Company and its subsidiaries have not
invested in other bank financial products.
2. The Company and its subsidiaries have not subscribed for new stocks or
reverse re-purchased treasury bonds in the 12 months prior to this announcement.
V. Independentdirectors’ opinions
The Company's independent directors believe that:
1. The decision-making procedure is legal. The Company has established a solid internal control system and regulations, which can effectively control investment risks and ensure capital safety.
2. The capital will be used to purchase financial products and reverse repurchase treasury bonds with low risks and relatively stable return.
3. Using idle capital for securities investment can optimize the utilization of
self-owned capital of the Company without affecting theCompany’s business
operation and development of main businesses.
Therefore, we agree with the Company and its subsidiaries in using idle capital
for securities investment.
6. Others
After the securities investment proposal is approved, the Proposal of Using
Self-Owned Idle Fund for Trusted Wealth Management approved at the
21st
meeting
of the 6th Board of Directors held on July 26, 2013 will become invalid.
The above is for the attention of the shareholders.
China Fangda Group Co., Ltd.
Board of Directors
March 11, 2014