Aerospace Ch Uav Co.Ltd(002389)
Feasibility analysis report on hedging business
1、 Purpose of hedging business
The military trade business of the company is mainly carried out through the military trade company. The sales contracts signed are priced in US dollars. According to the accounting standards, the company records them at the spot exchange rate on the day of revenue recognition. After receiving the foreign funds, the military trade company converts them into RMB according to the actual settlement exchange rate on the day of foreign exchange settlement, and then settles with the company. If no exchange rate risk management tool is adopted, it shall be converted into RMB at the spot exchange rate of the current day at the end of the reporting period, and the difference shall be included in the current profit and loss. The appreciation of RMB is reflected in exchange loss, otherwise it is exchange gain. Exchange rate fluctuations in the past two years have a great impact on the company’s performance, which is not conducive to maintaining the good image of listed companies. The company carries out hedging business on the basis of normal production and operation, relying on specific business operations, and for the purpose of avoiding and preventing exchange rate and interest rate risks.
2、 Overview of hedging business
1. Mainly involving currency and business type: the company carries out hedging business with accounts receivable as the subject, and the currency involved is USD. The hedging business conducted by the company is forward foreign exchange settlement and sales and other derivatives, and the trading place is OTC.
2. Capital scale and capital source: according to the company’s assets and business scale, the company’s proposed hedging business scale shall not exceed US $200 million, and the extension amount shall not be calculated repeatedly. The hedging business to be carried out by the company mainly uses the bank credit line or its own funds, and gives priority to the use of the bank credit line. If it uses its own funds, the proportion of the deposit paid is determined according to the specific agreement signed with the bank, and does not involve the raised funds.
3. Authorization and duration:
(1) Authorization: according to the provisions of the measures for the administration of the company’s currency derivative business, the company’s monetary derivative business transactions that account for less than 50% of the net assets of the audited consolidated statements of the company in the latest fiscal year or within 12 consecutive months shall be approved by the board of directors; If the amount of the company’s single currency derivative business transaction or accumulated within 12 consecutive months accounts for more than 50% of the net assets of the audited consolidated statements of the company in the latest fiscal year, it shall be reviewed and approved by the board of directors and submitted to the general meeting of shareholders for approval. If it constitutes a connected transaction, the examination and approval procedures for connected transactions shall be performed. The board of directors authorizes the general manager office of the company to examine and approve the scope of transaction authority and the list of personnel according to the business plan.
(2) Term: within 12 months from the date of deliberation and approval by the board of directors of the company.
4. Counterparty: large commercial banks or financial institutions with foreign exchange hedging business qualification.
5. Liquidity arrangement: all foreign exchange capital businesses correspond to normal and reasonable business background, match with the collection contract, and will not affect the liquidity of the company.
3、 Feasibility of carrying out currency derivatives business
1. The company’s foreign currency assets have certain foreign exchange exposure. Affected by international political and economic uncertainties, the foreign exchange market fluctuates frequently, affecting the performance of the company’s daily business. In order to prevent foreign exchange market risks, it is necessary for the company to appropriately carry out foreign exchange hedging business according to specific conditions.
2. The company’s foreign exchange hedging business is closely related to the company’s business, which can improve the company’s ability to deal with foreign exchange fluctuation risk and better avoid and prevent foreign exchange rate fluctuation risk. 3. It is feasible to develop foreign exchange hedging business by formulating the management measures for the company’s currency derivatives business, improving relevant internal control systems, setting up special posts, and taking targeted risk control measures.
4、 Accounting policies and accounting principles
The company will conduct corresponding accounting treatment for the foreign exchange hedging business in accordance with the relevant provisions of the 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 and other standards and guidelines of the Ministry of finance, And disclose the company’s hedging business in regular financial reports.
5、 Risk analysis of hedging business
The company follows the prudent principle in carrying out foreign exchange hedging business and does not carry out foreign exchange transactions for the purpose of speculation. All foreign exchange hedging businesses are based on normal production and operation, rely on specific business operations, and aim to avoid and prevent exchange rate and interest rate risks. However, there will be some risks in carrying out foreign exchange hedging business:
1. Exchange rate fluctuation risk: in case of significant deviation between the exchange rate trend and the direction of exchange rate fluctuation judged by the company, the cost incurred by the company after locking the exchange rate may exceed the cost incurred when it is not locked, resulting in losses to the company.
2. Internal control risk: foreign exchange hedging business is highly professional and complex, which may cause risks due to imperfect internal control system.
3. Counterparty default risk: there is a default risk that the foreign exchange hedging business cannot be performed when the contract expires.
4. Legal risk: due to the change of relevant laws and regulations or the counterparty’s violation of relevant laws and regulations, the contract may not be executed normally and bring losses to the company.
6、 Risk control measures taken by the company for hedging business
1. Formulate the management measures for the company’s currency derivatives business. The company will control all links in strict accordance with the system and regulations, strengthen the professional knowledge training of relevant personnel and improve the professional quality of employees.
2. Based on the principle of hedging, avoiding and preventing exchange rate risk, avoid the risk caused by exchange rate fluctuation to the greatest extent, and adjust the strategy in time in combination with market conditions.
3. The company only conducts business with large financial institutions with legal qualifications to avoid possible legal risks.
4. In the process of business operation, strictly abide by the provisions of relevant national laws and regulations, prevent legal risks, and regularly check the standardization of hedging business, the effectiveness of internal control mechanism and the authenticity of information disclosure.
5. The board of supervisors, independent directors and the audit committee of the board of directors of the company have the right to supervise and inspect, and can hire professional institutions to audit when necessary, and the expenses shall be borne by the company.
6. The audit and legal department of the company shall audit and supervise the hedging business carried out by the company.
7、 Conclusion on the feasibility of the company’s Hedging Business
The company’s hedging business is based on the business background and makes full use of foreign exchange hedging tools for the purpose of avoiding and preventing exchange rate risks, which is conducive to reducing the adverse impact of large exchange rate fluctuations on the company’s operation, and has a certain necessity. The company has formulated the management measures for the company’s currency derivatives business and deeply studied the accounting policies related to foreign exchange hedging. In conclusion, the targeted risk control measures taken by the company are feasible. By carrying out hedging business, the company can avoid the risk of exchange rate fluctuation to a certain extent.
January 17, 2002
