Stock code: 600690 Stock abbreviation: Qingdao Haier Number: Lin 2019-019
Bond code: 110049 Bond abbreviation: Haier convertible bonds
Announcement of Qingdao Haier Co., Ltd. on the development of foreign exchange derivatives business
The company’s board of directors and all directors guarantee this There are no false records, misleading statements or major omissions in the announcement content, and we bear individual and joint liability for the authenticity, accuracy and completeness of its content.
Qingdao Haier Co., Ltd. (hereinafter referred to as the "Company") held the 27th meeting of the company's ninth board of directors on April 29, 2019, and reviewed and approved the "Qingdao Haier Co., Ltd.'s Regulations on Carrying out Foreign Exchange Fund Derivatives Business" motion". Such business does not constitute related transactions, and the proposal must still be submitted to the shareholders' meeting for review.
In 2018, the company's overseas business accounted for 42%, and foreign currency revenue accounted for a relatively large proportion, while most of the cost components were local currency (RMB). The mismatch between income and expenditure currencies resulted in exchange rate fluctuations that had a greater impact on the company's profits. Based on the company’s import and export situation and operating budget, as well as the need to avoid exchange rate and interest rate risks in asset and liability businesses, it plans to operate foreign exchange derivatives business with a balance of no more than US$6.5 billion in 2019. The specific situation is as follows:
1. Overview and necessity of foreign exchange fund derivatives transactions
1. Foreign exchange fund derivatives are foreign exchange hedging financial products approved by the People's Bank of China. The principle of the transaction is to sign a forward foreign exchange purchase, settlement, and swap agreement with a bank, agreeing on the foreign exchange currency, amount, term, and exchange rate for future foreign exchange purchase and settlement. When it expires, the currency, amount, and exchange rate agreed upon in such agreement will be used. For foreign exchange purchase and settlement business, the cost of foreign exchange purchase and settlement for the current period will be locked.
2. The purpose of the company's foreign exchange derivatives business is to avoid and prevent the exchange rate risks faced by the company due to its international trade business, and to reduce the impact of exchange rate fluctuations on the company's performance. When handling foreign exchange derivatives transactions, fixing the exchange transaction costs at a certain level in advance can effectively avoid unexpected risks caused by large fluctuations in exchange rates.
3. The scale of the company's foreign exchange derivatives business is consistent with the company's actual import and export business volume, overseas assets/liabilities, etc., and there is no speculative operation. In the context of the continuous expansion of the company's overseas business scale, in order to ensure the company's sustained and steady development and accelerate the integration and synergy of the company's management and business with its new overseas subsidiaries, the company believes that it is necessary to avoid exchange rate risks through foreign exchange capital derivatives business .
2. Overview of the planned foreign exchange derivatives transactions
1. Forward foreign exchange settlement/purchase business
For the company's import and export business, it signs a forward foreign exchange settlement/purchase contract with a bank (or other financial institution that can engage in related business according to law) , locking the exchange rate for settlement/purchase of foreign exchange against RMB in the future and eliminating the impact of exchange rate fluctuations.
2. Currency swap business
In response to the company's different needs for near- and remote-end cash flow, it signs swap contracts with banks (or other financial institutions that can engage in related businesses according to law) to avoid the impact of exchange rate fluctuations.
3. Risk-controllable arbitrage portfolio business
This business is aimed at the difference between the company's foreign currency receipts and payments, and the forward exchange difference of foreign currency is affected by market fluctuations and is different from the exchange difference that should be formed by the theoretical spread, forming arbitrage space. It is planned to operate arbitrage business appropriately to make up for the cost of hedging when risks are controllable, such as spot foreign exchange purchase plus forward foreign exchange settlement, spot foreign exchange settlement plus forward foreign exchange purchase for foreign currency loans, etc.
4. Other NDF (non-deliverable forward foreign exchange transactions), currency futures and options business
The risks faced by the company are increasingly diversified in currencies and exchange rate fluctuations are increasing, such as the euro, Japanese yen, Indian rupee, Russian For some currencies, such as the ruble and the Thai baht, there is no ordinary forward that can be delivered normally in the local area or the hedging cost is too high. In order to increase hedging measures and effectively avoid exchange rate risks, the company will try to use other NDF, currency futures and options portfolios and other products as supplementary and backup hedging means.
5. Currency, interest rate swap and other businesses
With the company's international operations, the scale of overseas business, assets and liabilities are increasing day by day.In order to effectively hedge the exchange rate and interest rate fluctuation risks faced by overseas assets and liabilities, the company plans to avoid exchange rate and interest rate fluctuation risks through currency and/or interest rate swap business.
According to the company’s import and export situation and operating budget, the above 1-4 businesses are to avoid the risk of exchange rate fluctuations in import and export business, etc., and the planned operating balance in 2019 will not exceed US$4.5 billion; the 5th business is to avoid asset and liability business For exchange rate and interest rate risks, the planned operating balance in 2019 will not exceed US$2 billion. The company will adjust the specific operating amounts of the above 1-5 businesses within the total balance of US$6.5 billion based on actual business needs.
3. The main terms of the proposed foreign exchange hedging transactions
1. Contract period: The period of the foreign exchange capital business involved in the company's daily operating activities is basically within one year. The currency/interest rate swap business under the assets and liabilities involved is within 1-5 years.
2. Counterparty: bank (or other financial institution that can engage in relevant business according to law, but within the business scope of foreign exchange derivatives involved in this proposal, the counterparty of the company and its subsidiaries does not include Haier Group Finance Co., Ltd. or Haier Other entities under the group company that can engage in relevant business in accordance with the law [referred to as "Haier Group Finance Company, etc."] For the amount of foreign exchange derivatives business that may be transacted with Haier Group Finance Company, etc., please refer to the "About Qingdao Haier Co., Ltd." disclosed on the same day as this announcement. Announcement on Estimated Daily Related Transactions in 2019 (Announcement No.: Pro 2019-017).
3. Liquidity arrangement: All foreign exchange capital business corresponds to the normal and reasonable import and export business background, matches the collection and payment time, and will not affect the company's liquidity.
4. Management system related to foreign exchange capital business
Regarding the operating specifications of foreign exchange capital business, the company strictly implements foreign exchange in accordance with the relevant provisions of the "Foreign Exchange Risk Management Policy" and the "Foreign Exchange Derivatives Transaction Management System of Qingdao Haier Co., Ltd." Derivatives business.
V. Risk analysis of foreign exchange derivatives transactions
The company and its holding subsidiaries follow the principle of soundness in conducting foreign exchange derivatives business and do not conduct foreign exchange transactions for speculative purposes. All foreign exchange capital businesses are based on normal production and operations and are based on specific Based on business operations, the purpose is to avoid and prevent exchange rate risks. However, there are certain risks in conducting foreign exchange capital business:
1. Market risk
Unilateral forward foreign exchange settlement business: The company will determine whether to sign a forward contract based on the product cost (basically composed of RMB) and market risk. After signing the contract, it is equivalent to The exchange price is locked, and the unilateral forward exchange settlement business will effectively resist the risk of market fluctuations and ensure the company's reasonable and stable profit level.
Unilateral forward foreign exchange purchase business: Based on the import contract signed with the customer and the exchange rate risk, future exchange costs are locked in through this business. Although there is a certain risk of opportunity loss, unilateral forward foreign exchange purchase business will effectively reduce the risk of market fluctuations and lock in procurement costs.
Other NDF, currency futures and options businesses are mainly operated when it is impossible to sign ordinary unilateral forward settlement/foreign exchange purchase business or the cost is too high, and only serve as a supplement to the above unilateral business. When
arbitrage business is operated, its maturity income has been determined, and there is no risk of market fluctuations.
Currency swap business mainly adjusts the currencies of assets or liabilities to match the currencies of assets and liabilities to avoid the risk of exchange rate fluctuations; the interest rate swap business is to convert floating interest rate business into fixed interest rate business to avoid the risk of interest rate fluctuations. Or when interest rates fall, costs can be reduced by converting fixed interest rates to floating interest rates. The above businesses all have real business backgrounds and do not involve speculation.
2. Exchange rate fluctuation risk
After the company locks the forward exchange rate according to the foreign exchange management strategy, if the actual trend of the foreign exchange rate deviates significantly from the company's locked exchange rate fluctuation direction, the company's cost after locking the exchange rate may exceed the cost without locking. , thus causing losses to the company; when the foreign exchange rate fluctuates greatly, and the company locks in a large exchange rate fluctuation direction that is inconsistent with the direction of the foreign exchange hedging contract, exchange losses will be formed; if the exchange rate does not fluctuate in the future, it will be inconsistent with the foreign exchange hedging contract. Large deviations will also result in exchange losses.
3. Internal control risk
The foreign exchange derivatives business is highly professional and complex, and may cause risks due to imperfect internal control systems.
4. Transaction default risk
In the event that the counterparty to a foreign exchange derivatives transaction defaults, the company will be unable to obtain hedging profits as agreed to hedge the company's actual exchange losses, thus causing losses to the company.
5. Customer default risk
Overdue customer accounts receivable, customer adjustment of orders, etc. will cause the actual payment situation to be inconsistent with the expected payment situation, which may cause the actual cash flow to be inconsistent with the operating period of foreign exchange derivative products or The amounts could not be matched exactly, resulting in losses for the company.
6. The risk control measures the company intends to take
1. The purpose is to avoid exchange rate risks and is limited to foreign exchange operations related to the company’s import and export business and overseas asset/liability management. The company is not allowed to engage in foreign exchange derivatives outside this scope. Product trading.
2. The approval process shall be implemented strictly in accordance with the "Foreign Exchange Risk Management Policy" and the "Foreign Exchange Derivatives Transaction Management System". The company's general meeting of shareholders and the board of directors shall authorize the general manager/general manager's office meeting to be responsible for the operation and management of this foreign exchange derivatives business, and The Treasury Department serves as the handling department, and the Finance Department serves as the daily review department.
3. The company conducts foreign exchange derivatives business with large banks and other financial institutions with legal qualifications. The financial department tracks transaction changes in a timely manner and strictly controls the risk of delivery default.
4. The company’s foreign currency derivatives business must be based on careful predictions of the company’s foreign currency receipts (payments). The delivery date of the foreign exchange derivatives business must match the company’s predicted foreign currency receipts, deposit times or foreign currency payment times, or match the corresponding time. The repayment period of foreign currency bank borrowings matches.
7. Fair value analysis
The company conducts confirmation and measurement in accordance with Chapter 7 "Fair Value Determination" of the "Accounting Standards for Business Enterprises Article 22 - Recognition and Measurement of Financial Instruments". The fair value is basically based on the price provided or obtained by banks and other pricing service agencies. To determine, the company measures and confirms fair value every month.
8. Accounting policies and accounting principles
The accounting principles for foreign exchange fund transactions carried out by the company are based on the "Accounting Standards for Business Enterprises". The company complies with the relevant provisions of the Ministry of Finance's "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments", "Accounting Standards for Business Enterprises No. 24 - Hedging", and "Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments" and its guidelines, carry out corresponding accounting processing for the foreign exchange capital business carried out, and reflect relevant items on the balance sheet and profit and loss statement.
9. Opinions of independent directors
Independent directors believe that: the relevant decision-making procedures for the company and its holding subsidiaries to carry out foreign exchange derivatives business are in compliance with relevant national laws, regulations and the relevant provisions of the Articles of Association. Based on normal production and operation, relying on specific operating businesses, and on the premise of ensuring normal production and operation, the company uses foreign exchange capital derivatives instruments to reduce exchange rate risks, reduce exchange losses, and control operating risks without harming the company, all shareholders, and Especially in the case of the interests of small and medium-sized shareholders. The company has formulated the "Qingdao Haier Co., Ltd. Foreign Exchange Derivatives Transaction Management System". By strengthening control and implementing risk prevention measures, it has formulated specific operating procedures for the company's foreign exchange derivatives business. It is feasible for the company to carry out foreign exchange derivatives business this time, and the risks can be controlled.It is agreed that the company will carry out foreign exchange derivatives business in a timely manner according to business development needs and in accordance with relevant regulations on the premise of ensuring that normal operating capital requirements and capital security are not affected. We agree that the company's board of directors will submit the above proposals to the company's 2018 annual shareholders' meeting for review.
10. Opinions of the Board of Supervisors
The Board of Supervisors believes that: the company conducts foreign exchange capital business based on actual business needs, and its decision-making procedures comply with relevant national laws, regulations and the company's articles of association, which is conducive to preventing the risk of interest rate and exchange rate fluctuations and reducing the impact of interest rate fluctuations on the company. , there is no harm to the interests of the company and small and medium shareholders. Therefore, the Board of Supervisors unanimously agreed that the company will carry out foreign exchange capital business this time.
11. Documents for reference
1, Resolution of the 27th meeting of the 9th Board of Directors of Qingdao Haier Co., Ltd.;
2, Resolution of the 23rd meeting of the 9th Board of Supervisors of Qingdao Haier Co., Ltd.;
3, Resolution of the 23rd meeting of the 9th Board of Supervisors of Qingdao Haier Co., Ltd. Opinions of the company's independent directors on matters related to the 27th meeting of the ninth board of directors.
hereby announces.
Board of Directors of Qingdao Haier Co., Ltd.
April 29, 2019
