Wan Ma Cable Chairman Response Charlot questioned that 08-year 4-quarter futures losses have been reflected in the current profit and loss

-Our reporter Zhao Jiafao Xu Jie Yesterday, Pan Cable chairman of the summer grass issued by the "Million horse cable whitewash report conceal loss?"　　"Questions such as questioning and media concerns have been answered.　　Securities Daily: Recently some news media, network Friends of your company's distribution and operating conditions are very concerned about, Mr. Charlot in the blog also on the company's 08 performance questioned, in 2008 copper prices fell sharply, the company is how to avoid the risk? Pan: The company received orders, both in short time delivery of the current order, but also a few months after the delivery of forward orders. For the current order, the company uses direct in the spot market to buy the corresponding number of copper rods to lock the gross margin.　　For forward orders, the company adopts the "lock copper, hedging supplemented" procurement strategy to circumvent the risk of copper price fluctuations.　　2008, the company purchased more than 20,000 tons of copper in the warehouse, including the use of futures cover to buy more than 1400 tons of copper, accounting for the annual procurement of copper in the proportion of the amount is very low, the rest of the copper materials are used to buy or in the form of a long-term lock copper purchase. The company 2008 copper futures flat loss total of 4.1755 million yuan, all counted into the current investment income, of which 1-3 quarters of the contract closed the surplus of more than 100,000 Yuan, 4 quarterly contract liquidation loss of more than 4.2 million yuan; as of December 31, 2008, the Company futures account held 30 hands 150 tons, fair value 2.3686 million yuan,　　At the end of the contract, the market price is less than the cost of 88,500 yuan, the company has in accordance with the requirements of the relevant accounting standards in the balance sheet of December 31, 2008 trading financial assets subject and 2008 profit statement of the investment income and fair value changes in the profit and loss account to reflect.　　As a result, the company 2008 due to the 4 quarter copper prices caused by a sharp decline in the futures contract losses, has been reflected in the current profit and loss.　　The scope of hedging and profit and loss in the reporting period have been disclosed in the "ten, Management discussions and analysis" of the prospectus.　　Securities Daily: Can you explain the operation method of "lock copper" and "cover protect" concretely? Pan: The so-called "lock copper", refers to the company received orders, according to the number of orders, specifications to calculate the consumption of copper, and in accordance with the order delivery time and copper rod suppliers to sign a forward supply contract, locking copper prices.　　The so-called "hedging" refers to the company received orders, buy the corresponding copper futures contracts, in the actual production of the order, in the spot market to buy the corresponding copper, and will hold the futures contract closed positions. Both of these methods can play the role of avoiding the risk of copper price fluctuation. But these two ways in the financial performance is different, lock copper Lock is the product raw material cost, in this way the enterprise's gross margin is relatively stable. Hedging is often just a number of hedging, it is difficult to do with the order delivery date of the complete one by one corresponding, if not all corresponding, its profit and loss is reflected in the investment income. That is to say, the profit and loss of the hedging will lead to the fluctuation of gross profit margin, which is not conducive to the analysis of the gross profit of different product structure.The actual operation of the enterprise is clearly seen by the capital. Not only that, when the copper price has fallen substantially, the hedging method needs to continue to add margin, otherwise it will be forced to close the position.　　Therefore, we began to adopt the strategy of locking copper as a supplement in the 2007.　　"Securities Daily": in the second half of 2008 copper prices fell sharply, the company has a customer default situation? Pan: More than 75% of the company's main business income from the power system and industry quality customers, these customers generally have large scale, high credit rating characteristics, the company and these customers are long-term partnership, customers will not because of the decline in copper prices and not to fulfill the purchase contract signed with the company, In turn, the company will not because of the rise in copper prices refused to supply, each other attaches great importance to the contract credit. However, delays in delivery during the reporting period due to customer engineering progress have occurred, in the case of low volatility of copper prices, this delay in delivery will not have a significant impact on the operating results, in the case of a sharp decline in copper prices, this delay in the delivery of goods will lead to different reporting period of product gross margin fluctuations,　　Long term will not affect the profitability of the company. The company's 2008 4 quarterly gross Profit margin is the main reason for this, but this impact on the company's 2009 actual production of backorder orders will be reflected through the promotion of gross margin. For the company's main business of the lower income ratio of general user projects, in order to prevent the risk of customer default, the company has consistently received 30% of the sales policy of the advance collection.　　So when copper prices fell, there was little customer default because of the high cost of defaulting.　　It is also in line with the characteristics of the industry that the power system and the industry's high quality customers rarely default. 　　"Securities Daily": online an article questioned "million horse cable to customers charge 30% of the pre-payment", "huge amount of the missing mystery", said, please explain? Pan: It's just a misreading. At the agency's promotion meeting, some investors raised the question of whether there was a customer default in the second half of 2008 when copper prices fell sharply. I have made a relevant explanation for this, it talks about the company's main business income of more than 75% of the customers for the power system and large industry quality customers, the order has been signed, in the copper price rises when the company also does not increase prices, in the copper price falls when the customer will not default, so the company is usually used "lock copper, cover and　　Purchasing strategy to lock down the main material cost and avoid the risk of copper price fluctuation.　　But for the company's main business income ratio is lower (less than 25%) of the general user project, in order to circumvent the risk of default, the company insists on the implementation of a 30% of the advance payment of the sales policy. As of December 31, 2008, in advance payment of more than 3,980 million, compared to the general user engineering customers on the company's business income contribution, this is a more reasonable amount.　　The company does not collect the whole customer to receive the advance collection, therefore also does not exist "the huge advance receivable disappearance" to say. Securities Daily: The reform of this issue systemWhat's your opinion on the issue price of the leather and the million-horse cable? Pan: Under the proper guidance of the underwriters ' Ping An securities, we have carefully studied the new distribution system, before the release, together with Ping An securities issued a plan to discuss and discuss repeatedly, made a lot of preparatory work, we are acutely aware of the million horse cable as the IPO restart the second single, we are responsible for a significant. The new distribution system gives pricing power to the market, issuer as one of the main body of the market, we must have a correct understanding and positioning, we do not raise the amount of capital to maximize as the pursuit of the goal, the issue of pricing must give the two-tier market space, so love million horse cable institutional investors, small and medium-sized investment to get a reasonable return. I believe that million horse cable this market-oriented issue pricing is reasonable, we will continue to good business performance return to the vast number of investors.