I. Purpose of Conducting Foreign Exchange Hedging Business
Due to the significant proportion of overseas business in the overall operations of the company and its subsidiaries, with major settlement currencies being USD, EUR, JPY, HKD, and VND, exchange rate fluctuations will impact the company's performance. Therefore, to enhance the ability to manage foreign exchange risk, improve financial stability, and reduce the impact of future currency fluctuations on operational performance, the company and its subsidiaries plan to engage in foreign exchange hedging activities after careful consideration.
II. Basic Situation of Conducting Foreign Exchange Hedging Business
The company and its subsidiaries intend to conduct forward foreign exchange transactions through financial institutions approved by the State Administration of Foreign Exchange and the People's Bank of China, which have qualifications for forward foreign exchange business. This will be limited to the main settlement currencies used in the company's production and operations: USD, EUR, JPY, HKD, and VND. The forward foreign exchange transactions will adhere to the principle of hedging and will not involve speculative arbitrage trading, thus maintaining a low risk level. The total amount for the foreign exchange hedging business will not exceed 300 million RMB, effective for one year from the date of approval by the company's shareholders' meeting, with funds being reusable within the specified limit and timeframe.