I. Background of the Company's Foreign Exchange Derivative Trading Business
The company's import and export operations primarily use USD for settlement. Significant fluctuations in exchange rates may greatly impact the company's performance. To effectively avoid and mitigate potential exchange rate risks arising from import and export activities, the company will engage in foreign exchange derivative trading with banks and other financial institutions to enhance the efficiency of foreign exchange fund usage, reasonably reduce financial costs, and minimize adverse effects from exchange rate fluctuations. The foreign exchange derivative trading conducted by the company is based on hedging and risk avoidance, involving simple foreign exchange derivative products closely related to its core business, ensuring alignment in terms of type, scale, direction, and duration, in accordance with the company's prudent and stable risk management principles.
II. Overview of the Company's Foreign Exchange Derivative Trading Business
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Main Currencies and Business Types The foreign exchange derivative trading business the company intends to conduct is limited to currencies that match its primary settlement currencies used in production and operations. The main types of foreign exchange derivative business include, but are not limited to, forward foreign exchange contracts, foreign exchange swaps, currency swaps, foreign exchange futures, foreign exchange options, and other foreign exchange derivative products.
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Investment Amount and Duration The company plans to conduct foreign exchange derivative trading with an amount not exceeding $10 million (or equivalent). The investment duration will be from the date of the 2025 annual general meeting until the date of the 2026 annual general meeting, with the aforementioned amount available for rolling use within this period. If the duration of a single transaction exceeds the authorized period, the authorization period will automatically extend until the termination of that transaction.
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Counterparties Counterparties will be financial institutions approved by regulatory authorities and qualified to conduct foreign exchange derivative trading.