Yaoshi Technology: Feasibility Analysis Report on Carrying out Foreign Exchange Derivatives Trading Business in 2026
Nanjing Yaoshi Technology Co., Ltd.
Feasibility analysis report on carrying out foreign exchange derivatives trading business in 2026
1. The necessity and feasibility of carrying out foreign exchange derivatives trading business
Since most of the revenue of Nanjing Yaoshi Technology Co., Ltd. (hereinafter referred to as the "Company") and its subsidiaries comes from overseas markets, affected by multiple uncertain factors such as the international macroeconomic situation, foreign exchange market fluctuations may have a certain impact on the company's operating performance. In order to effectively avoid and prevent the adverse effects of large exchange rate fluctuations on the company's operations, reduce foreign exchange risks, and enhance the company's financial stability, while ensuring daily operating capital needs, the company and its subsidiaries must appropriately carry out foreign exchange derivatives trading business in 2026 based on specific circumstances to strengthen the company's foreign exchange risk management. At the same time, the company has formulated internal control systems such as the "Foreign Investment Management System" and "Financial Investment Implementation Rules", and formulated relevant business approval processes and risk control measures. The targeted risk control measures planned to be adopted are practical and feasible, and it is feasible to carry out foreign exchange derivatives trading business.
2. Basic information on carrying out foreign exchange derivatives trading business
(1) Investment purpose
Since most of the revenue of the company and its subsidiaries comes from overseas markets, and is affected by multiple uncertain factors such as the international macroeconomic situation, foreign exchange market fluctuations may have a certain impact on the company's operating performance. In order to improve the ability of the company and its subsidiaries to cope with foreign exchange fluctuation risks, better avoid and prevent the risks of foreign exchange exchange rate fluctuations faced by the company, enhance the company's financial stability, and reduce the uncertainty caused by exchange rate fluctuations on the company's profits and shareholders' equity, it is necessary for the company and its subsidiaries to appropriately carry out foreign exchange derivatives trading business in 2026 based on specific circumstances to strengthen the company's foreign exchange risk management.
(2) Investment amount
The total amount of foreign exchange derivatives trading business planned by the company and its subsidiaries in 2026 shall not exceed US$300 million or its equivalent in other currencies, and the transaction amount at any time during the period (including the amount related to re-trading of the proceeds of the aforementioned transactions) shall not exceed the reviewed amount.
(3) Investment methods
(1) Investment varieties: forward foreign exchange settlement and sales, RMB and other foreign exchange swap business, foreign exchange buying and selling, foreign exchange swaps, foreign exchange options, interest rate swaps, interest rate swaps, interest rate options and other products or a combination of the above products.
(2) Counterparty: Banks and other financial institutions approved by relevant government departments and qualified to operate foreign exchange derivatives business.
(4) Investment period
This proposal still needs to be submitted to the shareholders' meeting for review. The board of directors will request the shareholders' meeting to authorize the chairman or the company's financial investment decision-making group to review and approve the company's daily derivatives trading specific operation plan and sign relevant agreements and documents within the transaction limit reviewed and approved by the shareholders' meeting. The company's financial center will be responsible for specific transaction matters.
The authorization period is valid for 12 months from the date of approval at the company's shareholders' meeting, and can be used flexibly on a rolling basis during the validity period. If the duration of a single transaction exceeds the authorization period, the authorization period will automatically be extended until the transaction is terminated.
(5) Source of funds
The source of funds is the company and its subsidiaries' own funds, or funds raised through other methods permitted by laws and regulations, and does not involve raised funds.
3. Risk analysis and risk prevention and control measures for conducting foreign exchange derivatives trading business
(1) Risk analysis
The company will follow prudent and steady risk management principles to carry out foreign exchange derivatives trading business, with the purpose of locking in costs, avoiding and preventing exchange rate, interest rate and other risks, based on normal production and operations, and relying on specific operating businesses. However, there will also be certain risks in conducting foreign exchange derivatives trading business, mainly including:
Market risk: The difference between the contract exchange rate of foreign exchange derivatives trading business and the actual exchange rate on the maturity date will generate exchange gains and losses; during the duration of the derivatives, revaluation gains and losses will occur in each accounting period, and the cumulative value of the revaluation gains and losses by the maturity date is equal to investment gains and losses.
Liquidity risk: Derivatives transactions are based on the company's foreign exchange revenue and expenditure budget, which matches the actual foreign exchange revenue and expenditure to ensure that there are sufficient funds for settlement at the time of delivery, or net delivery of derivatives is selected to reduce cash flow needs on the maturity date. There is a risk that the transaction cannot be completed due to insufficient market liquidity.
Performance risk: The counterparties to the foreign exchange derivatives trading business planned to be carried out by the company and its subsidiaries are banks and other financial institutions with good credit and which have established long-term business relationships with the company, so the performance risk is relatively small.
Internal control risk: The foreign exchange derivatives trading business is highly professional and complex, and may cause risks due to imperfect internal control systems.
Repayment forecast risk: The company's business department usually makes payment and repayment forecasts based on purchase orders, customer orders and expected orders. However, during the actual execution process, suppliers or customers may adjust their own orders and forecasts, causing the company's repayment forecasts to be inaccurate, leading to the risk of delayed delivery of operated foreign exchange derivatives business transactions.
Other risks: When conducting business, if the operator fails to record the relevant information of the foreign exchange derivatives business accurately, timely and completely, it may lead to losses in the foreign exchange derivatives business or the loss of trading opportunities; at the same time, if the trading personnel fail to fully understand the terms of the trading contract and product information, they will face the resulting legal risks and trading losses.
(2) Risk prevention and control measures
According to the relevant regulations of the company, the company does not conduct foreign exchange derivatives business for the purpose of speculation. All foreign exchange derivatives business is based on normal production and operations, relying on specific operating businesses, and aims to avoid and prevent exchange rate or interest rate risks. The company's "Financial Investment Implementation Rules" clearly stipulates the operating principles and approval authority of the company's foreign exchange derivatives business, which complies with the relevant requirements of the regulatory authorities and meets the needs of actual operations. The risk control measures formulated are effective.
The company's financial investment decision-making group, company finance center and internal audit department, as relevant responsible departments, all have clear management positioning and responsibilities, and are equipped with professionals in investment decision-making, business operations, risk control and other areas. This fundamentally eliminates the risk of single-person or independent department operations and improves the speed of response to risks while effectively controlling risks.
The company conducts foreign exchange derivatives business with banks and other financial institutions that have been approved by relevant government departments and have foreign exchange derivatives business qualifications, and closely follows laws and regulations in relevant fields to avoid possible legal risks.
The Financial Center will continue to track changes in the open market price or fair value of foreign exchange derivatives, timely assess changes in risk exposures in foreign exchange derivatives transactions, and report regularly to the company's financial investment decision-making team. If abnormal situations are discovered, they will be reported in a timely manner, risk warnings will be implemented, and emergency stop-loss measures will be implemented.
The company's internal audit department will regularly or irregularly review the transaction processes, approval procedures, handling records and accounting information related to the foreign exchange derivatives business.
The audit committee and independent directors can supervise foreign exchange derivatives transactions and hire professional institutions to conduct audits when necessary.
The company will complete information disclosure in a timely manner in strict accordance with the relevant regulations of the Shenzhen Stock Exchange.
4. Feasibility analysis conclusion of the company’s foreign exchange derivatives transactions
The company's foreign exchange derivatives business is based on the characteristics of the CDMO industry in which the company operates and the company's business characteristics of focusing on exporting, so as to minimize the uncertain impact of foreign exchange rate fluctuations on the company's performance. This business is to meet the company's own actual business needs and is in line with the company's overall interests and long-term development. At the same time, the company has formulated the "Foreign Investment Management System" and formulated relevant business approval processes and risk control measures. The targeted risk control measures adopted are practical, the risks are controllable, and it is feasible to carry out foreign exchange derivatives business.
Board of Directors of Nanjing Yaoshi Technology Co., Ltd.
April 22, 2026