Stock code: 688525 Stock abbreviation: BIWIN Storage Announcement No.: 2024-091

Shenzhen BIWIN Storage Technology Co., Ltd

Announcement on the launch of financial derivatives hedging business in 2025

The board of directors and all directors of the company guarantee that there is no false record, misleading statement or material omission in the content of this announcement, and assume legal responsibility for the authenticity, accuracy and completeness of its content in accordance with the law.

Important Content Notes:

Trading Purpose, Trading Varieties and Tools, Trading Venues: In order to effectively avoid the risks of the foreign exchange and interest rate markets and prevent exchange rate and interest rate fluctuations from adversely affecting operating results, Shenzhen BIWIN Storage Technology Co., Ltd. (hereinafter referred to as the "Company") and its subsidiaries intend to carry out financial derivatives business for the purpose of hedging in 2025, including forward foreign exchange settlement and sales, currency swaps, interest rate swaps, interest rate swaps, interest rate swaps, foreign exchange swaps, difference transactions, NDF, For foreign exchange options business and other financial derivatives business, the trading venue is a bank or other financial institution approved by the relevant government departments and with the qualification of financial derivatives business. The company's financial derivatives business is based on normal production and operation, with the purpose of avoiding and preventing exchange rate and interest rate risks, and does not carry out speculation and arbitrage transactions solely for profit.

Transaction amount and term: The amount of funds shall not exceed US$500 million (or equivalent in RMB), and the source of funds shall be its own funds, and no funds shall be raised. The quota is valid for 12 months from the date of approval by the company's general meeting of shareholders, and the funds can be used on a rolling basis within the above period and quota.

Deliberation procedure: The company held the 25th meeting of the third session of the board of directors on December 9, 2024.

The "Proposal on Carrying out Financial Derivatives Hedging Business in 2025" was deliberated and passed. This proposal still needs to be submitted to the general meeting of shareholders of the company for deliberation. This matter does not involve related party transactions.

1. Overview of the transaction

(1) Purpose of the transaction

The company's overseas business is mainly settled in foreign currencies such as US dollars, euros, Japanese yen, and Hong Kong dollars, so when the exchange rate fluctuates greatly, the exchange gains and losses will have a certain impact on the company's operating results. In order to effectively avoid the risks of the foreign exchange market, prevent exchange rate fluctuations from adversely affecting the company's operating performance, and improve the use of foreign exchange funds

Derivatives business. The company's financial derivatives business is based on normal production and operation, with the purpose of avoiding and preventing exchange rate and interest rate risks, and does not carry out speculation and arbitrage transactions solely for the purpose of profit.

(2) Transaction methods

The financial derivatives business that the company intends to carry out is limited to engaging in the same currency as the main settlement currency used in the company's production and operation, i.e., US dollars, euros, Japanese yen, Hong Kong dollars, etc. The financial derivatives business carried out by the company includes forward foreign exchange settlement and sales, currency swaps, interest rate swaps, interest rate swaps, foreign exchange swaps, difference transactions, NDF, foreign exchange options and other financial derivatives business.

(3) The scale of the business and the source of funds

According to the characteristics of the company's asset scale, business needs in 2025, turnover period and other business backgrounds, and based on the principle of prudent forecasting, the cumulative amount of financial derivatives hedging business to be carried out by the company and its subsidiaries shall not exceed 500 million US dollars (or equivalent RMB), and the quota shall be valid for 12 months from the date of approval by the company's general meeting of shareholders. Within the above period and quota, the funds can be used on a rolling basis. The source of funds is its own funds, excluding raised funds.

(4) Authorization and duration

In view of the fact that the financial derivatives business is closely related to the production and operation of the company, the board of directors of the company proposes to the general meeting of shareholders to authorize the board of directors to approve the daily financial derivatives business plan and sign the relevant contracts of the financial derivatives business, and the board of directors agrees to authorize the chairman of the board of directors to delegate the general manager of the company or other relevant financial persons in charge and subsidiaries and their management to exercise the business decision-making power, sign financial derivatives business related agreements and other related matters within the scope of the aforementioned authorization, and the financial management department of the company shall be the daily executive agency. Responsible for the formulation of financial derivatives business plans, capital plans, business operation management, and the exercise of specific execution responsibilities of financial derivatives business. The authorization period is valid for 12 months from the date of approval by the general meeting of shareholders of the company.

(5) Counterparties and venues

Banks and other financial institutions approved by relevant government departments and qualified for financial derivatives business.

II. Deliberation Procedure

The company held the 25th meeting of the third board of directors on December 9, 2024, and deliberated and approved the "Proposal on Carrying out Financial Derivatives Hedging Business in 2025". This proposal still needs to be submitted to the general meeting of shareholders of the company for deliberation. This matter does not involve related party transactions.

3. Risk analysis

The company follows the principles of legality, prudence, safety and effectiveness in carrying out financial derivatives business, and does not do speculative and arbitrage trading operations, but there are still certain risks in financial derivatives business operations.

(1) Exchange rate and interest rate fluctuation risk

Changes in the domestic and foreign economic situation are unpredictable, and there may be a significant deviation between the judgment of the exchange rate or interest rate trend and the actual situation, and the financial derivatives business faces certain market risks.

(2) Internal control risks

In the process of handling financial derivatives business, there may still be imperfect internal control system, operators who do not fully understand derivatives information in a timely manner, or fail to operate in accordance with the prescribed procedures, resulting in certain risks.

(3) Risk of transaction default

When the counterparty of financial derivatives defaults, it cannot pay the company's hedging profits as agreed, so as to hedge the company's actual exchange losses, which will cause losses to the company.

(4) Customer default risk

If the customer's accounts receivable are overdue, the payment cannot be recovered within the predicted payment period, which will cause the company to lose due to delayed delivery.

(5) Legal risks

Due to changes in relevant laws or violations of relevant legal systems by counterparties, the normal execution of the contract may not be possible and losses may be incurred by the Company.

(6) Other risks

In the specific conduct of business, if the operator fails to record the financial derivatives business information accurately, timely and completely, it may lead to the loss of the financial derivatives business or the loss of trading opportunities.

Fourth, risk control measures

(1) The company has formulated the "foreign exchange derivatives trading business management system", which has made clear provisions on the company's financial derivatives business quota, variety scope, approval authority, internal audit process, responsible departments and responsible persons, information isolation measures, internal risk reporting system and risk treatment procedures, etc., the system meets the relevant requirements of the regulatory authorities, can meet the needs of actual operation, and the risk control measures formulated are practical and effective

Target.

(2) In order to avoid internal control risks, the financial management department of the company is responsible for the unified management of financial derivatives business. All foreign exchange transactions are based on normal production and operation, relying on specific business operations, and shall not carry out speculation and arbitrage transactions, and shall operate in strict accordance with the provisions of the "Foreign Exchange Derivatives Trading Business Management System" to effectively ensure the implementation of the system.

(3) The Company continues to pay attention to and manage the market risks of hedging business. The financial management department pays attention to the market information of the hedging business at any time, tracks the changes in the open market price or fair value of the hedging business, assesses the risk exposure of the traded hedging business in a timely manner, and submits a risk analysis report in a timely manner for the company to make decisions.

(4) The company's internal audit department will supervise and inspect the compliance of decision-making, management, and implementation of financial derivatives business, and review the use of funds and profit and loss.

(5) The company selects large commercial banks with legal qualifications and high credit ratings to carry out financial derivatives business, closely follows the laws and regulations in relevant fields, and avoids possible legal risks.

5. The impact of the transaction on the company and related accounting treatment

The company's financial derivatives business is to effectively avoid the risks of the foreign exchange market, prevent large fluctuations in exchange rates from adversely affecting the company's operating performance and shareholders' equity, improve the efficiency of the use of foreign exchange funds, reasonably reduce financial costs, and help enhance the company's operational stability, which is not expected to have a significant impact on the development of the company's main business.

The Company will carry out corresponding accounting treatment for the financial derivatives business to be carried out in strict accordance with the relevant provisions of the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, Accounting Standards for Business Enterprises No. 24 - Hedge Accounting, and Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments issued by the Ministry of Finance of the People's Republic of China. The specific accounting treatment is subject to the results of the annual audit and confirmation of the accountants.

6. Verification opinions of the sponsor institution

After verification, the sponsor Huatai United Securities Co., Ltd. believes that the company's financial derivatives business has been deliberated and approved by the company's board of directors, in line with relevant laws and regulations and has performed the necessary legal procedures, and this matter still needs to be submitted to the company's general meeting of shareholders for deliberation; On the premise of ensuring the normal production and operation of the company, the company carries out financial derivatives business, which helps to avoid and prevent foreign exchange market risks to a certain extent

The internal control and risk management system of the value business does not harm the interests of the company or shareholders.

The sponsor reminds the company to pay attention to the risks of financial derivatives business, and in the process of conducting financial derivatives business, it is necessary to strengthen the training of business personnel and risk responsibility education, and implement specific measures for risk control and accountability mechanism; Eliminate speculation with the goal of making profits, and do not use the raised funds to directly or indirectly conduct financial derivatives business transactions.

At the same time, the sponsor also reminds investors that although the company has adopted corresponding risk control measures for the financial derivatives business, the inherent exchange rate fluctuation risks, limitations of internal control, legal risks and transaction default risks such as derivatives transactions may have an impact on the company's operating results.

The sponsor has no objection to the company's financial derivatives business.

The announcement is hereby made.

Board of Directors of Shenzhen BIWIN Storage Technology Co., Ltd

December 10, 2024