Yidian Tianxia plans to conduct 2.5 billion yuan in foreign exchange hedging business to address exchange rate fluctuation risks

【Shenzhen News】Yidian Tianxia Network Technology Co., Ltd. (Stock Code: 301171, Stock Short Name: Yidian Tianxia) announced on March 24 that, in order to effectively hedge against foreign exchange market risk, the company and its subsidiaries plan to use their own funds with a total amount of no more than RMB 2.5 billion or an equivalent amount in other currencies to carry out foreign exchange hedging business. The expected upper limit for the transaction margin and option premium to be utilized is no more than RMB 110 million or an equivalent amount in other currencies.

The announcement shows that the main currencies involved in this foreign exchange hedging business are the settlement currencies used in the company’s overseas operations, with the U.S. dollar as the primary one. The specific business methods include forward exchange for settlement and sale/purchase, FX swaps, FX buying and selling, FX options, interest rate swaps, interest rate forwards, interest rate options, and combinations of the above products.

The authorized period for this foreign exchange hedging business is within 12 months from the date on which the company’s 2025 annual general meeting approves it. The额度 may be used in a revolving manner during the authorization period, but the total highest contract value held at any point in time shall not exceed RMB 2.5 billion or an equivalent amount of other currencies. The company emphasized that the funds for carrying out this business come from its own funds and does not involve the use of raised funds or bank credit funds.

Business Key Information Overview

The company stated that, with the continuous development of its overseas business, the impact of exchange rate fluctuations on the company’s operating performance has become increasingly significant. Carrying out foreign exchange hedging business is intended to effectively hedge against foreign exchange market risk, prevent adverse effects on the company caused by large exchange rate fluctuations, improve the efficiency of foreign exchange funds utilization, and enhance financial resilience.

In terms of risk control, the company has formulated the《Foreign Exchange Hedging Business Management System》，with clear provisions on business operation standards, approval authority, internal processes, and so on. The financial shared services center will centrally manage the foreign exchange hedging business to ensure that all transactions are based on normal production and business operations, and no speculative or arbitrage transactions may be carried out. The internal audit department will regularly review the actual operation of the business and report to the Audit Committee of the Board of Directors.

The announcement also notes that foreign exchange hedging business involves market risk, exchange rate fluctuation risk, internal control risk, and credit risk. If the trend of exchange rates deviates significantly from the company’s judgment, it may lead to the cost after locking the exchange rate exceeding the cost of not locking it, resulting in losses.

This proposal has been approved by the company’s 5th session of the Board of Directors’ 9th meeting and the Audit Committee, and still needs to be submitted for approval at the company’s 2025 annual general meeting. The company’s Audit Committee believes that carrying out foreign exchange hedging business is beneficial for hedging and preventing exchange rate fluctuation risk. The decision-making process complies with relevant laws and regulations and the provisions of the Company’s Articles of Association, and there is no situation that would damage the interests of the company and all its shareholders, especially small and medium-sized shareholders.

In accordance with the relevant provisions of the Accounting Standards for Business Enterprises, the company will conduct corresponding accounting treatment for the foreign exchange hedging business it undertakes. The related results will be reflected in the relevant items in the balance sheet and the income statement.

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