Northern International intends to carry out $1.935 billion in financial derivatives trading, focusing on exchange rate and interest rate risk prevention and control.

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【Shenzhen News】Beifang International Cooperation Co., Ltd. (stock abbreviation: Beifang International, stock code: 000065) announced on March 31 that, to address the risks of foreign exchange and interest rate fluctuations, the company and its controlling subsidiaries plan to carry out financial derivative trading business in 2026 with a total notional amount not exceeding USD 1.935 billion or an equivalent amount in other currencies. The matter has been approved by the company’s 19th meeting of the 9th board of directors and still needs to be submitted to the shareholders’ meeting for consideration.

The announcement shows that the core purpose of this financial derivative trading business is hedging, with the main types including currency-related forward contracts and swap transactions. The counterparties are large commercial banks with sound operations and good credit standing. The business term will be matched to the term of the corresponding underlying assets (or liabilities), and the额度 can be used on a revolving basis within one year.

Business background and operating principles

Beifang International states that, in its operations, the company is involved in a large volume of foreign-currency receipts and payments, foreign-currency deposits, and assets and liabilities denominated in foreign currency. At the same time, it faces the risk of fluctuations in funding costs for foreign-currency floating-rate loans. The purpose of carrying out financial derivative trading is to hedge the impact of foreign exchange and interest rate fluctuations on operating results through professional tools, thereby ensuring stable financial conditions.

The company emphasizes that all transactions will strictly follow the principle of “hedging as the guiding principle” and will not engage in speculative operations. Before trading, the company will conduct comparative analysis of multiple counterparties and products, prioritize financial derivative instruments with strong liquidity and controllable risk, and standardize the operating process through the 《Administrative Measures for Financial Derivative Business》.

Risk control system

In response to the five major categories of risks that derivative trading may face, the company has established a multi-layered risk control mechanism:

• Market risk: Monitor the underlying exchange rates and interest rates dynamically, and adjust operating strategies in a timely manner
• Operational risk: Clarify that the Finance and Treasury Department is the centralized management department; the management representatives, the legal and compliance department, and the audit department coordinate to oversee
• Liquidity risk: Prioritize standardized products with active trading
• Performance (fulfillment) risk: Only conduct transactions with large commercial banks that have valid legal qualifications
• Legal risk: Establish a creditworthiness assessment mechanism for counterparties to ensure that contracts are legal and compliant

Accounting treatment and information disclosure

The company will handle the accounting for derivative trading in accordance with relevant provisions of the 《Accounting Standards for Business Enterprises》. It will reflect the relevant items truthfully in the balance sheet and the income statement. According to regulatory requirements, the company will disclose specific details of derivative trading in its periodic reports, including transaction amounts, changes in fair value, risk exposure, and other information.

The business额度 accounts for approximately XX% of the company’s most recently audited net assets (the specific financial data has not been disclosed in the announcement). The board of directors believes that the setting of this额度 is reasonable and meets the company’s actual operating needs. Market analysts noted that, as an export-oriented enterprise, Beifang International’s use of derivative instruments for risk hedging helps improve earnings stability. The implementation of this business will play a positive role in helping the company respond to fluctuations in international markets.

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