Xuchang Yuandong Drive Shaft Co., Ltd. Business Report FY ended Dec. 2021

Financial overview

(CNY millions)

	FY ended Dec. 31, 2021	FY ended Dec. 31, 2020	Rate of change (%)	Factors
Sales	2,005.71	2,165.33	(7.37)	-Decreased sales and profitability due to decreased demand in the heavy-duty truck market and rising raw material costs.
Operating income	269.49	378.20	(28.74)
Ordinary income	267.17	370.74	(27.94)
Net income	234.93	324.43	(27.59)

Orders

-In the fiscal year ending December 2021, production began with the "high-end drive shaft intelligent production line project of 2 million sets per year" aiming to enter the passenger car market. The Company supplied products for the Renault Jiangling "Yi". In addition, it exclusively supplied for the Mobilize "Limo".

-The Company passed the supplier qualification examination of Volkswagen FAW Platform Co., Ltd.

Research and development activities

Projects	Progress	Note
Waterproof drive shaft ASSY main technology development	Complete type test	For specific customers
Development of parts for export such as differentials and intermediate flanges	Complete type test	For customers outside China
GAZ drive shaft development	In development	For low temperature regions outside of China
Development of lightweight high-end drive shafts	In development	For customers outside China
EQ140/EQ153 series drive shaft weight reduction development	Complete type test	Compatible with carbon neutral
Research and industrialization of key technologies for applying composite materials to drive shaft assemblies for light-duty trucks	Complete type test	Compatible with carbon neutral
Development and application of major technologies for weight reduction of series standardized drive shaft parts	In development	Support for carbon neutral and modular production

R&D structure

-The Company has a National Authorized Enterprise Technology Center, National Postdoctoral Research Station, Henan Province Drive Shaft Engineering Technology Research Center, Henan Province Postdoctoral Research and Development Center, Henan Province Laboratory of High Performance Lightweight Drive Shaft, and Henan Province Automotive Components Intelligent Heat Treatment Technology Workstation.

R&D expenditure

(CNY millions)

Year	FY ended Dec. 31, 2021	FY ended Dec. 31, 2020	FY ended Dec. 31, 2019
R&D expenditure	103.06	108.97	87.68
Ratio of R&D expenses to sales	5.14	5.03%	5.00%

-By the end of 2021, the Company had 238 R&D staff members, accounting for 11.58% of all employees.

Patents and Certifications

-As of the end of 2021, the company has 221 patents (28 invention patents, 6 exterior design patents, 183 utility model-type patents) and 4 software copyrights.

-The Company has received IATF16949:2016 quality management system certification, GB / T24001-2016 / ISO14001:2015 environmental management system certification, ISO5001:2018 energy management system certification, and ISO45001:2018 occupational health and safety management system certification.