Guangdong Dongfang Precision Science & Technology Co.Ltd(002611) : work report of the board of directors in 2021

Guangdong Dongfang Precision Science & Technology Co.Ltd(002611)

Work report of the board of directors in 2021

In 2021, the board of directors of the company, in accordance with the company law, the securities law, the stock listing rules of Shenzhen Stock Exchange, the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 1 – standardized operation of companies listed on the main board, the articles of association, the rules of procedure of the board of directors and other relevant laws and regulations, normative documents and the provisions of the company’s system, Earnestly perform the duties of the board of directors entrusted by the general meeting of shareholders, diligently carry out various work, and promote the sustainable, healthy and stable development of the company. The work of the board of directors in 2021 is reported as follows: Part I: operation of the board of directors in 2021

(I) convening of the board meeting

In 2021, the company convened and held board meetings in strict accordance with the articles of association and rules of procedure of the board of directors, and held 8 board meetings throughout the year. Among them, three meetings were held in the form of on-site attendance and five meetings were held in the form of communication voting. 27 proposals were considered and passed, and all proposals were adopted by the directors present at the meeting. The decision-making rights of the board of directors of the company are normally exercised. All directors fully perform their due responsibilities in the decision-making process of the board of directors, safeguard the overall interests of the company, effectively ensure the sound operation of the company, ensure that all shareholders are in an equal position and can fully exercise their legal rights. The board of directors of the company has not made any resolution detrimental to the interests of the company and shareholders.

(II) implementation of resolutions of the general meeting of shareholders by the board of directors

During the reporting period, the board of directors of the company completed the convening of three general meetings of shareholders in accordance with the requirements of the company law, the securities law and other relevant laws and regulations and the articles of association. Both adopt the combination of on-site and online voting, and count the votes of small and medium-sized investors separately on major matters affecting the interests of small and medium-sized investors, so as to facilitate the majority of investors to participate in the voting of the general meeting of shareholders and effectively protect the participation and supervision rights of small and medium-sized investors. In strict accordance with the relevant laws and regulations, the articles of association and the rules of procedure of the general meeting of shareholders, the company carefully implements the decision-making procedures for major matters, implements the decision-making principle of deliberation before implementation, and earnestly implements the resolutions adopted by the general meeting of shareholders in strict accordance with the resolutions and authorization of the general meeting of shareholders. There is no case that major matters have not been approved by the general meeting of shareholders, There is also no case of implementation before consideration.

Work report of the board of directors page 1 of 15

(III) performance of the board of directors

During the reporting period, the special committees under the board of directors of the company earnestly performed their duties in accordance with the articles of association and the implementation rules of each special committee. During the reporting period, the audit committee held four meetings, focusing on the financial information and disclosure of the company’s regular reports, made necessary communication and supervision with the external audit institutions on matters related to the annual report, and issued a summary report on the annual audit work of the external audit institutions; The remuneration and evaluation committee held a meeting to review the performance evaluation results of the incentive objects of the company’s restricted stock incentive plan in 2020, the achievements of lifting the restrictions in the first restricted stock granting period and the repurchase and cancellation of some restricted stocks.

The independent directors of the company fulfill their obligations, exercise their powers, actively attend relevant meetings and carefully consider various proposals of the board of directors in accordance with the requirements of the guiding opinions on the establishment of independent director system in listed companies, the articles of association, the rules of procedure of the board of directors, the working system of independent directors and other relevant laws and regulations, They fully expressed their opinions on major matters related to the company, and expressed relevant opinions on matters requiring prior approval or independent opinions of independent directors as required, giving full play to the role of independent directors and providing effective guarantee for the scientific decision-making of the board of directors.

Part II: review of the company’s main business work in 2021

(I) overview

In 2021, the world economy showed a general recovery trend; China’s macro-economic growth is strong, with GDP growing by more than 8% year-on-year, exceeding one billion yuan for the second consecutive year. China’s investment in manufacturing and high-tech industries is growing well. 2021 is the first year of China’s 14th five year plan. Under the strong leadership of the board of directors and the management team, Guangdong Dongfang Precision Science & Technology Co.Ltd(002611) take positive actions and seize opportunities to promote the steady and sound development of its businesses in all aspects.

In 2021, the annual operating revenue was about 3.524 billion yuan, with a year-on-year increase of 20.86%; The net profit attributable to the shareholders of the listed company was about 467 million yuan, a year-on-year increase of 20.08%; During the reporting period, the basic earnings per share was 0.35 yuan / share, with a year-on-year increase of 34.62%; The weighted average return on net assets was 11.72%, with a year-on-year increase of 5.52%.

Work report of the board of directors page 2 of 15

(II) analysis of operation of each sector during the reporting period

During the reporting period, the main business segments of the company’s main business income, and the changes of their respective revenue are as follows:

Business segment revenue in 2021 and year-on-year change in 2020

(10000 yuan) (10000 yuan)

Corrugated board production line sector 2522174121501730 + 17%

Corrugated box printing and packaging 66275315073087 + 31% production line sector

Aquatic power products 46873163462282 + 35%

1. Corrugated board production line: continue the steady development trend and steadily improve the operation quality

The business entities of the corrugated board production line business segment include the wholly-owned subsidiary fosber group (including fosber Italy, fosber America, qcorr and tiru ñ a group) and the holding subsidiary fosber Asia.

Corrugated board production line business segment is an important part of the company’s core main business corrugated paper packaging equipment business, which contributes most of the company’s overall main business income, and has achieved steady growth for many consecutive years. From 2018 to 2021, the average annual compound growth rate of revenue of this segment was about 16%.

(1) Fosber group

Fosber group’s business, assets and team personnel are distributed in Europe and the United States. All member enterprises implement localized management and operation mode, and product design, development and manufacturing are in Europe and the United States; The main products are corrugated board production lines and corrugated rollers with different market positioning. The end use of the finished products is to produce and process various types of corrugated paper packaging products.

Corrugated paper packaging is a rigid consumer goods in European and American countries and regions. The official implementation of the European “plastic ban order” in July 2021 has accelerated the development trend of the era of “replacing plastic with paper” in the packaging industry in European and American countries and regions. Amazon and other enterprises have expressed their position to use cardboard box packaging to replace disposable plastic packaging in Europe. The growth of demand for corrugated packaging products in Europe and the United States will help to stimulate the growth of demand for corrugated packaging production lines and production equipment. Due to the relatively high-quality and high-tech support of its subsidiaries in the international market, most of them are affected by the stable international consumption of terminal products and services, and are relatively stable in the international market.

In 2021, the monetary and fiscal policies of the United States, Europe and other countries and regions remained loose and the macroeconomic situation improved. Thanks to the positive changes in the above macroeconomic environment, the revenue and orders of fobser group increased. Page 3 of 15 of the work report of the board of directors

The overall operation quality and internal synergy have been steadily improved.

From 2019 to 2020, fosber group completed the acquisition of related business assets of tiru ñ a group, which has a history of nearly 100 years and focuses on the production of high-end corrugated rollers and pressure rollers, and agnati, an Italian corrugated board line manufacturer with a glorious history. A series of post investment integration, operation adjustment and other measures implemented after the acquisition began to release the integration benefits in 2021: the business performance of tiru ñ a group and qcorr was better than that of the same period last year, the order sales of corrugated roller products of tiru ñ a group increased year-on-year, and the order sales of quantum high-speed corrugated board production line of qcorr made positive progress, The operational efficiency of the two companies has also improved significantly.

(2) Fosber Asia

In 2021, the subsidiary fosber Asia fully grasped the development opportunity, strengthened the business development in China and Southeast Asia, and the impact of the low performance base under the epidemic in the same period last year, resulting in a significant year-on-year increase in operating performance. During the year, the company also completed the increase of its shareholding in fosber Asia, and the proportion of its shareholding in fosber Asia increased from 56.4% to 89.2%.

Fosber Asia’s Pro line and E-line series corrugated board production lines are developed according to the customer demand characteristics of China and Southeast Asia, and are produced in the factory located in Nanhai District, Foshan. The localization rate of parts is stable at about 90%. Fosber Asia has established a relatively stable supply chain system in China, making full use of China’s supply chain advantages with the most complete industrial categories and supporting facilities in the world, and providing high-quality domestic high-end corrugated board line products for industry customers in China and Southeast Asia.

During the reporting period, the orders and shipments of Pro line series increased rapidly. In 2021, the delivery of orders for high-end production lines from leading customers in downstream industries was completed. In the Chinese market, the first batch of customers realized re purchase orders in 2021, and the products and services were recognized by customers in the industry; The market expansion in Southeast Asia has made positive progress and delivered whole line orders to industrial customers in Thailand, India and other countries.

With the continuous launch of new products of domestic medium and high-end intelligent corrugated board line and the continuous growth of market share in China and Southeast Asia, fosber Asia’s business performance is expected to achieve good growth in the next few years. The company increased its shareholding in fosber Asia, which fully expressed its optimism and confidence in the company’s growth prospects.

2. Corrugated box printing and packaging production line: the overall revenue increased rapidly year-on-year

In 2021, Guangdong Dongfang Precision Science & Technology Co.Ltd(002611) (China) corrugated box printing and packaging equipment business overcame the difficulties such as the rise of shipping space price, the fluctuation of raw material price and the traffic restriction under the epidemic, and realized the stable growth of revenue and orders; Large and medium-sized customers in downstream industries during the year, such as Shanying International Holdings Co.Ltd(600567) , Mys Group Co.Ltd(002303) , Xiamen Hexing Packaging Printing Co.Ltd(002228) , Shanghai Xintonglian Packaging Co.Ltd(603022) , Zhejiang Great Shengda Packing Co.Ltd(603687) , page 4 of 15 of the work report of the board of directors

Equipment sales in Asian markets outside China have grown rapidly. The sales of parts and services also maintained a good and stable growth momentum.

In 2021, Guangdong Dongfang Precision Science & Technology Co.Ltd(002611) (Europe) made positive progress in the development of American and African markets while consolidating its market share in Europe. The high-end corrugated box printing and packaging equipment was recognized by more large and medium-sized enterprise customers in Europe and America.

3. Aquatic power products: product sales increased rapidly and operating efficiency continued to improve

In 2021, the subsidiary Yum power benefited from the continuous growth of overseas countries’ demand for water leisure and entertainment under the epidemic, and the orders and shipments of outboard machines and general gasoline minicomputers increased rapidly year-on-year.

Yum power actively seized market opportunities, strengthened marketing efforts for customers outside China, continued to increase R & D investment and improve product structure. During the reporting period, the sales revenue of Yum power medium and high horsepower outboard engines increased by more than 50% year-on-year. The self-developed 115 medium and high horsepower gasoline outboard engines were successfully mass produced in 2021, breaking the long-term monopoly of international well-known brands in this power segment.

Since 2021, yum power has made a breakthrough in the sales of Sweden’s Oxe marine high-power diesel outboard engines in the Chinese market. The diesel outboard engines are mainly used in commercial transportation, official law enforcement and other fields.

During the reporting period, yum power actively improved its operation and management level and introduced outstanding talents in R & D, sales, production and operation. The comprehensive strength of the team was further improved and the development foundation was further consolidated; Implement lean management, improve operation efficiency and capacity utilization, and steadily improve shipment quality, providing support for the growth of shipment volume of medium and high horsepower models.

4. Smart factory overall solution business: set sail and move forward steadily

The subsidiary Dongfang Hezhi is the undertaking unit of the overall solution business of corrugated packaging smart factory. In 2021, Dongfang Hezhi completed the team building, expanding from less than 3 people at the beginning of the year to more than 40 people at the end of the year, most of whom are software R & D technical talents with Internet or high-end manufacturing experience. At the same time, Dongfang Hezhi has also completed the construction of organizational structure and internal mechanism required for the normal operation of an independent company. In 2021, Dongfang Hezhi completed the research on the needs of customers in downstream industries for industrial Internet solutions, the product R & D roadmap was clearer, and the development of solution products was steadily promoted.

5. Extension business: promote the implementation of “1 + n” model and expand the development space of emerging industries

During the reporting period, the main progress of the company’s extension development business is as follows:

A. High end manufacturing: invest in three high-end core parts manufacturing enterprises

a) Invest in Guizhou Aerospace Xinli Technology Co., Ltd

During the reporting period, the company invested in Guizhou Aerospace Xinli Technology Co., Ltd. through direct equity participation. The company is subordinate to China Aerospace Science and industry group. It is mainly engaged in the R & D, production and manufacturing of high-end alloy steel castings and forgings, non-ferrous castings, structural parts and new aerospace materials. Its products are widely used in nuclear power, aviation, aerospace and other fields. It is a well-known nuclear grade part in China