Investor relations activity record sheet 1 securities code: Yusys Technologies Co.Ltd(300674) securities abbreviation: Yusys Technologies Co.Ltd(300674) Yusys Technologies Co.Ltd(300674) investor relations activity record sheet No.: 2022004 investor relations activity category □ specific object research □ analyst meeting □ media interview performance explanation meeting □ press conference □ roadshow activity □ on-site visit □ name of other participating units and personnel name of participants name of institution name of participants name of institution pan Ruchen fanyong Golden Eagle Fund Shen ruotong's giant private placement Zhang Yiqian Wanshan capital crown Hua danen Capital Zhuang Da Chongyang strategy Feng Qing China Zheshang Bank Co.Ltd(601916) Zheng Tao CITIC Lyon Wang liangyude investment sun Yao China Securities Investment Niu he zhisnobo assets Huang Yingfeng Huachen future Shen bin Bole road investment Zhu Zhanyu China Post life Liu Yingfei CITIC fixed income Xu enthalpy Causeway capital Lu Shasha BOCI China Bao Ge ran Tibet Dongcai fund long Yanyan light salt venture capital Chen Mengbi Xitai investment Hou Wensheng Western benefit fund Tang Gujun Dongfang Ruishi investment Zixue Xianghang bank financial management Mao Aibei Lanqi invests in Zhang Ying Zhaoyin financial management Li Kan Longma capital Liu Xuming Guohua Xingyi assets Zhu Yiping ZEQIU fund Li Zhilei Tian'an property insurance Zhang Liang Ping An assets Wang haoyinuo capital Zhai Yunlong Lingze invests in Wei Daqian Evergrande life Liu Hongjie Youshan fund Wu Jieqiang Zhejiang Guoxin Investment Dong Lingbo Shaoxia capital Zhu Xiaohu Shenjiu assets time 10:00-11:00 on April 2, 2022 investor relations activity Dynamic record table 2 location and form: Beijing; 2021 annual performance presentation (teleconference) name of the receptionist of the listed company Mr. Dai Shiping, director, chief financial officer and Secretary of the board of directors Ms. Zhou fan, chief securities officer the main contents of the investor relations activities introduced that the company's directors, chief financial officer and Secretary of the board of directors Mr. Dai Shiping and chief securities officer Ms. Zhou fan explained the company's annual performance in 2021: the company still maintained the established operation and management strategy in 2021, Both revenue and profit have achieved steady and sustained growth. In 2021, the revenue will reach 3.726 billion yuan, a year-on-year increase of 25%; Excluding the deduction of share based payment expenses, the non attributable net profit was 470 million yuan, a year-on-year increase of 22%. From the perspective of revenue breakdown in 2021, the proportion of software development and services has further increased to 77%; The proportion of innovative operation business increased from 3.8% to 4.4%, which was mainly due to the faster growth of innovative business compared with other businesses. From the perspective of software business revenue segmentation, it reflects the company's relatively balanced customer structure and the company's vertical system operation ability. The system integration business maintained a relatively smooth growth rate, with an increase of 16.6%. By the end of 2021, we had signed contracts for software development and services of about 3.34 billion, an increase of 26% over the end of 2020, which has brought good support for the company's business growth expectation in the future. Innovative business maintained a high growth trend, with an increase of 46% in 2021 compared with 2020. Digital credit includes C-end digital credit and Inclusive Finance with supply chain finance as the core scenario at the end of small, medium and micro enterprises; At the level of marketing and operation, three banks signed contracts last year. The purpose of marketing operation is to help banks and relevant financial institutions improve the efficiency of deposit solicitation and deposit solicitation, and help improve the incremental assets of bank deposits. The traditional technology operation business still maintained a steady trend and signed two insurance and two non bank financial institutions in 2021. These three scenario temsectors supported the growth rate of innovative operation business by 46% in 2021. In the future, this business will be the strategic focus of the company and will continue to invest in team, technology, operation mode and all levels to support the growth of the business. In investor relations activity record table 3, at the level of gross profit margin, the comprehensive gross profit margin is relatively stable and has only decreased by one point. The decline of software development and services is due to the company's efforts in product, customer management, team management and more granular project management. Looking forward to 2022, we believe that the gross profit margin will maintain a relatively stable level, and the software business revenue will adopt a more stable way to support the revenue growth in 2022 with the idea of business driven personnel growth, so as to realize the long-term sustainable and high-quality development of the company. The gross profit margin of system integration business increased by about one point. Although the gross profit margin of innovative operation business has decreased by two points compared with 2020, it remains at a relatively high level of 70 ~ 80%. One is to increase the scale of innovative applications. Second, the development of more modules and scenarios will also bring more investment, which has played a positive role in stabilizing and supporting the comprehensive gross profit margin. At the management level, since the listing, the management efficiency of the company has been gradually improved, and the management fee rate has decreased year by year. In terms of sales expense rate, the sales scale is expanding, but it does not rely on the way of laying heads to improve the scale. The sales staff is a single digit growth, which is reflected in the gradual decline of sales expense rate. In terms of R & D, since its listing, the company has continued to increase investment in R & D and continuously iterate platform tool capabilities. In 2021, the amount of R & D investment reached 435 million, an increase of 38% over 2020. The compound growth rate of R & D investment in the past few years was 34%. Q & a related to this exchange activity: 1. What is the impact of financial information innovation on our software business and integration business? A: in our opinion, financial innovation is an important factor to promote the long-term development and progress of the industry. Specifically, at the business level, in the area of system integration and sales, from 2014 and 2015, we proposed to go to IOE. Up to now, our system integration partners have basically all been domestic partners from the original foreign-funded enterprises. In terms of software business, the budget investment plan related to financial information innovation in 2022 is significantly higher than that of last year. The company's data products, credit products, regulatory products and other product lines will see more competitive projects in 2022 through the cooperation and iterative running in of financial Xinchuang and domestic standard manufacturers. During the promotion and polishing of Xinchuang last year and earlier, we formed many standard cases with our customers, which further highlighted the company's industry leading position and technology leadership. In the medium and long term, Xinchuang is more conducive to the improvement of market share of head manufacturers and is an important factor supporting the steady development of the industry. At first, Xinchuang is mainly based on the change of hardware ecological environment, and then the software replacement or upgrade based on hardware ecological environment. Last year, our partners invested not only in hardware, but also in software, and even some core systems and operating systems. Investment in software will further increase this year.
Therefore, what we perceive is the change of the whole ecological environment and the change related to the database. In fact, it is incremental business, and then superimposed with the distributed microservice architecture. There are still many business opportunities. In addition, according to the requirements of relevant departments this year, the promotion of Xinchuang is not only in the periphery, but also that each bank must have general operation, general business or core business, which should be implemented in financial Xinchuang. Therefore, capable and experienced manufacturers like Yusys Technologies Co.Ltd(300674) will benefit more. We also hope that the company's financial innovation ability can be exported to small and medium-sized banks, further help customers meet their financial innovation practice, and improve the company's competitiveness and market share in the industry. 2. Progress and future development prospect of innovative business? A: in terms of digital credit for C-end retail end, we added a large state-owned bank last year, and five branches have signed contracts to gradually realize the implementation. It is expected that they will be put into trial operation this year. At the same time, a new foreign bank has been added, which is expected to realize online trial operation this year. In the area of digital credit, two of our previous three customers are far from reaching the ceiling. We will see an increase in revenue in further operation and development. Looking forward to 2022, our other branches in large state-owned banks will land several branches this year. For the supply chain finance of small, medium and micro enterprises, we signed three large urban commercial banks last year and are expected to go online this year. These three urban commercial banks have shown a strong interest in supply chain finance related businesses, which is also in line with the development strategy of national Inclusive Finance and the record table 5 of investor relations activities. The second is marketing operation or business operation, which is essentially to help banks improve the efficiency and scale of their deposit collection and financial product sales. In essence, it is the digital operation of the bank's deposit, loan and foreign exchange deposit business. We not only provide a product platform, but also do business and operation, including the operation of small programs, private domain traffic and even the operation of various ways to obtain customers, so as to improve the business scale of customers. Last year, we signed three banks, one of which has been online in January this year, so this one will also be supported by income this year. The third is the traditional technology operation. We signed two insurance and two non bank financial institutions last year, which will also reflect the income this year. In addition, our two overseas projects in Indonesia last year were operational projects, and one project was officially launched in Indonesia in January this year. The other is officially launched in March. It is the first digital bank in Indonesia and an innovative operation mode. 3. The decline of gross profit margin of innovative business and the expectation of future changes? A: in the future, on the one hand, it will be implemented in more scenarios. Its own business is developing. In the past, it may only be digital credit for C-end retail end. Now it has been expanded to marketing operation and even the development of overseas business, and the gross profit margin is also within the normal fluctuation range. In the long run, we believe that the gross profit margin of about 70% of innovative business is normal, which is also the trend of sustainable business development. It is not only a very important profit contribution point of the company, but also an effective support point that can reflect the company's medium and long-term business strategy and high-quality development. 4. The impact of the epidemic on overseas business? A: it's true that the epidemic happened when I went to sea. In the past two years, with the development of the epidemic, I have persevered in the business and achieved good results. Projects have been implemented not only in Singapore and Cambodia, but also in Indonesia. Businesses have been implemented in four overseas countries, as well as modules at the levels of network transformation and digital mobile banking. This year, we will see more opportunities in overseas business. For example, Singapore has the first pilot project, which has been recognized by customers after successful delivery. This year, we will continue to serve on this basis and get phase II or phase III projects. The trend of investor relations activity record table 6 of overseas business is also similar to that of signing contracts with Chinese customers. Most of the projects that need to compete openly every year are about 20%, and the rest are phase II and phase III, including the above-mentioned information and innovation projects. Based on the achievements and capabilities of phase I, the negotiation of phase II and phase III orders will naturally be realized with a single source of competition, This reflects the recognition and progress of our customers in overseas markets. This year, we think there will still be very rapid growth overseas. One reason is that the base number is relatively low. Second, we do have good achievements in the implementation of our projects and the development of these countries. The impact of the epidemic in overseas markets is twofold. On the one hand, the epidemic in overseas markets must be very serious according to Chinese standards, so it has been difficult for countries to implement it first in the past few years; At the same time, many overseas countries, such as Singapore and Indonesia, work at home. It is still very difficult to do market development and meet customers. Another aspect is that China's epidemic has closed the door to the country, so traveling with each other has caused great problems, so it is difficult for our business experts to go abroad to talk to customers on site. But at present, there are still some good changes. Now, whether it is Singapore, Indonesia or Malaysia, it has basically been completely liberalized and there is no need for isolation. Therefore, at least in the local market of Southeast Asia, it is completely open without the impact of any epidemic. Therefore, I believe that this year's market development work can have many environmental improvements compared with last year. I hope that this year's overseas market will have a very obvious improvement compared with last year's projects. 5. The promotion progress of digital RMB and its impact on business? A: with regard to digital RMB, Yuxin has participated in the relevant access of large state-owned banks, commercial banks and individual users. Front, middle and back office related products and pilot work, especially in the two very important large state-owned banks, front, middle and back office products have participated in the construction, support and development. Looking forward to the third batch of pilot projects this year and even the development of digital RMB in the future. At present, the promotion and use of digital RMB is mainly at the payment level. In terms of the function of replacing paper money, what we see now is only the consumption scenario, in which the upgrading and construction of the system is not so large. Record of investor relations activities table 7 the typical cases of the two banks we participated in have increased several times this year compared with last year. We are also focusing on the digital RMB project to integrate our relevant technology and product capabilities to better support the multiple growth needs of our customers. But frankly speaking, it does not account for a very large proportion compared with the IT investment of more than 10 billion a year of state-owned banks. Looking ahead, we see more opportunities that when digital RMB moves from consumption scenario to credit scenario, and from personal scenario to public scenario, it will bring more needs for system transformation and upgrading, software development iteration, and even the need for large-scale development of the whole architecture. Yuxin has been a leader in the credit industry for many years. The change of potential opportunities for the public scene brought by digital RMB will also be one of the driving factors to promote the medium and long-term development of the industry, system and software upgrade iteration and demand. 6. What is the purpose plan of the fixed increase raised funds? A: Thank you for your support to the company. At the beginning of the year, we completed the refinancing issue of RMB 1.1 billion. First, we will still be
