We are subject to market rate risks due to fluctuations in interest rates and foreign currency exchange rates. Interest rate risk Our primary exposure of interest rate risk relates to interest-bearing loans and borrowings from banks. Yuchai’s debt consists of both variable and fixed rate short-term, medium-term and long-term Renminbi denominated borrowings. The variable interest rates of loans and borrowings are generally established in accordance with directives announced from time to time by the PBOC, which are in turn affected by various factors such as the general economic conditions in China and the monetary policies of the Chinese government. Information relating to interest-bearing loans and borrowings of the Company are disclosed in Note 27 to our consolidated financial statements in Item 18. The Company manages its interest rate risk by having a mixture of fixed and variable rates for its deposits and borrowings. 84 Table of Contents Interest rate sensitivity The sensitivity analyses below have been determined based on the exposure to interest rates for interest-bearing loans and borrowings from banks at December 31, 2025 and the stipulated change taking place at the beginning of the year and held constant throughout the reporting period in the case of instruments that have floating rates. A 50 basis points increase or decrease is used and represents management’s assessment of the possible change in interest rates. If interest rate had been 50 (2024: 50) basis points higher or lower and all other variables were held constant, the profit before tax for the year ended December 31, 2025 of the Company would decrease/increase by RMB 10.1 million (US$1.5 million) (2024: profit decrease/increase by RMB 12.5 million) arising from interest expenses on interest-bearing loans and borrowings. Foreign currency exchange rate risk Our exposure to foreign currency exchange rate risk primarily relates to cash and bank balances, purchases and sales that are denominated in currencies other than the respective functional currencies of entities within the Group. The currencies giving rise to this risk in fiscal years 2024 and 2025 are primarily Singapore dollar, US dollar and Euro. Foreign currency translation exposure is managed by incurring debt in the operating currency so that where possible operating cash flows can be primarily used to repay obligations in the local currency. This also has the effect of minimizing the exchange differences recorded against income, as the exchange differences on the net investment are recorded directly against equity. The Company’s exposures to foreign currency exchange rate risk are as follows: 2024 Singapore Dollar Euro US Dollar Others RMB RMB RMB RMB (in thousands) Trade and other receivables 625 3,997 63,161 253 Cash and bank balances 133,884 7,212 13,124 1,117 Financial liabilities (870 ) — — — Trade and other payables (7,628 ) (3,522 ) (7,238 ) (4,808 ) 126,011 7,687 69,047 (3,438 ) 2025 Singapore Dollar Euro US Dollar Others RMB RMB RMB RMB (in thousands) Trade and other receivables 309 21,088 78,667 152 Cash and bank balances 109,713 1,231 18,573 1,334 Financial liabilities (176 ) — — — Trade and other payables (11,642 ) (8,283 ) (2,683 ) (12,589 ) 98,204 14,036 94,557 (11,103 ) US$ 14,186 2,028 13,659 (1,604 ) A 10% strengthening of the following major currencies against the functional currency of each of the Company’s entities at the reporting date would increase profit before tax by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. 2024 2025 2025 RMB RMB US$ (in thousands) Singapore dollar 12,601 9,820 1,419 Euro 769 1,404 203 US dollar 6,905 9,456 1,366