The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ significantly from those projected in the forward-looking statements include, but are not limited to, those discussed below and elsewhere in this Annual Report. Our consolidated financial statements and the financial information discussed below have been prepared in accordance with IFRS Accounting Standards. During the fiscal years ended December 31, 2023, 2024 and 2025, our main business has been our 76.4% ownership interest in Yuchai. As a result, our financial condition and results of operations have depended primarily upon Yuchai’s financial condition and results of operations. Overview The Chinese economy maintained a stable GDP growth of 5% in 2025. According to CAAM, the total industry unit sales of commercial vehicles (excluding gasoline-powered and electric-powered vehicles) increased by 4.5% year-over-year (“YoY”) to 2.4 million units in 2025. At Yuchai, total number of engines sold in 2025 increased by 29.4% YoY to 461,309 units, compared with 356,586 units in 2024. Our on-road engine sales outperformed the overall truck and bus markets in 2025, reporting 42.8% growth in both truck and bus combined. Our off-road segments continued to deliver unit growth of 13.0% YoY, with both industrial and marine and genset unit sales growth of more than 24% YoY despite lower agricultural engine unit sales. Our gross profit increased by 44.3% to RMB 4.1 billion (US$587.6 million) from RMB 2.8 billion in 2024. Gross margin increased to 16.5% from 14.7% in 2024. The increase was mainly attributable to higher unit sales volume, a change of sales mix with higher unit sales of heavy-duty and high-horsepower engines, and continuing cost reduction initiatives. Total R&D expenditures, including capitalized costs, were RMB 1.5 billion (US$220.4 million) in 2025 compared with RMB 1.2 billion in 2024. During the year, Yuchai continued its initiatives to enhance the engine efficiency and performance of its National VI and Tier-4 emission standards compliant engines and power generation engines for data centers and marine applications, while also advancing its new energy solutions. Our joint ventures witnessed significant improvements, mainly driven by higher profits of 18.8% at MTU Yuchai Power and increased profits at Purem Yuchai. Yuchai’s gains contributed to a 66.3% rise in net profit attributable to China Yuchai’s shareholders, reaching RMB 537.4 million (US$77.6 million) compared with RMB 323.1 million in 2024. This growth translates to an increase in earnings per share to RMB 14.32 (US$2.07) for 2025, compared to RMB 8.21 for 2024. Demands for power and marine propulsion are accelerating the shift to more advanced engines. Surging AI and data‑center workloads require stronger power‑generation solutions. Sales of combined MTU Yuchai Power and Yuchai-branded high horsepower engines to data centers exceeded 2,000 units in 2025, up from 750 units in 2024. In parallel with these developments, we continue to expand our capabilities in new energy technologies. Yuchai established Yuchai Simlan in 2021 as its primary platform for the development of new energy power systems and products. In 2023, Yuchai Simlan established its own wholly-owned subsidiary, Cynland Hyentech, to focus on the development of hydrogen fuel cells and stacks, as well as the assembly of fuel cell systems and powertrains. Through Yuchai Simlan and Cynland Hyentech, we continue to invest and develop new energy power systems and products for both on- and off-road vehicles and equipment. These initiatives demonstrate our commitment to advancing new energy technologies, reducing carbon emissions, and promoting environmental sustainability. To enhance operational efficiency and support long-term growth, Yuchai has executed a series of strategic restructuring initiatives in recent years. We established Guangxi SKY Cloud Technology Co., Ltd., to develop proprietary operating systems with enhanced data analytics capabilities for smart and connected solutions applicable to a wide range of vehicles and machinery. We have also streamlined our specialized business segments by consolidating our marine and power generator businesses including the MTU Yuchai Power JV under MGP. In addition, we carved out certain existing businesses into specialized entities, including Yuchai Foundry Co., Ltd. to enhance operational control, foster innovation and optimize resource allocation. 46 Table of Contents We continue advancing our globalization efforts. In 2024, Yuchai Thailand commenced production operations for diesel and natural gas engines. During the same year, Yuchai entered into a strategic cooperation agreement with Kim Long Motor Hue, or Kim Long Motor, a subsidiary of Vietnam’s FUTA Group, to provide technology know-how, component supply and related support, and services for the construction of an engine manufacturing factory at Kim Long Motor’s designated site in Vietnam. We are also expanding our international sales and support offices, as we believe potential international partnerships will strengthen our global reach. Our strategy remains focused on serving multiple end markets with a growing and increasingly diversified product portfolio. The Chinese automotive industry continues to be highly competitive. Our ability to successfully compete in our industry will be fundamental to our future success in our existing and new markets. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business and Industry” for further details. Business Expansion and Diversification Plan Following the implementation of our business expansion and diversification plan as approved by our Board of Directors in 2005, we looked for new business opportunities to reduce our financial dependence on Yuchai and invested in the following companies: Thakral Corporation Ltd The first step in implementing this plan occurred in March 2005 when through VDL, we acquired a 15.0% equity interest in TCL. As of December 2009, our equity interest in TCL was 34.4%. The TCL group invests directly or with co-investors in real estate and other investment opportunities which include property-backed financial instruments. Since the fiscal year 2010, we have gradually reduced our equity interest in TCL. In 2022, we fully disposed of our shareholding interest in TCL. HL Global Enterprises Limited The second step in the implementation of our business expansion and diversification plan occurred in February 2006 when we acquired a 29.1% equity interest in HLGE and certain convertible preference and debt securities through two wholly-owned subsidiaries for an aggregate consideration of approximately S$132.0 million. On January 13, 2012, our wholly-owned subsidiary, Grace Star Services Limited (“Grace Star”) transferred 24,189,170 Series B redeemable convertible preference shares of HLGE (the “Trust Preference Shares”) to Amicorp Trustees (Singapore) Limited (the “Trustee”) pursuant to a trust deed entered into between HLGE and the Trustee (the “Trust”). The Trust Preference Shares were mandatorily converted into 24,189,170 new ordinary shares in the capital of HLGE (the “Trust Shares”) on January 16, 2012, resulting in our shareholding interest in HLGE decreasing from 49.4% to 48.1%. On April 4, 2012, as a result of the conversion of all the outstanding Series A redeemable convertible preference shares held by our wholly-owned subsidiaries, VDL and Grace Star, into new ordinary shares in the capital of HLGE, our shareholding interest in HLGE increased from 48.1% to 48.9%. In November 2025, Grace Star acquired 200,000 ordinary shares of HLGE, resulting in our shareholding interest in HLGE increasing from 48.9% to 49.1%. The Trust Shares are accounted for as treasury shares by HLGE as they are issued by HLGE and held by the Trust, which is considered as part of HLGE. As a result, based on the total outstanding ordinary shares of HLGE net of the Trust Shares, our shareholding interest in HLGE is stated as 50.4% for accounting purposes in the Company’s consolidated financial statements for the year ended December 31, 2025. However, these Trust Shares are not regarded as treasury shares under the Singapore Companies Act, Chapter 50, and the Trustee has the power, inter alia, to vote or abstain from voting in respect of the Trust Shares at any general meeting of HLGE in its absolute discretion and to waive its right to receive dividends in respect of the Trust Shares as it deems fit. Accordingly, based on the total outstanding ordinary shares of HLGE including the Trust Shares, our shareholding interest in HLGE is 49.1% as of December 31, 2025 and February 27, 2026. We consolidate the results of HLGE as a subsidiary of our Company. See Note 1.3 to the accompanying consolidated financial statements in Item 18. A.Operating Results The selected consolidated statement of financial position data as of December 31, 2024 and 2025, and the selected consolidated statement of profit or loss data set forth below for the years ended December 31, 2023, 2024 and 2025 are derived from our audited consolidated financial statements included in this Annual Report. The selected consolidated statement of financial position data as of December 31, 2023 are derived from our audited consolidated financial statements included in our Annual Report for the year ended December 31, 2024 on Form 20-F filed with the SEC on April 25, 2025. Our consolidated financial statements as of December 31, 2024 and 2025 and for the years ended December 31, 2023, 2024, and 2025 have been prepared in conformity with IFRS Accounting Standards. 47 Table of Contents We currently own, through six of our wholly-owned subsidiaries, 76.4% of the outstanding shares of Yuchai. Our ownership interest in Yuchai is our main business asset. As a result, our financial condition and results of operations depend primarily upon Yuchai’s financial condition and results of operations, and the continued implementation of the Reorganization Agreement, as amended by the Cooperation Agreement. We also have a 49.1% interest in the outstanding ordinary shares of HLGE. Year ended December 31, 2023 2024 2025 2025 RMB RMB RMB US$(1) (in thousands, except per share data) Consolidated Statement of Profit or Loss Data: Revenue 18,046,349 19,133,575 24,661,772 3,562,398 Cost of sales (2) (15,502,876 ) (16,315,074 ) (20,594,125 ) (2,974,825 ) Gross profit (2) 2,543,473 2,818,501 4,067,647 587,573 Research and development expenses (876,578 ) (984,659 ) (1,351,607 ) (195,240 ) Selling, general and administrative expenses (2) (1,499,808 ) (1,812,526 ) (2,071,102 ) (299,171 ) Other operating income, net 442,362 575,658 445,947 64,417 Operating profit 609,449 596,974 1,090,885 157,579 Share of results of associates and joint ventures, net of tax 62,078 101,548 111,063 16,043 Finance costs (100,175 ) (77,982 ) (61,765 ) (8,922 ) Profit before tax 571,352 620,540 1,140,183 164,700 Income tax expense (148,496 ) (128,798 ) (329,682 ) (47,623 ) Profit for the year 422,856 491,742 810,501 117,077 Attributable to: Equity holders of the Company 285,518 323,055 537,390 77,626 Non-controlling interests 137,338 168,687 273,111 39,451 Basic and diluted earnings per share attributable to equity holders of the Company (RMB/US$ per share) 6.99 8.21 14.32 2.07 Profit for the year per share (RMB/US$ per share) 10.35 12.50 21.60 3.12 Weighted average number of shares 40,858 39,326 37,518 37,518 Selected Consolidated Statement of Financial Position Data: Working capital (3) 7,105,273 7,290,726 7,075,924 1,022,119 Property, plant and equipment 3,553,601 3,418,243 3,525,131 509,206 Trade and other receivables 8,458,624 9,416,461 11,658,569 1,684,083 Total assets 25,757,618 27,048,094 31,958,501 4,616,412 Trade and other payables (4) 9,408,479 10,465,519 14,645,602 2,115,560 Short-term and long-term loans and borrowings 2,540,294 2,509,800 2,020,020 291,792 Non-controlling interests 2,949,097 3,134,940 3,314,658 478,803 Issued capital 2,081,138 2,081,138 2,081,138 300,621 Treasury shares — (285,561 ) (285,561 ) (41,249 ) Equity attributable to equity holders of the Company 9,226,528 9,164,625 9,580,961 1,383,972 (1)The Company’s functional currency is US dollar and its reporting currency is Renminbi. The functional currency of Yuchai is Renminbi. Translation of amounts from Renminbi to US dollar is solely for the convenience of the reader. Translation of amounts from Renminbi to US dollar has been made at the rate of RMB 6.9228 = US$1.00, the rate quoted by the PBOC at the close of business on February 27, 2026. No representation is made that the Renminbi amounts could have been, or could be, converted into US dollar at that rate or at any other rate prevailing on February 27, 2026 or any other date. The rate quoted by the PBOC at the close of business on December 31, 2025 was RMB 7.0288 = US$1.00. (2)Our management reclassified assurance-type warranty expenses from selling, general and administrative expenses to cost of sales for the year ended December 31, 2024. The comparative figures for the full year ended December 31, 2023 have been adjusted to conform with the 2024 presentation. (3)Current assets less current liabilities. (4)Inclusive of non-current other payables. 48 Table of Contents 2025 compared to 2024 Revenue for 2025 was RMB 24.7 billion (US$3.6 billion) compared with RMB 19.1 billion in 2024, an increase of 28.9%. The total number of engines sold by Yuchai in 2025 was 461,309 units compared with 356,586 units in 2024, representing an increase of 104,723 units, or 29.4%. Truck and bus engine unit sales rose by 42.8%, compared with overall vehicle market sales growth of 4.5% for 2025 (according to CAAM data, excluding gasoline- and electric-powered vehicles). Total truck engine unit sales rose by 50.7%, compared with overall truck market unit sales growth of 5.9% YoY (according to CAAM data). Off-road engine unit sales increased by 13.0%, with both industrial and marine and power generator sets unit sales growing more than 24% to offset lower agricultural engine unit sales. Cost of sales consisted of direct material costs, direct labor costs, and direct and indirect production overheads such as wages, depreciation and amortization, warranty expenses and freight charges. Gross profit was RMB 4.1 billion (US$587.6 million) in 2025, an increase of 44.3% from RMB 2.8 billion in 2024. Gross profit margin was 16.5% in 2025 compared with 14.7% in 2024. The increase was mainly due to higher unit sales volume, a change of sales mix with higher unit sales of heavy-duty and high horsepower engines, and continuing cost reduction initiatives. Other operating income, net was RMB 445.9 million (US$64.4 million) in 2025, a decrease of 22.5% from RMB 575.7 million in 2024. This was primarily due to lower bank interest income and reduced government grants. R&D expenses increased by 37.3% to RMB 1.4 billion (US$195.2 million), compared with RMB 984.7 million in 2024, primarily driven by higher experimental costs, increased personnel expenses, and impairments related to fuel cell development. Yuchai continued with its initiatives to enhance the engine efficiency and performance of its engines compliant with National VI and Tier-4 emission standards, and power generation engines for data centers and marine applications, while also advancing its new energy solutions. Total R&D expenditure, including capitalized costs, was RMB 1.5 billion (US$220.4 million), representing 6.2% of the revenue in 2025, compared with RMB 1.2 billion, or 6.2% of the revenue in 2024. SG&A expenses increased by 14.3% to RMB 2.1 billion (US$299.2 million), representing 8.4% of the revenue in 2025, compared with RMB 1.8 billion, or 9.5% of the revenue in 2024. This was mainly due to higher personnel expenses and consultancy fees, as well as increased after-sales and service expenses that partially offset lower accounts receivable provisions. As a result, operating profit increased by 82.7% to RMB 1.1 billion (US$157.6 million), compared with RMB 597.0 million in 2024. The operating margin was 4.4%, up from 3.1% in 2024. Finance costs decreased by 20.8% to RMB 61.8 million (US$8.9 million) from RMB 78.0 million in 2024, primarily due to lower bank term loans. The share of financial results of the associates and joint ventures increased by 9.4% to income of RMB 111.1 million (US$16.0 million), compared with income of RMB 101.5 million in 2024. The improvement was mainly driven by higher profits of 18.8% at MTU Yuchai Power, and increased profits at Purem Yuchai, partially offset by lower profits at Y&C. Profit before tax was RMB 1.1 billion (US$164.7 million) in 2025 compared with RMB 620.5 million in 2024. Income tax expense increased by 156.0% to RMB 329.7 million (US$47.6 million), compared with RMB 128.8 million in 2024. The tax increase was driven by higher profits in 2025 as compared with 2024, and higher deferred tax expenses. As a result of the foregoing factors, profit for the year was RMB 810.5 million (US$117.1 million) in 2025 compared with RMB 491.7 million in 2024, representing an increase of 64.8%. Net profit attributable to our shareholders increased by 66.3% to RMB 537.4 million (US$77.6 million), compared with RMB 323.1 million in 2024. 49 Table of Contents 2024 compared to 2023 Revenue for 2024 was RMB 19.1 billion compared with RMB 18.0 billion in 2023, an increase of 6.0%. The total number of engines sold by Yuchai in 2024 was 356,586 units compared with 313,493 units in 2023, representing an increase of 43,093 units, or 13.7%, primarily due to higher sales in the truck, bus, industrial and marine and power generation markets. Stronger performance in truck and bus engine sales was achieved despite a 2.6% year-over-year decrease in sales of commercial vehicles (excluding gasoline- and electric-powered vehicles) in 2024 as reported by CAAM. Cost of sales consisted of direct material costs, direct labor costs, and direct and indirect production overheads such as wages, depreciation and amortization, warranty expenses and freight charges. Gross profit was RMB 2.8 billion in 2024, an increase of 10.8% from RMB 2.5 billion in 2023. Gross profit margin was 14.7% in 2024 compared with 14.1% in 2023. The increase in gross margin was mainly attributable to higher revenue from higher unit sales volume, and continuing cost reduction initiatives, partially offset by greater labor and overhead expenses. Other operating income, net was RMB 575.7 million in 2024, an increase of 30.1% from RMB 442.4 million in 2023. The increase was mainly due to higher government grants, higher rebate on value-added taxes, and recognition of technology licensing fees. R&D expenses increased by 12.3% to RMB 984.7 million in 2024 compared with RMB 876.6 million in 2023, mainly attributable to higher mold costs and impairment of a discontinued R&D project. We continued with our initiatives to enhance the efficiency and performance of our National VI and Tier-4 emission standards compliant engines with marine and power generation applications, while advancing new energy solutions. In 2024, total R&D expenditures, including capitalized costs, were RMB 1.2 billion, compared with RMB 1.1 billion in 2023, representing 6.2% of the revenue compared with 5.9% in 2023. SG&A expenses were RMB 1.8 billion in 2024, representing 9.5% of the revenue, compared with RMB 1.5 billion, representing 8.3% of the revenue in 2023. This increase was mainly due to higher allowance for expected credit loss on trade receivables, and higher travelling, personnel and selling expenses compared with 2023. As a result, operating profit decreased by 2.0% to RMB 597.0 million in 2024 from RMB 609.4 million in 2023. Operating margin was 3.1% in 2024 compared with 3.4% in 2023. Finance costs decreased by 22.2% to RMB 78.0 million in 2024 from RMB 100.2 million in 2023. The share of financial results of the associates and joint ventures was an income of RMB 101.5 million in 2024 compared with an income of RMB 62.1 million in 2023. The improvement was mainly driven by higher profits at MTU Yuchai Power. Additionally, Y&C Engine and Purem Yuchai achieved profitability in 2024 compared to a loss last year. Profit before tax was RMB 620.5 million in 2024 compared with RMB 571.4 million in 2023. Income tax expense in 2024 was RMB 128.8 million compared with RMB 148.5 million in 2023. As a result of the foregoing factors, profit for the year was RMB 491.7 million in 2024 compared with RMB 422.9 million in 2023, representing an increase of 16.3%. Net profit attributable to our shareholders increased by 13.1% to RMB 323.1 million compared with RMB 285.5 million in 2023. Impact of Inflation and Foreign Currency Fluctuations The average annual inflation in China per CPI for 2025 remained flat compared with 2024, according to the National Bureau of Statistics. The results of our operations may be affected by inflation, particularly rising prices for parts and components, labor costs, raw materials and other operating costs. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business and Industry — If prices of energy, raw materials or components increase, it may adversely affect our profitability or cause us to suffer operating losses.” Substantially all of our revenues and operating expenses are generated by our Chinese operating subsidiaries and are denominated in Renminbi. With our continued increasing international sales and overseas expansion, any inflation and foreign currency fluctuations may adversely affect the results of our operations. 50 Table of Contents Seasonality Historically, Yuchai’s results of operations in the first and second quarters of calendar years were typically marginally higher than in the third and fourth quarters of the corresponding year. However, this seasonal trend has not always been consistent and may not be materialized during periods of extraordinary events, such as the COVID period in 2021 and 2022. There are no strict rules governing sales trend in the dynamic market where we operate, and customer purchasing pattern may change based on various factors including government policies, incentives, and market conditions. Any change in these factors may affect the seasonal trend as it has occurred in the past. As a result, cash generated from operations may also be subject to some seasonal variation. B.Liquidity and Capital Resources Our primary sources of cash are funds from operations generated by Yuchai, as well as debt financing obtained by us. Our revenues are substantially generated by Yuchai and its subsidiaries, our Chinese operating companies, and are denominated in Renminbi. The Renminbi is currently freely convertible under the “current account” which includes dividends, trade and service-related foreign exchange transactions. However, conversions for dividend payment are subject to bank review and validation in accordance with the PRC regulatory and procedural requirements. The Renminbi is not currently freely convertible under the “capital account” which includes, among other things, foreign direct investment and overseas borrowings by Chinese entities. Some of the conversions between Renminbi and foreign currency under the capital account are subject to regulatory oversight and may require SAFE registration or approval. As a result, there is no material restriction on the ability of the Chinese subsidiaries to transfer funds to Yuchai. However, certain funds transfers from Yuchai to us, such as capital reductions, liquidation proceeds, and external debt repayments, may be subject to bank review or SAFE registration. See “Item 3. Key Information — D. Risk Factors — General Risk Factors — We are a holding company and depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations and to make dividend payments. Regulations in China regarding currency conversion could limit our ability to obtain sufficient foreign currency to satisfy our foreign currency requirements or to pay dividends to shareholders.” Our primary cash requirements are for working capital, capital expenditures for production capacity expansion and new product developments, dividend payments and other operational requirements. We believe that our sources of liquidity are sufficient for our operational and working capital requirements over the next twelve months from December 31, 2025. However, under the current market conditions, there can be no assurance that our business activity will be maintained at the expected level to generate the anticipated cash flows from operating activities. If the current market conditions deteriorate, we may experience a decrease in demand for our products, resulting in our cash flows from operating activities being lower than anticipated. If our cash flows from operations are lower than anticipated, we may need to obtain additional financing which may not be available on favorable terms, or at all. Other factors which may affect our ability to generate funds from operations include increased competition, fluctuations in customer demand for our products, our ability to collect and control our level of accounts receivable, the financial health of our customers, the status of our investment in Yuchai under Chinese law and the implementation of the Reorganization Agreement and the Cooperation Agreement. See “Item 4. Information on the Company — A. History and Development of the Company — Reorganization Agreement.” Our cash and bank balances are primarily held in Renminbi, Singapore dollar and US dollar in accounts managed by third party financial institutions. While we monitor the cash balances in our operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or could be subjected to other adverse conditions in the financial markets. As of the date of this Annual Report, we have experienced no loss or lack of access to cash in our operating accounts. As of December 31, 2025, we had approximately RMB 7.9 billion (US$1.1 billion) in cash and bank balances on a consolidated basis. We believe that if we are considered on a stand-alone basis without our investment in Yuchai, we would find it difficult to raise new capital (either debt or equity) on our own. We expect that cash generated from operations should provide us with sufficient financial flexibility to satisfy future bank obligations, capital expenditures and projected working capital requirements. However, at certain times, cash generated from operations is subject to seasonal fluctuations. As our business continues to grow, we will also require additional funds for increased working capital requirements and to fund our continued business expansion plans. We expect to fund our working capital requirements primarily from funds from operations generated by Yuchai and, to the extent that is insufficient, from bank borrowings, discounting of bills receivable, follow-on equity offerings, accounts receivable factoring or other financing activities by Yuchai. 51 Table of Contents The following table summarizes the key elements of our cash flows for the last three years: For Year ended December 31, 2023 2024 2025 2025 RMB RMB RMB US$ (in thousands) Net cash from operating activities 1,226,038 779,416 2,718,305 392,660 Net cash (used in)/from investing activities (113,256 ) 113,101 (274,357 ) (39,631 ) Net cash used in financing activities (33,742 ) (526,635 ) (828,035 ) (119,610 ) Net increase in cash and cash equivalents 1,079,040 365,882 1,615,913 233,419 Cash and cash equivalents at January 1 4,451,489 5,544,376 5,915,916 854,555 Effect of exchange rate changes on balances in foreign currencies 13,847 5,658 (106 ) (15 ) Cash and cash equivalents at December 31 5,544,376 5,915,916 7,531,723 1,087,959 In 2025, net cash provided by operating activities was RMB 2.7 billion (US$392.7 million). The inflow was mainly derived from operating income of RMB 2.4 billion (US$351.4 million) and cash generated from working capital of RMB 486.5 million (US$70.3 million). The net cash outflow from working capital was mainly due to higher trade and other payables, partially offset by higher trade and other receivables and higher inventories. We settled our income tax liability by a cash payment of RMB 200.9 million (US$29.0 million). In 2024, net cash provided by operating activities was RMB 779.4 million. The inflow was mainly derived from operating income of RMB 1.8 billion, partially offset by cash used for working capital requirements of RMB 887.6 million. The net cash outflow from working capital was mainly due to higher trade and other receivables, partially offset by higher trade and other payables. The Group settled its income tax liability by a cash payment of RMB 113.4 million. In 2023, net cash provided by operating activities was RMB 1.2 billion. The inflow was mainly derived from operating income of RMB 1.4 billion, partially offset by cash used for working capital requirement of RMB 23.1 million. We settled our income tax liability by a cash payment of RMB 109.9 million. In 2025, net cash used in investing activities was RMB 274.4 million (US$39.6 million). The outflow was mainly due to the purchase of property, plant and equipment of RMB 483.1 million (US$69.8 million), additional investment in associates of RMB169.9 million (US$24.5 million) and spending on technology development of RMB 164.3 million (US$23.7 million), partially offset by proceeds received from government grants of RMB 258.9 million (US$37.4 million), dividend received from a joint venture of RMB 100.0 million (US$14.4 million), interest received of RMB 97.2 million (US$14.0 million) as well as withdrawal of fixed deposits from banks (net of placement) of RMB 80.2 (US$11.6 million). In 2024, net cash from investing activities was RMB 113.1 million. The inflow was mainly due to the receipt of RMB 217.6 million for proceeds from disposal of a subsidiary in 2023 (excluding RMB 13.4 million, or US$1.9 million which was restricted in use as retention money) and proceeds from government grants of RMB 228.8 million, partially offset by purchase of property, plant and equipment of RMB 360.2 million and spending on technology development of RMB 185.0 million. In 2023, net cash used in investing activities was RMB 113.3 million. The outflow was mainly due to the purchase of property, plant and equipment of RMB 237.8 million, spending on technology development of RMB 169.6 million, partially offset by proceeds from government grants of RMB 257.4 million. In 2025, net cash used in financing activities was RMB 828.0 million (US$119.6 million). The outflow was primarily due to net repayment of borrowings (net of proceeds from borrowings) of RMB 489.8 million (US$70.7 million) and dividend payment of RMB 248.9 million (US$35.9 million). In 2024, net cash used in financing activities was RMB 526.6 million. The outflow was primarily due to payment of RMB 285.6 million for our share buyback plan, dividend payment of RMB 177.8 million and payment for finance costs of RMB 75.1 million. In 2023, net cash used in financing activities was RMB 33.7 million. The outflow was primarily due to dividend payment of RMB 115.2 million and payment for finance costs of RMB 96.3 million, partially offset by proceeds from borrowings (net of repayment) of RMB 198.9 million. In relation to cash management, it is our practice to consider various financing options so as to minimize financing costs. The cash generated from operations is used for working capital, capital expenditures, dividend payments and other operational requirements. Our working capital as of December 31, 2025 was RMB 7.1 billion (US$1.0 billion) compared with RMB 7.3 billion as of December 31, 2024. As part of our business strategy, we seek opportunities to invest in China domestic manufacturers of diesel engine and new energy parts and components, as well as strategic partners in other related powertrain solution businesses. We may make such investments and acquisitions with funds provided by operations, future debt or equity financing or a combination thereof. 52 Table of Contents Capital Expenditures Our capital expenditures are primarily for expanding and upgrading existing production facilities in order to comply with engine emission standards, enhance production flow, strengthen safety measures, improve testing capability, improve environment control, increase warehousing capacity and support other routine upgrading and replacement. Capital expenditures for building new facilities are part of Yuchai’s ongoing efforts to develop new products and to improve the efficiency and performance of existing products. Our capital expenditures were RMB 348.5 million, RMB 537.9 million and RMB 724.6 million (US$104.7 million) in 2023, 2024 and 2025, respectively. These expenditures were used primarily for expanding and upgrading Yuchai’s production capacity and for technology development for new engines. As our business continues to grow, we will require additional funds for capital expenditures. As of December 31, 2025, we had committed capital expenditures of RMB 465.7 million (US$67.3 million) for upgrading existing facilities and building new facilities. We expect to continue funding our capital expenditures primarily from funds generated by Yuchai’s operations and, to the extent that is insufficient, from bank loans and other financing activities by Yuchai. Yuchai’s ability to obtain financing is limited by regulations in China. Additional capital contributions to Yuchai by us would be subject to filing with the relevant State Administration for Market Regulation. Any borrowing of foreign debt by Yuchai may be subject to registration or approval with the PRC authorities. Contractual and Other Obligations The following table sets forth information on payments related to our material contractual obligations for the periods indicated as of December 31, 2025: Payments Due by Period Contractual Obligations Total Less than 1 Year 1-5 Years More than 5 Years RMB RMB RMB RMB (in millions) Loans and borrowings (1) 2,036.9 2,016.7 20.2 — Lease liabilities (1) 85.3 37.3 33.7 14.3 Capital expenditures (2) 465.7 303.5 162.2 — Total 2,587.9 2,357.5 216.1 14.3 (1)Includes contractual interest payments. (2)The timing of the payment will depend on the actual progress of work. Indebtedness As of December 31, 2025, we had outstanding bank borrowings of RMB 2.0 billion (US$291.8 million), all of which were incurred by Yuchai. Yuchai has established banking relationships with a number of domestic Chinese banks, each of which will review Yuchai’s loan applications on a case-by-case basis. From time to time, we may also decide to refinance our indebtedness. As of December 31, 2024, Yuchai had a bank borrowing which was secured by bills receivables. As of December 31, 2025, all bank borrowings are unsecured and denominated in Renminbi. The majority of these borrowings have a tenor of one year, and bear a fixed interest rate of approximately 2.0%. In addition, CYI has credit facilities granted by banks in Singapore amounted to RMB 542.5 million (US$75.6 million), all of which remained undrawn as of December 31, 2025. 53 Table of Contents Details of CYI’s credit facilities granted by banks in Singapore are as follows: •On February 10, 2025, we entered into an agreement with Sumitomo Mitsui Banking Corporation Singapore Branch for uncommitted revolving credit facilities with tenors of one, three or six months in US dollars and/or Singapore dollars, with an aggregate value not exceeding US$30.0 million. The facility may be used to finance the Company’s general working capital requirements. Among other things, it requires that Hong Leong Asia owns beneficially at least 7,290,000 of the issued and paid-up shares and retained ownership of the special share in the Company and that the Company remains a subsidiary of Hong Leong Asia. It also includes financial covenants requiring our consolidated tangible net worth (as defined in the agreement) as of June 30 and December 31 of each year not to be less than US$200 million and the ratio of our consolidated total net debt (as defined in the agreement) to consolidated tangible net worth as of June 30 and December 31 of each year not to exceed 2.0 times, as well as negative pledge provisions and customary drawdown requirements. •On June 25, 2021, we entered into a revolving credit facility agreement with DBS Bank Ltd. of Singapore with an uncommitted aggregate value of S$30.0 million. This facility may be used to finance our general working capital requirements. Among other things, it requires that at all times (i) CYI owns directly or indirectly at least 76.4% ownership in Yuchai; (ii) Hong Leong Asia retains ownership of the special share, owns directly or indirectly at least 35% ownership in CYI and that CYI remains a subsidiary of Hong Leong Asia; and (iii) HLGE remains listed on the Main Board of Singapore Exchange. It also includes certain financial covenants requiring our consolidated tangible net worth (as defined in the agreement) not to be less than US$400 million, and the ratio of our consolidated total debt (as defined in the agreement) to consolidated tangible net worth not to exceed 1.0 time. •On August 18, 2023, we entered into an agreement with MUFG Bank Ltd, Singapore Branch for multi-currency short-term loan credit facilities with an uncommitted aggregate amount of S$30.0 million. The facility may be used to finance our general working capital requirements. Among other things, it requires that at all times (i) Hong Leong Asia maintains legal and beneficial ownership of at least 7,290,000 of the issued and paid-up shares and retains ownership of the special share in CYI; (ii) CYI remains a consolidated subsidiary of Hong Leong Asia; (iii) CYI owns directly or indirectly at least 76.4% ownership in Yuchai; and (iv) HLGE remains listed on the Main Board of Singapore Exchange. It also includes certain financial covenants requiring our tangible net worth (as defined in the agreement) not to be less than US$120 million at all times and the ratio of our total net debt (as defined in the agreement) to tangible net worth not to exceed 2.0 times at all times, as well as negative pledge provisions and customary drawdown requirements. We believe that should there be a need for further loans from banks, we can borrow additional amounts through our established banking relationships with a number of domestic Chinese or Singapore banks. We can also obtain financing by issuing bonds, issuing bills payable, discounting bills receivable, factoring accounts receivable or through other financing activities. However, such activities are subject to market conditions and there is no assurance that such additional activities would be successful. Off-Balance Sheet Arrangements As of December 31, 2024 and 2025, outstanding bills receivable discounted with banks for which Yuchai had retained a recourse obligation amounted to RMB 1.0 billion and RMB 869.2 million (US$125.5 million), respectively. These bills receivables were received from customers in settlement for their purchases. Yuchai discounted these bills receivables to fund its operations, as and when required. As of December 31, 2024 and 2025, outstanding bills receivable endorsed to suppliers for which Yuchai had retained a recourse obligation amounted to RMB 1.4 billion and RMB 2.8 billion (US$402.0 million), respectively. The bills receivables received from customers can be endorsed to suppliers as a form of settlement of Yuchai’s purchase for production materials. C.Research and Development, Patents and Licenses See “Item 4. Information on the Company — B. Business Overview — Research and Development.” D.Trend Information Other than as disclosed elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events since December 31, 2025 that are reasonably likely to have a material and adverse effect on our revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions. 54 Table of Contents E.Critical Accounting Estimates The preparation of our consolidated financial statements requires our management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, the accompanying disclosures, and the disclosure of contingent liabilities. For more information, see the disclosure included in Note 3 to the accompanying consolidated financial statements in Item 18.