Dear shareholders,

On behalf of the Board of Directors, we are pleased to present to you the annual report of World Precision Machinery Limited (“World Precision” and together with its subsidiaries, the “Group”) for the financial year ended 31 December 2025 (“FY2025”).

2025: YEAR IN REVIEW

China’s Gross Domestic Product (”GDP”) expanded by 5.0% in 2025, meeting the Chinese government’s official growth target despite a challenging operating environment marked by stress in the real estate sector and external headwinds from ongoing trade tensions with the United States. Growth momentum moderated towards the latter part of the year, with GDP growth easing from 5.4% year-on-year in the first quarter to 4.5% in the fourth quarter ended 31 December 2025, reflecting the diminishing impact of stimulus measures and continued softness in domestic demand¹.

Retail sales, a key indicator of household demand, rose by only 0.9% year-on-year in December 2025, falling short of market expectations. In response to subdued retail activity and soft consumer confidence, the Chinese government has rolled out targeted policy measures to support household spending, including enhanced coordination between commerce and financial regulators and expanded access to credit. Nonetheless, the economy continues to face structural challenges characterised by a persistent imbalance between strong supply and relatively weak demand².

In 2026, China has set one of its lowest growth targets in decades, announcing a GDP growth target of 4.5%–5%, reflecting mounting domestic challenges and rising global uncertainty. This marks the first time since 1991 that the target has fallen below the 5% threshold. The move signals a more cautious outlook as China grapples with deflationary pressures, a prolonged downturn in the property sector, and escalating trade tensions with the United States³.

Financial Performance
The Group recorded a 26.9% decline in revenue to RMB745.4 million in FY2025 compared to RMB1,018.9 million in the financial year ended 31 December 2024 (“FY2024”). This was primarily attributable to a decrease in number of units sold in conventional stamping machines and high performance and high tonnage stamping machines which were partially offset by an upward revision in the average selling prices of stamping machines. In line with the decrease in revenue, the Group’s gross profit decreased by 41.3% to RMB98.7 million in FY2025 from RMB168.2 million in FY2024 while the gross profit margin decreased by 3.3 percentage points to 13.2% in FY2025 from 16.5% in FY2024. The drop in gross profit margin was largely due to a decrease in production of conventional stamping machines and high performance and high tonnage stamping machines which were partially offset by an upward revision in the average selling prices of the stamping machines.

In FY2025, other income decreased by 19.3% to RMB20.1 million from RMB24.8 million in FY2024, primarily attributable to a decrease in government grants and subsidies received, gain from disposal of raw and scrap materials and gain on stock count, which were partially offset by an increase in processing income and labour service fees. In addition, distribution and selling expenses declined by 29.0% to RMB53.1 million from RMB74.8 million in FY2024. This decrease was mainly attributed to higher sales to related parties which resulted in a decrease in sales commission payable to sales personnel, transport expenses, exhibition and advertising expenses, travelling expenses, entertainment expenses and after sales services which were partially offset by an increase in marketing expenses. Depreciation and amortisation expenses increased by 9.8% to RMB88.1 million from RMB80.2 million in FY2024. The increase was mainly due to an increase in amortisation and depreciation of hotel assets, which were partially offset by some intangible assets that were fully amortised this year.

Other expenses increased significantly by 372.3% to RMB13.4 million in FY2025 from RMB2.8 million in FY2024, primarily due to an increase in foreign exchange loss which was partially offset by a decrease in goodwill impairment and quality compensation. Net provision of impairment losses on trade and other receivables increased by 19.3% to RMB13.6 million in FY2025 from RMB11.4 million in FY2024. The increase in net provision of impairment losses on trade and other receivables was mainly due to slower collections from customers.

As a result of the above, the Group recorded a net loss attributable to equity holder of RMB55.4 million in FY2025 as compared to a net profit attributable to equity holder of RMB7.0 million in FY2024.

INDUSTRY OUTLOOK

China has strengthened its position as a global leader in advanced manufacturing, hosting 101 of the world’s 224 lighthouse factories widely recognised as the standard for manufacturing excellence. These factories use advanced technologies such as artificial intelligence (AI), big data and automation to improve efficiency, flexibility and sustainability. This achievement underscores not only the widespread adoption of smart manufacturing in China, but also the country’s strong capabilities in large-scale implementation, technological innovation, scenario expansion and efficient commercialisation. China’s lighthouse factories span a diverse range of industries, including steel, new energy, automotive, electronics and telecommunications⁴. The integration of AI with advanced manufacturing is emerging as a key driver of China’s industrial transformation, as intelligent technologies increasingly reshape factory operations and industrial systems across the country⁵.

China’s automotive industry delivered a record performance in 2025, with vehicle production and sales reaching 34.53 million and 34.40 million units, respectively, representing year-on-year growth of 10.4% and 9.4%. This marked China’s 17th consecutive year as the world’s largest auto market, with exports emerging as a key driver of growth⁶.

New energy vehicles (“NEVs”) continued to expand strongly, with production and sales rising to 16.63 million and 16.49 million units respectively, accounting for 50.8% of total domestic vehicle sales. This marked respective year-on-year increases of 29% and 28.2%, and maintaining the top position in the world for 11 straight years. However, the gradual scaling back of policy support, including reduced tax incentives and trade-in subsidies, signals a shift towards a more demand-driven market, which is expected to moderate NEV growth.

Looking ahead, following a robust 2025 that absorbed much of the pent-up demand, growth in China’s automotive market is expected to moderate in 2026, with domestic demand remaining fragile amid ongoing concerns over income visibility and job security⁷.

China’s trade-in policy has significantly boosted consumer goods sales, reaching RMB3.92 trillion and benefiting 494 million consumers during the 2024–2025 period. Over the same timeframe, 18.3 million vehicles were traded in, with new energy vehicles accounting for nearly 60% of the total. In addition, 192 million home appliances were replaced through the programme. The strong uptake of new energy vehicles and smart home appliances has steadily expanded the scale of China’s green consumption market. At the same time, the supply of green products has become increasingly abundant, green consumption models continue to evolve, and the overall ecosystem supporting sustainable consumption has been further strengthened⁸.

China’s demographic transition continues to reshape industry dynamics. The elderly population is projected to expand by more than 10 million annually over the next decade, with the silver economy expected to account for approximately 9% of national GDP by 2035. In tandem, the senior-friendly home appliance market is forecast to reach RMB1 trillion by 2030, underscoring the scale and longevity of the opportunity. In response to this structural shift, leading home appliance manufacturers are accelerating investments in research and development and advancing technological innovation in senior-centric products. The integration of artificial intelligence into home appliances is increasingly central to meeting the evolving and diversified needs of an ageing population, positioning the sector for sustainable long-term growth⁹.

FUTURE PLANS

China’s domestic demand and consumer confidence are expected to remain subdued, which is likely to weigh on overall economic growth. The Group also continues to face significant external headwinds arising from geopolitical uncertainties, including the Russia–Ukraine conflict, the Israel–Hamas war, USA-Iran War and heightened U.S. tariff measures, factors that collectively contribute to a more volatile global environment. These conditions may dampen consumer sentiment, disrupt international trade flows, and constrain capital expenditure across manufacturing sectors. Given these challenges, the Group expects business conditions to remain subdued. The Group will continue to closely monitor the evolving macroeconomic landscape and adjust its strategies where necessary to mitigate risks and safeguard operational resilience.

Despite ongoing uncertainties, the Group remains firmly committed to investing in research and development, with a clear focus on maintaining high product quality to stay competitive against both local and international peers. This commitment to technology and product innovation is reflected in its collaborations with local universities and knowledge exchanges with overseas counterparts, which have significantly strengthened the Group’s research and developments (”R&D”) capabilities and long-term competitiveness.

In response to evolving customer needs and market trends, the Group plans to launch new products in the coming year, including High-Speed Precision Presses and Forging Presses, which are in strong demand across the automotive and renewable energy sectors. While approximately 95% of the Group’s revenue is currently derived from the domestic Chinese market, it aims to achieve sustainable growth by expanding its international presence, with a strategic focus on Southeast Asia, Europe, South America and South Africa.

Against the backdrop of ongoing geopolitical tensions and economic uncertainties, the Group remains firmly focused on long-term value creation. As it navigates an increasingly complex and volatile global environment, it continues to prioritise agility and adaptability. By leveraging its strong R&D capabilities, maintaining a steadfast commitment to innovation, and expanding its international footprint, it is well positioned to sustain growth. Guided by a clear strategic vision both domestically and globally, the Group will continue to respond to evolving customer needs and strengthen its competitive position within the industry.

A WORD OF APPRECIATION

On behalf of the Board, we extend our deepest appreciation to our dedicated employees, whose perseverance, professionalism, and unwavering commitment have enabled the Group to navigate a demanding and fast-changing operating environment. Their hard work and resilience continue to be the driving force behind our progress.

We also wish to express our sincere gratitude to our fellow Directors for their invaluable guidance, strategic counsel, and steadfast leadership throughout the year. Their insights have been instrumental in shaping the Group’s direction.

Our heartfelt thanks go to our business partners, suppliers, and customers for their trust, collaboration, and continued support. Most importantly, we are profoundly grateful to our shareholders for standing by us during this tough period. Your support strengthens our resolve as we work toward sustainable growth.

As we enter a new financial year, the Group remains firmly committed to advancing its transformation, driving innovation, and enhancing long-term value for all stakeholders. Together, we look forward to achieving meaningful milestones and charting a path toward sustained growth.

Mr Wang Weiyao
Executive Chairman

Mr Wen Hui
Chief Executive Officer

• China hits 2025 GDP growth target on export boom, but can't shake domestic chill, https://www.reuters.com/world/asia-pacic/chinas-q4-gdp-grows-45-yy-just-ahead-market-forecast-2026-01-19/
• China issues 11-point policy package to boost consumer spending amid slowing retail sales, https://www.scmp.com/economy/china-economy/article/3336515/china-issues-11-point-policy-package-boost-consumer-spending-amid-slowing-retail-sales
• China lowers 2026 growth target to 4.5-5%, rst cut in three years amid mounting headwinds, https://www.channelnewsasia.com/east-asia/china-two-sessions-economy-gdp-target-15th-ve-year-plan-5969961
• Nation widens edge in advanced manufacturing, https://www.chinadaily.com.cn/a/202601/20/WS696ed9b8a310d6866eb34a62.html
• Experts: AI driving transformation of manufacturing in China, https://www.chinadaily.com.cn/a/202601/22/WS6971cd6ba310d6866eb35313.html
• China's 2025 auto market hits new highs in both annual sales, output, https://autonews.gasgoo.com/articles/news/chinas-2025-auto-market-hits-new-highs-in-both-annual-sales-output-2011438280283627520
• China Auto Market Boomed in 2025: Why Growth May Be Softer in 2026, https://nance.yahoo.com/news/china-auto-market-boomed-2025-160000821.html
• China's trade-in policy drives consumer goods sales to reach 3.92 trillion yuan: Ocial, https://news.cgtn.com/news/2026-01-06/China-s-trade-in-policy-drives-3-92-trillion-yuan-in-goods-sales--1JIjY7FIhVu/p.html
• China’s home appliance makers tap silver economy with AI-driven products, creating growth drivers, https://www.straitstimes.com/asia/east-asia/chinas-home-appliance-makers-tap-into-silver-economy-with-high-tech-ai-driven-products