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 2024 (“FY2024”).

2024: YEAR IN REVIEW

China achieved its 2024 economic growth target with a 5.0% increase in gross domestic product, despite facing significant internal and external challenges. This marked one of its slowest growth rates in decades. In recent months, Beijing has rolled out its most aggressive support measures in years to revive an economy grappling with a prolonged property market debt crisis, sluggish consumer spending, and other headwinds. While these measures helped stabilise the economy in the fourth quarter, sustaining the recovery and boosting economic momentum will require substantial and ongoing policy stimulus¹.

Financial Performance
The Group recorded a 5.5% decrease in revenue to RMB1,018.9 million in FY2024 from RMB1,078.3 million in the financial year ended 31 December 2023 (”FY2023”). This was primarily attributed 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 tandem with the decrease in revenue, the Group’s gross profit decreased by 10.1% to RMB168.2 million in FY2024 from RMB187.1 million in FY2023 while the gross profit margin decreased by 0.8 percentage points to 16.5% in FY2024 from 17.3% in FY2023. The drop in gross profit margin was mainly due a decrease in the sales of 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 FY2024, other income surged by 21.8% to RMB24.8 million from RMB20.4 million in FY2023, primarily driven by higher processing income and gain on stock count. Meanwhile, distribution and selling expenses declined by 20.4% to RMB74.8 million from RMB93.9 million in FY2023. This decrease was mainly attributed to higher sales to related parties, leading to lower sales commissions payable to sales personnel, as well as reductions in transport, travel, and entertainment expenses. These cost savings were partially offset by an increase in meeting expenses and after-sales service costs. Other expenses dropped significantly by 77.8% to RMB2.8 million in FY2024 from RMB12.8 million in FY2023, primarily due to goodwill impairment and quality compensation, partially offset by an increase in foreign exchange gain.

As a result of the above, the Group’s net profit attributable to equity holder increased by 16.0% to RMB7.0 million in FY2024 from RMB6.0 million in FY2023, translating into basic earnings per ordinary share of RMB0.0175 for its shareholders.

Corporate Developments
Hainan Xingmei Spring Hotel Co., Ltd. (海南兴梅温泉酒店有限公司), the newly incorporated project company holding hospitality assets and liabilities transferred from Hainan Xinglong Pearl Investment Co., Ltd., is now a wholly owned subsidiary of the Group. The project company holds land use rights for a parcel of land on the south side of Pearl Avenue in Xinglong Hot Spring Tourism City, Wanning City, Hainan Province. Designated exclusively for tourism-related purposes, the site features various building structures, including 40 hotel villa properties and additional facilities.

The Hainan Free Trade Port is rapidly taking shape, driven by policies promoting "zero tariffs" and "low tax rates," which continue to generate economic benefits, create business opportunities, and boost tourism. According to data from the Hainan Provincial Tourism and Culture Authority, the island province welcomed 97.2 million tourist trips in 2024, marking an 8.0% year-on-year increase, with total tourist spending exceeding RMB204.0 billion. Notably, the number of inbound tourists surpassed 1.0 million, more than doubling from the previous year². We see this as a timely opportunity to venture into Hainan’s tourism sector and capitalise on its strong growth momentum.

INDUSTRY OUTLOOK

China, the world’s largest manufacturing powerhouse, is accelerating its push toward new industrialisation by fostering the growth of advanced manufacturing clusters and making the manufacturing sector higher-end, smarter and more eco-friendly. According to the Ministry of Industry and Information Technology (MIIT), industrial software plays a crucial role in this transformation. Leveraging on cutting-edge technologies such as artificial intelligence (AI), the sector aims to deliver comprehensive, end-to-end intelligence across the entire industrial value chain³. China’s large-scale equipment upgrades are set to drive technological transformation, enabling businesses to achieve significant advancements in smart manufacturing, new energy, and green technologies, thus further strengthening the country’s economic momentum⁴.

China’s automobile industry outperformed expectations in 2024, despite a relatively sluggish commercial vehicle market. Total vehicle sales, new energy vehicle (“NEVs”) production and sales, and exports all surpassed forecasts, setting new records. According to the China Association of Automobile Manufacturers, the country’s total automobile production reached 31.3 million units, while sales hit 31.4 million units, reflecting year-on-year growth of 3.7% and 4.5%, respectively. This marks the 16th consecutive year that annual production and sales volumes have exceeded 30.0 million units, reinforcing China’s position as the world’s largest automobile market⁵.

The rapid rise of NEVs continued, with production and sales reaching 12.9 million and 12.9 million units, respectively, representing year-on-year growth of 34.4% and 35.5%. This solidifies China’s decade-long streak as the global leader in NEV production and sales. Government incentives, such as subsidies for trade-ins, played a pivotal role in encouraging many, particularly fuel vehicle owners, to transition to NEVs. Additionally, policies like the Shanghai authorities’ decision to grant free car plates to first-time NEV buyers spurred early purchases, as consumers rushed to take advantage of the benefits amid concerns over potential policy changes. Beyond being the world’s largest automobile market, China has also emerged as a global R&D hub for cutting-edge automotive technologies⁶.

In March 2024, China introduced an action plan to drive economic growth by implementing large-scale equipment upgrades and a consumer goods trade-in program aimed at stimulating spending. The initiative encourages consumers to replace outdated electronics and appliances with energy-efficient models through direct discounts and retailer incentives. Backed by this policy, China’s home appliance sales surged in 2024, with retail sales of home appliances and audio-visual equipment reaching RMB1.0 trillion. This marks the first time the figure has exceeded the RMB1.0 trillion threshold, reflecting a 12.3% year-on-year increase. To further strengthen the program, China has expanded the list of home appliance categories eligible for government subsidies from 8 in 2024 to 12 in 2025, adding microwaves, water purifiers, dishwashers, and rice cookers to the trade-in scheme⁷.

FUTURE PLANS

Amid an economic slowdown and weak consumer sentiment, the Chinese government has introduced a series of measures to stimulate growth, which in turn is fostering expansion in key sectors. However, the Group faces significant challenges from geopolitical uncertainties such as the China-US trade tensions, the Russia-Ukraine war, and the Israel-Hamas conflict. These issues contribute to inflationary pressures and a more volatile global environment. The combined effect of these factors is expected to dampen consumer confidence, disrupt international trade, and reduce capital expenditure in manufacturing. Given these medium- to long-term challenges, the Group remains cautious about the business outlook. We will continue to closely monitor developments and adjust our strategies to mitigate risks and maintain resilience.

Despite these ongoing uncertainties, the Group remains committed to investing in R&D, since it was already defined in page 01 Company Profile, with a clear focus on maintaining high product quality to stay ahead of local and international competitors. Our strong commitment to technology and product innovation is evident in our collaborations with local universities and exchanges with foreign peers, which have significantly enhanced the Group’s R&D capabilities. These efforts will ensure that we remain competitive in the industry. In line with evolving customer preferences and market demands, the Group plans to introduce new products in the coming year, such as High-Speed Precision Presses and Forging Presses, both of which are in high demand within the automotive and renewable energy sectors. Currently, approximately 95.0% of the Group’s sales are generated from the domestic Chinese market. To achieve sustainable growth, the Group plans to broaden its international footprint with expansion initiatives targeting Southeast Asia, Europe, South America, and South Africa.

In light of the challenges posed by the ongoing geopolitical tensions and economic uncertainties, the Group remains focused on ensuring its long-term success. As we navigate these turbulent times, we are committed to staying agile and adapting to the ever-changing global landscape. By leveraging our strong R&D capabilities, maintaining our dedication to innovation, and expanding our international market presence, we are confident that the Group will continue to thrive. With a clear vision for growth, both domestically and globally, we aim to meet the evolving demands of our customers and strengthen our competitive edge in the industry.

A WORD OF APPRECIATION

We extend our heartfelt gratitude to our dedicated employees for their perseverance, diligence, and unwavering commitment in helping the Group navigate challenges. Our sincere appreciation also goes to our fellow directors for their invaluable contributions and strategic insights in driving the Group’s progress.

We are deeply thankful to our business partners and customers for their steadfast support and confidence in us, even amidst an uncertain business environment. Most importantly, we are truly grateful to our shareholders for standing by us through uncertain times. Your continued trust and support are invaluable as we strive toward greater milestones in the year ahead.

As we embark on a new financial year, the Group remains committed to driving innovation and maximizing long-term value for all stakeholders. Together, we look forward to achieving sustained growth.

Mr. Wang Weiyao
Executive Chairman

Mr. Wen Hui
Chief Executive Officer

• Chinese economic growth among slowest in decades, https://www.businesstimes.com.sg/international/global/chinese-economic-growth-among-slowest-decades
• HainanOutlook | Tourism industry of China's Hainan Province booms in 2024, https://english.news.cn/20250105/bfbca22f784d4af9b3fcf8d0c0b3a780/c.html
• Invest in China: New industrialisation eorts upgrade opportunities for global industrial software provider, https://english.news.cn/20241120/27f0dc585779474583bf6644baf169ee/c.html
• China invests heavily in large-scale equipment renewals amid green drive, https://global.chinadaily.com.cn/a/202409/25/WS66f34c14a310f1265a1c4a09.html
• CAAM: China's auto industry exceeds expectations in 2024, https://www.chinadaily.com.cn/a/202501/14/WS67860912a310f1265a1dabd6.html
• China's NEV production, sales surpass 12m each, leading globally in 2024 for 10th year, https://www.globaltimes.cn/page/202501/1326817.shtml#:~:text=In%202024%2C%20NEV%20production%20and,points%20from%20the%20previous%20year.
• China's home appliance sales surge in 2024 under trade-in scheme, https://www.globaltimes.cn/page/202501/1327132.shtml