KHD Humboldt Wedag International : AG Group Annual Report 2025

About this update from Khd Humboldt Wedag International Ag

Group Annual Report 2025 Innovation by tradition khd.com Table of Contents 03 TO OUR SHAREHOLDERS 14 COMBINED MANAGEMENT REPORT Key Figures 03 Facts & Figures 04 Foreword of the Management Board 05 Report of the Supervisory Board 10 Members of the Supervisory Board 13 Fundamental Principles of the KHD Group 14 Business Model 14 Corporate Governance 18 Objectives and Strategies 19 Management and Control System 19 Research and Development 21 Economic Report 23 Macroeconomic and sector-related Conditions 23 Overall Assessment of the Results of 24 Operations and Economic Position Business and Earnings Position 26 Financial Position and Net Assets 29 Non-financial Performance Indicators 33 For the sake of improved readability, in this report KHD may occasionally make reference to people using grammatically masculine terminology. These references to persons in general apply to all genders equally: masculine, feminine, or other. Table of contents Financial Statements of 35 KHD Humboldt Wedag International AG Disclosures pursuant to Section 315a 41 of the German Commercial Code (HGB) Compensation Report 42 Risk and Opportunities Report 43 57 GROUP FINANCIAL STATEMENTS Outlook Group Balance Sheet Group Income Statement Group Statement of Comprehensive Income Group Statement of Cash Flows Group Statement of Changes in Equity Notes to the Consolidated Financial Statements Responsibility Statement Independent Auditor's Report 53 57 59 60 62 63 64 115 116 OTHER INFORMATION List of Abbreviations Please note that rounding differences can result from the use of rounded amounts and percentages in accordance with commercial rounding practices. 125 in € million 2025 2024 Order intake 257.6 175.4 Revenue 177.9 218.1 Adjusted gross profit 43.5 44.0 Adjusted gross profit margin (in %) 24.4 20.2 Adjusted EBIT 6.7 10.4 Adjusted EBIT margin (in %) 3.8 4.8 Earnings before taxes (EBT) 11.4 15.9 Group net profit 6.9 10.6 EPS (in €) 0.14 0.21 Operating cash flow 16.7 13.2 Cash flow from investing activities -39.0 0.5 Cash flow from financing activities in € million -2.2 2025 -1.8 2024 Equity 105.7 107.5 Equity ratio (in %) 42.2 42.2 Cash and intercompany loans * 149.2 140.5 Net working captial ** -53.7 -32.1 Order backlog 210.4 176.4 Employees 1,016 944 Key figures at a glance * Including intercompany loan of C 60 million (PY: C 10 million) with entitlement to call for early repayment by giving 30 days' notice ** Balance of current assets (less cash and cash equivalents and current loans granted) and current liabilities (less current borrowings) 3 Key Figures Facts & figures + Good order intake despite a persistently difficult environment + Satisfactory earnings position - third consecutive year with positive operational result (EBIT) + Sustainably good liquidity and equity ratio Revenue Adjusted gross profit 300 250 200 150 100 50 224.7 218.1 60 50 57.2 49.6 177.9 43.7 167.5 168.6 134.2 40 32.0 14.2% 30 20 10 30 44.0 43.5 26 24.4% 20.2% 22 18 14 10 0 € million 2023 2024 2025 0 € million 2023 2024 2025 6 margin in % Capex Plant Services Adjusted GP in € million Adjusted GP margin in % Employees by region 243 23 Europe Americas 1,016 India China 727 23 worldwide 4 Order intake in € million Order backlog in € million 257.6 210.4 Foreword by the Management Board Dear shareholders, customers, business partners and friends of KHD, Before we say anything about the past 2025 financial year and the expected further development of the KHD Group, we must say goodbye to our highly esteemed fellow Management Board member Matthias Mersmann. As Chief Technology Officer (CTO), he has shaped the technological development of KHD like no other before him. Developing solutions to decarbonize the cement industry was far more than a project for him - it was a personal mission. He drove forward the current orientation of KHD towards this future topic with vision, scientific curiosity, strategic focus and great commitment. We lost not only an outstanding CTO, but a person who worked with attitude, intelligence, and humanity. Our deep sympathy goes to his family. We are grateful for the time together and will always keep Matthias Mersmann in the best of our memories. The 2025 financial year was challenging not only because of geopolitical uncertainties and growing polarization. Rising protectionism and tensions between major economies are affecting the development of the global economy. For the KHD Group, the markets for green technologies are characterized by uncertainty and restraint and have not yet been able to develop the desired momentum. The green transformation of the cement industry requires our customers to make very high investments, which, from a profitability perspective, are currently often only carried out if subsidies or other incentives are granted. Outside of India, KHD faces customer reluctance regarding investment decisions. Measured in terms of the key performance indicator of order intake, KHD's business development in 2025 appears to be fully satisfactory. With an order intake volume of € 257 million, we were able to significantly exceed expectations, but it should be noted that € 208 million (almost 81%) of this amount come from the sales region India. Due to adverse conditions, order intake in the other sales regions does not correspond to the potential that our products and our sales activities should unlock for KHD. The segment Capex was hit by customers' reluctance to invest in CO 2 reduction technologies and a tough price competition, so we cannot be satisfied in all sales regions except for India. In India, however, our expectations were significantly exceeded, which is due in particular to a major order for which we have also taken over the project management of construction and erection activities for the first time in addition to engineering, supplies of all equipment, and supervision of erection and commissioning. With a good order intake of € 47 million in the Plant Services segment, we were able to benefit from our service orientation and customer proximity. Despite the low order intake in some regions, we have deliberately strengthened our workforce in all regions. With 1,016 employees, we have the highest number of employees since many years. The unsatisfactory order intake in the Capex segment in some regions, together with the persistently high pressure on margins, means that despite a fully satisfactory overall development in the Plant Services segment, we expect only a slightly positive operating result (EBIT) for the business year 2026. Revenue amounted to € 178 million (previous year: € 218 million) and was significantly adversely affected by the weakness of the Indian rupee in our most important market. In close coordination with our customers, we were able to drive forward execution progress in running projects as planned. In addition, our good project execution led to significant reductions in total estimated costs for several projects after successful performance tests as well as during project execution. This enabled KHD to achieve a gross profit of € 41.5 million. In the financial year 2025 , KHD generated in a difficult economic environment a good operating result (EBIT) of € 4.7 million. At the beginning of November 2025, we were able to inform the capital market that KHD was raising its earnings forecast. Earnings before taxes (EBT) reached a fully satisfactory level in the financial year 2025 at € 11.4 million (previous year: € 15.9 million). Despite the cautious earnings forecast for the 2026 financial year, we remain committed to generating a sustainable positive return for our shareholders in the future. Increasing the performance and competitiveness of all KHD companies remains our top priority. Even though our order intake does not yet meet our expectations, we are driving forward KHD's transformation towards innovative products, technologies and services with great determination. The development towards green technologies is progressing more slowly than originally expected. The current reluctance of our customers to invest in green technologies is painful but will not deter us from our path. KHD has always stood for innovative, cutting-edge technology; accordingly, we focus on performance and future viability. The future development of KHD is based on the further improvement of our competitiveness, the expansion of the service business and our opportunities in connection with the green transformation of the cement industry. In addition, long-term thinking and sustainability are part of our DNA. Despite persistently challenging conditions, we are convinced that we will keep KHD on course and lead it into a successful future. KHD's equity ratio of 42% and high liquidity (including bank deposits and financial assets with affiliated companies) of € 149 million provide a good basis for the successful implementation of our strategy and thus sustainable growth. The focus of sales activities remains on projects with new technology (e.g. clay calcination and increase use of alternative fuels through our Pyrorotor) as well as on expanding our position in the markets relevant to KHD. Although the introduction of new technologies is always associated with higher risks, a balanced opportunity/risk profile remains a key aspect for our projects. Our investments in research and development - € 6.9 million in the financial year 2025 - are the highest since our IPO in 2010. With innovative products and solutions, KHD underpins its claim to be the technology leader in the cement industry. Important milestones in our research and development activities are three investment projects at KHD's Technology Center in Cologne, which we already reported on at the 2025 Annual General Meeting: Clay calciner on a semi-industrial scale; New grinding circuit (GrindX). Disc Mill. The calcination of clay is a key element in the "green transition" of the cement industry. With the clay calciner in the Technology Center, KHD can test the suitability of raw material for clay calcination. The new grinding circuit (GrindX) is a modular grinding system that provides increased reliability regarding the results of grindability tests. With the Disc Mill, KHD develops and builds the prototype for a novel solution for (ultra-fine) grinding of cement. The investment projects are scheduled to be completed in the 2026 financial year. At KHD, we are proud of our process engineering expertise and our innovative strength, which play a decisive role in helping our customers to transform the cement industry towards climate neutrality. The cement industry keeps focusing on emission reduction, energy efficiency and reduction of operating costs - and KHD offers the right solutions for this. We would like to thank our customers and business partners for their trust and professional cooperation in the past 2025 financial year. Special thanks go to our employees, who represent the foundation of the successful development of KHD through their hard work, exceptional commitment and willingness to actively participate in shaping change. We would also like to explicitly thank you, our shareholders -not least our majority shareholder AVIC - and the Supervisory Board. Our strategy offers you, our owners and shareholders, great opportunities in the coming years. As the Management Board, we are committed to creating value and leveraging the potential for growth and profitability at KHD associated with the topic of sustainability in the cement industry! The Management Board - KHD Humboldt Wedag International AG Report of the Supervisory Board Dear Shareholders, The Supervisory Board has learned with shock and deep sorrow about the passing of our Chief Technology Officer (CTO), Mr. Matthias Mersmann. During his time at KHD, Matthias made significant contributions to the company. The Supervisory Board particularly appreciates his ambitious striving for innovative technology and his devotion to genuine collaboration. We and the entire KHD are committed to building on Mr. Mersmann's extraordinary commitment through dedicated collaboration in all our future efforts aimed at driving KHD to greater success. For KHD Humboldt Wedag International AG the 2025 financial year was a quite successful year, particularly while considering the geopolitical crises and uncertainties. Instability and the incalculability of the framework for action remain a permanent challenge. Protectionism, growing polarization and tensions caused by different political systems are having a detrimental effect on the development of the global economy. In the 2025 financial year, the Supervisory Board of KHD Humboldt Wedag International AG carefully and conscientiously performed supervisory and advisory functions as required by law, the articles of association, and the rules of procedure. In doing so, the Supervisory Board was guided by the German Corporate Governance Code. It monitored and advised the Management Board on a continual basis and consulted with the Management Board in meetings and in numerous discussions outside of these meetings. The Supervisory Board requested the Management Board to report regularly, in a timely manner, and comprehensively, both in writing and verbally, about intended business policy and strategy, fundamental issues concerning financial, investment, and personnel planning, the course of business and the profitability of the Group and of the significant Group companies. The Management Board also reported on the strategic alignment of the Group and the status of strategy implementation. In addition, information on sustainability issues is becoming increasingly important in discussions with the Management Board. The Supervisory Board was involved in all decisions of fundamental importance to the KHD Group. Cooperation between the Management Board and the Supervisory Board has always been constructive. The Chairman of the Supervisory Board was in regular contact with the Management Board and particularly the Chief Executive Officer over and above the regular meetings and discussed the Group's strategy, risk situation, and risk management. The Chief Executive Officer immediately notified the Chairman of the Supervisory Board of any important events, which were essential for assessing the situation and development of the KHD Group. Changes in the Supervisory Board and the Management Board At the end of the Annual General Meeting on May 23, 2025, the mandate of our Supervisory Board Chairman, Mr. Jiayan Gong, ended. The Supervisory Board wants to express its extraordinary gratitude to the former Chairman for his work. At the Annual General Meeting on May 23, 2025, the shareholders re-elected Messrs. Gerhard Beinhauer, Xiaodong Wu, and Jingnan Yang as members of the Supervisory Board. In addition, Mr. Sibo Yan was elected to the Supervisory Board for the first time. At the constituent meeting on May 26, the Supervisory Board elected Mr. Yang as Chairman and Mr. Beinhauer as Vice Chairman. In addition to the tragic passing away of Mr. Mersmann, there were other changes to the Management Board. On September 29, 2025, the Supervisory Board decided to appoint Mr. Martin Strouhal as a further member of the Management Board with effect from January 1, 2026. As Chief Sales Officer, Mr. Strouhal is responsible in particular for the further strengthening of sales in order to better leverage market potential for KHD through convincing technical solutions at competitive prices and customer proximity. With effect from December 20, 2025, Mr. Jianlong Shen resigned from his position as Chairman and member of the Management Board. His contribution to the positive development of KHD in recent years is expressly praised and recognized. By resolution of the Supervisory Board dated November 18, 2025, Mr. Heng Xiang was appointed as a member of the Management Board and Chairman with effect from December 20, 2025. As Chief Executive Officer (CEO), Mr. Xiang focuses on the consistent implementation and further development of the Group strategy. In addition, due to its good networking, he plays a decisive role in terms of close cooperation with our parent company AVIC. Meetings and Resolutions of the Supervisory Board In 2025, the Supervisory Board held five meetings. The meetings on March 20, June 24 and November 18 were held in person. The Supervisory Board dealt extensively with all issues of fundamental importance to the KHD Group. In addition, 20 single resolutions were passed by telephone/video conference. The Supervisory Board also exchanged views on individual topics in the face-to-face meetings and in video or telephone conferences without members of the Management Board. All members of the Supervisory Board participated in the meetings in person, the meetings by video conference and in passing the resolutions. The participation rate of the members of the Supervisory Board was 100% overall in the reporting year. Individualized disclosure of Supervisory Board members' attendance at meetings Supervisory Board Meetings Supervisory Board Resolutions Mr. Jingnan Yang Number Participation Rate Number Participation Rate (Chairman) 5/5 100% 20/20 100% Mr. Gerhard Beinhauer (Vice Chairman) 5/5 100% 20/20 100% Mr. Xiaodong Wu 5/5 100% 20/20 100% Mr. Sibo Yan 4/4 100% 8/8 100% Mr. Jiayan Gong (former Chairman) 1/1 100% 12/12 100% The Supervisory Board concerned itself with the monitoring of the financial reporting process and, in the presence of the auditors and the Management Board, with the annual and consolidated financial statements for 2024. At the meeting on March 20, 2025, the Supervisory Board held a thorough discussion of the draft of the annual and consolidated financial statements for the 2024 financial year. By resolution on March 27, 2025, the Supervisory Board approved the audited annual and audited consolidated financial statements of KHD Humboldt Wedag International AG for the financial year ended December 31, 2024. The agendas of the Supervisory Board meetings in March, May, June, August, and November covered reports on business development, deviations of the actual business development from the budget and forecasts, the 2026 budget and the medium-term planning for 2027-30, discussions of the half-year report prior to publication, changes to the schedule of responsibilities for the members of the Management Board, the assessment of the performance of the members of the Management Board and other Management Board matters, discussion of the agenda for the Annual General Meeting of shareholders, the internal control system, the risk management system, as well as discussions related to Corporate Governance, the decision on the proposal of the new auditor for the 2025 financial year and organizational matters relating to the Supervisory Board. Particular focal points in the 2025 financial year were the research and development program, strengthening cooperation with the parent company AVIC, expanding EPC capabilities, and KHD's strategy relating to major tenders. In addition, the improvement of competitiveness and development prospects were once again discussed with the Management Board. In terms of operational issues, the focus was particularly on risk management in relation to major projects. The resolutions passed by telephone/video conference concerned transactions requiring approval by the Supervisory Board, personnel issues relating to the members of the Management Board (including the assessment of target achievement for the 2024 financial year and the definition of bonus targets for the 2025 financial year), proposed resolutions for the Annual General Meeting, as well as the approval of the Declaration of Compliance with the German Corporate Governance Code and the separate nonfinancial Group report (CSR report) for 2024. Responsibilities as Defined by Section 107 Paragraph 3 of the German Stock Corporation Act (AktG) Responsibilities that would otherwise be passed on to an Audit Committee have been carried out by the full Supervisory Board. The Supervisory Board issued the audit mandate to the auditors and discussed and agreed upon the focal points of the audit as well as the audit fees. Furthermore, the Supervisory Board monitored the independence, qualification, rotation, and efficiency of the auditors as well as the services provided in addition to the audit of financial statements. The Supervisory Board also dealt with issues of corporate governance, including the preparation of the Declaration of Compliance with the German Corporate Governance Code. Based on reports from the Management Board, the Supervisory Board concerned itself with the internal control system and was informed about the effectiveness and further development of the Group-wide risk management system. Significant opportunities and risks, including the risk situation, risk identification, and risk monitoring as well as the compliance structure and compliance issues within the KHD Group were discussed. The Supervisory Board assessed the effectiveness of the internal control system and the risk management system. Corporate Governance and Declaration of Compliance There were no conflicts of interest among the members of the Supervisory Board or Management Board during the reporting year. According to its own assessment, the Supervisory Board included an appropriate number of independent members as defined by the German Corporate Governance Code at all times during the reporting year. The Supervisory Board monitors the development of corporate governance standards on a continual basis, as well as the implementation of the recommendations of the German Corporate Governance Code at KHD Humboldt Wedag International AG. The Management Board and Supervisory Board issued the annual declaration of compliance pursuant to Section 161 of the German Stock Corporation Act (AktG) in February 2026. This was published on February 6, 2026 and made permanently available to shareholders on the Company's website at https://www.khd.com/ir/corporate-governance/ #declaration-of-compliance. Further information on corporate governance can be found in the Corporate Governance Statement (within the meaning of the German Corporate Governance Code as amended on April 28, 2022), which has also been published on the Company's website. KHD supports the members of the Supervisory Board upon their appointment by explaining a list of key tasks and handing over important core documents, for example the Rules of Procedure for the Supervisory Board as well as for the Management Board and the list of transactions requiring Supervisory Board approval. The Company generally supports the members of the Supervisory Board in training and development measures. In the 2025 financial year, content and duties of the Supervisory Board in relation to sustainability issues were explained in particular. In addition, a training was held to deepen specialist knowledge regarding the special regulations of the International Financial Reporting Standards (IFRS) related to plant engineering. Separate Non-financial Group Report The Management Board prepared the separate non-financial Group report for the 2025 financial year in accordance with Section 315b Paragraph 3 of the German Commercial Code (HGB). Before its publication, the Supervisory Board audited the separate non-financial Group report in accordance with Section 171 Section 1 of the German Stock Corporation Act (AktG). Annual and Consolidated Financial Statements The Management Board prepared the annual financial statements of KHD Humboldt Wedag International AG as of December 31, 2025 and the consolidated financial statements as of December 31, 2025 in a timely manner and in accordance with principles set out in the German Commercial Code (HGB), in accordance with IFRS as adopted by the European Union, including the combined management report for the 2025 financial year. The annual financial statements and the consolidated financial statements, including the combined management report, were audited by BDO AG Wirtschaftsprüfungsgesellschaft, Cologne office, who were appointed by the Annual General Meeting of shareholders on May 23, 2025. The auditors issued an unqualified audit opinion on both sets of financial statements. Furthermore, the auditors confirmed that the early risk recognition system complies with the legal requirements set out in Section 91 Paragraph 2 of the German Stock Corporation Act (AktG); no risks that might affect the viability of the Company as a going concern were identified. The financial statement documents and the audit reports were sent to all members of the Supervisory Board in due time. The audit reports were subject to intensive deliberations in the Supervisory Board meeting convened to approve the financial statements on March 18, 2026. The meeting to approve the financial statements on March 18, 2026 was attended by the auditors as well as the Management Board. The auditors reported on the scope, the focus, and the main findings of the audit, addressing in particular the key audit matters. During the Supervisory Board meeting, the auditors were available to provide further information and answer questions. The Supervisory Board conducted its own examination of the annual financial statements for the 2025 financial year and of the consolidated financial statements, including the combined management report, for the 2025 financial year, taking into account the auditors' reports. In its audit, the Supervisory Board concerned itself in particular with the key audit matters. After considering the final results of the Supervisory Board's review of the documents submitted by the Management Board and the auditors, the Supervisory Board has no objections to raise and concurs with the result of the audit conducted by BDO AG Wirtschaftsprüfungsgesellschaft. The Supervisory Board approves the annual financial statements and the consolidated financial statements as of December 31, 2025, as prepared by the Management Board. The annual financial statements of KHD Humboldt Wedag International AG are therefore adopted. Compensation Report The Management Board and Supervisory Board have jointly prepared the compensation report in accordance with the requirements of Section 162 of the German Stock Corporation Act (AktG). The compensation report was separately audited by the auditor in accordance with the formal audit required by law (pursuant to Section 162 (1) and (2) AktG). The compensation report together with the auditor's opinion is published on the Company's website. Management Board's report on the relationships with affiliated companies The Management Board's report on the relationships with affiliated companies (Dependent Company Report) was audited by the auditors and issued with the following unqualified audit opinion: "Based on our audit performed in accordance with professional standards and our professional judgment, we confirm that: The factual statements contained in the report are correct. The consideration paid by the Company for the legal transactions stated in the report was not unreasonably high." The Management Board presented the Dependent Company Report to the Supervisory Board, which also reviewed the Dependent Company Report. After considering the final results of its own review, the Supervisory Board has no objections to raise with respect to the Management Board's final declaration in the Dependent Company Report or with respect to the result of the audit by the auditors. Expression of Thanks The Supervisory Board would like to thank all KHD employees for their active commitment and successful work. Thanks are equally due for the constructive cooperation with the Management Board, which led KHD with great commitment through a challenging financial year that ended with a positive operating result (EBIT). Cologne, March 18, 2026 Jingnan Yang (Chairman of the Supervisory Board) Members of the Supervisory Board Jingnan Yang Chairman of the Supervisory Board (since May 26, 2025) President of AVIC International Beijing Co. Limited Gerhard Beinhauer Vice Chairman of the Supervisory Board Managing Director of BBI Beteiligungs- und Handelsgesellschaft mbH Membership in supervisory boards and other governing bodies: - BIEGLO Holding GmbH & Co. KGaA, Hamburg, Chairman of the Supervisory Board Xiaodong Wu Chief Financial Officer of AVIC International Beijing Co. Limited Sibo Yan (since May 23, 2025) Vice President of AVIC International Beijing Co. Limited Jiayan Gong (until May 23, 2025) Chairman of the Supervisory Board Retired, former Chairman of the Board of Directors of AVIC International Beijing Co. Limited Combined Management Report This management report comprises both the Group Management Report and the Management Report of KHD Humboldt Wedag International AG ("KHD AG"). This report addresses business development, including the business performance, as well as the position and expected development of the Group and of KHD AG. The information about KHD AG is presented in the economic report in a separate section, with disclosures pursuant to the German Commercial Code (HGB). The German Accounting Standard 20 (DRS 20) "Group Management Report" was applied. KHD is subject to the non-financial reporting requirements and prepares a separate non-financial Group report in accordance with Section 315b, Paragraph 3 HGB. The non-financial Group report for the 2025 financial year is not integrated into the Group management report, but is instead a separate report that is published on the KHD website at https://www.khd.com/ir/news-reports/ #sustainability. The Compensation Report in accordance with Section 162 AktG for the 2025 financial year is publicly available on the Group's website ( https://www.khd.com/ir/news-reports/ #compensation-reports). FUNDAMENTAL PRINCIPLES OF KHD GROUP Business Model Organizational Structure and Locations With its subsidiaries in Europe, the Americas, and Asia, KHD Humboldt Wedag International AG (hereafter also referred to as "KHD" or "KHD- Group") based in Cologne, Germany, is a globally active supplier of equipment and services for the cement industry. The scope of services encompasses process know-how and design, engineering, project management, the supply of technology and equipment as well as supervising the erection and commissioning of cement plants and related equipment. It also includes customer services such as supplying spare parts, optimizing, maintaining, and repairing cement plants, conducting studies, and training plant personnel. In selected and individual cases, KHD also provides its customers with EPC (engineering, procurement, construction) solutions. In this context, KHD works with construction and assembly partners in the framework of a consortium or, with smaller EPC projects, takes on the role of a general contractor. In cement plant engineering, KHD focuses mainly on knowledge-intensive areas. The manufacturing of plant equipment is predominantly outsourced to quality-certified, external manufacturers who work in accordance with KHD's specifications. Selected products are manufactured with the Group's own production capacities in Faridabad, India. In its capacity as the ultimate holding company of the Group, KHD AG holds a 100% investment in KHD Humboldt Wedag GmbH ("KHD GmbH"), Cologne, Germany, which functions as a holding company with no operating business activities. The nine KHD Group companies (previous year: nine) primarily focus on the business segment of industrial plant engineering as well as related services. KHD Humboldt Wedag Vermögensverwaltungs-AG ("KHD VV"), located in Cologne, focuses exclusively on managing its own portfolio. Humboldt Wedag Do Brasil Servicos Technicos Ltda., Sao José dos Campos, Brazil, did not undertake any operational business in the 2025 financial year. KHD AG has been a group company of the AVIC International Beijing Co. Limited ("AVIC Beijing") based in Beijing, People's Republic of China, since January 2014. In turn, AVIC Beijing is part of the Aviation Industry Corporation of China, a corporate group owned by the People's Republic of China Ltd., Beijing, People's Republic of China. AVIC International Engineering Holdings Pte. Ltd. ("AVIC Engineering"), Singapore, Republic of Singapore, and Max Glory Industries Limited ("Max Glory"), Hong Kong, Hong Kong Special Administrative Region of the People's Republic of China, directly hold a 69.02% stake and a 20.00% stake in KHD AG, respectively. Group Structure KHD's customer base is made up of cement producers from around the world. Maintaining close contact with this target group is one of the keys to the success of the Group's business activities. Through our targeted sales, we ensure that our customers are served in accordance with their individual needs. We ensure direct customer care through our KHD subsidiaries in the respective sales territories. One advantage of our structure is the technological leadership by Humboldt Wedag GmbH ("HW GmbH") in Cologne, the operating company at the Cologne headquarters, combined with the proximity of the regional subsidiaries to the respective customers and their knowledge of the local market environment. In order to tap into markets in which the KHD Group is not represented by its own sales force, the subsidiaries also employ sales agents. Within the KHD Group, in addition to technological leadership through the Center of Excellence (CoE), HW GmbH assumes important central functions and serves as a contact for specialist and organizational matters. The markets in Europe, the Middle East and North and West Africa as well as the Asia-Pacific region (with the exception of China) are managed directly from Cologne by HW GmbH. The other regions - India and its neighboring countries as well as Sub-Saharan Africa, the Americas and China - are each managed by other KHD subsidiaries. Humboldt Wedag India Private Ltd. ("HW India") in New Delhi, India, is responsible for the important Indian market and the neighboring countries of Nepal, Bangladesh, Bhutan, and Sri Lanka as well as Indonesia, Myanmar, and Sub-Saharan Africa. With about 400 engineers as of December 31, 2025, HW India not only executes its own orders, but it also increasingly supports the other KHD subsidiaries. HW India has its own facilities in Faridabad, near New Delhi, for producing key components and for refurbishing roller presses. ZAB - Zementanlagenbau GmbH Dessau ("ZAB") in Dessau-Roßlau, Germany covers the 15 states of the former Soviet Union as well as Mongolia, Vietnam, and Syria. In addition to new plants, the focus is on taking advantage of the potential in the region for modernization and expansion investments. Large projects are executed in cooperation with HW GmbH. Due to the war of aggression against Ukraine and the resulting sanctions there are currently no business activities in Russia. Business contacts remain in place but are not being used operationally under the current circumstances. The company is continuously monitoring further political and legal developments and will adjust its measures accordingly if necessary. Humboldt Wedag, Inc. ("HW Inc."), with its headquarters in Peachtree Corners, near Atlanta, Georgia in the USA, is responsible for both North and South America. For large project execution, HW Inc. is supported by HW GmbH, HW India, and KHD Nanjing. KHD Humboldt Wedag Machinery Equipment (Beijing) Co. Ltd. ("KHD Beijing"), in Beijing, People's Republic of China, plays an important role in the ongoing development of the Chinese sales and procurement markets. In addition to the Beijing site, KHD Beijing operates a site with engineers in Nanjing, People's Republic of China. Employees of KHD Beijing support other KHD companies in terms of engineering and making use of the cost and efficiency advantages of the Chinese procurement market. Many activities are currently being undertaken together and with support from AVIC Beijing, HW GmbH, and HW India. Range of Products and Services The range of KHD products and services includes the Project Business (Capex) and Plant Services segments. Capex (Project Business) The scope in the Capex business unit encompasses the process technology, design, engineering, project management, and the supply of technology and equipment (grinding, pyro process, clay calcination, system automation). The supervision of the erection and commissioning of cement plants and related equipment (Field Services) that is directly connected with the project business is also classified under this segment. The KHD Group also organizes training for cement plant personnel. For this purpose, KHD draws on its own e-learning program, SIMULEX ® , with which all processes in a cement plant can be simulated and controlled by the course participants. Specialized e-learning programs about the pyro process expand the training options. The Capex segment comprises all of the deliveries and services directly connected with a plant engineering project. The core product range of the equipment supplied by KHD includes plants for grinding (grinding systems) and pyro processing (pyro systems), including clay calcination, and for electrical systems and automation, which are essential elements of every cement plant. Our grinding technology is utilized in raw material, clinker and clinker substitute grinding, and comprises crushing, grinding, and separation equipment as well as fans. The KHD pyro processing equipment (pyro systems) covers all of the key components of the kiln line, such as preheaters, calciner systems, burners, process fans, rotary kilns, and clinker coolers. With the PYROROTOR ® , a further development of traditional calciner technology, KHD is also providing technological solutions with which very coarse and poorly prepared secondary fuels can be used to manufacture cement. With the solutions for the calcination of clay (particularly the Flash Calciner), KHD provide cement manufacturers with a foundation for reducing the clinker factor. Moreover, KHD has developed a number of system automation products which are used together with process control systems to optimize plant performance. In general, our products are characterized by their low energy consumption, low maintenance costs, reduced vibrations and noise emissions, as well as minimal wear. Plant Services KHD's services include the supply of spare and wear parts as well as various plant services. These include maintenance services such as refurbishing roller presses, technical inspections and audits, as well as consulting and assistance services. In this respect, consultation, including the preparation of feasibility studies, on energy efficiency, as well as emissions reduction (particularly CO 2 ) and reduction of operating costs (e.g. substituting fossil fuels with alternative fuels) when modernizing plants are increasingly important subjects. The portfolio of (digital) service products is undergoing rigorous expansion. KHD ProMax® integrates the existing data and systems of cement plants into our cloud-based suite of digital optimization solutions. KHD ProMax® is based on the most advanced technologies for digital twins and machine learning to enable the optimum operation of cement plants. KHD is rigorously pursuing the goals of lower costs, reduced emissions, and less energy consumption. Management and Supervision KHD is governed by the provisions of the German Stock Corporation Act (AktG), capital market regulations, and the rules set out in its articles of association. Pursuant to the dual board system, the Management Board is responsible for managing KHD, while the Supervisory Board carries out advisory and monitoring functions. Both boards cooperate closely for the benefit of the Company. Their common goal is to ensure sustainable value, while taking the interests of the shareholders, employees, and other stakeholders into account. Management Board The rules of procedure implemented for the Management Board by the Supervisory Board govern the fundamental principles of the Management Board's work. The assignment of functional responsibilities for individual Management Board members is laid out in the schedule of responsibilities. Mr. Jianlong Shen, Chairman of the Management Board (CEO), resigned from his position effective December 20, 2025 and has withdrawn from the Management Board. The Supervisory Board appointed Mr. Heng Xiang effective December 20, 2025 as a new member and Chairman of the Management Board. As a result, as of December 31, 2025, the Management Board of KHD continues to consist of four members (previous year: four). Mr. Martin Strouhal was also appointed to the Management Board effective January 1, 2026. As Chief Sales Officer, his responsibilities include, in particular, the further optimization of sales activities. Mr. Matthias Mersman passed away after the reporting date. Supervisory Board In accordance with the articles of association, the Supervisory Board continues to consist of four people. The work of the Supervisory Board is governed by the rules of procedure. The previous Chairman of the Supervisory Board, Mr. Jiayan Gong, resigned from the Supervisory Board on May 23, 2025, the date of the most recent Annual General Meeting. On May 23, 2025, the shareholders reelected Mr. Jingnan Yang, Mr. Gerhard Beinhauer, and Mr. Xiaodong Wu and elected Mr. Sibo Yan as members of the Supervisory Board. In the inaugural meeting on May 26, the Supervisory Board confirmed Mr. Yang as Chairman and Mr. Beinhauer as Deputy Chairman. Corporate Governance The Company is managed and controlled in accordance with the standards set out in the German Corporate Governance Code ("GCGC"). The main aspects of corporate governance at KHD are listed in the Declaration on Corporate Governance that also includes the Declaration of Compliance pursuant to Section 161 of the German Stock Corporation Act (AktG). The Declaration of Compliance and the Declaration on Corporate Governance are available on KHD's website at https://www.khd.com/ir/corporate-governance/#declaration-of-compliance and https://www.khd.com/ir/corporate-governance/#corporate-governance-statement . The Declaration on Corporate Governance also include the information required by Section 289 et seq., Paragraph 2, Number 1a of the German Commercial Code (HGB). The Compensation Report for the 2025 financial year, including the Auditor's Report in accordance with Section 162 of the AktG is available at www.khd.com/ir/news-reports/#compensation-reports . A complete description of the compensation system of the Management Board in accordance with Section 87a, Paragraphs 1 and 2, Sentence 1 of the AktG is publicly available as part of the invitation to the Annual General Meeting in the 2025 financial year at www.khd.com/ir/annual-general-meeting/#2025 . The resolutions regarding the approval of the Compensation Report for the 2024 financial year, approval of the compensation system, and the confirmation of the compensation of the members of the Supervisory Board in accordance with Section 113, Paragraph 3 of the AktG are publicly available at https://www.khd.com/ir/annual-general-meeting/ #2025. Objectives and Strategies KHD identifies itself as a full service provider for cement plants and can offer the essential material key components of a complete cement plant, a clay calcinator, or separate grinding facility with its own products. Since its establishment more than 170 years ago, KHD has set itself apart with innovative machines and plants developed in Germany. In product development, KHD focuses strongly on energy efficiency, clean plants with minimal polluting emissions, long service life and very easy maintenance in addition to the paramount issue of CO 2 reduction. The KHD Group has a rigorous focus on its work in the five fields of action with regard to strategy implementation which were introduced previously at the Annual General Meeting in May 2023: Benefiting from the "green transition"; Go China/India and improving the presence in selected markets; EPC (engineering, procurement, construction); Expansion of the service portfolio and digitalization; Improvement of competitiveness on the cost side and excellence in execution; The five fields of action are closely interrelated and, when implemented successfully, ensure the KHD Group's future viability. We are collaborating closely with AVIC Beijing, especially where the Go China initiative and the implementation of our EPC concept are concerned. Our organization's flexibility allows us to address individual customer requirements and produce efficient solutions. Management and Control System The strategy of KHD also manifests itself in the way the Group is managed. A uniform system of key financial targets across the Group ensures a common understanding of how to measure success. The primary financial indicators KHD uses to determine target achievement are calculated monthly on the basis of key figures. These performance indicators are determined consistently and continuously to ensure comparability across various periods. In part, these performance indicators are alternative performance measures, which are not defined according to the International Financial Reporting Standards (IFRS). The primary financial performance indicators are defined and derived as follows: Order intake and order backlog The approval for project execution is important for recording order intake. Here, in addition to the legally binding implementation a customer contract, other conditions must also be routinely met. These conditions include, for example, submission of a payment or the effective opening of a letter of credit. If the respective prerequisites are met, the contract value is recorded in the order intake. With this recording in order intake, the order backlog increases accordingly. This means that the order backlog represents the total of the binding, concluded contracts which are still to be executed by KHD. It changes continually based on the recorded order intake and progressing execution of the existing backlog (revenue recognition according to production progress). Reductions of order values or cancellations of orders as well as effects due to exchange rate fluctuations are shown as changes in the order backlog. In this way, the order intake directly represents the new business gained in the financial year. Group revenue Group revenue is determined pursuant to the regulations of IFRS 15. Adjusted Group earnings before interest and taxes (adjusted EBIT) as well as the ratio to revenue (adjusted EBIT margin) EBIT provides information about the Group's operating profitability and includes all of the components of the income statement that refer to operating performance. It is determined as the Group net result for the year plus the net finance income and income tax expense. The EBIT margin is a relative indicator used to compare operational profitability. A ratio of EBIT to revenue is used to determine this figure. For Group management purposes (though not for the segments), KHD adjusts EBIT as necessary with regard to special effects. Special effects are one-time-items or effects that are special in nature and/or magnitude, e.g. expenses for restructuring, reorganization or litigation, expenses related to under-utilization of capacity or amortization of goodwill. The adjusted EBIT is more suitable for comparing the operating performance across several periods and is determined for the 2025 financial year as follows: in € million 2025 2024 EBIT prior to adjustments 4.7 10.4 Under-utilization of capacity 2.0 0.0 Adjusted EBIT 6.7 10.4 Operating cash flow Operating cash flow (or cash flow from operating activities) is determined in accordance with generally accepted accounting principles as defined by IAS 7 and includes all cash flows that are not associated with the investment and financing area. Research and development In the 2025 financial year, the following trends -- driven in particular by the necessary decarbonization - continued to define the cement industry: Reduction of the CO 2 intensity of the process with the objective of complete decarbonization of cement manufacturing, Reduction of the clinker factor by using clinker substitutes, Digital solutions and applications for improving operating performance, Use of alternative fuels, Need for energy-efficient plants to reduce operating costs, Higher requirements for emission controls, Improvements in cement quality due to better grinding technology. Research and development activities at KHD are focused on the development of convincing responses to the trends listed above. The expenses for research and development in the 2025 financial year amounted to € 6.9 million (previous year: € 5.7 million). This corresponds to 3.9% (previous year: 2.6%) of revenue. A total of 19 patents (previous year: 14 patents) were applied for and 99 patent applications were nationalized in foreign countries in the reporting year. At the end of the year, KHD owned the rights to a total of 1,099 items of intellectual property (previous year: 1,021), of which 522 were patents (previous year: 439), 569 were brands (previous year: 573), and eight were registered designs (previous year: nine). Developing convincing concepts for drastically reducing the carbon emissions of cement plants remains paramount to the future of the cement industry. To minimize the CO 2 footprint, KHD continues to invest in the development of new technologies. Meaningful progress in this area is demonstrated by participation in two EU-supported projects: In the context of the ACCESS project, KHD is working on innovative solutions for CO 2 separation and use. This technology is critically important for reaching the climate goals of the cement industry. The ELECTRA project focuses on the electrification of cement and quicklime manufacturing. This pioneering initiative allows KHD to take part in the development of low CO 2 production processes and to continue to expand our expertise in the area of electrical heating in the pyro process. Three investment projects in the KHD Technology Center in Cologne, which were already reported on at the 2025 Annual General Meeting, represent significant milestones in our research and development activities: Clay calcinator on a pilot scale; New cycle grinding plant (GrindX); Disc mill. The calcination of clay is a central building block in the "green transition" of the cement industry. With the clay calcinator in the technical center, KHD can test the suitability of raw material for clay calcination. The new cycle grinding plant (GrindX) is a modular grinding system that achieves greater reliability in grindability tests. With the disc mill, KHD is developing and building the prototype for an innovative solution for the (fine) grinding of cement The investment projects are scheduled to conclude in the 2026 financial year, although extensive preparatory work was already completed in the 2024 and 2025 financial years. Other main areas of our development activities include: Oxyfuel plants, Increased use of alternative fuels, Recarbonization of used concrete and other mineral substances, CCUS (carbon capture, utilization, and storage of CO 2 ). In the area of digital solutions and applications, we are focusing on the Real-Time-Optimizer ("RTO") with the integration of artificial intelligence technologies for improving the operating performance of cement plants, IIOT/Cloud solutions for data utilization and the digitization of engineering lifecycle management. With KHD PROMAX ® , KHD can provide customers with a digital twin suite with extensive functions for optimizing production as well as maintenance of the entire cement manufacturing line as well as spare part management. Increasingly, our customers are requesting solutions that use alternative raw and residual materials to replace classic cement clinker, which is CO 2 intensive, to prevent the very high CO 2 emissions from limestone. The commissioning of the clay calcinator (Flash Calciner) in the technical center emphasizes the position of KHD in this pioneering area. Based on the advanced technologies of the flow calciners and rotary kilns which have existed for decades, the KHD Group provides two alternative solutions for the calcination of clinker substitutes. With the PYROROTOR ® burning chamber, KHD meets the requirements of the market with regard to an increased use of alternative fuels. The continuous advanced development of this technology, based on increasing knowledge, is among our development efforts along with the development of new sizes of the PYROROTOR ® . The Anhui Conch Cement Co., Hong Kong, Hong Kong Special Administrative Region of the People's Republic of China (Conch Group) is one of the five largest construction material enterprises in the world. Via AVIC Beijing, the Conch Group provides a strategic partnership for promoting technological innovations for decarbonizing cement production. This links the technological expertise of KHD with the experience of the Conch Group in cement production. Through joint research and development projects, solutions for the decarbonization of cement on an industrial scale are not only developed, but also applied in selected Conch production lines. The solutions include, among others, clay calcination, oxyfuel clinker lines, and electrocalcination. With numerous efficiency enhancing measures, modernization policies, and improvements as well as services for plants, the KHD Group continues to orient itself, based on customer requirements, toward environmentally conscious solutions that simultaneously reduce operating expenses for its customers. ECONOMIC REPORT Macroeconomic and Sector-related Conditions According to the outlook of the International Monetary Fund (IMF) in January 2026, growth in the global economy of 3.3% is expected for 2025. The IMF expects positive growth rates of 3.3% for 2026 and 3.2% for 2027. For Germany, the IMF forecast slightly positive economic growth of 0.2% for 2025 and an increase to 1.1% in 2026 and 1.5% in 2027. This stable development is a result of the balancing of divergent forces. The negative effects of the changing trade policies are compensated for by positive effects from increasing investments in the technology area, including artificial intelligence, which are more noticeable in North America and Asia than in other regions, along with fiscal and monetary support, financial conditions that have accommodated to the policies, and the adaptability of the private sector. Industry Environment According to CW Research ("Global Cement Volume Forecasts Report 2H2025 extended update", published in December 2025), another decrease of 2.2% in global cement demand and an expected volume of 3.7 billion tons are forecast for 2025. The KHD Group depends indirectly on the development of global cement production and cement consumption. The key markets of the KHD Group demonstrated the following tendencies in relation to cement consumption in the 2025 financial year: For western Europe, following a decrease in cement demand of 4.3% in 2024, CW Research is forecasting a decrease (-0.7%) for the 2025 reporting year as well. This is due to the economic downturn in some counties as a result of global tariff tensions. For Germany, following a reduction in cement demand of 6.6% in 2024, a decrease of 2.4% in cement demand is expected for 2025. The construction sector in Turkey remains promising in 2025. Accordingly, following an increase in cement demand of 5.5% in 2024, CW Research expects another increase of 6.1% for 2025. For the 2025 reporting year, CW Research expects cement demand in India to increase by 6.4% (previous year: 7.3%) to a total volume of 470.6 million tons. Consequently, the Indian construction sector remains an important pillar of growth in 2025. It is expected that in the years from 2025 - 2030 demand for cement will continue to undergo positive development, with an average annual growth rate of 7.2%. For the USA, cement demand is expected to decrease in the 2025 reporting year by 4.9% to 103.4 million tons. Nevertheless, in view of the efforts of the US government in the area of infrastructure investments, a growth in the construction sector is expected in the future. Forecasts regarding cement demand in the ASEAN countries in 2025 vary. While CW Research forecasts a reduction in cement demand of 0.1% in the Philippines and 16.5% in South Korea in 2025, an increase in cement demand of 3.0% is expected for Thailand. For China, a reduction in cement demand of 6.0% is expected for 2025, following a sharp decrease in 2024 (-11.9%). The Chinese government continues to strive toward the goal of CO 2 neutrality by 2060. The Chinese cement industry continues to be directly exposed to these political priorities. Moreover, the ongoing strain on the real estate sector limited construction activity and, therefore, cement demand. Financial Market Environment Because of KHD's global presence, its business performance is subject to currency effects, among others. Particularly relevant for the KHD Group is the development of the Indian rupee and the US dollar. Compared with the closing rate for the previous year, as of December 31, 2025, the Indian rupee decreased 19.11% with regard to the euro. At 98.88 rupees to the euro, the average rate was 9.36% below the previous year's level (90.42 rupees to the euro). The closing rate for the US dollar also decreased with respect to the euro (by 13.48%). At 1.13 US dollars to the euro, the average rate was 4.63% below the previous year's level (1.08 US dollars to the euro). The rate of the Chinese yuan against the euro as of December 31, 2025 was 8.69% lower than the figure at the end of the previous year, and the average rate was 4.52% below that of the previous year. Due to converting local financial statements into euros in the income statement, the exchange rate changes over the reporting year have had an overall negative impact on the KHD Group. Overall Assessment of the Results of Operations and Economic Position of the Group The 2025 financial year was once again negatively affected by geopolitical tensions, including the ongoing conflicts in Ukraine and the Middle East. US trade tariffs and protectionist policies aggravated insecurities in global trade. In most of the key markets for KHD, the reticence of customers to make investment decisions is still significantly noticeable. As measured by the performance indicator of revenue, business development of the Group in 2025 was unsatisfactory. But despite the considerable reduction in revenue, profitability significantly exceeded expectations. Adjusted EBIT decreased from € 10.4 million in 2024 to € 6.7 million in the reporting year. EBT of € 11.4 million in 2025 was also considerably below the previous year's figure (€ 15.9 million). Group net profit totaled € 6.9 million in the reporting year, following € 10.6 million in the 2024 financial year. The order intake volume of € 257.6 million in 2025 significantly exceeded expectations. Order intake was 47% greater in comparison with the 2024 financial year. The order backlog of € 210.4 million as of December 31, 2025 is, in line with our forecast, considerably above the level of the previous year (€ 176.4 million). However, due to exchange rate fluctuations (€ 34.6 million) and order cancellations (€ 11.0 million), the expectation of an increase in order backlog of more than 30% was not met. Revenue amounted to € 177.9 million in the 2025 financial year, following € 218.1 million in the previous year and was therefore 18% lower, while our forecast assumed a reduction of less than 10%. Overall, the Group achieved EBIT of € 4.7 million (previous year: € 10.4 million) and an adjusted EBIT of € 6.7 million (previous year: € 10.4 million). The EBIT margin was 2.6% (previous year: 4.8%) and the adjusted EBIT margin was 3.8% (previous year: 4.8%). This means that both EBIT and the EBIT margin as well as the adjusted EBIT and the adjusted EBIT margin considerably exceeded the forecast we submitted, which was based on rather conservative planning. A significant driver for achieving EBIT significantly higher than that was planned was the gross profit margin in both segments, which exceeded expectations. At € 16.7 million, cash flow from operating activities was greater than the previous year's figure (€ 13.2 million). Because net working capital was significantly better than planned, operating cash flow was considerably higher than the forecast, in which we assumed a negative cash flow from operating activities in the single-digit millions range. As planned, the financial and net assets position of the KHD Group remains stable, and therefore fully satisfactory due to continuing adequate liquidity and a high equity ratio. In the Capex segment, order intake totaled € 210.9 million, following a figure of € 125.6 million in 2024 and therefore even exceeded our forecast (more than 40% above the level of the previous year). Revenue for the 2025 financial year in the amount of € 134.2 million was about 20% below the level the previous year (€ 168.6 million). Therefore, our expectations for revenue at about the same level of the 2024 financial year were not met. As expected, EBIT in the amount of € -3.2 million (EBIT margin of -2.1%) was negative and decreased in comparison with the previous year's figure of € -0.7 million (EBIT margin of -0.4%). As a result, despite lower revenue, the Capex segment achieved and even slightly exceeded the EBIT figure we forecast (negative, a few percentage points worse than in the 2024 financial year). Due to good project execution, KHD achieved a gross profit margin that was considerably higher than the planned figure. For several projects, significant reductions in the estimated overall costs were realized after successful performance testing or even during execution. In addition, some of the provisions for warranties at the end of the warranty phase were reversed. Encouragingly and in contrast to our forecast, order intake in the Plant Services business unit of € 46.7 million was only about 6% below the level of the previous year (€ 49.8 million). KHD had expected a reduction in order intake of about 10-20%. At € 43.7 million, the segment's revenue was, as expected, more than 10% less than the volume of the corresponding period in the previous year (€ 49.5 million). The margins in the Plant Services segment developed within the context of our expectations in that adjusted EBIT of € 7.9 million decreased, following € 11.1 million in the previous year. Business and Earnings Position Order Intake and Order Backlog KHD achieved order intake of € 257.6 million in the 2025 financial year, which was considerably higher (47%) than the volume of the previous year (€ 175.4 million). Although the order backlog of € 210.4 million as of December 31, 2025 was considerably above the previous year's figure of € 176.4 million, special effects resulted in a strongly negative impact. Adjustments due to the reduction of order values or cancellation of orders, which are reported as an adjustment to order backlog, totaled € 11.0 million (previous year: € 5.9 million). Exchange rate fluctuations impacted order backlog in the amount of € -34.6 million (previous year: € 5.5 million). In the Capex segment, the Group achieved order intake of € 210.9 million (previous year: € 125.6 million). The markets of HW India (in particular India) again made a significant contribution to order intake in amounts that were considerably above the planned figures. In contrast, the other regions lagged behind expectations. Order intake in the spare parts and service business (Plant Services) of € 46.7 million was below the figure of the previous year (€ 49.8 million). The Plant Services segment was responsible for 18.1% of the total order intake (previous year: 28.4%) in the 2025 financial year. Group Revenue In the 2025 financial year, the Group achieved revenue in the amount of € 177.9 million, following € 218.1 million in the corresponding period in the previous year. Projects in India were the biggest contributors to revenue. Group Earnings Position The costs of sales totaled € 136.4 million in the 2025 financial year (previous year: € 174.1 million). The gross profit from sales of € 41.5 million was below that of the previous year (€ 44.0 million). Due to the unsatisfactory order volume at some of the Group companies, idle capacity costs for under-utilized capacities in the amount of € 2.0 million were reported (previous year: € 0.0 million). For tax purposes, these idle capacity costs were adjusted when determining the gross profit from sales and EBIT. The other operating income of € 2.1 million was lower than the previous year's figure (€ 2.6 million). As in the previous year as well, it also includes income from exchange rate fluctuations in the amount of € 1.0 million (previous year: € 1.6 million). Sales expenses amounting to € 14.1 million were above the level of the previous year (€ 12.1 million), which was particularly due to the intensification of sales activities. The general and administrative expenses of € 15.7 million were below the level of the previous year (€ 15.8 million). General and administrative costs include, in particular, legal and consulting costs, accounting costs, IT costs, Management Board remuneration, Supervisory Board remuneration, and costs related to the Group's stock exchange listing. Other expenses totaling € 9.0 million increased in comparison with the previous year's figure of € 8.2 million and include currency exchange rate fluctuations and changes in market value of exchange rate forward contracts for hedging exposure on foreign currency receivables of € 1.5 million (previous year: € 1.7 million) and, in particular, expenses for research and development in the amount of € 6.9 million (previous year: € 5.7 million). The significant increase reflects the greater intensity of research and development activities in the 2025 financial year, illustrating the efforts of KHD Group to continue to expand its technological expertise. In the 2025 financial year, the Group achieved considerably lower adjusted EBIT in comparison with the previous year in the amount of € 6.7 million (previous year: € 10.4 million). Adjusted EBIT decreased from 4.8% to 3.8%. Taking idle capacity costs into consideration, EBIT of € 4.7 million was € 5.7 below the figure of the previous year. The Group's net finance income improved from € 5.6 million in the previous year to € 6.7 million in the reporting year. In particular, it includes interest income of € 2.9 million (previous year: € 3.1 million) from the loans granted to AVIC Kairong. The loans granted to AVIC Kairong in the amount of € 60 million in total were renegotiated in the 2025 financial year. In the process, the two existing loans were consolidated into one loan, the term extended to December 31, 2028, and the interest rate was adjusted from 5.0% to 4.0% as of November 1, 2025. Interest income from bank deposits and cash equivalents increased from € 3.2 million to € 4.0 million. Securities held for trading yielded share price increases and dividend earnings totaling € 0.9 million (previous year: € 0.1 million). The largest items under finance expenses, which totaled € 1.2 million (previous year: € 0.8 million), are the interest related to provisions and pension benefit obligations (€ 0.9 million; previous year: € 0.5 million) and interest expenses related to lease liabilities (€ 0.2 million, previous year: € 0.2 million). The 2025 reporting year concludes with positive earnings before taxes (EBT) amounting to € 11.4 million (previous year: € 15.9 million). The Group incurred income tax expenses in the amount of € 4.4 million in the 2025 financial year (previous year: € 5.4 million. The income tax expense is due to the varying profitability of the KHD subsidiaries. Some subsidiaries achieved positive EBT that resulted in income tax expenses, whereas other subsidiaries sustained losses. KHD also capitalized deferred tax assets on temporary differences and tax loss carry-forwards only to a limited extent, so that only a low compensation effect on current income tax expenses could be recognized. The Group net profit for the year amounted to € 6.9 million (previous year: € 10.6 million). Diluted and basic earnings per share decreased to € 0.14 (previous year: € 0.21).

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