REGISTERED NUMBER: 07295448 (England and Wales)

Strategic Report, Report of the Director and

Financial Statements for the Year Ended 31 December 2025

for

Changan UK R & D Centre Limited

Page

Company Information

1

Strategic Report

2

Report of the Director

4

Statement of Director's Responsibilities

5

Report of the Independent Auditors

6

Statement of Comprehensive Income

9

Statement of Financial Position

10

Statement of Changes in Equity

11

Notes to the Financial Statements

12

DIRECTOR:

W Deng

REGISTERED OFFICE:

Building 3500 Parkside

Birmingham Business Park

Birmingham

B37 7YG

REGISTERED NUMBER:

07295448 (England and Wales)

AUDITORS:

Shinewing Wilson Accountancy Limited

Chartered Certified Accountants

and Statutory Auditors

9 St Clare Street

London

EC3N 1LQ

The director presents his strategic report for the year ended 31 December 2025.

FAIR REVIEW OF THE BUSINESS

During the financial year under review, CAUK (the company) continued to be a trusted supplier of R&D services to its parent company. The development cycle has continued, with programmes carried over from previous years having successfully gone into further stages of development, moving along with the development cycle and becoming part of new production vehicles which are on the market and proving to be good sellers for HQ.

CAUK continues to deliver the next generation of powertrain products including high efficiency engine platforms, E-drive systems and platform software for e-machine control. Performance tests have shown that the engine family will be very competitive when launched. Work on the high efficiency engine variants will continue in order to prepare the technologies of the future engine family. CAUK also continues to provide troubleshooting support to HQ lead projects and strategic consultancy to power system related subjects or matters at its parent company.

In addition to powertrain projects, CAUK continued to expand its engineering service to its HQ for vehicle dynamics and insurance performance, with a primary focus on the products planned for the EU/UK markets. CAUK's role in those projects is to support localised validation and provide improvement suggestions from the European perspective. The directors hope this is the area that CAUK can continue to grow in the future.

During 2025 CAUK continued to meet its performance task set by its HQ by providing engineering outputs on time and on quality. By having own test facilities, we are able to carry out most powertrain and vehicle tests on site, which may have proven to be an issue if these had to be done externally.

The company continues to hold a small property portfolio, which provides a small but useful revenue stream and will continue to do so going forward. This business is efficiently managed in-house with the help of third parties where needed. All the rents due for 2025 have been collected as per the lease agreements.

The director believes that the company's strong engineering and support service enables the company's continued growth and enables it to continue to focus on developing high-quality automotive products and technologies to meet the needs of the parent company in the short, medium and long term.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

CAUK's activities expose it primarily to the financial risks of continuation of work contracts, and the associated funding, from the parent company. CAUK is not structured in a manner which would allow it to automatically sustain itself through third party business in the absence of the parent company's contracts.

Short-term liquidity risk is managed by close liaison with the parent company to ensure that cash settlement is carried out in a timely matter. CAUK's policy is to always run in credit and have no UK bank loans. Core business debtor management is limited by the fact that the only customer is our parent company.

GLOBAL INVESTMENTS

In order to support our HQ's global sales strategy, CAUK completed several key overseas investments:

In March 2024, CAUK, in partnership with United Prosperity Investment Co., Ltd, completed RMB 22.5 million investment to establish a joint venture - Changan Automobile Mexico Sales Company.

In July 2024, the board approved the investment of RMB 18 million to establish a wholly owned subsidiary, Changan Automobile Deutschland GmbH, which was also finalised within 2024.

Additionally, in July 2024, CAUK and United Prosperity Investment Co., Ltd agreed to establish a joint venture named Changan Netherlands Holding B.V., in which CAUK holds a 15% share equivalent to RMB 11 million. This investment has been finalised in March 2025.

During 2025, the historic investment made in 2024 continued to support the development of the Group's European operations. Public announcements made by the wider Changan group during the year indicate further progress in European market entry, localisation and organisational build-out, including continued focus on the UK as one of the key European markets.

From CAUK's perspective, these developments are consistent with the Group's ongoing commitment to the European market and support the strategic relevance of the UK operations within the wider European development plan.

Looking ahead to 2026 and beyond, CAUK expects the Group to continue investing in its European presence, with an ongoing focus on new energy vehicles, intelligent vehicle technologies and local market development. CAUK is expected to continue supporting this broader strategy through its role in the UK.

KEY FINANCIAL PERFORMANCE INDICATORS

The company has several key financial indicators used internally to monitor and challenge performance, The company performance in 2025 and comparative information for previous year is summarised below.

2025

2024

Movement

£

£

Gross assets

31,973,022

30,847,259

3.6%

Total equity

28,102,082

27,942,190

0.6%

Debt to equity ratio

13.77%

10.40%

32.4%

Total revenue

10,234,948

10,196,653

0.4%

Profit/(loss) before tax

447,331

1,691,844

-73.6%

The increase in gross assets is primarily attributable to higher cash at bank, mainly driven by repayments from HQ and receipts from HMRC. Profit before tax decreased compared with FY24, mainly due to higher administrative expenses, including costs incurred on behalf of CAEU entities. While other income increased as a result of related recharges, this was insufficient to offset the higher cost base. Excluding the impact of these recharges, other income decreased due to the cessation of Innovate UK grant income and a reduced RDEC credit.

ON BEHALF OF THE BOARD:

W Deng - Director

17 April 2026

The director presents his report with the financial statements of the company for the year ended 31 December 2025.

PRINCIPAL ACTIVITY

The principal activity of the company continued to be that of the design and development of automotive powertrain products for the parent company in China.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2025 (2024: Nil).

RESEARCH AND DEVELOPMENT

The company undertakes a continual programme of research and development in the area of automotive design.

DIRECTOR

W Deng held office during the whole of the period from 1 January 2025 to the date of this report.

DISCLOSURE IN THE STRATEGIC REPORT

The Company has chosen to disclose information regarding future development opportunities for the Company and financial instrument risk management policies in the strategic report rather than the director's report.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditor, Shinewing Wilson Accountancy Limited will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

W Deng - Director

17 April 2026

The director is responsible for preparing the Strategic Report, the Report of the Director and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Opinion

We have audited the financial statements of Changan UK R & D Centre Limited (the 'company') for the year ended 31 December 2025 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2025 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.

Other information

The director is responsible for the other information. The other information comprises the information in the Strategic Report, the Report of the Director and the Statement of Director's Responsibilities, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Director have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Director.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of director's remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of director

As explained more fully in the Statement of Director's Responsibilities set out on page five, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Discussions with and enquiries of management and those charged with governance were held with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.

The following laws and regulations were identified as being of significance to the entity:

- Those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, Company law, Tax legislation, Employment law and Distributable profits legislation.

- Those laws and regulations for which non-compliance may be fundamental to the operating aspects of the business and therefore may have a material effect on the financial statements include Landlord and Tenant Act 1954, Health and Safety legislation, off-payroll working rules (IR35) and General Data Protection Regulation (GDPR).

Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of entries in the nominal ledger, including journal entries; reviewing transactions around the end of the reporting period; and the performance of analytical procedures to identify unexpected movements in account balances which may be indicative of fraud.

No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity's controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Nijendra Dhungana FCCA (Senior Statutory Auditor)

for and on behalf of Shinewing Wilson Accountancy Limited

Chartered Certified Accountants

and Statutory Auditors

9 St Clare Street

London

EC3N 1LQ

17 April 2026

TURNOVER

4

10,234,948

10,196,653

Cost of sales

7,424,424

6,983,390

GROSS PROFIT

2,810,524

3,213,263

Administrative expenses

4,996,984

3,592,124

(2,186,460

)

(378,861

)

Other operating income

5

2,633,791

2,070,705

OPERATING PROFIT and

PROFIT BEFORE TAXATION

447,331

1,691,844

Tax on profit

8

287,439

755,554

PROFIT FOR THE FINANCIAL YEAR

159,892

936,290

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

159,892

936,290

FIXED ASSETS

Intangible assets

9

48,218

74,913

Tangible assets

10

13,642,787

14,644,056

Investments

11

5,715,316

4,506,613

Investment property

12

4,976,280

4,976,280

24,382,601

24,201,862

CURRENT ASSETS

Debtors

13

3,441,526

3,321,529

Cash at bank

4,148,894

3,323,868

7,590,420

6,645,397

CREDITORS

Amounts falling due within one year

14

3,347,642

2,364,158

NET CURRENT ASSETS

4,242,778

4,281,239

TOTAL ASSETS LESS CURRENT LIABILITIES

28,625,379

28,483,101

PROVISIONS FOR LIABILITIES

17

523,297

540,911

NET ASSETS

28,102,082

27,942,190

CAPITAL AND RESERVES

Called up share capital

18

26,393,935

26,393,935

Retained earnings

1,708,147

1,548,255

SHAREHOLDERS' FUNDS

28,102,082

27,942,190

The financial statements were approved by the director and authorised for issue on 17 April 2026 and were signed by:

W Deng - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2024

26,393,935

611,965

27,005,900

Changes in equity

Total comprehensive income

-

936,290

936,290

Balance at 31 December 2024

26,393,935

1,548,255

27,942,190

Changes in equity

Total comprehensive income

-

159,892

159,892

Balance at 31 December 2025

26,393,935

1,708,147

28,102,082

1.	STATUTORY INFORMATION

Changan UK R & D Centre Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain assets.

Going concern

At the time of approving the financial statements, the dìrector has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the dírector continues to adopt the going concern basis of accounting in preparing the financial statements.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 33.7.

The financial statements of the company are consolidated in the financial statements of Chongqing Changan Automobile Company Limited, https://www.changan.com.cn/cca/basicinfo?index=1

Preparation of financial statements as an individual company

The Company is a part of a larger group and included in the consolidated financial statements of a parent. The ultimate parent undertaking Chongqing Changan Automobile Co., Ltd., holds 100% of the share capital of the Company, is the smallest and largest group to consolidate these financial statements. The Company continues under section 401 of the Companies Act to take exemption in preparing consolidated accounts for the UK sub-group. These financial statements present information about the Company as an individual undertaking and not about its group. Ultimate parent company's accounts continue to be prepared under Chinese GAAP, and have been filed along with the Company's accounts at the Companies House in accordance with the Companies Act 2006. The consolidated financial statements are available at the ultimate parent's registered office, Building T2, No. 2, Financial City, No. 61 Dongshengmen Road, Jiangbei District, Chongqing.

Turnover

Turnover is measured at the fair value of the consideration received or receivable and represents amounts receivable for work provided in the normal course of business, net of discounts, VAT and other sales related taxes.

The company provides research and development services on a continuous basis to, and under the general direction of, its parent company, in accordance with the terms of a single agreement/contract. Accordingly, revenue receivable from the parent company is recognised on a straight-line basis over the specified period.

Other income

Other income is recognised when it is probable that the economic benefit will flow to the company, and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Computer software is being amortised evenly over its estimated useful life of three years.

Tangible fixed assets

Tangible fixed assets are measured at cost, net of depreciation and any impairment losses.

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Freehold buildings: 35 and 20 years straight line

Equipment: 5-12 years straight line

Fixture & fittings: 12 years straight line

Freehold land: not provided

Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the assets (or cash-generating unit) prior years. A reversal of impairment loss is recognised immediately in profit or loss.

Investment property

Investment property is carried at fair value and derived from the current market rents and investment property yields for comparable real estate, adjusted if necessary, for any difference in the nature, location or condition of the specific asset. No depreciation is provided.

Subsequent to initial recognition, investment property is stated at fair value. Gains or losses arising from changes in the fair values are included in the Income Statement in the year in which they arise.

Investment property is derecognised when it has been disposed of or permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses are recognised in the Income Statement.

Gains or losses on the disposal of investment property are determined as the difference between net disposal proceeds and the carrying value of the asset at the date of disposal.

Leasing arrangements

The investment properties are leased to tenants under operating leases with rentals payable quarterly. Rental income from operating leases where the company is a lessor is recognised in income on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis.

Financial instruments

The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' of FRS 102 to all of its financial instruments.

Financial instruments are recognised when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include trade and other debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the financial asset is measured at the present value of the future receipts discounted at a market rate of interest.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset's original elective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occuring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including trade and other creditors and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the company's contractual obligations are discharged, cancelled, or they expire.

Share capital

Financial instruments issued by the company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.

The company's ordinary shares are classified as equity instruments.

Taxation

Taxation for the year comprises current, over/under provision from previous period and deferred tax. Tax liability is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. R&D tax credit is recognised each year and included in the other operating income.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Research and development

Research expenditure is written off against profits in the year in which it is incurred.

The Company undertakes research and development activities as a supplier rather than for its own benefits, therefore, no development costs are capitalised.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating result.

Retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

The assets of the scheme are held separately from those of the company in an independently administered fund.

Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Investment in joint venture and subsidiary

Investments in joint ventures and subsidiaries are initially recognised at cost in the financial statements, representing the actual funds invested by the company, subsequently investments are carried at cost, less any accumulated impairment losses. Impairment is assessed at each reporting date, and any loss is recognised in profit or loss if the recoverable amount falls below the carrying value.

Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.

3.	CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements and Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows:

Valuation of investment property

The valuation is based on the fair value of the freehold interests of the individual properties subject to the various tenancies prevailing and subject to the assumptions that the property will meet the minimum requirements laid down by the legislation and that there will be no adverse impact on value and marketability.

Valuation of investment in JV and subsidiary

Investments in joint ventures and subsidiaries are initially recognised at cost, which complies with FRS 102. The company reviews the carrying amount of investments annually for any indications of impairment. Where an impairment is identified, the recoverable amount is reassessed, and any shortfall in carrying value is recognized immediately in profit or loss.

Research and Development Expenditure Credit

The company recognises an RDEC tax credit and the related debtor based on management's assessment of qualifying R&D activities and eligible expenditure in accordance with HMRC rules. The calculation involves judgement in determining whether costs meet the qualifying criteria, the appropriate categorisation of expenditure, and the basis of any allocations.

4.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

31.12.25

31.12.24

£

£

Service revenue

10,234,948

10,196,653

10,234,948

10,196,653

An analysis of turnover by geographical market is given below:

31.12.25

31.12.24

£

£

P.R. China

10,234,948

10,196,653

10,234,948

10,196,653

5.	OTHER OPERATING INCOME

31.12.25

31.12.24

£

£

Rents received

480,681

471,421

Sundry receipts

36,178

17,012

R&D tax reliefs

464,610

1,225,514

Insurance claim

1,967

-

Recharge income

1,520,691

-

Government grants and enhanced

credit scheme

129,664

356,758

2,633,791

2,070,705

6.	EMPLOYEES AND DIRECTORS

31.12.25

31.12.24

£

£

Wages and salaries

4,281,837

4,293,732

Social security costs

614,377

487,744

Other pension costs

950,842

817,064

5,847,056

5,598,540

The average number of employees during the year was as follows:

31.12.25

31.12.24

Development staff

59

56

Administrative staff

5

5

64

61

31.12.25

31.12.24

£

£

Director's remuneration

-

-

During the year, the director was not remunerated for services provided to the company as these costs were borne by other companies in the group.

7.	OPERATING PROFIT

The operating profit is stated after charging:

31.12.25

31.12.24

£

£

Depreciation - owned assets

1,111,238

1,142,873

Loss on disposal of fixed assets

1,207

14,778

Computer software amortisation

38,125

39,439

Auditors' remuneration

11,000

10,000

Other non- audit services

1,600

27,188

Foreign exchange differences

8,821

7,270

8.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

31.12.25

31.12.24

£

£

Current tax:

UK corporation tax

305,053

753,755

Deferred tax

(17,614

)

1,799

Tax on profit

287,439

755,554

UK corporation tax has been charged at 25% (2024 - 25%).

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

31.12.25

31.12.24

£

£

Profit before tax

447,331

1,691,844

Profit multiplied by the standard rate of corporation tax in the UK of 25% (2024 - 25%)

111,833

422,961

Effects of:

Depreciation in excess of capital allowances

193,220

190,121

Adjustments to tax charge in respect of previous periods

(17,614

)

142,472

to tax rate change

Total tax charge

287,439

755,554

For the financial year ended 31 December 2025, the current tax rate was 25%.

OECD Pillar Two model rules

Changan UK (CAUK) is within the scope of the OECD Pillar Two model rules, which establish a global minimum tax rate of 15%. Pillar Two legislation has been enacted in the UK and is effective from 2024. Under this legislation, CAUK may be liable for a top-up tax based on the difference between the GloBE effective tax rate in each jurisdiction and the 15% minimum rate, including any applicable domestic top-up taxes.

As CAUK's parent company is based in China, where Pillar Two has not been implemented, the company is assessing its exposure to the legislation and the potential impact on its financial position. Liabilities will be recognized when they become probable and measurable, in accordance with applicable accounting standards.

9.	INTANGIBLE FIXED ASSETS

Computer

software

£

COST

At 1 January 2025

1,395,060

Additions

11,431

Disposals

(97,544

)

At 31 December 2025

1,308,947

AMORTISATION

At 1 January 2025

1,320,148

Amortisation for year

38,125

Eliminated on disposal

(97,544

)

At 31 December 2025

1,260,729

NET BOOK VALUE

At 31 December 2025

48,218

At 31 December 2024

74,912