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Income tax expense | 12 Months Ended
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Dec. 31, 2024
Major components of tax expense (income) [abstract] |
Income tax expense | 8. Income tax expense The major components of income tax expense for the years ended December 31, 2022, 2023 and 2024 are as follows:
|  | 31.12.2022 |  |  | 31.12.2023 |  |  | 31.12.2024 |  |  | 31.12.2024 |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | US$’000 |
Current income tax |  |  |  |  |  |  |  |  |  |  |  |
- Current year |  |  | 61,374 |  |  |  | 66,493 |  |  |  | 77,923 |  |  |  | 10,862 |
- Under provision in respect of prior years |  |  | 27,406 |  |  |  | 27,837 |  |  |  | 151 |  |  |  | 21 |
Deferred tax |  |  |  |  |  |  |  |  |  |  |  |
- Movement in temporary differences |  |  | (41,147 | ) |  |  | (14,837 | ) |  |  | 17,384 |  |  |  | 2,423 |
- (Over)/under provision in respect of prior years |  |  | (103 | ) |  |  | 54,131 |  |  |  | 17,675 |  |  |  | 2,464 |
Withholding tax |  |  |  |  |  |  |  |  |  |  |  |
- Income tax expense recognized in profit or loss |  |  | 11,535 |  |  |  | 14,872 |  |  |  | 15,665 |  |  |  | 2,184 |
Consolidated income tax expense reported in the statement of profit or loss |  |  | 59,065 |  |  |  | 148,496 |  |  |  | 128,798 |  |  |  | 17,954 |
The reconciliation between tax expense and the product of accounting profit multiplied by the PRC income tax rate of 15% (being tax rate of Yuchai) for the years ended December 31, 2022, 2023 and 2024 for the following reasons:
|  | 31.12.2022 |  |  | 31.12.2023 |  |  | 31.12.2024 |  |  | 31.12.2024 |
|  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | US$’000 |
Profit before tax |  |  | 394,726 |  |  |  | 571,352 |  |  |  | 620,540 |  |  |  | 86,501 |
Income tax expense at 15% |  |  | 59,209 |  |  |  | 85,703 |  |  |  | 93,081 |  |  |  | 12,975 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |
Non-deductible expenses |  |  | 7,924 |  |  |  | 5,888 |  |  |  | 7,807 |  |  |  | 1,088 |
Tax-exempt income |  |  | (500 | ) |  |  | (11,993 | ) |  |  | (16,087 | ) |  |  | (2,242 | )
Utilization of deferred tax benefits previously not recognized |  |  | (3,093 | ) |  |  | (6,211 | ) |  |  | (8,077 | ) |  |  | (1,126 | )
Recognition of deferred tax benefits not previously recognized |  |  | — |  |  |  | — |  |  |  | (3,458 | ) |  |  | (482 | )
Write off deferred tax benefits previously recognized |  |  | — |  |  |  | — |  |  |  | 105,682 |  |  |  | 14,732 |
Deferred tax benefits not recognized |  |  | 22,606 |  |  |  | 42,830 |  |  |  | 72,680 |  |  |  | 10,131 |
Tax credits for research and development expense |  |  | (76,835 | ) |  |  | (85,372 | ) |  |  | (114,006 | ) |  |  | (15,892 | )
Tax rate differential |  |  | 10,901 |  |  |  | 21,542 |  |  |  | (42,633 | ) |  |  | (5,943 | )
Under provision in respect of previous years |  |  | 27,303 |  |  |  | 81,968 |  |  |  | 17,826 |  |  |  | 2,485 |
Withholding tax expense |  |  | 11,535 |  |  |  | 14,872 |  |  |  | 15,665 |  |  |  | 2,184 |
Others |  |  | 15 |  |  |  | (731 | ) |  |  | 318 |  |  |  | 44 |
Total |  |  | 59,065 |  |  |  | 148,496 |  |  |  | 128,798 |  |  |  | 17,954 |
8. Income tax expense (cont’d) Global minimum top-up tax The Group has applied a temporary mandatory relief from deferred tax accounting for the impact of the top-up tax and accounts for it as a current tax when it is incurred. Malaysia, Singapore, Thailand, Hong Kong and Germany had enacted new legislation to implement the global minimum top-up tax. The Group does not expect Pillar Two top up exposure arising from the operations in these countries for financial year 2024. Deferred tax Deferred tax relates to the following:
|  | Consolidated statement of financial position |  |  | Consolidated statement of profit or loss |
|  | 31.12.2023 |  |  | 31.12.2024 |  |  | 31.12.2024 |  |  | 31.12.2022 |  |  | 31.12.2023 |  |  | 31.12.2024 |  |  | 31.12.2024 |
|  | RMB’000 |  |  | RMB’000 |  |  | US$’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | RMB’000 |  |  | US$’000 |
Accelerated tax depreciation |  |  | (77,806 | ) |  |  | (34,108 | ) |  |  | (4,755 | ) |  |  | 16,472 |  |  |  | 44,492 |  |  |  | 43,698 |  |  |  | 6,091 |
Interest receivable |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 363 |  |  |  | 3,033 |  |  |  | — |  |  |  | — |
PRC withholding tax on dividend income (i) |  |  | (64,717 | ) |  |  | (64,717 | ) |  |  | (9,021 | ) |  |  | (11,458 | ) |  |  | (14,457 | ) |  |  | (15,541 | ) |  |  | (2,166 | )
Effect of change in residual value and impairment of property, plant and equipment |  |  | 2,866 |  |  |  | 724 |  |  |  | 101 |  |  |  | 4,273 |  |  |  | (66,774 | ) |  |  | (2,142 | ) |  |  | (299 | )
Write-down of inventories |  |  | 37,120 |  |  |  | 38,632 |  |  |  | 5,385 |  |  |  | 9,253 |  |  |  | 7,617 |  |  |  | 1,512 |  |  |  | 211 |
Impairment losses on trade receivables |  |  | 7,426 |  |  |  | 32,540 |  |  |  | 4,536 |  |  |  | 282 |  |  |  | 355 |  |  |  | 25,114 |  |  |  | 3,501 |
Accruals |  |  | 232,048 |  |  |  | 166,623 |  |  |  | 23,227 |  |  |  | (48,841 | ) |  |  | (2,505 | ) |  |  | (65,540 | ) |  |  | (9,120 | )
Deferred income |  |  | 79,896 |  |  |  | 126,107 |  |  |  | 17,579 |  |  |  | (41,348 | ) |  |  | 23,416 |  |  |  | 46,211 |  |  |  | 6,442 |
Losses available for offsetting against future taxable income |  |  | 112,601 |  |  |  | — |  |  |  | — |  |  |  | 116,675 |  |  |  | (27,146 | ) |  |  | (112,601 | ) |  |  | (15,696 | )
Others |  |  | 31,854 |  |  |  | 79,871 |  |  |  | 11,134 |  |  |  | (4,421 | ) |  |  | (7,325 | ) |  |  | 44,230 |  |  |  | 6,149 |
Deferred tax benefits/(expenses) |  |  |  |  |  |  |  |  |  |  |  | 41,250 |  |  |  | (39,294 | ) |  |  | (35,059 | ) |  |  | (4,887 | )
Net deferred tax assets |  |  | 361,288 |  |  |  | 345,672 |  |  |  | 48,186 |  |  |  |  |  |  |  |  |  |  |  |  |
Reflected in the consolidated statement of financial position as follows: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax assets |  |  | 426,377 |  |  |  | 410,728 |  |  |  | 57,254 |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax liabilities |  |  | (65,089 | ) |  |  | (65,056 | ) |  |  | (9,068 | ) |  |  |  |  |  |  |  |  |  |  |  |
|  |  | 361,288 |  |  |  | 345,672 |  |  |  | 48,186 |  |  |  |  |  |  |  |  |  |  |  |  |
Note: (i) The movement of PRC withholding tax on dividend income is as follows:
|  | 31.12.2023 |  |  | 31.12.2024 |  |  | 31.12.2024 |
|  | RMB’000 |  |  | RMB’000 |  |  | US$’000 |
At January 1 |  |  | (61,825 | ) |  |  | (64,717 | ) |  |  | (9,021 | )
Provision made to consolidated statement of profit or loss |  |  | (14,457 | ) |  |  | (15,541 | ) |  |  | (2,166 | )
Utilization |  |  | 11,565 |  |  |  | 15,541 |  |  |  | 2,166 |
December 31 |  |  | (64,717 | ) |  |  | (64,717 | ) |  |  | (9,021 | )
The Corporate Income Tax (“CIT”) law provides for a tax of 10% to be withheld from dividends paid to foreign investors of PRC enterprises. This withholding tax provision does not apply to dividends paid out of profit earned prior to January 1, 2008. Beginning on January 1, 2008, a 10% withholding tax is imposed on dividends paid to the Company, as a non-resident enterprise, unless an applicable tax treaty provides for a lower tax rate. The Company recognizes a deferred tax liability for withholding tax payable for profits accumulated after December 31, 2007 for the earnings that the Company does not plan to indefinitely reinvest in the PRC enterprises. As of December 31, 2024, the deferred tax liability for withholding tax payable was RMB 64.7 million (US$9.0 million) (2023: RMB 64.7 million). The amount of unrecognized deferred tax liability relating to undistributed earnings of the PRC enterprises is estimated to be RMB 227.2 million (US$31.7 million) (2023: RMB 204.7 million). 8. Income tax expense (cont’d) Deferred tax (cont’d) Deferred tax assets have not been recognized in respect of the following items:
|  | 31.12.2023 |  |  | 31.12.2024 |  |  | 31.12.2024 |
|  | RMB’000 |  |  | RMB’000 |  |  | US$’000 |
Unutilized tax losses |  |  | 628,534 |  |  |  | 1,681,991 |  |  |  | 234,463 |
Unutilized capital allowances and investment allowances |  |  | 94,447 |  |  |  | 95,697 |  |  |  | 13,340 |
Other unrecognized temporary differences relating to asset impairment and deferred grants |  |  | 156,226 |  |  |  | 166,552 |  |  |  | 23,217 |
|  |  | 879,207 |  |  |  | 1,944,240 |  |  |  | 271,020 |
Unrecognized tax losses for the Group are subject to agreement with the tax authorities and compliance with tax regulations in the respective countries in which the Group operates. The unutilized tax losses for PRC subsidiaries and Malaysia subsidiaries expire within the next 5 to 10 years and 10 years, respectively. These losses may not be used to offset taxable income elsewhere in the Group. Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profits will be available against which the Group can utilize the benefits.

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