Annual Report 2025

INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) China Merchants China Direct Investments Limited Annual Report 2025 9 ACQUISITIONS AND EXITS OF INVESTMENTS (CONTINUED) In addition, the Fund completed a full exit from two listed investments, as well as from one unlisted investment, during the year. In February 2025, the Fund completed the sale of its entire holding of 4.81 million A shares of Oriental Pearl Media Co., Ltd. (“ Oriental Pearl ”) for net proceeds of RMB44.66 million (equivalent to US$6.69 million). The pre-tax internal rate of return to the Fund from Oriental Pearl was negative 14.33%. In February 2025, the Fund sold its entire holding of 2.12 million H shares of China International Capital Corporation Limited (“ CICC ”) for net proceeds of HK$33.98 million (equivalent to US$4.37 million). The pre-tax internal rate of return to the Fund from CICC was 101.69%. In May 2025, the Fund completed a transfer of its entire 20% equity interest in Yunnan Jinlanmei International Travel Investment Development Co., Ltd. (“ Jinlanmei Travel ”) to another shareholder of Jinlanmei Travel, and has received the consideration of RMB2.79 million (equivalent to US$0.39 million) in full. The pre-tax internal rate of return to the Fund from Jinlanmei Travel was negative 13.91%. LIQUIDITY, FINANCIAL RESOURCES, GEARING AND COMMITMENTS The Fund’s cash and cash equivalents decreased by 2.46%, from US$30.95 million at the end of last year to US$30.19 million (representing 2.89% of the Fund’s total assets) as of 31 December 2025, due mainly to the payments of investment amounts for the projects JBD and Neuracle Technology by the Fund during the year. As of 31 December 2025, the Fund had no outstanding bank loans (31 December 2024: Nil). As of 31 December 2025, the Fund had no commitments (31 December 2024: Nil). EXPOSURE TO FLUCTUATIONS IN EXCHANGE RATES AND RELATED HEDGES Most of the Fund’s investments are located in China where the official currency is the Renminbi (“ RMB ”). The conversion rate of RMB against the US dollar recorded an increase of 2.22% in 2025, which had a positive impact on the Fund since it holds a considerable amount of assets denominated in RMB. The Fund currently does not have a foreign currency hedging policy in place. Nevertheless, the Fund will continue to monitor foreign exchange risks and will consider hedging material foreign currency exposures when necessary. EMPLOYEES Other than a qualified accountant whose remuneration package is determined and borne by the Investment Manager, the Fund has no employees. The Investment Manager handles the portfolio and day-to-day administration of the Fund.