Gates Industrial Corp Ltd.

Unaudited Condensed Consolidated Statements of Operations

The accompanying notes form an integral part of these condensed consolidated financial statements.

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

The accompanying notes form an integral part of these condensed consolidated financial statements.

Unaudited Condensed Consolidated Balance Sheets

Unaudited Condensed Consolidated Statements of Cash Flows

Unaudited Condensed Consolidated Statements of Shareholders’ Equity

Notes to the Unaudited Condensed Consolidated Financial Statements

1. Introduction

A. Background

Gates Industrial Corporation plc was a public limited company that was registered in England and Wales on September 25, 2017.

On July 20, 2026, Gates Industrial Corporation plc completed a shareholder and court approved scheme of arrangement in the U.K., pursuant to which a new Bermudan holding company, Gates Industrial Corporation Ltd., a Bermuda exempted company limited by shares, became the sole shareholder of Gates Industrial Corporation plc and the parent company of the entire group of Gates Industrial Corporation companies (the “Redomiciliation”).

The Redomiciliation resulted in the Gates Industrial Corporation group parent company changing its jurisdiction of incorporation from England and Wales to Bermuda. As the parent company, Gates Industrial Corporation Ltd. does not conduct any operations other than with respect to its direct and indirect ownership of its subsidiaries.

In these condensed consolidated financial statements and related notes, all references to the “Company”, “Gates,” “we,” “us,” and “our” after the Redomiciliation refer, unless the context requires otherwise, to Gates Industrial Corporation Ltd. and its consolidated subsidiaries and, for periods prior to the Redomiciliation, refer to Gates Industrial Corporation plc and its consolidated subsidiaries.

B. Accounting periods

Our fiscal quarters end on the Saturday closest to the end of March, June and September for the first three fiscal quarters of each year, and on December 31 for our fourth fiscal quarter. Accordingly, the condensed consolidated balance sheets as of June 27, 2026 and December 31, 2025, and the related condensed consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented, where relevant, for the 179 day period from December 31, 2025 to June 27, 2026, with comparative information for the 183 day period from December 28, 2024 to June 28, 2025.

C. Basis of preparation

The condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars unless otherwise indicated. The condensed consolidated financial statements and related notes contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company’s financial position as of June 27, 2026 and the results of its operations and cash flows for the periods ended June 27, 2026 and June 28, 2025. Interim period results are not necessarily indicative of the results to be expected for the full fiscal year.

The preparation of consolidated financial statements under U.S. GAAP requires us to make assumptions and estimates concerning the future that affect the reported amounts of assets, liabilities, revenue and expenses. Estimates and assumptions are particularly important in accounting for items such as revenue, rebates, impairment of long-lived assets, intangible assets and goodwill, inventory valuation, financial instruments, expected credit losses, product warranties, income taxes and post-retirement benefits. Estimates and assumptions used are based on factors such as historical experience, observance of trends in the industries in which we operate and information available from our customers and other outside sources.

These condensed consolidated financial statements are unaudited and have been prepared on substantially the same basis as Gates’ audited annual consolidated financial statements and related notes for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K and should be read in conjunction therewith. The condensed consolidated balance sheet as of December 31, 2025 has been derived from those audited financial statements.

During 2021, the Company implemented a program with an unrelated third party under which we may periodically sell trade accounts receivable from one of our aftermarket customers with whom we have extended payment terms as part of a commercial agreement. The purpose of using this program is to generally offset the working capital impact resulting from this terms extension. All eligible accounts receivable from this customer are covered by the program, and any factoring is solely at our option. Following the factoring of a qualifying receivable, because we maintain no continuing involvement in the underlying receivable, and collectability risk is fully transferred to the unrelated third party, we account for these transactions as a sale of a financial asset and derecognize the asset. Cash received under the program is classified as operating cash inflows in the consolidated statement of cash flows. As of June 27, 2026, the collection of $79.1 million of our trade accounts receivable had been accelerated under this program, compared to the accelerated collection of $165.9 million as of December 31, 2025. During the three and six months ended June 27, 2026, we incurred costs in respect of this program of $1.6 million and $3.8 million, respectively. During the three and six months ended June 28, 2025, we incurred costs in respect of this program of $2.5 million and $4.4 million, respectively.

The accounting policies used in preparing these condensed consolidated financial statements are the same as those applied in the prior year. We have reclassified amounts relating to prior period results to conform to current period presentation. The results of these reclassifications did not impact net income and are not considered material.

2. Recent accounting pronouncements not yet adopted

The following accounting pronouncements are relevant to Gates’ operations but have not yet been adopted.

•Accounting Standards Update (“ASU”) 2026-02 “Environmental Credits and Environmental Credit Obligations (Topic 818)”

In May 2026, the Financial Accounting Standards Board (“FASB”) issued an ASU to improve the financial accounting for and disclosure of environmental credits and environmental credit obligations. This update impacts recognition, measurement, presentation, and disclosure requirements for all entities that generate, purchase, or receive environmental credits, or have a regulatory compliance obligation that may be settled with environmental credits. The updated standard is effective for our annual periods beginning in fiscal year 2028 and interim periods beginning in the first quarter of fiscal year 2029, with early adoption permitted. We are currently evaluating the impact the updated standard will have on our consolidated financial statements and disclosures and do not expect the application of this standard to have a material impact.

•ASU 2025-6“Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40)”

In September 2025, the FASB issued an ASU to modernize the accounting for software costs. The amendment removes all references to prescriptive and sequential software development stages (referred to as “project stages”) for capitalization throughout Subtopic 350-40 and introduces a principles-based capitalization model. Under the new guidance, an entity is required to start capitalizing software costs when both of the following occur: (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The amendment also introduces the concept of significant development uncertainty, which precludes capitalization until such uncertainty is resolved. The updated standard is effective for our annual periods beginning in fiscal year 2028 and interim periods beginning in the first quarter of fiscal year 2028, with early adoption permitted. We are currently evaluating the impact the updated standard will have on our consolidated financial statements and disclosures.

•ASU 2024-03“Income Statement - Reporting Comprehensive Income: Expense Disaggregation Disclosures”

In November 2024, the FASB issued an ASU to require disclosure of specified information about certain expense amounts comprising of Cost of sales, and Selling, general and administrative expenses, as well as qualitative description of the remaining expense amounts. The amendments in this update are intended to provide investors with additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods. The updated standard is effective for our annual periods beginning in fiscal year 2027 and interim periods beginning in the first quarter of fiscal year 2028, with early adoption permitted. We are currently evaluating the impact the updated standard will have on our consolidated financial statements and disclosures.

•ASU 2023-06 “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative”

In October 2023, the FASB issued an ASU to amend certain disclosure and presentation requirements for a variety of topics within the Accounting Standards Codification (“ASC”). These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K as promulgated by the Securities and Exchange Commission (“SEC”). The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. We do not expect the application of this standard to have a material impact on our consolidated financial statements and disclosures.

3. Segment information

A. Background

The segment information provided in these condensed consolidated financial statements reflects the information that is used by the chief operating decision maker for the purposes of making decisions about allocating resources and in assessing the performance of each segment. The chief executive officer (“CEO”) of Gates serves as the chief operating decision maker. These decisions are based principally on net sales and Adjusted EBITDA (defined below).

B. Operating segments and segment assets

Gates manufactures a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and original equipment manufacturer (“OEM”) channels, throughout the world.

Our reportable segments are identified on the basis of our primary product lines, as this is the basis on which information is provided to the CEO for the purposes of allocating resources and assessing the performance of Gates’ businesses. Our operating and reporting segments are therefore Power Transmission and Fluid Power.

Segment asset information is not provided to the chief operating decision maker and therefore segment asset information has not been presented. Due to the nature of Gates’ operations, cash generation and profitability are viewed as the key measures rather than an asset-based measure.

C. Segment net sales and disaggregated net sales

Sales between reportable segments and the impact of such sales on Adjusted EBITDA for each segment are not included in internal reports presented to the CEO and have therefore not been included below.

Our commercial function is organized by region and therefore, in addition to reviewing net sales by our reporting segments, the CEO also reviews net sales information disaggregated by region, including between emerging and developed markets.

The following table summarizes our net sales by key geographic region of origin:

(1) Europe, Middle East and Africa (“EMEA”).

(2) Asia-Pacific (“APAC”).

The following tables summarize our segment net sales into OEM and Aftermarket channels:

D. Measure of segment profit or loss

The CEO uses Adjusted EBITDA, as defined below, to measure the profitability of each segment. Adjusted EBITDA is, therefore, the measure of segment profit or loss presented in Gates’ segment disclosures.

“EBITDA” represents net income from continuing operations for the period before net interest and other expense, income taxes, depreciation and amortization.

“Adjusted EBITDA” represents EBITDA before certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. During the periods presented, the items excluded from EBITDA in computing Adjusted EBITDA primarily included:

•transaction-related expenses incurred in relation to major corporate transactions, including the acquisition of businesses and related integration activities, and equity and debt transactions;

•non-cash charges in relation to share-based compensation;

•inventory adjustments related to certain inventories accounted for on a LIFO basis;

•asset impairments;

•restructuring expenses, including severance and restructuring-related expenses; and

•other expenses (income), excluding foreign currency transaction gain or loss and insurance recoveries.

Adjusted EBITDA by segment was as follows:

The table below represents the segment profit or loss provided to the CEO on a quarterly basis:

(1) Adjusted cost of sales excluded inventory impairments and adjustments primarily related to the reversal of the adjustment to remeasure certain inventories on a LIFO basis, and restructuring related expenses (included in cost of sales).

(2) Adjusted selling, general and administrative expenses excluded acquired intangible assets amortization, share-based compensation expense, and restructuring related expenses (included in SG&A).

(3) Other adjustments primarily relates to net foreign currency transaction (loss) gain and insurance (losses) recoveries.

Reconciliation of income from continuing operations before taxes to Adjusted EBITDA:

(1) Transaction-related expenses relate primarily to advisory fees and other costs recognized in respect of major corporate transactions, including the acquisition of businesses, and equity and debt transactions.

(2) Inventory adjustments includes the reversal of the adjustment to remeasure certain inventories on a LIFO basis.

(3) Other(income) expenses excludes foreign currency transaction losses of $1.5 million and $4.3 million and insurance losses of $1.8 million and $2.5 million during the three and six months ended June 27, 2026, respectively, and foreign currency transaction losses of $1.0 million and $2.1 million during the three and six months ended June 28, 2025, respectively.

4. Restructuring, asset impairments, and restructuring related expenses

Gates continues to undertake various restructuring and restructuring related initiatives to drive increased productivity in all aspects of our operations. These actions include efforts to consolidate our manufacturing and distribution footprint, scale operations to current demand levels, streamline our SG&A back-office functions and relocate certain operations to lower cost locations.

Restructuring expenses by expense type and asset impairments are included in the table below:

Restructuring expenses during the three and six months ended June 27, 2026 included $0.7 million and $1.4 million, respectively, of costs related to a global cost reduction effort and reorganization of our operations in Mexico.

Restructuring expenses during both the three and six months ended June 28, 2025 primarily included $12.6 million of severance and other labor and benefits expense related to a global cost reduction effort.

Restructuring expenses and asset impairments by segment were as follows:

The following summarizes the reserve for restructuring expenses for the six months ended June 27, 2026 and June 28, 2025, respectively:

Restructuring reserves are included in the condensed consolidated balance sheet within the accrued expenses and other current liabilities line.

Certain expenses related to strategic initiatives, not qualified as restructuring under U.S. GAAP, have been provided in the table below:

Restructuring related expenses during the three and six months ended June 27, 2026 included $3.9 million and $6.3 million, respectively, of costs related to the relocation of certain production activities and reorganization of our operations in Mexico and $5.4 million and $6.8 million, respectively, of costs related to professional service fees and general severance.

Restructuring related expenses during the three and six months ended June 28, 2025 included $1.3 million and $2.3 million, respectively, of costs related to the relocation of certain production activities and reorganization of our operations in Mexico and $3.0 million and $4.7 million, respectively, of costs related to professional service fees and general severance.

5. Income taxes

We compute the year-to-date income tax provision by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjust for discrete tax items in the period in which they occur.

For the three months ended June 27, 2026, we had an income tax benefit of $78.0 million on pre-tax income of $100.2 million, which resulted in an effective tax rate of (77.8)%, compared to an income tax expense of $16.8 million on pre-tax income of $80.2 million, which resulted in an effective tax rate of 20.9%, for the three months ended June 28, 2025.

For the three months ended June 27, 2026, the effective tax rate was driven primarily by net discrete tax benefits of $100.7 million, comprised of discrete tax benefits related to $97.1 million of changes in realizability of certain deferred tax assets primarily in Luxembourg, $8.3 million related to unrecognized tax benefits, and $3.5 million related to other net discrete tax benefits, offset by $8.2 million of discrete expense related to an audit settlement in China. For the three months ended June 28, 2025, the effective tax rate was driven primarily by net discrete tax benefits of $7.2 million, of which $3.2 million related to prior year adjustments primarily from various foreign jurisdictions in which returns were filed, $2.6 million related to excess tax benefits on stock option exercises, and $2.0 million related to changes in the realizability of certain deferred tax assets; offset by $0.6 million of other net discrete tax expenses.

For the six months ended June 27, 2026, we had an income tax benefit of $66.5 million on pre-tax income of $178.1 million, which resulted in an effective tax rate of (37.3)%, compared to an income tax expense of $42.0 million on pre-tax income of $174.0 million, which resulted in an effective tax rate of 24.1%, for the six months ended June 28, 2025.

For the six months ended June 27, 2026, the effective tax rate was driven primarily by net discrete tax benefits of $107.1 million, comprised of a discrete tax benefit of $99.0 million related to the changes in realizability of certain deferred tax assets primarily in Luxembourg, $9.1 million related to unrecognized tax benefits, $4.2 million related to the expected refund of research and development credits from prior years, and $3.0 million related to other net discrete tax benefits; offset by $8.2 million related to an audit settlement in China. For the six months ended June 28, 2025, the effective tax rate was driven primarily by net discrete tax benefits of $7.1 million, of which $8.6 million related to excess tax benefits on stock option exercises, $3.2 million related to prior year adjustments primarily from various foreign jurisdictions in which returns were filed and $0.6 million other discrete tax benefits, offset by $3.2 million related to changes in the realizability of certain deferred tax assets and $2.1 million related to net unrecognized tax benefits

Deferred Tax Assets and Liabilities

We recognize deferred tax assets and liabilities for future tax consequences arising from differences between the carrying amounts of existing assets and liabilities under U.S. GAAP and their respective tax bases, and for net operating loss carryforwards and tax credit carryforwards. We evaluate the recoverability of our deferred tax assets, weighing all positive and negative evidence, and are required to establish or maintain a valuation allowance for these assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized.

As of each reporting date, we consider new evidence, both positive and negative, that could impact our view with regard to the future realization of deferred tax assets. We will maintain our positions with regard to future realization of deferred tax assets, including those with respect to which we continue maintaining valuation allowances, until there is sufficient new evidence to support a change in expectations. Such a change in expectations could arise due to many factors, including those impacting our forecasts of future earnings, as well as changes in the international tax laws under which we operate and tax planning. It is not reasonably possible to forecast any such changes at the present time, but it is possible that, should they arise, our view of their effect on the future realization of deferred tax assets may materially impact our financial statements.

After weighing all of the evidence, giving more weight to the evidence that was objectively verifiable, we determined that, as of June 27, 2026, it is more likely than not that deferred tax assets in Luxembourg totaling $108.6 million are realizable as a result of facilitating the Redomiciliation which increased Luxembourg’s projected earnings. Accordingly, we recognized $96.6 million of our deferred tax assets as a discrete event in the quarter, while the remaining $12.0 million will be recognized during the year through the effective tax rate. As a result of changes in future taxable profits against which net operating losses and interest carryforward can be utilized, our position and judgment regarding the realizability of these deferred tax assets changed.

6. Earnings per share

Basic earnings per share represents net income attributable to shareholders divided by the weighted average number of shares outstanding during the period. Diluted earnings per share considers the dilutive effect of potential shares, unless the inclusion of the potential shares would have an anti-dilutive effect. The treasury stock method is used to determine the potential dilutive shares resulting from assumed exercises of equity-related instruments.

The computation of earnings per share is presented below:

7. Inventories

8. Goodwill

9. Intangible assets

During the three months ended June 27, 2026, the amortization expense recognized in respect of intangible assets was $35.9 million, compared to $32.1 million for the three months ended June 28, 2025. In addition, movements in foreign currency exchange rates resulted in a decrease in the net carrying value of total intangible assets of $0.4 million for the three months ended June 27, 2026, compared to an increase of $22.6 million for the three months ended June 28, 2025.

During the six months ended June 27, 2026, the amortization expense recognized in respect of intangible assets was $70.5 million, compared to $63.5 million for the six months ended June 28, 2025. In addition, movements in foreign currency exchange rates resulted in a decrease in the net carrying value of total intangible assets of $4.2 million for the six months ended June 27, 2026, compared to an increase of $29.8 million for the six months ended June 28, 2025.

10. Derivative financial instruments

We are exposed to certain financial risks relating to our ongoing business operations. From time to time, we use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact.

We recognize derivative instruments as either assets or liabilities in the condensed consolidated balance sheets. We designate certain of our currency swaps as net investment hedges and designate our interest rate swaps as cash flow hedges. The gain or loss on the designated derivative instrument is recognized in other comprehensive income (“OCI”) and reclassified into net income in the same period or periods during which the hedged transaction affects earnings.

Derivative instruments that have not been designated in an effective hedging relationship are considered economic hedges, and their change in fair value is recognized in net income in each period.

The period end fair values of derivative financial instruments were as follows:

A. Instruments designated as net investment hedges

We hold cross currency swaps that have been designated as net investment hedges of certain of our foreign subsidiaries. During the second quarter of 2025, we expanded our net investment hedge activity by entering into cross currency swaps and foreign exchange forward contracts with a gross notional value at inception of $820.0 million and terms between three tofive years, designated in hedges of portions of our net investment in Canadian, Chinese, and Japanese subsidiaries.

The fair value gains (losses) before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments were as follows:

During the three and six months ended June 27, 2026, a net gain of $5.8 million and $11.2 million, respectively, was recognized in interest expense in relation to our cross currency swaps and foreign exchange forward contracts that have been designated as net investment hedges, compared to a net gain of $5.7 million and $10.5 million, respectively, during the three and six months ended June 28, 2025.

B. Instruments designated as cash flow hedges

We use interest rate swaps as part of our interest rate risk management strategy to add stability to interest expense and to manage our exposure to interest rate movements. These instruments are all designated as cash flow hedges. In April 2025, we entered into an agreement to execute two additional pay-fixed, receive floating interest rate swaps to hedge the cash flow risk on a portion of our floating-rate debt, effective starting June 30, 2025 upon expiration of the previous interest rate swaps. The notional amount of these interest rate swaps are $470.0 million and $230.0 million with five-year terms.

During the second quarter of 2025, we hedged portions of our forecasted sales and purchases which occur within the next twelve months that are denominated in non-functional currencies, with currency forward contracts designated as cash flow hedges. These currency forward contracts are primarily used in respect of hedging our operational currency exposures in Europe to exchange currencies, principally between Euro and U.S. Dollar, Pound Sterling, Polish Zloty, and Czech Koruna.

The movements before tax recognized in OCI in relation to our cash flow hedges were as follows:

C. Derivative instruments not designated as hedging instruments

Prior to second quarter of 2025, we did not designate our currency forward contracts that are primarily used in respect of hedging our operational currency exposures in Europe as discussed above. As of June 27, 2026, the notional amount of outstanding currency forward contracts that are not designated as hedging instruments was$0.1 million related to other foreign currencies, compared to $0.1 million as of December 31, 2025. The fair value gains recognized in net income in relation to derivative instruments that have not been designated as hedging instruments were as follows:

11. Fair value measurement

A. Fair value hierarchy

We account for certain assets and liabilities at fair value. Topic 820 “Fair Value Measurements and Disclosures” establishes the following hierarchy for the inputs that are used in fair value measurement:

•“Level 1” inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

•“Level 2” inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

•“Level 3” inputs are not based on observable market data (unobservable inputs).

Assets and liabilities that are measured at fair value are categorized in one of the three levels on the basis of the lowest-level input that is significant to its valuation.

B. Financial instruments not held at fair value

Certain financial assets and liabilities are not measured at fair value; however, items such as cash and cash equivalents, restricted cash, drawings under revolving credit facilities and bank overdrafts generally attract interest at floating rates and accordingly their carrying amounts are considered to approximate fair value. Due to their short maturities, the carrying amounts of accounts receivable and accounts payable are also considered to approximate their fair values.

The carrying amount and fair value of our debt are set out below:

Debt is comprised principally of borrowings under the secured credit facility and the unsecured senior notes. The dollar term loans under the secured credit facilities pay interest at floating rates, subject to a 0.50% Term SOFR floor as further described in Note 12. The fair values of the term loans are derived from a market price, discounted for illiquidity. The unsecured senior notes have fixed interest rates, are traded by “Qualified Institutional Buyers” and certain other eligible investors, and their fair value is derived from their quoted market price.

C. Assets and liabilities measured at fair value on a recurring basis

The following table categorizes the assets and liabilities that are measured at fair value on a recurring basis:

Derivative assets and liabilities included in Level 2 represent foreign currency exchange forward and swap contracts, and interest rate derivative contracts. Cash equivalents included in Level 2 represent certificates of deposit and commercial paper.

We value our foreign currency exchange derivatives using models consistent with those used by a market participant that maximize the use of market observable inputs including forward prices for currencies.

We value our interest rate derivative contracts using a widely accepted discounted cash flow valuation methodology that reflects the contractual terms of each derivative, including the period to maturity. The methodology derives the fair values of the derivatives using the market standard methodology of netting the discounted future cash payments and the discounted expected receipts. The inputs used in the calculation are based on observable market-based inputs, including interest rate curves, implied volatilities and credit spreads.

We incorporate credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.

Transfers between levels of the fair value hierarchy

During the periods presented, there were no transfers between Levels 1 and 2, and Gates had no assets or liabilities measured at fair value on a recurring basis using Level 1 or Level 3 inputs.

D. Assets measured at fair value on a non-recurring basis

Gates has non-recurring fair value measurements related to certain assets, including goodwill, intangible assets, and property, plant, and equipment. During April 2024, Gates made a $5.0 million equity investment in a privately held company. Gates does not have the ability to exercise significant influence over the investee and the investment does not have a readily determinable fair value. We elected to recognize the investment at its cost in accordance with ASC 321 “Investments – Equity Securities” and will adjust the fair value of the investment if we identify any observable price changes in orderly transactions.

12. Debt

Gates’ secured debt is jointly and severally, irrevocably and fully and unconditionally guaranteed by certain of its subsidiaries and is secured by liens on substantially all of their assets.

Gates is subject to covenants, representations and warranties under certain of its debt facilities. During the periods covered by these condensed consolidated financial statements, we were in compliance with the applicable financial covenants. Also under the agreements governing our debt facilities, our ability to engage in activities such as incurring certain additional indebtedness, making certain investments and paying certain dividends is dependent, in part, on our ability to satisfy tests based on measures determined under those agreements.

Dollar Term Loans

Our outstanding secured credit facilities consist oftwo loans, which include a tranche of $1,300.0 million dollar-denominated term loans issued on June 4, 2024 (the “2024 Dollar Term Loans”) and a tranche of $575.0 million of dollar-denominated term loans issued on November 16, 2022 (the “2022 Dollar Term Loans”). These term loan facilities bear interest at a floating rate, at our option, at either a base rate as defined in the credit agreement plus an applicable margin, or Term SOFR plus an applicable margin.

As of June 27, 2026, the 2024 Dollar Term Loans’ interest rate was Term SOFR, subject to a floor of 0.50%, plus a margin of 1.75%, and borrowings under this facility bore interest at a rate of 5.37% per annum. The interest rate is currently re-set on the last business day of each month based on the election of one month interest periods. The 2024 Dollar Term Loans mature on June 4, 2031.

As of June 27, 2026, the 2022 Dollar Term Loans’ interest rate was Term SOFR, subject to a floor of 0.50%, plus a margin of 1.75%, and borrowings under this facility bore interest at a rate of 5.37% per annum. The interest rate is currently re-set on the last business day of each month based on the election of one month interest periods. The 2022 Dollar Term Loans mature on November 16, 2029.

The 2024 Dollar Term Loans and 2022 Dollar Term Loans are subject to quarterly amortization payments of 0.25%, based on the original principal amount less certain repayments with the balance payable on maturity. During the six months ended June 27, 2026, we made amortization payments against the 2024 Dollar Term Loans and the 2022 Dollar Term Loans of $3.3 million and $1.4 million, respectively.

Under the terms of the credit agreement, we are obliged to offer annually to the term loan lenders an “excess cash flow” amount as defined under the agreement, based on the preceding year’s final results. Based on our 2025 results, the leverage ratio as defined under the credit agreement was below the threshold above which payments are required, and therefore no excess cash flow payment is required to be made in 2026.

Gates Corporation, a wholly-owned U.S. subsidiary of Gates Industrial Holdco Limited (the parent guarantor and direct subsidiary of Gates Industrial Corporation Ltd.), is the principal obligor under the term loans for U.S. federal income tax purposes and makes the payments due on the term loans. As a result, interest received by lenders of this tranche of debt is U.S. source income.

Unsecured Senior Notes

As of June 27, 2026, we had $500.0 million of Dollar Senior Notes due 2029 outstanding that were issued on June 4, 2024. The Dollar Senior Notes due 2029 are scheduled to mature on July 1, 2029 and bear interest at an annual fixed rate of 6.875% with semi-annual interest payments.

Prior to July 1, 2026, we may redeem the Dollar Senior Notes due 2029, at our option, in whole at any time or in part from time to time, at a “make-whole” redemption price. In addition, on or subsequent to July 1, 2026, we may redeem the Dollar Senior Notes due 2029, at our option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest to the redemption date:

Additionally, net cash proceeds from an equity offering can be utilized at any time prior to July 1, 2026, to redeem up to 40% of the Dollar Senior Notes due 2029 at a redemption price equal to 106.875% of the principal amount thereof, plus accrued and unpaid interest through to the redemption date.

Upon the occurrence of specified types of change of control or of certain qualifying asset sales, the holders of the Dollar Senior Notes due 2029 will have the right to require us to make an offer to repurchase each holder's notes at a price equal to 101% (in the case of a change of control offer) or 100% (in the case of an asset sale offer) of their principal amount, plus accrued and unpaid interest.

Revolving credit facility

We have a secured revolving credit facility that provides for multi-currency revolving loans. On June 4, 2024, we amended the credit agreement governing this facility to increase the size of the facility from $250.0 million to $500.0 million, and extended the maturity date from November 18, 2026 to the date that is the earliest of (x) June 4, 2029 and (y) April 1, 2029, if greater than $500.0 million in aggregate principal amount of the Dollar Senior Notes due 2029 are outstanding. This facility also includes a letter of credit sub-facility of $150.0 million. Debt under the revolving credit facility bears interest at a floating rate, at our option, at either a base rate as defined in the credit agreement plus an applicable margin or the reference rate plus an applicable margin.

On January 21, 2025, we amended our credit agreement to lower the margin with respect to the revolving loans by 50 basis points compared to the previous term. The revolving loans bear interest at our option either Term SOFR (subject to a floor of—%) plus a margin of 1.75% per annum or the base rate plus 0.75% per annum. The applicable margin for the revolving credit facility borrowings will be subject to one 25 basis point step down determined in accordance with Gates Industrial Holdco Limited achieving a certain consolidated first lien net leverage level.

As of both June 27, 2026 and December 31, 2025, there wereno drawings for cash under the revolving credit facility.

The letters of credit outstanding under this facility were $27.8 million and $29.0 million as of June 27, 2026 and December 31, 2025, respectively. In addition, Gates had other outstanding performance bonds, letters of credit and bank guarantees amounting to $11.8 million as of June 27, 2026, compared to $12.6 million as of December 31, 2025.

13. Post-retirement benefits

Gates provides defined benefit pension plans in certain of the countries in which it operates, in particular, in the U.S. and U.K. All of the defined benefit pension plans are closed to new entrants. In addition to the funded defined benefit pension plans, Gates has unfunded defined benefit obligations to certain current and former employees.

Gates also provides other post-retirement benefits, principally health and life insurance coverage, on an unfunded basis to certain of its employees in the U.S. and Canada.

Net periodic benefit cost (income)

The components of the net periodic benefit cost (income) for pensions and other post-retirement benefits were as follows:

The components of the above net periodic benefit cost (income) for pensions and other post-retirement benefits that are reported outside of operating income are all included in the other expense line in the condensed consolidated statement of operations.

In March 2026, we completed an annuity purchase for most of the retirees in the Canadian defined benefit pension plan. The $30.4 million purchase price, funded from plan assets, settled $30.4 million of the pension benefit obligation. We recognized a one-time, non-cash pension settlement loss of $5.2 million.

For 2026 as a whole, we expect to contribute approximately $12.6 million to our defined benefit pension plans and approximately $2.6 million to our other retirement plans.

14. Share-based compensation

The Company operates a share-based incentive plan over its shares to provide incentives to Gates’ senior executives and other eligible employees. During the three and six months ended June 27, 2026, we recognized a charge of $9.4 million and $15.7 million, respectively, compared to $9.6 million and $15.7 million during the three and six months ended June 28, 2025, respectively.

Awards issued under the 2014 Gates Industrial Corporation plc Stock Incentive Plan (the “2014 Plan”)

Gates has a number of share-based incentive awards issued under the 2014 Plan, which was assumed by Gates Industrial Corporation plc and renamed the Gates Industrial Corporation plc Stock Incentive Plan in connection with our initial public offering in January 2018 (our “IPO”) and subsequently assumed by Gates Industrial Corporation Ltd. in connection with our Redomiciliation in July 2026. No new awards have been granted under this plan since 2017. The options granted prior to our IPO were split equally into four tiers, each with specific vesting conditions. Tier I, Tier II and IV options all vested, while the performance conditions associated with Tier III were not achieved and therefore expired during 2022. All the options expireten years after the date of grant.

Due to Chinese regulatory restrictions on foreign stock ownership, awards granted under this plan to Chinese employees have been issued as stock appreciation rights (“SARs”). The terms of these SARs are identical to those of the options described above with the exception that no share is issued on exercise; instead, cash equivalent to the increase in the value of the shares from the date of grant to the date of exercise is paid to the employee. These awards are therefore treated as liability awards under Topic 718 “Compensation - Stock Compensation” and are revalued to their fair value at each period end. The SARs have the same vesting terms as the Tier II, III and IV option awards described above. All Tier III SARs expired during 2022 as the specific performance conditions were not achieved.

Changes in the awards granted under this plan are summarized in the tables below.

Awards issued under the Gates Industrial Corporation Ltd. Amended and Restated 2018 Omnibus Incentive Plan (the “2018 Plan”)

In conjunction with the initial public offering in January 2018, Gates Industrial Corporation plc adopted the 2018 Plan, which is a long-term incentive program that allows for the issue of a variety of equity-based and cash-based awards, including stock options, SARs and restricted stock units (“RSUs”). In July 2026, Gates Industrial Corporation Ltd. assumed and amended and restated the 2018 Plan and renamed it the Gates Industrial Corporation Ltd. Amended and Restated 2018 Omnibus Incentive Plan.

The SARs issued under this plan take the form of options, except that, generally, no share is issued on exercise; instead, cash equivalent to the increase in the value of the shares from the date of grant to the date of exercise is paid to the employee. These awards are therefore treated as liability awards under Topic 718 “Compensation - Stock Compensation” and are revalued to their fair value at each period end. The SARs and the majority of the share options issued under this plan vest evenly over either three years orfour years from the grant date. Certain premium-priced options vested evenly over athree-year period, startingtwo years from the grant date. All options vest subject to the participant’s continued employment by Gates on the vesting date and expireten years after the date of grant.

The RSUs issued under the plan consist of time-vesting RSUs and performance-based RSUs (“PRSUs”). The time-vesting RSUs vest evenly over eitherone orthree years from the date of grant, subject to the participant’s continued provision of service to Gates on the vesting date. The number of PRSUs earned will range from 0% to 200% of the total award amount and is dependent upon the extent the Company achieves certain performance metric targets measured over athree-year performance period subject to the participant’s continued employment through the end of the performance period. Performance metrics include return on investments and relative total shareholder return (“Relative TSR”) or adjusted gross profit margin and data center revenue, each, as defined in the applicable award agreements.

New awards and movements in existing awards granted under this plan are summarized in the tables below.

Summary of movements in options outstanding

As of June 27, 2026, the aggregate intrinsic value of options that were exercisable was $39.4 million, and these options had a weighted average remaining contractual term of 2.8 years. As of June 27, 2026, the aggregate intrinsic value of options that were vested or expected to vest was $39.9 million, and these options had a weighted average remaining contractual term of 3.0 years.

As of June 27, 2026, the unrecognized compensation charge relating to the nonvested options was $0.8 million, which is expected to be recognized over a weighted-average period of 2.2 years.

During the three and six months ended June 27, 2026, cash of $2.0 million and $2.5 million was received in relation to the exercise of vested options, respectively, compared to $2.9 million and $4.7 million during the three and six months ended June 28, 2025, respectively. The aggregate intrinsic value of options exercised during the three and six months ended June 27, 2026 was $1.3 million and $2.4 million, respectively, compared to $4.3 million and $18.2 million during the three and six months ended June 28, 2025, respectively.

Summary of movements in RSUs and PRSUs Nonvested

As of June 27, 2026, the unrecognized compensation charge relating to unvested RSUs and PRSUs was $60.9 million, which is expected to be recognized over a weighted average period of 2.0 years, subject, where relevant, to the achievement of the performance conditions described above. The total fair value of RSUs and PRSUs vested during the three and six months ended June 27, 2026 was $0.3 million and $22.0 million, respectively, compared to $0.2 million and $20.7 million during the three and six months ended June 28, 2025, respectively.

Valuation of awards granted during the period

The grant date fair value of the SARs are measured using a Black-Scholes valuation model. RSUs are valued at the share price on the date of grant. The Relative TSR component of the PRSUs were valued using Monte Carlo simulations. As Gates only has volatility data for its shares for the period since its IPO, this volatility has, where necessary, been weighted with the debt-levered volatility of a peer group of public companies in order to determine the expected volatility over the expected option life. The expected option life represents the period of time for which the options are expected to be outstanding and is based on consideration of the contractual life of the option, option vesting period, and historical exercise patterns. The weighted average fair values and relevant assumptions were as follows:

15. Equity

Movements in the Company’s number of shares in issue for the six months ended June 27, 2026 and June 28, 2025, respectively, were as follows:

In March 2026, the Company repurchased 710,058 shares under the existing share repurchase program in the open market at a total cost of approximately $16.5 million, plus costs paid directly related to the transaction of $0.1 million. All shares repurchased in March 2026 were cancelled.

In May 2026, the Company repurchased 922,947 shares under the existing share repurchase program in the open market at a total cost of approximately $22.0 million, plus costs paid directly related to the transaction of $0.1 million. All shares repurchased in May 2026 were cancelled. Approximately $155.8 million remained available under the share repurchase program as of June 27, 2026.

On July 22, 2026, the Board of Gates Industrial Corporation Ltd. approved the assumption of the remaining amounts available under the share repurchase program from Gates Industrial Corporation plc.

16. Analysis of accumulated other comprehensive (loss) income

Changes in accumulated other comprehensive (loss) income by component, net of tax, were as follows:

17. Related party transactions

A. Equity method investees

Purchases from equity method investees were as follows:

Amounts outstanding in respect of these transactions were payables of $0.2 million as of June 27, 2026, compared to $0.1 million as of December 31, 2025. No dividends were received from our equity method investees during the periods presented.

B. Non-Gates entities controlled by non-controlling shareholders

Sales to and purchases from non-Gates entities controlled by non-controlling shareholders were as follows:

Amounts outstanding in respect of these transactions were as follows:

18. Commitments and contingencies

A. Contingencies

Gates is, from time to time, party to general legal proceedings and claims, which arise in the ordinary course of business. Gates is also, from time to time, party to legal proceedings and claims in respect of environmental obligations, product liability, intellectual property, commercial and contractual disputes, employment matters and other matters which arise in the ordinary course of business and against which management believes Gates has meritorious defenses available. When appropriate, management consults with legal counsel and other appropriate experts to assess claims. If, in management’s opinion, we have incurred a probable loss as set forth by U.S. GAAP, an estimate is made of the loss and the appropriate accrual is reflected in our consolidated financial statements. Currently, there are no material amounts accrued.

While it is not possible to quantify the financial impact or predict the outcome of all pending claims and litigation, management does not anticipate that the outcome of any current proceedings or known claims, either individually or in aggregate, will materially affect Gates’ financial position, results of operations or cash flows.

B. Warranties

The following summarizes the movements in the warranty liability for the six months ended June 27, 2026 and June 28, 2025, respectively: