Dear Shareholders,

We are pleased to share that Zixin Group has successfully implemented the sweet potato circular economy industrial value chain in the financial year ended 31 March 2025 (“FY2025”), in conjunction with the supporting industries of smart warehousing and the fermentation of agricultural waste into feedstock.

Over the past decade, we have been developing and integrating our core business segments in depth and breadth across the sweet potato supply chain, with the primary focus of delivering a consistent quality supply of fresh sweet potatoes and expanding the range of processed products to consumers. We are determined to create a resilient and sustainable sweet potato industrial value chain that meets the evolving demands of the market, as well as balance risks associated with the agriculture sector. We are committed to remain at the forefront of the industry by adopting new agritech methods and advanced technologies through our long-term collaboration with research institutes. This commitment enables us to enhance efficiency and sustainability throughout our operations, ultimately driving value for our stakeholders.

While ongoing trade disputes, geopolitical uncertainties, and economic slowdowns cast doubts over the business environment, we are heartened that the prospects of the sweet potato agricultural sector are supported by the Chinese government’s national initiatives to enhance food security, modernising agriculture through advanced techniques and technologies, and promoting rural revitalisation by 2035¹.

It is gratifying to witness the results of our efforts as we have navigated numerous challenges to achieve our planned milestones. This journey has not only tested our resilience but has also nurtured innovation and collaboration within our team. As we progress, we remain committed to pushing boundaries and embracing the new opportunities that lie ahead.

We are heartened that the prospects of the sweet potato agricultural sector are underpinned by the Chinese government’s national initiatives.

Revenue Analysis By Reportable Segments And Products

FYE 31 March (RMB ’000)	1H FY2025	2H FY2025	VARIANCE	FY2025
Cultivation & Supply
Fresh sweet potatoes	48,645	51,342	5.5%	99,987
Sweet potato seedlings	800	421	(47.4)%	1,221
Product Innovation & Food Production
Sweet potato processed products	107,241	215,786	101.2%	323,027
Recovery & Recycling
Fermented sweet potato feedstock	-	445	N.M.	445
Total	156,686	267,994	71.0%	424,680

In FY2025, Zixin Group recorded a 33.1% year-on-year increase in revenue to RMB 424.7 million, up from RMB 319.0 million in FY2024, and achieved a net profit after tax of RMB 42.7 million, a 219.9% year-on-year growth from RMB 13.4 million in FY2024. The significant growth in revenue and net profit can be attributed to the contributions arising from expansions in our three core business segments, comprising (i) Cultivation and Supply, (ii) Product Innovation and Food Production, and (iii) Recovery and Recycling.

The commendable set of results was achieved despite the increased overheads associated with the addition of new machinery and equipment at the new manufacturing facility, which has yet to fully utilised. We counterbalanced these costs with a strategy focused on higher-margin products. Gross profit rose by 41.5% year-on-year, increasing from RMB 102.1 million in FY2024 to RMB 144.4 million in FY2025, and the composite gross margin improved from 32.0% in FY2024 to 34.0% in FY2025.

During FY2025, we incurred a one-off expense of RMB 1.1 million related to the rights-cum-warrants issue, along with the non-cash staff compensation comprising 61 million performance shares, totalling RMB 6.6 million. Excluding these one-off expenses, our Group will report a net profit of RMB 50.4 million, a 276.1% year-on-year growth from FY2024.

Optimising Capabilities, Enhancing Values

The increasing awareness of traceability and growing demands for food safety, food security and feed security bode well for Zixin Group. At Zixin, we aim to address agricultural challenges and mitigate risk by creating a closed-loop circular economy for the sweet potato industrial value chain. The current implementation only marks the beginning of our efforts.

While we continue to refine our processes and products in line with our planned expansion across our core business segments, we invite more stakeholders to engage with our circular economy business platform. This platform facilitates the use of third-party services, including smart warehousing, agricultural waste disposal, and fermentation, depending on their business operations within the sweet potato supply chain. We believe their involvement will not only optimise capabilities and enhance the value of our sweet potato circular economy industrial value chain model but also contribute to the transformation of the sweet potato agriculture sector in Liancheng County, fostering stability and sustainability in their lives.

Beyond Zixin Group’s base in Liancheng County, we will be replicating the integrated sweet potato industrial value chain progressively in Lingao County, Hainan Province, which aligns with the national directives. We believe this project not only seeks to improve productivity and stimulate economic growth for Lingao County but also promotes Zixin Group’s sustainable growth collectively, creating mutually beneficial outcomes for all.

Acknowledgements And Appreciation

I acknowledge and appreciate the invaluable guidance and contribution of my fellow directors in the past year.

On behalf of the Board, I would like to convey our appreciation to all Zixin Group members for their commitments and efforts. We are also appreciative and thankful for the unwavering support and patience of our business partners, customers, and shareholders in Zixin Group.

As we progress with our planned expansions, we are also looking forward to the opportunities to replicate our business model in China and overseas to address the growing concerns of food safety, food security, and feed security. We are determined to make a positive difference to everyone’s lives.

Liang Chengwang
Executive Chairman & Chief Executive Officer