D&G TECHNOLOGY ACHIEVES 2015 INTERIM REVENUE OF RMB197 MILLION • Adjusted NET Profit Surges 125% to RMB30 Million

Ms. Glendy CHOI, Executive Director and Chief Executive Officer of D&G Technology, said, “In implementing the ‘One Belt One Road’ policy, the country dedicates considerable resources to push forward road construction projects. The Group has achieved steady business growth as the demand for its recycling plants has risen. During the period, the Group completed 25 asphalt mixing plants contracts and continued to participate in the top-tier highways construction and maintenance projects in PRC and overseas. The asphalt mixing plants were used in major highway construction and maintenance projects including National Highway 310 Expansion Project, Jinan-Qingdao Expressway Expansion Project, Shiyan-Tianshui Expressway, Yinchuan Yellow River Bridge, Daqing-Guangzhou Expressway and Zhengzhou Port Municipal Project. The Group actively developed overseas markets, including countries and regions along the path of ‘One Belt One Road’ and completed projects in Russia and India during the period. To fully take advantage of the future rapid growth of the PRC road construction and maintenance industry, the Group has successfully listed on the Stock Exchange of Hong Kong Limited on 27 May 2015, as a first step towards the international capital market.”

D&G Technology is specialised in the research and development, design, manufacturing and sale of Conventional and Recycling asphalt mixing plants, and provides one-stop customized solutions to the customers in the PRC and overseas markets.

Sales of asphalt mixing plants business

Sales of asphalt mixing plants business is the Group’s major source of income. During the reporting period, turnover generated from the business increased by 14.6% over the prior period to RMB174 million, primarily because of the increase in average contract value completed during the period. Gross profit margin continued to maintain at a satisfactory and high level of 39.2% during the period. Turnover from the sales of Recycling Plants increased by 18.7% over the prior period to RMB112 million, accounting for 64.2% of the turnover from sales of asphalt mixing plants. which was mainly resulted from the demand for high capacity and high degree of customization of asphalt mixing plants from customers. Gross profit from the sales of Recycling Plants increased by 13.9% over the prior period to RMB44.0 million. During the period, the Group has actively strived to develop overseas market and completed projects in Russia and India. In addition, turnover from the sales of Conventional Plants also increased by 7.9% to RMB62.4 million mainly resulted from the demand for high capacity asphalt mixing plants from the customers.

Sales of spare parts and components and provision of equipment modification services business

Turnover generated from the sales of spare parts and components and provision of equipment modification services business increased by 7.9% over the prior period to approximately RMB13 million; and gross profit margin also further improved by 0.9 percentage point during the period to 41.3%.

Operating lease of asphalt mixing plants business

Turnover generated from the operating lease of asphalt mixing plants increased significantly by 83.1% over the prior period to RMB9.80 million. Gross profit margin continued to increase and reached 63.9% during the period. Amid with the strong market demand and customised solutions offered to the customers, the number of asphalt mixing plants held for operating leases increased from 5 to 7 during the period. The asphalt mixing plants leased by the Group during the period were used in major highways construction and maintenance projects such as Beijing-HongKong-Macau Expressway Expansion, Changli Expressway, Yuexi-Wuhan Expressway and Chaozhou-Huizhou Expressway.

The Group has a well-established research and development team and industry-leading R&D capability. Recently, the Group is closely collaborating with its customer, Hunan Road & Bridge Construction Group Co., Ltd., in a large pavement maintenance project at the Hunan Litan section of the main national, Shanghai-Kunming Highway Expressway. The project is deploying the Group’s self-developed “double drum dryer recycling technology” and is the first national highway asphalt pavement project that adopts environmentally-friendly and low emission hot-mix plant recycling technology in the surface layer, which can bring significant saving in material costs compared with using conventional technology. The Group is also collaborating with Ganyu Transport Bureau to participate in another large national road improvement project in Lianyungang Ganyu section of National Highway 310(G310). The Group’s self-developed patented “monoblock recycling plant” is also deployed in the project and the performance is satisfactory.

The Group is currently expanding the manufacturing and R&D facilities in Langfang to increase the production capacity. It is aimed to complete the expansion of manufacturing facilities in 2016 such that the increased production capacity is able to satisfy the increasing demand of the products in asphalt mixing plants in both PRC and overseas markets. The Group expects that hot-mix plant recycling technology will become the trend of medium and large scale maintenance project in the PRC and will provide encouraging return to the Group in the near future. In addition, the Group will set up service centres in Russia, Middle East and India in the second half of this year.

Ms. Glendy CHOI, concluded, “The Group believes that the continuous national investment in highway infrastructure and the environmental concern in the PRC will strengthen the demand for energy-saving environmental asphalt mixing plants. Meanwhile, there is a growth in the increased maintenance mileage of highway. Making use of reclaimed asphalt pavement (RAP) during the road maintenance is in line with the national policy of resource recycling and can provide good economic returns. As a result of all these factors, it is expected that the demand for recycling plants will grow further. With the initiative of ‘One Belt One Road’ by the PRC government, the Group is prepared and ready to expand overseas market business. A new brand of asphalt mixing plants and solutions, PRIMACH, tailored for the market in the countries along the path of ‘One Belt One Road’ will be launched in the second half of this year to expand the Group’s overseas markets. Looking ahead, the Group is confident and optimistic about the prospect of the business and is committed to achieve healthy, sustainable and diversified growth of business in the long run.”