China Vanguard Group Ltd
CHINA VANGUARD: Announces Annual Results for Financial Year of 2014 / 2015, Revenue from Lottery-Related Operations Surged 51% to HK$124 Million – Strengthening Existing Operations While Capturing New Opportunities with Innovative Solutions

[For Immediate Release]

China Vanguard Announces Annual Results for Financial Year of 2014 / 2015
Revenue from Lottery-Related Operations surged 51% to HK$124 million

Strengthening Existing Operations While
Capturing New Opportunities with Innovative Solutions

(5 October, 2015, Hong Kong) China Vanguard Group Limited (“China Vanguard” or the “Company”, collective with its subsidiaries as the “Group,” Stock Code: 8156.HK) is pleased to announce its annual results for the year ended 30 June 2015.

For the financial year under review, the Group’s turnover rose by 29% to about HK$124 million. Profit attributable to shareholders increased by 28% to about HK$19 million compared with approximately HK$15 million for the previous financial year. The growth in profit was mainly attributable to the increase in profit from the lottery-related operation. Gross profit margin edged up one percentage point to 95%. Basic earnings per share grew by 25% to 0.6 HK cents from 0.48 HK cents from the previous financial year. The board of directors does not recommend any dividend for the financial year.

The Group’s lottery-related operations covered 65% of China’s population
For the year ended 30 June 2015, revenue from the lottery-related operations rose by 51% to about HK$124 million and accounted for over 99% of the Group’s total revenues. The Group reinforced its status as China’s leading provider of lottery solutions by actively seeking new opportunities across the country. Within 18 months prior to the end of the review period, the Group expanded its market coverage in China by winning six contracts to supply lottery solutions in Shandong, Chongqing, Hebei, Guizhou, Shaanxi and Sichuan, thus enriching the geographical reach of its business to cover 21 provinces and municipalities with a combined population of nearly 900 million, or 65% of the country’s total. The additional business under the new contracts will unlock the Group’s immense potential for growth upon full-fledge roll-out.

In order to expand the scope of its business, the Group has entered into separate agreements with a specialized payment solution firm, All in Pay Network Services Co., Ltd, in August 2015 and a leading smart city technology developer in September 2015 to explore opportunities for the provision of lottery services in the communities of various smart cities in the country.

Enhancing customer participation through gamification of lottery
The Group has been broadening the distribution channels for lottery products and, while at the same time enhancing value-added services at lottery outlets, such as boosting lottery sales by providing more relevant information to customers at lottery outlets and VIP lounges. Integrating gamified lottery content into conventional lottery sales counters and introducing new interactive lottery content has rendered the Group’s services more entertaining for consumers. Meanwhile, the Group has continued the initiative to convert conventional lottery sales outlets into VIP lounges and by prolonging the consumers’ participation per transaction with rich and interactive content of gamified lottery.

During the financial year under review, the Group focused on developing value-added services for proprietors of lottery outlets. In May 2015, the Group acquired a company which mainly provided an electronic interactive marketing and sales platform and management services for lottery centres in order to raise the efficiency of information management and enhance the end-user experience. The Group will continue to explore the latest technologies with the aim of providing the most advanced solutions for customers and end users.

Mr. Chan Ting, Executive Director and the Chief Executive Officer of China Vanguard Group Limited said, “The uniqueness of the Group’s strategy has enabled us to enhance the benefits for both lottery centres’ and the end-users’. Our operating model, essentially unique as a distribution platform, has brought about the greatest benefit to our customers as an effectively designed lottery service solutions that can be customized to cater to every province or municipal which we have worked with. Moreover, we have been able to collect and then provide market intelligence nationwide through our partnerships with various business partners, thus ensuring efficient and effective delivery of our services. The uniqueness and advantages have contributed to the Group’s success in expanding its business nationwide and in formulating strategies and solutions to meet the needs of its customers and business partners. This has laid the solid foundations for the Group’s development in the coming years and has enhanced its capability to generate good returns to shareholders.”

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About China Vanguard Group Limited
China Vanguard Group Limited was founded in 1999, and was successfully listed on the GEM board of The Stock Exchange of Hong Kong Limited in November 2002. At present, as a leading lottery solutions provider in China’s sports and welfare lottery industry, China Vanguard provides lottery equipment, software, related services and a comprehensive lottery distribution network for China’s Sports and Welfare Lottery authorities located in 21 provinces and regions across China. In order to establish a solid foundation in the traditional lottery industry, the Group introduced revolutionary self-service lottery solutions and developed one-stop shop business model from providing lottery programs to lottery operations to expand market share. In the future, the Group will continue focusing on the high margin, interactive self-service lottery business and comprehensive license portfolio with diversified virtual distribution channels to expand the potential of lottery business; and leveraging international cooperation with software and hardware developers to enhance the R&D capability. The Group strives to become a leading lottery solutions provider in China.

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