CTI.L Regulatory News (CTI)

14 Sep 2007 12:41

Cathay International Holdings Ld14 September 2007 14 September 2007 CATHAY INTERNATIONAL HOLDINGS LIMITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 CHAIRMAN'S INTERIM STATEMENT RESULTS Hotel Corporate Operations Pharmaceutical Office Total Production, Research & marketing &(Stated in USD'000) development distribution For the six monthsended 30 June 2007Revenue 3,387 - 10,031 - 13,418Segment gross profit (366) - 6,903 - 6,537/(loss)Segment operating (230) (541) 844 (1,356) (1,283)profit/(loss)Segment finance (837) - (247) (972) (2,056)costs - netSegment profit/(loss) before (1,067) (541) 597 (2,328) (3,339)income tax For the six monthsended 30 June 2006Revenue - - 7,211 - 7,211Segment gross profit - - 4,442 - 4,442Segment operating (25) (567) 357 (1,368) (1,603)profit/(loss)Segment finance (835) 13 (207) (329) (1,358)costs - netSegment profit/(loss) before (860) (554) 150 (1,697) (2,961)income tax For the year ended31 December 2006Revenue 1,884 - 15,778 - 17,662Segment gross profit 336 - 10,510 - 10,846Segment operating (155) (1,015) 1,881 (3,080) (2,369)profit/(loss)Segment finance (1,660) 24 (430) (980) (3,046)costs - netSegment profit/(loss) before (1,815) (991) 1,451 (4,060) (5,415)income tax Group turnover for the six months ended 30 June 2007 was USD13,418,000 comparedwith USD7,211,000 for the six months ended 30 June 2006. The increase inturnover was the result of: (i) a further increase in sales of the pharmaceutical production, marketing and distribution businesses; and (ii) the incorporation of the Landmark Hotel's full six months' turnover. Last year, the Hotel was in its "soft" re-opening period until September 2006 and the Hotel's turnover during such period was recorded as a reduction of pre-operating expenses. The Group's gross profit for the six month period was USD6,537,000 (2006:USD4,442,000); the increase was generated from the growth in sales ofpharmaceutical products. The Group recorded an operating loss of USD1,283,000 for the six month period(2006: loss of USD1,603,000). The pharmaceutical production, marketing anddistribution businesses have achieved an increase in operating profit toUSD844,000 for the six month period (2006: profit of USD357,000). Corporateoffice expenses and salaries have been tightly controlled. The Group's loss before income tax for the six month period was USD3,339,000(2006: loss of USD2,961,000). The increased loss in the six month period in 2007was mainly due to increased finance costs of USD698,000. BIOTECHNOLOGY AND PHARMACEUTICAL BUSINESS Ningbo Liwah Pharmaceutical Company Limited ("Liwah") and Lansen Medicine(Shenzhen) Company Limited ("Lansen") continue to be the major contributors tothe Group's pharmaceutical businesses. Ningbo Liwah Plant Technology Limited ("Plant Extraction Company"), an associatecompany of Liwah, is preparing the application to the Zhejiang DrugAdministration for GMP Certification of its new herbal extract facilitieslocated in the Chemical Industrial Zone, Ningbo. Construction of the newfacilities is completed and testing for full commercial operation is underway.It is expected that the GMP inspection will commence in the fourth quarter of2007. The herbal extract facilities will produce a range of extracts includingGinkgo Biloba, Green Tea, Red Clover, Paeonia Lactiflora and Huperzia Serrate,as well as herbal medicine in granule form, for natural and traditional Chinesemedicinal uses. The herbal extract products are mainly used as ingredients forherbal medicines. In the initial stage, most of the herbal extract productsproduced by the Plant Extraction Company will be used by Liwah in its productionof Chinese herbal medicines. However, with the enlarged production capacity andenhanced technology and equipment, we expect the Plant Extraction Company toaggressively expand into overseas markets to which it had restricted accessbefore because of the limitations of its production and technology. More effortswill be devoted to R&D to develop new and innovative products. Barringunforeseen circumstances, we expect that the new facilities will commenceproduction and start contributing revenue to the Group in 2008. As stated in the 2006 Annual Report, we are investing in R&D to support thelong-term development of our pharmaceutical business. The drug development cycleis relatively long and, as a result, the R&D division has not contributed toearnings in this period and is not expected to generate earnings in 2007. In addition to organic growth, we envisage that the Group will, in the comingyears, expand its pharmaceutical business through further acquisitions. We willlook to acquire companies that offer growth potential, and ideally with productsand/or production facilities that would create synergies with our existingproducts. LANDMARK HOTEL (SHENZHEN) The Shenzhen hotel industry continues to be highly competitive. It isanticipated that three luxury hotels with international brands will be opened inShenzhen between now and the year ending 2009. Despite the difficult operatingenvironment, we are pleased to report a gradual increase in occupancy levelsover the past few months. The Hotel achieved an average occupancy rate of 33.6%and an average room rate of USD118 for the first six months in 2007. This is inline with our observation of the market conditions in China that following ahotel being re-positioned and re-launched, it can take up to 18 months for thepricing and occupancy to reach expected levels. In accordance with its usual practice, the Group will conduct an annualvaluation of the Hotel at the year end. BANK FACILITIES In August 2007, the Group obtained a five-year banking facility in the amount ofUSD50 million. The facility will be used to re-finance existing loans and forcorporate funding requirements. This facility should position the Group to grow while reducing funding cost. Itshould also permit the Group to better manage its currency risk. CONCLUSION The Board believes that it is well positioned for future expansion in thepharmaceutical industry in China. With regard to the hotel business, the Boardis of the view that as customers become more familiar with the quality of therenovation, the Hotel will make an increasing contribution to the Group'sresults. On behalf of the Board, I would like to thank our management and staff for theircontinued dedication and commitment. James BuchananChairman Enquiries: Stephen Hunt (Deputy Chairman) (via Brunswick) 020 7404 5959Patrick Sung (Director - Finance) Jon Coles, Brunswick 020 7404 5959 Group Condensed Income Statement Six months Six months Year ended ended 30 June ended 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) Note USD'000 USD'000 USD'000-------------------- ------ ---------- ----------- ---------- Revenue 2 13,418 7,211 17,662Cost of sales (6,881) (2,769) (6,816)-------------------- ------ ---------- ----------- ----------Gross profit 6,537 4,442 10,846Selling and distribution (4,368) (3,060) (6,447)expensesAdministrative expenses (3,452) (2,960) (6,253)Pre-operating expenses - (25) (515)-------------------- ------ ---------- ----------- ----------Loss from operations (1,283) (1,603) (2,369)Finance costs - net (2,056) (1,358) (3,046)-------------------- ------ ---------- ----------- ----------Loss before income tax 2 (3,339) (2,961) (5,415)Income tax expense 3 (178) - --------------------- ------ ---------- ----------- ----------Loss for the period (3,517) (2,961) (5,415)==================== ====== ========== =========== ========== Attributable to:Equity shareholders of (3,504) (2,923) (5,315)the parentMinority interest (13) (38) (100)-------------------- ------- ---------- ----------- ---------- (3,517) (2,961) (5,415) ======= ========== =========== ==========Loss per share------------------- ------- ---------- ----------- ----------Basic 4 (1.27) cents (1.10) cents (1.96) cents=================== ======= ========== =========== ========== Group Condensed Balance Sheet As at As at As at 30 June 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) USD'000 USD'000 USD'000--------------------- ----------- ---------- -----------ASSETS NON-CURRENT ASSETSProperty, plant and equipment 147,336 134,227 144,699Investment property 1,405 1,333 1,365Intangible assets 499 545 521Goodwill 7,781 6,487 7,781Loans to minority shareholders 674 1,423 1,087--------------------- ----------- ---------- ----------- 157,695 144,015 155,453--------------------- ----------- ---------- ----------- CURRENT ASSETSInventories 2,149 2,240 2,186Trade and other receivables 13,457 13,235 12,065Cash and cash equivalents 1,412 4,720 1,983--------------------- ----------- ---------- ----------- 17,018 20,195 16,234 ----------- ---------- ----------- TOTAL ASSETS 174,713 164,210 171,687===================== =========== ========== =========== EQUITY AND LIABILITIES EQUITY ATTRIBUTABLE TO EQUITYHOLDERS OF THE PARENT 78,358 78,668 81,892 MINORITY INTEREST 7,319 7,466 7,789--------------------- ----------- ---------- -----------TOTAL EQUITY 85,677 86,134 89,681--------------------- ----------- ---------- ----------- NON-CURRENT LIABILITIESBorrowings 2,121 3,026 22,838Deferred tax liabilities 16,820 15,164 16,820--------------------- ----------- ---------- ----------- 18,941 18,190 39,658 ----------- ---------- ----------- CURRENT LIABILITIESBorrowings 29,506 29,400 9,451Trade and other payables 40,589 30,486 32,897--------------------- ----------- ---------- ----------- 70,095 59,886 42,348 ----------- ---------- ----------- TOTAL LIABILITIES 89,036 78,076 82,006--------------------- ----------- ---------- -----------TOTAL EQUITY AND LIABILITIES 174,713 164,210 171,687===================== =========== ========== =========== Group Condensed Statement of Changes in Equity Attributable to equity holders of the parent Share Share Capital Revaluation Exchange Statutory Profit Total Minority Total Capital Premium and Reserve Equalisation Reserve and Loss Interest Equity Special Reserve Account Reserve USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Balance at 1 January 2006 13,043 8,355 43,320 55,884 (11,551) 1,104 (30,515) 79,640 6,383 86,023 ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Exchange differences arising on translation of foreign currency operations - - - 747 (1,022) 12 - (263) 5 (258)Reverse waiver of payable to minority interest on impairment of intangible assets - - (397) - - - - (397) 397 - ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Net income recognised directly in equity - - (397) 747 (1,022) 12 - (660) 402 (258)Loss for the period - - - - - - (2,923) (2,923) (38) (2,961) ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Total recognised income and expenses for the period - - (397) 747 (1,022) 12 (2,923) (3,583) 364 (3,219) ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Issue of share capital 750 1,861 - - - - - 2,611 - 2,611 Deemed disposal of interest in subsidiaries - - - - - - - - 284 284 Capital injection from minorityinterest - - - - - - - - 1,095 1,095 Dividends of subsidiaries - - - - - - - - (660) (660) ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Balance at 30 June2006 13,793 10,216 42,923 56,631 (12,573) 1,116 (33,438) 78,668 7,466 86,134 ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Balance at 1 Janaury 2007 13,793 10,216 42,923 64,176 (14,529) 1,143 (35,830) 81,892 7,789 89,681 ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Exchange differences arising on translation of foreign currency operations - - - 2,308 (2,371) 33 - (30) 6 (24) ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Net income recognised directly in equity - - - 2,308 (2,371) 33 - (30) 6 (24)Transfer to capital and special reserve - - 223 - - - (223) - - - Loss for the period - - - - - - (3,504) (3,504) (13) (3,517) ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Total recognised income and expenses for the period - - 223 2,308 (2,371) 33 (3,727) (3,534) (7) (3,541) ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Deemed disposal of interest in subsidiaries - - - - - - - - 325 325Buy back of minoirty shares - - - - - - - - (788) (788) ------- ------- ------- ------- ------- ------- ------- ------- ------- -------Balance at 30 June 2007 13,793 10,216 43,146 66,484 (16,900) 1,176 (39,557) 78,358 7,319 85,677 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Group Condensed Cash Flow Statement Six months Six months Year ended ended 30 June ended 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) USD'000 USD'000 USD'000 ---------- ---------- ----------Net cash generated from/(usedin) operating activities 3,554 (4,335) (1,821)Net cash used in investingactivities (2,573) (4,707) (8,041)Net cash (used in)/generatedfrom financing activities (2,054) 4,118 1,418--------------------------- ---------- ---------- ---------- Net decrease in cash and cashequivalents (1,073) (4,924) (8,444)Effects of exchange rate changes 527 (376) 147Cash and cash equivalents atbeginning of the period 1,723 10,020 10,020--------------------------- ---------- ---------- ---------- Cash and cash equivalents at endof the period 1,177 4,720 1,723--------------------------- ---------- ---------- ---------- Analysis of cash and cash equivalentsCash and bank balances 1,412 4,720 1,983Bank overdrafts (235) - (260)--------------------------- ---------- ---------- ---------- 1,177 4,720 1,723 ---------- ---------- ---------- NOTES 1. BASIS OF PREPARATION The interim condensed financial statements have been prepared in accordance withInternational Accounting Standard (IAS) 34, Interim Financial Reporting andunder the historical cost convention, modified where appropriate to incorporatea professional valuation of certain fixed assets. The accounting policies adopted are consistent with those followed in thepreparation of the Group's annual financial statements for the year ended 31December 2006. 2. SEGMENTAL INFORMATION Six months Six months Year ended ended 30 June ended 30 June 31 December 2007 2006 2006 (Unaudited) (Unaudited) (Audited) USD'000 USD'000 USD'000---------------------- ------------ ----------- ---------- Classes of Business RevenuePharmaceutical:Research & Development - - -Production, Marketing &Distribution 10,031 7,211 15,778Hotel Operations 3,387 - 1,884---------------------- ------------ ----------- ---------- 13,418 7,211 17,662---------------------- ------------ ----------- ---------- (Loss)/Profit before income taxPharmaceutical:Research & Development (541) (554) (991)Production, Marketing &Distribution 597 150 1,451Hotel Operations (1,067) (860) (1,815)Corporate Office (2,328) (1,697) (4,060)---------------------- ------------ ----------- ---------- (3,339) (2,961) (5,415)---------------------- ------------ ----------- ---------- All turnover during the period arose from activities in China. 3. INCOME TAX EXPENSE The provision for current tax has been made in respect of the assessable profitsarising in China during the period. 4. LOSS PER SHARE Loss per share is based upon the loss after tax attributable to shareholders ofUSD3,504,000 for the six months ended 30 June 2007 (six months ended 30 June2006: loss of USD2,923,000) and the weighted average number of A shares andcommon shares in issue during the period of 11,825,550 and 264,034,554respectively (30 June 2006 - A shares: 11,854,143, common shares: 254,005,961). 5. PUBLICATION OF NON-STATUTORY ACCOUNTS The unaudited interim results do not constitute full accounts prepared inaccordance with the listing rules of the UK Financial Services Authority. Thefigures for the year ended 31 December 2006 have been based on the full accountsof the Company which were prepared under IFRS and which included an unqualifiedaudit report. The interim financial information in this report has been neitheraudited nor reviewed by the Company's auditors. 6. Copies of this report have been sent to shareholders and are available to thepublic from the Company's UK Transfer Agents, Capita Registrars, The Registry,34 Beckenham Road, Beckenham, Kent BR3 4TU. This information is provided by RNS The company news service from the London Stock Exchange