CTI.L Regulatory News (CTI)

29 Aug 2008 16:00



29 August 2008

CATHAY INTERNATIONAL HOLDINGS LIMITED

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008

Gross turnover for the six months ended 30 June 2008 was USD29,521,000 compared with USD13,418,000 for the six months ended 30 June 2007. The increase in turnover was the result of :

i) 66% growth in sales of the existing pharmaceutical production, marketing and distribution businesses of Liwah and Lansen;

ii) growth in sales of Crowne Plaza Hotel & Suites Landmark Shenzhen.

The Group's gross profit for the six month period was USD12,960,000 (2007: USD6,537,000). The increase was due to growth in sales of pharmaceutical products and to an increased contribution from the hotel sector.

The Group recorded an operating profit of USD1,264,000 (2007: loss of USD1,283,000). The pharmaceutical production, marketing and distribution businesses increased operating profit to USD2,245,000 (2007: USD844,000). Corporate office expenses and salaries have been stable when compared to the same period last year.

The Group's loss before income tax for the six month period was USD2,230,000 (2007: loss of USD3,339,000). The reduction of the gross loss was mainly due to increased contributions from the hotel and pharmaceutical production, marketing and distribution sectors.

The finance costs for the six month period were USD3,494,000 (2007: USD2,056,000). The increase was due to the higher utilisation of bank facilities.

BIOTECHNOLOGY AND PHARMACEUTICAL BUSINESS

Ningbo Liwah Pharmaceutical Company Limited ("Liwah") and Lansen Medicine (Shenzhen) Company Limited ("Lansen") continue to be the major contributors to the Group's pharmaceutical business. Their business grew by 66% when compared to the same period in 2007.

The gross profit margin of the Liwah and Lansen pharmaceutical business was 70% (2007: 69%).

CROWNE PLAZA HOTEL & SUITES LANDMARK SHENZHEN

The Shenzhen hotel industry remains highly competitive. In addition, the hotel industry in China was adversely affected by the Sichuan earthquake in May which reduced travel and entertainment throughout China. The travel industry expected the number of foreign visitors to increase in the run up to and during the Olympic Games. However, the Chinese government, in the interests of security for the Games, imposed stringent restrictions on the issuance of foreign visas in the second quarter of 2008. This resulted in the cancellation of numerous business conferences and seminars across China and sharply reduced the expected number of business travellers. This in turn led to reduced occupancy levels at our hotel.

Despite the difficult operating environment, we are pleased to report that the InterContinental Hotels Group ("IHG"), which has been managing the hotel since 18 December 2007, has achieved an average occupancy rate of 43% (2007: 34%) and an average room rate of USD130 (2007: USD118) for the first six months of 2008. The hotel's profit from operations for the first six months of 2008 was USD627,000 (2007: loss of USD230,000).

In accordance with our usual practice, the Group will conduct an annual valuation of the hotel at the year end.

BANK FACILITIES

In June 2008, the Group obtained a 3-5 year banking facility in the amount of USD22 million. The facility will be used to re-finance existing loans and for corporate funding requirements.

CONCLUSION

The Board believes that it is well positioned for continued expansion in the pharmaceutical industry in China. With regard to the hotel business, the Board is of the view that IHG is already having a positive impact on performance in a very difficult market. As conditions return to normal in China, we expect enhanced hotel results.

On behalf of the Board, I would like to thank our management and staff for their continued dedication and commitment.

James Buchanan

Chairman

Enquiries: 

Stephen Hunt (Deputy Chairman) (via Brunswick) 020 7404 5959

Patrick Sung (Director - Finance)

GROUP CONDENSED INCOME STATEMENT

GROUP CONDENSED BALANCE SHEET

GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY

GROUP CONDENSED CASH FLOW STATEMENT

NOTES TO THE ACCOUNTS