7 Mar 2016 10:34
Cathay International Holdings Limited
("Cathay", the "Company" or the "Group")
Lansen's release of its Trading Update
Hong Kong, 7 March 2016 - Cathay International Holdings Ltd. (LSE: CTI.L), a leading operator and investor in the growing healthcare sector in the People's Republic of China, announces that its 50.56% owned subsidiary, Lansen Pharmaceutical Holdings Ltd ("Lansen") (HKEX: 503), has today made an announcement (the "Lansen Announcement") regarding its trading position for the year to 31 December 2015 pursuant to relevant local regulation and legislation.
Lansen has announced that it expects its profit from operations from its core business to show a noticeable decrease as compared to that in 2014. In addition, Lansen recorded certain one-off non-operating losses and there was an accounting treatment to recognise an insurance claim income in 2015 which was yet to be determined in its year-end audit. As a result, the net profit of Lansen for the year ended 31 December 2015 is expected to show a relatively substantial decline as compared to that in 2014.
· The decrease in Lansen's profitability was mainly attributed to a number of operating factors already taken into account by Cathay in its interim results of 28 August 2015 and its trading update announcement of 29 December 2015. The operating factors were:
(1) the decrease in sales of Leflunomide tablets as the product was rebranded from Tuoshu to Hepai;
(2) the market launch costs of new products including Fillderm and Bio-Rad diagnostic kits, which resulted in increased operating expenses in 2015 but are expected to contribute to Group earnings in 2016; and
(3) realignment of product development and limiting production capacities of its healthcare business.
· In addition, the Lansen Announcement referred to the one-off items relating to the ginkgo incident of approximately RMB24.67 million (approximately USD3.70 million). The one-off items included the administrative penalty of RMB18.29 million (approximately USD2.74 million) which had been announced by Lansen on 29 December 2015 and was already taken into account in Cathay's trading update on the same date.
· Lansen also referred to an insurance claim and its related accounting treatment, which was new information since Cathay's trading update on 29 December 2015. Lansen has booked RMB25.50 million (approximately USD3.83 million), arising from the expected receipt of insurance claim proceeds relating to flood damage to inventories held by certain Lansen subsidiaries, which would offset the write-off of inventories damaged by the flood during the 2015 financial year. Due to slow progress of the insurance claim processing and payment by the insurance company concerned, legal proceedings were initiated by Lansen's subsidiaries to speed up the enforcement of the payment of the claim under the relevant insurance policies. As the year-end audit is in progress, the accounting treatment to recognise the insurance claim income in 2015 is yet to be determined.
· Lansen's Board has confirmed to its shareholders and potential investors that the financial position of the Lansen group remains stable.
The full text of the Lansen Announcement can be found at http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0307/LTN20160307606.pdf and will also be made available at the Announcements & Notices section of Lansen's hompage at http://www.lansen.com.cn/En/Announcements&Notices.asp.
The information contained in the Lansen Announcement is based on the latest management accounts of the Lansen group and its preliminary review of the currently available information, and such information may be adjusted after further internal review, and will only be confirmed after completion of the audit process.
-ENDS-
For further enquiries, please contact:
Cathay International Holdings Limited
Eric Siu (Finance Director)
Patrick Sung (Director and Controller)
Tel: +852 2828 9289
N+1 Singer
+44 (0) 20 7496 3000
Aubrey Powell/ Lauren Kettle - Corporate Finance
Brough Ransom - Sales
Consilium Strategic Communications
Mary-Jane Elliott/ Matthew Neal / Lindsey Neville
Tel: +44 (0) 20 3709 5702
About Cathay
Cathay International Holdings Limited (LSE: CTI.L) is a main market listed investment holding company and a leading operator and investor in the growing healthcare sector in the People's Republic of China (the "PRC"). The Company and its subsidiaries (collectively the "Group") aim to leverage on growth opportunities in the strong and growing domestic demand for high quality healthcare products in the PRC and build its portfolio companies into market sector leaders with competitive edge. Cathay has already demonstrated a strong track record of identifying high-growth potential investment opportunities in this area including: Lansen, a leading specialty pharmaceutical company focused on rheumatology and dermatology in the PRC; Haizi, a company engaged in the manufacture, marketing and sale of inositol and its by-product, di-calcium phosphate; Yangling, a company engaged in production and sales of plant extracts for use as key active ingredients in healthcare products; and Botai, a company engaged in collagen products.
The Group employs approximately 2,000 people across the PRC, including over 30 specialist corporate and business development staff based at the holding company's offices in Hong Kong and Shenzhen. Cathay also has a hotel investment. For more information please visit the Company's website: www.cathay-intl.com.hk.