29 Dec 2015 08:45
Cathay International Holdings Limited
("Cathay", the "Company" or the "Group")
Trading Update
Hong Kong, 29 December 2015 - Cathay International Holdings Ltd. (LSE: CTI.L), a leading operator and investor in the growing healthcare sector in the People's Republic of China, today provides an update on trading ahead of its year ending 31 December 2015. For the current financial year, the Group expects revenue and gross profit performance to be broadly in line with market expectations, albeit slightly lower than anticipated.
However, reported operating expenses are expected to be significantly higher than originally anticipated, due to additional spending in supporting and marketing both existing and new product ranges (particularly the latter), and expansion into new product areas. Consequently the Group expects to report a material loss before tax, a performance which will be markedly below market expectations.
Since publishing the half year results in August 2015, trading conditions in the Chinese markets have remained difficult. Continued slower macro-economic growth in China, devaluation in renminbi, the continued low price of inositol and China's nationwide regulatory inspection of ginkgo businesses have continued to represent significant challenges to the Group.
In response to the current trading environment, Cathay has taken strategic actions to launch new products and initiatives, a number of which are showing initial positive progress and have, to a certain extent, compensated for revenue and margin pressures arising from previously reported factors.
In addition, the Group is required to disclose an event regarding the Group's 50.56 per cent subsidiary, Lansen Pharmaceutical Holdings Limited ("Lansen"). Lansen announced today that a nationwide inspection and regulation on ginkgo products conducted by the CFDA earlier this year, found a number of batches of ginkgo produced by its wholly-owned subsidiary, Ningbo Liwah, failed to meet national standards. In December 2015, because of the findings by CFDA and upon an investigation by the relevant regulatory authorities in China, the production and sale of sub-standard ginkgo tablets by Ningbo Liwah were determined to be in breach of relevant rules and regulations in China and an administrative penalty of approx. USD2.74 million on Ningbo Liwah is to be settled in three instalments payable in 2015 and 2016. The amount of the administrative penalty will be reflected in Lansen's income statement for 2015 but will have minimum impact on Lansen's cashflow, and it will not affect Lansen's business development. The Group's reported results will correspondingly reflect this administrative penalty and such other effects that Lansen might experience.
Commenting on the announcement, Mr. Lee Jin-Yi, CEO of Cathay International Holdings Limited, said: "Disappointingly, adverse economic conditions in China and other factors specific to the Group's businesses have continued to adversely affect our business. However, Cathay will continue to execute its core strategy to focus on launching new medical products, expanding sales of its existing medical products, reducing costs and improving margins. Furthermore, the Group will explore opportunities in the growing health supplements business.
The Board remains optimistic that the steps being taken should position Cathay competitively against the challenges it faces and improve its performance in the short to medium term and continues to focus on delivery of future value for shareholders."
Forward-looking statements
This announcement contains statements which constitute "forward-looking statements. Forward-looking statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of the Company, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking statements. Any forward-looking statements speak only as of the date they are made, and the Company gives no undertaking to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes to events, conditions or circumstances on which any such statement is based. No reliance should be placed on forward-looking statements.
-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.