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CTI China Travel International Investment Hong Kong Ltd

0.12
0.00 (0.00%)
12:10:36 - Realtime Data
Share Name Share Symbol Market Type
China Travel International Investment Hong Kong Ltd TG:CTI Tradegate Ordinary Share
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 0.12 0.115 0.127 0.00 12:10:36

Interim Results

26/09/2003 1:22pm

UK Regulatory


RNS Number:2290Q
Cathay International Holdings Ld
26 September 2003



                                                            26th September, 2003



                     CATHAY INTERNATIONAL HOLDINGS LIMITED

             INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003

                          CHAIRMAN'S INTERIM STATEMENT


The first half of 2003 saw a significant change in the composition of the
Group's assets, the return of approximately USD24 million of surplus cash to
shareholders, difficult trading conditions as a result of the SARS virus and new
investments being made in line with the Group's strategy.



In the first quarter of 2003 shareholders approved the disposal of the Stonehill
Business Park ("Stonehill") for a cash consideration of USD30,869,000 and the
termination of the joint venture relating to the Xiyuan Hotel and development
site in Beijing ("Xiyuan"), resulting in a cash entitlement for the Group of
USD50,900,000, net of taxes, including USD18,747,000 of undistributed profits.
Each of these transactions resulted in a gain which has been reflected in the
unaudited accounts for the six months to 30 June 2003.



Following receipt of the cash proceeds from these transactions your Board
concluded that approximately USD24 million would be surplus to the Group's short
term requirements and that a tender offer was the most appropriate means of
returning such surplus to shareholders.  In February 2003 shareholders approved
the proposed tender offer and the Company purchased 99,999,780 common shares at
a fixed price of 15 pence per share, representing a 93.5% premium to the closing
share price on the day prior to the announcement of the tender offer.



In March 2003, the unexpected outbreak of the Severe Acute Respiratory Syndrome
("SARS") virus began seriously to affect the operations of the Landmark Hotel in
Shenzhen, the People's Republic of China ("China").  From March to June 2003,
the Landmark Hotel, in common with other leading hotels in Shenzhen, experienced
unprecedented low levels of occupancy.  From an average occupancy rate of 62% in
the first three months of 2003, the occupancy rate dropped to an average of 19%
in April.  The average occupancy rate for the first six months of 2003 was
approximately 41% compared to 61% for the same period last year.  Turnover at
food and beverage outlets at the Hotel was also adversely affected.  Since June
2003, when the World Health Organisation removed Shenzhen from the affected
areas list, there has been a slow, but steady, recovery of the hotel business.
We expect the Landmark Hotel to return to normal levels of activity during the
last quarter of 2003.



The results for the six months to 30 June 2003 have therefore been significantly
affected by the SARS outbreak. They also reflect the disposals of Stonehill and
Xiyuan and the return of surplus cash to shareholders.  Turnover for the six
months to 30 June 2003 was USD5,510,000 compared with USD15,806,000 for the six
months ended 30 June 2002.  The operating profit for the period was USD404,000
(2002: profit of USD2,214,000) and the pre-tax loss before minority interests
was USD346,000 (2002: profit of USD1,002,000).  The profit after tax and
minority interests was USD9,810,000 (2002: loss of USD104,000).  This profit
figure mainly results from the accounting treatment of deferred taxation
expenses required under International Accounting Standards ("IAS").  The balance
of cash at bank and in hand as at 30 June 2003 was USD24,801,000 (2002:
USD40,069,000).



Under EU Regulations publicly traded companies must prepare, by 2005 at the
latest, consolidated accounts under IAS.  The Group has adopted the
International Financial Reporting Standards ("IFRS") as the basis for preparing
its financial statements this year.  The effects of the adoption of IFRS on the
amounts reported in the financial statements of previous periods are shown in
the notes to the interim financial statements.



In accordance with its usual practice, the Group will conduct an annual
valuation of its property at the year end.  Any adjustments in asset value will,
if necessary, be reported at that time.



In line with the Group's core strategy your Board has been seeking new business
and investment opportunities in China which are expected to provide high growth
rates and generate improved shareholder returns.  Your Board has identified the
biotechnology and pharmaceutical market in China as having high growth
potential.  In June 2003 the Group announced a joint venture with a group of
Chinese medical, science and management professionals with expertise in the
biotechnology and pharmaceutical industry.  The Group's strategy is to build a
portfolio of biotechnology and pharmaceutical projects with the aim of providing
a steady stream of products to be manufactured and marketed in China.  The Group
has invested USD2,650,000 for a 74.58% interest in Cathay International
Changchun Biotechnology and Pharmaceutical Limited ("Changchun Biotechnology")
with the minority interest being held by the professionals mentioned above, who
have contributed the rights they own to certain technologies and specialist
expertise.  Changchun Biotechnology's first project is the acquisition of a
95.2% interest in Changchun Botai Medicine and Biological Technology Company
Limited ("Botai").  Botai is a sino-foreign joint venture company based in
Changchun, the capital city of Jilin Province in the North East of China.  The
other shareholder of Botai is Tongtuo High-tech Development Center of Jilin
University.  Jilin University is one of China's leading scientific research
universities and, in particular, a major research institution for biotechnology,
pharmaceutical and medical science.  The Tongtuo High-tech Development Center
will contribute technology to Botai and provide scientific and research
equipment and professionals.  In early August, the Group announced a second
investment, a USD550,000 investment for a 70% interest in Tianjin Longbai
Biological Engineering and Technology Company Limited ("Longbai"), an equity
joint venture in Tianjin City in the North of China.  Longbai researches and
develops technology for new drug delivery formats, focusing on oral fast release
drugs.  The Group expects to make further investments in the biotechnology and
pharmaceutical industry in China and will make announcements at the appropriate
time.



Your Board continues to believe that there are attractive opportunities for
investment in China and we are actively seeking additional business
opportunities in China to provide new sources of earnings and capital growth.



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



James Buchanan
Chairman


Enquiries:

Stephen Hunt (Deputy Chairman)                  (via Brunswick)               020 7404 5959
Patrick Sung (Director - Finance)

Jon Coles, Brunswick                                                          020 7404 5959


GROUP CONDENSED PROFIT AND LOSS ACCOUNT


                                                                            (Restated)           (Restated)
                                                       Six months           Six months           Year ended
                                                    ended 30 June        ended 30 June          31 December
                                                             2003                 2002                 2002
                                                      (Unaudited)          (Unaudited)            (Audited)
                                           Notes          USD'000              USD'000              USD'000

TURNOVER                                       3           5,510               15,806               32,586

COST OF SALES                                             (5,590)             (12,560)             (25,491)
                                                    _____________         ____________         ____________
GROSS PROFIT (LOSS)                                          (80)               3,246                7,095

ADMINISTRATIVE EXPENSES
Administrative expenses                                   (1,355)              (1,032)              (3,479)
Deficit on revaluation of fixed assets                         -                    -             (163,566)
Recognition of negative goodwill as
  Income                                                       -                    -               98,140
Profit on disposal of subsidiary                           1,860                    -                    -
Profit on disposal of fixed assets                            76                    -                  274
Tender offer expenses                                        (97)                   -                    -
                                                             484               (1,032)             (68,631)
                                                    _____________         ____________         ____________
PROFIT/(LOSS) FROM OPERATIONS                                404                2,214              (61,536)

FINANCE COSTS - NET                                         (750)              (1,212)              (2,512)
                                                    _____________         ____________         ____________
(LOSS)/PROFIT BEFORE TAXATION                  3            (346)               1,002              (64,048)

TAXATION                                       4          10,129                 (450)              57,807
                                                    _____________         ____________         ____________
PROFIT/(LOSS) ON ORDINARY
  ACTIVITIES AFTER TAXATION                                9,783                  552               (6,241)

MINORITY INTEREST                                             27                 (656)              40,510
                                                    _____________         ____________         ____________
ACCUMULATED PROFIT/(LOSS )
  ATTRIBUTABLE TO
  EQUITY SHAREHOLDERS                                      9,810                 (104)              34,269
                                                      ===========           ==========           ==========

PROFIT/(LOSS) PER SHARE
BASIC                                          6       4.58 cents         (0.04) cents          12.20 cents
                                                      ===========           ==========           ==========



GROUP CONDENSED BALANCE SHEET

                                                                                    (Restated)       (Restated)
                                                                        As at            As at            As at
                                                                      30 June          30 June      31 December
                                                                         2003             2002             2002
                                                                  (Unaudited)      (Unaudited)        (Audited)
                                                        Note          USD'000          USD'000          USD'000

ASSETS

NON-CURRENT ASSETS
Property, plant and equipment                                         102,799         369,547          197,464
Intangible assets                                                       1,101        (102,544)          (4,404)
                                                                _____________     ____________     ____________
                                                                      103,900         267,003          193,060
                                                                _____________     ____________     ____________
CURRENT ASSETS
Inventory                                                                 377           1,104            1,116
Trade debtors and other receivables                                       594           2,073            1,882
Cash and cash equivalents                                              24,801          40,069           43,320
                                                                _____________     ____________     ____________
                                                                       25,772          43,246           46,318
                                                                _____________     ____________     ____________

TOTAL ASSETS                                                          129,672         310,249          239,378
                                                                  ===========       ==========       ==========
EQUITY AND LIABILITIES

CAPITAL AND RESERVES                                       7           78,766          78,250          108,042

MINORITY INTERESTS                                                      1,077          79,095           37,985

NON-CURRENT LIABILITIES
Borrowings                                                             23,961          32,543           23,286
Deferred tax liabilities                                   8           13,849          90,840           30,731
                                                                _____________     ____________     ____________
                                                                       37,810         123,383           54,017
                                                                _____________     ____________     ____________
CURRENT LIABILITIES
Borrowings                                                              5,250           3,453           12,739
Trade creditors and other payables                                      6,769          26,068           26,595
                                                                _____________     ____________     ____________
                                                                       12,019          29,521           39,334
                                                                _____________     ____________     ____________

TOTAL EQUITY AND LIABILITIES                                          129,672         310,249          239,378
                                                                   ==========        =========       ==========








GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY




                                                      Capital and                  Exchange     Profit
                                   Share  Revaluation     Special  Statutory   Equalisation   and Loss
                                 Capital      Reserve     Reserve    Reserve        Reserve    Account      Total
                                 USD'000      USD'000     USD'000    USD'000        USD'000    USD'000    USD'000

Balance at January 1, 2002       14,042       61,055      61,639      2,463          1,029    (62,859)    77,369

Exchange adjustment                   -         (529)        146        (42)         1,410          -        985

Loss for the period                   -            -           -          -              -       (104)      (104)
                                 _______    _________    ________    _______      _________    _______    _______

Balance at June 30, 2002         14,042       60,526      61,785       2421          2,439    (62,963)    78,250
                                  ======     ========     =======     ======       ========     ======     ======

Balance at January 1, 2003       14,042       53,834      61,639      2,550          4,687    (28,710)   108,042

Exchange adjustment                   -         (388)          -         (7)         1,124        167        896

Realised exchange reserve on
disposal of subsidiary                -            -           -          -        (16,266)         -    (16,266)

Purchase of shares               (5,000)           -     (18,716)         -              -          -    (23,716)

Profit for the period                 -            -           -          -              -      9,810      9,810

Transfer on disposal of
subsidiary and fixed assets           -       (3,613)          -     (1,463)             -      5,076          -
                                 _______    _________    ________    _______      _________    _______    _______
Balance at June 30, 2003          9,042       49,833      42,923      1,080        (10,455)   (13,657)    78,766
                                  ======     ========     =======     ======       ========     ======     ======




GROUP CONDENSED CASH FLOW STATEMENT


                                                                                  (Restated)       (Restated)
                                                                Six months        Six months       Year ended
                                                             ended 30 June     ended 30 June      31 December
                                                                      2003              2002             2002
                                                               (Unaudited)       (Unaudited)        (Audited)
                                                                   USD'000           USD'000          USD'000


Cash flows from operating activities                               (2,600)             (281)           1,774

Cash flows from investing activities                               31,542            (1,096)            (578)

Cash flows from financing activities                              (45,438)              475             (763)

Effects of exchange rate changes                                      271               907            1,379
                                                              ____________       ___________     ____________

Net increase (decrease) in cash and cash equivalents              (16,225)                5            1,812

Cash and cash equivalents at beginning of the period               41,026            39,214           39,214
                                                              ____________       ___________     ____________

Cash and cash equivalents at end of the period                     24,801            39,219           41,026
                                                                ==========         =========       ==========




NOTES



1 BASIS OF PREPARATION

In 2003, the Group adopted the IFRS as the basis for preparing its financial
statements. The comparative financial statements have been restated to comply
with the IFRS. The adoption of the IFRS has resulted in the recognition of
deferred tax provisions as set out in note 10.



The interim condensed financial statements have been prepared in accordance with
International Accounting Standard No. 34 Interim Financial Reporting and under
the historical cost convention, modified where appropriate to incorporate a
professional valuation of certain fixed assets.



The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of financial statements and the reported
amounts of revenues and expenses during the reporting period. Although these
estimates are based on management's best knowledge of current events and
actions, actual results may differ from those estimates.





2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



The principal accounting policies adopted are set out below.



Basis of consolidation



The consolidated financial statements incorporate the financial statements of
the Company and enterprises controlled by the Company (its subsidiaries) made up
to 31 December each year. Control is achieved where the Company has the power to
govern the financial and operating policies of an investee enterprise so as to
obtain benefits from its activities. On acquisition, the assets and liabilities
of a subsidiary are measured at their fair values at the date of acquisition.
Any excess (deficiency) of the cost of acquisition over (below) the fair values
of the identifiable net assets acquired is recognised as goodwill (negative
goodwill). The interest of minority shareholders is stated at the minority's
proportion of the fair values of the assets and liabilities recognised.



The results of subsidiaries acquired or disposed of during the year are included
in the consolidated income statement from the effective date of acquisition or
up to the effective date of disposal, as appropriate. Where necessary,
adjustments are made to the financial statements of subsidiaries to bring the
accounting policies used into line with those used by other members of the
Group.



All significant intercompany transactions and balances between group enterprises
are eliminated on consolidation.



Goodwill



Goodwill arising on consolidation represents the excess of the cost of
acquisition over the Group's interest in the fair value of the identifiable
assets and liabilities of a subsidiary, associate or jointly controlled entity
at the date of acquisition. Goodwill is recognised as an asset and amortised on
a straight-line basis over its estimated useful life. Goodwill arising on the
acquisition of subsidiaries is presented separately in the balance sheet.



On disposal of a subsidiary, associate or jointly controlled entity, the
attributable amount of unamortised goodwill is included in the determination of
the profit or loss on disposal.



Negative goodwill



Negative goodwill represents the excess of the Group's interest in the fair
value of the identifiable assets and liabilities of a subsidiary at the date of
acquisition over the cost of acquisition. Negative goodwill is released to
income based on an analysis of the circumstances from which the balance
resulted. To the extent that the negative goodwill is attributable to losses or
expenses anticipated at the date of acquisition, it is released to income in the
period in which those losses or expenses arise. The remaining negative goodwill
is recognised as income when the future economic benefits embodied in the
identifiable underlying assets acquired are consumed.



Negative goodwill arising on the acquisition of subsidiaries is presented
separately in the balance sheet as a deduction from assets.



On disposal of a subsidiary, the attributable amount of unamortised negative
goodwill is included in the determination of the profit or loss on disposal.



Foreign currencies



Transactions in currencies other than United States Dollar are initially
recorded at the rates of exchange prevailing on the dates of the transactions.
Monetary assets and liabilities denominated in such currencies are retranslated
at the rates prevailing on the balance sheet date. Profits and losses arising on
exchange are included in net profit or loss for the period.



On consolidation, the assets and liabilities of the Group's overseas operations
are translated at exchange rates prevailing on the balance sheet date. Income
and expense items are translated at the average exchange rates for the period.
Exchange differences arising, if any, are classified as equity and transferred
to the Group's translation reserve. Such translation differences are recognised
as income or as expenses in the period in which the operation is disposed of.



Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the parent company and
translated at the exchange rate at the date of transaction.



Taxation



Income tax expense represents the sum of the tax currently payable and deferred
tax.



The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.



Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax basis used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill (or negative goodwill) or from the initial
recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax profit nor the
accounting profit.



Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.



The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the asset to be
recovered.



Deferred tax is calculated at the tax rates enacted at the balance sheet dates
and that are expected to apply in the period when the liability is settled or
the asset realised. Deferred tax is charged or credited in the income statement,
except when it relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.



Deferred tax assets and liabilities are offset when they relate to income taxes
levied by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.



Hotel properties



Hotel properties are stated at open market value based on annual professional
valuations. Hotel valuations are inclusive of all fixtures and equipment, and
thus the revaluation surplus/deficit on hotel properties is shown after
deducting the net book value of separable and non-integrated fixtures and
equipment. Changes in the value of hotel properties are dealt with as movements
in the revaluation reserve. If the balance of this reserve is insufficient to
cover a deficit, on an individual hotel basis, the excess of the deficit is
charged to the profit and loss account.



It is the Group's practice to maintain hotel properties and integral fixed plant
in a continual state of sound repair, such that their value is not diminished by
the passage of time. Accordingly, the Directors consider that the useful
economic lives of these assets are sufficiently long and their residual values,
based on prices prevailing at the time of valuation, are sufficiently high that
their depreciation is insignificant. The cost of maintenance and repairs of the
properties is charged to the consolidation profit and loss account as incurred
and the cost of significant improvements is capitalised.



Properties held for development



Properties held for development were stated at existing use value based on
professional valuation. Valuations are inclusive of all fixtures and equipment
and thus the revaluation surplus/deficit on such properties is shown after
deducting the net book value of separable and non-integrated fixtures and
equipment.



Interest incurred on borrowings to finance the development of these properties
is capitalised and included in the carrying value thereof.





Investment properties



Investment properties are interests in land and buildings for which construction
work and development have been completed and which are intended to be held on a
long term basis. Such properties are stated at their fair values based on
valuations by the Directors.



Gains or losses arising from the disposal of investment property are determined
as the difference between the net disposal proceeds and the carrying amount of
the asset and are recognised as income or expense in the income statement.



Properties let to group companies



Properties let to group companies are interests in properties which are let to
subsidiaries of the ultimate parent company. These properties are intended to be
held on a long term basis.



Other tangible fixed assets



Other tangible fixed assets are stated at cost less accumulated depreciation.



Depreciation is provided to write off the cost of fixed assets on a systematic
basis over their estimated useful lives. The major categories of fixed assets
are depreciated as follows:


Plant and equipment, fixtures and fittings                                                        3-15 years
Motor vehicles                                                                                    5-12 years
Computer equipment                                                                                   5 years
Leasehold properties and improvements                                                    Residual lease term



Inventory



Inventory comprises goods purchased for re-sale and consumable stores and are
valued at the lower of cost and estimated net realisable value.



Cash and cash equivalents



Cash and cash equivalents are carried in the balances sheet at cost. For the
purposes of the cash flow statement, cash and cash equivalents comprise cash on
hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank
overdrafts. Bank overdrafts are included within borrowings in current
liabilities on the balance sheet.





3 Segmental Information


                                                                                   (Restated)       (Restated)
                                                                 Six months        Six months       Year ended
                                                              ended 30 June     ended 30 June      31 December
                                                                       2003              2002             2002
                                                                (Unaudited)       (Unaudited)        (Audited)
                                                                    USD'000           USD'000          USD'000

Classes of Business


Turnover
Hotel Operations                                                      5,421            14,370           29,806
Property investment                                                      89             1,436            2,780
                                                                ___________      ____________      ___________
                                                                      5,510            15,806           32,586

(Loss)/Profit before taxation
Hotel Operations                                                        662             1,745          (2,912)
Property Investment                                                     165               149              900
Property Development                                                      -                 -         (60,274)
Pharmaceutical                                                         (56)                 -                -
Corporate Office                                                     (1117)             (892)          (1,762)
                                                                ___________      ____________      ___________
                                                                        346             1,002         (64,048)

Geographical segments


Turnover
United Kingdom                                                            -             1,248            2,404
PRC                                                                   5,510            14,558           30,182
                                                                ___________      ____________      ___________
                                                                      5,510            15,806           32,586
(Loss)/Profit before taxation
United Kingdom                                                           76               (9)              311
PRC                                                                     695             1,903         (62,597)
Hong Kong                                                           (1,117)             (892)          (1,762)
                                                                ___________      ____________      ___________
                                                                      (346)             1,002         (64,048)
                                                                 ==========       ===========       ==========





4 TAXATION


                                                                             (Restated)           (Restated)
                                                        Six months           Six months           Year ended
                                                     ended 30 June        ended 30 June          31 December
                                                              2003                 2002                 2002
                                                       (Unaudited)          (Unaudited)            (Audited)
                                                           USD'000              USD'000              USD'000

Current tax                                                      -                (450)                (993)
Deferred tax (note 8)                                       10,129                    -               58,800
                                                      ____________          ___________         ____________
                                                            10,129                (450)               57,807
                                                        ==========           ==========           ==========



No provision for current tax has been made as there was no assessable profit
during the period.





5 DIVIDENDS



No ordinary dividend is proposed (2002: Nil).





6 PROFIT PER SHARE



Profit per share is based upon the profit after tax attributable to shareholders
of USD9,810,000 for the six months ended 30 June 2003 (six months ended 30 June
2002: loss of USD104,000) and the weighted average number of A shares and common
shares in issue during the period of 12,566,102 and 201,609,483 respectively (30
June 2002 - A shares: 14,042,105, common shares: 266,800,000).





7 SHARE CAPITAL



Pursuant to the tender offer approved in February 2003, the Company purchased
99,999,780 common shares at a fixed price of 15 pence per share. The total
consideration paid was USD 23,716,000 and has been deducted from shareholders'
equity. The purchased shares have been cancelled.





8 DEFERRED TAXATION


                                                                              (Restated)           (Restated)
                                                                As at              As at                As at
                                                         30 June 2003       30 June 2002     31 December 2002

                                                          (Unaudited)        (Unaudited)            (Audited)
                                                              USD'000            USD'000              USD'000

Deferred tax liabilities on revaluation of                     15,081             92,213               31,963
properties
Deferred tax assets on tax losses                             (1,232)            (1,473)              (1,232)
                                                         ____________        ___________         ____________
Net position                                                   13,849             90,840               30,731
                                                           ==========         ==========           ==========



The movement for the period in the net deferred tax position was as follows:


                                                                              (Restated)           (Restated)
                                                                As at           As at                As at
                                                         30 June 2003       30 June 2002     31 December 2002
                                                          (Unaudited)        (Unaudited)            (Audited)
                                                              USD'000            USD'000              USD'000

At 1 January                                                   30,731             90,840               90,840
Charge to income                                                    -                  -             (58,800)
Charge to equity                                                    -                  -              (1,309)
Net liability disposed of on disposal of                     (16,882)                  -                    -
subsidiary
                                                         ____________        ___________         ____________
                                                               13,849             90,840               30,731
                                                           ==========         ==========           ==========





9 ACQUISITION AND DISPOSAL OF SUBSIDIARIES



Disposal of subsidiary

On 24 February 2003, the Company's shareholders approved the termination of the
joint venture relating to Xiyuan Hotel and development site in Beijing and a
distribution of assets by the joint venture company, Beijing Xiyuan Landmark
Limited ("Beijing Xiyuan"). The distribution was completed on 24 February 2003.



The results of Beijing Xiyuan for the period from 1 January 2003 to 24 February
2003, which have been included in the Group's results for the period, were as
follows:


                                                                                                     (Restated)

                                                                         1 January 2003 to     Six months ended

                                                                         24 February 2003          30 June 2002

                                                                                 (Unaudited)        (Unaudited)
                                                                                     USD'000            USD'000

Turnover                                                                               2,507              9,750
Operating costs                                                                      (2,544)            (7,924)
Interest                                                                                   -                265
                                                                                ____________       ____________
(Loss)/Profit before taxation                                                           (37)              2,091
Taxation                                                                                   -              (450)
                                                                                ____________       ____________
(Loss)/Profit after taxation                                                            (37)              1,641
Minority interests                                                                        15              (656)
                                                                                ____________       ____________
(Loss)/Profit for the period                                                            (22)                985
                                                                                  ==========         ==========





The net assets of Beijing Xiyuan at the date of disposal were as follows:




                                                                                             24 February 2003

                                                                                                     (Unaudited)
                                                                                                         USD'000

Net assets disposed of                                                                                    64,977
Reclassification from shareholders' equity
- exchange equalisation reserve                                                                         (16,266)
Transaction expenses                                                                                         329
                                                                                                    ____________
                                                                                                          49,040
Profit on disposal                                                                                         1,860
                                                                                                    ____________
Total consideration                                                                                       50,900
                                                                                                      ==========

The net cash inflow on disposal is determined as follows:
Proceeds from disposal                                                                                    50,900
Repayment of sums owing to Beijing Xiyuan                                                                (6,800)
Transaction expenses                                                                                       (329)
Cash and cash equivalents in subsidiary disposal of                                                     (41,808)
                                                                                                    ____________

Net cash inflow on disposal                                                                                1,963
                                                                                                      ==========



Beijing Xiyuan did not make any significant contribution to the cash flows of
the Group during the interim period.



Acquisitions



In 2003, the Group acquired for a cash consideration of USD 2,650,000 a 74.58%
interest in Cathay International Changchun Biotechnology and Pharmaceutical
Limited, which in turn acquired a controlling interest in Changchun Botai
Medicine and Biological Technology Company Limited.



10 RECONCILIATION OF EFFECTS OF ADOPTION OF IFRS



Reconciliation of net assets


                                                                                      As at                As at
                                                                               30 June 2002     31 December 2002
                                                                                (Unaudited)            (Audited)
                                                                                    USD'000              USD'000

Net assets under UK accounting standards                                            138,817              132,020
Recognition of deferred taxation                                                   (90,840)             (30,731)
Minority interest share of deferred taxation                                         30,273                6,753
                                                                               ____________         ____________
Net assets under IFRS                                                                78,250              108,042
                                                                                 ==========           ==========



Reconciliation of net profit/(loss)


                                                                                      As at                As at
                                                                               30 June 2002     31 December 2002
                                                                                (Unaudited)            (Audited)
                                                                                    USD'000              USD'000

Net loss under UK accounting standards                                                (104)              (1,011)
Recognition of deferred taxation                                                          -               58,800
Minority interest share of deferred taxation                                              -             (23,520)
                                                                               ____________         ____________
Net profit/(loss) under IFRS                                                          (104)               34,269
                                                                                 ==========           ==========





11 PUBLICATION OF NON-STATUTORY ACCOUNTS



The unaudited interim results do not constitute full accounts prepared in
accordance with the listing rules of the UK Financial Services Authority. The
figures for the year ended 31 December 2002 have been based on the full accounts
of the Company which were prepared under UK GAAP and which included an
unqualified audit report. The adjustments in respect of the adoption of IFRS
have not been audited. The interim financial information in this report has been
neither audited nor reviewed by the Company's auditors.



12 Copies of this report have been sent to shareholders and are available to the
public from the Company's UK Transfer Agents, Capita IRG plc, The Registry, 34
Beckenham Road, Beckenham, Kent BR3 4TU.






                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

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