RESULTS
The Board of Directors ("the Directors") of China Travel International Investment Hong Kong Limited ("the Company") is pleased to announce that the unaudited consolidated results of the Company and its subsidiaries ("the Group") for the six months ended 30 June 2000 are as follows:
2000 1999
Notes HK$'000 HK$'000
Turnover 1,405,116 1,327,246
========== ==========
Operating profit 337,613 213,843
Provision for doubtful debt - (14,000)
Gain on disposal of
an associate - 60,549
Loss on deemed disposal of
an associate (34,521) -
Share of results of associates 18,287 18,986
Share of results of jointly
controlled entities (478) (646)
---------- ----------
Profit before tax 320,901 278,732
Tax (1) (44,581) (33,251)
---------- ----------
Profit before minority interests 276,320 245,481
Minority interests (156,247) (59,153)
---------- ----------
Profit attributable to shareholders 120,073 186,328
Interim dividend (32,511) (32,511)
---------- ----------
Retained profits 87,562 153,817
========== ==========
Earnings per share (HK cents) (2)
- Basic 3.69 5.73
- Diluted 3.59 5.39
========== ==========
Notes:
(1) Tax
2000 1999
HK$'000 HK$'000
Group:
The People's Republic of China:
Hong Kong 7,382 7,298
Elsewhere 34,733 23,640
Jointly controlled entities - -
Associates 2,466 2,313
---------- ----------
44,581 33,251
========== ==========
Hong Kong profits tax has been provided at the rate of 16% (1999: 16%) on the estimated assessable profits arising in Hong Kong during the period. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.
(2) Earnings per share
The calculation of basic earnings per share is based on the net profit attributable to shareholders for the period of HK$120,073,000 (1999: HK$186,328,000), and 3,251,115,027 (1999: 3,251,115,027) ordinary shares in issue during the period.
The calculation of diluted earnings per share is based on the net profit attributable to shareholders for the period of HK$131,917,000 (1999: HK$198,172,000), after adjustment for the interest saved upon deemed conversion of all convertible notes at the beginning of the period. The weighted average number of shares used in the calculation are 3,251,115,027 shares in issue during the period, as used in the basic earnings per share calculation, and the weighted average of 427,272,727 ordinary shares assumed to have been issued on the deemed conversion of all of the convertible notes at the beginning of the period. The Company's share options did not have a dilutive effect and, accordingly, were not included in the calculation of the diluted earnings per share.
(3) Comparative figures
Certain comparative figures have been re-classified to conform with current period's presentation.
INTERIM DIVIDEND
The Directors have resolved to declare an interim dividend of HK1 cent (1999: HK1 cent) per share for the period ended 30 June 2000. The interim dividend will be paid to the shareholders whose names appear on the Register of Members of the Company at the close of business on 20 October 2000 (Friday). The interim dividend will be paid on or around 31 October 2000 (Tuesday).
CLOSURE OF REGISTER OF MEMBERS
The Register of Members of the Company will be closed from 16 October 2000 (Monday) to 20 October 2000 (Friday), both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the interim dividend, all transfer documents accompanied by the relevant share certificates must be lodged with the Company's Registrars, Standard Registrars Limited, at 5/F., Wing On Centre, 111 Connaught Road Central, Hong Kong not later than 4:00 p.m. on 13 October 2000 (Friday).
BUSINESS REVIEW AND PROSPECTS
In the first half of 2000, the steady growth of GDP in China and the recovery of economy in Hong Kong have created a favourable environment for the Group to operate and develop its business. The management and all the staff of the Group have striven and seized this opportunity to significantly enhance its operation and cost management. Most businesses of the Group, particularly the line of tour and leisure, have achieved a better performance compared with the same period of the prior year. For the six months ended 30 June 2000, the unaudited profit for the Group amounted to HK$120,073,000. Excluding the gain on disposal of an associate amounting to HK$60,549,000 and bad debt provision of HK$14,000,000 in last year and the dilution effect to the Group's shareholdings in Hing Kong Holdings Limited ("Hing Kong") which incurred an estimated loss of HK$34,521,000, profit attributable to shareholders increased by 11% compared with the same period of the prior year.
Tour and Leisure
Since the living standard improves and holiday travel becomes popular in China, the Group's tour and leisure business has achieved an outstanding performance.
The Group has added various new attractions for its three Shenzhen theme parks - Windows of the World, Splendid China, and China Folk Culture Villages, which have made them more appealing to tourists. As a result, the number of visitors and operating profit increased by 18% and 64% respectively over the same period of the prior year. Realising the business opportunity created by the trend of holiday travel, the Group has enhanced the development of the three theme parks. It highlighted the theme of each park by integrating the original facilities. The newly launched Kerxin Grass Slide and the Alpine Indoor Skiing Gymnasium encourage tourists' participation and have been very popular. The Group is planning to develop new attractions for these three theme parks for further development.
In the first half of 2000, the number of tourists served by China Travel (HK & Macau Tour) Management Hong Kong Limited ("HK & Macau Tour") set the highest record and grew by 27% over the same period of the prior year. However, due to the market of Hong Kong and Macau tour is gradually opened to other operators, the margin of this operation is inevitably lowered. Despite this intense competitive travel market, HK & Macau Tour adheres to high quality service, which has successfully established "China Travel" brand name and consolidated its market share. In the face of the fully open travel market, HK & Macau Tour has tightly controlled its cost and adopted the volume sales strategy, which managed to maintain a reasonable profit margin and make positive contribution for the Group.
Shenzhen Tycoon Golf Club ("the Club") has achieved a significant improvement in its business operation after its corporate reengineering in 1999. It has established its reputation after enhancing its promotional activities. Nevertheless, keen competition exists among the golf clubs in Shenzhen, the Club has on one hand to seek new source of revenue and on the other hand to reduce cost to generate satisfactory return for the shareholders.
It is expected that the tour and leisure business will maintain the same rate of growth in the second half of the year and achieve better results than those in the prior year.
Hotel
As the economy in the region, especially in the South East Asia, picks up again, the number of tourists to Hong Kong has increased over last year. However, during this period of consolidation, most local hotels have reduced their room rates to secure the occupancy. It has thus intensified the market competition.
The three hotels under the Group, The Metropole Hotel, Hotel New Harbour, and Hotel Concourse, achieved an average occupancy rate of over 85% in the first half of the year, which was higher than that in the prior year. At the same time, the average room rate increased slightly compared with the same period in the prior year. The results of hotel business in the first half of the year have ended the operating loss in the last two consecutive years.
The Hong Kong hotel industry very much relies on the external market situation. As the external economic situation improves, the three hotels of the Group shall strive to better manage the cost and operation. It is expected to generate more profit for the year.
Transportation
Although the sales turnover of cargo transportation in the first half of the year was increased compared with the same period of the prior year, price had not generally been increased due to the fierce competition in the industry. China Travel Service (Cargo) Hong Kong Limited has thus adopted a "Northbound" strategy to seize an opportunity to explore the market in the Mainland aiming to improve its overall performance and competitiveness.
The Group is facing a major challenge in the cargo transportation market. However, as the economic activities among Hong Kong, Macau, and the Mainland steadily rise, it will be beneficial to the Group's cargo transportation business and it is expected to have better results in the second half of the year.
For the passenger transportation business, the passenger volume for the route between Hong Kong and the Mainland operated by the China Travel Tours Transportation Services Hong Kong Limited ("China Travel Transportation") has been steadily on the rise. Reviewing and revising the routes based on the market demand, China Travel Transportation has added new vehicles to its fleet as necessary and strived to enhance its service quality. China Travel Transportation recorded a substantial increase in profit over the same period of the prior year.
For the passenger service by ferry between Hong Kong and Macau, the Shun Tak-China Travel Shipping Investments Limited has managed to maintain a market share of over 90% in terms of passenger volume. However, due to the downward adjustment in ticket fares and the upsurge of oil prices, the profit for the first half of the year amounted to only HK$42,880,000.
Infrastructure
In the first half of the year, the Shaanxi Weihe Power Co. Ltd. ("Weihe") achieved an output of 2.9 billion kWh, representing 48.7% of the target for the full year. As Weihe intensified the cost review and improved the efficiency, the unit cost of power generation was reduced by 5.3% and the profit increased by 8.8% over the same period of the prior year. Since rainfall in the northwest area of the Mainland increased in the first half of the year, the electricity output by various hydropower plants also grew. However, Weihe will continue to boost its sales and launch more promotion in the second half of the year to accomplish its sales target of power output.
Property Development
In the first half of the year, Hing Kong issued twice a total of 564,500,000 new shares for the acquisition of 95% of share interest in the Shenzhen CyberCity International Co., Ltd. ("SCCIL"). The major business of SCCIL is to develop a high-tech science park named CyberCity Shenzhen of China, which occupies a total site area of approximately 338,000 square metres. The Group believes the acquisition will enable Hing Kong to participate in the information technology industry in China and consolidate its asset base by enhancing its investment portfolio in China. However, the issues of new shares have diluted the shareholding of the Group in Hing Kong from 36.33% to 23.79%, which incurred an estimated loss of HK$34,521,000.
Future Prospects
It is expected that the economic situation will further improve in the second half of 2000. The Directors thus believe the businesses of tour and leisure as well as cargo and passenger transportation will achieve a better performance. The infrastructure projects will also generate steady income for the Group.
The Group will continue to enhance the management of the operation and motivate all the staff. It will also seize all business opportunities, develop new products and projects, realign company structure and increase its competitiveness to generate better returns for the shareholders.
CODE OF BEST PRACTICE
In the opinion of the Directors, the Company has complied with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited throughout the accounting period covered by the interim report, except that the Independent Non-Executive Directors of the Company are not appointed for specific terms as they are subject to retirement by rotation at the annual general meeting in accordance with the Company's articles of association.
PURCHASE, SALE OR REDEMPTION OF SECURITIES OF THE COMPANY
During the period, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's securities or the 6% Interest Rate Convertible Notes due in 2001.
By Order of the Board
Che Shujian
Chairman
Hong Kong, 25 September 2000
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