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CHINA TRAVEL INTERNATIONAL INVESTMENT
HONG KONG LIMITED



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

The 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 for 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 leisure business, 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") at the beginning of the period 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 Pearl River Delta area, 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 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 visiting 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, namely, 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 operating 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, 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 in the second half of the year to accomplish its sales target of power output.

Investment Holdings

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 hi-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 on deemed disposal 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.

DIRECTORS' INTERESTS IN SHARES

As at 30 June 2000, the interests of the Directors in the share capital of the Company or its associated corporations as recorded in the register maintained by the Company pursuant to Section 29 of the Securities (Disclosure of Interests) Ordinance (the "SDI Ordinance") were as follows:

Ordinary Shares of the Company

                        Number of shares held and nature of interest
                    Personal    Corporate          Other
Name of Director    Interest     Interest       Interest          Total

Dr. Fong Yun Wah           -      500,000(a)     502,000(b)   1,002,000

Notes:

(a) These shares are beneficially owned by certain corporations in which Dr. Fong Yun Wah is taken to be interested by virtue of the SDI Ordinance.

(b) These shares are beneficially owned by certain charitable foundations in which Dr. Fong Yun Wah is the chairman and has non-beneficial interests.

Ordinary Shares of the Associate
Hing Kong Holdings Limited

                         Number of shares held and nature of interest
                        Personal     Corporate        Other
Name of Director        Interest      Interest     Interest      Total

Mr. Zhang Fengchun        30,000             -            -     30,000

Save as disclosed above, none of the Directors or their associates had any interest in the share capital of the Company or its associated corporations as defined in the SDI Ordinance.

DIRECTORS' RIGHTS TO ACQUIRE SHARES

As at 30 June 2000, the Directors of the Company who held share options granted under the Company's share option scheme were as follows:

                     Number of share
Name of          options outstanding   Exercise period of  Exercise price
Director             at 30 June 2000        share options       per share
                                                                      HK$

Mr. Zhu Yuening           69,000,000   14-1-98 to 13-1-01           3.568
Mr. Zheng Hongqing        45,000,000   14-1-98 to 13-1-01           3.568
Mr. Zheng Heshui           3,000,000   14-1-98 to 13-1-01           3.568
Mr. Lo Sui On              1,500,000   14-1-98 to 13-1-01           3.568

No options have been exercised by the Directors since the date of grant on 11 July 1997.

Save as disclosed above, at no time during the period was the Company, its holding company or any of its subsidiaries a party to any arrangement to enable the Directors, their respective spouse, or children under 18 years of age to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

SUBSTANTIAL SHAREHOLDERS

As at 30 June 2000, the register of shareholders maintained under Section 16(1) of the SDI Ordinance showed that the following shareholders had an interest of 10% or more in the issued share capital of the Company:

                                                       Number of
Name                                                 shares held       %

China Travel Service (Holdings) Hong Kong Limited
  ("CTS Holdings")                                 1,956,561,741   60.18
China Travel Service Head Office of the PRC        1,956,561,741   60.18

Note:

The entire issued share capital of CTS Holdings is beneficially owned by China Travel Service Head Office of the PRC. CTS Holdings is the direct holding company of the Company. Accordingly, the interests of China Travel Service Head Office of the PRC in the Company duplicate the interests of CTS Holdings.

Save as disclosed above, the register of shareholders maintained by the Company pursuant to section 16(1) of the SDI Ordinance discloses no person as having an interest of 10% or more in the issued share capital of the Company as at 30 June 2000.

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 ("the Listing Rules") 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.

PRACTICE NOTE 19 OF THE LISTING RULES

As at 30 June 2000, the Company had loan facilities, which was subject to, inter alia, a specific performance obligation on the controlling shareholder of the Company, CTS Holdings, during the tenure of such loan facilities. The specific performance obligation is that CTS Holdings shall maintain a holding of not less than 51% of the total issued share capital of the Company throughout the tenure of the loan facilities granted to the Company. A breach of the obligation will constitute an event of default. As a result of such breach, the loan facilities may become due and payable on demand by the relevant lenders according to the respective terms and conditions thereof. The details of the loan facilities are as follows:

   Amount outstanding
   as at 30 June 2000       Final maturity of the loan facilities

1.     HK$300 million                               27 March 2001
2.     HK$200 million                            15 December 2000
3.      US$62 million                            14 November 2003*

* Subject to the exercise of the lenders' option to demand the repayment of the remaining outstanding principal on Put Option date, i.e., 14 May 2002.

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


Source: China Travel International Investment Hong Kong Limited
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