(Incorporated in Hong Kong under the Companies Ordinance)



The Board of Directors of China Travel International Investment Hong Kong Limited (the "Company") is pleased to announce that the audited consolidated results of the Company and its subsidiaries (the "Group") for the year ended 31 December 1999 are as follows:

                                        Notes          1999          1998
                                                    HK$'000       HK$'000

Turnover                                          2,766,954     1,566,007
Cost of sales                                    (1,702,886)     (927,150)
                                                 ----------    ----------
Gross profit                                      1,064,068       638,857

Other revenue                                       124,993       260,391
Distribution costs                                  (44,838)      (45,267)
Administrative expenses                            (294,257)     (291,891)
Other operating expenses                           (137,410)     (125,196)
Provision for doubtful debts and
  bad debts written off                             (63,055)      (76,295)
Revaluation deficits on hotel properties                  -      (350,000)
Gain/(loss) on disposal of an associate              60,549          (102)
                                                 ----------    ----------
  ACTIVITIES                                        710,050        10,497
Finance costs                                      (184,993)     (108,138)
Share of profits and losses of:
  Jointly-controlled entities                          (597)       (1,044)
  Associates                                         13,489      (143,313)
                                                 ----------    ----------
PROFIT/(LOSS) BEFORE TAX                            537,949      (241,998)
Tax                                      (1)        (71,734)        5,299
                                                 ----------    ----------
  INTERESTS                                         466,215      (236,699)
Minority interests                                 (216,083)      (80,659)
                                                 ----------    ----------
  TO SHAREHOLDERS                                   250,132      (317,358)
Dividends                                (3)        (65,022)            -
                                                 ----------    ----------
RETAINED PROFIT/(LOSS) FOR THE YEAR                 185,110      (317,358)
                                                 ==========    ==========
  Basic                                  (4)           7.69         (9.76)
                                                 ==========    ==========
  Diluted                                (4)           7.44           N/A
                                                 ==========    ==========
  Interim                                              1.00             -
                                                 ==========    ==========
  Final                                                1.00             -
                                                 ==========    ==========


(1) Taxation

                                        1999        1998
                                     HK$'000     HK$'000

Company and subsidiaries
The People's Republic of China
  Hong Kong profits tax              (15,911)     (8,521)
  Elsewhere                          (44,006)    (15,672)
  Overprovision in prior year          2,583      28,774
Deferred taxation                    (13,665)        763
                                    --------    --------
                                     (70,999)      5,344
                                    --------    --------
Associated companies                    (730)        (38)
Jointly controlled entities               (5)         (7)
                                    --------    --------
                                        (735)        (45)
                                    --------    --------
                                     (71,734)      5,299
                                    ========    ========

Hong Kong profits tax is calculated at the rate of 16% (1998: 16%) on the estimated assessable profits for the year. Elsewhere taxation has been provided for at the applicable rates on the estimated assessable profits of the elsewhere subsidiaries and associated companies.

Deferred taxation represents the tax effect of timing differences calculated under the liability method.

(2) Prior year adjustments

(i) According to the Group's accounting policy, any hotel property revaluation deficit in excess of the available revaluation reserve for that specific hotel property should be charged to the profit and loss account as and when it is incurred. During the year ended 31 December 1997, an excess revaluation deficit of HK$101,048,000 in respect of one of the Group's hotel properties was wrongly charged to the then available revaluation reserves arising in respect of the Group's other hotel properties. During the year ended 31 December 1998, this amount of revaluation deficit of HK$101,048,000 was then included in the revaluation deficit of HK$451,048,000 charged to the Group's profit and loss account.

An adjustment has now been made to reverse the charge in respect of the revaluation deficit of HK$101,048,000 from the Group's 1998 profit and loss account into the Group's 1997 profit and loss account. This has resulted in a decrease in the Group's net loss for the year ended 31 December 1998 from HK$411,224,000 to HK$310,176,000, and a decrease in the Group's net profit for the year ended 31 December 1997 from HK$499,077,000 to HK$398,029,000. This prior year adjustment affected only the comparative amounts presented to the current year financial statements and therefore had no impact on the Group's results for the year ended 31 December 1999.

(ii) To comply with the new requirements of SSAP1 - as subsequently clarified by an interpretation statement issued by the Hong Kong Society of Accountants, group policy of accounting for deferred pre-operating expenses which, in prior years, were capitalised and amortised over periods not exceeding five years on a straight-line basis, beginning when the related production commenced, was changed during the year ended 31 December 1999. Deferred pre-operating expenses are now recognised as expenses in the period in which they are incurred.

This change in accounting policy has been accounted for retrospectively. The comparative financial statements for 1998 have been restated to conform to the new policy. The effect of the change in respect of the year ended 31 December 1998 is an increase in share of losses in associates of HK$8,342,000, and a resulting increase in the net loss of HK$7,182,000. The opening retained earnings for 1998 have been reduced by HK$28,344,000 which is the amount of the adjustment in respect of the Group's share of pre-operating expenses in associates and its own pre-operating expenses written off relating to the periods prior to 1 January 1998.

(3) Dividends

                                                     1999       1998
                                                  HK$'000    HK$'000

Interim - 1 cent (1998: Nil) per ordinary share    32,511          -
Proposed final - 1 cent (1998: Nil)
  per ordinary share                               32,511          -
                                                  -------    -------
                                                   65,022          -
                                                  =======    =======

(4) Earnings (Loss) per share

The calculation of basic earnings per share is based on the net profit attributable to shareholders for the year of HK$250,132,000 (1998: loss of HK$317,358,000 (as restated)), and 3,251,115,027 (1998: weighted average of 3,251,110,698) ordinary shares in issue during the year.

The calculation of diluted earnings per share is based on the net profit attributable to shareholders for the year of HK$273,820,000, after adjustment for interest saved upon the deemed conversion of all convertible notes during the year. The weighted average number of shares used in the calculation is 3,251,115,027 shares in issue during the year, 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 the convertible notes. 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.

No diluted loss per share for the year ended 31 December 1998 has been presented because the conversion of the convertible notes and the guarantee convertible bonds, and the exercise of the Company's share warrants would have anti-dilutive effects. The Company's share options did not have a dilutive effect.


The Board of Directors has resolved to recommend the payment of a final dividend of HK1 cent per share (1998: Nil) for the year ended 31 December 1999. Subject to the approval of the shareholders as regarded to the proposed payment of the final dividend at the forthcoming Annual General Meeting, the proposed final dividend will be paid on 11 July 2000 (Tuesday).


The Register of Members of the Company will be closed from 19 June 2000 (Monday) to 23 June 2000 (Friday), both days inclusive, in order to determine entitlements to the final dividend. In order to qualify for the final dividend, all transfer documents accompanied by the relevant share certificates must be lodged with the Company's Registrar, Standard Registrars Limited, at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong not later than 4:00 p.m. on 16 June 2000 (Friday).


Tour Operation and Leisure Business

The Group's tour operation and leisure business include HK & Macau Tour, the three Shenzhen theme parks, namely Window of the World, Splendid China and China Folk Culture Villages as well as Shenzhen Tycoon Golf Club.

During the year, the Tour Operation and Leisure Business contributed to the Group a profit of HK$158 million.

(1) Tour Operation

The total number of local visitors from Mainland China increased by 18.7% in 1999. At the same time, the number of visitors served by China Travel (HK & Macau Tour) Management Hong Kong Limited under the Group also increased by 28.6% over the same period last year. Besides, the profits of China Travel (HK & Macau Tour) Management Hong Kong Limited also recorded an increase in 1999 as compared with the same period last year. It is expected that visitors from Mainland China will continue to be the major source of growth to the Hong Kong tourist industry in 2000. This is particularly so in view of the plan to construct a Disney theme park on the Lantau Island has been finalized and adoption of other initiatives in the pipeline to develop additional facilities to attract more visitors to Hong Kong. In addition, the implementation of the three long statutory holidays in PRC, namely, Labour Festival in May, National Festival in October and Chinese New Year will boost the tour business in PRC. As such, the Group estimates that the number of PRC tourists to Hong Kong and Macau will continue to grow.

(2) Theme Parks

In 1999, there was an increase in the number of visitors to the three Shenzhen theme parks as compared with 1998. While such parks were built several years ago, they continued to attract a steady number of visitors. Shenzhen The Splendid China Development Co., Ltd. ("Splendid China") and Shenzhen The World Miniature Co., Ltd. ("Window of the World") both achieved their targets for cost control and staff value added programs. The two companies maintained their profits level due to corporate re-engineering, structural rationalization and better allocation of human resources.

While there is a number of new theme parks in the Pearl River Delta area, none can compare to Splendid China and Window of the World in terms of scale of operation, publicity, management skill and design concept. Meanwhile, in order to improve competitiveness, management teams of the three theme parks have kept upgrading the facilities and creating new programs. In 2000, the number of visitors to the Group's theme parks is expected to increase further as compared with 1999. In the long run, with the completion of the new Disney theme park in Hong Kong, there will be many visitors who are interested in visiting theme parks come to Hong Kong. This will bring additional visitors to the Group's theme parks in Shenzhen.

(3) Golf Club

Shenzhen Tycoon Golf Club ("Tycoon Club"), has been in operation since March 1999, is a 27-hole golf course with facilities including a villa hotel, a clubhouse, swimming pool, tennis courts, a sauna and massage center and a restaurant featuring Chinese and Western cuisine. The golf club is located by the Shenzhen Baoan Tiegang Reservoir, near the Shenzhen Huangtian Airport and the Shenzhen Fuyong Terminal, and is accessible from the Guangshen Expressway. Owing to its idyllic scenery and convenient transportation network, Tycoon Club was elected as the most popular golf club in the PRC in 1999. At the end of 1999, Tycoon Club has approximately 600 members, while its facilities served an average of 4,000 visitors each month during the year.

Hotel Operations

According to the statistics from Hong Kong Tourist Association, the number of visitors to Hong Kong in 1999 reached 10,680,000, representing an increase of 11% over 9,600,000 last year. However, the occupancy rate of hotels in Hong Kong was little changed from 1998, staying at around 79%. The average occupancy rate of the Group's three hotels in 1999 increased to 84.8% from 80.4% in 1998. Still, the average room rate of the three hotels fell further from HK$342 to HK$301 due to vehement price competition among hotels in the face of excess supply. Actually some hotels even let out their rooms on short- or long-term tenancy for residential purpose. Hotel Metropole reduced losses this year and achieved an average occupancy rate of 79.5%. Hotel Concourse and Hotel New Harbour both recorded an increase in profit during the year, with the average occupancy rate of Hotel Concourse at 91.7% and that of Hotel New Harbour at 82.9%. Overall, the combined results of the three hotels showed a higher profit in comparison with last year. Nevertheless, the Group forecasts that the business environment for the hotel industry will remain difficult in 2000.

The Group's new hotel situated in Causeway Bay is still under construction. The foundation works were already completed in mid 1999 and over 20 floors of the hotel building have also been built. The whole project is expected to complete fully by the early summer of 2001. The official opening has been scheduled in late autumn of 2001. The four-star hotel will provide 325 guestrooms, targeting at business travelers as its primary customers.

Transportation Business

For 1999, the Group's transportation business recorded a profit of HK$14 million.

(1) Freight Forwarding

The Group's freight forwarding operation recorded a loss in 1999. The poor results were attributable to the reduction in the volume of cargo transportation due to contracted re-export trading handled by Hong Kong for the PRC. The ever improving expressway networks and deep harbour facilities in the PRC has been drawing customers away and brought severe adverse impact on the railway transportation business. In a bid to diversify its freight forwarding operation, CTII Worldwide Limited was established by the Group in the second half of 1999 to focus on the expansion of the freight forwarding network between Hong Kong and the PRC as well as the international market so as to supplement the railway transportation through the Hong Kong Shenzhen Railway in handling cargoes between Hong Kong and Mainland China. The Group has also started to look into the idea of developing logistic centers in Hong Kong and the PRC. Detailed planning for such investments may begin within 2000.

(2) Passenger Transportation

Competition in cross-border passenger transportation was extremely fierce during the year. On the one hand, through trains running between Hong Kong and Guangzhou has shortened their drive-run and increase the number of dispatch. On the other hand, a number of shuttle bus companies based in Lowu, Shenzhen to other places in Guangdong have also entered the market. As a result, both the passenger volume and fare level of the Group were under pressure, and 1999 turned out to be a very difficult year to the businesses of through bus operation and cross-border vehicle rental services. Fortunately, owing to the insight of the management of China Travel Tours Transportation Services Hong Kong Limited ("CT Tours") to set up new routes between Chek Lap Kok Airport and Dongguan as well as Guangzhou, and between Zhuhai and Shenzhen, the Group's passenger transportation business managed to return to profit. Although, it is forecasted that the cross-border transportation will remain vehemently competitive in 2000, the prospects of the Group's through bus operation and vehicle rental service are expected to improve. The Group believes that as long as it can manage to stay ahead of its competitors and remain adaptive to market demand, it will achieve success in gaining a competitive position in the cross-border transportation market.

(3) Citybus

The Group considered that the plan to develop cross-border transportation business with the Citybus Group Limited ("Citybus") had no chance to materialize, and it was meaningless to continue to be a strategic shareholder of Citybus. Therefore, following the general offer proposed by the UK's Stagecoach Asia Limited ("Stagecoach") at the beginning of 1999, the Group, after careful consideration, entered into an agreement to dispose of its entire equity interest of 23.13% in Citybus to Stagecoach at a consideration of HK$1.95 per share. Accordingly, the Group recorded a gain of over HK$60 million.

(4) Passenger Ferry Operation

The Group fulfilled the capital injection in mid 1999 for its 29% equity interests in Shun Tak-China Travel Shipping Investments Limited ("Shun Tak-CTS"), a merger of the Hong Kong-Macau jetfoil operation of Shun Tak Holdings Limited ("Shun Tak") and the Hong Kong-Macau express ferry service operation of CTS-Parkview under the Parent Company of the Group. The principal routes are Hong Kong-Macau, Hong Kong-Shenzhen and Hong Kong-Guangzhou. Owing to the increase in expenditure caused by personnel reshuffle under the corporate restructuring after the merger, Shun Tak-CTS only managed to register a profit of HK$16 million in 1999. Nevertheless, Shun Tak-CTS's HK-Macau route market share are over 90%. In the past, Shun Tak had been in direct competition with the Hong Kong-Macau ferry services of the Parent Company of the Group in respect of price as well as the number of dispatch. The Group believes that due to the synergy effect after the merger, it will benefit from better cost control and more responsive adjustment to dispatch frequency by Shun Tak-CTS. In addition, with the improved social order of Macau after the enclave's sovereignty has been returned to the PRC, Shun Tak-CTS is expected to deliver higher profit contribution to the Group in 2000.

Investment Holdings


Apart from the above core businesses, the Group is also a substantial shareholder of Hing Kong Holdings Limited ("Hing Kong"). For the purpose of improving the rate of return on that property, the Group has sold during the year the whole of 33rd floor of the China Merchants Tower of Shun Tak Centre to Hing Kong, whose principle businesses include property development and high technology investment. The consideration of such disposal was HK$40 million in cash plus HK$66 million worth of convertible bonds (with the exercise price of HK$0.986 per share) in Hing Kong. Meanwhile, the Group has also entered into an agreement with Hing Kong to jointly develop a land lot in Fanling held by the Group in order to maximize the value of such land lot.

In late 1999, Hing Kong has acquired 95% equity interests in Shenzhen CyberCity International Co. Ltd. ("SCCIL") through share swap, marking its very first step into the realm of technology investment. Through SCCIL, Hing Kong intends to attract renowned international and local information technology corporation as well as business service providers for the provision of communication infra-structure, internet-hosting, technology management and e-commerce enabling services to set up their bases in the property of SCCIL as tenants and/or business partner of Hing Kong. It is expected that the Group will benefit from Hing Kong's investment in high technology.


During 1999, profit contributed from the infrastructure projects, including Weihe Power Plant and projects on roads and bridges in the PRC, amounted to HK$430 million.

(1) Weihe Power Plant

For the year, the total volume of electricity generated by Weihe Power Plant was 5.98 billion kWh, representing an increase of over 200 million kWh over last year. As electricity consumption was little changed in the northwestern regions in 1999, the amount of offtake electricity was still lower than the guaranteed minimum amount of electricity sold. During the year, the average tariff was maintained at RMB0.35 per kWh, while the unit cost of electricity generation was RMB0.195 per kWh. Profit before tax of Weihe Power Plant for 1999 recorded a remarkable increase as compared with 1998. It is expected that the profit contributions from Weihe Power Plant will continue to increase as compared with 1999.

(2) Roads and Bridges

Through its investment in CTS-Coastal Transportation Investment Limited ("CTS-Coastal"), the Group has participated in a number of projects on roads and bridges in the PRC. Fuzhou Bridge are already in service, with a daily traffic flow exceeds 23,000 cars. The existing revenue is satisfactory and the traffic flow is expected to increase further.


The Company has complied throughout the year ended 31 December 1999 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 ("Listing Rules") apart from the Independent Non-executive Directors are not appointed for a specific term as they are subject to retirement by rotation at Annual General Meeting in accordance with the Company's Articles of Association.


During the year, no shares of the Company was purchased or sold by the Company or any of its subsidiaries.


The Group has made a successful transition to the year 2000. All Year 2000 compliance activities were completed as scheduled and all of the Group's electronic systems have proven to be fully Year 2000 compliant.

By the order of the Board
Zhu Yuening

Hong Kong, 26 May, 2000

Source: China Travel International Investment Hong Kong Limited
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