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China Travel International Investment Hong Kong Limited
(incorporated in Hong Kong under the Companies Ordinance)

RESULTS

The Board of Directors of China Travel International Investment Hong Kong Limited ("the Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries ("the Group") for the six months ended 30th June, 1999 as follows:

                                                  Note        1999        1998
                                                           HK$'000     HK$'000

Turnover                                                 1,327,246     642,397
                                                         =========     =======
Operating profit                                           213,843     161,680
Exceptional items                                 (1)       46,549      28,198
Share of results of associated companies          (2)       18,986     (40,175)
Share of results of jointly controlled
  entities                                                    (646)      (410)
                                                         ---------     -------
Profit before taxation                                     278,732     149,293
Taxation                                          (3)      (33,251)    (16,023)
                                                         ---------     -------
Profit before minority interests                           245,481     133,270
Minority interests                                         (59,153)    (19,763)
                                                         ---------     -------
Profit attributable to shareholders                        186,328     113,507
Interim dividend                                           (32,511)          0
                                                         ---------     -------
Retained profits                                           153,817     113,507
                                                         =========     =======
Earnings per share (HK cents)                     (4)
  - Basic                                                     5.73        3.49
                                                         =========     =======

Notes:

(1) Exceptional Items

                                                       1999           1998
                                                    HK$'000        HK$'000

Doubtful debt (provided for) written back           (14,000)        28,300
Gain on disposal of an associated company            60,549              -
Loss on deemed disposal of an associated company          -           (102)
                                                    -------        -------
                                                     46,549         28,198
                                                    =======        =======

(2) Share of results of associated companies

                                                       1999           1998
                                                    HK$'000        HK$'000

Share of operating results                            5,251        (40,175)

Share of exceptional items
  Written back for diminution in value of				
    property projects                                   591              -	
  Unrealised gain on trading listed securities       13,144              -
                                                    -------        -------
                                                     18,986        (40,175)
                                                    =======        =======

(3) Taxation

                                              1999            1998
                                           HK$'000         HK$'000

Group
  Profits tax
    Hong Kong                                7,298           7,778
    Other regions in the PRC                23,640           8,295
  Deferred taxation                              -               -
Associated companies
  Profits tax
    Hong Kong                                2,313             (50)
    Other regions in the PRC                     -               -
  Deferred taxation                              -               -
                                            ------          ------
                                            33,251          16,023
                                            ======          ======

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

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

(4) Earnings per share

The calculation of the basic earnings per share for the six months ended 30th June, 1999 is based on the following data:

                                                               1999            1998
                                                            HK$'000         HK$'000

Earnings

Profit for the period and earnings for the
  purpose of basic earnings per share                       186,328         113,507
                                                      -------------   -------------
Number of shares

Weighted average number of ordinary shares for
  the purpose of basic earnings per share             3,251,106,299   3,251,106,299
                                                      =============   =============

No diluted earnings per share has been presented as the exercise of the Company's outstanding share options and convertible notes would not have any dilutive effect.

(5) Comparative figures

Certain comparative figures have been re-classified to conform with current periodís presentation.

INTERIM DIVIDEND

The Board of Directors has resolved to declare an interim dividend of 1.0 cent (1998: Nil) per share for the year ending 31st December, 1999. The interim dividend will be payable on 15th November, 1999 (Monday) to the shareholders whose names appear on the Register of Members of the Company at close of business on 29th October, 1999 (Friday).

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from 25th October, 1999 (Monday) to 29th October, 1999 (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 Registrar, Standard Registrars Limited, at 5/F., Wing On Centre, 111 Connaught Road Central, Hong Kong not later than 4:00 p.m. on 22nd October, 1999 (Friday).

BUSINESS REVIEW AND PROSPECTS

Hong Kong's economy showed signs of gradual recovery and improvement in the first half of 1999. The Group recorded better results for the past six months, which were attributable to its solid foundation, the continuous streamlining of its operations, the implementation of stringent cost control and the enhancements made to its competitive edge. Most of the Group's businesses, its tour and leisure operations in particular, reported encouraging results as compared with those of the first half of last year. Taking into account the exceptional profit derived from the disposal of its entire equity interest in Citybus Group Limited ("Citybus"), the Group recorded unaudited consolidated profits attributable to shareholders in the amount of HK$186 million for the six months ended 30th June, 1999, representing an increase of 64% as compared with those of the first half of last year.

Tour Operation and Leisure Business

The Group's tour operation achieved satisfactory and stable return due to its consistently high standard of services in times when the tourist industry has just started to recover.

In the first half of the year, the number of tourists served by China Travel (HK & Macau Tour) Management Hong Kong Limited ("HK & Macau Tour") increased by 57% with its operating profits before interest and tax increased by 25% as compared with those in the same period of last year. Through the implementation of tightened cost control measures, effective promotional and marketing efforts, HK & Macau Tour succeeded in maintaining its growth in profits. It is also well positioned to benefit from the proactive measures initiated by the HK SAR Government to promote and assist its tourist industry. The Board anticipates that HK & Macau Tour will continue to contribute to the Group's profits.

The results of the three theme parks in Shenzhen, namely Windows of the World, Splendid China and China Folk Culture Villages, continue to show signs of improvement. The profits of the three theme parks increased by 8%, notwithstanding the fact that the number of visitors remained stable as that of the same period last year. The three theme parks will continue to improve their quality of services and introduce new attractions to lure more visitors.

The Shenzhen Tycoon Golf Club (the "Club") commenced its operation on 12th March, 1999. The Club sold over 300 of its memberships as of 30th June, 1999, enabling it to become another profit contributor to the Group's leisure business. In order to further enhance the Group's management in its leisure business, the Group and HKR International Limited intend to form a joint venture management company in the second half of this year to expand on their existing leisure businesses and promote high quality management in this area.

The Group anticipates that its tour and leisure operations will continue their steady growth in the second half of this year.

Hotel Operations

Hotel business in Hong Kong continued to suffer under the influence of the devaluation of most South East Asian currencies. The number of tourists increased but competition continued to drive down tariff rates.

The Group's hotels, namely The Metropole Hotel, Hotel New Harbour and Hotel Concourse, enjoyed an over 80% average occupancy rate in the first half of the year. However, discounted room tariff rates undermined their earnings. As a result, the Group recorded a slight loss in its hotel operations in the first half of the year. More emphasis will be placed on tightened cost control and improved staff efficiency in the remainder of the year.

Faced with the current market difficulties in the hotel industry, the Group's hotels will strive to achieve a breakeven in their operations for the remainder of the year by streamlining its hotel operations and implementing flexible pricing strategies.

Transportation

Despite continued efforts of the Group to strengthen its operational management, enlarge its customers' base and tighten its costs, the performance of its cargo and passenger service operations has not been satisfactory due to fierce competition and global price reduction.

In order to further enhance its express delivery and freight forwarding business in the People's Republic of China ("PRC"), China Travel Service (Cargo) Hong Kong ("CTS-Cargo") Limited has developed a "Northbound strategy" by moving part of its operations to the PRC with a view to improve its competitive edge. Negotiations are currently under way for CTS-Cargo to set up an international freight forwarding joint venture operation to extend its client base to the United States and Europe. By combining its well-established network in the PRC with an international network, the Group expects the new venture to give a fresh impetus to the business.

On the passenger service front, the Group formed a new joint venture company, Shun Tak-China Travel Shipping Investments Limited (the "Shun Tak-CTS") with Shun Tak Holdings Limited in June to develop passenger ferry services in Hong Kong, Macau as well as the Pearl River Delta area. The Group holds 29% equity interest in Shun Tak-CTS. The Group believes that this combined strength with the Shun Tak Group will be beneficial to its shareholders.

Although the overall performance of the transportation sector has not been entirely satisfactory, the disposal in February of 23.12% equity interest in Citybus to Stagecoach Asia Limited at a consideration of HK$528 million, which contributed an exceptional gain of HK$61 million, enables the transportation sector to record a 132% increase in profits as compared with that of the same period last year. The Group is confident that with the introduction of an international and new passenger service market, the performance of the cargo and passenger service operations will improve in the second half of 1999.

Infrastructure

The total amount of electricity generated by Shaanxi Weihe Power Co., Limited (the "Power Plant") in the first half of 1999 was 2.956 billion kWh, representing 49.3% of the planned electricity offtake for the year. The performance of the Power Plant for the first six months was satisfactory since the management continued to explore new measures to improve its operating efficiency and profits. The operating profits before shareholders' loan interest and taxation of the Power Plant for the first half-year are over HK$230 million. Despite this positive result, the Power Plant is faced with serious challenges, including a reduction in electricity demand in the Shaanxi Province, which restricts any further increase in the generation of electricity. The Group expects this situation to persist for some time. The Power Plant will in the meantime strive to achieve its operational target by strengthening its management as well as tightening its costs.

Two of the road and bridges' projects, namely the Tianjing North Section of Beijing-Shanghai Expressway (the "Tianjing North Section") and the three-bridge project in Fuzhou (the "Fuzhou Project"), are fully operational in the first half of this year. The remaining routes are expected to be operational by the end of the year. Profits derived from the above projects are approximately HK$7 million for the first 6 months of this year.

Property

Hing Kong Holdings Limited ("Hing Kong") recorded a gain for the first half of this year in light of the recovering local property market. Given a stabilized property market, the Group expects that Hing Kong will increase its contribution to the Group's profits upon the completion and sale of Hing Kong's properties in the second half of the year.

Prospects

The Board believes that the economic climate will improve gradually in the second half of 1999. The governmental support in promoting and investing in tourism will help to boost the Group's tour and leisure businesses. A significant breakthrough is also expected in the transportation business. Together with the stable return from the Group's infrastructure projects as well as continuous efforts insisted on its internal management control and in the strengthening of the quality and structure of its various businesses, the Board is optimistic about the overall performance of the Group for the second half of this year.

Year 2000 Compliance

The Group's management has conscientiously attended to the Year 2000 issue. The Group commenced rectification work on the computer system of each group company in the first half of 1998 to ensure that the business operations of the Group will not be disrupted prior to, during and beyond the Year 2000.

After assessing the impact of the Year 2000 issue on the Group's business operations, the Group implemented appropriate measures such as the upgrade on its computer hardware and rectification and replacement of its application software systems to tackle the impact. The rectification work is progressing satisfactorily and over 95% of the work has now been completed. The Group aims to complete the Year 2000 compliance program by October 1999.

The total costs for the Year 2000 issue are estimated to be approximately HK$3.3 million. As at 30th June, 1999, approximately HK$3 million were incurred mainly in connection with the renewal and rectification of its application software systems.

DIRECTORS' INTERESTS

As at 30th June 1999, the interests of the Directors in shares of the Company as recorded in the register maintained under Section 29 of the Securities (Disclosure of Interests) Ordinance (the "SDI Ordinance") were as follows:

                                    No. of shares held
                      Personal    Corporate        Other
Name                 Interests    interests    interests        Total

Dr. Fong Yun Wah             -      500,000      502,000    1,002,000
                                   (note 1)     (note 2)

Notes:

(1) 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.

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

Save as disclosed above, as at 30th June 1999, none of the Directors nor their associates had any interests in any securities of the Company or any of its associated corporations as defined in the SDI Ordinance.

DIRECTORS' INTEREST IN OPTIONS TO SUBSCRIBE FOR SHARES

Particulars of the outstanding share options as at 30th June 1999 were as follows:

                                                    Exercisable
                                      No. of share        price             Exercisable
Name               Date of grant   options granted    per share                  period

Zhu Yuening       11th July 1997        69,000,000        3.568    14th January 1998 to
                                                                      13th January 2001
Qiu Yiyong        11th July 1997        45,000,000        3.568    14th January 1998 to
                                                                      13th January 2001
Zheng Hongqing    11th July 1997        45,000,000        3.568    14th January 1998 to
                                                                      13th January 2001
Xu Shiquan        11th July 1997        45,000,000        3.568    14th January 1998 to
                                                                      13th January 2001
Wang Changle      11th July 1997         3,500,000        3.568    14th January 1998 to
                                                                      13th January 2001
Chen Wangtao      11th July 1997         3,500,000        3.568    14th January 1998 to
                                                                      13th January 2001
Zheng Heshui      11th July 1997         3,000,000        3.568    14th January 1998 to
                                                                      13th January 2001

None of the options granted was exercised by the Directors from the date of the grant up to the date of this report.

Save as disclosed above, at no time during the six months ended 30th June 1999 was the Company, or any of its subsidiaries, a party to any arrangement to enable the Directors of the Company 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 30th June 1999, the following shareholders of the Company were recorded in the register required to be kept under Section 16(1) of the SDI Ordinance as having an interest in 10% or more of the issued share capital of the Company:

                                                                  Percentage of
                                                No. of ordinary    total issued
Name                                                shares held   share capital

China Travel Service (Holdings) Hong
  Kong Limited                                    1,956,561,741          60.18%
China Travel Service Head Office of China         1,956,561,741          60.18%

Note: The entire issued share capital of China Travel Service (Holdings) Hong Kong Limited is beneficially owned by China Travel Service Head Office of China. China Travel Service (Holdings) Hong Kong Limited is the direct holding company of the Company. Accordingly, the interests of China Travel Service Head Office of China in the Company duplicate the interests of China Travel Service (Holdings) Hong Kong Limited.

Save as disclosed above, as at 30th June 1999, no other person was recorded in the register kept pursuant to Section 16(1) of the SDI Ordinance as having an interest in 10% or more of the issued share capital of the Company.

CODE OF BEST PRACTICE

None of the Directors is aware of any information that would reasonably indicate that the Company is not, or was not for any part of the six months ended 30th June, 1999, in compliance with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on the Stock Exchange except that the Non-executive Directors are not appointed for specific terms but are subject to retirement by rotation at Annual General Meeting in accordance with the Company's Articles of Association.

PURCHASE, SALE OR REDEMPTION OF THE GROUP'S SECURITIES

During the period, no shares of the Company or 6% Convertible Notes due 2001 issued by the Company were purchased, sold or redeemed by the Company or any of its subsidiaries.

By Order of the Board
Zhu Yuening
Chairman

Hong Kong, 21st September, 1999


Source: China Travel International Investment Hong Kong Limited
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