CK Life Sciences Int'I Hldgs : Announcement - Interim Results for 2016

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(Incorporated in the Cayman Islands with limited liability) (Stock Code: 0775)

CK Life Sciences Int'l., (Holdings) Inc. ("CK Life Sciences" or the "Company") recorded a steady performance during the first half of 2016.

For the six months ended 30 June 2016, profit attributable to shareholders was HK$187.4 million, an increase of 5% over the corresponding period last year.

The Board of Directors has not declared any interim dividend for the period under review (2015: Nil).

As at 30 June 2016, the agriculture-related business recorded profit contribution of HK$143.7 million, an amount similar to that of the same period last year.

Australian Agribusiness Holdings Ltd, which comprises Accensi Pty Ltd ("Accensi") and Amgrow Pty Ltd ("Amgrow") performed well during the period under review. Accensi, the leading toll manufacturer of crop protection products in Australasia, witnessed record volumes produced at all locations. Amgrow, the largest supplier of products and services in Australia's professional golf and turf management industry, also reported satisfactory growth.

Backed by long term tenancy agreements, CK Life Sciences' vineyard portfolio continued to generate recurrent income. The Group is currently the second largest vineyard owner in Australasia, and one of the top ten largest vineyard owners in the world.

Cheetham Salt, Australasia's leading supplier of domestic salt, maintained share under competitive pressure through enhanced management of customer relationships.

CK Life Sciences' nutraceutical business achieved a 29% increase in profit contribution, amounting to HK$268.1 million.

During the first half, businesses in the portfolio progressed well. Santé Naturelle

A.G. Ltée in Canada continued to show improvements in market share and growth. Preparations for the launch of a premium line of products in Quebec have been completed.

In the United States, Vitaquest International Holdings LLC ("Vitaquest") completed the first phase of its project to automate powder and packaging operations. This advancement enabled Vitaquest to further improve margins.

In Australia, commissioning of a new standalone packing facility in Lipa Pharmaceuticals Limited has been completed with regulatory certification targeted to be in place in the third quarter. In addition to improving efficiency, the new facility will allow the business to reduce the use of external contractors, improve customer service and flexibility, as well as build a platform for future growth and development in this sector.

In pharmaceutical R&D, our areas of focus have been oncology and pain management.

Our lead project in oncology is a vaccine for melanoma designed for patients in earlier stages of the disease. Current products on the market target patients at a late stage of the disease and their safety profile is not appropriate for earlier stage patients. Since there is no safe and effective treatment which slows or prevents recurrence of melanoma among earlier stage patients, our product, if demonstrated to be effective, could reach a market larger than that for current products targeted at late stage patients. We are now in the second part of the Phase III clinical trial under a Special Protocol Assessment (SPA) with the Food and Drug Administration (FDA) in the United States. Patient recruitment is in progress.

In pain management, our unique product derived from the tetrodotoxin (TTX) in puffer fish has entered Phase III trial in Canada for cancer-related pain (CRP) and Phase II trial for chemotherapy-induced neuropathic pain (CINP) in the United States. These two indications are the most severe of pain types. Current treatments for severe pain are predominantly opioid-based and carry significant side effects and can be abused easily. Data from the trials so far of our TTX product show that it is safe with minimal side effects. If demonstrated effective, it has potential to address a very large market for severe as well as less severe pain. We have submitted an SPA to the United States FDA for Phase III trial in CINP and will shortly submit one for CRP. We will also communicate our SPA plans with Health Canada, with whom we have interacted closely to work towards aligning the United States and Canadian registration programmes to allow registration in both countries.

We are optimistic about CK Life Sciences' future prospects.

The combination of organic growth and progress in R&D gives us confidence about CK Life Sciences' future prospects. We will continue to strive for improvement in performance through organic growth, pursue acquisition opportunities as well as provide adequate funding to support R&D, and where possible, speed up the commercialisation process.

I would like to take this opportunity to thank our shareholders, Board of Directors and staff for their continued support over the years.

Chairman

Hong Kong, 27 July 2016

As at 30 June 2016, the total assets of the Group were about HK$9,754.2 million, of which bank balances and time deposits were about HK$768.8 million and treasury investments were about HK$212.2 million. The bank interest generated for the first six months of 2016 was HK$1.7 million. The net loss arising from the Group's investment segment for the period ended 30 June 2016 was HK$2.9 million.

At the end of the period under review, the total liabilities of the Group were HK$5,275.9 million, comprising borrowings from banks and major shareholders amounted to HK$2,853.3 million and HK$1,356.0 million, respectively. The financing from banks and major shareholders was mainly used for financing the acquisition of overseas businesses as well as providing general working capital for some of the overseas businesses. Total finance cost incurred by the Group for the six months ended 30 June 2016 was HK$50.4 million.

As at 30 June 2016, the net debt to net total capital ratio of the Group was approximately 43.46%, which is calculated as the Group's net borrowings over the aggregate of the Group's total equity and net borrowings. For this purpose, the Group defines net borrowings as total borrowings (including bank borrowings, finance lease obligations and other borrowings) less cash, bank balances and time deposits.

The net asset value of the Group was HK$0.47 per share.

The Group continues to adopt a prudent treasury policy and manage most of its treasury functions at the head office regarding its funding needs, foreign exchange and interest rate exposures.

Most of the Group's financial instruments are denominated in United States dollars and Hong Kong dollars, and thus exchange rate risk associated with such investments is low. Most of the Group's borrowings are principally on a floating rate basis. To minimise its interest rate risk, the Group has been regularly and closely monitoring its overall net debt position, and reviewing its funding costs and loan maturity profile so as to facilitate refinancing whenever appropriate.

As at 30 June 2016, certain assets of the Group's subsidiary companies with carrying value of HK$970.0 million were pledged as part of the security for bank borrowings totalling HK$526.3 million granted to the subsidiary companies.