CK Life Sciences Intl : Announcement - Interim Results for 2017

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.

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

INTERIM RESULTS FOR 2017 2017 FIRST HALF RESULTS

For the six months ended 30 June 2017, CK Life Sciences Int'l., (Holdings) Inc. ("CK Life Sciences" or the "Company") recorded unaudited profit attributable to shareholders of HK$170 million, a decrease of 9% over the corresponding period last year.

The gap between the two interim periods exemplifies the exceptionally good results attained in the interim period last year, which was characterised by the surge in demand of products manufactured by Lipa Pharmaceuticals Limited ("Lipa") in the Mainland China market and also the very favourable weather conditions in Australia which led to a record high profit for the Group's Australian Agribusiness. The two phenomena, however, did not persist in the first half of 2017.

The Board of Directors has not declared any interim dividend for the period under review (2016: Nil).

NUTRACEUTICAL BUSINESS

The company's nutraceutical business is made up of Lipa in Australia, Vitaquest International Holdings LLC ("Vitaquest") in the United States and Santé Naturelle

A.G. Ltée ("Santé Naturelle") in Canada.

Lipa grew rapidly in the last few years on the back of a surge in demand in Mainland China for products it manufactured for a number of key Australian customers, who began to build up significant inventory in anticipation of further ongoing growth in demand. When China announced a change of regulations governing the import of health supplements, customers drastically started reducing orders in the second half of 2016 to deplete accumulated inventory. This condition continued in 2017 and is expected to stabilise in second half of the year. Nonetheless, Lipa remains a profitable business with a strong reputation in quality and service. It continues to be a significant contributor to the Company's profit.

Over in Vitaquest, with the help of automated and upgraded production capacity, powder products continued its growth momentum and top customers recorded decent volume increase. Meanwhile, growth of Santé Naturelle products at point of sale continued apace above the market average.

AGRICULTURE-RELATED BUSINESS

CK Life Sciences' agriculture-related business consists of three main streams - Australian Agribusiness, vineyards and Cheetham Salt Limited ("Cheetham Salt"). In the first half of 2017, this business segment reported mixed results.

In the first half of 2017, Western and Southern Australia experienced dry conditions, delaying and in some cases reducing the application of plant protection products manufactured by Australian Agribusiness. Though there has been a slowdown of orders placed, Australian Agribusiness remains the only toll manufacturer of such products comprehensively covering the largest growing regions nationwide and is best placed to benefit when weather conditions improve.

With a span of approximately 6,500 hectares in Australasia, the Company's vineyard portfolio is among the three largest in Australasia and top ten in the world. Profit generated from this segment in the first half of 2017 was in line with expectations. Over 95% of the vineyard portfolio is currently under long-term tenancy agreements, generating stable and recurring revenues.

Cheetham Salt, Australasia's leading supplier of domestic salt, performed in line with target. In May 2017, CK Life Sciences entered into an agreement with its business partner to acquire the remaining 50% share of the salt field operations in New Zealand, and to dispose of its shares in a 50/50 joint venture engaged in retail and distribution in Australia and New Zealand. This asset swap achieves twin goals in that it will allow the Company to strategically focus on the stable, cash-generative salt production and refinery business, while at the same time exiting the cyclical distribution businesses. This exercise is subject to the approval of the Overseas Investment Office in New Zealand. Completion of the transaction is expected to take place in October 2017.

PHARMACEUTICAL RESEARCH AND DEVELOPMENT

CK Life Sciences' pharmaceutical R&D is focused primarily on oncology and pain management.

The Phase III clinical trial of Polynoma LLC's therapeutic cancer vaccine for the treatment of melanoma is progressing according to schedule. The second part of the multi-part clinical trial approved by the US FDA (Food and Drug Administration) is ongoing, with approximately 350 patients enrolled. These patients are being dosed with the vaccine or a placebo for a period of two years and monitored for recurrence of melanoma.

Following promising results seen in a Phase II clinical trial of its tetrodotoxin ("TTX")-based cancer pain management product for chemotherapy-induced neuropathic pain ("CINP"), WEX Pharmaceuticals Inc. ("WEX Pharma") is in advanced stages of discussion with the US FDA to approve a Phase III clinical trial in this indication. As there is currently no specific FDA-approved treatment for CINP, doctors often prescribe analgesics, including opioids, which have significant side effects and may not be very effective for CINP. WEX Pharma's product could be a breakthrough alternative when demonstrated to be effective. WEX Pharma is hopeful of starting this clinical trial in the near future and will also submit the clinical trial protocol to Health Canada for review, enabling the trial to be conducted simultaneously in both countries.

PROSPECTS

Irrespective of short-term challenges from market conditions in some segments in the first half of the year, we remain positive about future prospects.

While we will continue to strengthen our performance through organic growth, the Company will keep pursuing suitable acquisitions in vineyards and other prospective investments that present stable incomes with recurring cash flow. Capitalising on the uniqueness as a member of the CK Group, we will also tap into the rich capital resources and vast working experience of other members of the Group and work with them to explore synergistic opportunities.

On the R&D front, we will continue to deploy the necessary funding to support projects that will both create and launch ground-breaking products which serve unmet market demand.

Finally, I wish to thank our shareholders, Board of Directors and staff for their continued support.

Li Tzar Kuoi, Victor

Chairman

Hong Kong, 17 July 2017

FINANCIAL REVIEW Financial Resources and Liquidity

As at 30 June 2017, the total assets of the Group were about HK$9,785.1 million, of which bank balances and time deposits were about HK$816.8 million and treasury investments were about HK$186.3 million. The bank interest generated for the first six months of 2017 was HK$2.9 million. The net loss arising from the Group's investment segment for the period ended 30 June 2017 was HK$1.2 million.

At the end of the period under review, the total liabilities of the Group were HK$5,167.7 million, comprising bank and other borrowings amounted to HK$4,255.0 million. These borrowings were 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 2017 was HK$46.2 million.

As at 30 June 2017, the net debt to net total capital ratio of the Group was approximately 42.69%, 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$0.48 per share.

Treasury Policies

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.

Charge on Assets

As at 30 June 2017, certain assets of the Group's subsidiary companies with carrying value of HK$808.1 million were pledged as part of the security for bank borrowings totalling HK$360.0 million granted to the subsidiary companies.