RNS Number:3272Q
Pokphand (C.P.) Co Ltd
30 September 2003


Contents


Consolidated Results                                                           2

Condensed Consolidated Profit and Loss Account                                 2

Condensed Consolidated Statement of Changes in Equity                          3

Condensed Consolidated Balance Sheet                                           4

Condensed Consolidated Cash Flow Statement                                     5

Notes to Condensed Consolidated Financial Statements                           6

Interim Dividend                                                              12

Financial Review                                                              12

Business Review                                                               13

Management's Discussion and Analysis                                          14

Restructuring                                                                 15

Outlook                                                                       15

Practice Note 19                                                              16

Directors' and Chief Executives' Interests and Short Positions in Shares,   18
Underlying Shares or Debentures

Persons who have an Interest or Short Position which is Discloseable under    20
the Securities and Futures Ordinance and Substantial Shareholders

Share Option Scheme                                                           21

Purchase, Sale or Redemption of Listed Securities                             22

Code of Best Practice                                                         22

Audit Committee                                                               22




CONSOLIDATED RESULTS

The board of directors (the "Directors") announces the unaudited consolidated
results of C.P. Pokphand Co. Ltd. and its subsidiaries (the "Group") for the
six months ended 30th June, 2003, together with the comparative figures for the
corresponding period in 2002 and (for information purpose) the audited
comparative figures for the year ended 31st December, 2002, as follows:


Condensed Consolidated Profit and Loss Account
                                         Six months                    Year ended
                                      ended 30th June,               31st December,
                                      ----------------                   ---------
                                       2003               2002                 2002
                                (Unaudited)        (Unaudited)            (Audited)
                        Notes       US$'000            US$'000              US$'000
 ---------------------- -----     ---------  ----    ---------  ----      ---------  ---

Turnover                     2      759,000            704,971            1,542,196
Cost of sales                      (692,036 )         (611,980 )         (1,363,107 )
                                  ---------          ---------            ---------

Gross profit                         66,964             92,991              179,089
Selling expenses                    (30,230 )          (25,719 )            (56,335 )
General and                         (46,899 )          (45,490 )            (92,496 )
administrative expenses
Other income, net            3        4,242             49,040              102,294
                                  ---------          ---------            ---------

Profit/(Loss) from           4       (5,923 )           70,822              132,552
operating activities
Finance costs                       (16,866 )          (20,891 )            (37,103 )
Share of profits less
losses of
jointly controlled                    
entities                              1,628              8,351               19,048
Share of profits less                (1,060 )            1,387                1,204
losses of associates              ---------          ---------            ---------

Profit/(Loss) before                (22,221 )           59,669              115,701
tax
Tax                          5       (7,446 )           (6,500 )            (15,105 )
                                  ---------          ---------            ---------

Profit/(Loss) after tax             (29,667 )           53,169              100,596
Minority interests'
share of
profits less losses                  (1,442 )           (5,596 )             (7,994 )
                                  ---------          ---------            ---------

Net profit/(loss) from
ordinary activities
attributable to                     
shareholders                        (31,109 )           47,573               92,602
Accumulated losses at
beginning of period                 (49,650 )         (140,483 )           (140,483 )
                                  ---------          ---------            ---------

Accumulated losses                  (80,759 )          (92,910 )            (47,881 )
Transfer to statutory        9       (1,369 )           (1,286 )             (1,769 )
reserves                          ---------          ---------            ---------

Accumulated losses at               (82,128 )          (94,196 )            (49,650 )
end of period                     ---------          ---------            ---------

                                   US cents           US cents             US cents

Earnings/(Loss) per          6
share:
Basic                                (1.441 )            2.204                4.290
Diluted                                 N/A                N/A                  N/A

Dividend per share                        -                  -                    -




Condensed Consolidated Statement of Changes in Equity
                                         Six months                    Year ended
                                      ended 30th June,               31st December,
                                      ----------------                 ---------
                                       2003               2002                 2002
                                (Unaudited)        (Unaudited)            (Audited)
                        Notes       US$'000            US$'000              US$'000
 ---------------------- -----     ---------  ----    ---------  ----      ---------  ---

Surplus/(Deficit) on
revaluation of
fixed assets                 9       (3,753 )            2,595                3,672
Movements arising from
restructuring of a                        
subsidiary                                -              2,755                  875
Release upon
reclassification from
associate to short term                   
investment                                -                  -               (3,192 )
Exchange differences on
translation
of foreign currency
financial
statements and exchange
realignment                  9        2,826               (756 )               (681 )
                                  ---------          ---------            ---------

Net profit/(loss) not
recognised
in the profit and loss                 
account                                (927 )            4,594                  674
Deficit on revaluation
of land and
buildings                                 -                  -                 (153 )
Release upon disposal                     -             (5,463 )            (10,144 )
of associates
Net profit/(loss) for
the year/period
attributable to              
shareholders                 9      (31,109 )           47,573               92,602     
                                  ---------          ---------            ---------
Total changes in equity             (32,036 )           46,704               82,979
                                  ---------          ---------            ---------




Condensed Consolidated Balance Sheet
                                             30th June,         31st December,
                                                   2003                   2002
                                            (Unaudited)              (Audited)
                                   Notes        US$'000                US$'000
          ----------------------- ------   ------------  -----    ------------

Non-current assets
Fixed assets                                    571,238                579,201
Investment properties                             1,527                  1,527
Interests in jointly controlled                  91,143                 87,236
entities
Interests in associates                          24,766                 25,907
Long term investments                             2,054                  1,574
Goodwill                                         (8,528 )                3,690
Deferred tax assets                                 951                    862
                                           ------------           ------------

                                                683,151                699,997
                                           ------------           ------------

Current assets
Short term investments                           10,913                 32,883
Inventories                                     165,643                167,248
Accounts receivable, other              7        93,830                 94,539
receivables and deposits
Bills receivable                                    676                    239
Tax recoverable                                      82                  1,014
Amounts due from related                         11,732                  4,748
companies
Cash held in escrow account                      11,624                 11,085
Fixed and pledged deposits                            -                  1,690
Cash and cash equivalents                        86,365                 95,633
                                           ------------           ------------

                                                380,865                409,079
                                           ------------           ------------

Current liabilities
Accounts payable, other payables
and accrued expenses                    8       212,803                195,690
Bills payable                                     9,964                  5,583
Tax payable                                       7,678                  4,378
Provisions for staff bonuses
and welfare benefits                              8,844                  5,736
Amounts due to related companies                  3,577                  4,717
Interest-bearing bank loans and                 452,281                487,355
other loans                                ------------           ------------

                                                695,147                703,459
                                           ------------           ------------

Net current liabilities                        (314,282 )             (294,380 )
                                           ------------           ------------

                                                368,869                405,617

Non-current liabilities
Interest-bearing bank loans and                (177,754 )             (172,521 )
other loans                                ------------           ------------

                                                191,115                233,096
                                           ------------           ------------

Capital and reserves
Issued capital                                  107,924                107,924
Share premium                                    51,210                 51,210
Reserves                                9       (39,571 )               (7,535 )
                                           ------------           ------------

                                                119,563                151,599

Minority interests                               71,552                 81,497
                                           ------------           ------------

                                                191,115                233,096
                                           ------------           ------------




Condensed Consolidated Cash Flow Statement
                                               Six months ended 30th June
                                                    2003                  2002
                                             (Unaudited)           (Unaudited)
                                                 US$'000               US$'000
                --------------------------  ------------  ------  ------------

Net cash inflow from operating activities
before tax paid                                   18,011                38,815
Tax paid                                          (2,392 )              (4,370 )
                                            ------------          ------------

Net cash inflow from operating activities         15,619                34,445
Net cash inflow from investing activities         14,651                36,359
                                            ------------          ------------

Net cash inflow before financing                  30,270                70,804
activities
Net cash outflow from financing activities       (39,538 )             (72,598 )
                                            ------------          ------------

Decrease in cash and cash equivalents             (9,268 )              (1,794 )
Cash and cash equivalents at beginning of         95,633                88,649
period                                      ------------          ------------

Cash and cash equivalents at end of period        86,365                86,855
                                            ------------          ------------


Notes to Condensed Consolidated Financial Statements

1. Accounting policies

The condensed consolidated interim financial statements are unaudited and have
been prepared in accordance with the Rules (the "Listing Rules") Governing the
Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock
Exchange") and International Accounting Standard 34 "Interim Financial
Reporting".


The accounting policies adopted are consistent with those followed in the
Group's annual financial statements for the year ended 31st December, 2002.


2. Segmental information

Turnover represents rental income, dividend income and the net invoiced value of
sales after allowances for goods returned and trade discounts, and after the
elimination of intra-group transactions.


An analysis of turnover by activity and geographical location is as follows:


Turnover:
                                     Six months                    Year ended
                                  ended 30th June,               31st December,
                                 ------------------                ---------
                                   2003               2002                 2002
                            (Unaudited)        (Unaudited)            (Audited)
                                US$'000            US$'000              US$'000
   -----------------------    ---------  ----    ---------  ----      ---------

By activity:
Feedmill and poultry            758,980            704,889            1,542,090
operations
Investment properties                20                 82                  106
                              ---------          ---------            ---------

                                759,000            704,971            1,542,196
                              ---------          ---------            ---------

By geographical location:
People's Republic of
China ("PRC"):
Hong Kong                            20                 82                  106
Elsewhere                       669,791            647,062            1,415,510
                              ---------          ---------            ---------

                                669,811            647,144            1,415,616

Turkey                           89,189             57,827              126,580
                              ---------          ---------            ---------

                                759,000            704,971            1,542,196
                              ---------          ---------            ---------


The above analysis does not include the turnover of the Group''s jointly
controlled entities and associates.


3. Other income, net
                                   Six months                    Year ended
                                ended 30th June,               31st December,
                               ------------------                ---------
                                 2003               2002                 2002
                          (Unaudited)        (Unaudited)            (Audited)
                             US$'000           US$'000             US$'000
 -----------------------    ---------  ----    ---------  ----      ---------  ---

Amortisation of deferred            -               (931 )             (1,862 )
restructuring expenses
Gain on disposal of             3,754             44,505                  579
short term investments
Unrealised gain/(loss)           (604 )            3,829               21,358
of short term
investments
Tax refund in respect of           46                  -                1,013
re-investments
Interest income                 1,046              1,637                3,016
Gain on disposal of                 -                  -               87,556
interests in associates
Gain on disposal of
interests in jointly
controlled entities                 -                  -                1,918
Revaluation deficit on              -                  -                 (153 )
land and buildings
Revaluation deficit on              -                  -                 (258 )
investment properties
Impairment loss in                  -                  -               (8,320 )
respect of fixed assets
Impairment loss in
respect of investments
in jointly controlled                  
entities                            -                  -                 (901 )
Impairment loss in                  -                  -               (1,652 )
respect of goodwill         ---------          ---------            ---------

                                4,242             49,040              102,294
                            ---------          ---------            ---------





4. Profit/(Loss) from operating activities
                                  Six months                    Year ended
                               ended 30th June,               31st December,
                              ------------------                ---------
                                2003               2002                 2002
                         (Unaudited)        (Unaudited)            (Audited)
                             US$'000            US$'000              US$'000
 ----------------------    ---------  ----    ---------  ----      ---------  ---

The Group's profit/
(loss) from operating
activities is arrived
at after
charging/(crediting):

Foreign exchange loss/        (1,129 )            1,008                2,161
(gain), net
Depreciation                  29,651             24,459               68,972
Staff costs                   45,346             42,882               90,111
Loss/(Gain) on disposal         (527 )              153                  652
of fixed assets, net
Amortisation of                  121                123                  242
goodwill



5. Tax
                                  Six months                    Year ended
                               ended 30th June,               31st December,
                              ------------------                ---------
                                2003               2002                 2002
                         (Unaudited)        (Unaudited)            (Audited)
                             US$'000            US$'000              US$'000
 ----------------------    ---------  ----    ---------  ----      ---------  ---

The Company and
subsidiaries:
Provision for taxation
in respect of
profit for the period:
PRC:
Hong Kong                          -                  -                    -
Elsewhere                      2,545              4,239                6,870
Overseas                       3,058                  -                2,684
Deferred tax credit                -                  -                  (81 )
                           ---------          ---------            ---------

                               5,603              4,239                9,473
                           ---------          ---------            ---------

Underprovision in the
prior year:
PRC:
Hong Kong                          -                  -                    -
Elsewhere                          -                  -                  345
                           ---------          ---------            ---------

                                   -                  -                  345
                           ---------          ---------            ---------

Jointly controlled
entities:
PRC:
Hong Kong                          -                  -                    -
Elsewhere                      1,827              2,129                4,983
                           ---------          ---------            ---------

                               1,827              2,129                4,983
                           ---------          ---------            ---------

Associates:
PRC:
Hong Kong                          -                  -                    -
Elsewhere                         16                132                  304
                           ---------          ---------            ---------

                                  16                132                  304
                           ---------          ---------            ---------

Tax charged for the            7,446              6,500               15,105
period                     ---------          ---------            ---------



No provision for Hong Kong taxation has been made as the Group earned no
assessable income in Hong Kong during the period (2002: nil).


The overseas tax represents corporation tax payable in Turkey in respect of
income earned during the period (2002: nil).


6. Loss per share is calculated based on the net loss from ordinary
activities attributable to shareholders of US$31,109,000 (net profit for the six
months ended 30th June, 2002: US$47,573,000) and the weighted average of
2,158,480,786 shares (2002: 2,158,480,786 shares) of the Company in issue during
the period.


As the exercise price of options outstanding during the period is higher than
the average market price of the Company's shares during the respective periods,
the diluted earnings/loss per share for the periods ended 30th June, 2003 and
2002 are not presented because the impact of the options is anti-dilutive.


7. Accounts receivable, other receivables and deposits

The Group normally grants a credit policy of 0 to 30 days. An aging analysis of
the accounts receivable, other receivables and deposits of the Group are as
follows:


                                           30th June,        31st December,
                                                 2003                  2002
                                          (Unaudited)             (Audited)
                                             US$'000              US$'000
            ----------------------------  -----------  ----     -----------  ---

Accounts receivable:
Less than 90 days                              30,994                33,591
91 to 180 days                                    940                 1,711
181 to 365 days                                 1,806                   431
Over 365 days                                   8,482                 7,813
                                          -----------           -----------

                                               42,222                43,546
Other receivables and deposits                 66,030                65,450
                                          -----------           -----------

                                              108,252               108,996
Less: Provision for bad and doubtful          (14,422 )             (14,457 )
debts                                     -----------           -----------

                                               93,830                94,539
                                          -----------           -----------


8. Accounts payable, other payables and accrued expenses

An aging analysis of the accounts payable, other payables and accrued expenses
of the Group are as follows:


                                                 30th June,       31st December,
                                                       2003                 2002
                                                (Unaudited)            (Audited)
                                                    US$'000              US$'000
              ----------------------------      -----------          -----------

Accounts payable:
Less than 90 days                                    97,031               97,708
91 to 180 days                                       11,101                6,151
181 to 365 days                                       2,727                2,146
Over 365 days                                         1,900                1,768
                                                -----------          -----------

                                                    112,759              107,773
Other payables and accrued expenses                 100,044               87,917
                                                -----------          -----------

                                                    212,803              195,690
                                                -----------          -----------




9. Reserves
                                 Fixed
                                 asset                                                  Exchange
              Contributed  revaluation    General    Capital  Reserve  Expansion    equalization  Accumulated
                  surplus      reserve    reserve    reserve     fund       fund         reserve       losses    Total
                  US$'000      US$'000    US$'000    US$'000  US$'000    US$'000         US$'000      US$'000  US$'000
   ---------       ------       ------     ------    ------   ------     ------          ------   -----------  -------

1st January,        6,093        9,347     (1,783)    36,912   22,766     13,727         (44,947)    (49,650)  (7,535)
2003
Exchange                -        2,078          -         27        -          -               -           -    2,105
realignments
Deficit on              -       (3,753)         -          -        -          -               -           -   (3,753)
revaluation
Exchange
gain arising
from
translation
of foreign
currency
financial
statements              -            -          -          -        -          -             721           -      721
Transfer
from/(to)
profit and              
loss account            -            -          -        217    1,604       (452)              -      (1,369)       -
Loss for the            -            -          -          -        -          -               -     (31,109) (31,109)
period            -------      -------       -------   -------  -------    -------         -------    -------  -------

30th June,          6,093        7,672     (1,783)    37,156   24,370     13,275         (44,226)    (82,128) (39,571)
2003              -------      -------       -------   -------  -------    -------         -------    -------  -------


10. Related party transactions

(a)A portion of the Group's sales and purchases transactions, together
with certain less significant commercial transactions, are with companies in
which Mr. Jaran Chiaravanont, Mr. Montri Jiaravanont, Mr. Dhanin Chearavanont,
Mr. Sumet Jiaravanon, Mr. Prasert Poongkumarn, Mr. Min Tieanworn, Mr. Thirayut
Phitya-Isarakul, Mr. Thanakorn Seriburi and Mr. Veeravat Kanchanadul, directors
of the Company, have beneficial interests. Details of major related party
transactions are set out as follows:


                                            Six months                Year ended   
                                         ended 30th June,         31st December,   
                                               
                                          2003          2002              2002
                                   (Unaudited)   (Unaudited)         (Audited)
                          Notes        US$'000       US$'000           US$'000
       ------------------ -----      ---------    ----------  ----   ---------  ---

Sales of goods to jointly
controlled
entities and associates    (i)          10,787         8,040            15,752
Sales of goods to related  (i)          21,631         1,097            12,513
companies
Purchases of raw
materials from
Jointly controlled
entities
and associates             (ii)         10,395        20,245            38,826
Purchases of raw
materials from
related companies          (ii)          8,075        12,671            23,753



Notes:


(i) The sales of goods were made according to the published prices and
conditions offered to the major customers of the Group, except that a longer
credit period was normally granted.


(ii) The purchases of raw materials were made according to the published prices
and conditions offered to the major customers of the supplier, except that a
longer credit period was normally granted.


(b) During the period, the Company paid an advisory fee of US$50,000 (six
months ended 30th June, 2002: US$50,000) to Charoen Pokphand Group Company
Limited for the provision of technical and management support services to the
Group.

Mr. Jaran Chiaravanont, Mr. Montri Jiaravanont, Mr. Dhanin Chearavanont and Mr.
Sumet Jiaravanon, directors of the Company, have beneficial interests in the
share capital of Charoen Pokphand Group Company Limited.


INTERIM DIVIDEND

The Directors do not recommend an interim dividend for the year ending 31st
December, 2003 (2002: nil).


FINANCIAL REVIEW

The following analyses are the Group's total and attributable turnover under
management (including turnover of our jointly controlled entities and
associates) and net profit/(loss) attributable to shareholders by activity and
geographical location:


Analysis of the Group's total and attributable turnover under management

Six months ended 30th June, 2003


                           Total              Group            Attributable
                         turnover           ownership              turnover
                     ----------------                           ---------------
                US$ million              %          %      US$ million             %
 --------------   ---------  --  ---------   --------  ---   ---------  --  --------

PRC                   988.2           75.9     25-100            755.2          83.3
agri-business
Turkey                 89.2            6.9         85             75.4           8.3
agri-business
PRC industrial        224.4           17.2      19-38             76.3           8.4
business          ---------      ---------                   ---------      --------

                    1,301.8          100.0                       906.9         100.0
                  ---------      ---------                   ---------      --------


Analysis of the Group's net profit/(loss) attributable to shareholders by
activity and geographical location


                                                     Six months
                                                  ended 30th June,
                                               ----------------------

                                                   2003               2002
                                            (Unaudited)        (Unaudited)
                                                US$'000            US$'000
            ------------------------------  -----------  ----  -----------   ---

By activity:
Feedmill and poultry operations                 (29,193 )           52,738
Industrial operations                             3,488              1,526
Investment properties                              (484 )             (370 )
Investment holding*                              (4,920 )           (6,321 )
                                            -----------        -----------

                                                (31,109 )           47,573
                                            -----------        -----------

By geographical location:
PRC:
Hong Kong                                        (5,645 )          (11,064 )
Elsewhere                                       (31,252 )           48,168
                                            -----------        -----------

                                                (36,897 )           37,104
Turkey                                            5,547              6,096
Indonesia                                           241              3,829
Thailand                                              -                544
                                            -----------        -----------

                                                (31,109 )           47,573
                                            -----------        -----------



* including Hong Kong headquarters' general expenses




BUSINESS REVIEW

The first half of 2003 was a period of challenges for our core business and our
operations sustained a loss during the period. Consolidated turnover was
US$759.0 million (2002: US$705.0 million). Consolidated loss from operating
activities was US$5.9 million (2002: profit of US$70.8 million). Net loss from
ordinary activities attributable to shareholders was US$31.1 million (2002: net
profit of US$47.6 million).


PRC

Agri-business

Our agri-business operations in the PRC faced an unfavourable operating
environment during the period under review. Turnover under management was
US$988.2 million (2002: US$1,082.0 million). Turnover on a consolidated basis
was US$669.8 million (2002: US$647.1 million), a slight increase by 3.5%.
Consolidated loss attributable to shareholders of this division during the
period was US$34.7 million (2002: profit of US$46.6 million). Unit sales of our
two main products, complete feed and day-old chicks, were 2.3 million tonnes
(2002: 2.4 million tonnes) and 167.8 million units (2002: 189.4 million units)
respectively.


The outbreak of severe acute respiratory syndrome (SARS) in part of the PRC in
the first half of 2003 had an adverse impact on the Group's agri-businesses
operating across the country. The business-related travelling of our purchasing
and sales staffs, the movement of raw materials required for production and the
delivery of our finished products suffered interruptions at some locations and
sales were retarded due to lowered consumption. These adverse factors had
complicated an already challenging operating environment due to the increased
costs of the raw materials required for feed production since December 2002. As
a result, gross profit margin declined significantly.


In addition, the outburst of a fire in our Qingdao operation in April 2003 and
the re-introduction of an import ban by Japan on poultry products from the PRC
since 12th May, 2003 have adversely affected the Group's chicken meat export as
Japan is our primary market for export.


During the period under review, the Group disposed of 49,562,783 shares (2002:
100,935,116 shares) in Shanghai Dajiang (Group) Stock Co. Ltd. ("Shanghai
Dajiang") and recorded a gain of US$3.4 million (2002: US$44.0 million). As at
30th June, 2003, the Group's interest in Shanghai Dajiang was 1.4% (31st
December, 2002: 8.7%).


Industrial business

Ek Chor China Motorcycle Co. Ltd. ("EKC"), our subsidiary, previously listed
on the New York Stock Exchange, registered improved results. Net income
attributable to the Group was US$3.5 million as compared to US$1.5 million in
the same period of 2002.


On 16th April, 2003, EKC announced its privatization by way of a scheme of
arrangement under Bermuda law. The privatization was duly approved at the Court
Meeting and Special General Meeting both held on 12th June, 2003. With the
satisfaction of all requirements prescribed by the relevant authority, EKC was
privatized and became a wholly-owned subsidiary of the Company on 23rd June,
2003. The listing status of EKC's shares was then withdrawn from the New York
Stock Exchange. The gain from privatization was recognized as negative goodwill
in the Condensed Consolidated Balance Sheet.


Turkey

Our Turkish operation continued to perform satisfactorily and recorded a profit
attributable to shareholders of US$5.5 million (2002: US$6.1 million).


Indonesia

The Group maintains a 19.75% interest in P.T. Surya Hidup Satwa and a 7.09%
interest in P.T. Central Proteinaprima.




MANAGEMENT'S DISCUSSION AND ANALYSIS

Liquidity and financial resources

As at 30th June, 2003, the Group had total assets of US$1,064.0 million, down
4.1% from US$1,109.1 million at the year end of 2002. Total debt and debt to
equity ratio (debt to equity ratio is calculated by dividing the total debt by
the net asset value) were US$630.0 million and 329.7% respectively, as compared
to US$659.9 million and 283.1% as at 31st December, 2002.


Most of the borrowings by the Group are in U.S. dollars and Renminbi and the
interest rates ranged from 2.22% to 6.90% per annum for the period.


The Group had not engaged in any derivative for hedging against both the
interest and exchange rate.


Capital structure

The Group finances its working capital requirements through a combination of
funds generated from operations, short term and long term bank loans, floating
rate notes and from the disposal of certain assets and investments. The Group
had cash and cash equivalents of US$86.4 million as at 30th June, 2003 (31st
December, 2002: US$95.6 million), a decrease of US$9.2 million.


Charges on group assets

As at 30th June, 2003, out of the total borrowings of US$630.0 million (31st
December, 2002: US$659.9 million) obtained by the Group, only US$146.1 million
(31st December, 2002: US$123.5 million) were secured and accounted for 23.2%
(31st December, 2002: 18.7%) of the total. Certain of the Group's fixed assets
located in the PRC with net book value of US$255.3 million (31st December, 2002:
US$195.4 million) have been pledged as security for various short and long term
bank loans.


Contingent liabilities

As at 30th June, 2003, the guarantees provided by the Group was US$27.2 million
(31st December, 2002: US$27.2 million).


Employee and remuneration policies

As at 30th June, 2003, the Group employed around 53,000 staff (including 21,000
staff from the jointly controlled entities and associates) in the PRC, Hong Kong
and Turkey. The Group remunerates its employees based on their performance,
experience and prevailing market rate while performance bonuses are granted on a
discretionary basis. Other employee benefits include insurance and medical
cover, subsidized training programme as well as share option scheme.


RESTRUCTURING

The Company has made a distribution of US$28.0 million during the period,
amounting to an aggregate distribution of US$333.4 million. Moreover, the
Company's creditors have agreed to an amended debt reduction schedule and an
extension of the period of the restructuring by 12 months to 31st December, 2004
subject to the completion of relevant documentation.


OUTLOOK

The business conditions in the second half of 2003 is expected to remain
challenging. We will endeavour to streamline our business and improve our
operating efficiency.


PRACTICE NOTE 19

As at 30th June, 2003, the financial assistance and guarantees given to and for
affiliated companies in aggregate amounted to approximately 24.6% of the audited
consolidated net tangible assets of the Company as at 31st December, 2002, after
adjusting for the net loss of US$31.11 million for the six months ended 30th
June, 2003. Furthermore, there were covenants in certain loan agreements of the
Group relating to specific performance obligations of the Company's controlling
shareholders.


Pursuant to Practice Note 19 of the Listing Rules, the following information is
hereby disclosed:


(i) Information extracted from the balance sheets as at 30th June, 2003
of the affiliated companies which the Company has provided financial assistance:


                                  Equity                          Net Asset
                                Interest                             Value/
                                Owned by    Total        Total       (Asset
Name of Affiliated Companies   the Group   Assets  Liabilities  Deficiency)
                                          US$'000      US$'000      US$'000
     ------------------------     ------   ------       ------      -------  ---

Beijing Chia Tai Feedmill            33%   14,867       10,179        4,688
Limited

Hunan Chia Tai Animal                50%    2,940          133        2,807
Husbandry Co., Ltd.

Jilin Chia Tai Enterprises           50%   15,767        5,480       10,287
Co., Ltd.

Kaifeng Chia Tai Company             50%   33,997       30,597        3,400
Limited

Nantong River Mouth Bio-tech
Co., Ltd.                            33%    7,644        5,842        1,802

Tangshan Chia Tai Feedmill           38%    2,817        4,177       (1,360 )
Co., Ltd.                                 -------      -------      -------

                        Total              78,032       56,408       21,624
                                          -------      -------      -------


(ii) Information extracted from the balance sheets as at 30th June, 2003
of the affiliated companies which the Company has provided guarantees for
facilities/loans offered to them:


                                 Equity                           Net Asset
                               Interest                              Value/
                               Owned by     Total        Total       (Asset
Name of Affiliated Companies  the Group    Assets  Liabilities  Deficiency)
                                          US$'000      US$'000      US$'000
    ------------------------     ------    ------       ------      -------  ---

Beijing Chia Tai Feedmill           33%    14,867       10,179        4,688
Limited

Han Dan Chia Tai Feed Co.,          50%     3,058        2,617          441
Ltd.

Jilin Chia Tai Company              45%     7,497       10,885       (3,388 )
Limited

Jilin Da He Feedmill Co.,           29%       761          491          270
Ltd.

Kaifeng Chia Tai Company            50%    33,997       30,597        3,400
Limited

P.T. Centralpertiwi Bahari          16%   173,557      176,298       (2,741 )
                                          -------      -------      -------

                       Total              233,737      231,067        2,670
                                         --------     --------      -------



(iii)Loan agreements with covenants relating to special performance
obligations of the Company's controlling shareholders:


Certain banking facilities of the Group imposed a requirement for a specified
minimum shareholding level in the Company (being, in one of such facilities,
50%, and, in another two of such facilities, 51%) to be maintained by the
Company's controlling shareholders, which hold approximately 49.4% interest in
the issued share capital of the Company. As at 30th June, 2003, the outstanding
amount owing by the Group under these facilities aggregated approximately
US$7.76 million.


As announced by the Company in 1998, the Company was unable to redeem certain of
its floating rate notes upon their early redemption which, as a result of
cross-default provisions, constituted an event of default under its other
floating rate notes and the credit facilities provided by certain of its bank
creditors. Such facilities include those referred to above with minimum
shareholding covenants.


DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS AND SHORT POSITIONS IN SHARES,
UNDERLYING SHARES OR DEBENTURES

As at 30th June, 2003, the interests and short positions of the Directors and
chief executives of the Company in shares, underlying shares or debentures of
the Company or any associated corporation (within the meaning of the Securities
and Futures Ordinance ("SFO")) as recorded in the register required to be kept
by the Company under Section 352 of the SFO or as otherwise notified to the
Company and the Stock Exchange pursuant to the Model Code for Securities
Transactions by Directors of Listed Companies were as follows:


Long position in shares of the Company


                                                                           
                  Capacity/Nature of Interest                              Approximate
                       ------------------                                percentage of
                                     Interest of Total number of          issued share
                 Beneficial           Controlled   Shares in the            capital of
Name of               Owner         Corporations         Company           the Company
Director          ---------  ----      ---------       ---------  -----      ---------  ---
---------------

Mr. Jaran           843,750                    -         843,750                  0.04
Chiaravanont

Mr. Dhanin                -        1,066,662,834   1,066,662,834    (1)          49.42
Chearavanont

Mr. Sumet                 -        1,066,662,834   1,066,662,834    (1)&         49.42
Jiaravanon                                                          (2)


Notes:


(1) 428,441,073 shares were held by Perfect Investment Limited,
539,988,444 shares were held by Pakeman Co. Inc. and 98,233,317 shares were held
by CPI Holding Co., Ltd. Mr. Dhanin Chearavanont and Mr. Sumet Jiaravanon have
indirect beneficial interests in these three companies.


(2) 1,066,662,834 shares are duplicated in the corporate interests
attributable to Mr. Dhanin Chearavanont.


Long position in shares of an associated corporation


                        Name of associated corporation                 Number of
                                                                          shares
Name of Director        in which notifiable interest is held                held
------------------      ------------------                    ------------------

Mr. Thanakorn Seriburi  Chia Tai Quanzhou Company Limited                 20,000




Long position in underlying shares of the Company

Pursuant to the old share option scheme (the "Old Scheme") adopted on 10th
April, 1992 which expired on 10th April, 2002 and the existing share option
scheme (the "Existing Scheme") adopted by the Company on 26th November, 2002,
certain Directors were granted share options. As at 30th June, 2003, the
interests of the Directors of the Company in options to subscribe for shares in
the capital of the Company under the Old Scheme and the Existing Scheme were as
follows:


                                          Number of                    Price per
                                             shares
                                      issuable upon                  share to be
                                        exercise of                      paid on
                                            options
                                         held as at   Period during  exercise of
                                                              which
Name of Director      Date of Grant 30th June, 2003     options are      options
                                                        exercisable
                                                                             HK$
       ------------   -------------     -----------  --------------    ---------

Mr. Dhanin           26th February,      12,800,000  26th February,         0.39
Chearavanont                   2003                            2003
                                                            to 25th
                                                     February, 2013

Mr. Sumet            26th February,      12,800,000  26th February,         0.39
Jiaravanon                     2003                            2003
                                                            to 25th
                                                     February, 2013

Mr. Prasert          20th May, 1994      18,479,248  20th May, 1994        1.752
Poongkumarn
                                                       to 20th May,
                                                               2004
                     26th February,      21,584,807  26th February,         0.39
                               2003                            2003
                                                            to 25th
                                                     February, 2013

Mr. Min Tieanworn    26th February,      21,584,807  26th February,         0.39
                               2003                            2003
                                                            to 25th
                                                     February, 2013

Mr. Thirayut           10th August,      25,000,000    10th August,       0.3875
Phitya-Isarakul                1998                            1998
                                                    to 10th August,
                                                               2008
                     26th February,      21,584,807  26th February,         0.39
                               2003                            2003
                                                            to 25th
                                                     February, 2013

Mr. Thanakorn          10th August,      17,500,000    10th August,       0.3875
Seriburi                       1998                            1998
                                                    to 10th August,
                                                               2008
                     26th February,      21,584,807  26th February,         0.39
                               2003                            2003
                                                            to 25th
                                                     February, 2013

Mr. Veeravat         26th February,      21,584,807  26th February,         0.39
Kanchanadul                    2003                            2003
                                                            to 25th
                                                     February, 2013


As at 30th June, 2003, none of the above share options had been exercised.


Save as disclosed above, as at 30th June, 2003, none of the Directors and chief
executives of the Company had any interest or short position in shares,
underlying shares or debentures of the Company or any associated corporation
(within the meaning of the SFO) as recorded in the register required to be kept
by the Company under Section 352 of the SFO or as otherwise notified to the
Company and the Stock Exchange pursuant to the Model Code for Securities
Transactions by Directors of Listed Companies.


PERSONS WHO HAVE AN INTEREST OR SHORT POSITION WHICH IS DISCLOSEABLE UNDER THE
SECURITIES AND FUTURES ORDINANCE AND SUBSTANTIAL SHAREHOLDERS

As at 30th June, 2003, the following persons had the following interests or
short positions in shares or underlying shares of the Company as recorded in the
register required to be kept by the Company pursuant to Section 336 of the SFO:


Long position in shares
                                                                     Approximate
                              Capacity/                 Number of  percentage of
                              Nature of                 shares of   issued share
Name of Shareholder            Interest   Notes       the Company        capital
------------------         ------------ ---------        --------    -----------

Citigroup Inc.                 Security          1    181,886,124           8.43
                              interest,
                             investment
                                manager
                         and beneficial
                                  owner

Charoen Pokphand Overseas    Beneficial          2    195,834,452           9.07
Investment Company                owner
Limited

Charoen Pokphand (Hong    Interest of a          2    195,834,452           9.07
Kong)
Company Limited              controlled
                            corporation

Chia Tai International       Beneficial          3    232,606,621          10.78
Investment Company                owner
Limited

Charoen Pokphand (China)  Interest of a          3    232,606,621          10.78
Company Limited              controlled
                            corporation

Charoen Pokphand Holding    Interest of          4    428,441,073          19.85
Company Limited              controlled
                           corporations

Perfect Investment          Interest of          5    428,441,073          19.85
Limited                      controlled
                           corporations

Pakeman Co. Inc.             Beneficial          6    539,988,444          25.02
                                  owner

CPI Holding Co., Ltd.        Beneficial          7     98,233,317           4.55
                                  owner

C.P. Intertrade Co.,      Interest of a          7     98,233,317           4.55
Ltd.                         controlled
                            corporation

Mr. Dhanin Chearavanont      Beneficial          8  1,066,662,834          49.42
                                  owner

Mr. Sumet Jiaravanon         Beneficial          8  1,066,662,834          49.42
                                  owner



Notes:

1. Of the 181,886,124 shares held by Citigroup Inc., 181,503,699 shares
were held as security, 364,625 shares were held as investment manager and the
balance of 17,800 shares were held beneficially.


2. Charoen Pokphand Overseas Investment Company Limited (CP Overseas)
beneficially owned 195,834,452 shares. Charoen Pokphand (Hong Kong) Company
Limited ("CP Hong Kong") has declared an interest in these same 195,834,452
shares by virtue of its shareholding in CP Overseas.


3. Chia Tai International Investment Company Limited ("CTII")
beneficially owned 232,606,621 shares. Charoen Pokphand (China) Company Limited
("CP China") has declared an interest in these same 232,606,621 shares by
virtue of its shareholding in CTII.


4. Charoen Pokphand Holding Company Limited ("CP Holding") has
declared an interest in an aggregate of 428,441,073 shares which comprised the
195,834,452 shares referred to in Note 2 above by virtue of its shareholding in
CP Hong Kong and the 232,606,621 shares referred to in Note 3 above by virtue of
its shareholding in CP China.


5. Perfect Investment Limited has declared an interest in the same
428,441,073 shares in which CP Holding has declared an interest (see Note 4), by
virtue of its shareholding in CP Holding.


6.Pakeman Co. Inc. beneficially owned a total of 539,988,444 shares.


7. CPI Holding Co., Ltd. beneficially owned 98,233,317 shares. C.P.
Intertrade Co., Ltd. has declared an interest in these same 98,233,317 shares by
virtue of its shareholding in CPI Holding Co., Ltd.


8. Each of Mr. Dhanin Chearavanont and Mr. Sumet Jiaravanon has declared
an interest in an aggregate of 1,066,662,834 shares, comprising the 428,441,073
shares in which Perfect Investment Limited has declared an interest (see Note 5
above), the 539,988,444 shares in which Pakeman Co. Inc. has declared an
interest (see Note 6 above) and the 98,233,317 shares in which C.P. Intertrade
Co., Ltd. has declared an interest (see Note 7 above), by virtue of their
respective beneficial shareholding interests in these three companies.


Save as disclosed above, as at 30th June, 2003, no other person had an interest
or a short position in shares or underlying shares of the Company as recorded in
the register required to be kept by the Company pursuant to section 336 of the
SFO.


SHARE OPTION SCHEME

Details of the Directors' interest in the Old Scheme and the Existing Scheme
are set out in the sub-section headed "Long position in underlying shares of
the Company" under section headed "Directors" and chief executives'
interests and short positions in shares, underlying shares or debentures" 
above.


Outstanding share options

As at 30th June, 2003, options to subscribe for an aggregate of 284,527,326
shares (which include the options granted to certain Directors as disclosed
above) of the Company granted pursuant to the Old Scheme and the Existing Scheme
were outstanding. Details are as follows:


                                           Subscription
                                                  price
Number of share options                       per share            Option period
                                                    HK$

                         18,479,248               1.752           20th May, 1994
                                                                    to 20th May,
                                                                            2004
                         50,200,000              0.3875             10th August,
                                                                            1998
                                                                 to 10th August,
                                                                            2008
                        215,848,078                0.39           26th February,
                                                                            2003
                                                                         to 25th
                                                                  February, 2013


PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

There was no purchase, sale or redemption of the Company's listed securities by
the Company or any of its subsidiaries during the period under review.


CODE OF BEST PRACTICE

In the opinion of the Directors, the Company complied with the Code of Best
Practice as set out in Appendix 14 of the Listing Rules throughout the
accounting period covered by the interim report.


AUDIT COMMITTEE

The Audit Committee comprises the two independent non-executive directors of the
Company. The Audit Committee has reviewed with management the accounting
principles and practices adopted by the Group and discussed internal control and
financial reporting matters including the review of the unaudited interim
financial statements.


                             By Order of the Board

                              Dhanin Chearavanont

                      Chairman and Chief Executive Officer

                                       

Hong Kong, 22nd September, 2003






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            The company news service from the London Stock Exchange

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IR SDESESSDSELU