Richina Registers Profit Of $4.7 Million

Richina Achieves Impressive Performance Improvement
In Registering Profit Of $4.7 Million

Statement made by Sir Allan Wright, Chairman, Richina Pacific Limited

Richina Pacific has significantly improved earnings, recording an audited after tax profit of $4.7 million for the year ended 31 December 2000.

The result is an $8.5 million improvement on the position over the previous year.

Richina Pacific’s trading operations in China and in New Zealand achieved an operating surplus, a first for our China operations over a 12-month period.

New Zealand contributed an earnings surplus of $17.1 million (up 160%), before allocation of overheads and interest, and China $2.9 million (against a loss of $1 million last year). Unallocated overheads, including interest costs of $11.1 million (up 26%), increased by 37% to $15.3 million.

Revenue increased by 26% to $725 million, with major revenue gains being registered by our leather operations, up 63%, and venison, up 27%.

Assets increased by 9% to $277.3 million.

The New Zealand semi-processed leather operations, successfully amalgamated during the year into a single entity trading under the Colyer Mair name, were the Group’s main contributor to profit. A combination of good quality hides and favourable exchange rates saw this business lift turnover by 27% to $138 million.

Sales of finished leather from our China operations grew by 134% to exceed $129 million in the 12 months.

The China finished leather business has established itself as one of the world’s top 20 finished leather manufacturers. We are a major supplier of fashion leather to leading international shoe brands and, in the specialised waterproof shoe leather market, we are now number two world-wide. Shanghai Richina Leather is also expanding sales to the upholstery and garment industries.

The processing and marketing of venison was an outstanding contributor to Richina Pacific’s improved performance in the year. Revenue from this business increased by 27% to $43.0 million. The contribution to surplus rose from $233,000 to $4 million.

Mainzeal continued to perform soundly in an environment of intense competition and uncertainty. Mainzeal increased its turnover by 12% to $406.6 million and posted a modest profit of $2.9 million, down 28%.

Our Blue Zoo Beijing operation registered a loss of $37,000 compared to a profit of $934,000 last year, due to fierce price-cutting by competitor aquariums in the Chinese capital. Nevertheless, this business remains a key contributor of cash to the Group’s operations.

In December 2000 the Directors reported they were seeking ways of fully funding the continued exceptional growth opportunities that have arisen in Shanghai Richina Leather and that they had retained consultants to review the Company’s financial structures and investments and advise on alternative funding methods which may be available to the Company.

The Directors went on to advise that the reports, when received, may include recommendations to further restructure our businesses and/or realise one or more of the Company’s investments. Progress has been made with identifying the options available and Directors will inform the market should there be material matters to report.

On the whole, we are now firmly on the right track and I believe we have reason to be proud of these results. I am personally delighted to have presided over the Company’s return to profitability and believe that the future of Richina Pacific is bright.

As I have advised the Board, it is time for me to stand down as Chairman and I will do so at the forthcoming annual meeting. I have been asked to remain a Director of the Company, however, and will be pleased to do so if elected by the shareholders.

It is anticipated that the Deputy Chairman, Alastair MacCormick, will be elected Chairman at the board meeting following the annual meeting.

Ends

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