China Leather Performs For Richina Pacific

Statement made by Alastair MacCormick, Chairman, Richina Pacific Limited

A solid contribution from its leather operations in China has lifted Richina Pacific to an unaudited after tax profit of $7 million for the six months ending 30 June 2001, up 245% on that for the same period last year.

Earnings per share were 9.8 cents (2.8 cents).

With New Zealand operations also performing strongly, the Company has made a sound start to the year.

Our leather operation in China is now starting to fulfil its promise. While this business is still in an expansionary mode, profits are beginning to flow.

Revenue from the China leather business more than doubled to $107.5 million, with the surplus before overheads and interest lifting to $5.5 million (up from $136,000).

Our leather operation in China is significant in world terms, and the investment and commitment we have made and are continuing to make in building this business is now starting to deliver returns to shareholders.

New Zealand businesses contributed $11.1 million to the surplus before overheads and interest, up 35%.

Our New Zealand construction and venison businesses (venison was sold on 30 April 2001) made sound contributions to our overall surplus.

The New Zealand semi-processed leather operation also made a solid contribution, while being 15% down on the same period last year. While Lowe Corporation has sought and received Commerce Commission approval to acquire the Colyer Mair business, there is no agreement in place at this stage.

Directors have indicated that they would be prepared to contemplate a sale of this business if they consider it to be in the best interests of all shareholders. Shareholders will be informed of the outcome of ongoing discussions as matters progress.

Construction contributed $1.3 million ($1.3 million) and venison, prior to sale, $3.9 million ($1.0 m) to the surplus.

Overheads at $1.9 million were down 3% and net interest payments at $6.6 million were up 37%.

The proceeds from the sale of the venison business were applied to reducing debt levels and have strengthened the balance sheet.

Directors are not recommending an interim dividend.

No provision was made for taxation in either year.

Revenue at $373.5 million was up 6% (with China now contributing 29.6% of total revenue).

Total assets at period end were $283 million, up 3%, and 50% of the Company’s assets are now based in China.

The only business unit to disappoint was Beijing Blue Zoo, which registered a $758,000 loss for the period (profit of $485,000). This business faces demanding price cutting tactics from local competitors.

The outlook for the second six months is positive. However, with no second half contribution from venison and uncertainty as to the ongoing ownership of the New Zealand semi-processed leather business, the next six-months’ profit is unlikely to match that of the first half.

For some time directors have been advising shareholders that the future of the Company lies in China, and within the results of the first six months of trading can be seen tangible signs of what can be achieved.

This media statement and the NZ Stock Exchange Preliminary Half Year Report Announcement (Form A) will shortly be available on our website www.richinapacific.com.

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