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Richina Pacific Confirms Profit Forecast At $8 Mil

December 20, 2002

Media statement

Richina Pacific Confirms Profit Forecast At $8 Million

Statement made by Alastair MacCormick, Chairman, Richina Pacific Limited, based on addresses given at today’s special meeting in Auckland


Richina Pacific has confirmed that its after tax operating profit for the year ending 31 December, 2002, will be in the region of $8 million.

At today’s special meeting to confirm Richina Enterprise Holdings Limited ( REHL ) as underwriter for its forthcoming rights issue to raise US$10.4 million, shareholders were told that the “lion’s share” of that profit will come from Shanghai Richina Leather (SRL ) its international leather manufacturing operation in China.

At the half year Richina Pacific reported an after tax profit of $4.2 million.

Shareholders at the meeting approved REHL, a related party, underwriting the issue.

Funds raised from the rights issue will be used to fund SRL’s day-to-day operations and expansion of its buildings, plant and equipment.

SRL’s CEO, Dennis Thams, told the meeting that in this financial year the tannery would produce 55 million sq feet of leather, for a sales value of about NZ$200 million, up 30% on the previous year’s turnover.

In the next three years the tannery is looking to increase its leather manufacturing capacity on a monthly basis from the current 6.6 million sq feet by 68% to 11 million sq ft a month.

To achieve this, SRL will need to invest an additional US$13 million in new plant and buildings.

With that level of investment, SRL anticipates it could double yearly sales from the current US$102 million to US$225 million in 2005.

Leather for shoes remains SRL’s major market, with China producing some 50% of the world’s footwear.

Major markets for leather furniture and automotive leather are also evolving in China.

SRL has created for itself a position where it is recognized as a leading supplier, and the SRL brand sits proudly in the upper echelons of the supply chain for the world leather industry.

ENDS

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