Rubicon Announces Strong Six Months Results
Auckland, 15 November 2001 - Today Rubicon announced its interim earnings results to 30 September 2001. For the six-month period, Rubicon recorded Net Earnings of $30.8 million.
Mr Luke Moriarty, the Chief Executive Officer of Rubicon said “This is a very strong result for the Company’s first reporting period, and one that reflects the successful transactional nature of our first six months of operation. During the period we:
Disposed of our Capstone shareholding for $44
Sold our Brisbane fuels terminal business for A$19 million
Exited our Challenge petrol retailing operation for $50 million
Completed a $60 million share buy-back programme, reducing the shares on issue by 21% to 279 million, and in so doing increased the net asset backing of the Company by 5%
Reviewed new investment opportunities, and
Created the infrastructure of people and networks necessary to take Rubicon forward.
From a financial results perspective, we recorded Operating Earnings of $32.0 million, which included $31.7 million of income that accrued from transactions undertaken in the period – being $63.2 million from the disposition of our Capstone Turbine Corporation shares and the sales of our Brisbane fuels terminal and Challenge service station network businesses, partially offset by a write-down of $31.5 million in the market value of our investments in Fletcher Challenge Forests (from 31.4 cents to 25.2 cents per share) and Genesis Research & Development (from $3.78 to $2.80 per share)” he said.
Commenting on the write-down in the carrying value of its listed securities, Mr Moriarty said “We have adopted accounting policies that require us to account for the value of our listed investments at market value. This ensures that the net asset backing number we publish (an NTA of 97 cents per Rubicon share at 30 September) effectively “marks-to-market” those of our assets that are traded in the public equity markets. Having said that, we continue to believe that the true value of our Fletcher Challenge Forests shareholding is well in excess of 25 cents per share – the market price on 30 September 2001.”
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Excluding the earnings items noted above, Rubicon recorded Operating Earnings of $0.3 million, representing income of $0.6 million from its treestock development and sales activities at its Trees and Technology operation in Te Teko, less net corporate expenses of $0.3 million. Earnings from Associates were a loss of $1.2 million, reflecting the impact that an extremely difficult, and deteriorating, Argentine economy was having on the Company’s eucalyptus forestry and processing activities in South America.
The Company’s Statement of Financial Position showed Term Assets and Investments of $201.8 million, representing its 17.6% shareholding in Fletcher Challenge Forests ($123.8 million), its 2.8% investment in Genesis ($2.1 million), and its forestry “biotech” assets ($75.9 million) acquired from Fletcher Challenge Forests earlier this year. The Company also reported cash and liquid deposits of $74.7 million as at 30 September.
Looking ahead, Mr Moriarty said “Rubicon will be focusing on three core value strategies:
Bringing value to its 17.6% shareholding in Fletcher
Commercialising its existing forestry biotechnology portfolio
Exploiting new investment opportunities
with our immediate attention being on the first two of these imperatives. Our shareholding in Fletcher Challenge Forests now represents nearly 50% of Rubicon’s net asset backing, with our shareholders having, indirectly, 1.76 Fletcher Challenge Forests shares for every Rubicon share they hold. It is clear that bringing value to our investment in Fletcher Challenge Forests is critical to the value of Rubicon moving forward.”
Rubicon will also continue to move ahead on the strategic positioning of its forestry biotechnology assets – its prime investment being ArborGen, a tree-bioengineering joint venture in which it is an equal partner with Westvaco and International Paper. Rubicon has a commitment to provide US$4 million per annum for the next four years in follow-on funding, and it is actively participating in setting the strategy and development path of the business. The Company is also moving forward the commercialisation of its Trees and Technology business – in particular, looking to bring the last decade’s investment in superior treestock development through to the market in New Zealand, and also investigating the establishment of operations in international markets that may allow Rubicon to leverage the clonal work it has already undertaken in Radiata and Eucalyptus in New Zealand and Argentina.
“On the new investment front, during the period we invested NZ$1.6 million in the second round of funding into ArborGen. In addition, in our first six months of operation we have analysed, “gated” and in some cases undertaken detailed due diligence, on over 30 investment proposals. To date, none has yet met our demanding criteria for investment. Having said that, however, we continue to believe that high-growth investment opportunities do exist within Rubicon’s arenas of interest in forestry, horticulture and agriculture, and we have continued to build our relationships and networks accordingly”, he said.