Richina Pacific Announces Restructuring
March 31, 2006
Richina Pacific Announces Restructuring
Statement by John L. Walker, Chairman of Richina Pacific Limited
The Board of Directors of Richina Pacific Limited (RPL) has reviewed and considered in detail a range of restructuring proposals for Richina Land and the RPL Corporate Office. These proposals have been the subject of full consultations and have subsequently been refined and endorsed by the Independent Directors of Mainzeal and by the Directors and the CEO of RPL.
This announcement reinforces Richina Pacific's commitment to remaining very active in construction and development in New Zealand with our Mainzeal interests and also in China, with our significant land and property holdings. Implementation of the restructuring will begin immediately. New appointments are expected to be made for key roles over the next three months and completed within 12 months.
This is the next step in transforming Richina Pacific into a streamlined organisation, which began in 2005 as a result of our purchase in late 2004 of the Chinese State-owned enterprise (SOE) group, Shanghai Leather Company (SLC). These important organisational changes will allow us to maximise the value and performance of our operational businesses and our land and property interests in both New Zealand and China.
Following the successful establishment of the Richina Industries division, which resulted from our merging Shanghai Richina Leather into Richina Industries, RPL is to undertake a similar process with the construction and development operations of Mainzeal by merging them into RPL's larger Richina Land division.
The Richina Land division will be responsible for all of RPL's land and property development assets, both in China and in New Zealand, including the current New Zealand-based activities of Mainzeal. The Mainzeal operations within New Zealand will be supported even more strongly by the larger organisation, and it is also expected that Mainzeal's capabilities and experience will be increasingly utilised in the ongoing development of RPL's large land and property interests in Shanghai. It is also RPL's intention that Mainzeal will apply for a construction license in China, thereby leveraging opportunities that may be presented through the current negotiations between China and New Zealand on a Free Trade Agreement.
During this implementation phase of merging and integrating Mainzeal into Richina Land, Richard Yan, RPL's CEO and Managing Director, will assume the position of CEO of Richina Land, reporting to a dedicated Richina Land Board that will incorporate directors from the current Mainzeal Board and will be chaired by the Rt. Hon Jenny Shipley.
Reporting to Mr Yan will be the newly created positions of Richina Land's Chief Operating Officer for Construction and Richina Land's Chief Operating Officer for Development, as well as Richina Land's Head of Finance.
Following full consideration of the restructuring proposals and the associated consultations, it has been decided that the Richina Land COO for Construction will reside in New Zealand, with the Area Managers of Mainzeal reporting directly to that position.
It is intended that the Richina Land COO for Development will reside in Shanghai and will be supported by, and will have reporting to that position, the present General Manager of Development in New Zealand.
The Richina Land Head of Finance will also reside in NZ, and the financial teams of Richina Land located in China and New Zealand will report directly to that position.
These three senior positions outlined above will work as an integrated team to manage and develop our construction and development businesses for both China and New Zealand, and, as stated previously, they will report to Richard Yan. For the next two to three years, and with immediate effect, Richard Yan will be based in Auckland, where his family will relocate by mid-year 2006.
Even though Mainzeal is being incorporated into the Richina Land division, Mainzeal will remain a strong and valued brand and will be further developed, fully utilising the larger and stronger Richina Land operations. The experience and expertise of our Mainzeal people in construction, development, interiors and infrastructure within New Zealand will assist in the ongoing development and enhancement of Richina Pacific's very large land and property holdings in Shanghai.
Simultaneously with the restructuring associated with these developments in the Richina Land division, the RPL Board has endorsed a plan that will move RPL's corporate operational headquarters from Singapore to Kuala Lumpur, Malaysia.
This move is driven by the desire of the Board of RPL to build further, in a cost effective way, the corporate management resources that are necessary to support the Company's now much larger and more complex asset base.
Malaysia has the same common law and commonwealth country history as New Zealand and Singapore, but it also has the advantage of a significantly lower base in operating costs when compared with these other countries, and even more recently when compared with Shanghai. Yet Malaysia has a wealth of talented professional people, many of whom have been educated abroad, who can assist us in bridging the language and management gaps.
It is planned that RPL will establish an office in Kuala Lumpur in early May 2006 and, over a short period of time, recruit a full compliment of staff in the areas of finance, accounting, treasury, legal, internal audit, human resources, corporate communications, technology and general corporate support. Tun Cheng Chiam, who for the past eight years has been the CEO of RPL's Blue Zoo Beijing aquarium, will return to his native Malaysia to be the Chief Operating Officer of the Kuala Lumpur office.
Although the corporate office in Kuala Lumpur (KL) will be significantly larger in terms of staff numbers and space than was the case with the Singapore corporate office, the total costs are expected to be similar to the costs of the Singapore office together with those incurred in Auckland, which in the past has provided support to the Singapore office. Some of the roles that currently exist in Auckland will be transferred to KL.
Over the next few weeks our plans will require further re-alignment or consolidation. The employment processes associated with this restructuring plan are continuing with staff and where affected staff are not able or willing to apply for new positions within the new structures, some redundancies may occur. The restructuring is expected to have little or no effect on current area management or staff
Our restructuring plan has no impact on the legal status of any contracts that clients, suppliers, sub-contractors or advisors have with Mainzeal. Mainzeal will continue to contract in accordance with previous and well-established practice.
These restructuring plans and their implementation are discussed in more detail in the 2005 Annual Report, which will be sent to shareholders on March 31, 2006, and will be discussed further at the upcoming Annual General Meeting that is scheduled for May 18, 2006 in Auckland.