By NZPA
|
Wednesday 26th February 2003 |
Text too small? |
Richina has just announced an $8.2 million net profit in 2002 against a $15.3 million loss the year before, largely due to its brightest investment, its leather operations in China.
Yesterday the company held a shareholders' meeting to kick director Ming Lu off the board because they claimed he was blocking Richina's $NZ18.6 million rights issue to help develop the Chinese leather operation.
Mr MacCormick said Mr Lu, who represented 9.6 percent shareholder JP Morgan, believed the Shanghai tannery should be expanded by realising other assets, rather than the rights issue.
"They have a different view over where we should be going."
Richina's other major assets are Mainzeal Construction and a Chinese aquarium, Blue Zoo Beijing.
Mainzeal made a strong $6.8 million contribution to operating surplus, after a previous loss of $2.3 million. Mr MacCormick said it was performing well and "not for sale at the present time".
Blue Zoo made a modest net surplus of $657,000, compared to a $20 million loss last year, following a significant writedown to its book value.
Asked whether Blue Zoo could go up for sale, Mr MacCormick said the company was hoping the strong competition suppressing its profits would be temporary.
"If one were to try and realise the value of that at the moment, it probably wouldn't realise its full value."
Richina's book value currently stands at $187 million, with Mainzeal claiming $86.2 million, Blue Zoo at $19.4 million, the Chinese tannery at $76.4 million, and overhead assets of $4.9 million.
Mr MacCormick said the one-for-one rights issue was necessary, even though Richina has decided to reinvest its profits and not pay a dividend this year. The company's cashflow was "insufficient" to upgrade the Shanghai tannery, boost its working capital, and replace the cost of servicing $5 million in related party loans.
The Chinese factory contributed $13.1 million (up 386 percent) to the company's total operating surplus before unallocated overheads and interest expenses of $8.6 million -- down by $2.4 million.
The leather operation increased its revenue by 17 percent to $216 million, and Richina believes the company could boost capacity by three quarters over three years.
Mr MacCormick also said it would be several months before Richina could announce whether it was moving its listing and headquarters offshore.
He ruled out China as a potential location but said Singapore was an option. However, there were a "very large number of issues" to assess, including capital markets and tax.
He doubted there was much that could be done to make New Zealand more attractive to Richina.
"The essential things that are considerations here are one, that the centre of gravity of the firm itself is moving towards China, with the growth of the leather business, and the second issue would be that the tax position of the firm is complicated because of substantial operations being in China."
Richina's result showed shareholders earned 11.3cps, compared with losing 21cps when the company wrote down assets by $18.6 million.
Pre-tax operating profit rose to $8.2 million from $2.9 million, and did not include the $66 million sale of the Wellington complex, Mobil-on-the-Park, in September. Richina anticipates a $2.5 million profit.
After settling debt, it would then have $26.5 million cash in hand.
Richina's total revenue fell 23 percent to $497 million because of the sale last year of its New Zealand tannery and venison operations.
No comments yet
