By Phil Boeyen, ShareChat Business News Editor
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Thursday 14th March 2002 |
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The setback is just one of the reasons for the company recording a loss of $15.32 million for the year ended December, well down on the previous year's $4.68 million profit. The operating surplus before asset writedowns was $2.9 million, 34% lower than the previous year.
Richina warned in December that it was facing a tough leather market as a result of September 11 and also that it would be writing down the value of its Beijing Blue Zoo aquarium operations.
In the final accounts the Beijing business has been written down by $18.6 million for a loss of $15.3 million for the year compared to the previous year's profit of $4.7 million.
"During 2001 the trading situation deteriorated as two competitors attempted to achieve increased patronage by charging entrance fees that were guaranteed to see them operate at a loss," says chairman Alastair MacCormick.
"With little prospect for an early improvement in this situation, directors decided it was prudent to revalue the aquarium assets."
Mr MacCormick says the damage that the events of September 11 had on the company's leather business can be judged by comparing the first and second halves of the year.
"In the first half of our year revenues for Shanghai Richina Leather were $108 million, while for the second half they were $77 million. The first half surplus for our leather operation was $5.5 million and for the second half it was a deficit of $2.8 million."
Despite the challenges Mr MacCormick says trading is now returning to levels above that experienced in the first half of 2001.
"It is only the size, strength and international standing of our leather operations which has enabled us to absorb and then recover quickly from such a severe downturn.
"International leather manufacturing and marketing is the main source of future growth for Richina Pacific. As the US economy picks up, our world-class facilities provide the basis for the company's recovery in the current financial year."
Elsewhere in the company its Mainzeal business lost $2.3 million compared to the previous year's $2.9 million surplus after making a provision of $4 million to cover a potential doubtful debt.
Mainzeal reports that its "order book remains strong with in excess of $150 million of secured work."
Richina sold two NZ businesses during the year, Mair Venison and Colyer Mair, and says the timing of both sales was fortuitous, with the prices received being at the top end of the market. Proceeds from the sales were applied to reducing debt.
Net tangible assets a share at year-end were 97 cents compared to $1.19 in 2000.
Mr MacCormick says with the world's economy on the improve there is every reason to position last year's result as a setback caused by a one-off combination of circumstances.
"Richina can return with confidence to shaping its future around its expanding international leather operations based in Shanghai."
A fuller assessment of the potential of Shanghai Richina Leather should be available for the company's annual meeting in June.
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