Rubicon profits from realignment

By Felicity Anderson, Nzoom.com Business News Editor

Tuesday 21st May 2002

Fletcher Challenge splinter Rubicon has made a maiden profit for the year to March 31 of $30.4 million.

That includes gains of $63.2 million from the sale of Fletcher Challenge Fuels, Challenge Petroleum and Capstone shares.

And it takes in to account a revaluation of almost $22.5 million of Rubicon's investments in Fletcher Challenge Forests (FCF) and Genesis Research and Development to reflect their lower traded market prices.

Rubicon also lost $10.6 from its operations of Forestadora Tapebicua (FTSA) in Argentina ($5.4 million) and expenditure on research activities in ArborGen ($5.2 million).

Luke Moriarty, Chief Executive of Rubicon, says FTSA has been affected by the political unrest and currency devaluation in Argentina, which slices into the dollar converted carrying value of the company on Rubicon's accounts.

He says FTSA's export positioning has benefited from the peso devaluation and the business is producing positive results at the earnings before interest, tax, depreciation and amortisation (Ebitda) level.

However, he warns the short-term economic outlook for Argentina is not favourable and domestic demand will remain suppressed.

Commenting on the company's biotechnology assets, Moriarty said $7.7 million had been invested in ArborGen during the period.

He said the venture is progressing well and although it is still some time away from the sale of bio-engineered treestocks, the portfolio of intellectual property being created should begin to bring value to the business well before product commercialisation.

Rubicon's Trees & Technology tree improvement operation recorded commercial sales in the period of around 9.4 million Radiata treestocks, 1.6 million of which were superior clonal stocks. That gave it earnings of $500,000.

Moriarty says the realignment of the business's portfolio over the 12 months created 18 cents a share in value for shareholders and he pointed our that shareholders got back, by the way of a share buyback, $60 million of the cash raised from assets sales.

"The value gap in our stock has been closing progressively as we have continued to refine our portfolio, with our share price closing on balance date at 64 cents - more than twice the value at which the share had traded in the grey market pre-listing in March of last year, and 50% more than its listing price," he said.

Just over half a million shares were traded on the New Zealand Stock Exchange on Tuesday at 65c a share.

Rubicon says its net asset backing at March 31 was 89 cents per share.

Rubicon announced on Monday it was in discussions with FCF in relation to FCF's declared interest in acquiring the assets of the Central North Island Forest Partnership.

FCF wants to buy back Rubicon's 17.6% shareholding in CNIFP in return for Rubicon acquiring part of FCF's forest estate.

Moriarty said he would not comment further at this stage.

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