Rubicon interim profit falls 70 percent

By NZPA

Monday 16th December 2002

Listed biotechnology and forestry company Rubicon posted a 70 percent drop in interim net profit to $9.39 million.

The after-tax profit for the six months ended September compared with a $30.75 million surplus for the same period last year.

Sales revenue was almost unchanged at $4.57 million, but total operating revenue dropped to $12.41 million ($69.71 million).

The company declared no dividend, while earnings per share fell to 3.4cps from 9.2cps last year.

Rubicon's prime investment is ArborGen, a tree bio-engineering joint venture in which it is an equal partner with Westvaco and Carter Holt Harvey's major owner, International Paper.

The company, which was spun off from the Fletcher Challenge conglomerate last year, has a key holding in Fletcher Forests and shares in Genesis Research among its other investments.

"While we have continued to make operational advances in all of the businesses that make up our current forestry portfolio, the period will be remembered most as one of lost opportunity for Rubicon shareholders," chairman Michael Andrews said.

He said the company was keen to see settled quickly the litigation between its biggest shareholder, Guinness Peat Group (19.9 percent) and second-largest holder Perry Corporation (16.3 percent) over Perry's disclosure of its interest in Rubicon.

"Although Rubicon is a defendant in this case for purely technical reasons, the discovery requirements placed on it in the proceedings have been considerable and diversionary to management's focus."

The court case is currently being heard, with the outcome expected early next year.

"Our immediate priority remains unchanged -- addressing our Fletcher Forests shareholding," Mr Andrews said.

In August, Fletcher Forests shareholders voted down the revised Central North Island Forests deal, which involved Rubicon selling its stake in Fletcher Forests for 37c per share, in exchange for Rubicon's Tahorakuri Forest.

Rubicon shares are currently trading at 67c, well below an independent valuation of between 98c and $1.28 per share, largely because Fletcher Forests shares were trading below their valuation by Grant Samuels, he said.

"We have put behind us the failed Fletcher Forests/Tahorakuri transaction.

"We now need to look forward, as it is critical that we help bring value to Fletcher Forests itself in order to increase the value of our strategic investment in that company and, in turn, increase the value of Rubicon."

The company had spent $1.6 million in new investment activity, and was likely to continue focusing on realising value from its existing forestry-based investments and operations.

"Our core investment spend will continue to be ArborGen-related, in meeting our $US4 million ($NZ7.9 million) per annum investment obligations to that venture," he said.

During the period, Rubicon also invested $US2 million to meet its share of the ArborGen partners' contributions.

Costs during the period included a $550,000 charge to close its Brazil office; $3.5 million relating to the unsuccessful Fletcher Forests/Tahorakuri transaction; and $300,000 relating to the GPG/Perry court proceedings.

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