Richina Pacific On Target For Strong Profit

June 19, 2002

Richina Pacific On Target For Strong Profit Performance

Statement based on presentations made at today’s annual meeting of

Richina Pacific Limited in Auckland

Richina Pacific is “on target” to fulfil its promise to make profits out of its Chinese leather operations, and shareholders were told at today’s annual meeting that after five months of trading the company’s earnings before interest and tax stood at $7.5 million.

Chairman, Dr Alastair MacCormick, said that after adjusting for subsidiaries sold during the year “the overall result is ahead of the same period last year, and that forecasts for the balance of the year show the firm to be tracking in line with our budget for a profitable year”.

He said all three subsidiaries - Shanghai Richina Leather, Blue Zoo Beijing and Mainzeal - should generate operating profits for the year.

Shanghai Richina Leather (SRL) was described as experiencing strong growth, and is now one of the largest tanneries in China.

Projections shown to shareholders at the meeting had sales by SRL for the full year at some US$106 million, 35% higher than in 2001. Sales were forecast to grow to US$200 million over the next three years.

Mainzeal was reported as having a “solid programme and its order book is being maintained” and Blue Zoo Beijing as “returning to profitability”.

Dr MacCormick reported that the company’s debt funding is being separated and restructured so that its China businesses are funded from financial markets experienced and informed about business in China.

New Zealand operations continue to be funded locally with the only local debt at 31 December 2001 being a $41 million mortgage on Mobil on the Park. This building is generating cash positive returns and its book value is $63 million.

Dr MacCormick also foreshadowed significant change for Richina Pacific in the medium future as it responded to the opportunities presented by the continued development of SRL as a world class manufacturer and marketer of leather.

These included

- funding growth in China through seeking access to equity capital markets outside of New Zealand

- corporate restructuring in China that might involve the conversion of SRL from a joint venture into a “ company limited by shares” or the acquisition of a China investment holding company

- giving serious consideration to participating in opportunities that complemented existing businesses in China and

- dual reporting of the company’s performance in NZ and US dollars, making the company’s reporting more relevant to international investors.

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