Rubicon Announces Strong Maiden Profit Result

Auckland, 21 May, 2002 - Rubicon Limited today announced audited results for its maiden 12 months reporting period, to 31 March 2002. The Company reported Net Earnings of $30.4 million. Included in this figure were gains of $63.2 million from the exit of its energy portfolio, partly offset by downward revaluations of $22.5 million to reflect the lower traded market prices of its investments in Fletcher Challenge Forests (FCF) and Genesis Research and Development. A loss of $10.6 million was incurred in relation to Associates (included in the Net Earnings figure above), comprising a loss from the operations of Forestadora Tapebicua (FTSA) in Argentina ($5.4 million) and expenditure on research activities in ArborGen ($5.2 million). Trees & Technology recorded earnings of $0.5 million, and Corporate (net of interest revenue) incurred a loss of $0.2 million.

Mr Luke Moriarty, the Chief Executive Officer of Rubicon said, “This is a strong result to close out our first year of operation. The net earnings figure largely reflects the significant transactional achievements we have made in the realignment of our business portfolio.”

During the year, the Company:

- Disposed of its Capstone Turbine Corporation shareholding for $44 million

- Sold its Brisbane fuels terminal for A$19 million

- Exited the Challenge petrol retailing operation for $50 million

“In total, we realised more than $60 million over our acquisition cost of these businesses, creating 18 cents per Rubicon share of value for shareholders. We returned to shareholders, by way of a share buyback, $60 million of the cash raised from these dispositions. 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.

Net asset backing for the Company at 31 March was 89 cents per share. The Statement of Financial Position showed Fixed Assets and Investments of $187.4 million and current assets net of liabilities of $60.0 million. Cash and liquid deposits were $66.8 million.

Commenting on the Company’s biotechnology assets, Mr Moriarty said, “We have continued to actively build our forestry biotechnology activities, investing $7.7 million in ArborGen during the period. 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. Our Trees & Technology tree improvement operation in New Zealand is developing well - recording commercial sales in the period of around 9.4 million Radiata treestocks, 1.6 million of which were superior clonal stocks.”

The severe economic, political and civil unrest that occurred in Argentina in the second six months of the financial year combined to create an extremely difficult operating environment for FTSA, and was the key reason for the business recording a loss in the period. In addition, the peso, which was pegged 1:1 against the US dollar, was floated in January and is now trading at only 2.9 pesos to the US dollar - a massive decline, and one that, when converted to New Zealand dollars, resulted in a significant reduction in the New Zealand dollar converted carrying value of FTSA in Rubicon’s Statement of Financial Position. While FTSA’s export positioning has benefited from the peso devaluation and the business is producing positive results at the EBITDA level, the short-term economic outlook for Argentina is not favourable and domestic demand will remain suppressed.

Rubicon announced yesterday that it was in discussions with FCF in relation to FCF’s declared interest in acquiring the assets of the Central North Island Forest Partnership. The substance of the discussions is a proposal to buy back most of Rubicon’s 17.6% shareholding interest in FCF in return for Rubicon acquiring part of FCF’s forest estate. The proposal with Rubicon would proceed only if the conditional agreement between Vela forestry and the Receivers of the CNIFP terminates and FCF can negotiate a purchase transaction with the Receivers. Any agreement between Rubicon and FCF would be subject to the satisfaction of shareholder and regulatory approvals, and also to FCF completing its transaction with the Receivers. The Company would not comment further at this stage.

Mr Moriarty reiterated the focus for Rubicon moving forward as: -

- Bringing value to its shareholding in FCF

- Commercialising its existing forestry biotechnology portfolio

- Exploiting appropriate new investment opportunities

“While we will deal with these objectives simultaneously, their order of importance in value terms to the Company is as listed.”

ENDS

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