Mainzeal loss impacts Richina result

A "satisfactory" result was severely dented by a loss on an apartment being developed by subsidiary Mainzeal, Bermuda-registered Richina Pacific said yesterday.

The Singapore-based company said its June half-year net profit rose 84 per cent to US$4.4 million ($6.4 million).

The former New Zealand company has most of its assets in China (the Beijing Blue Zoo and Richina Industries) but also has the New Zealand construction and development business.

Chairman John Walker said there was "a significant unexpected loss" at Richina Land that materially lowered an otherwise outstanding half-year result.

Mainzeal is part of Richina Land, which posted a loss of US$2.25 million.

Mainzeal Construction provided for a "large loss", principally on an Auckland apartment building project negotiated in 2003.

Mainzeal management, which has paid the price through a shake-up, has told the board the loss would not be recovered in the second half. An overall loss for Mainzeal was being forecast for the full year.

Walker said some more loss provisions might be required in the second half of the year.

The Mainzeal and Richina Pacific boards viewed the failure as "completely unacceptable" and had mandated management changes at Mainzeal, particularly in the Auckland construction division where the problems occurred.

Walker said the Mainzeal loss had been the subject of extensive internal and independent reviews.

Mainzeal had decided it would no longer undertake similar apartment projects in New Zealand.

Before the apartment fiasco, Mainzeal reported three years of improving results.

- NZPA