Future still a puzzle for Rubicon

By CHRIS DANIELS, Forestry writer

One-off sales have dominated the accounts of Fletcher Challenge spin-off Rubicon, which has announced a maiden half-year profit of $30.8 million.

Though Rubicon appears in fine financial health, with cash in the bank, shareholders are wondering exactly what awaits them on the other side of the river.

Operating earnings of $32 million were made up almost entirely of income accrued from transactions - accounting for $31.7 million.

During the six months to October, Rubicon earned money from:

* Selling its shareholding in United States turbine maker Capstone for $44 million.

* Selling its fuel terminals business in Melbourne for $A19 million.

* Selling the Challenge chain of petrol stations, which it inherited from Fletcher Energy, for $50 million.

Rubicon also completed a $60 million share buyback, which reduced issued shares by 21 per cent, raising net asset backing by 5 per cent.

But the future is not clear, with the company apparently about to embark on some as-yet unknown technological-based investments.

An obvious priority is increasing the value of its 17.6 per cent shareholding in the moribund Fletcher Challenge Forests.

This represents nearly half of the company's net asset backing, and each Rubicon shareholder indirectly owns 1.76 Fletcher shares for each single Rubicon share.

"We believe it is worth a lot more than 25c," said chief executive Luke Moriarty said. "So you wouldn't want to dump that into the market now."

He said that though Rubicon might appear to have a lot of money in the bank, much was committed to investments.

One of its main commitments is the $10 million-a-year investment in ArborGen, a joint venture with International Paper (part owner of Carter Holt Harvey), US company Westvaco and local biotech firm Genesis.

ArborGen is developing genetically engineered trees it hopes will have better yields, grow stiffer and have less lignin, which is expensive to remove when making pulp and paper. It is also involved in cloning technology for trees.