Zespri drops $13.9m provision for China invoicing scandal, ups profit forecast
The forecast profit range is now $32 million to $35 million for the year ending March 31.
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Hawke’s Bay
The board of kiwifruit marketer Zespri has increased its profit forecast for the 2016 financial year by $13 million after being assured it no longer needs to hold a provision in its accounts relating to the under-declaration of customs duties by a Chinese subsidiary.
The forecast profit range is now $32 million to $35 million for the year ending March 31, compared to $19 million to $22 million previously.
Zespri had been holding a $13.9 million provision since the 2012/2013 financial year after its subsidiary Zespri Management Consulting Company was found guilty by a Shanghai court of being an accessory to the under-declaration of customs duties between 2008 and 2010.
It was fined $1.1 million and a Chinese-based employee sentenced to five years in jail and ordered to make reparations for illegal gains that, at the time, were said could amount to around $10 million. The employee had been conniving with a former independent importer who was convicted on criminal smuggling charges.
Zespri chief financial officer Dave Hazlehurst said since then there have been external legal and forensic accounting reviews undertaken and the company has now had an assurance from the Chinese authorities and the Shanghai Court that no further reparation will need to be paid.
During the 2013 court case, Zespri pleaded not guilty to the charges on the basis the legal obligations to meet all customs requirements sat with its former importer, who had already repaid about $7 million of the underpaid duties.
Hazlehurst said he was satisfied that the kiwifruit marketer has improved its compliance framework to avoid this sort of situation recurring in any of its markets.
China remains an "exciting opportunity" for the New Zealand kiwifruit industry, he said. Zespri sales in China increased by 50 percent in the 2015/2016 season to reach record levels of around 18 million trays and it's expected to become the largest market by volume in the 2016/2017 season.
(BusinessDesk)
Fiona Rotherham
Wed, 16 Mar 2016
Wed, 16 Mar 2016
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Zespri drops $13.9m provision for China invoicing scandal, ups profit forecast
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