Tuesday 21 June 2016 06:01 PM
Zespri raises profit forecast range to recognise $50M of Gold3 licence revenue
June 21 (BusinessDesk) - Zespri International, the kiwifruit marketer, raised its full-year profit forecast to take into account licence revenue of $50 million from the release of 400 hectares of Gold3 licence in 2016.
Zespri is now forecasting profit of $70 million to $75 million for the 2016/17 year, up from the range of $25 million to $30 million it gave in April. The earlier forecast excluded revenue from the release of Gold3 licences that were tendered in May.
The closed tender bid process attracted broad participation from the industry with 1,376 hectares bid and 266 successful bidders for the 400 hectares of the SunGold licence, Zespri said. Half the hectares were restricted to Green and Green14/Sweet Green growers to provide an opportunity for existing green growers to convert over to SunGold, it said. The other half was unrestricted and open to all growers and greenfield plantings. Consideration was given to accessibility and affordability, allowing for deferred payments.
While the revenue gain is being recognised in the current year, the revenue itself will be realised over a number of years, Zespri said.
"The take-up of deferral terms by a substantial number of bidders means that the licence release will not generate net cash flow to Zespri until the 2018/19, 2019/20 and 2020/21 financial years," it said. "At that time, the Zespri board will make decisions regarding use of funds and distribution to shareholders."
Further releases of 1,200 hectares of SunGold licence is planned in three more tranches over the next three years, subject to board consideration, it said.