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Kiwifruit giant anticipated the impact and boosted grower payments earlier this year

Zespri restates $42.3 million of cloud software investment

Kiwifruit co-op Zespri has quantified the impact of a change in accounting standards for software as a service (SaaS) investments in its annual report, released today.

In total, the company had to write off $42.3 million of SaaS previously recognised as an intangible asset but now classed as an operating cost. Zespri embarked on an ambitious $160 million cloud-based transformation just as the rules were being changed, so had little opportunity to depreciate its new investments before having to write them down.

In February, Zespri opted to pay its New Zealand growers five cents more per tray for the next three years to compensate for the accounting change. The the board approved the extraordinary loyalty payment for class 1 trays following an agreement at its industry advisory council.

Dubbed Horizon, that project is described as a phased approach to modernise Zespri's systems and processes to support future growth. 

Deloitte is Zespri's implementation partner leading a New Zealand-based consortium rolling out SAP S/4HANA, private cloud edition. Zespri is also shifting its reporting ad data to SAP Analytics Cloud. 

"This will enable us to turn data into intelligence that will help us gain a business advantage, make better decisions, improve business performance and mitigate risk," the annual report said.

Total investment in the Horizon programme to 31 March, 2022, was $72.6 million.

"We have continued our ambitious approach to updating our digital systems and processes to better protect and enhance our ability to get fruit to market and returns back to growers," Zespri CEO Dan Mathieson and chair Bruce Cameron jointly reported.

"We’re unpicking old systems and building new ones to deliver better data management and faster, more intuitive digital systems and processes. It is a significant investment, but one which we have had to tackle after years of under-investment in our digital infrastructure. It is a critical part of our ability to continue to grow the industry and our returns to growers."

The Horizon programme would provide faster, more reliable systems with more functionality and consistency to Zespri's supply chain teams, the report said. It would also develop intuitive tools, reliable data, information and other support services to give growers a better experience.

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