22 May Yue Yuen Estimates $37M Worker Provision over China Strike
Yue Yuen Industrial Holdings Ltd said it would make a preliminary provision of some $37 million to an employee benefit program at its Gaobu factory in southern China as part of an agreement that resolved a major strike.
In late April, Yue Yuen had the labor dispute that stopped some of its production last month would cost it nearly $60 million initially. Workers walked off the job in early April the the plant in the Dongguan, Guangdong province, largely over what they alleged were insufficient social-insurance and housing payments. They returned toward the end of the month after Yue Yuen agreed to meet some of their demands for better social benefits.
The full release follows:
PROVISIONS FOR CONTRIBUTIONS TO EMPLOYEE BENEFIT PAYMENTS
Reference is made to the announcements of the Company dated 17 April 2014 and 25 April 2014 (the “Announcements”). Unless otherwise defined herein, terms in this announcement shall have the same meanings as those ascribed to them in the Announcements.
The Board wishes to inform the shareholders and potential investors of the Company that based on the information currently available to the Board, the Board estimates that a provision of approximately USD37 million will be made for post-payment contributions to the Employee Benefit Payments of Gaobu Factory.
The above provision was estimated mainly having regard to the Company’s communications with the relevant governmental authorities as to the basis of determination and payment procedures relating to the post-payment contributions, preliminary survey results recently received from employees of Gaobu Factory and the number of applications received from employees of Gaobu Factory to date for the post-payment contributions to the Employee Benefit Payments.
The actual provisions to be made by the Company will be subject to the actual number of applications received and the approval by the relevant governmental authorities of such applications. Such provisions will be reflected in the Group’s consolidated financial statements for the six months ending 30 June 2014.