PKC Group Plc Company Announcement 23 September 2014 9.00 a.m.
PKC HAS RECEIVED A TAX REASSESSMENT DECISION RELATED TO BUSINESS RESTRUCTURING CARRIED OUT IN 2009 – TAXES AND RELATED PAYMENTS AMOUNT TO EUR 8.3 MILLION
PKC Group has received a tax reassessment decision from Finnish tax administration in relation to the Wiring Systems business restructuring carried out in 2009. The decision obliges PKC Group to pay EUR 8.3 million additional taxes, punitive tax increases and interests, which company will record in the third quarter results.
The tax reassessment decision is based on the transfer pricing tax audit carried out in the beginning of 2011. Tax reassessment relates to the Wiring Systems business restructuring that was carried out in 2009 due to business and commercial reasons. As a part of the restructuring, the company sold certain specified, fixed term client contracts and inventory to its Estonian subsidiary. The company used third party valuation to support the assessment of arm’s length pricing for the transactions. The valuation was carried out in accordance with generally applied valuation principles. The company’s management considered that the valuation supported its view on the market value of the assets sold. At the time of the decision-making on the restructuring, the financial crisis was at its deepest and the business subject to reorganisation was loss-making. Due to the difficult market situation and the loss-making business, the company was forced to adapt its business operations. PKC Group also carried out several co-determination negotiations in its Finnish operations in 2009.
The company and the Finnish tax administration have significantly different views in assessing the nature of the reorganisation and its valuation. PKC Group is of the opinion that it has complied with the tax laws, OECD’s transfer pricing guidelines and tax administration’s guidelines. PKC Group considers the claim to be without foundation and will appeal the decision to the Board of Adjustment.
PKC Group Plc
Board of Directors
Matti Hyytiäinen
President & CEO
For additional information, contact:
Matti Hyytiäinen, President & CEO, PKC Group Plc, +358 400 710 968
Juha Torniainen, CFO, PKC Group Plc, Tel. + 358 (0)40 570 8871
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www.pkcgroup.com
PKC Group is a global partner, designing, manufacturing and integrating electrical distribution systems, electronics and related architecture components for the commercial vehicle industry and other selected segments. The Group has production facilities in Brazil, China, Estonia, Finland, Germany, Lithuania, Mexico, Poland, Russia, Serbia and the USA. The Group's revenue in 2013 totalled EUR 884.0 million. PKC Group Plc is listed on NASDAQ OMX Helsinki Ltd.