Murray Goulburn cops $650,000 fine over disclosure failures

The Federal Court has ordered Murray Goulburn to pay a $650,000 fine plus ASIC's legal costs over the embattled dairy giant's disclosure failures ahead of last year's profit downgrade.

The Australian Securities and Investments Commission took Murray Goulburn to the Federal Court alleging that from March 22, 2016 to April 27, 2016, the listed diary co-op failed to notify the ASX that it was unlikely to achieve forecasts it made in February.

Confirming the settlement agreed to between the troubled dairy processor and ASIC in November, Justice Davies said the penalty was towards the higher end of the statutory maximum, because of the "gravity" of breach, the "involvement of the senior level of management," and the "market impact and prejudice" it caused

The court found that MGRE contravened its disclosure obligations under section 674(2) of the Corporations Acton and from 22 March 2016, continuing until 27 April 2016 by failing to notify the ASX that circumstances had arisen a consequence of which was that, Murray Goulburn Co-operative Co. Limited (MG) was unlikely to achieve the forecast:

• Available Weighted Average Southern Milk Region Farmgate Milk Price for the financial year ending 30 June 2016 of $5.60 per kilogram of milk solids; and
• Full-year net profit after tax for the financial year ending 30 June 2016 of approximately $63 million, as stated by MG and MGRE in their ASX announcements dated 29 February 2016 entitled 'Murray Goulburn – Half Year Financial Results News Release' and 'Murray Goulburn – Half Year Financial Results Presentation.'

ASIC issued proceedings against MGRE in November last year.

MGRE admitted the contravention in a Statement of Agreed Facts and Admissions and the parties filed joint submissions for a declaration and a civil penalty to be imposed.

In handing down her judgment on Friday 15 December 2017, the Hon Justice Davies said "the penalty is towards the higher end of the statutory maximum but a penalty towards the higher end is warranted, reflecting the gravity of the contravention, the market impact and prejudice caused by the contravention, the involvement of the senior level of management in the contravention and failure of governance, and the inadequacy of MGRE's compliance policies at the time and the duration of the contravention."

ASIC Commissioner Cathie Armour said if an entity has previously given a profit forecast to the market and that subsequently changes causing its profit forecast to differ from that guidance by a material amount, it is crucial to inform the market immediately in order that investors are apprised with up-to-date information.

MG Unit Trust was officially admitted to the official list of the ASX in July 2015.

Murray Goulburn's previous management was responsible for destroying one of the greatest agricultural entities in Australia, Barnaby Joyce recently said.