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LISTED dairy co-op Murray Goulburn (ASX: MGC) has agreed to pay a $650,000 settlement and admitted to breaching its continuous disclosure obligations.
The troubled dairy company says the Australian Securities and Investments Commission (ASIC) will apply to the Federal Court seeking a declaration of one breach under the Corporations Act, with no suggestion of intent.
"We consider that this settlement is in the best interests of Murray Goulburn as we continue to focus on our objective of supporting our farmer suppliers," says Murray Goulburn chairman John Spark.
The breach of obligations arises from 29 February 2016 when Murray Goulburn released announcements to the ASX forecasting average milk price for FY16 of $5.60 per kgms, and a full year profit expectation of $63 million.
ASIC alleges that the milk co-op contravened disclosure obligations by failing to notify the ASX of circumstances on the 22 March 2016, a consequence of which was that Murray Goulburn was unlikely to achieve its forecast profits.
At the time, the milk group slashed its profit forecast by as much as 40 per cent and announced retrospective price cuts on its milk payments to farmers.
Murray Goulburn said it expected a net profit after tax of between $39 million and $42 million, just months after forecasting the $63 million net profit.
Murray Goulburn has admitted to the ASIC allegations.
ASIC Commissioner Cathie Armour says listed companies need to be thorough with their forecast expectations.
"Listed entities must inform the market immediately when they become aware of circumstances that mean there will be material differences in market expectations of its earnings," says Armour.
After the announcement in 2016, shares in the milk co-op plunged, with suppliers thrown into turmoil. In the 18 months since, suppliers have left the dairy processor and the amount of milk it produces has plummeted.
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Business News Australia
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