Murray Goulburn’s $650,000 penalty confirmed

18 Dec, 2017 01:40 PM
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Big dairy co-operative Murray Goulburn has had its recent $650,000 fine confirmed by the Federal Court.

MG, currently in the throes of selling off its entire processing and marketing operation, including the successful Devondale brand, must pay up after admitting to the Australian Securities and Investments Commission (ASIC) it breached continuous disclosure obligations to shareholders last year.

The penalty was a consequence of its behaviour leading up to last year's dramatic 40 per cent profit downgrade and subsequent retrospective farmgate milk price cut to its farmer suppliers, which triggered an earnings crash for farmers across southern Australia.

ASIC brought Federal Court proceedings alleging between March 22, 2016 to April 27 MG failed to notify the Australian Securities Exchange it was unlikely to achieve forecasts it had made in February.

In its April update to the ASX ,MG revealed a new after-tax profit forecast of $39m to $42m, well down from the $63m predicted in February 2016.

Both profit forecasts followed its 2015 partial stock market float forecast of an $89m profit.

MG Trust shares dived with news and are currently worth 81 cents each – down from their $2.70 peak two years ago.

Last month, as part of a settlement with ASIC, MG agreed it had breached its obligations once.

ASIC did not allege MG had deliberately contravened its continuous disclosure obligations.

The maximum penalty for a breach could have been $1 million, which was why the court was left to determine the final amount of the penalty.

MG, and its former chief executive Gary Helou, still face an Australian Competition and Consumer Commission (ACCC) prosecution for alleged unconscionable conduct.

The ACCC alleged MG knew for many months leading up to the April update it would fail to meet its forecasts, but MG is disputing the claims.

Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media

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