Nufarm hit with fine over disclosure failure
Nufarm has been hit with a $66,000 fine and will have to review its reporting processes after an investigation into whether it failed to adequately disclose its first half results.
The agricultural chemicals supplier has provided the Australian Securities and Investments Commission an enforceable undertaking to settle claims about its continuous disclosure obligations.
The claims relate to Nufarm's disclosure of its first half profits for fiscal 2010.
By February 11, Nufarm's board knew the company's after tax net loss for the six months to December 31, 2009 would be $61.8 million, and the operating net loss after tax would be $55.6 million, ASIC said.
Given the information, Nufarm faced uncertainty regarding its half-year profit for the period ending one month later, on January 31, 2010, ASIC said.
The corporate regulator said some Nufarm executives expected an after tax operating profit of about $5 million to $7 million for the half year, an 89 per cent fall on the previous corresponding period.
As a general rule, variations in excess of 10 per cent or 15 per cent from previously released forecasts were considered material and should be announced to investors, ASIC said in a statement on Wednesday.
But Nufarm did not release a financial forecast or expectation for the 2010 half year until March 2, ASIC said.
ASIC said Nufarm had elected to pay the $66,000 fine and comply with the infringement notice, but there was no admission of guilt, and the company was not regarded as having contravened the Corporations Act.
As part of its undertakings, Nufarm has agreed to engage Deloitte to review its financial reporting processes and its policies and procedures regarding continuous disclosure.
Law firm Maurice Blackburn, which is running a class action against Nufarm over the company's financial disclosures, said the ASIC result strengthened its case.
Maurice Blackburn senior associate Jason Geisker said the law firm's action focused on a slightly different period, but also concerned the adequacy of Nufarm's disclosure to investors.
"We will have to consider this material and decide in coming days whether to extend our class period," Mr Geisker said.
"This is further evidence in support of our case theory that Nufarm's financial reporting systems did not operate sufficiently to enable it to have up-to-date information," he said.
He said Nufarm's approach to corporate governance should come under close scrutiny at the company's annual general meeting in Melbourne tomorrow.
Nufarm shares added nine cents, or two per cent, to close at $4.64.
