Believe it or not, Nufarm managed to send out another release yesterday, but it wasn’t of its own making.
ASIC, the half asleep corporate watchdog has pinged Nufarm over its continuous disclosure performance.
ASIC says Nufarm sat on the news that earnings could be down by at least 89% for the first half of the year to January 30 and sat on the news for a number of days, from a board meeting on February 11, until a statement was made to the market on March 2.
The news won’t help calm what’s expected to be a fiery AGM in Melbourne later today where the company’s appalling performance over the past year will be the prime issue, followed by the management and boardroom efforts of CEO Doug Rathbone and other directors.
ASIC said that "Nufarm Ltd has paid a $66,000 penalty following an infringement notice issued by ASIC for an alleged failure by the company to disclose material information regarding its year to date financial results in the period from 11 February 2010 to 2 March 2010".
The market regulator said Nufarm had agreed to pay the fine following ASIC’s issue of an infringement notice on 30 November 2010.
"The notice and the undertaking follow an ASIC investigation into suspected contraventions by Nufarm of its continuous disclosure obligations between 1 December 2009 and 2 March 2010," ASIC said.
ASIC said it has also "accepted an enforceable undertaking from Nufarm following concerns that Nufarm’s financial reporting systems did not produce sufficient up-to-date information about its financial performance and current market conditions to enable the company to have a more precise view of its likely half yearly results at the time of the contravention alleged in the infringement notice".
"The enforceable undertaking from Nufarm requires the company to engage an independent external consultant to review its financial reporting and disclosure systems, recommend changes, and review the implementation and effectiveness of those changes.
"Under the terms of the undertaking, Nufarm will implement changes recommended by the consultant.
"The company will also cease issuing securities using a cleansing notice under sections 708AA and 708A or a short form prospectus under section 713 of the Corporations Act or under related ASIC class orders for a minimum of nine months and not until the external consultant confirms that the recommended changes to the financial reporting systems and disclosure systems have been effectively put into operation," ASIC said.
The guts of the ASIC claim was:
"By 11 February 2010, Nufarm was aware of the following information:
"Nufarm’s financial year-to-date results for the period from 1 August 2009 to 31 December 2009 consisted of:
(a) an after-tax net loss of $61.8 million; and
(b) an after-tax operating net loss of $55.6 million
"The Information was presented at a meeting of Nufarm’s board of directors on 11 February 2010. All of Nufarm’s then current directors as well as a number of the company’s senior executives were present at the meeting.
"Given the Information, Nufarm faced uncertainty regarding its expected half-year profit. There is evidence that Nufarm considered there were significant possibilities of a break even result, a small after tax net profit or a small after tax net loss. There is evidence that Nufarm senior executives expected an operating profit in the region of $5-7 million for the half year ending January 2010. An operating profit of $7 million would represent an 89% fall from the after-tax net operating profit in the previous corresponding period (1 August 2008 to 31 January 2008 (sic) It should be January 2009).
"Nufarm did not release a financial forecast or expectation for the 2010 financial year or half year until 2 March 2010.”
And Nufarm was all contrite in this statement yesterday.
"Earlier today, Nufarm Limited provided enforceable undertakings to ASIC which ASIC has accepted in resolution and settlement of ASIC’s investigation into Nufarm’s compliance with its continuous disclosure obligations in respect of the Company’s result for first half of the 2010 financial year.
"The undertakings include an agreement to engage Deloitte to review financial reporting processes and Nufarm’s policies and procedures relating to continuous disclosure. The recommendations of that review are to be implemented over the next 9 months.
"Nufarm’s managing director, Doug Rathbone, said the company acknowledges the fundamental importance of accurate and timely disclosure and will fully comply with the ASIC requirements.
"There are a number of initiatives underway, to which Nufarm is already committed, that are designed to achieve appropriate improvements in these areas."
"The enforceable undertakings include measures limiting Nufarm’s reliance on so called "low doc" equity raising provisions for the period until the Deloitte recommendations are determined and implemented.
"ASIC has also issued an infringement notice in relation to Nufarm’s disclosure of its results for the first half of the 2010 financial year.
"Nufarm has paid the $66,000 penalty specified in that notice.
"The payment is not an admissi
