FSA censures Sportsworld

RNS Number:0315X
Financial Services Authority
29 March 2004

FSA/PN/029/2004

For immediate release

29 March 2004



FSA censures Sportsworld and fines former CEO #45,000 for listing rules breach



The Financial Services Authority (FSA) today censured Sportsworld Media Group
plc ("Sportsworld") for breaching the Listing Rules.  Sportsworld's former CEO,
Mr Geoffrey Brown, has also been fined #45,000 for being knowingly concerned in
this breach.  This is the first time that the FSAhas used its statutory powers
to fine a director of a listed company.



The FSA has found that Sportsworld breached the Listing Rules by failing to
notify the market of changes in its business performance and expectations as to
its pre-tax profit (PTP) until 28 January 2002, despite having been aware of the
situation since 24 December 2001.



Andrew Procter, FSA Director of Enforcement, said:



"A company's decision on whether or not to make an announcement must be made
objectively taking into account the market's likely reaction.  Sportsworld's
optimism, no matter how honestly held, as to an improvement in its performance,
was not a sufficient basis for the company to conclude that no announcement was
necessary in respect ofthe changes in its performance and expectations.



"Mr Brown, as CEO, was responsible for ensuring Sportsworld observed the Listing
Rules.  Mr Brown and Sportsworld's failure to inform investors and other market
participants of changes in its performance and expectations as to performance
without delay, and not a month later, could have caused investors to make
decisions based on inaccurate information.



"The obligation on listed companies, and their directors, to inform the market
without delay of any changes to their business performance is a fundamental
protection for shareholders and is vital to ensuring the smooth operation of
efficient, orderly and competitive markets."



Sportsworld's profit forecasts, agreed by the Board, for the year ending June
2002 indicated an expected PTP of #16.1 million with expected profits of #5.5
million (34%) in the first half and #10.6 million (66%) in the second half.  The
company communicated positive views of its prospects in a statement on 3 October
2001 with its preliminary results and again on 29 November 2001 to coincide with
its AGM. These announcements helped shape the market's expectation of
Sportsworld's likely profits.



Sportsworld's senior management were in receipt of the November management
accounts on 24 December 2001.  These were disappointing and indicated that
Sportsworld had experienced significant losses rather than the expected profit
in the year to date, and only greatly improved performance in the second half of
the year would allow the company to meet expectations.  Management accounts for
December 2001, available in the week beginning 21 January 2002, showed a first
half year loss of #1.7 million.



Despite the situation becoming ever more apparent in the weeks following 24
December 2001, the Board did not meet until 25 January 2002 to discuss the
company's changed circumstances and a trading statement.  Sportsworld announced
a reduced full year PTP expectation of #9-10 million on 28 January 2002.



Mr Brown, as the CEO, failed in his duty under the Listing Rules to ensure that
the Board were kept fully informed of developments so that they were able to
consider whether these changes were price sensitive and therefore should have
been released to the market without delay.

It was not enough for Mr Brown or the company to rely on an optimistic belief
that lost ground would be made up in the rest of the financial year as a
sufficient basis for not informing the market without delay of price sensitive
information concerning the company's adverse performance.  The market should
have been allowed to judge for itself the credibility of that belief.



Sportsworld would have been subject to a substantial financial penalty in
respect of this breach were it not for its lack of financial resources.



NOTES FOR EDITORS



1.      The full text of the Decision from the Regulatory Decisions Committee of
the FSA and its censure is available on the FSA's website www.fsa.gov.uk/pubs/
final/index-2004.html.



2.      Sportsworld's listing was suspended on 2 April 2002 pending announcement
of its interim results and on 10 April 2002 Administrative Receivers were
appointed.



3.     Paragraph 9.2of the Listing Rules states that:



"A company must notify the Company Announcements Office without delay
of all relevant information which is not public knowledge concerning a change:



(a)     in the company's financial condition;

(b)  in the performance of its business; or

(c)     in the company's expectation as to its performance;



which, if made public, would be likely to lead to substantial movement in the
price of its listed securities."



4.      The FSA took on new powers under the Financial Services and Markets Act
2000 on 1 December 2001. The disciplinary sanctions available to the FSA for
breaches of the Listing Rules that take place on or after 1 December 2001
include a fine or a public statement.



5.      The FSA regulates the financial services industry and has four
objectives under the Financial Services and Markets Act 2000: maintaining market
confidence; promoting public understanding of the financial system; securing the
appropriate degree of protection of consumers; and fighting financial crime.



6.      The FSA aims to maintain efficient, orderly and clean financial markets
and help retail consumers achieve a fair deal.



ENQUIRIES

Press:       David Cliffe         020 7066 3232

             Outside office hours          07625 197 939

Public:      FSA Consumer Helpline         0845 606 1234



Website:                     www.fsa.gov.uk


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            The company news service from the London Stock Exchange
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